SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 22, 1996
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact name of registrant as specified in its charter)
Texas 1-9016 75-6335572
(State or Other Jurisdiction (Commission File Number)(I.R.S. Employer
of Incorporation) Identification Number)
6220 North Beltline, Suite 205, Irving, 75063
Texas (zip code)
(Address of principal executive
offices)
(214) 550-6053
(Registrant's telephone number,
including area code)
Item 5. Other Events
Effective May 22, 1996, the Trust, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership (two of the
Trust's affiliates) entered into a Settlement Agreement to repay
the Trust's 8.8% unsecured notes to The Manufacturers Life
Insurance Company ("MLI") and The Manufacturers Life Insurance
Company (U.S.A.) ("MLI-USA") at a substantial discount in
connection with the settlement of the Trust's litigation with
MLI, MLI- USA, and Fidelity Management and Research Company,
Fidelity Galileo Fund, L.P., Belmont Capital Partners II, L.P.,
Fidelity Puritan Trust and Fidelity Management Trust Co.
(together, the "Fidelity Entities").
Pursuant to the Settlement Agreement and related documents,
the Trust has been granted the option to repay the approximately
$45,239,000 principal amount due and owing on its outstanding
notes for $36,800,000 (the "Option Price"). As a condition to
entering the Settlement Agreement, the Trust paid $5,200,000 to
MLI in satisfaction of $6,568,000 in outstanding accrued and
unpaid interest (which included default rate interest of
$1,095,000) through April 12, 1996, allowing the Trust to
recognize an immediate gain of $1,368,000. The Trust further
paid approximately $168,000 to MLI in satisfaction of accrued and
unpaid interest through May 1, 1996.
In order to achieve the discount on the principal balance of
the notes, the Trust will be required to pay at least $25,000,000
to MLI and MLI-USA by November 23, 1996, to be applied pro rata
to the outstanding principal balance of the notes and dollar-for-
dollar to the Option Price. The Trust must pay the remaining
amount of the Option Price during extended option periods ending
on March 31, 1997 or June 30, 1997, subject to the payment of
additional principal payments in the amount of $250,000 and
$150,000, respectively (which will be applied pro rata to the
outstanding principal balance of the notes but not the Option
Price). Interest also continues to accrue at the non-default
rate of 8.8% per annum (and at the default rate upon an event of
default), and monthly interest payments beginning June 3, 1996
must be made in order to receive the discount. Although interest
will accrue against the outstanding principal balance of the
notes, the interest payments will be calculated against the
balance of the Option Price; the portion of the accrued interest
which is not satisfied by the required monthly payments will be
deferred and due only upon an event of default and not payable if
the Trust performs its obligations pursuant to the Settlement
Agreement.
The notes remain fully matured, due and payable, subject to
a moratorium on any collection efforts by MLI and MLI-USA through
November 23, 1996, with possible extensions through June 30, 1997
as described above, as long as the Trust remains current in its
obligations under the Settlement Agreement. If the Trust is
unable to perform under the Settlement Agreement, it will be
required to pay the outstanding principal balance of the notes
plus the 8.8% interest thereon, net of interest payments paid on
the Option Price as described above. If the Trust successfully
completes the discounted payment of the notes, this transaction
will result in a total gain to the Trust of approximately
$9,807,000, or $1.08 per share (comprised of approximately
$8,439,000 of reduced principal payments and approximately
$1,368,000 of accrued and unpaid interest).
In addition, the Settlement Agreement provides that the
notes will now be secured by liens on fourteen of the Trust's
properties, including both phases of the Patapsco Industrial
Center near Baltimore, Maryland; the Beltline Business Center,
Gateway 5 and 6, the Northgate II project and the Meridian
warehouse property located in or near Dallas, Texas; Plaza
Southwest, Commerce Park and Westchase Park located in Houston,
Texas; Huntington Drive Center located near Los Angeles,
California; two of the industrial buildings comprising the
Northwest Business Park located near Milwaukee, Wisconsin; the
Cahill property located near Minneapolis, Minnesota; and the
Springbrook Business Park located near Seattle, Washington. The
notes will be further secured by the Trust's interests in AIP
Tamarac, Inc., AIP Northview, Inc., AIP Properties #1, L.P. and
AIP Properties #2, L.P., the Trust's affiliates which own Tamarac
Square in Denver, Colorado and Northview Distribution Center in
Dallas, Texas. The Trust has agreed not to sell or encumber any
of these properties (or the Trust's Burnsville property near
Minneapolis, Minnesota or the third building of the Northwest
Business Park which were already previously encumbered) or
otherwise transfer its interests therein except in compliance
with the Settlement Agreement, which requires application of
certain proceeds to the Trust's obligations to MLI and MLI-USA.
As provided in a Release Agreement executed concurrently
with the Settlement Agreement, MLI and MLI-USA have released the
Trust and its officers, trust managers, agents, affiliates and
subsidiaries from any cause of action, with the exception that
the Trust, Patapsco #1 Limited Partnership, Patapsco #2 Limited
Partnership, AIP Properties #1, L.P. and AIP Properties #2, L.P.
have not been released from any claims or damages relating to or
arising from the notes, the Settlement Agreement or certain
transfers of property by the Trust that may be deemed fraudulent
to creditors under applicable law. The Trust agreed to release
and indemnify MLI and MLI-USA and their respective officers,
directors and agents from claims and damages. Additionally,
mutual releases were given between the Trust, MLI and MLI-USA on
the one hand and the Fidelity Entities on the other.
Simultaneously with the execution of the Release Agreement, the
Trust, MLI, MLI-USA and the Fidelity Entities executed an Agreed
Motion to (i) Non-Suit Claims of MLI and MLI-USA Without
Prejudice and (ii) Enter Taking Nothing Judgment as to Claims
Asserted by the Trust and Counterclaims Asserted by the Fidelity
Entities, and an Agreed Final Judgment, which dismisses the
claims by the Trust and the Fidelity Entities, and non-suits the
claims made by MLI and MLI-USA.
The Settlement Agreement also requires that the Trust not
pay distributions to shareholders until the Trust has paid the
Option Price in full. For this reason, the Trust Managers have
determined that it is in the best interests of the Trust and its
shareholders to suspend distributions to shareholders until such
time as the Option Price has been paid and the discount on the
notes fully achieved. Any future distributions to shareholders
will be evaluated by the Trust Managers based on the liquidity of
the Trust, performance of the Trust's portfolio, cash flow of the
Trust and other circumstances existing upon payment of the Option
Price.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
99.1 Settlement Agreement by and between American
Industrial Properties REIT, Patapsco #1 Limited Partnership,
Patapsco #2 Limited Partnership, The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.)
dated as of May 22, 1996.
99.2 Agreed Final Judgment.
99.3 Agreed Motion to (i) Non-Suit Claims of the of The
Manufacturers Life Insurance Company and The Manufacturers Life
Insurance Company (U.S.A.) Without Prejudice and (ii) Enter
Taking Nothing Judgment as to Claims Asserted by American
Industrial Properties REIT and Counterclaims Asserted by the
Fidelity Entities.
99.4 Release Agreement by and between American
Industrial Properties REIT, Patapsco #1 Limited Partnership,
Patapsco #2 Limited Partnership, The Manufacturers Life Insurance
Company, The Manufacturers Life Insurance Company (U.S.A.),
Fidelity Management & Research Company, Fidelity Galileo Fund,
L.P., Belmont Capital Partners, II, L.P., Fidelity Puritan Fund
and Fidelity Management Trust Co.
99.5 AIP Partnership Interest Pledge Agreement by and
between American Industrial Properties REIT, The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company (U.S.A.)
99.6 Stock Pledge Agreement by and between American
Industrial Properties REIT, The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.).
99.7 Partnership and Stock Financing Statement in favor
of The Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company (U.S.A.).
99.8 Option Agreement, dated May 22, 1996, between The
Manufacturers Life Insurance Company, The Manufacturers Life
Insurance Company (U.S.A.) and American Industrial Properties
REIT.
99.9 Sample Deed of Trust, Assignment of Rents and
Security Agreement and Fixture Filing in favor of The
Manufacturers Life Insurance Company and The Manufacturers Life
Insurance Company (U.S.A.) filed in California.
99.10 Sample Indemnity Deed of Trust, Assignment of
Rents and Security Agreement in favor of The Manufacturers Life
Insurance Company and The Manufacturers Life Insurance Company
(U.S.A.) filed in Maryland.
99.11 Sample Mortgage, Assignment of Rents and
Security Agreement in favor of The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.)
filed in Minnesota.
99.12 Sample Deed of Trust, Assignment of Rents and
Security Agreement in favor of The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.)
filed in Texas.
99.13 Sample Deed of Trust, Assignment of Rents and
Security Agreement in favor of The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.)
filed in Washington.
99.14 Sample Mortgage, Assignment of Rents and
Security Agreement in favor of The Manufacturers Life Insurance
Company and The Manufacturers Life Insurance Company (U.S.A.)
filed in Wisconsin.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
AMERICAN INDUSTRIAL PROPERTIES REIT
/s/ Charles W. Wolcott
Charles W. Wolcott
President and Chief Executive Officer
DATE: June 4, 1996
D1995\17018-1
Index to Exhibits
Sequentially
Exhibit No Description Numbered
Pages
99.1 Settlement Agreement by and between
American Industrial Properties REIT,
Patapsco #1 Limited Partnership,
Patapsco #2 Limited Partnership, The
Manufacturers Life Insurance Company
and The Manufacturers Life Insurance
Company (U.S.A.) dated as of May 22,
1996.
99.2 Agreed Final Judgment.
99.3 Agreed Motion to (i) Non-Suit Claims of
the of The Manufacturers Life Insurance
Company and The Manufacturers Life
Insurance Company (U.S.A.) Without
Prejudice and (ii) Enter Taking Nothing
Judgment as to Claims Asserted by
American Industrial Properties REIT and
Counterclaims Asserted by the Fidelity
Entities.
99.4 Release Agreement by and between
American Industrial Properties REIT,
Patapsco #1 Limited Partnership,
Patapsco #2 Limited Partnership, The
Manufacturers Life Insurance Company,
The Manufacturers Life Insurance
Company (U.S.A.), Fidelity Management &
Research Company, Fidelity Galileo
Fund, L.P., Belmont Capital Partners,
II, L.P., Fidelity Puritan Fund and
Fidelity Management Trust Co.
99.5 AIP Partnership Interest Pledge
Agreement by and between American
Industrial Properties REIT, The
Manufacturers Life Insurance Company
and The Manufacturers Life Insurance
Company (U.S.A.)
99.6 Stock Pledge Agreement by and between
American Industrial Properties REIT,
The Manufacturers Life Insurance
Company and The Manufacturers Life
Insurance Company (U.S.A.).
99.7 Partnership and Stock Financing
Statement in favor of The Manufacturers
Life Insurance Company and The
Manufacturers Life Insurance Company
(U.S.A.).
99.8 Option Agreement, dated May 22, 1996,
between The Manufacturers Life
Insurance Company, The Manufacturers
Life Insurance Company (U.S.A.) and
American Industrial Properties REIT.
99.9 Sample Deed of Trust, Assignment of
Rents and Security Agreement and
Fixture Filing in favor of The
Manufacturers Life Insurance Company
and The Manufacturers Life Insurance
Company (U.S.A.) filed in California.
99.10 Sample Indemnity Deed of Trust,
Assignment of Rents and Security
Agreement in favor of The Manufacturers
Life Insurance Company and The
Manufacturers Life Insurance Company
(U.S.A.) filed in Maryland.
99.11 Sample Mortgage, Assignment of Rents
and Security Agreement in favor of The
Manufacturers Life Insurance Company
and The Manufacturers Life Insurance
Company (U.S.A.) filed in Minnesota.
99.12 Sample Deed of Trust, Assignment of
Rents and Security Agreement in favor
of The Manufacturers Life Insurance
Company and The Manufacturers Life
Insurance Company (U.S.A.) filed in
Texas.
99.13 Sample Deed of Trust, Assignment of
Rents and Security Agreement in favor
of The Manufacturers Life Insurance
Company and The Manufacturers Life
Insurance Company (U.S.A.) filed in
Washington.
99.14 Sample Mortgage, Assignment of Rents
and Security Agreement in favor of The
Manufacturers Life Insurance Company
and The Manufacturers Life Insurance
Company (U.S.A.) filed in Wisconsin.
SETTLEMENT AGREEMENT BY AND BETWEEN
AMERICAN INDUSTRIAL PROPERTIES REIT,
PATAPSCO #1 LIMITED PARTNERSHIP,
PATAPSCO #2 LIMITED PARTNERSHIP,
THE MANUFACTURERS LIFE INSURANCE COMPANY AND
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
DATED AS OF May 22, 1996
TABLE OF CONTENTS
Page
ARTICLE I - Definitions 1
1.01 Agreed Judgment 1
1.02 Agreed Motion 1
1.03 AIP 1
1.04 AIP Partnership and Stock Financing Statement 1
1.05 AIP Partnership Interest Pledge Agreement 1
1.06 Beltline Property 1
1.07 Beltline Property Deed of Trust 1
1.08 Beltline Property UCC-1 Financing Statement 2
1.09 Burnsville Permitted Encumbrances 2
1.10 Burnsville Property 2
1.11 Business Day 2
1.12 Cahill Property 2
1.13 Cahill Property Deed of Trust 2
1.14 Cahill Property UCC-1 Financing Statement 2
1.15 Closing Date 2
1.16 Collateral Documents 2
1.17 Commerce Park Property 3
1.18 Commerce Park Property Deed of Trust 3
1.19 Commerce Property UCC-1 Financing Statement 3
1.20 Default 3
1.21 Event of Default 3
1.22 Existing Lien Properties 3
1.23 Existing Lien Properties Release Price 3
1.24 The Fidelity Entities 4
1.25 Financing Expenses 4
1.26 Gateway Property 4
1.27 Gateway Property Deed of Trust 4
1.28 Gateway Property UCC-1 Financing Statement 4
1.29 Huntington Property 4
1.30 Huntington Property Deed of Trust 4
1.31 Huntington Property UCC-1 Financing Statement 4
1.32 Initial Moratorium Period 5
1.33 Meridian Property 5
1.34 Meridian Property Deed of Trust 5
1.35 Meridian Property UCC-1 Financing Statement 5
1.36 MLI 5
1.37 MLI USA 5
1.38 Moratorium Period Extension 5
1.39 Net Proceeds 5
1.40 Northgate Property 5
1.41 Northgate Property Deed of Trust 5
1.42 Northgate Property UCC-1 Financing Statement 5
1.43 Northview Permitted Encumbrances 5
1.44 Northview Property 6
1.45 Northwest Business Park I Permitted Encumbrances 6
1.46 Northwest Business Park I Property 6
1.47 Northwest Business Park II and III Property 6
1.48 Northwest Business Park II and III Property Deed of Trust6
1.49 Northwest Business Park II and III Property UCC-1 Financing
Statement 6
1.50 Note Purchase Agreement 6
1.51 Obligations 6
1.52 Obligor 7
1.53 Opinion Letter 7
1.54 Option Agreement 7
1.55 Option Two Price 7
1.56 Patapsco #1 Property 7
1.57 Patapsco #1 Property Deed of Trust 7
1.58 Patapsco #1 Property UCC-1 Financing Statement 7
1.59 Patapsco #2 Property 7
1.60 Patapsco #2 Property Deed of Trust 7
1.61 Patapsco #2 Property UCC-1 Financing Statement 8
1.62 Permitted Encumbrances 8
1.63 Person 8
1.64 Plaza Southwest Property 8
1.65 Plaza Southwest Property Deed of Trust 8
1.66 Plaza Southwest Property UCC-1 Financing Statement 8
1.67 Promissory Note B-1 8
1.68 Promissory Note B-1 Option Price 8
1.69 Promissory Note B-2 8
1.70 Promissory Note B-2 Option Price 9
1.71 Qualified Institutional Investor 9
1.72 Release Agreement 9
1.73 Release Price 9
1.74 Second Moratorium Period Extension 10
1.75 Selling Expenses 10
1.76 Springbrook Property 10
1.77 Springbrook Property Deed of Trust 10
1.78 Springbrook Property UCC-1 Financing Statement 10
1.79 Stock Pledge Agreement 10
1.80 Subject Collateral 10
1.81 Subject Lawsuit 11
1.82 Subject Notes 11
1.83 Tamarac Permitted Encumbrances 11
1.84 Tamarac Property 11
1.85 Westchase Property 11
1.86 Westchase Property Deed of Trust 11
1.87 Westchase Property UCC-1 Financing Statement 11
ARTICLE II - Acknowledgments 11
ARTICLE III - Closing 13
3.01 Closing 13
3.02 Delivery at Closing 13
ARTICLE IV - Conditions 17
4.01 Conditions to the Obligations of MLI and MLI USA 17
4.02 Conditions to the Obligations of Obligor. 18
ARTICLE V - Note Purchase Agreement and Subject Notes 19
ARTICLE VI - Moratorium 20
6.01 Moratorium 20
6.02 Initial Moratorium Period 20
6.03 Moratorium Period Extension 21
6.04 Conditions to Moratorium Period Extension 21
6.05 Second Moratorium Period Extension 22
6.06 Conditions to Second Moratorium Period Extension 22
6.07 Effect of Failure to Satisfy Condition to Moratorium
Period Extension 23
6.08 Effect of Failure to Satisfy Condition to Second
Moratorium Period Extension 23
ARTICLE VII - Interest Accrual and Payments 23
7.01 Interest Accrual 23
7.02 Interest Payment on Promissory Note B-1 23
7.03 Interest Payment on Promissory Note B-2 24
7.04 Principal Payments 25
7.05 Sale, Refinance or Financing 25
ARTICLE VIII - Partial Releases 26
8.01 Partial Releases 26
ARTICLE IX - Option Agreement 27
ARTICLE X - Covenants of AIP 27
10.01 Information 27
10.02 Liens and Sale 29
10.03 AIP Properties #1, L.P. and AIP Tamarac, Inc. 30
10.04 AIP Properties #2, L.P. and AIP Northview, Inc. 31
10.05 Maintenance of Insurance 33
10.06 Payment of Taxes, Impositions and Claims 33
10.07 Distributions 33
10.08 Environmental Law Compliance and Indemnity 33
10.09 Payment on Taking or Destruction 36
10.10 Covenant Compliance 36
10.11 Additional Documents 36
10.12 Court Signing of the Agreed Judgment 37
ARTICLE XI - Covenants of Patapsco #1 Limited Partnership 37
11.01 37
11.02 Maintenance of Insurance 37
11.03 Payment of Taxes, Impositions and Claims 38
11.04 Environmental Law Compliance and Indemnity 38
11.05 Payment on Taking or Destruction 41
11.06 Covenant Compliance 41
11.07 Additional Documents 41
ARTICLE XII - Covenants of Patapsco #2 Limited Partnership 41
12.01 42
12.02 Maintenance of Insurance 42
12.03 Payment of Taxes, Impositions and Claims 42
12.04 Environmental Law Compliance and Indemnity 43
12.05 Payment on Taking or Destruction 45
12.06 Covenant Compliance 46
12.07 Additional Documents 46
ARTICLE XIII - Covenants of MLI 46
13.01 Disclosure to any Other Person 46
13.02 Limitation of Liability 48
13.03 Court Signing of the Agreed Judgment 48
ARTICLE XIV - Covenants of MLI USA 48
14.01 Disclosure to any Other Person 48
14.02 Limitation of Liability 50
14.03 Court Signing of Agreed Judgment 50
ARTICLE XV - Representations and Warranties of AIP 50
15.01 Existence and Power 50
15.02 Authorization; Contravention 51
15.03 Enforceable Obligations 51
15.04 Title to Properties; Liens; Ownership 52
15.05 Full Disclosure 52
15.06 Environmental Matters 52
15.07 53
15.08 53
ARTICLE XVI - Representations and Warranties of Patapsco #1
Limited Partnership 53
16.01 Existence and Power 53
16.02 Authorization; Contravention 54
16.03 Enforceable Obligations 54
16.04 Title to Properties; Liens; Ownership 55
16.05 Environmental Matters 55
ARTICLE XVII - Representations and Warranties of Patapsco #2
Limited Partnership 56
17.01 Existence and Power 56
17.02 Authorization; Contravention 56
17.03 Enforceable Obligations 57
17.04 Title to Properties; Liens; Ownership 57
17.05 Environmental Matters 57
ARTICLE XVIII - Representations and Warranties of MLI 59 18.01
Organization 59
18.02 Legal, Valid and Binding Instrument 59
18.03 Conflicting Agreements and Other Matters 59
ARTICLE XIX - Representations and Warranties of MLI USA 60
19.01 Organization 60
19.02 Legal, Valid and Binding Instrument 60
19.03 Conflicting Agreements and Other Matters 60
ARTICLE XX - Assignability 61
ARTICLE XXI - Defaults 61
21.01 Events of Default 61
21.02 Notice 66
21.03 Remedies 66
21.04 Separate Sales 68
21.05 Remedies Cumulative; Concurrent and Non-Exclusive 68
21.06 No Conditions Precedent to Exercise Remedies 68
21.07 Release of Resort to Collateral 69
21.08 Waivers 69
21.09 Discontinuance of Proceedings 70
21.10 Application of Proceeds 70
ARTICLE XXII - Miscellaneous 71
22.01 Continuing Agreement 71
22.02 Payments 72
22.03 Notices 72
22.04 No Waivers 74
22.05 Expenses; Documentary Taxes; Indemnification 74
22.06 Amendments and Waivers; Consent to Deviation 75
22.07 Survival 76
22.08Prior Understandings; No Defenses; Release; No Oral Agreements 76
22.09 Limitation on Interest 77
22.10 Table of Contents and Captions; References 78
22.11 Construction 78
22.12 APPLICABLE LAW 78
22.13 Counterparts 79
22.14 79
INDEX TO EXHIBITS
Exhibit 1 Agreed Judgment
Exhibit 2 Agreed Motion
Exhibit 3 Release Agreement
Exhibit 4 AIP Partnership and Stock Financing Statement
Exhibit 5 AIP Partnership Interest Pledge Agreement
Exhibit 6 Beltline Property
Exhibit 7 Burnsville Property
Exhibit 8 Cahill Property
Exhibit 9 Commerce Park Property
Exhibit 10 Gateway Property
Exhibit 11 Huntington Property
Exhibit 12 Meridian Property
Exhibit 13 Northgate Property
Exhibit 14 Northview Property
Exhibit 15 Northwest Business Park I Property
Exhibit 16 Northwest Business Park II and III Property
Exhibit 17 Patapsco #1 Property
Exhibit 18 Patapsco #2 Property
Exhibit 19 Plaza Southwest Property
Exhibit 20 Springbrook Property
Exhibit 21 Tamarac Property
Exhibit 22 Westchase Property
Exhibit 23 Northview Permitted Encumbrances
Exhibit 24 Option Agreement
Exhibit 25 Stock Pledge Agreement
Exhibit 26 Tamarac Permitted Encumbrances
Exhibit 27 Northwest Business Park I Permitted Encumbrances
Exhibit 28 Burnsville Property Permitted Encumbrances
SETTLEMENT AGREEMENT
The parties to this Agreement are American Industrial
Properties REIT, Patapsco #1 Limited Partnership, Patapsco #2
Limited Partnership, The Manufacturers Life Insurance Company and
The Manufacturers Life Insurance Company (U.S.A.).
ARTICLE I
Definitions
The following terms, as used in this Agreement, shall have
the meanings indicated below unless the context otherwise
requires:
1.01 "Agreed Judgment" shall mean the Agreed Final Judgment
in the form attached hereto as Exhibit 1.
1.02 "Agreed Motion" shall mean the Agreed Motion to (i) Non-
Suit Claims of The Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company (U.S.A.) Without Prejudice
and (ii) Enter Take Nothing Judgment in the form attached hereto
as Exhibit 2.
1.03 "AIP" shall mean American Industrial Properties REIT.
1.04 "AIP Partnership and Stock Financing Statement" shall
mean the instrument by that title in the form of Exhibit 4.
1.05 "AIP Partnership Interest Pledge Agreement" shall mean
the instrument by that title in the form of Exhibit 5.
1.06 "Beltline Property" shall mean the property described in
Exhibit 6.
1.07 "Beltline Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Beltline
Property.
1.08 "Beltline Property UCC-1 Financing Statement" shall mean
that certain financing statement to be executed at Closing by AIP
relating to the Beltline Property.
1.09 "Burnsville Permitted Encumbrances" shall mean the
encumbrances on the Burnsville Property described in Exhibit 28.
1.10 "Burnsville Property" shall mean the property described
in Exhibit 7.
1.11 "Business Day" shall mean a day other than a Saturday, a
Sunday or any United States Federal holiday.
1.12 "Cahill Property" shall mean the property described in
Exhibit 8.
1.13 "Cahill Property Deed of Trust" shall mean that certain
Mortgage, Assignment of Rents and Security Agreement to be
executed at Closing by AIP as Mortgagor, in favor of MLI and MLI
USA as Mortgagee, encumbering the Cahill Property.
1.14 "Cahill Property UCC-1 Financing Statement" shall mean
that certain financing statement to be executed at Closing by AIP
relating to the Cahill Property.
1.15 "Closing Date" shall mean May 22, 1996 or such other
date as agreed upon by MLI, MLI USA, AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership.
1.16 "Collateral Documents" shall mean the Cahill Property
Deed of Trust, the Cahill Property UCC-1 Financing Statement, the
Patapsco #1 Property Deed of Trust, the Patapsco #1 Property UCC-
1 Financing Statement, the Patapsco #2 Deed of Trust, the
Patapsco #2 Property UCC-1 Financing Statement, the Springbrook
Property Deed of Trust, the Springbrook Property UCC-1 Financing
Statement, the Beltline Property Deed of Trust, the Beltline
Property UCC-1 Financing Statement, the Commerce Park Property
Deed of Trust, the Commerce Park Property UCC-1 Financing
Statement, the Gateway Property Deed of Trust, the Gateway
Property UCC-1 Financing Statement; the Huntington Property Deed
of Trust, the Huntington Property UCC-1 Financing Statement, the
Meridian Property Deed of Trust, the Meridian Property UCC-1
Financing Statement, the Northgate Property Deed of Trust, the
Northgate Property UCC-1 Financing Statement, the Plaza Southwest
Property Deed of Trust, the Plaza Southwest Property UCC-1
Financing Statement, the Westchase Property Deed of Trust, the
Westchase Property UCC-1 Financing Statement, the Northwest
Business Park II and III Property Deed of Trust, the Northwest
Business Park II and III Property UCC-1 Financing Statement, the
AIP Partnership Interest Pledge Agreement, the Stock Pledge
Agreement, and the AIP Partnership and Stock Financing Statement.
1.17 "Commerce Park Property" shall mean the property
described in Exhibit 9.
1.18 "Commerce Park Property Deed of Trust" shall mean that
certain Deed Trust, Assignment of Rents and Security Agreement to
be executed at Closing by AIP encumbering the Commerce Park
Property.
1.19 "Commerce Park Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by AIP relating to the Commerce Park Property.
1.20 "Default" shall mean the occurrence of any conditions,
events or acts which would constitute an Event of Default or
which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default
1.21 "Event of Default" shall mean the occurrence of any
conditions, events or acts described in Section 21.01.
1.22 "Existing Lien Properties" shall mean the Burnsville
Property and the Northwest Business Park I Property.
1.23 "Existing Lien Properties Release Price" shall mean the
Release Price for the Existing Lien Properties.
1.24 "The Fidelity Entities" shall mean Fidelity Management &
Research Corporation, Fidelity Galileo Fund, L.P., Belmont
Capital Partners II, L.P., Fidelity Puritan Trust, and Fidelity
Management Trust Co.
1.25 "Financing Expenses" shall mean the direct costs, fees
and expenses incurred by AIP, Patapsco #1 Limited Partnership or
Patapsco #2 Limited Partnership in connection with obtaining
financing or refinancing on a property, including but not limited
to, commissions, finders fees, title policy premiums,
endorsement charges, escrow fees, reasonable and actual legal
fees and charges of the lender (i.e., engineering, repairs and
repair allowances, legal, appraisal and loan fees), survey
expenses, and title company charges and Obligor's actual legal
fees.
1.26 "Gateway Property" shall mean the property described in
Exhibit 10.
1.27 "Gateway Property Deed of Trust" shall mean that certain
Deed of Trust, Assignment of Rents and Security Agreement to be
executed at Closing by AIP encumbering the Gateway Property.
1.28 "Gateway Property UCC-1 Financing Statement" shall mean
that certain financing statement to be executed at Closing by AIP
relating to the Gateway Property.
1.29 "Huntington Property" shall mean the property described
in Exhibit 11.
1.30 "Huntington Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Huntington
Property.
1.31 "Huntington Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by AIP relating to the Huntington Property.
1.32 "Initial Moratorium Period" shall mean the period of
moratorium described in Section 6.02.
1.33 "Meridian Property" shall mean the property described in
Exhibit 12.
1.34 "Meridian Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Meridian
Property.
1.35 "Meridian Property UCC-1 Financing Statement" shall mean
that certain financing statement to be executed at Closing by AIP
relating to the Meridian Property.
1.36 "MLI" shall mean The Manufacturers Life Insurance
Company.
1.37 "MLI USA" shall mean The Manufacturers Life Insurance
Company (U.S.A.).
1.38 "Moratorium Period Extension" shall mean the period of
moratorium described in Section 6.03.
1.39 "Net Proceeds"(i) in the case of a sale shall mean the
gross proceeds from the sale less the Selling Expenses, (ii) in
the case of a financing or refinancing, shall mean the gross
proceeds received from the financing or refinancing less the
Financing Expenses.
1.40 "Northgate Property" shall mean the property described
in Exhibit 13.
1.41 "Northgate Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Northgate
Property.
1.42 "Northgate Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by AIP relating to the Northgate Property.
1.43 "Northview Permitted Encumbrances" shall mean the
encumbrances on the Northview Property described in Exhibit 23.
1.44 "Northview Property" shall mean the property described
in Exhibit 14.
1.45 "Northwest Business Park I Permitted Encumbrances" shall
mean the encumbrances on the Northwest Business Park I Property
described in Exhibit 27.
1.46 "Northwest Business Park I Property" shall mean the
property described in Exhibit 15.
1.47 "Northwest Business Park II and III Property" shall mean
the property described in Exhibit 16.
1.48 "Northwest Business Park II and III Property Deed of
Trust" shall mean that certain Mortgage, Assignment of Rents and
Security Agreement to be executed at Closing by AIP as Mortgagor,
in favor of MLI and MLI USA as Mortgagee, encumbering the
Northwest Business Park II and III Property.
1.49 "Northwest Business Park II and III Property UCC-1
Financing Statement" shall mean that certain financing statement
to be executed at Closing by AIP relating to the Northwest
Business Park II and III Property.
1.50 "Note Purchase Agreement" shall mean an agreement by
that title, dated February 27, 1992, by and between Trammell Crow
Real Estate Investors (now AIP) and MLI.
1.51 "Obligations" shall mean the following: (a) all
indebtedness of AIP now or hereafter evidenced by the Subject
Notes, (b) any and all past, concurrent or future modifications,
extensions, renewals, rearrangements, replacements and increases
of the Subject Notes, (c) all obligations and indebtedness of
each Obligor to MLI and MLI USA which are evidenced by or created
or incurred under the Settlement Agreement, (d) all present and
future debts and obligations of any Obligor to MLI and MLI USA
under or pursuant to the Collateral Documents, and (e) all
reasonable and actual costs incurred by MLI and MLI USA to
enforce this Agreement and the Collateral Documents and collect
the Obligations including but not limited to reasonable actual
attorneys' fees, legal expenses and expenses of sale.
1.52 "Obligor" shall mean AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership, collectively.
1.53 "Opinion Letter" shall mean the opinion letter furnished
at Closing by Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.,
counsel for AIP, Patapsco #1 Limited Partnership, and Patapsco #2
Limited Partnership in a form and substance satisfactory to MLI
and MLI USA.
1.54 "Option Agreement" shall mean an agreement by that title
in the form of Exhibit 24.
1.55 "Option Two Price" shall mean the sum of Thirty-Six
Million Eight Hundred Thousand and 00/100 Dollars
($36,800,000.00).
1.56 "Patapsco #1 Property" shall mean the property described
in Exhibit 17.
1.57 "Patapsco #1 Property Deed of Trust" shall mean that
certain Indemnity Deed of Trust, Assignment of Rents and Security
Agreement to be executed at Closing by Patapsco #1 Limited
Partnership encumbering the Patapsco #1 Property.
1.58 "Patapsco #1 Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by Patapsco #1 Limited Partnership relating to the Patapsco #1
Property.
1.59 "Patapsco #2 Property" shall mean the property described
in Exhibit 18.
1.60 "Patapsco #2 Property Deed of Trust" shall mean that
certain Indemnity Deed of Trust, Assignment of Rents and Security
Agreement to be executed at Closing by Patapsco #2 Limited
Partnership in favor of MLI and MLI USA encumbering the Patapsco
#2 Property.
1.61 "Patapsco #2 Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by Patapsco #2 Limited Partnership relating to the Patapsco #2
Property.
1.62 "Permitted Encumbrance" shall collectively have the
meaning provided for in each of the respective Collateral
Documents.
1.63 "Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a joint-stock
company, a trust, an association, an unincorporated organization
and a government or any department or agency thereof.
1.64 "Plaza Southwest Property" shall mean the property
described in Exhibit 19.
1.65 "Plaza Southwest Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Plaza Southwest
Property.
1.66 "Plaza Southwest Property UCC-1 Financing Statement"
shall mean that certain financing statement to be executed at
Closing by AIP relating to the Plaza Southwest Property.
1.67 "Promissory Note B-1" shall mean a promissory note,
dated February 27, 1992, in the original face amount of Nineteen
Million One Hundred Forty-Three Thousand Six Hundred Forty-Six
and 92/100 Dollars ($19,143,646.92) executed by Trammell Crow
Real Estate Investors (now AIP) in favor of MLI.
1.68 "Promissory Note B-1 Option Price" shall mean the sum of
$16,613,295.49.
1.69 "Promissory Note B-2" shall mean a promissory note,
dated February 27, 1992, in the original face amount of Twenty-
Three Million Two Hundred Sixty-One Thousand Three Hundred
Seventeen and 66/100 Dollars ($23,261,317.66) executed by
Trammell Crow Real Estate Investors in favor of MLI.
1.70 "Promissory Note B-2 Option Price" shall mean the sum of
$20,186,704.51.
1.71 "Qualified Institutional Investor" shall mean a
"qualified institutional buyer" as defined in Rule 144A
promulgated under the Securities Act.
1.72 "Release Agreement" shall mean the agreement by that
title attached as Exhibit 3.
1.73 "Release Price" shall, on a property-by-property basis,
be the following amounts:
Release Price
to be Paid to
Property MLI/MLI USA
Burnsville Property $400,000
Cahill Property $2,700,000
Northwest Business Park I Property $600,000
Northwest Business Park II and III Property $4,500,000
Patapsco #1 Property $1,980,000
Patapsco #2 Property $1,320,000
Springbrook Property $4,000,000
Beltline Property $1,900,000
Commerce Park Property $2,500,000
Gateway Property $2,000,000
Huntington Property $3,700,000
Meridian Property $1,100,000
Northgate Property $4,800,000
Plaza Southwest Property $3,800,000
Westchase Property $1,500,000
AIP's partnership interest in AIP
Properties #1, L.P. $10,000,000
AIP's partnership interest in AIP
Properties #2, L.P. $400,000
Stock of AIP Tamarac, Inc. $10,000,000
Stock of AIP Northview, Inc. $400,000
1.74 "Second Moratorium Period Extension" shall mean the
period of moratorium described in Section 6.05.
1.75 "Selling Expenses" shall mean the direct costs, fees and
expenses incurred by the seller in connection with the sale of a
property, including but not limited to, all transfer gains and
sales taxes, sales commissions, finders fees, title policy
premiums, endorsement charges, escrow fees, survey expenses and
title company charges, repair costs and repair allowances and
Obligor's actual legal costs and fees.
1.76 "Springbrook Property" shall mean the property described
in Exhibit 20.
1.77 "Springbrook Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP as Grantor, in favor of MLI and
MLI USA as Grantee, encumbering the Springbrook Property.
1.78 "Springbrook Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at closing
by AIP relating to the Springbrook Property.
1.79 "Stock Pledge Agreement" shall mean the instrument by
that title in the form of Exhibit 25.
1.80 "Subject Collateral" shall mean all property pledged as
collateral to MLI and MLI USA pursuant to this Agreement and the
instruments and agreements provided for herein, including the
Collateral Documents.
1.81 "Subject Lawsuit" shall mean No. 95-4181-G, styled
American Industrial Properties REIT v. The Manufacturers Life
Insurance Company, et al., pending in the 134th Judicial District
Court of Dallas County, Texas.
1.82 "Subject Notes" shall mean Promissory Note B-1 and
Promissory Note B-2.
1.83 "Tamarac Permitted Encumbrances" shall mean the
encumbrances on the Tamarac Property described in Exhibit 26.
1.84 "Tamarac Property" shall mean the property described in
Exhibit 21.
1.85 "Westchase Property" shall mean the property described
in Exhibit 22.
1.86 "Westchase Property Deed of Trust" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement
to be executed at Closing by AIP encumbering the Westchase
Property.
1.87 "Westchase Property UCC-1 Financing Statement" shall
mean that certain financing statement to be executed at Closing
by AIP relating to the Westchase Property.
ARTICLE II
Acknowledgments
2.01 MLI is the owner of Promissory Note B-2.
2.02 MLI previously assigned and endorsed over to MLI USA
Promissory Note B-1. MLI USA is the owner of Promissory Note B-1.
2.03 As of the May 22, 1996, the principal balance due and
owing by AIP to MLI USA evidenced by Promissory Note B-1 is
$20,423,153.06.
2.04 As of the May 22, 1996, the principal balance due and
owing by AIP to MLI evidenced by Promissory Note B-2 is
$24,816,037.03.
2.05 As of the May 22, 1996, the unpaid accrued interest due
and owing by AIP to MLI USA on Promissory Note B-1 is
$3,223,832.94.
2.06 As of the May 22, 1996, the unpaid accrued interest due
and owing by AIP to MLI on Promissory Note B-2 is $3,917,257.89.
2.07 AIP has previously defaulted on its obligations under
the terms of the (i) Note Purchase Agreement, and (ii) Subject
Notes.
2.08 MLI and MLI USA were entitled to and did in fact
lawfully accelerate the maturities of the Subject Notes in
accordance with the terms of the Subject Notes and the Note
Purchase Agreement. As of the Closing Date, the indebtedness
evidenced by the Subject Notes is fully matured, due and owing.
2.09 Entry into this Agreement and the agreements provided
for herein and payment by AIP of the sums provided for herein is
not intended to and will not (i) reinstate the Subject Notes, or
(ii) decelerate the maturities of the Subject Notes. The Subject
Notes shall remain fully matured, with all principal and accrued
interest due and owing. However, enforcement of MLI and MLI
USA's rights under the Subject Notes and Note Purchase Agreement
is now subject to the provisions of this Agreement. Upon payment
of the amounts specified in Section 3.02(a)(1) and (2), all
accrued and unpaid interest on the Subject Notes at the non-
default and default rates provided therein shall be deemed paid
in full through and including May 1, 1996.
2.10 Except as provided in the Release Agreement, no claim or
right of MLI or MLI USA with respect to the Subject Notes is
released or discharged by entry into this Agreement.
ARTICLE III
Closing
3.01 Closing. The Closing shall be held on the Closing Date,
after all of the conditions to Closing described in Article IV of
this Agreement shall have been satisfied or waived (the "Closing
Date"). Unless otherwise designated by MLI and MLI USA by notice
to AIP, the Closing shall be held at the offices of Ware, Snow,
Fogel, Jackson & Greene, P.C., 1111 Bagby, 49th Floor, Houston,
Texas 77002.
3.02 Delivery at Closing. At the Closing, the following
events shall occur, and each event shall be deemed to occur
simultaneously with each other event:
a. Delivery by AIP to MLI and MLI USA. AIP shall
deliver or cause to be delivered to MLI and MLI USA the
following:
1. The sum of $2,944,688.16 U.S. by wire transfer
for the benefit of MLI to Citibank, NY, ABA #021 000
089, for credit to Account #36858201, for further
credit to Account #845978.
2. The sum of $2,423,425.50 U.S. by wire transfer
for the benefit of MLI USA to State Street Bank and
Trust Co., ABA #011 000 028, BNF: MANUSA CORP SURPLUS
HIGH YIELD, Account #4362-780-1, OBI: MANUSA CORP
SURPLUS HIGH YIELD, Fund #YZ22.
3. The duly executed originals of the Collateral
Documents with the exception of the Collateral
Documents to be executed and delivered by Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership
pursuant to Sections 3.02(b) and 3.02(c) of this
Agreement.
4. A schedule of insurance coverage on a property-
by-property basis for the Subject Collateral owned by
AIP.
5. The duly executed original of the Release
Agreement.
6. The duly executed original of the Agreed
Motion.
7. The duly executed original of the Agreed
Judgment.
8. The duly executed original of the Option
Agreement.
9. The AIP Tamarac, Inc. Stock.
10. The AIP Northview, Inc. Stock.
11. The supporting documents provided for in
Section 4.01(d).
12. The Opinion Letter.
13. The Notice of Requirements of
Sale, Finance and Refinance - Tamarac.
14. The Notice of Requirements of
Sale, Finance and Refinance - Northview.
b. Delivery by Patapsco #1 Limited Partnership to MLI
and MLI USA. Patapsco #1 Limited Partnership shall deliver
or cause to be delivered to MLI and MLI USA the following:
1. The duly executed original of the Patapsco #1
Property Deed of Trust.
2. The duly executed original of the Patapsco #1
Financing Statement.
3. A schedule of insurance coverage on the
Patapsco #1 Property.
4. The supporting documents
provided for in Section 4.01(d).
5. The Opinion Letter.
c. Delivery by Patapsco #2 Limited Partnership to MLI
and MLI USA. Patapsco #2 Limited Partnership shall deliver
or cause to be delivered to MLI and MLI USA the following:
1. The duly executed original of the Patapsco #2
Property Deed of Trust.
2. The duly executed original of the Patapsco #2
Financing Statement.
3. A schedule of insurance coverage on the
Patapsco #2 Property.
4. The supporting documents
provided for in Section 4.01(d).
5. The Opinion Letter.
d. Delivery by MLI to AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership. MLI shall
deliver to AIP, Patapsco #1 Limited Partnership and Patapsco
#2 Limited Partnership the following which have been duly
executed by MLI:
1. The Option Agreement.
2. The Release Agreement.
3. The Agreed Motion.
4. The Agreed Judgment.
5. The supporting documents provided for in
Section 4.02(c).
e. Delivery by MLI USA to AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership. MLI USA
shall deliver to AIP, Patapsco #1 Limited Partnership and
Patapsco #2 Limited Partnership the following which have
been duly executed by MLI USA:
1. The Option Agreement.
2. The Release Agreement.
3. The Agreed Motion.
4. The Agreed Judgment.
5. The supporting documents provided for in
Section 4.02(c).
f. Delivery by AIP to the Fidelity Entities. AIP
shall deliver to the Fidelity Entities the following which
have been duly executed by AIP:
1. The Release Agreement.
2. The Agreed Motion.
3. The Agreed Judgment.
g. Delivery by MLI and MLI USA to the Fidelity
Entities. MLI and MLI USA shall deliver to the Fidelity
Entities the following which have been duly executed by MLI
and MLI USA:
1. The Release Agreement.
2. The Agreed Motion.
3. The Agreed Judgment.
h. Delivery by the Fidelity Entities to MLI and MLI
USA. The Fidelity Entities shall deliver to MLI and MLI USA
the following which have been duly executed by the Fidelity
Entities:
1. The Release Agreement.
2. The Agreed Motion.
3. The Agreed Judgment.
i. Delivery by the Fidelity Entities to AIP. The
Fidelity Entities shall deliver to AIP the following which
have been duly executed by the Fidelity Entities:
1. The Release Agreement.
2. The Agreed Motion.
3. The Agreed Judgment.
ARTICLE IV
Conditions
4.01 Conditions to the Obligations of MLI and MLI USA. The
obligations of MLI and MLI USA hereunder are subject to the
satisfaction, unless waived in writing by MLI and MLI USA at
their option, and in their sole discretion, on or before the
closing of the conditions set forth below:
a. Representations and Warranties of Each Obligor to
be True and Correct. The representations and warranties of
each Obligor contained in this Agreement shall be true and
correct in all material respects on and as of the Closing,
with the same effect as though such representations and
warranties had been made on and as of each such date.
b. Performance of Covenants and Agreements. Each
Obligor shall have performed and complied with all
covenants, agreements and obligations contained in this
Agreement required to be performed or complied with by them
prior to or at the Closing.
c. Consents and Litigation. Each Obligor shall have
obtained all required third party consents to the
transactions contemplated by this Agreement and all
statutory requirements for valid consummation of the
transactions contemplated by this Agreement shall have been
fulfilled and all necessary governmental consents, approvals
or authorizations shall have been obtained. There shall not
have been filed or threatened any suit, action or other
proceeding (including any investigation of any governmental
agency) to restrain or invalidate the transactions
contemplated by this Agreement and no order, writ,
injunction, or decree shall have been entered or be in
effect that restrains, enjoins or limits the transactions
contemplated by this Agreement.
d. Supporting Documents. MLI, MLI USA and its counsel
shall have received prior to or at the Closing copies of the
following documents:
1. A certificate of the Secretary for AIP
certifying that attached is a resolution of the Trust
Managers of AIP dated the Closing Date and certifying
(a) that attached thereto is the resolutions of the
Trust Managers of AIP authorizing (AIP, in its
individual trust capacity, and in its capacity as the
sole general partners of Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership) the
execution, delivery, and performance of this Agreement;
the consummation of the transaction contemplated
hereby; the execution, delivery and performance of each
of the other instruments provided for in this
Agreement; which resolutions remain in full force and
effect on behalf of AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership; and
(b) to the election, incumbency and signatures of the
officer or officers of AIP executing this Agreement,
each agreement provided for herein, and any certificate
or instrument furnished pursuant hereto.
e. The Fidelity Entities shall have executed and
delivered the Release Agreement, Agreed Motion and Agreed
Judgment.
4.02 Conditions to the Obligations of Obligor. The
obligations of each Obligor hereunder are subject to the
satisfaction, unless waived in writing by Obligor at its option,
and in its sole discretion, on or before the Closing of the
conditions set forth below:
a. Representations and Warranties of MLI and MLI USA
to be True and Correct. The representations and warranties
of MLI and MLI USA contained in this Agreement shall be true
and correct in all material respects on and as of the
Closing, with the same effect as though such representations
and warranties had been made on and as of each such date.
b. Performance of Covenants and Agreements. MLI and
MLI USA shall have performed and complied with all
covenants, agreements and obligations contained in this
Agreement required to be performed or complied with by them
prior to or at the Closing.
c. Supporting Documents. Each Obligor and its counsel
shall have received prior to or at the Closing copies of the
following documents:
1. A certificate of an officer that is at least a
Senior Vice-President of MLI certifying that MLI has
full power and authority, and has taken all corporate
actions necessary to execute and deliver this Agreement
and consummate the transactions contemplated hereby and
perform all of its obligations hereunder.
2. A certificate of an officer of MLI USA that
is at least an Assistant Secretary certifying MLI USA
has full power and authority, and has taken all
corporate actions necessary to execute and deliver this
Agreement and consummate the transactions contemplated
hereby and perform all of its obligations hereunder.
d. The Fidelity Entities shall have executed and
delivered the Release Agreement, Agreed Motion and Agreed
Judgment.
ARTICLE V
Note Purchase Agreement and Subject Notes
5.01 The determination as to the existence of an Event of
Default subsequent to the Closing Date under this Agreement shall
be governed solely by the provisions of Article XXI of this
Agreement and not Article VI of the Note Purchase Agreement.
AIP, MLI and MLI USA agree that Articles V, VI and VIII of the
Note Purchase Agreement are of no continuing force and/or effect.
5.02 The paragraphs numbered 14 of each of the Subject Notes
are each modified to delete all of the language of such
paragraphs and replace it with the following:
"The obligation or liability of REIT
hereunder shall not be personally binding
upon nor shall there be resort for the
enforcement thereof to the private property
of its Trust Managers, Shareholders,
officers, employees or agents, regardless of
whether such obligation or liability is in
the nature of contract, tort, or otherwise."
5.03 To the extent of any conflict between this Agreement,
the Note Purchase Agreement and the Subject Notes, the provisions
of this Agreement shall control.
ARTICLE VI
Moratorium
6.01 Moratorium. During the Initial Moratorium Period, and
if applicable, the Moratorium Period Extension and the Second
Moratorium Period Extension, MLI and MLI USA will forbear from
instituting (i) any suit or action against any Obligor or any of
its assets to collect the indebtedness evidenced by the Subject
Notes and this Agreement, and (ii) any foreclosure or legal
proceedings upon the Subject Collateral. During the Initial
Moratorium Period and, if applicable, the Moratorium Period
Extension and Second Moratorium Period Extension, the running of
any statutes of limitation effecting any claim or right of MLI
and MLI USA are suspended and tolled.
6.02 Initial Moratorium Period. The Initial Moratorium
Period shall be from the Closing Date until the earlier of (i)
5:00 p.m., Central Standard Time, on November 23, 1996, or (ii)
the occurrence of an Event of Default.
6.03 Moratorium Period Extension. The Moratorium Period
Extension shall be from 5:00 p.m., Central Standard Time, on
November 23, 1996 until the earlier of (i) 5:00 p.m., Central
Standard Time, on March 31, 1997, or (ii) the occurrence of an
Event of Default.
6.04 Conditions to Moratorium Period Extension. There shall
not be a Moratorium Period Extension unless each of the following
conditions are strictly adhered to and timely and fully satisfied
by Obligor:
a. Condition No. 1. No Event of Default shall have
occurred during the Initial Moratorium Period.
b. Condition No. 2. All payments required to be made
during the Initial Moratorium Period pursuant to Sections
7.02, 7.03, 7.04 and 7.05 of this Agreement must have been
made to MLI and MLI USA by Obligor.
c. Condition No. 3. During the Initial Moratorium
Period Obligor must have made principal payments to MLI and
MLI USA totaling at least Twenty-Five Million and 00/100
Dollars ($25,000,000.00), exclusive of the payment made
pursuant to Section 6.04(d). The principal payments
(excluding the payment made pursuant to Section 6.04(d)),
shall be applied dollar-for-dollar as and when paid to the
Option Two Price and pro rata to the outstanding principal
balances of the Subject Notes from time to time outstanding.
Payments made pursuant to Sections 3.02, 7.02 and 7.03 are
interest payments and are not to be credited against the
Twenty-Five Million and 00/100 Dollars ($25,000,000.00)
principal payment required in this section.
d. Condition No. 4. On or before 5:00 p.m., Central
Standard Time, on November 23, 1996, Obligor must have made
an additional payment to MLI and MLI USA in the amount of
Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00)
to be applied pro rata to the principal balances of the
Subject Notes, but not the Option Two Price. This payment
is in addition to the payments required pursuant to Sections
3.02, 7.02, 7.03, 7.04 and 7.05.
6.05 Second Moratorium Period Extension. The Second
Moratorium Period Extension shall be from 5:00 p.m., Central
Standard Time, on March 31, 1997, until the earlier of (i) 5:00
p.m., Central Standard Time, on June 30, 1997, or (ii) the
occurrence of an Event of Default.
6.06 Conditions to Second Moratorium Period Extension. There
shall be a Section Moratorium Period Extension if and only if
each of the following conditions are strictly adhered to and
timely and fully satisfied by Obligor.
a. Condition No. 1. All of the conditions set forth
in Section 6.04 must have been strictly adhered to and
timely and fully satisfied.
b. Condition No. 2. No Event of Default shall have
occurred during the Moratorium Period Extension.
c. Condition No. 3. All payments required to be made
during the Moratorium Period Extension pursuant to Sections
7.02, 7.03, 7.04 and 7.05 of this Agreement must have been
made to MLI and MLI USA by Obligor.
d. Condition No. 4. On or before 5:00 p.m., Central
Standard Time, on March 31, 1997, Obligor must have made an
additional principal reduction payment to be applied pro
rata to the then outstanding principal balances of the
Subject Notes in the amount of One Hundred Fifty Thousand
and 00/100 Dollars ($150,000.00). This payment is in
addition to payments required pursuant to Sections 3.02,
6.04(d), 7.02, 7.03, 7.04 and 7.05.
6.07 Effect of Failure to Satisfy Conditions to Moratorium
Period Extension. If any one or more of the conditions set forth
in Section 6.04 is not wholly or timely satisfied, then the
Moratorium provided in Section 6.01 shall terminate as provided
in Section 6.02.
6.08 Effect of Failure to Satisfy Conditions to Second
Moratorium Period Extension. If the conditions set forth in
Section 6.04 are wholly and timely satisfied but any one or more
of the conditions set forth in Section 6.06 is not wholly and
timely satisfied, then the moratorium provided in Section 6.01
shall terminate as provided in Section 6.03.
ARTICLE VII
Interest Accrual and Payments
7.01 Interest Accrual. Interest will accrue from April 13,
1996 on the outstanding principal balances owing on the Subject
Notes at the rate of 8.80% per annum computed as provided in the
Subject Notes until the occurrence of an Event of Default
hereunder. Although the Subject Notes remain fully matured, and
due and owing, interest shall accrue thereon at the non-default
rate provided for in the Subject Notes. Upon the occurrence of
an Event of Default hereunder, interest shall accrue on the
outstanding balance of each of the Subject Notes at the default
rate provided for in the Subject Notes.
7.02 Interest Payment on Promissory Note B-1. During the
Initial Moratorium Period and, if applicable, the Moratorium
Period Extension and Second Moratorium Period Extension, Obligor
shall, on or before the first Business Day of each month,
commencing on June 3, 1996, pay to MLI USA or its assignee
permitted under the terms of this Agreement such interest
accruing through the first day of each applicable month at the
rate of 8.80% per annum specified in Promissory Note B-1 and
calculated by utilizing the unpaid portion of the Promissory Note
B-1 Option Price from time to time outstanding as opposed to the
outstanding balance of Promissory Note B-1 from time to time
outstanding. The interest payment due June 1, 1996 shall be
calculated from (and include interest on) May 2, 1996. The
monthly payments shall be applied against the interest accruing
on the outstanding principal balance of Promissory Note B-1.
Notwithstanding the fact that monthly payments of interest under
this Agreement shall be calculated by utilizing principal amounts
that will be less than the actual principal balance of Promissory
Note B-1 from time to time outstanding, Obligor acknowledges and
agrees that interest shall accrue on Promissory Note B-1 on the
actual principal balance thereof from time to time outstanding.
That portion of the accrued interest which is not satisfied by
the required monthly payments shall be deferred and shall be due
and payable upon the occurrence of an Event of Default.
7.03 Interest Payment on Promissory Note B-2. During the
Initial Moratorium Period and, if applicable, the Moratorium
Period Extension and Second Moratorium Period Extension, Obligor
shall on or before the first Business Day of each month,
commencing on June 3, 1996, pay to MLI or its assignee permitted
under the terms of this Agreement such interest accruing through
the first day of each applicable month at the rate of 8.80% per
annum specified in Promissory Note B-2 and calculated by
utilizing the unpaid portion of the Promissory Note B-2 Option
Price from time to time outstanding as opposed to the outstanding
balance of Promissory Note B-2. The interest payment due June 1,
1996 shall be calculated from May 2, 1996. The monthly payments
shall be applied against the interest accruing on the outstanding
principal balance of Promissory Note B-2 from time to time
outstanding. Notwithstanding the fact that monthly payments of
interest under this Agreement shall be calculated by utilizing
principal amounts that will be less than the actual principal
balance of Promissory Note B-2 from time to time outstanding,
Obligor acknowledges and agrees that interest shall accrue on
Promissory Note B-2 on the actual balance thereof from time to
time outstanding. That portion of the accrued interest which is
not satisfied by the required monthly payments shall be deferred
and shall be due and payable upon the occurrence of an Event of
Default.
7.04 Principal Payments. Prior to expiration or termination
of the Initial Moratorium Period, Obligor must make principal
payments to MLI and MLI USA or their assignees permitted under
this Agreement totaling at least Twenty-Five Million and 00/100
Dollars ($25,000,000), exclusive of the payment provided for in
Section 6.04(d) of this Agreement. Payments made pursuant to
Sections 3.02, 7.02 and 7.03 of this Agreement are to be applied
solely against accrued interest and not the outstanding principal
balance of the Subject Notes or the Option Two Price. The
payments made pursuant to Sections 6.04(d) and 6.06(d) of this
Agreement are to be applied pro rata against the outstanding
principal balances of the Subject Notes but not the Option Two
Price.
7.05 Sale, Refinance or Financing. In the event that any
Obligor finances, refinances or sells all or any portion of the
Subject Collateral or Existing Lien Properties a payment shall be
made by Obligor to MLI and MLI USA to be applied pro rata against
the outstanding principal balances of the Subject Notes and to
the extent required by the Option Agreement, be applied dollar
for dollar to the Promissory Note B-1 Option Price and Promissory
Note B-2 Option Price on a pro rata basis) equal to the greater
of: (i) the Net Proceeds arising from the sale, refinance or
financing, or (ii) the Release Price specified for the applicable
property. In the event that MLI and MLI USA are paid an amount
in excess of the Release Price in connection with any sale,
refinance or financing of the Subject Collateral or Existing Lien
Properties, or AIP delivers amounts to MLI and MLI USA under
Sections 10.03(d), 10.03(e), 10.04(d) and 10.04(e) hereof, prior
to an Event of Default, said excess and/or amounts may be
utilized by Obligor at its election as a credit against the
Release Price requirements on any future transaction involving
the Subject Collateral or Existing Lien Properties until such
time as any such credit is exhausted. Under no circumstances
shall the proceeds from the sale, refinance or financing by an
Obligor of the Subject Collateral or Existing Lien Properties be
applied to satisfy Obligor's obligations pursuant to Sections
7.02, 7.03, 6.04(d) and 6.06(d) of this Agreement.
ARTICLE VIII
Partial Releases
8.01 Partial Releases. Obligor shall be entitled to releases
of (1) a portion of the Subject Collateral from the Collateral
Documents and (2) the Existing Lien Properties from the
restrictions contained herein subject to and in accordance with
the following provisions:
a. At the time of the release, no Event of Default
exists.
b. The instruments or documents evidencing such
partial release shall be prepared at the cost of Obligor and
shall be in a form and substance reasonably satisfactory to
MLI and MLI USA.
c. Such other documentation and information relating
to the transaction giving rise to the requested release
reasonably requested by MLI and MLI USA in connection with
such partial release shall be delivered to MLI and MLI USA
by Obligor.
d. With respect to any sale, the purchase price must
be paid in full and in cash at the closing unless Obligor
pays the applicable Release Price with other available funds
of Obligor and/or credits provided for in this Agreement.
MLI and MLI USA shall be under no obligation to release any
right hereunder with respect to the Subject Collateral or
the Existing Lien Properties in connection with a sale that
provides for purchase money financing to be provided by an
Obligor unless Obligor pays the applicable Release Price
with other available funds of Obligor and/or credits
provided for in this Agreement.
e. MLI and MLI USA shall have received full payment in
cash or immediately available funds in accordance with
Section 7.05.
ARTICLE IX
Option Agreement
9.01 MLI and MLI USA acknowledge that in the event that, and
only in the event that, AIP timely and fully complies with each
and every condition of the Option Agreement, that all of AIP's
obligations to MLI and MLI USA under the Subject Notes and this
Agreement shall be satisfied by full and timely payment of the
Option Two Price in accordance with the terms of the Option
Agreement. Nothing in this Agreement is intended to or shall be
construed to alter in any respect the terms and conditions set
forth in the Option Agreement. To the extent of any conflict
between the Option Agreement, this Agreement and the Subject
Notes, the provisions of the Option Agreement shall control.
ARTICLE X
Covenants of AIP
AIP hereby covenants and agrees with MLI and MLI USA that
until the Obligations are satisfied, it will comply at all times
with the covenants set forth in this Article.
10.01 Information. AIP will deliver, or cause to be
delivered, to MLI and MLI USA:
a. AIP shall furnish or cause to be furnished to MLI
and MLI USA within five (5) Business Days after AIP is
required to file the same with the Securities and Exchange
Commission ("Commission"), copies of the periodic
information, documents and other reports which AIP is
required to file with the Commission pursuant to Section
13(a) of the Exchange Act. If AIP ceases to be required to
file information, documents and other reports pursuant to
Section 13 of the Exchange Act, it shall remain obligated to
furnish the same information, documents and reports
otherwise required under Section 13(a) of the Exchange Act
to MLI and MLI USA within five (5) Business Days after AIP
would have been required to file the same with the
Commission.
b. AIP shall furnish or cause to be furnished to MLI
and MLI USA, within five Business Days after the effective
date thereof, copies of any amendment or modification to its
By-Laws and Declaration of Trust.
c. Within thirty (30) days after the end of each
quarter, commencing July 1, 1996, AIP shall furnish or
cause to be furnished to MLI and MLI USA rent rolls as of
the end of the preceding quarterly period applicable to the
Subject Collateral and Existing Lien Properties.
d. AIP shall furnish or cause to be furnished copies
of all tax assessments relating to the Subject Collateral
within five (5) Business Days of receipt thereof by AIP, but
not AIP's tax consultants.
e. Within five (5) Business Days of written request,
AIP shall furnish or cause to be furnished to MLI and MLI
USA proof of payment of all current year tax bills relating
to the Subject Collateral and Existing Lien Properties prior
to delinquency.
f. AIP shall furnish or cause to be furnished copies
of any third party appraisal received by it that is
performed on the real estate and improvements pledged
pursuant to the Collateral Documents as well as the Existing
Lien Properties within ten (10) days of receipt.
10.02 Liens and Sale. Except in connection with a
financing transaction, refinancing transaction or sale in which
AIP has satisfied the requirements of Sections 7.05 and 8.01 of
this Agreement, AIP will not (i) sell all or any material part of
the Subject Collateral, or (ii) directly or indirectly create,
incur or permit to exist any liens with respect to the Subject
Collateral. AIP will not (i) sell all or any material part of
the Existing Lien Properties, or (ii) directly or indirectly
create, incur or permit to exist any liens on or with respect to
the Existing Lien Properties (other than the existing liens
securing not more than the existing indebtedness amounts in favor
of GMAC Commercial Mortgage Corporation and Textron Financial
Corporation) except in connection with a sale or refinance
transaction that will either (i) generate cash Net Proceeds that
will equal or exceed the applicable Existing Lien Property's
Release Price, or (ii) otherwise, together with other available
funds of AIP and/or credits under this Agreement (available
pursuant to this Section 10.02 and Section 7.05) allow AIP to pay
the applicable Existing Lien Property Release Price. In the
event AIP finances, refinances or sells either of the Existing
Lien Properties, AIP hereby covenants and agrees to pay to MLI
and MLI USA (to be applied pro rata to the then outstanding
principal balances of Promissory Note B-1 and Promissory Note B-2
and to the extent required by the Option Agreement, to the
Promissory Note B-1 Option Price and Promissory Note B-2 Option
Price on a pro rata basis) the greater of: (i) the Release Price
specified for the applicable Existing Lien Property, or (ii) the
actual Net Proceeds resulting from such sale or refinance. To
the extent AIP pays to MLI and MLI USA an amount in excess of the
Release Price in connection with any sale or refinance of any
Existing Lien Property, such excess may be utilized by AIP at its
election as a credit against the Release Price requirements on
any future transactions involving any Existing Lien Property or
any Subject Collateral until such time as any such credit is
exhausted.
10.03 AIP Properties #1, L.P. and AIP Tamarac, Inc. As
the (i) owners of 100% of the outstanding stock of AIP Tamarac,
Inc., the general partner and owner of a one percent interest in
AIP Properties #1, L.P., and (ii) owner of a 99% limited
partnership interest in AIP Properties #1, L.P., AIP shall take
all actions necessary to prevent:
a. The resignation or removal of AIP Tamarac, Inc. as
general partner of AIP Properties #1, L.P. without the prior
written consent of MLI and MLI USA.
b. The sale, transfer or encumbrance by AIP Tamarac,
Inc. of its one percent partnership interest in AIP
Properties #1, L.P. unless the greater of (i) $10,000,000.00
(which may be paid from proceeds of the transaction or other
funds of AIP and/or credits available pursuant to this
Agreement), or (ii) the actual Net Proceeds of the sale are
immediately dividended and/or distributed to AIP which in
turn pays such sum to MLI and MLI USA (to be applied pro
rata to the outstanding principal balances of the Subject
Notes and to the extent required by the Option Agreement, to
the Option Two Price).
c. The issuance of any shares of AIP Tamarac, Inc.
which are not pledged to MLI and MLI USA pursuant to the
Stock Pledge Agreement.
d. AIP Properties #1, L.P. from directly or indirectly
creating or incurring any liens with respect to the Tamarac
Property (other than existing liens securing not more than
the existing indebtedness amounts in favor of Amresco
Capital Corp.), except in connection with a refinance
transaction with respect to which the greater of (i)
$10,000,000, or (ii) the actual Net Proceeds are immediately
dividended and/or distributed to AIP and which in turn pays
such sums to MLI and MLI USA (to be applied pro rata to the
outstanding principal balances of the Subject Notes and to
the extent provided in the Option Agreement, to the Option
Two Price).
e. The sale by AIP Properties #1, L.P. of all or any
material portion of the Tamarac Property unless the greater
of (i) $10,000,000 (which may be paid from proceeds of the
transaction or other available funds of AIP and/or credits
available pursuant to this Agreement), or (ii) the actual
Net Proceeds of the sale are immediately dividended and/or
distributed to AIP which in turn pays such sums to MLI and
MLI USA (to be applied pro rata to the outstanding principal
balances of the Subject Notes and to the extent provided in
the Option Agreement, to the Option Two Price).
AIP shall cause AIP Properties #1, L.P. to maintain and keep in
force substantially similar insurance coverage relating to the
Tamarac Property as maintained as of the date of this Agreement,
including but not limited to liability coverage of at least
$2,000,000. AIP will cause proof of payment of the premiums for
all such insurers to be delivered to MLI and MLI USA promptly
after each such payment is made and in any case at least fifteen
(15) days before payment becoming delinquent.
10.04 AIP Properties #2, L.P. and AIP Northview, Inc. As
the (i) owners of 100% of the outstanding stock of AIP Northview,
Inc., the general partners and owner of a one percent interest in
AIP Properties #2, L.P., and (ii) owner of a 99% limited
partnership interest in AIP Properties #2, L.P., AIP shall take
all actions necessary to prevent:
a. The resignation or removal of AIP Northview, Inc.
as general partner of AIP Properties #2, L.P. without the
prior written consent of MLI and MLI USA.
b. The sale, transfer or encumbrance by AIP Northview,
Inc. of its one percent partnership interest in AIP
Properties #2, L.P. unless the greater of (i) $400,000
(which may be paid from proceeds of the transaction or other
available funds of AIP and/or credits available pursuant to
this Agreement), or (ii) the actual Net Proceeds of the sale
are immediately dividended and/or distributed to AIP which
in turn pays such sum to MLI and MLI USA (to be applied pro
rata to the outstanding principal balances of the Subject
Notes and to the extent provided in the Option Agreement, to
the Option Two Price).
c. The issuance of any shares of AIP Northview, Inc.
which are not pledged to MLI and MLI USA pursuant to the
Stock Pledge Agreement.
d. AIP Properties #2, L.P. from directly or indirectly
creating or incurring any liens with respect to the
Northview Property (other than existing liens securing not
more than the existing indebtedness amounts in favor of
Amresco Capital Corp.), except in connection with a
refinance transaction with respect to which the greater of
(i) $400,000, or (ii) the actual Net Proceeds are
immediately divided and re distributed to AIP and which in
turn pays such sums to MLI and MLI USA (to be applied pro
rata to the outstanding principal balances of the Subject
Notes and to the extent provided in the Option Agreement, to
the Option Two Price).
e. The sale by AIP Properties #2, L.P. of all or any
material portion of the Northview Property unless the
greater of (i) $400,000.00 (which may be paid from proceeds
of the transaction or other available funds of AIP and/or
credits available pursuant to this Agreement), or (ii) the
actual Net Proceeds of the sale are immediately divided
and/or distributed to AIP which in turn pays such sums to
MLI and MLI USA (to be applied pro rata to the outstanding
principal balances of the Subject Notes and to the extent
provided in the Option Agreement, to the Option Two Price).
AIP shall cause AIP Properties #2, L.P. to maintain and keep in
force substantially similar insurance coverage relating to the
Northview Property as maintained as of the date of this
Agreement, including but not limited to liability coverage of at
least $2,000,000. AIP will cause proof of payment of the
premiums for all such insurers to be delivered to MLI and MLI USA
promptly after each such payment is made and in any case at least
15 days before payment becoming delinquent.
10.05 Maintenance of Insurance. AIP will at all times
before the satisfaction of the Obligations, maintain and keep in
force substantially similar insurance coverages relating to the
Subject Collateral and Existing Lien Properties as maintained by
AIP as of the date of this Agreement, including but not limited
to liability coverage of at least $2,000,000.
10.06 Payment of Taxes, Impositions and Claims. AIP
shall pay, when due, all taxes, assessments and governmental
charges or levies imposed upon it, the income of AIP, the Subject
Collateral or the proceeds arising from the disposition of the
Subject Collateral, and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and any other like
Person which, if unpaid, might result in the creation of a lien
upon the income of AIP, the Subject Collateral or the proceeds
arising from the disposition of the Subject Collateral; provided
that items of the foregoing description need not be paid while
being contested in good faith and by appropriate proceedings.
10.07 Distributions. AIP shall not make distributions to
shareholders until such time as the Subject Notes are satisfied
in full in accordance with the provisions of this Agreement and
the Option Agreement.
10.08 Environmental Law Compliance and Indemnity. AIP
shall promptly pay and discharge when due all debts, claims,
liabilities and obligations with respect to any clean-up measures
necessary for AIP to comply with Applicable Environmental Laws.
AIP hereby indemnifies and agrees to defend and hold MLI and MLI
USA and their successors and assigns harmless from and against
any and all third party claims, demands, causes of action, loss,
damage, liabilities, costs and expenses (including reasonable
attorneys' fees and court costs) of any and every kind or
character, known or unknown, fixed or contingent, asserted
against or incurred by MLI and MLI USA at any time and from time
to time including, without limitation, those asserted or arising
subsequent to the payment or other satisfaction of the Subject
Notes, by reason of or arising out of the ownership,
construction, occupancy, operation, use and maintenance of any of
the Subject Collateral, including matters arising out of the
negligence of MLI and MLI USA; provided, however, this indemnity
shall not apply with respect to matters caused by or arising out
of (i) the gross negligence or willful misconduct of MLI and MLI
USA (it being the express intention of the parties hereto that
MLI and MLI USA shall be indemnified from the consequences of
their negligence; and (ii) the construction, occupancy,
operation, use and maintenance of the Subject Collateral by any
lessee or party in possession of the Subject Collateral
subsequent to the ownership of the Subject Collateral by AIP,
provided further, however, that this subclause (ii) shall not
exclude from the foregoing indemnity and agreement, liability,
claims, demands, causes of action, loss, damage, costs and
expenses imposed by reason of the ownership of the Subject
Collateral by MLI and MLI USA after purchase by MLI and MLI USA
at any foreclosure sale or transfer in lieu thereof from the
extent the same shall be solely attributable to events that occur
subsequent to the date legal title to the subject portion of the
Subject Collateral is vested in MLI and MLI USA during their
ownership thereof). The foregoing indemnity and agreement
applies to the violation of any Applicable Environmental Law
prior to the payment or other satisfaction of the Subject Notes
and any act, omission, event or circumstance existing or
occurring on or about the Subject Collateral (including without
limitation the presence on the Subject Collateral or release from
the Subject Collateral of asbestos or other hazardous substances
or solid waste disposed of or otherwise presenting or released
prior to the payment or other satisfaction of the Subject Notes).
It shall not be a defense to the covenant of AIP to indemnify
that the act, omission, event or circumstance did not constitute
a violation of any Applicable Environmental Law at the time of
its existence or occurrence. The terms "hazardous substance" and
"release" shall have the meanings specified in the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), and the
terms "solid waste" and "disposed" shall have the meanings
specified in the Resource Conservation and Recovery Act of 1976
("RCRA"); provided, to the extent that any other applicable laws
of the United States of America or political subdivision thereof
establish a meaning for "hazardous substance", "release", "solid
waste", or "disposed" which is broader than that specified in
either SARA or RCRA, such broader meaning shall apply. As used
in this Agreement, "Applicable Environmental Law" shall mean and
include the singular, and "Applicable Environmental Laws" shall
mean and include the collective aggregate of the following: Any
law, statute, ordinance, rule, regulation, order or determination
of any governmental authority or any board of fire underwriters
(or other body exercising similar functions),or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any of the Subject Collateral pertaining to health, safety or the
environment, including, without limitation, all applicable zoning
ordinances and building codes, flood disaster laws and health,
safety or the environment, including without limitation, the
comprehensive Environmental Response, Compensation, and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
the Superfund Amendments and Reauthorization Act of 1986, the
Occupational Safety and Health Act and any federal, state or
municipal laws, ordinances, regulations or law which may now or
hereafter require removal of asbestos or other hazardous wastes
from any of the Subject Collateral or impose any liability on MLI
and MLI USA related to asbestos or other hazardous wastes in any
of the Subject Collateral. The provisions of this Section 10.08
shall survive the repayment of the Subject Notes and any
foreclosure of MLI and MLI USA's liens or deed in lieu of
foreclosures with respect to any Subject Collateral, and shall
continue thereafter in full force and effect. In the event of
the transfer of the Subject Notes or any portion thereof, in
accordance with this Agreement, MLI and MLI USA or any prior
holder of the Subject Notes and any participants permitted under
this Agreement shall continue to be benefitted by this indemnity
and agreement with respect to the period of such holding of the
Subject Notes.
10.09 Payment on Taking or Destruction. In the event
that damage, destruction or a taking shall occur in respect of
all or a portion of the Subject Collateral, AIP shall apply any
insurance or condemnation proceeds in respect thereof in
accordance with the provisions of the Collateral Documents.
10.10 Covenant Compliance. AIP shall perform and comply
with all covenants, obligations and agreements contained in this
Agreement, the Release Agreement and in the Collateral Documents.
10.11 Additional Documents. AIP shall execute and
deliver or cause to be executed and delivered to MLI and MLI USA
upon MLI and MLI USA's reasonable request such other and further
instruments or documents as in the reasonable judgment of MLI and
MLI USA to conform, create, evidence, perfect, preserve or
maintain MLI and MLI USA's liens or MLI and MLI USA's rights
hereunder or under the Collateral Documents, and AIP shall do all
such additional acts, give such assurances and execute such
instruments as MLI and MLI USA may reasonably require to vest
more completely in and assure to MLI and MLI USA their rights
under this Agreement.
10.12 Court Signing of the Agreed Judgment. AIP shall
take all actions reasonably necessary to obtain the signature by
the Court of the Agreed Judgment in the Subject Litigation.
ARTICLE XI
Covenants of Patapsco #1 Limited Partnership
Patapsco #1 Limited Partnership hereby covenants and agrees
with MLI and MLI USA that until all of the Obligations are
satisfied, it will comply at all times with the covenants set
forth in this Article.
11.01 Patapsco #1 Limited Partnership will not directly
or indirectly create, incur or permit to exist any liens on or
with respect to the Patapsco #1 Property, except in connection
with a refinance transaction in which the actual Net Proceeds are
immediately paid to MLI and MLI USA (to be applied pro rata to
the outstanding principal balances of the Subject Notes and to
the extent required by the Option Agreement, to the Promissory
Note B-1 Option Price and Promissory Note B-2 Option Price on a
pro rata basis). In the event Patapsco #1 Limited Partnership
sells all or any material portion of the Patapsco #1 Property,
Patapsco #1 Limited Partnership agrees to immediately pay MLI and
MLI USA out of the sales proceeds (to be applied pro rata to the
outstanding principal balances of the Subject Notes and to the
extent required by the Option Agreement, to the Promissory Note B-
1 Option Price and Promissory Note B-2 Option Price on a pro rata
basis) the greater of (i) the Net Proceeds, or (ii) $1,980,000
U.S.
11.02 Maintenance of Insurance. Patapsco #1 Limited
Partnership will at all times before the satisfaction of the
Obligations, maintain and keep in force substantially similar
insurance coverages relating to the Patapsco #1 Property as
maintained by Patapsco #1 Limited Partnership as of the date of
this Agreement, including but not limited to liability coverage
of at least $2,000,000.
11.03 Payment of Taxes, Impositions and Claims. Patapsco
#1 Limited Partnership shall pay, when due, all taxes,
assessments and governmental charges or levies imposed upon it,
the income of Patapsco #1 Limited Partnership, the Patapsco #1
Property or the proceeds arising from the disposition of the
Patapsco #1 Property, and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and any other like
Person which, if unpaid, might result in the creation of a lien
upon the income of Patapsco #1 Limited Partnership, the Patapsco
#1 Property or the proceeds arising from the disposition of the
Patapsco #1 Property; provided that items of the foregoing
description need not be paid while being contested in good faith
and by appropriate proceedings.
11.04 Environmental Law Compliance and Indemnity.
Patapsco #1 Limited Partnership shall promptly pay and discharge
when due all debts, claims, liabilities and obligations with
respect to any clean-up measures necessary for Patapsco #1
Limited Partnership to comply with Applicable Environmental Laws.
Patapsco #1 Limited Partnership hereby indemnifies and agrees to
defend and hold MLI and MLI USA and their successors and assigns
harmless from and against any and all third party claims,
demands, causes of action, loss, damage, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs)
of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by MLI and MLI USA at
any time and from time to time including, without limitation,
those asserted or arising subsequent to the payment or other
satisfaction of the Subject Notes, by reason of or arising out of
the ownership, construction, occupancy, operation, use and
maintenance of the Patapsco #1 Property, including matters
arising out of the negligence of MLI and MLI USA; provided,
however, this indemnity shall not apply with respect to matters
caused by or arising out of (i) the gross negligence or willful
misconduct of MLI and MLI USA (it being the express intention of
the parties hereto that MLI and MLI USA shall be indemnified from
the consequences of their negligence; and (ii) the construction,
occupancy, operation, use and maintenance of the Patapsco #1
Property by any lessee or party in possession of the Patapsco #1
Property subsequent to the ownership of the Patapsco #1 Property
by Patapsco #1 Limited Partnership, provided further, however,
that this subclause (ii) shall not exclude from the foregoing
indemnity and agreement, liability, claims, demands, causes of
action, loss, damage, costs and expenses imposed by reason of the
ownership of the Patapsco #1 Property by MLI and MLI USA after
purchase by MLI and MLI USA at any foreclosure sale or transfer
in lieu thereof from the extent the same shall be solely
attributable to events that occur subsequent to the date legal
title to the subject portion of the Patapsco #1 Property is
vested in MLI and MLI USA during their ownership thereof). The
foregoing indemnity and agreement applies to the violation of any
Applicable Environmental Law prior to the payment or other
satisfaction of the Subject Notes and any act, omission, event or
circumstance existing or occurring on or about the Patapsco #1
Property (including without limitation the presence on the
Patapsco #1 Property or release from the Patapsco #1 Property of
asbestos or other hazardous substances or solid waste disposed of
or otherwise presenting or released prior to the payment or other
satisfaction of the Subject Notes). It shall not be a defense to
the covenant of Patapsco #1 Limited Partnership to indemnify that
the act, omission, event or circumstance did not constitute a
violation of any Applicable Environmental Law at the time of its
existence or occurrence. The terms "hazardous substance" and
"release" shall have the meanings specified in the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), and the
terms "solid waste" and "disposed" shall have the meanings
specified in the Resource Conservation and Recovery Act of 1976
("RCRA"); provided, to the extent that any other applicable laws
of the United States of America or political subdivision thereof
establish a meaning for "hazardous substance", "release", "solid
waste", or "disposed" which is broader than that specified in
either SARA or RCRA, such broader meaning shall apply. As used
in this Agreement, "Applicable Environmental Law" shall mean and
include the singular, and "Applicable Environmental Laws" shall
mean and include the collective aggregate of the following: Any
law, statute, ordinance, rule, regulation, order or determination
of any governmental authority or any board of fire underwriters
(or other body exercising similar functions),or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any of the Patapsco #1 Property pertaining to health, safety or
the environment, including, without limitation, all applicable
zoning ordinances and building codes, flood disaster laws and
health, safety or the environment, including without limitation,
the comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Conservation and Recovery Act
of 1976, the Superfund Amendments and Reauthorization Act of
1986, the Occupational Safety and Health Act and any federal,
state or municipal laws, ordinances, regulations or law which may
now or hereafter require removal of asbestos or other hazardous
wastes from any of the Patapsco #1 Property or impose any
liability on MLI and MLI USA related to asbestos or other
hazardous wastes in any of the Patapsco #1 Property. The
provisions of this Section 11.04 shall survive the repayment of
the Subject Notes and any foreclosure of MLI and MLI USA's liens
or deed in lieu of foreclosures with respect to any of the
Patapsco #1 Property, and shall continue thereafter in full force
and effect. In the event of the transfer of the Subject Notes or
any portion thereof, in accordance with this Agreement, MLI and
MLI USA or any prior holder of the Subject Notes and any
participants permitted under this Agreement shall continue to be
benefitted by this indemnity and agreement with respect to the
period of such holding of the Subject Notes.
11.05 Payment on Taking or Destruction. In the event
that damage, destruction or a taking shall occur in respect of
all or a portion of the Patapsco #1 Property, Patapsco #1 Limited
Partnership shall apply any insurance or condemnation proceeds in
respect thereof in accordance with the provisions of the
Collateral Documents.
11.06 Covenant Compliance. Patapsco #1 Limited
Partnership shall perform and comply with all covenants,
obligations and agreements contained in this Agreement and in the
Collateral Documents.
11.07 Additional Documents. Patapsco #1 Limited
Partnership shall execute and deliver or cause to be executed and
delivered to MLI and MLI USA upon MLI and MLI USA's reasonable
request such other and further instruments or documents as in the
reasonable judgment of MLI and MLI USA to conform, create,
evidence, perfect, preserve or maintain MLI and MLI USA's liens
or MLI and MLI USA's rights hereunder or under the Collateral
Documents, and Patapsco #1 Limited Partnership shall do all such
additional acts, give such assurances and execute such
instruments as MLI and MLI USA may reasonably require to vest
more completely in and assure to MLI and MLI USA their rights
under this Agreement.
ARTICLE XII
Covenants of Patapsco #2 Limited Partnership
Patapsco #2 Limited Partnership hereby covenants and agrees
with MLI and MLI USA that until all of the Obligations are
satisfied, it will comply at all times with the covenants set
forth in this Article.
12.01 Patapsco #2 Limited Partnership will not directly
or indirectly create, incur or permit to exist any liens on or
with respect to the Patapsco #2 Property, except in connection
with a refinance transaction in which the Net Proceeds are
immediately paid to MLI and MLI USA (to be applied pro rata to
the outstanding principal balances of the Subject Notes and to
the extent required by the Option Agreement, to the Promissory
Note B-1 Option Price and Promissory Note B-2 Option Price on a
pro rata basis). In the event Patapsco #2 Limited Partnership
sells all or any material portion of the Patapsco #2 Property,
Patapsco #2 Limited Partnership agrees to immediately pay MLI and
MLI USA out of the sales proceeds (to be applied pro rata to the
outstanding principal balances of the Subject Notes and to the
extent required by the Option Agreement, to the Promissory Note B-
1 Option Price and Promissory Note B-2 Option Price on a pro rata
basis) greater of (i) the Net Proceeds, and (ii) $1,320,000.00
U.S.
12.02 Maintenance of Insurance. Patapsco #2 Limited
Partnership will at all times before the satisfaction of the
Obligations, maintain and keep in force substantially similar
insurance coverages relating to the Patapsco #2 Property as
maintained by Patapsco #2 Limited Partnership as of the date of
this Agreement, including but not limited to liability coverage
of at least $2,000,000.
12.03 Payment of Taxes, Impositions and Claims. Patapsco
#2 Limited Partnership shall pay, when due, all taxes,
assessments and governmental charges or levies imposed upon it,
the income of Patapsco #2 Limited Partnership, the Patapsco #2
Property or the proceeds arising from the disposition of the
Patapsco #2 Property, and all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and any other like
Person which, if unpaid, might result in the creation of a lien
upon the income of Patapsco #2 Limited Partnership, the Patapsco
#2 Property or the proceeds arising from the disposition of the
Patapsco #2 Property; provided that items of the foregoing
description need not be paid while being contested in good faith
and by appropriate proceedings.
12.04 Environmental Law Compliance and Indemnity.
Patapsco #2 Limited Partnership shall promptly pay and discharge
when due all debts, claims, liabilities and obligations with
respect to any clean-up measures necessary for Patapsco #2
Limited Partnership to comply with Applicable Environmental Laws.
Patapsco #2 Limited Partnership hereby indemnifies and agrees to
defend and hold MLI and MLI USA and their successors and assigns
harmless from and against any and all third party claims,
demands, causes of action, loss, damage, liabilities, costs and
expenses (including reasonable attorneys' fees and court costs)
of any and every kind or character, known or unknown, fixed or
contingent, asserted against or incurred by MLI and MLI USA at
any time and from time to time including, without limitation,
those asserted or arising subsequent to the payment or other
satisfaction of the Subject Notes, by reason of or arising out of
the ownership, construction, occupancy, operation, use and
maintenance of the Patapsco #2 Property, including matters
arising out of the negligence of MLI and MLI USA; provided,
however, this indemnity shall not apply with respect to matters
caused by or arising out of (i) the gross negligence or willful
misconduct of MLI and MLI USA (it being the express intention of
the parties hereto that MLI and MLI USA shall be indemnified from
the consequences of their negligence; and (ii) the construction,
occupancy, operation, use and maintenance of the Patapsco #2
Property by any lessee or party in possession of the Patapsco #2
Property subsequent to the ownership of the Patapsco #2 Property
by Patapsco #2 Limited Partnership, provided further, however,
that this subclause (ii) shall not exclude from the foregoing
indemnity and agreement, liability, claims, demands, causes of
action, loss, damage, costs and expenses imposed by reason of the
ownership of the Patapsco #2 Property by MLI and MLI USA after
purchase by MLI and MLI USA at any foreclosure sale or transfer
in lieu thereof from the extent the same shall be solely
attributable to events that occur subsequent to the date legal
title to the subject portion of the Patapsco #2 Property is
vested in MLI and MLI USA during their ownership thereof). The
foregoing indemnity and agreement applies to the violation of any
Applicable Environmental Law prior to the payment or other
satisfaction of the Subject Notes and any act, omission, event or
circumstance existing or occurring on or about the Patapsco #2
Property (including without limitation the presence on the
Patapsco #2 Property or release from the Patapsco #2 Property of
asbestos or other hazardous substances or solid waste disposed of
or otherwise presenting or released prior to the payment or other
satisfaction of the Subject Notes). It shall not be a defense to
the covenant of Patapsco #2 Limited Partnership to indemnify that
the act, omission, event or circumstance did not constitute a
violation of any Applicable Environmental Law at the time of its
existence or occurrence. The terms "hazardous substance" and
"release" shall have the meanings specified in the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), and the
terms "solid waste" and "disposed" shall have the meanings
specified in the Resource Conservation and Recovery Act of 1976
("RCRA"); provided, to the extent that any other applicable laws
of the United States of America or political subdivision thereof
establish a meaning for "hazardous substance", "release", "solid
waste", or "disposed" which is broader than that specified in
either SARA or RCRA, such broader meaning shall apply. As used
in this Agreement, "Applicable Environmental Law" shall mean and
include the singular, and "Applicable Environmental Laws" shall
mean and include the collective aggregate of the following: Any
law, statute, ordinance, rule, regulation, order or determination
of any governmental authority or any board of fire underwriters
(or other body exercising similar functions),or any restrictive
covenant or deed restriction (recorded or otherwise) affecting
any of the Patapsco #2 Property pertaining to health, safety or
the environment, including, without limitation, all applicable
zoning ordinances and building codes, flood disaster laws and
health, safety or the environment, including without limitation,
the comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Conservation and Recovery Act
of 1976, the Superfund Amendments and Reauthorization Act of
1986, the Occupational Safety and Health Act and any federal,
state or municipal laws, ordinances, regulations or law which may
now or hereafter require removal of asbestos or other hazardous
wastes from any of the Patapsco #2 Property or impose any
liability on MLI and MLI USA related to asbestos or other
hazardous wastes in any of the Patapsco #2 Property. The
provisions of this Section 12.04 shall survive the repayment of
the Subject Notes and any foreclosure of MLI and MLI USA's liens
or deed in lieu of foreclosures with respect to any of the
Patapsco #2 Property, and shall continue thereafter in full force
and effect. In the event of the transfer of the Subject Notes or
any portion thereof, in accordance with this Agreement, MLI and
MLI USA or any prior holder of the Subject Notes and any
participants permitted under this Agreement shall continue to be
benefitted by this indemnity and agreement with respect to the
period of such holding of the Subject Notes.
12.05 Payment on Taking or Destruction. In the event
that damage, destruction or a taking shall occur in respect of
all or a portion of the Patapsco #2 Property, Patapsco #2
Limited Partnership shall apply any insurance or condemnation
proceeds in respect thereof in accordance with the provisions of
the Collateral Documents.
12.06 Covenant Compliance. Patapsco #2 Limited
Partnership shall perform and comply with all covenants,
obligations and agreements contained in this Agreement and in the
Collateral Documents.
12.07 Additional Documents. Patapsco #2 Limited
Partnership shall execute and deliver or cause to be executed and
delivered to MLI and MLI USA upon MLI and MLI USA's reasonable
request such other and further instruments or documents as in the
reasonable judgment of MLI and MLI USA to conform, create,
evidence, perfect, preserve or maintain MLI and MLI USA's liens
or MLI and MLI USA's rights hereunder or under the Collateral
Documents, and Patapsco #2 Limited Partnership shall do all such
additional acts, give such assurances and execute such
instruments as MLI and MLI USA may reasonably require to vest
more completely in and assure to MLI and MLI USA their rights
under this Agreement.
ARTICLE XIII
Covenants of MLI
MLI covenants and agrees with Obligor that until all of the
Obligations are satisfied, it will comply at all times with the
covenants set forth in this Article.
13.01 Disclosure to any Other Person. AIP acknowledges
that MLI and MLI USA or any holder of the Subject Notes may
deliver copies of any financial statements and other documents
delivered to MLI and MLI USA or such holder and disclose any
other information disclosed to MLI and MLI USA or such holder by
or on behalf of AIP in connection with or pursuant to this
Agreement to (a) MLI and MLI USA's or such other holder's
directors, officers, employees, agents and professional
consultants, (b) any Person to which MLI and MLI USA or such
holder offers to sell any of the Subject Notes, (c) any Person to
which MLI and MLI USA or such holder sells or offers to sell a
participation in all or any part of the Subject Notes, (d) any
federal or state regulatory authority having jurisdiction over
MLI, MLI USA or such holder, (e) the National Association of
Insurance Commissioners or any similar organization, or (f) any
other Person to which such delivery or disclosure may be
necessary and appropriate (i) in compliance with any law, rule,
regulation or order applicable to MLI, MLI USA or such holder,
(ii) in response to any subpoena or other legal process, (iii) in
connection with any litigation or court proceeding to which MLI,
MLI USA or such holder is a party, or (iv) in order to protect
MLI, MLI USA's or such other holder's investment in the Subject
Notes. MLI shall provide AIP with notice of any subpoena or
other legal process served upon it which requests the information
furnished pursuant to Sections 10.01(c) and 10.01(f). MLI will
not produce to the party issuing the subpoena or other legal
process the information provided pursuant to Sections 10.01(c)
and (f) of this Agreement if AIP timely obtains from the subject
court an order quashing the subpoena or legal process and
excusing MLI's compliance with such subpoena or other legal
process. MLI and MLI USA acknowledge that they have been advised
by AIP that the information provided or disclosed to them by AIP
pursuant to Sections 10.01(c) and 10.01(f) of this Agreement may
constitute material non-public information under United States
securities laws and that such laws prohibit any person who has
material non-public information about a person from purchasing or
selling securities of such person. Accordingly, MLI and MLI USA
agree that the information provided pursuant to Sections 10.01(c)
and 10.01(f) of this Agreement will be kept confidential by them;
provided, however, that such information may be disclosed for the
purposes described above, provided that (except with regard to
the matters covered by Section 13.01(f)) the parties receiving
such information shall agree for the benefit of Obligor to keep
such information confidential and shall be advised of the non-
public nature of such information and of their responsibility
under United States securities laws. MLI and MLI USA do not
hereby assume any obligations or duties with respect to the
conduct of any parties that receive the information.
13.02 Limitation of Liability. Any obligation or
liability of AIP under this Agreement or the Subject Notes, or
any obligation or liability incurred by it pursuant to any other
instrument, transaction or undertaking contemplated by this
Agreement or the Subject Notes shall not be personally binding
upon nor shall there be any resort for the enforcement thereof to
the private property of any of its trust managers, shareholders,
officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or
otherwise.
13.03 Court Signing of the Agreed Judgment. MLI shall
take all actions reasonably necessary to obtain the signature by
the court of the Agreed Judgment in the Subject Litigation.
ARTICLE XIV
Covenants of MLI USA
MLI USA covenants and agrees with Obligor that until all of
the Obligations are satisfied, it will comply at all times with
the covenants set forth in this Article.
14.01 Disclosure to any Other Person. AIP acknowledges
that MLI and MLI USA or any holder of the Subject Notes may
deliver copies of any financial statements and other documents
delivered to MLI and MLI USA or such holder and disclose any
other information disclosed to MLI and MLI USA or such holder by
or on behalf of AIP in connection with or pursuant to this
Agreement to (a) MLI and MLI USA's or such other holder's
directors, officers, employees, agents and professional
consultants, (b) any Person to which MLI and MLI USA or such
holder offers to sell any of the Subject Notes, (c) any Person to
which MLI and MLI USA or such holder sells or offers to sell a
participation in all or any part of the Subject Notes, (d) any
federal or state regulatory authority having jurisdiction over
MLI, MLI USA or such holder, (e) the National Association of
Insurance Commissioners or any similar organization, or (f) any
other Person to which such delivery or disclosure may be
necessary and appropriate (i) in compliance with any law, rule,
regulation or order applicable to MLI, MLI USA or such holder,
(ii) in response to any subpoena or other legal process, (iii) in
connection with any litigation or court proceeding to which MLI,
MLI USA or such holder is a party, or (iv) in order to protect
MLI, MLI USA's or such other holder's investment in the Subject
Notes. MLI USA shall provide AIP with notice of any subpoena or
other legal process served upon it which requests the information
furnished pursuant to Sections 10.01(c) and 10.01(f). MLI USA
will not produce to the party issuing the subpoena or other legal
process the information provided pursuant to Sections 10.01(c)
and (f) of this Agreement if AIP timely obtains from the subject
court an order quashing the subpoena or legal process and
excusing MLI USA's compliance with such subpoena or other legal
process. MLI and MLI USA acknowledge that they have been advised
by AIP that the information provided or disclosed to them by AIP
pursuant to Sections 10.01(c) and 10.01(f) of this Agreement may
constitute material non-public information under United States
securities laws and that such laws prohibit any person who has
material non-public information about a person from purchasing or
selling securities of such person. Accordingly, MLI and MLI USA
agree that the information provided pursuant to Sections 10.01(c)
and 10.01(f) of this Agreement will be kept confidential by them;
provided, however, that such information may be disclosed for the
purposes described above, provided that (except with regard to
the matters covered by Section 14.01(f)) the parties receiving
such information shall agree for the benefit of Obligor to keep
such information confidential and shall be advised of the non-
public nature of such information and of their responsibility
under United States securities laws. MLI and MLI USA do not
hereby assume any obligations or duties with respect to the
conduct of any parties that receive the information.
14.02 Limitation of Liability. Any obligation or
liability of AIP under this Agreement or the Subject Notes, or
any obligation or liability incurred by it pursuant to any other
instrument, transaction or undertaking contemplated by this
Agreement or the Subject Notes shall not be personally binding
upon nor shall there be any resort for the enforcement thereof to
the private property of any of its trust managers, shareholders,
officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or
otherwise.
14.03 Court Approval of the Agreed Judgment. MLI USA
shall take all actions reasonably necessary to obtain approval of
and signature by the court of the Agreed Judgment in the Subject
Litigation.
ARTICLE XV
Representations and Warranties of AIP
AIP represents and warrants to MLI and MLI USA that:
15.01 Existence and Power. AIP has been duly formed and
is validly existing as an unincorporated real estate investment
trust under the laws of the State of Texas, with full real estate
investment trust power and authority to own its properties and
conduct its business as presently being conducted, and has been
duly qualified for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction.
15.02 Authorization; Contravention. The execution,
delivery and performance of this Agreement and the Collateral
Documents by AIP are within AIP's powers and have been duly
authorized by all necessary trust action. The execution,
delivery and performance of this Agreement and the Collateral
Documents by AIP and the compliance by AIP with all provisions of
this Agreement and the Collateral Documents and the consummation
of the transactions herein and therein contemplated will not
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or
instrument to which AIP is a party or by which AIP is bound or to
which any of the property or assets of AIP is subject, nor will
such action result in any violation of the provisions of the
Declaration of Trust or the By-Laws or any statute or any order,
rule or regulation of any court or governmental agency or body
having jurisdiction over AIP or any of its properties; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the consummation by AIP of the transactions
contemplated by this Agreement. No consent or approval from AIP
Properties #1, L.P., AIP Tamarac, Inc., AIP Properties #2, L.P.
or AIP Northview, Inc. is necessary or required for execution and
delivery of (i) this Agreement, (ii) the Stock Pledge Agreement,
or (iii) the AIP Partnership Interest Pledge Agreement.
15.03 Enforceable Obligations. This Agreement and the
Collateral documents each constitute valid and binding agreements
of AIP, enforceable in accordance with their terms, subject to
applicable bankruptcy laws, insolvency, moratorium and
reorganization laws and other laws generally affecting the
enforcement of creditors' rights.
15.04 Title to Properties; Liens; Ownership. AIP has
good and indefeasible title to all of the Subject Collateral,
except the Subject Collateral owned by Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership, (subject to any
applicable Permitted Encumbrances with respect to the Subject
Collateral). AIP has good and indefeasible title to the Existing
Lien Properties (subject to the Burnsville Permitted Encumbrances
and Northwest Business Park I Permitted Encumbrances). AIP
Properties #1, L.P. has good and indefeasible title to the
Tamarac Property (subject to the Tamarac Permitted Encumbrances).
AIP Properties #2, L.P. has good and indefeasible title to the
Northview Property (subject to the Northview Permitted
Encumbrances).
15.05 Full Disclosure. All information heretofore
furnished by AIP to MLI and MLI USA for purposes of or in
connection with this Agreement or any transaction contemplated
hereby is, and all such information hereafter furnished by AIP
will be, true and accurate in every material respect and shall be
without material omission.
15.06 Environmental Matters. To AIP's knowledge (a) no
portion of the Subject Collateral is contaminated by any
substance or material presently identified to be toxic or
hazardous according to any Applicable Environmental Law,
including, without limitation, any asbestos, polychlorinated
biphenyl, radioactive substance, methane, volatile hydrocarbons,
industrial solvents or any other material or substance which has
in the past or could foreseeably at the present time or at any
time in the future cause or constitute a material health, safety
or other environmental hazard to any Person or property, except
as otherwise disclosed in a certificate executed by an authorized
officer of AIP and delivered to MLI and MLI USA prior to
execution and delivery of this Agreement, (b) neither AIP nor any
other Person has caused or suffered to occur a discharge,
spillage, uncontrolled loss, seepage or filtration of oil or
petroleum or chemical liquids or solids, liquid or gaseous
products or hazardous waste, or hazardous substance at, upon,
under or within any portion of the Subject Collateral or any
contiguous real estate, (c) neither AIP nor any other Person has
been or is involved in operations at or near any portion of the
Subject Collateral which could lead to the imposition on AIP or
any operator of such property of liability which could have a
material adverse effect on the financial condition or business
operations of AIP or AIP together with the subsidiaries or the
creation of a lien on such property, under any Applicable
Environmental Law, or (d) neither AIP nor any other Person has
knowingly permitted any tenant or occupant of any portion of the
Subject Collateral to engage in any activity that could lead to
the imposition of liability on such tenant or occupant, AIP or
any operator of any such property which could have a material
adverse effect on the financial condition or business operations
of AIP or AIP together with the subsidiaries, or could lead to
the creation of a lien on such property, under any Applicable
Environmental Law. No part of the Subject Collateral is located
within any property formerly used as a landfill.
15.07 AIP Properties #1, L.P. has good and indefeasible
title to the Tamarac Property subject to the Tamarac Permitted
Encumbrances.
15.08 AIP Properties #2, L.P. has good and indefeasible
title to the Northview Property subject to the Northview
Permitted Encumbrances.
ARTICLE XVI
Representations and Warranties of Patapsco #1 Limited Partnership
Patapsco #1 Limited Partnership represents and warrants to
MLI and MLI USA that:
16.01 Existence and Power. Patapsco #1 Limited
Partnership has been duly formed and is validly existing as a
limited partnership under the laws of the State of Texas, with
full power and authority to own its properties and conduct its
business as presently being conducted, and has been duly
qualified for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction.
16.02 Authorization; Contravention. The execution,
delivery and performance of this Agreement by Patapsco #1 Limited
Partnership are within Patapsco #1 Limited Partnership's powers
and have been duly authorized by all necessary action. The
execution, delivery and performance of this Agreement by Patapsco
#1 Limited Partnership and the compliance by Patapsco #1 Limited
Partnership with all provisions of this Agreement and the
Collateral Documents and the consummation of the transactions
herein and therein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which
Patapsco #1 Limited Partnership is a party or by which Patapsco
#1 Limited Partnership is bound or to which any of the property
or assets of Patapsco #1 Limited Partnership is subject, nor will
such action result in any violation of the provisions of the
partnership agreement or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over Patapsco #1 Limited Partnership or any of its
properties; and no consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the consummation by
Patapsco #1 Limited Partnership of the transactions contemplated
by this Agreement.
16.03 Enforceable Obligations. This Agreement and the
Collateral Documents each constitute valid and binding agreements
of Patapsco #1 Limited Partnership, enforceable in accordance
with their terms, subject to applicable bankruptcy laws,
insolvency, moratorium and reorganization laws and other laws
generally affecting the enforcement of creditors' rights.
16.04 Title to Properties; Liens; Ownership. Patapsco #1
Limited Partnership has good and indefeasible title to all of the
Patapsco #1 Property (subject to the Permitted Encumbrances with
respect to the Patapsco #1 Property).
16.05 Environmental Matters. To Patapsco #1 Limited
Partnership's knowledge (a) no portion of the Patapsco #1
Property is contaminated by any substance or material presently
identified to be toxic or hazardous according to any Applicable
Environmental Law, including, without limitation, any asbestos,
polychlorinated biphenyl, radioactive substance, methane,
volatile hydrocarbons, industrial solvents or any other material
or substance which has in the past or could foreseeably at the
present time or at any time in the future cause or constitute a
material health, safety or other environmental hazard to any
Person or property, except as otherwise disclosed in a
certificate executed by an authorized officer of Patapsco #1
Limited Partnership and delivered to MLI and MLI USA prior to
execution and delivery of this Agreement, (b) neither Patapsco #1
Limited Partnership nor any other Person has caused or suffered
to occur a discharge, spillage, uncontrolled loss, seepage or
filtration of oil or petroleum or chemical liquids or solids,
liquid or gaseous products or hazardous waste, or hazardous
substance at, upon, under or within any portion of the Patapsco
#1 Property or any contiguous real estate, (c) neither Patapsco
#1 Limited Partnership nor any other Person has been or is
involved in operations at or near any portion of the Patapsco #1
Property which could lead to the imposition on Patapsco #1
Limited Partnership or any operator of such property of liability
which could have a material adverse effect on the financial
condition or business operations of Patapsco #1 Limited
Partnership or Patapsco #1 Limited Partnership together with the
subsidiaries or the creation of a lien on such property, under
any Applicable Environmental Law, or (d) neither Patapsco #1
Limited Partnership nor any other Person has knowingly permitted
any tenant or occupant of any portion of the Patapsco Property #1
to engage in any activity that could lead to the imposition of
liability on such tenant or occupant, Patapsco #1 Limited
Partnership or any operator of any such property which could have
a material adverse effect on the financial condition or business
operations of Patapsco #1 Limited Partnership or Patapsco #1
Limited Partnership together with the subsidiaries, or could lead
to the creation of a lien on such property, under any Applicable
Environmental Law. No part of the Patapsco #1 Property is
located within any property formerly used as a landfill.
ARTICLE XVII
Representations and Warranties of Patapsco #2 Limited Partnership
Patapsco #2 Limited Partnership represents and warrants to
MLI and MLI USA that:
17.01 Existence and Power. Patapsco #2 Limited
Partnership has been duly formed and is validly existing as a
limited partnership under the laws of the State of Texas, with
full power and authority to own its properties and conduct its
business as presently being conducted, and has been duly
qualified for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require
such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any
such jurisdiction.
17.02 Authorization; Contravention. The execution,
delivery and performance of this Agreement by Patapsco #2 Limited
Partnership are within Patapsco #2 Limited Partnership's powers
and have been duly authorized by all necessary action. The
execution, delivery and performance of this Agreement by Patapsco
#2 Limited Partnership .and the compliance by Patapsco #2 Limited
Partnership with all provisions of this Agreement and the
consummation of the transactions herein and therein contemplated
will not result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other material
agreement or instrument to which Patapsco #2 Limited Partnership
is a party or by which Patapsco #2 Limited Partnership is bound
or to which any of the property or assets of Patapsco #2 Limited
Partnership is subject, nor will such action result in any
violation of the provisions of the partnership agreement or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Patapsco #2
Limited Partnership or any of its properties; and no consent,
approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required
for the consummation by Patapsco #2, L.P. of the transactions
contemplated by this Agreement.
17.03 Enforceable Obligations. This Agreement and the
Collateral Documents each constitute valid and binding agreements
of Patapsco #2 Limited Partnership, enforceable in accordance
with their terms, subject to applicable bankruptcy laws,
insolvency, moratorium and reorganization laws and other laws
generally affecting the enforcement of creditors' rights.
17.04 Title to Properties; Liens; Ownership. Patapsco #2
Limited Partnership has good and indefeasible title to all of the
Patapsco #2 Property (subject to the Permitted Encumbrances with
respect to the Patapsco #2 Property).
17.05 Environmental Matters. To Patapsco #2 Limited
Partnership's knowledge (a) no portion of the Patapsco #2
Property is contaminated by any substance or material presently
identified to be toxic or hazardous according to any Applicable
Environmental Law, including, without limitation, any asbestos,
polychlorinated biphenyl, radioactive substance, methane,
volatile hydrocarbons, industrial solvents or any other material
or substance which has in the past or could foreseeably at the
present time or at any time in the future cause or constitute a
material health, safety or other environmental hazard to any
Person or property, except as otherwise disclosed in a
certificate executed by an authorized officer of Patapsco #2
Limited Partnership and delivered to MLI and MLI USA prior to
execution and delivery of this Agreement, (b) neither Patapsco #2
Limited Partnership nor any other Person has caused or suffered
to occur a discharge, spillage, uncontrolled loss, seepage or
filtration of oil or petroleum or chemical liquids or solids,
liquid or gaseous products or hazardous waste, or hazardous
substance at, upon, under or within any portion of the Patapsco
#2 Property or any contiguous real estate, (c) neither Patapsco
#2 Limited Partnership nor any other Person has been or is
involved in operations at or near any portion of the Patapsco #2
Property which could lead to the imposition on Patapsco #2
Limited Partnership or any operator of such property of liability
which could have a material adverse effect on the financial
condition or business operations of Patapsco #2 Limited
Partnership or Patapsco #2 Limited Partnership together with the
subsidiaries or the creation of a lien on such property, under
any Applicable Environmental Law, or (d) neither Patapsco #2
Limited Partnership nor any other Person has knowingly permitted
any tenant or occupant of any portion of the Patapsco Property #2
to engage in any activity that could lead to the imposition of
liability on such tenant or occupant, Patapsco #2 Limited
Partnership or any operator of any such property which could have
a material adverse effect on the financial condition or business
operations of Patapsco #2 Limited Partnership or Patapsco #2
Limited Partnership together with the subsidiaries, or could lead
to the creation of a lien on such property, under any Applicable
Environmental Law. No part of the Patapsco #2 Property is
located within any property formerly used as a landfill.
ARTICLE XVIII
Representations and Warranties of MLI
MLI represents and warrants to Obligor that:
18.01 Organization. MLI has been and is validly existing
as a corporation under the laws of Canada, with full power and
authority to enter into this Agreement, to consummate the
transactions contemplated hereby and to carry out the terms of
this Agreement.
18.02 Legal, Valid and Binding Instrument. This
Agreement has been duly authorized, executed and delivered by
MLI, and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
18.03 Conflicting Agreements and Other Matters. The
compliance by MLI with all provisions of this Agreement and the
consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or
instrument to which MLI is a party or by which MLI is bound or to
which any of the property or assets of MLI is subject, nor will
such action result in any violation of the provisions of the
organizational documents of MLI or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over MLI or any of its properties; and no consent,
approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required
for the consummation by MLI of the transactions contemplated by
this Agreement.
ARTICLE XIX
Representations and Warranties of MLI USA
MLI USA represents and warrants to Obligor that:
19.01 Organization. MLI USA has been and is validly
existing as a corporation under the laws of Michigan, with full
power and authority to enter into this Agreement, to consummate
the transactions contemplated hereby and to carry out the terms
of this Agreement.
19.02 Legal, Valid and Binding Instrument. This
Agreement has been duly authorized, executed and delivered by MLI
USA, and constitutes a valid and legally binding instrument,
enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
19.03 Conflicting Agreements and Other Matters. The
compliance by MLI USA with all provisions of this Agreement and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other material agreement or
instrument to which MLI USA is a party or by which MLI USA is
bound or to which any of the property or assets of MLI USA is
subject, nor will such action result in any violation of the
provisions of the organizational documents of MLI USA or any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over MLI USA or
any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the consummation by
MLI USA of the transactions contemplated by this Agreement.
ARTICLE XX
Assignability
20.01 MLI, MLI USA and each other holder of the Subject
Notes may from time to time transfer all or a part of their
interest in the Subject Notes, and/or grant any participation in
all or any part of their respective interests in the Subject
Notes, without prior notice to or the consent of AIP, to a Person
which is either (i) a wholly-owned subsidiary of MLI or MLI USA,
or (ii) a Qualified Institutional Investor that has no
significant lending, financial or other relationship with AIP.
Any other transfer or participation shall require the prior
written consent and approval of AIP, which consent shall not be
unreasonably withheld. No representation express or implied is
made by MLI and MLI USA as to when and to what Person the Subject
Notes may be assigned provided that such satisfies the
requirements specified in this section. MLI and MLI USA each
agrees to pay and save Obligor harmless from and against
liability for the payment of any taxes in connection with the
transfer of any Subject Notes. Notwithstanding anything
contained in this Agreement or the Subject Notes to the contrary,
if on or after the Closing Date MLI or MLI USA shall grant
participation in all or any part of the Subject Notes to a
permitted or approved participant, AIP shall only be obligated to
deliver to MLI and MLI USA any notices, demands, requests,
documents and other information required to be delivered
hereunder or under the Subject Notes, and MLI and MLI USA shall,
promptly upon receipt thereof, distribute to each applicable
participant such notices, demands, requests, and other
information.
ARTICLE XXI
Defaults
21.01 Events of Default. The occurrence of any one or
more of the following events shall constitute an Event of Default
hereunder.
a. The failure of any Obligor to pay when due any
Obligations required in this Agreement, the Release
Agreement or the Collateral Documents and such failure shall
continue for a period of five (5) days after receipt of
written notice of such Default by AIP from MLI and/or MLI
USA. Provided, however, it shall constitute an Event of
Default without MLI and MLI USA providing notice of Default
if (i) any Obligor fails to pay when due any Obligation
required in this Agreement, (ii) such failure shall continue
for a period of five (5) days, and (iii) on two (2) prior
occasions after the Closing Date any Obligation was not paid
when due and written notice of such Default was provided by
MLI and/or MLI USA on each such prior occasion.
b. The failure of AIP to satisfy the payment
obligations evidenced by the Subject Notes in full in
accordance with this Agreement and the Option Agreement
prior to termination or expiration of the Initial Moratorium
Period unless the conditions to the Moratorium Extension
Period set forth in Section 6.04 are timely satisfied.
c. The failure of AIP to satisfy the payment
obligations evidenced by the Subject Notes in full in
accordance with this Agreement and the Option Agreement (i)
prior to termination or expiration of the Moratorium
Extension Period, unless the conditions set forth in Section
6.06 are timely satisfied, or (ii) prior to termination or
expiration of the Second Moratorium Extension Period.
d. The failure, refusal or neglect of an Obligor to
properly observe, perform or comply with any covenant,
agreement or obligation contained in this Agreement, the
Release Agreement or any of the Collateral Documents [other
than those covered by any other subsection of Section 21.01]
and the continuation of such failure, refusal or neglect for
thirty (30) days after written notice thereof has been given
to such Obligor by MLI and MLI USA; provided, however, that
such cure period will be extended for another single thirty
(30) day period if the default or breach has not been cured
within that period but the Obligor has used its best efforts
to cure the default or breach and thereafter proceeds to
cure the same within that period with diligence.
e. Any representation, warranty, certification or
statement made by any Obligor in this Agreement or by any
Obligor in any certificate or other document delivered
pursuant to this Agreement shall prove to have been
incorrect in any material respect when made or deemed to
have been made and is not cured by such Obligor within ten
(10) days after written notice thereof has been given to
such Obligor by MLI and MLI USA.
f. The filing or commencement by any Obligor of a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
any Obligor shall consent to any such relief or to the
appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debt as they
become due, or shall take any corporate action to authorize
any of the foregoing.
g. The filing or commencement of an involuntary case
or other proceeding against any Obligor seeking liquidation,
reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of ninety (90) days;
or an order for relief shall be entered against any Obligor
under the federal bankruptcy laws as now or hereafter in
effect.
h. The liquidation or dissolution of any Obligor prior
to sale of all of its assets in accordance with the terms of
this Agreement.
i. One or more judgments or orders for the payment of
money aggregating in excess of $1,000,000 shall be signed
against any Obligor or any such judgment or order (A) shall
continue unsatisfied and unstayed (unless bonded with a
supersedeas bond at least equal to such judgment or order)
for a period of thirty (30) days, or (B) is not fully paid
and satisfied at least ten (10) days prior to the date on
which any of its assets may be lawfully sold to satisfy such
judgment or order.
j. The liens of MLI and MLI USA with respect to the
Subject Collateral, or any part thereof, shall not
constitute first and prior liens and/or security interest
(except in the case of a Permitted Encumbrance).
k. Any Obligor shall claim that MLI and MLI USA do not
have a valid lien on the property described in the
Collateral Documents.
l. Any court shall sign a judgment or order that
provides that MLI and MLI USA do not have a valid fully
perfected first lien on the property described in the
Collateral Documents.
m. Any Obligor shall have concealed, removed, or
permitted to be concealed or removed, any material part of
its property, with intent to hinder, delay or defraud any of
its creditors, or make or suffered a transfer of any of its
property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law, or shall have made
any transfer of a material part of its property to or for
the benefit of a creditor at a time when other creditors
similarly situated have not been paid, or, while insolvent,
shall have suffered or permitted any creditor to obtain a
lien upon any material part of its property through legal
proceedings or distraint which is not vacated within thirty
(30) days from its date.
n. The failure, refusal or neglect of AIP to properly
observe, perform or comply with the covenants, agreements or
obligations contained in Section 10.03 and 10.04 of this
Agreement.
o. AIP Properties #1, L.P., AIP Tamarac, Inc., AIP
Properties #2, L.P. or AIP Northview, Inc. enters into a
written agreement to encumber or sell property which is not
consistent with the terms and conditions other than provided
for in Section 10.03 and 10.04 of this Agreement that has
not otherwise been approved by MLI and MLI USA.
p. Either AIP Properties #1, L.P. or AIP Tamarac, Inc.
(i) claim that they are not obligated to comply with the
provisions of Section 10.03, or (ii) assert any claim
against MLI or MLI USA relating to or arising out of the
attempt of AIP Tamarac, Inc. and AIP Properties #1, L.P. to
sell or encumber the Tamarac Property on terms and
conditions other than provided for in Section 10.03.
q. Either AIP Properties #2, L.P. or AIP Northview,
Inc. (i) claim that they are not obligated to comply with
the provisions of Section 10.03, or (ii) assert any claim
against MLI or MLI USA relating to or arising out of the
attempt of AIP Northview, Inc. and AIP Properties #2, L.P.
to sell or encumber the Northview Property on terms and
conditions other than provided for in Section 10.04.
21.02 Notice. Notwithstanding anything to the contrary
to this Agreement, the Subject Notes and the Collateral
Documents, each Obligor WAIVES any and all right to notice of
the occurrence of an Event of Default but not the occurrence of a
Default (except as provided in Section 21.01(a) of this
Agreement).
21.03 Remedies. Upon the occurrence of any Event of
Default, the applicable moratorium period provided pursuant to
Article VI shall terminate immediately, without notice (unless
expressly provided for herein), demand or presentment (including,
without limitation, notice of an Event of Default) all of which
are hereby waived. In addition to any other provision of this
Agreement or any Collateral Document, MLI and MLI USA may
exercise any or all of the following rights, remedies and
recourses:
a. Enter upon the Subject Collateral or any part
thereof and take exclusive possession thereof and of all
books, records and accounts relating thereto. If any
Obligor remains in possession of all or any part of the
Subject Collateral after an Event of Default occurs and is
continuing and without MLI and MLI USA's prior written
consent thereto, MLI and MLI USA may invoke any and all
legal remedies to dispossess any Obligor, including
specifically one or more actions for forcible entry and
detainer, trespass to try title and writ of restriction.
Nothing contained in the foregoing sentence shall, however,
be construed to impose any greater obligation or any
prerequisites to acquiring possession of the Subject
Collateral or any part thereof after an Event of Default
occurs than would have existed in the absence of such
sentence.
b. Hold, lease, manage, operate or otherwise use or
permit the use of the Subject Collateral, or any part
thereof, either by itself or by other Persons, in such
manner, for such time and upon such other terms as MLI and
MLI USA may deem to be prudent and reasonable under the
circumstances (making such repairs, alternations, additions
and improvements thereto and taking any and all other action
with reference thereto, from time to time, as MLI and MLI
USA shall deem necessary or desirable), and apply all
proceeds from the Subject Collateral in accordance with the
provisions hereof.
c. Sell or offer for sale the Subject Collateral, or
any part thereof, in such portions, order and parcels as MLI
and MLI USA may determine, with or without having first
taken possession of same, in accordance with the provisions
of the applicable Collateral Documents and applicable legal
requirements.
d. Make application to a court of competent
jurisdiction, as a matter of strict right and, except as
otherwise provided by applicable law, without notice to each
Obligor or without regard to the adequacy of the Subject
Collateral for payment of the obligations to MLI and MLI USA
hereunder and under the Subject Notes for the appointment of
a receiver of the Subject Collateral, or any part thereof,
and, to the extent permitted by applicable law, AIP does
hereby irrevocably consent to such appointment. Any such
receiver shall have all the usual powers and duties of
receivers in similar cases, including the full power to
rent, maintain, sell, dispose and otherwise operate the
Subject Collateral, any part thereof, upon such terms that
may be approved by the court, and shall apply all proceeds
from such operation of the Subject Collateral in accordance
with the provisions hereof.
e. Exercise any and all other rights, remedies and
recourses granted hereunder or under the Collateral
Documents or otherwise now or hereafter existing in equity,
at law, by virtue of statute or otherwise.
21.04 Separate Sales. The Subject Collateral may be sold
in one or more parcels and in such manner and order as MLI and
MLI USA, in their sole discretion, may elect, it being expressly
understood and agreed that the right of sale arising out of any
Event of Default shall not be exhausted by any one or more sales.
21.05 Remedies Cumulative, Concurrent and Non-Exclusive.
MLI and MLI USA shall have all rights, remedies and recourses
granted in the Collateral Documents, and available at law or
equity (including specifically those granted by the UCC in effect
and applicable to the Subject Collateral, or any portion thereof)
and same (a) shall be cumulative and concurrent, (b) may be
pursued separately, successively or concurrently against any
Obligor or against the Subject Collateral or against any one or
more of them, at the sole discretion of MLI and MLI USA, (c) may
be exercised as often as the occasion therefor shall arise, it
being agreed by each Obligor that the exercise or failure to
exercise any of same shall in no event be construed as a waiver
or release thereof or of any other right, remedy or recourse, and
(d) are intended to be, and shall be, non-exclusive.
21.06 No Conditions Precedent to Exercise Remedies.
Obligor shall not, except as otherwise provided by applicable
law, be relieved of their obligations by reason of (a) the
failure of a trustee to comply with any request of any Obligor,
to foreclose the liens on the Subject Collateral or to enforce
any provisions of the Collateral Documents, (b) the release,
regardless of consideration, of any person or entity obligated
with respect to the obligations, or of the Subject Collateral or
any part thereof, or the addition of any other property to the
Subject Collateral, (c) any agreement or stipulation between any
subsequent owner of the Subject Collateral and MLI and MLI USA
extending, renewing, rearranging or in any other way modifying
the terms of the Collateral Documents without first having
obtained the consent of, given notice to or paid any
consideration to any Obligor, or such other Person, and in such
event, Obligor and all such other Persons shall continue to be
liable to make payments in accordance with the terms of any such
extension or modification agreement unless expressly released and
discharged in writing by MLI and MLI USA, and (d) any other act
or occurrence, save and except the satisfaction of each Obligor's
obligations hereunder and under the Subject Notes. Each Obligor
waives any right to require MLI and MLI USA to proceed against
any other Person, exhaust any of the Subject Collateral, or
pursue any other remedy in MLI and MLI USA's power.
21.07 Release of Resort to Collateral. The release or
substitution of all or any part of the Subject Collateral,
regardless of consideration, shall not in any way impair, affect,
subordinate, or release MLI and MLI USA's liens or their status
as first and prior liens (except for the Permitted Encumbrances)
in and to any remaining Subject Collateral. For payment and
performance of each Obligor's obligations hereunder and under the
Subject Notes, MLI and MLI USA may resort to any other security
therefor held by a trustee in such order and manner as MLI and
MLI USA may elect.
21.08 Waivers. To the full extent permitted by law, each
Obligor hereby irrevocably and unconditionally waives and
releases (a) all benefit that might accrue to any Obligor by
virtue of any present or future law exempting the Subject
Collateral from attachment, levy or sale on execution or
providing for any appraisement, evaluation, stay of execution,
exemption from civil process, redemption or extension of time for
payment, (b) all notices of MLI or MLI USA's election to exercise
or his or its actual exercise of any right, remedy or recourse
provided for under the Collateral Documents after the occurrence
of an Event of Default, (c) any right to a marshalling of assets
with respect to any of the Subject Collateral or any debt of
Obligor, or a sale in inverse order of alienation, and (d) any
and all right to receive demand, grace, notice, presentment for
payment and protest but not (except as provided in Section
21.01(b)) the right to receive written notice of any Default.
21.09 Discontinuance of Proceedings. In case MLI or MLI
USA shall have proceeded to invoke any right, remedy or recourse
permitted under the Collateral Documents and shall thereafter
elect to discontinue or abandon same for any reason, MLI and MLI
USA shall have the unqualified right to do so and, in such event,
Obligor and MLI and MLI USA shall be restored to their former
positions with respect to Obligor's obligation hereunder and
under the Subject Notes, the Collateral Documents, the collateral
and otherwise, and the rights, remedies, recourses and powers of
MLI and MLI USA shall continue as if same had never been invoked.
21.10 Application of Proceeds. All payments on the
Subject Notes received by MLI and MLI USA during the existence of
an Event of Default (unless otherwise elected by MLI and MLI
USA), and the proceeds of any sale or disposition of, and all
proceeds generated by the holding, leasing, operation or other
use of, the Subject Collateral, or any part thereof, during the
existence of an Event of Default and upon the exercise of MLI and
MLI's rights and remedies hereunder or under any of the
Collateral Documents shall be applied by MLI and MLI USA, the
applicable trustee or the receiver, if one is appointed, to the
extent that funds are so available therefrom, in the following
order of priority;
a. First, to the payment of the costs and expenses of
taking possession of the Subject Collateral and holding,
using, leasing, repairing, improving or selling the same,
including without limitation (i) reasonable trustee's and
receiver's fees, court costs, attorneys' and accountants'
fees, (ii) costs of advertisement, and (iii) the payment of
any and all impositions and amounts secured by any liens
equal or superior to MLI and MLI USA's liens.
b. Second, to the payment of all amounts and
obligations, other than the unpaid principal balance of the
Subject Notes and accrued unpaid interest thereon, due to
MLI and MLI USA, under the Collateral Documents, and any
advances made by MLI and MLI USA to effect performance of
any unperformed obligations of any Obligor under any of the
Collateral Documents, together with any accrued interest
thereon if and as provided in the Collateral Documents.
c. Third, to the payment of any and all accrued and
unpaid interest due on the Subject Notes.
d. Fourth, to the payment of the unpaid principal
balance of the Subject Notes, in such order and manner as
MLI and MLI USA shall elect.
e. Fifth, to the extent known by MLI and MLI USA and
permitted by law, to the payment of any indebtedness or
obligation secured by liens against the Subject Collateral
which are subordinate to MLI and MLI USA's liens.
f. Sixth, to Obligor, or such other person entitled to
the same.
ARTICLE XX
Miscellaneous
22.01 Continuing Agreement. This is a continuing
Agreement and all the rights, powers and remedies of MLI and MLI
USA hereunder and all agreements and obligations of Obligor
hereunder, shall continue to exist until the obligations of each
Obligor to MLI and MLI USA are paid in full.
22.02 Payments. All payments to MLI or MLI USA shall
(unless Obligor is otherwise advised in writing by MLI and MLI
USA) be made by wire transfer as follows:
If to MLI: Citibank, NY
ABA #: 021 000 089
For credit to Acct #36858201
For further credit to Acct #845978
If to MLI USA: State Street Bank and Trust Co.
ABA #: 011 000 028
BNF: MANUSA CORP SURPLUS HIGH YIELD
Acct # 4362-780-1
OBI: MANUSA CORP SURPLUS HIGH YIELD
Fund Number: YZ22
22.03 Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including bank wire, telex, telecopy or similar writing), except
for any telephone notices as specifically provided for herein,
may be personally served or sent by telex, telecopier, mail or
the express mail service of the United States Postal Service,
Federal Express or other equivalent overnight or expedited
delivery service, and (a) if given by personal service, telex
(confirmed by telephone) or telecopier (confirmed by telephone),
it shall be deemed to have been given upon receipt; (b) if sent
by telex or telecopier without telephone confirmation, it shall
be deemed to have been given twenty-four (24) hours after being
given; (c) if sent by mail, it shall be deemed to have been given
upon the earlier of (i) actual receipt, or (ii) three (3)
Business Days after deposit in a depository of the United States
Postal Service, first class mail, postage prepaid, or actual
receipt; (d) if sent by Federal Express, the express mail
services of the United States Postal Service or other equivalent
overnight or expedited delivery service, it shall be deemed given
upon the earlier of (i) actual receipt, or (ii) twenty-four (24)
hours after delivery to such overnight or expedited delivery
service, delivery charges prepaid, and properly addressed to
Obligor, MLI or MLI USA, as the case may be; provided that
notices to MLI and MLI USA shall not be effective until received.
For purposes hereof, the address of the parties to this Agreement
shall be as follows:
If to Obligor: American Industrial Properties REIT
6220 North Beltline, Suite 205
Irving, Texas 75063-2656
Telecopy No.: (214) 550-6037
Attention: Mr. Charles W. Wolcott, President
with copies to: Bryan Goolsby
Liddell, Sapp, Zivley, Hill
& LaBoon, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75201
Telecopy No.: (214) 220-4899
If to MLI and MLI USA: Manulife Financial
200 Bloor Street East
Toronto, Ontario M4W 1E5
Telecopy No.: (416) 926-5262
Attention: Stewart Sprague
with copies to: Phil Snow
Ware, Snow, Fogel, Jackson & Greene, P.C.
1111 Bagby, 49th Floor
Houston, Texas 77002
Telecopy No.: (713) 659-6262
Any party may, by proper written notice hereunder to the other
parties, change the address to which notices shall thereafter be
sent to it. Notwithstanding anything to the contrary implied or
expressed herein, the notice requirements herein (including the
method, timing or deemed giving of any notice) is not intended to
and shall not be deemed to increase the number of days or to
modify the method of notice or to otherwise supplement or affect
the requirements for any notice required or sent pursuant to any
legal requirement (including, without limitation, any applicable
statutory or law requirement), or otherwise given hereunder, that
is not required under this Agreement or the other Collateral
Documents. The provisions of this Section 22.03 shall control
over any conflicting contractual notice provisions contained in
the Collateral Documents.
22.04 No Waivers. No failure or delay by MLI and MLI USA
in exercising any right, power or privilege hereunder or under
the Subject Notes or any Collateral Document shall operate as a
waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law or in any of the Collateral
Documents.
22.05 Expenses; Documentary Taxes; Indemnification.
Obligors shall pay (a) all actual expenses and costs required by
the applicable governmental entities, filing offices and/or
recording offices, incurred by MLI and MLI USA (which shall be
paid within five (5) days of receipt of a request) in connection
with proper recordation, filing and perfection of the Collateral
Documents and perfection of the liens and security interests
provided for in the Collateral Documents; (b) all expenses of MLI
and MLI USA, including reasonable and actual fees and
disbursements of legal counsel for MLI and MLI USA, in connection
with any waiver or consent hereunder or under the Collateral
Documents or any amendment, supplement or replacement of any of
the Collateral Documents, or any Default or alleged Default
hereunder; and (c) if a Default or an Event of Default occurs,
all reasonable and actual out-of-pocket expenses incurred by MLI
and MLI USA, including fees and disbursements of legal counsel in
connection with such Event of Default and collection and other
enforcement proceeding resulting therefrom (including, without
limitation, any bankruptcy or other insolvency proceedings), fees
of auditors and consultants incurred in connection therewith and
investigation expenses incurred by MLI and MLI USA in connection
therewith. Obligors indemnify and hold harmless MLI and MLI USA
from all claims and damages that may be asserted by AIP
Properties #1, L.P., AIP Tamarac, Inc., AIP Properties #2, L.P.
and AIP Northview, Inc. which relate to or arise out of Section
10.03 and Section 10.04 of this Agreement or the exercise or
failure to exercise by MLI and MLI USA of any right provided for
in Section 10.03 and Section 10.04 of this Agreement, excluding
claims and damages arising from MLI or MLI USA's gross
negligence. This indemnity and hold harmless agreement is
specifically intended to operate and be applicable even if it is
alleged, charged or proven that all or some of the damages being
sought were caused in whole or in part by any act, omission,
negligence, breach of contract, intentional contract violation of
statute or common law, breach of warranty, or any other conduct
whatsoever of MLI or MLI USA, but not intended to operate and be
applicable to instances arising from the gross negligence of MLI
or MLI USA.
22.06 Amendments and Waivers; Consent to Deviation. Any
provision of this Agreement, the Subject Notes or the Collateral
Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by all parties.
Notwithstanding the foregoing, and except as otherwise
specifically provided in this Agreement or any other Collateral
Document, the procedure to be followed by Obligor to obtain the
consent of MLI and MLI USA to any deviation from the requirements
and covenants of the Collateral Documents, whether such deviation
shall be with respect to a waiver or an amendment of such
requirements and covenants, shall be as follows: (A) Obligor
shall send a written notice to MLI and MLI USA setting forth in
detail (i) the covenant or requirement from which Obligor is
requesting a deviation, (ii) the requested deviation from the
requirement or covenant involved, and (iii) the reason for
Obligor's request to deviate from such covenant or requirement;
and (b) MLI and MLI USA, within fifteen (15) Business Days after
receiving such written request, shall send a written notice to
Obligor consenting to or denying consent to the specific request.
MLI and MLI USA's failure to send such written notice within such
time period shall be deemed denial or refusal by MLI and MLI USA
of such request. MLI and MLI USA may request any additional
details or information regarding any such request from AIP and,
in connection with any such request, MLI and MLI USA may extend
such fifteen (15) Business Day period for such period of time as
may be designated in MLI and MLI USA's request for more
information.
22.07 Survival. All representations, warranties and
covenants made by any Obligor herein or in any certificate or
other instrument delivered by it or on its behalf under the
Collateral Documents shall be considered to have been relied upon
by MLI and MLI USA and shall survive the delivery to MLI and MLI
USA of such Collateral Documents, regardless of any investigation
made by or on behalf of MLI and MLI USA.
22.08 Prior Understandings; No Defenses; Release; No Oral
Agreements. This Agreement supersedes all other prior
understandings and agreements, other than the Subject Notes and
the Note Purchase Agreement (except as provided herein with
respect to each), whether written or not, between the parties
hereto relating specifically to the transactions provided for
herein. Each Obligor confirms that there are no existing
defenses, claims, counterclaims or rights of offset against MLI
and MLI USA in connection with the negotiation, preparation,
execution, performance or any other matters related to this
Agreement or any of the Collateral Documents executed as of the
date hereof and any of the transactions contemplated thereby, and
each Obligor hereby expressly releases and discharges MLI and MLI
USA, and their officers and representatives, from any and all
such claims, known or unknown. The provisions of the preceding
sentence are in addition to, and do not supersede or control
over, the agreements and provisions set forth in the Release
Agreement. Each Obligor further confirms that MLI and MLI USA
have not made any agreements with, or commitments or
representations to, any Obligor (either in writing or orally)
other than as expressly stated herein or in the other Collateral
Documents executed as of the date hereof.
THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN
DOCUMENTS PROVIDED FOR HEREIN, REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENT OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. To the fullest extent applicable, each Obligor and MLI
and MLI USA acknowledge and agree that this Agreement and each of
the Collateral Documents shall be subject to Section 26.02 of the
Texas Business and Commerce Code.
22.09 Limitation on Interest. In case any provision in
this Agreement, the agreements executed in connection herewith or
the Subject Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provision
shall not in any way be affected or impaired thereby.
Furthermore, all agreements of Obligor whether now existing or
hereafter arising and whether written or oral, are expressly
limited so that in no contingency or event whatsoever shall the
amount paid, or agreed to be paid to MLI and MLI USA for the use,
forbearance or detention of the indebtedness evidenced by the
Subject Notes or for the performance or payment of any covenant
or obligation contained herein, exceed the maximum amount
permissible under applicable law from time to time in effect. If
for any reason whatsoever fulfillment of any provision hereof or
of any other document evidencing, securing or pertaining to this
Agreement at the time performance of such provision shall be due,
shall involve transcending the limit of validity, and if under
any such circumstances MLI and MI USA shall ever receive anything
of value deemed interest under applicable law from time to time
in effect which would exceed interest at the highest lawful rate,
such amount that would be excessive interest shall be applied to
the reduction of the principal amount owing under the Subject
Notes and not to the payment of interest, or if such amount that
would be excessive interest exceeds the unpaid balance of
principal of the Subject Notes, such excess shall be refunded to
Obligor.
22.10 Table of Contents and Captions; References. The
captions in this Agreement and in the table of contents hereof
are for convenience of reference only and shall not define,
affect or limit any of the terms or provisions hereof. Reference
herein to sections, subsections, clauses, paragraphs, exhibits or
schedule without reference to the document in which they are
contained are references to sections, subsections, clauses,
paragraphs, exhibits of or to this Agreement.
22.11 Construction. The parties hereto acknowledge and
agree that neither this Agreement nor any Collateral Document
shall be construed more favorably in favor of one than the other
based upon which party drafted the same, it being acknowledged
that all parties hereto contributed substantially to the
negotiations and preparation of this Agreement and the Collateral
Documents.
22.12 APPLICABLE LAW. THIS AGREEMENT, THE SUBJECT NOTES
AND ALL THE COLLATERAL DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS, EXCEPT TO
THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION GOVERN THE
CREATION, PERFECTION OR ENFORCEMENT OF INTERESTS, OR THE
REMEDIES, RELATED TO PERFECTION OR ENFORCEMENT OF INTERESTS, OR
THE REMEDIES, RELATED TO ANY PART OF THE SUBJECT COLLATERAL OR
OTHER COLLATERAL, OR TO THE EXTENT THAT UNITED STATES FEDERAL LAW
APPLIES PURSUANT TO SECTIONS 10.08, 11.04, 12.04 OR OTHERWISE.
22.13 Counterparts. This Agreement and all the
Collateral Documents may be executed in any number of original
counterparts, each of which when so executed and delivered shall
be an original, and all of which, collectively, shall constitute
one and the same agreement, it being understood and agreed that
the signature pages may be detached from one or more counterparts
and combined with the signature pages from any other counterpart
in order that one or more fully executed originals may be
assembled.
22.14 The Release Prices provided for herein are not
intended by the parties to equal the fair market value of the
properties.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective authorized officers
effective as of ___________________, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/Charles W. Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
PATAPSCO #1 LIMITED PARTNERSHIP
By American
Industrial Properties REIT, General
Partner
By:/s/Charles W. Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
PATAPSCO #2 LIMITED PARTNERSHIP
By American
Industrial Properties REIT, General
Partner
By:/s/Charles W. Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
THE
MANUFACTURERS LIFE INSURANCE
COMPANY
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
THE
MANUFACTURERS LIFE INSURANCE
COMPANY (U.S.A.)
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
NO. 95-4181-G
AMERICAN INDUSTRIAL PROPERTIES IN THE DISTRICT COURT OF
REIT,
Plaintiff
V. DALLAS COUNTY, T E X A S
THE MANUFACTURERS LIFE
INSURANCE COMPANY, FIDELITY
MANAGEMENT & RESEARCH
CORPORATION, FIDELITY GALILEO
FUND, L.P., BELMONT CAPITAL
PARTNERS II, L.P., FIDELITY
PURITAN TRUST, AND FIDELITY
MANAGEMENT TRUST CO.,
Defendant 134TH JUDICIAL DISTRICT
AGREED FINAL JUDGMENT
ON THIS DAY came on for consideration the Agreed Motion to
(i) Non-Suit Claims of The Manufacturers Life Insurance Company
and The Manufacturers Life Insurance Company (U.S.A.) Without
Prejudice and (ii) Enter Take Nothing Judgment as to Claims
Asserted by American Industrial Properties REIT filed by The
Manufacturers Life Insurance Company, The Manufacturers Life
Insurance Company (U.S.A.), American Industrial Properties REIT,
Fidelity Management & Research Company, Fidelity Galileo Fund,
L.P., Belmont Capital Partners II, L.P., Fidelity Puritan Trust,
and Fidelity Management Trust Co., and it appearing to the Court
that the parties have reached an agreement that provides for
entry of a judgment dismissing the claims of The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company (U.S.A.) without prejudice to refiling and awarding a
take nothing judgment as to all other claims and causes of action
asserted. It is therefore
ORDERED that all claims and causes of action asserted by The
Manufacturers Life Insurance Company and The Manufacturers Life
Insurance Company (U.S.A.) have been non-suited and dismissed
without prejudice to The Manufacturers Life Insurance Company and
The Manufacturers Life Insurance Company (U.S.A.) refiling same;
it is further
ORDERED that Plaintiff, American Industrial Properties REIT
take nothing with regard to all claims asserted by it against The
Manufacturers Life Insurance Company, The Manufacturers Life
Insurance Company (U.S.A.), Fidelity Management & Research
Company, Fidelity Galileo Fund, L.P., Belmont Capital Partners
II, L.P., Fidelity Puritan Trust, and Fidelity Management Trust
Co.; it is further
ORDERED that Counterplaintiffs Fidelity Management &
Research Company, Fidelity Galileo Fund, L.P., Belmont Capital
Partners II, L.P., Fidelity Puritan Trust, and Fidelity
Management Trust Co. take nothing with regard to all claims
asserted by them against American Industrial Properties REIT; it
is further
ORDERED that costs of Court shall be borne by the party
having incurred same; it is further
ORDERED that this Judgment disposes of all claims and causes
of action asserted by the parties in this case which have not
been non-suited and dismissed. All relief sought herein which
has not been non-suited and which is not expressly granted is
DENIED.
SIGNED this ____ day of ______________________, 1996.
Presiding Judge
AGREED AS TO FORM AND
SUBSTANCE:
WARE, SNOW, FOGEL, JACKSON & GREENE, P.C.
By:/s/ Phil F. Snow
Phil F. Snow
State Bar No. 18812600
Don Fogel
State Bar No. 07201900
J. Edward Cole
State Bar No. 04538400
Texaco Heritage Plaza
1111 Bagby, Suite 4900
Houston, Texas 77002
(713) 659-6400--Telephone
(713) 659-6262--Facsimile
ATTORNEYS FOR DEFENDANTS THE MANUFACTURERS
LIFE INSURANCE COMPANY AND THE MANUFACTURERS
LIFE INSURANCE COMPANY (U.S.A.)
LIDDELL, SAPP, ZIVLEY, HILL & LABOON, L.L.P.
By:/s/ Craig L. Weinstock
Craig L. Weinstock
State Bar No. 21097300
Mark C. Taylor
State Bar No. 19713225
Roger B. Cowie
State Bar No. 00783886
2200 Ross Ave., Suite 900
Dallas, TX 75201
(214) 220-4800
(214) 220-4899 (Fax)
ATTORNEYS FOR AMERICAN INDUSTRIAL PROPERTIES REIT
GOODWIN, PROCTER & HOAR L.L.P.
By:/s/ Kenneth A. Cohen
Kenneth A. Cohen
R. Todd Cronan
Mary M. Diggins
Exchange Place
Boston, MA 02109-2881
(617) 570-1000
(617) 523-1231 (Fax)
ATTORNEYS FOR FIDELITY MANAGEMENT & RESEARCH COMPANY, FIDELITY
PURITAN TRUST, FIDELITY MANAGEMENT TRUST CO., FIDELITY GALILEO
FUND, L.P., BELMONT CAPITAL PARTNERS II, L.P.
NO. 95-4181-G
AMERICAN INDUSTRIAL PROPERTIES IN THE DISTRICT COURT OF
REIT,
Plaintiff
V. DALLAS COUNTY, T E X A S
THE MANUFACTURERS LIFE
INSURANCE COMPANY, FIDELITY
MANAGEMENT & RESEARCH
CORPORATION, FIDELITY GALILEO
FUND, L.P., BELMONT CAPITAL
PARTNERS II, L.P., FIDELITY
PURITAN TRUST, AND FIDELITY
MANAGEMENT TRUST CO.,
Defendant 134TH JUDICIAL DISTRICT
AGREED MOTION TO (i) NON SUIT CLAIMS OF
THE MANUFACTURERS LIFE INSURANCE COMPANY AND
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
WITHOUT PREJUDICE AND (ii) ENTER TAKE NOTHING
JUDGMENT AS TO CLAIMS ASSERTED BY
AMERICAN INDUSTRIAL PROPERTIES REIT AND
COUNTERCLAIMS ASSERTED BY THE FIDELITY ENTITIES
TO THE HONORABLE JUDGE OF SAID COURT:
COME NOW, The Manufacturers Life Insurance Company ("MLI"),
The Manufacturers Life Insurance Company (U.S.A.) ("MLI USA"),
American Industrial Properties REIT ("AIP"), Fidelity Management
& Research Company, Fidelity Galileo Fund, L.P., Belmont Capital
Partners II, L.P., Fidelity Puritan Trust, and Fidelity
Management Trust Co. (collectively "The Fidelity Entities") and
file this Agreed Motion to (i) Non-suit Claims of The
Manufacturers Life Insurance Company and The Manufacturers Life
Insurance Company (U.S.A.) Without Prejudice and (ii) Enter Take
Nothing Judgment as to Claims Asserted by American Industrial
Properties REIT, and counterclaims asserted by The Fidelity
Entities and would show unto this Honorable Court the following:
1. This action was commenced by AIP filing Plaintiff's
Petition, Application for Declaratory Judgment, and Application
for Injunctive Relief (the "Petition"). The Petition was amended
on May 26, 1995, June 26, 1995, October 19, 1995, December 15,
1995 and December 27, 1995.
2. The parties to this litigation have reached an
agreement to settle their various claims including those asserted
in this litigation.
3. In order to effectuate the terms of the agreement
between the parties, it is necessary that (i) the claims and
causes of action asserted by MLI and MLI USA be non-suited and
dismissed by the Court without prejudice to refiling, and (ii) a
take nothing judgment with respect to all claims asserted by AIP
and counterclaims asserted by The Fidelity Entities be executed
by the Court.
WHEREFORE, PREMISES CONSIDERED, The Manufacturers Life
Insurance Company, The Manufacturers Life Insurance Company
(U.S.A.), American Industrial Properties REIT, Fidelity
Management & Research Company, Fidelity Galileo Fund, L.P.,
Belmont Capital Partners II, L.P., Fidelity Puritan Trust, and
Fidelity Management Trust Co. respectfully request this Court
enter an Agreed Final Judgment (i) non-suiting and dismissing the
claims and causes of action asserted by MLI and MLI USA without
prejudice to refiling, and (ii) awarding a take nothing judgment
as to all other claims and causes of action asserted, including
all claims brought by American Industrial Properties REIT, and
counterclaims asserted by The Fidelity Entities, and for such
other and further relief to which they may be justly entitled.
Respectfully submitted,
WARE,
SNOW, FOGEL, JACKSON & GREENE, P.C.
By:/s/ Phil F. Snow
Phil F. Snow
State Bar No. 18812600
Don Fogel
State Bar No. 07201900
J. Edward Cole
State Bar No. 04538400
Texaco Heritage Plaza
1111 Bagby, Suite 4900
Houston, Texas 77002
(713) 659-6400--Telephone
(713) 659-6262--Facsimile
ATTORNEYS
FOR DEFENDANTS THE MANUFACTURERS
LIFE INSURANCE COMPANY AND THE
MANUFACTURERS LIFE INSURANCE
COMPANY (U.S.A.)
LIDDELL,
SAPP, ZIVLEY, HILL & LABOON, L.L.P.
By:/s/ Craig L. Weinstock
Craig L. Weinstock
State Bar No. 21097300
Mark C. Taylor
State Bar No. 19713225
Roger B. Cowie
State Bar No. 00783886
2200 Ross Ave., Suite 900
Dallas, TX 75201
(214) 220-4800
(214) 220-4899 (Fax)
ATTORNEYS
FOR AMERICAN INDUSTRIAL PROPERTIES
REIT
GOODWIN,
PROCTER & HOAR L.L.P.
By:/s/ Kenneth A. Cohen
Kenneth A. Cohen
R. Todd Cronan
Mary M. Diggins
Exchange Place
Boston, MA 02109-2881
(617) 570-1000
(617) 523-1231 (Fax)
ATTORNEYS
FOR FIDELITY MANAGEMENT & RESEARCH
COMPANY, FIDELITY PURITAN TRUST,
FIDELITY MANAGEMENT TRUST CO.,
FIDELITY GALILEO FUND, L.P.,
BELMONT CAPITAL PARTNERS II, L.P.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the
foregoing instrument has been forwarded to the following counsel
of record by either hand delivery or certified mail, return
receipt requested on this the ____ day of _____________, 1996:
Craig L. Weinstock
Mark C. Taylor
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75201
Todd Cronan
Goodwin, Procter & Hoar
Exchange Place
Boston, Massachusetts 02109
Tim Durst
Baker & Botts, L.L.P.
2001 Ross Avenue, Suite 800
Dallas, Texas 75201-2980
Phil F. Snow
RELEASE AND AGREEMENT
The parties to this Release and Agreement are American
Industrial Properties REIT, Patapsco #1 Limited Partnership,
Patapsco #2 Limited Partnership, The Manufacturers Life Insurance
Company, The Manufacturers Life Insurance Company (U.S.A.),
Fidelity Management & Research Company, The Galileo Fund, L.P.,
Belmont Capital Partners II, L.P., Fidelity Puritan Fund, and
Fidelity Management Trust Company.
Recitals
WHEREAS, capitalized terms in the whereas clauses in this
Release and Agreement are defined in Article I;
WHEREAS, AIP has asserted that MLI and The Fidelity Entities
are liable for damages in connection with the Subject
Transactions, Occurrences and Actions (as defined below);
WHEREAS, The Subject Lawsuit was commenced on May 1, 1995 by
AIP filing Plaintiff's Petition, Application for Declaratory
Judgment, and Application for Injunctive Relief;
WHEREAS, MLI, MLI USA and The Fidelity Entities have denied
any liability to AIP;
WHEREAS, The Fidelity Entities and MLI have asserted
counterclaims against AIP, and AIP has denied any liability to
MLI and The Fidelity Entities.
NOW, THEREFORE, in consideration of the mutual promises and
agreements contained in this Release and Agreement, including the
recitals set forth above and in consideration of the other
contemporaneous written agreements between MLI and MLI USA on the
one hand and AIP on the other, the parties agree as follows:
ARTICLE I
Definitions
The following terms, as used in this Release and Agreement,
shall have the meanings indicated below, unless the context
otherwise requires:
1.01 "AIP" shall mean American Industrial Properties REIT.
1.02 "AIP Parties" shall mean AIP; the agents, employees,
officers, directors, shareholders and attorneys of AIP,
including, but not limited to, Charles Wolcott, William Bricker
and Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P.; all companies
or firms affiliated with, subsidiary to AIP; the predecessors,
successors and assigns of AIP; and, all other persons, firms, and
corporations for whose conduct the persons or entities named in
this definition may be liable.
1.03 "Claims" shall mean any and all theories of recovery
whether known or unknown, recognized by the law of any
jurisdiction and comprehensively includes, but is not limited to,
causes of action, demands, liability, counterclaims, third party
claims, or defenses to liability arising from the Subject
Transactions, Occurrences and Actions, the Subject Notes, or
relating to offsets against the Subject Notes, suits and
judgments, whether arising in equity or under the common law or
any contract or tort or any statute, regulation or otherwise,
including, but not limited to, all theories pled or that might
have been pled in The Subject Lawsuit or in the Pure World
Lawsuit. "Claims" does include any causes of action arising
after the date of this Release and Agreement out of actions or
omissions occurring after the date of this Release and Agreement.
1.04 "Damages" shall mean any and all elements of relief or
recovery, whether known or now unknown, recognized by the law of
any jurisdiction and comprehensively includes, but is not limited
to, actual damages of every description, such as economic loss,
damage to business reputation, lost profits or good will,
consequential damages, damages ensuing from loss of credit,
property loss, or personal injury; any other item of loss or
injury; statutory or treble or multiple or punitive damages;
attorney's fees; prejudgment or post judgment or other interest;
equitable relief; expenses; and costs of court. The term Damages
also includes, but is not limited to, all elements of recovery or
relief pled, or that might have been pled in either The Subject
Lawsuit or the Pure World Lawsuit arising from the Subject
Transactions, Occurrences and Actions.
1.05 "Insider" shall have the meaning set out in 11 U.S.C.
101.(31) and "Affiliate" shall have the meaning set out in 11
U.S.C. 101(2).
1.06 "MLI" shall mean The Manufacturers Life Insurance
Company.
1.07 "MLI Parties" shall mean MLI; the agents, employees,
officers, directors, shareholders and attorneys of MLI,
including, but not limited to, Stewart Sprague, Joe Mounsey,
Richard Coles, Bruce Monus, Ray Britt and Ware, Snow, Fogel,
Jackson & Greene, P.C.; all companies or firms affiliated with,
subsidiary to MLI; the predecessors, successors and assigns of
MLI; and, all other persons, firms, and corporations for whose
conduct the persons or entities named in this definition may be
liable.
1.08 "MLI USA" shall mean The Manufacturers Life Insurance
Company (U.S.A.).
1.09 "MLI USA Parties" shall mean MLI USA; the agents,
employees, officers, directors, shareholders and attorneys of MLI
USA; all companies or firms affiliated with, subsidiary to or the
parent of MLI USA; the predecessors, successors, heirs and
assigns of MLI USA; and, all other persons, firms, and
corporations for whose conduct the persons or entities named in
this definition may be liable.
1.10 "Note Purchase Agreement" shall mean an agreement by
that title, dated February 27, 1992, by and between Trammell Crow
Real Estate Investors and Manufacturers Life Insurance Company.
1.11 "Pure World Lawsuit" shall mean Civil Action No. 3:96-
CV-0068-H, styled American Industrial Properties REIT v. Pure
World, Inc. and Paul O. Koether, pending in the United States
District Court for the Northern District of Texas, Dallas
Division.
1.12 "Settlement Agreement" shall mean the agreement by and
between American Industrial Properties REIT, Patapsco #1 Limited
Partnership, Patapsco #2, Limited Partnership, The Manufacturers
Life Insurance Company and The Manufacturers Life Insurance
Company (U.S.A.) of the same date as this Release and Agreement.
1.13 "Subject Notes" shall mean that certain (i) promissory
note, dated February 27, 1992, in the original face amount of
$23,261,317.66 executed by Trammell Crow Real Estate Investors
and payable to MLI, and (ii) promissory note, dated February 27,
1992, in the original face amount of $19,143,646,92 executed
Trammell Crow Real Estate Investors and payable to MLI USA.
1.14 "Subject Transactions, Occurrences and Actions" shall
mean all actions, facts, matters or things, regardless of whether
in the past or present, through and including the date of this
Release and Agreement, and regardless of whether now known or
unknown which directly or indirectly arise out of or are
incidental to, or in any manner connected with the following:
(1) The Note Purchase Agreement;
(2) The Note Transfer Agreement;
(3) The Subject Notes;
(4) Any negotiations or agreements between MLI or MLI
USA or the MLI Parties on the one hand and The Fidelity Entities
or any of them, or The Fidelity Parties on the other hand
relating to the Subject Notes;
(5) Any agreement between AIP on the one hand and MLI
and/or MLI USA on the other hand which was entered into prior to
the date of this Release and Agreement;
(6) Any notice of default with respect to the Subject
Notes;
(7) The acceleration of the Subject Notes;
(8) Communications between MLI and MLI USA on the one
hand and any prospective purchaser of the Subject Notes on the
other hand;
(9) Any actions taken by MLI or MLI USA to collect on
or market the Subject Notes;
(10) The facts pled or disclosed in discovery and the
claims made or that could have been made in The Subject Lawsuit;
(11) The facts pled or disclosed in discovery and the
claims made or that could have been made in the Pure World
Lawsuit and any claims that might in the future be made by AIP
against Pure World or its Insiders or Affiliates for conduct
occurring up to the date of this Release and Agreement;
(12) Any actions by MLI or in concert with MLI Parties
or The Fidelity Parties that were or that AIP believes were
intended to change the ownership and control of AIP;
(13) The disclosure to any person or entity of
information concerning AIP which is believed by AIP to have been
confidential or proprietary; and
(14) Any communication between The Fidelity Parties or
the MLI Parties on the one hand and any other person connected
with the Subject Notes, or with AIP, or with any person involved
in any dispute with AIP, including but not limited to any dispute
about the governance of AIP, its stockholders' rights, or any
actions taken by any stockholders of AIP, on the other hand.
1.15 "The Fidelity Entities" shall mean Fidelity Management
& Research Company, The Galileo Fund, L.P., Belmont Capital
Partners II, L.P., Fidelity Puritan Fund, and Fidelity Management
Trust Company.
1.16 "The Fidelity Parties" shall mean The Fidelity
Entities; the agents, employees, officers, directors,
shareholders and attorneys of any of The Fidelity Entities,
including, but not limited to, Goodwin, Procter & Hoar L.L.P. and
Baker & Botts, L.L.P.; all companies or firms affiliated with,
subsidiary to or the parent of The Fidelity Entities; the
predecessors, successors and assigns of The Fidelity Entities;
and, all other persons, firms, and corporations for whose conduct
the persons or entities named in this definition may be liable.
1.17 "The Subject Lawsuit" shall mean No. 95-4181-G, styled
American Industrial Properties REIT v. The Manufacturers Life
Insurance Company, et al., pending in the 134th Judicial District
Court of Dallas County, Texas.
ARTICLE II
Releases
2.01 Release and Indemnity by AIP to MLI Parties and MLI USA
Parties. AIP hereby presently, generally, fully, finally and
forever releases, acquits and discharges the MLI Parties and the
MLI USA Parties from any and all claims, causes of action,
demands, liability, suits and judgments, whether arising in
equity or under the common law, or under any contract or tort or
any statute, regulation or otherwise, including but not limited
to any and all Claims and Damages. AIP will indemnify and hold
harmless the MLI Parties and the MLI USA Parties from any action,
third party actions or cross actions seeking contribution from
the MLI Parties or the MLI USA Parties by any person, entity,
firm or corporation that is alleged to be liable to AIP for the
Claims and Damages in connection with the Subject Transactions,
Occurrences and Actions. In no event, however, shall AIP be
liable for an amount in excess of the amount that AIP recovers
from any such person, entity or corporation seeking contribution
from the MLI Parties or the MLI USA Parties. This indemnity and
hold harmless agreement is specifically intended to operate and
be applicable even if it is alleged, charged or proven that all
or some of the Damages being sought were caused in whole or in
part by any act, omission, negligence, gross negligence, breach
of contract, intentional conduct, violation of statute or common
law, breach of warranty, or any other conduct whatsoever of the
MLI Parties or MLI USA Parties. Notwithstanding the foregoing,
AIP shall have no obligation to indemnify or hold harmless the
MLI Parties for any attorneys' fees or costs of defense.
2.02 Release and Indemnity by AIP to The Fidelity Parties.
AIP hereby presently, generally, fully, finally and forever
releases, acquits and discharges The Fidelity Parties from any
and all claims, causes of action, demands, liability, suits and
judgments, whether arising in equity or under the common law, or
under any contract or tort or any statute, regulation or
otherwise, including but not limited to any and all Claims and
Damages. AIP will indemnify and hold harmless The Fidelity
Parties from any action, third party actions or cross actions
seeking contribution from The Fidelity Parties by any person,
entity, firm or corporation that is alleged to be liable to AIP
for the Claims and Damages in connection with the Subject
Transactions, Occurrences and Actions. In no event, however,
shall AIP be liable for an amount in excess of the amount that
AIP recovers from any such person, entity or corporation seeking
contribution from The Fidelity Parties. This indemnity and hold
harmless agreement is specifically intended to operate and be
applicable even if it is alleged, charged or proven that all or
some of the Damages being sought were caused in whole or in part
by any act, omission, negligence, gross negligence, breach of
contract, intentional conduct, violation of statute or common
law, breach of warranty, or any other conduct whatsoever of The
Fidelity Parties. Further, AIP agrees to indemnify and hold
harmless The Fidelity Parties from the reasonable and actual
expenses up to but not exceeding $5,000.00 incurred by any of The
Fidelity Parties in responding to discovery initiated by or on
behalf of AIP in any lawsuit arising out of or related to the
Subject Transactions, Occurrences and Actions. Notwithstanding
the foregoing, AIP shall have no obligation to indemnify or hold
harmless The Fidelity Parties for any attorneys' fees or costs of
defense beyond the $5,000 obligation set forth in the immediately
preceding sentence.
2.03 Release by MLI and MLI USA to The Fidelity Parties.
MLI and MLI USA hereby presently, generally, fully, finally and
forever release, acquit and discharge The Fidelity Parties from
any and all Claims and Damages arising from the Subject
Transactions, Occurrences and Actions.
2.04 Release by The Fidelity Entities to the MLI Parties and
the MLI USA Parties. The Fidelity Entities hereby presently,
generally, fully, finally and forever release, acquit and
discharge the MLI Parties and the MLI USA Parties from any and
all Claims and Damages arising from the Subject Transactions,
Occurrences and Actions.
2.05 Release by The Fidelity Entities to the AIP Parties.
The Fidelity Entities hereby presently, generally, fully, finally
and forever release, acquit and discharge the AIP Parties from
any and all Claims and Damages arising from the Subject
Transactions, Occurrences and Actions.
2.06 Release by MLI and MLI USA to AIP Parties. MLI and MLI
USA hereby presently, generally, fully, finally and forever
release, acquit and discharge the AIP Parties other than AIP,
Patapsco #1 Limited Partnership, Patapsco #2 Limited Partnership,
AIP Properties #1, L.P. and AIP Properties #2, L.P. from any and
all Claims and Damages arising from the Subject Transactions,
Occurrences and Actions. MLI and MLI USA hereby presently,
generally, fully, finally and forever release AIP, Patapsco #1
Limited Partnership, Patapsco.#2 Limited Partnership, AIP
Properties #1, L.P. and AIP Properties #2, L.P. from any causes
of action other than Claims and Damages that relate to or arise
from (i) the Subject Notes, (ii) the Settlement Agreement, or
(iii) the transfer by AIP of any property which is actionable
under Chapter 24 of the Texas Business and Commerce Code or any
other applicable state or federal fraudulent transfer statutes.
MLI and MLI USA on the one hand and AIP, Patapsco #1 Limited
Partnership, Patapsco #2 Limited Partnership, AIP Properties #1,
L.P. and AIP Properties #2, L.P. on the other hand agree that (i)
no claims arising out of any alleged fraudulent transfers of AIP
property shall be filed by MLI and MLI USA prior to an Event of
Default under the Settlement Agreement, and (ii) the applicable
statutes of limitations on any such claims are tolled from the
date of this Release and Agreement until an Event of Default
under the Settlement Agreement. Nothing in this Release and
Agreement shall be construed to release or impair in any respect
any rights of MLI and MLI USA with respect to the Subject Notes
and Settlement Agreement. Nothing in this Release and Agreement
shall be construed to release AIP, Patapsco #1 Limited
Partnership, or Patapsco #2 Limited Partnership of any
obligations under the Subject Notes and the Settlement Agreement.
ARTICLE III
Dismissal and Judgment
3.01 AIP, MLI, MLI USA and The Fidelity Entities agree to
entry of a Final Judgment in the Subject Lawsuit in the form of
Exhibit B. Simultaneous with execution of this Release and
Agreement, AIP and The Fidelity Entities shall execute and
deliver to MLI and MLI USA (a) an Agreed Motion to (i) Non-Suit
Claims of The Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company (U.S.A.) Without Prejudice
and (ii) Enter Take Nothing Judgment as to Claims Asserted by
American Industrial Properties REIT and counterclaims asserted by
The Fidelity Entities in the form of Exhibit A, and (b) the
Agreed Final Judgment in the form of Exhibit B.
3.02 MLI and MLI USA shall execute the (a) Agreed Motion to
(i) Non-Suit Claims of The Manufacturers Life Insurance Company
and The Manufacturers Life Insurance Company (U.S.A.) Without
Prejudice and (ii) Enter Take Nothing Judgment as to Claims
Asserted by American Industrial Properties REIT and counterclaims
asserted by The Fidelity Entities in the form of Exhibit A, and
(b) Agreed Final Judgment in the form of Exhibit B, and file same
with the Court.
3.03 AIP shall take all actions necessary to cause the
Agreed Final Judgment in the form of Exhibit B to be signed in
The Subject Lawsuit.
ARTICLE IV
Representations
4.01 Representations by AIP. AIP represents and warrants
the following to MLI, MLI USA and The Fidelity Entities: (1) AIP
is correctly described in this Release and Agreement; (2) before
executing this Release and Agreement, AIP became fully informed
of the terms, contents, conditions, and effect of this Release
and Agreement; (3) the signatory to this Release and Agreement,
for or on behalf of AIP, is fully authorized and legally
competent to execute this Release and Agreement and is a duly
authorized representative of AIP; (4) this Release and Agreement
is fully and forever binding on AIP, its successors, assigns and
shareholders and the other signatories hereto; (5) no promise or
representation of any kind has been made to AIP or by anyone
acting for AIP, except as is expressly stated in this Release and
Agreement; (6) AIP has not assigned, pledged, or in any manner
sold or transferred any right, title, interest, or claim that
arises out of this Release and Agreement, the Subject
Transactions, Occurrences and Actions, the Claims, or Damages;
(7) in entering this Release and Agreement, AIP has had the
benefit of the advice of lawyers of its own choosing; and, AIP
enters this Release and Agreement freely, by AIP's own choice,
and judgment, and without duress or other influence; (8) AIP
understands that this Release and Agreement is in full, final and
complete release of the MLI Parties, MLI USA Parties and The
Fidelity Parties; and (9) the Subject Notes are not subject to
any claims of offset or defenses by AIP.
4.02 Representations by MLI. MLI represents and warrants
the following to AIP and The Fidelity Entities: (1) MLI is
correctly described in this Release and Agreement; (2) before
executing this Release and Agreement, MLI became fully informed
of the terms, contents, conditions, and effect of this Release
and Agreement; (3) the signatory to this Release and Agreement,
for or on behalf of MLI, is fully authorized and legally
competent to execute this Release and Agreement and is a duly
authorized representative of MLI; (4) this Release and Agreement
is fully and forever binding on MLI, its successors, assigns and
shareholders and the other signatories hereto; (5) no promise or
representation of any kind has been made to MLI or by anyone
acting for MLI, except as is expressly stated in this Release and
Agreement; (6) MLI has not assigned, pledged, or in any manner
sold or transferred any right, title, interest, or claim that
arises out of this Release and Agreement, the Subject
Transactions, Occurrences and Actions, the Claims, or Damages;
(7) in entering this Release and Agreement, MLI has had the
benefit of the advice of lawyers of its own choosing; and, MLI
enters this Release and Agreement freely, by MLI's own choice,
and judgment, and without duress or other influence; and (8) MLI
understands that this Release and Agreement is in full, final and
complete release of The Fidelity Parties.
4.03 Representations by MLI USA. MLI USA represents and
warrants the following to AIP and The Fidelity Entities: (1) MLI
USA is correctly described in this Release and Agreement; (2)
before executing this Release and Agreement, MLI USA became fully
informed of the terms, contents, conditions, and effect of this
Release and Agreement; (3) the signatory to this Release and
Agreement, for or on behalf of MLI USA, is fully authorized and
legally competent to execute this Release and Agreement and is a
duly authorized representative of MLI USA; (4) this Release and
Agreement is fully and forever binding on MLI USA, its
successors, assigns and shareholders and the other signatories
hereto; (5) no promise or representation of any kind has been
made to MLI USA or by anyone acting for MLI USA, except as is
expressly stated in this Release and Agreement; (6) MLI USA has
not assigned, pledged, or in any manner sold or transferred any
right, title, interest, or claim that arises out of this Release
and Agreement, the Subject Transactions, Occurrences and Actions,
the Claims, or Damages; (7) in entering this Agreement, MLI USA
has had the benefit of the advice of lawyers of its own choosing;
and, MLI USA enters this Release and Agreement freely, by MLI
USA's own choice, and judgment, and without duress or other
influence; and (8) MLI USA understands that this Release and
Agreement is in full, final and complete release of The Fidelity
Parties.
4.04 Representations by The Fidelity Entities. The Fidelity
Entities represent and warrant the following to MLI, MLI USA and
AIP: (1) The Fidelity Entities are correctly described in this
Release and Agreement; (2) before executing this Release and
Agreement, The Fidelity Entities became fully informed of the
terms, contents, conditions, and effect of this Release and
Agreement; (3) the signatories to this Release and Agreement, for
or on behalf of The Fidelity Entities, are fully authorized and
legally competent to execute this Release and Agreement and are
duly authorized representatives of The Fidelity Entities; (4)
this Release and Agreement is fully and forever binding on The
Fidelity Entities, their successors, assigns and shareholders and
the other signatories hereto; (5) no promise or representation of
any kind has been made to The Fidelity Entities or by anyone
acting for The Fidelity Entities, except as is expressly stated
in this Release and Agreement; (6) The Fidelity Entities have not
assigned, pledged, or in any manner sold or transferred any
right, title, interest, or claim that arises out of this Release
and Agreement, the Subject Transactions, Occurrences and Actions,
the Claims, or Damages; (7) in entering this Release and
Agreement, The Fidelity Entities have had the benefit of the
advice of lawyers of their own choosing; and, The Fidelity
Entities enter this Release and Agreement freely, by The Fidelity
Entities' own choice, and judgment, and without duress or other
influence; and (8) The Fidelity Entities understand that this
Release and Agreement is in full, final and complete release of
the MLI Parties, MLI USA Parties and the AIP Parties.
ARTICLE V
Miscellaneous
5.01 Denial of Liability. The Parties deny all liability
claimed, or which might have been claimed, in The Subject
Lawsuit. The Parties execute this Release and Agreement for the
purpose of avoiding the expense and inconvenience of continued
litigation and proceedings in any forum.
5.02 Modification. This Release and Agreement supersedes
all prior agreements, understandings and representations. This
Release and Agreement cannot be altered, changed or modified
except in a writing executed by a duly authorized representative
for each of the Parties, and the provisions of this Release and
Agreement may not be waived by the Parties unless that waiver is
expressed in writing and signed by a duly authorized
representative of each of the Parties.
5.03 Multiple Originals. The Parties may execute this
Release and Agreement in multiple originals and/or in
counterparts, and if so executed it shall be valid and binding as
if all Parties had executed the same original. "Counterparts"
include copies executed and transmitted by facsimile telecopier
to be followed by "hard copies."
5.04 Successors. This Release and Agreement binds and
inures to the benefit of the Parties and their successors and
assigns.
5.05 Applicable Law. This Release and Agreement shall be
governed by, construed, and enforced in accordance with the laws
of the State of Texas.
5.06 Joint Efforts. It is agreed that this Release and
Agreement shall be deemed for all purposes prepared through the
joint efforts of the Parties hereto and shall not be construed
against one Party or the other as a result of the preparation,
drafting, submittal, or other event of negotiation, drafting or
execution of the Release and Agreement.
EXECUTED in multiple originals on May 22, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
PATAPSCO #1 LIMITED PARTNERSHIP
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
PATAPSCO #2 LIMITED PARTNERSHIP
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
THE MANUFACTURERS LIFE INSURANCE COMPANY
By:Ray Britt
Name:Raymond L. Britt
Title:Vice President
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By:Ray Britt
Name:Raymond L. Britt
Title:Vice President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By:/s/Thomas P. Lavin
Name:Thomas P. Lavin
Title:Senior Investment Officer
FIDELITY PURITAN FUND
By:/s/John H. Costello
Name:John H. Costello
Title:Assistent Treasurer
FIDELITY MANAGEMENT TRUST COMPANY
By:/s/Thomas P. Lavin
Name:Thomas P. Lavin
Title:Vice President
THE GALILEO FUND, L.P.
By DDJ Galileo, L.L.C., its general partner
By:/s/Judy K. Mencher
Name:Judy K. Mencher
Title:Member
BELMONT CAPITAL PARTNERS II, L.P.
By Fidelity Capital Partners II Corp., as general partner
By:/s/Robert Lawrence
Name:Robert A. Lawrence
Title:Senior Vice President
AIP PARTNERSHIP INTEREST PLEDGE AGREEMENT
THIS AIP PARTNERSHIP INTEREST PLEDGE AGREEMENT, dated as of
May 22, 1996 (herein, as amended or modified and in effect from
time to time, called this "Agreement"), is entered into and
between American Industrial Properties REIT, whose address is
6220 North Beltline, Suite 205, Irving, Texas 75063-2656
(referred to herein as "Pledgor"), and The Manufacturers Life
Insurance Company ("MLI"), whose address is 200 Bloor Street
East, Toronto, Ontario M4W 1E5 and The Manufacturers Life
Insurance Company (U.S.A.) ("MLI USA"), whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5 (MLI and MLI USA are
collectively referred to herein as "Pledgee").
ARTICLE I
Definitions
The following terms, as used in this Agreement, shall have
the meanings indicated below unless the context otherwise
requires:
1.01 "Collateral Documents" shall have the defined meaning
set forth in the Settlement Agreement.
1.02 "Event of Default" shall mean any Event of Default (as
defined in Article XXI of the Settlement Agreement).
1.03 "Obligations" shall mean the following: (a) all
indebtedness of Pledgor now or hereafter evidenced by the Subject
Notes, (b) any and all past, concurrent or future modifications,
extensions, renewals, rearrangements, replacements and increases
of the Subject Notes, (c) all obligations and indebtedness of
each Obligor to Pledgee which are evidenced by or created or
incurred under the Settlement Agreement, (d) all present and
future debts and obligations of any Obligor to Pledgee under or
pursuant to the Collateral Documents, and (e) all reasonable and
actual costs incurred by Pledgee to enforce this Agreement, the
Settlement Agreement and the Collateral Documents and collect the
Obligations including but not limited to reasonable and actual
attorneys' fees, legal expenses and expenses of sale.
1.04 "Obligor" shall mean Pledgor, Patapsco #1 Limited
Partnership, and Patapsco #2 Limited Partnership, collectively.
1.05 "Option Agreement" shall mean an agreement by that
title in the form of Exhibit 24 to the Settlement Agreement.
1.06 "Option Two Price" shall mean the sum of Thirty-Six
Million Eight Hundred Thousand and 00/100 Dollars
($36,800,000.00) allocated $16,613,295.49 to Promissory Note B-1
and $20,186,704.51 to Promissory Note B-2.
1.07 "Release Price" shall mean (i) as to the partnership
interest of Pledgor in AIP Properties #1, L.P. in the sum of
$10,000,000, and (ii) as to the partnership interest of Pledgor
in AIP Properties #2, L.P. in the sum of $400,000.
1.08 "Settlement Agreement" shall mean the Settlement
Agreement by and Between American Industrial Properties REIT,
Patapsco #1 Limited Partnership, Patapsco #2 Limited
Partnership., The Manufacturers Life Insurance Company and The
Manufacturers Life Insurance Company (U.S.A.) dated as of May 22,
1996.
1.09 "Subject Notes" shall mean (i) that certain promissory
note dated November 27, 1992 in the face amount of Twenty-Three
Million Two Hundred Sixty-One Thousand Three Hundred Seventeen
and 66/100 Dollars ($23,261,317.66), bearing interest at the rate
or rates therein stated, executed by Trammell Crow Real Estate
Investors (now known as Pledgor), and (ii) that certain
promissory note dated November 27, 1992 in the face amount of
Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by Trammell Crow
Real Estate Investors (now known as Pledgor).
ARTICLE II
Partnership Interest Pledge; Voting Rights
2.01 Pledge. As security for the prompt and complete
payment when due of all the Obligations, Pledgor hereby pledges,
assigns and transfers to the Pledgee, hereby delivers to Pledgee
and hereby grants to Pledgee a security interest in, all of the
following, whether presently existing or hereafter arising or
acquired:
(a) the partnership interests described in Exhibit A,
all of the instruments representing such interests, and all cash
equivalents, instruments, chattel paper, interest, distributions,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such interests and all other proceeds
of such interests;
(b) any additional interest in AIP Properties #1, L.P.
and AIP Properties #2, L.P. at any time and from time to time
acquired by Pledgor in any manner, all instruments representing
such additional interests, and all cash equivalents, instruments,
chattel paper, interest, distributions, rights and other property
at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of such interests and all other proceeds of such interests; and
(c) all other property hereafter delivered to Pledgor
in substitution for or in addition to any of the foregoing, all
instruments representing or evidencing such property and all cash
equivalents, securities, instruments, chattel paper, interest,
dividends, distributions, rights and other property at any time
and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof
and all other proceeds of such property.
all of the foregoing being herein collectively called the
"Pledged Interest."
2.02 Distributions. If, while this Agreement is in effect,
the Pledgor shall become entitled to receive or shall receive or
shall possess any instrument or writing representing any Pledged
Interest (including, without limitation, any instrument issued in
connection with or representing a partnership interest
distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any
reorganization), or any instrument or other writing representing
or constituting an option or other right to acquire securities or
other interests or documents, whether as an addition to, in
substitution of, or in exchange for any Pledged Interest, or
otherwise, the Pledgor agrees the same constitute a portion of
the Pledged Interest and be subject to the terms of this
Agreement.
2.03 Cash Distributions. All payments received by the
Pledgor under or in respect of any of the Pledged Interest
arising directly or indirectly out of the sale, finance or
refinance of the Pledged Interest shall be held by the Pledgor in
trust for the Pledgee, shall be segregated from other funds of
the Pledgor and shall, forthwith upon receipt by the Pledgor, be
turned over to the Pledgee, in the same form as received by the
Pledgor (duly endorsed to the Pledgee, if required) to be applied
by the Pledgee (i) to the principal balance of the Subject Notes
on a pro rata basis, and (ii) to the extent provided by the
Option Agreement, to the Option Two Price on a pro rata basis.
Nothing in this Agreement is intended to or shall be construed to
modify in any respect the terms and conditions set forth in the
Option Agreement. The Pledgee shall have the sole and exclusive
right and authority to receive and apply all such payments and
distributions in accordance with the Settlement Agreement.
2.04 Voting Rights. At any time after the occurrence of an
Event of Default, the Pledgee, at its option, may have any part
or all of the Pledged Interest registered in its name or that of
its nominee, and the Pledgor hereby covenants that, upon the
Pledgee's request, the Pledgor will cause the issuer, transfer
agent or registrar of the Pledged Interest to effect such
registration. Prior to the occurrence of an Event of Default,
the Pledgor shall retain all voting rights with respect to the
Pledged Interest, and, for that purpose, the Pledgee shall upon
written request execute and deliver to the Pledgor all necessary
proxies (which proxies shall in any event expire automatically
upon the occurrence of an Event of Default). Upon (i) the
occurrence of an Event of Default, and (ii) after delivery of
written notice to Pledgor, the Pledgee or its nominee shall have
the right to exercise all voting rights as to all interests and
with respect to all of the Pledged Interest, all other
partnership rights and all conversion, exchange, subscription or
other rights, privileges or options pertaining thereto as if it
were the absolute owner thereof, including, without limitation,
the right to exchange any or all of the Pledged Interest upon the
merger, consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, or upon the exercise by such
issuer of any right, privilege, or option pertaining to any of
the Pledged Interest. The Pledgee shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not
be responsible for any failure to do so or delay in so doing; and
(ii) Pledgee may by written notice to Pledgor relinquish, either
partially or completely in accordance with any terms or
conditions Pledgee may set forth in such notice, any or all
voting rights Pledgee may acquire pursuant to this Article 2.04.
Until receipt thereof, this Agreement shall constitute the
Pledgor's proxy to the Pledgee or its nominee to vote all
interests of Pledged Interest then registered in the Pledgor's
name at any and all such times as Pledgee has the right to vote
such interests pursuant to the terms of this Agreement.
ARTICLE III
Waivers; Standard of Care
3.01 Waiver of Certain Rights. The Pledgor to the extent it
may lawfully do so, expressly waives and releases any, every and
all rights to demand or to have all or any portion of the Pledged
Interest marshalled upon any sale, or sold in inverse order of
alienation, in any case whether made under any power of sale
granted herein or pursuant to judicial proceedings or upon any
foreclosure or any enforcement of this Agreement, and consents
and agrees that all the Pledged Interest may at any such sale be
offered and sold as an entirety.
Except as provided in Section 2.04 hereof and the Settlement
Agreement, the Pledgor hereby waives, to the extent it may
lawfully do so, presentment, demand and protest in connection
with this Agreement and any action taken by the Pledgee with
respect to the Pledged Interest.
3.02 Limitation on Duties in Respect of Pledged Interest;
Standard of Care. Beyond the duty of applying and accounting to
the Pledgor for money and other property received by it under
this Agreement, the Pledgee shall not have any duty to the
Pledgor as to any Pledged Interest in its possession or control
or in the possession or control of any agent or nominee of them
or to any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto.
The Pledgor shall not be entitled to any right or remedy against
the Pledgee on account of (i) any failure by the Pledgee to have
exercised reasonable care in the custody and preservation of the
Pledged Interest if the Pledgee shall have taken such action for
that purpose as the Pledgor shall have requested in writing, or
(ii) any failure by the Pledgee to do any act with respect to the
preservation of the Pledged Interest not so requested by the
Pledgor unless such failure constitutes gross negligence or
willful misconduct. The failure of the Pledgee to comply with
any request described in this Section 3.02 shall not of itself be
deemed a failure to exercise reasonable care.
The Pledgee shall not be liable for any failure to enforce
the collection of, or realize on, any Pledged Interest or any
proceeds of Pledged Interest (and no such failure shall be deemed
to be a waiver of any right of the Pledgee hereunder) and the
Pledgee shall have no other responsibility in connection with
such collection or realization, except the responsibility to
account to the Pledgor for funds actually received.
3.03. Certain Actions Permitted to be Taken by the
Pledgee. The Pledgee may, from time to time, without notice to
the Pledgor and without incurring responsibility to, or
discharging or otherwise affecting any liability of the Pledgor
or altering or diminishing the force and effect of Pledgee's
rights hereunder, (i) retain or obtain a security interest in any
property, in addition to the Pledged Interest, to secure payment
of any of the Obligations, (ii) retain or obtain the primary or
secondary liability of any person, with respect to any of the
Obligations, (iii) resort to the Pledged Interest for payment of
any of the Obligations whether or not the Pledgee shall have
resorted to any other property securing payment of the
Obligations or shall have proceeded against any Obligor liable on
any of the Obligations, and (iv) extend, rearrange, renew,
increase or otherwise change in any way other security for any
part of the Obligations.
ARTICLE IV
Remedies on Default
4.01 Remedies. Upon the occurrence of an Event of Default,
the Pledgee, shall exercise all rights and remedies of secured
parties under this Agreement, the Uniform Commercial Code and any
other applicable law as in effect in any relevant jurisdiction.
Without limiting the foregoing, the Pledgor expressly agrees that
in any such event the Pledgee may, without demand, presentment or
protest of any kind (except the notice specified below in this
Section 4.01 of time and place of public or private sale or
disposition) to or upon Pledgor or any other Person (all and each
of which demands, presentments and/or protests are hereby
expressly waived), (i) forthwith collect, receive, appropriate
and realize upon the Pledged Interest, or any part thereof,
and/or (ii) forthwith, in a commercially reasonable manner, sell,
assign, give an option or options to purchase, or otherwise
dispose of and deliver said Pledged Interest (or contract to do
so), or any part thereof, in one or more parcels at one or more
public or private sales or other dispositions, any of the
Pledgee's offices, the office of its counsel, Ware, Snow, Fogel,
Jackson & Greene, P.C. or any premises of the Pledgor or
elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or other
consideration or on credit or for future delivery without
assumption of any credit risk (provided that such credit risk is
secured by the property to be disposed of), free of any claim or
right of whatsoever kind (including any right or equity of
redemption) of the Pledgor which claim, right and equity are
hereby expressly waived and releases. Pledgee, to the extent
permitted by applicable law, upon any such sale or disposition,
public or private, shall have the right to purchase the whole or
any part of said Pledged Interest so sold or conveyed.
The Pledgee will give the Pledgor reasonable written notice
of the time and place of any public sale or other disposition or
of the time after which any private sale or other disposition of
such Pledged Interest is to be made. Pledgor agrees that ten
(10) days written notice to it from the Pledgee of the time and
place of any public sale or other disposition or of the time
after which a private sale or other disposition may take place
shall be commercially reasonable notification of such matters.
With respect to any sale or disposition of any Pledged Interest,
no such written notification need be given to the Pledgor if it
has signed, after the occurrence of an Event of Default, a
statement renouncing any right to notification of sale or other
disposition.
4.02 Application of Proceeds. The proceeds of any
disposition or other action by the Pledgee shall be applied as
follows:
(a) First, to the reasonable and actual costs and
expenses incurred in connection therewith or incidental thereto
or to the care or safekeeping of any of the Pledged Interest or
in any way relating to the rights of the Pledgee hereunder,
including reasonable and actual attorneys' fees and legal
expenses;
(b) Second, to the satisfaction of the Obligations;
(c) Third, to the payment of any other amounts
required by applicable law (including, without limitation,
Section 9-504(a) of the Uniform Commercial Code); and
(c) Fourth, to the Pledgor to the extent of any
surplus proceeds.
4.03 Acknowledgments & Disclaimers regarding Private Sale.
Pledgor acknowledges and agrees that the Pledgee may comply with
limitations or restrictions in connection with any sale or other
disposition of Pledged Interest in order to avoid any violation
of applicable law or in order to obtain any required approval of
the sale or other disposition or of the purchase by any
governmental regulatory authority or official and, without
limiting the generality of the foregoing, the Pledgor
acknowledges and agrees that the Pledgee may be unable to effect
a public sale or other disposition of any or all of the Pledged
Interest by reason of certain prohibitions contained in the
federal securities laws and applicable state securities laws, but
may be compelled to resort to one or more private sales or
dispositions thereof to a restricted group of purchasers or
transferees who will be obliged to agree, among other things, to
acquire such securities for their own account for investment and
not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale or
other disposition may result in prices and other terms less
favorable to the seller than if such sale were a public sale or
other disposition. Notwithstanding any such circumstances, the
Pledgor acknowledges and agrees that such compliance shall not
result in any such private sale or other disposition for such
reason alone being deemed to have been made in a commercially
unreasonable manner. The Pledgee shall not be liable or
accountable to the Pledgor for any discount allowed by reason of
the fact that any Pledged Interest is sold or transferred in
compliance with any such limitation or restriction. The Pledgee
shall not be under any obligation to delay a sale or other
disposition of any of the Pledged Interest for the period of time
necessary to permit the issuer of such securities to register
such securities for public sale or other disposition under the
federal securities laws, or under applicable state securities
laws, even if the issuer would agree to do so.
4.04 Additional Duties of Pledgor. If Pledgee elects to
exercise its right to sell or transfer all or any Pledged
Interest, after the occurrence of an Event of Default, upon
written request, the Pledgor shall from time to time furnish to
the Pledgee all such information as the Pledgee may reasonably
request in order to determine which Pledged Interest may be sold
or transferred as exempt transactions under the federal
securities laws.
4.05 Remedies Not Exclusive. No remedy conferred upon or
reserved to the Pledgee herein is intended to be exclusive of any
other remedy or remedies, but every such remedy shall be
cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity
or by statute.
4.06 Non Waiver. No delay or omission of the Pledgee to
exercise any right, remedy or power under this Agreement, the
Settlement Agreement, Collateral Documents and Subject Notes
shall impair any such right, remedy or power or shall be
construed to be a waiver of any Event of Default or an
acquiescence therein; and every right, power and remedy given by
this Agreement, the Settlement Agreement, Collateral Documents
and Subject Notes to the Pledgee may be exercised from time to
time and as often as may reasonably be deemed expedient by the
Pledgee.
4.07 Discontinued Enforcement Proceeding. In case Pledgee
has proceeded to enforce any right, remedy or power under this
Agreement, the Settlement Agreement or any of the Collateral
Documents, and the proceeding for the enforcement thereof shall
have been discontinued or abandoned for any reason or shall have
been determined adversely to the Pledgee, then and in every such
case the Pledgee shall, subject to any determination in such
proceeding and the doctrines of collateral estoppel and res
judicata, severally and respectively be restored to their former
positions and rights hereunder and under such Settlement
Agreement and Subject Notes with respect to the Pledged Interest
and in all other respects, and thereafter all rights, remedies
and powers of the Pledgee shall, subject to any such
determination and such doctrines, continue as though no such
proceeding had been taken.
4.08 Other Remedies. Pledgee shall not be obligated to
pursue or exhaust any rights or remedies as against any other
collateral securing the Obligations before pursuing or enforcing,
any rights or remedies as against any of the Pledged Interest.
ARTICLE V
Representations and Warranties of Pledgor
5.01 The Pledgor Represents and Warrants That:
(a) It has all requisite power and authority to enter
into this Agreement, to pledge the Pledged Interest, and to carry
out the transactions contemplated by this Agreement;
(b) It is the legal and beneficial owner of all of the
Pledged Interest;
(c) The Pledged Interest constitutes all of the issued
and outstanding limited partnership interest of AIP Properties
#1, L.P. and AIP Properties #2, L.P.
(d) All of the partnership interest of the Pledged
Interest have been duly and validly issued, are fully paid and
nonassessable, and are owned by the Pledgor free of any pledge,
mortgage, hypothecation, lien, charge, encumbrance or security
interest in such partnership interest or the proceeds thereof,
except such as are granted hereunder;
(e) The execution and delivery of this Agreement, and
the performance of its terms, will not violate or constitute a
default under the terms of any agreement, indenture or other
instrument, license, judgment, decree, order, law, statute,
ordinance or other governmental rule or regulation applicable to
the Pledgor or any of its property; and
(f) This Agreement shall create a valid first lien
upon, and perfected security interest in, the Pledged Interest
and the proceeds thereof, subject to no prior security interest,
lien, charge, encumbrance or agreement purporting to grant to any
third party a security interest in the property or assets of the
Pledgor which would include the Pledged Interest.
ARTICLE VI
Covenants of Pledgor
6.01 Negative Covenants. The Pledgor hereby covenants that,
until all of the Obligations have been satisfied in full, it will
not:
(a) Except as provided in Section 7.12 below, sell,
convey or otherwise dispose of any of the Pledged Interest, or
any interest therein or create, incur or permit to exist any
pledge, mortgage, lien, charge, encumbrance or any security
interest whatsoever in, or with respect to, any of the Pledged
Interest, or the proceeds thereof, other than that created
hereby; or
(b) Except with respect to a Pledged Interest which
has been released as provided in Section 7.12 below, consent to,
or approve of, the issuance of any additional partnership
interest of the Pledged Interest; or any securities convertible
voluntarily by the holder thereof or automatically upon the
occurrence or nonoccurrence of any event or condition into, or
exchangeable for, any such interest; or any warrants, options,
rights or other commitments entitling any person to purchase or
otherwise acquire any such interest.
6.02 Affirmative Covenants. Pledgor hereby covenants, that,
until all of the Obligations have been satisfied in full, it
will, at its own expense, defend the Pledgee's right, title,
special property and security interest in and to the Pledged
Interest against the claims of any person, firm, corporation or
other entity.
ARTICLE VII
Miscellaneous
7.01 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not
invalidate the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
7.02 Amendments and Waivers; Rights Cumulative. None of the
terms of provisions of this Agreement may be waived, altered,
modified or amended except by an instrument in writing which is
duly executed by the Pledgor and the Pledgee. No failure on the
part of the Pledgee to exercise, no course of dealing with
respect to, and no delay in exercising, any right, power or
privilege under this Agreement or the Subject Notes, Collateral
Documents or Settlement Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies under this Agreement are cumulative and
may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by the Settlement Agreement or
any Subject Notes or Collateral Documents or by law or in equity.
7.03 Headings. Article, subsection and other headings used
in this Agreement are for convenience only and shall not affect
the construction of this Agreement.
7.04 Notices. Notices shall be given in accordance with
Section 22.03 of the Settlement Agreement.
7.05 Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this agreement are
intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part, or not entitled to be
recorded, registered, or filed under the provisions of any
applicable law.
7.06 Binding Effect; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, as provided
in the Settlement Agreement, and nothing herein is intended or
shall be construed to give any other person any right, remedy or
claim under, to or in respect of this Agreement.
7.07 Termination; Survival of Certain Provisions. Promptly
after satisfaction of all of Pledgor's Obligations, the Pledgee
shall release the Pledged Interest in which the Pledgee then has
a security interest as provided in the Settlement Agreement. The
waivers contained herein shall survive any reversion of the
Pledged Interest to the Pledgor or termination of this Agreement.
7.08 Applicable Law. This Agreement shall be governed by,
and be construed in accordance with, the laws of the State of
Texas without reference to principles of conflict of laws, except
as required by mandatory provisions of law.
7.09 Proceeds. The security interests granted hereunder
shall include proceeds of the Pledged Interest, whether such
proceeds arise before or after the commencement of a case under
any applicable bankruptcy law.
7.10 Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be an original and all
of which taken together shall constitute one and the same
instrument.
7.11 Further Assurances. The Pledgor will promptly execute
and deliver any and all such further instruments and documents
and take such further action the Pledgee reasonably deems
necessary in obtaining the full benefits of this Agreement and of
the rights and powers herein granted, including, without
limitation, (i) the filing of any financing or continuation
statements under the UCC or any other applicable law in effect in
any jurisdiction with respect to the liens granted hereby, and
(ii) the prompt correction of any defect which may hereafter be
discovered in the execution, delivery and acknowledgment of this
Agreement or the description of any Pledged Interest. The
Pledgor also hereby authorizes the Pledgee to file any such
financing or continuation statement without the signature of the
Pledgor to the extent permitted by applicable law.
7.12 Release. Pledgor shall be entitled to release of the
Pledged Interest subject to and in accordance with the following
provisions:
a. At the time of the release no Event of Default has
occurred.
b. The instruments or documents evidencing such
release shall be prepared at the cost of Pledgor and shall be in
a form and substance satisfactory to Pledgee.
c. Such other documentation and information
reasonably requested by Pledgee relating to the transaction
giving rise to the requested release shall be delivered to
Pledgee.
d. Pledgee shall have received full payment of the
full applicable Release Price in cash or immediately available
funds in accordance with the Settlement Agreement.
e. Pledgor shall not be entitled to exercise the
rights under this Section 7.12 with respect to less than One
Hundred Percent (100%) of its interest in either the AIP
Properties #1, L.P. partnership interest or the AIP Properties
#2, L.P. partnership interest.
7.13 Limitation of Liability. Any obligation or liability
of Pledgor under this Agreement shall not be personally binding
upon nor shall there be any resort for the enforcement thereof to
the private property of any of its trust managers, shareholders,
officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or
otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed and
delivered by their duly authorized officers, as of the date first
above written.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
6220 North Beltline, Suite 205
Irving, Texas 75063-2656
(214) 550-6037 (Fax)
MANUFACTURERS LIFE INSURANCE COMPANY
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
200 Bloor Street East
Toronto, Ontario M4W 1E5
(416) 926 5262 (Fax)
MANUFACTURERS LIFE INSURANCE COMPANY, U.S.A.
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
200 Bloor Street East
Toronto, Ontario M4W 1E5
(416) 926-5262 (Fax)
Exhibit A
1. AIP Properties #1 L.P., a Delaware limited partnership
created pursuant to that certain Agreement of Limited Partnership
of AIP Properties #1 L.P. dated November 3, 1994 between AIP
Tamarac, Inc., as general partner, and Debtor, as limited
partner, and all amendments, modifications and supplements
thereof or substitutions therefore.
2. AIP Properties #2 L.P., a Delaware limited partnership
created pursuant to that certain Agreement of Limited Partnership
of AIP Properties #2 L.P. dated November 3, 1994 between AIP
Northview, Inc., as general partner, and Debtor, as limited
partner, and all amendments, modifications and supplements
thereof or substitutions therefore.
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT, dated as of May 22, 1996
(herein, as amended or modified and in effect from time to time,
called this "Agreement"), is entered into and between American
Industrial Properties REIT, whose address is 6220 North Beltline,
Suite 205, Irving, Texas 75063-2656 (referred to herein as
"Pledgor"), and The Manufacturers Life Insurance Company ("MLI"),
whose address is 200 Bloor Street East, Toronto, Ontario M4W 1E5
and The Manufacturers Life Insurance Company (U.S.A.) ("MLI
USA"), whose address is 200 Bloor Street East, Toronto, Ontario
M4W 1E5 (MLI and MLI USA are collectively referred to herein as
"Pledgee").
ARTICLE I
Definitions
The following terms, as used in this Agreement, shall have
the meanings indicated below unless the context otherwise
requires:
1.01 "Collateral Documents" shall have the defined meaning
set forth in the Settlement Agreement.
1.02 "Event of Default" shall mean any Event of Default (as
defined in Article XXI of the Settlement Agreement).
1.03 "Obligations" shall mean the following: (a) all
indebtedness of Pledgor now or hereafter evidenced by the Subject
Notes, (b) any and all past, concurrent or future modifications,
extensions, renewals, rearrangements, replacements and increases
of the Subject Notes, (c) all obligations and indebtedness of
each Obligor to Pledgee which are evidenced by or created or
incurred under the Settlement Agreement, (d) all present and
future debts and obligations of any Obligor to Pledgee under or
pursuant to the Collateral Documents, and (e) all reasonable and
actual costs incurred by Pledgee to enforce this Agreement, the
Settlement Agreement and the Collateral Documents and collect the
Obligations including but not limited to reasonable and actual
attorneys' fees, legal expenses and expenses of sale.
1.04 "Obligor" shall mean Pledgor, Patapsco #1 Limited
Partnership, and Patapsco #2 Limited Partnership, collectively.
1.05 "Option Agreement" shall mean an agreement by that
title in the form of Exhibit 24 to the Settlement Agreement.
1.06 "Option Two Price" shall mean the sum of Thirty-Six
Million Eight Hundred Thousand and 00/100 Dollars
($36,800,000.00) allocated $16,613,295.49 to Promissory Note B-1
and $20,186,704.51 to Promissory Note B-2.
1.07 "Release Price" shall mean (i) as to the shares of
stock of AIP Tamarac, Inc. the sum of $10,000,000, and (ii) as to
the shares of stock of AIP Northview, Inc. in the sum of
$400,000.
1.08 "Settlement Agreement" shall mean the Settlement
Agreement by and Between American Industrial Properties REIT,
Patapsco #1 Limited Partnership, Patapsco #2 Limited Partnership,
The Manufacturers Life Insurance Company and The Manufacturers
Life Insurance Company (U.S.A.) dated as of May 22, 1996.
1.09 "Subject Notes" shall mean (i) that certain promissory
note dated November 27, 1992 in the face amount of Twenty-Three
Million Two Hundred Sixty-One Thousand Three Hundred Seventeen
and 66/100 Dollars ($23,261,317.66), bearing interest at the rate
or rates therein stated, executed by Trammell Crow Real Estate
Investors (now known as Pledgor), and (ii) that certain
promissory note dated November 27, 1992 in the face amount of
Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by Trammell Crow
Real Estate Investors (now known as Pledgor).
ARTICLE II
Stock Pledge; Voting Rights
2.01 Pledge. As security for the prompt and complete
payment when due of all the Obligations, Pledgor hereby pledges,
assigns and transfers to the Pledgee, hereby delivers to Pledgee
and hereby grants to Pledgee a security interest in, all of the
following, whether presently existing or hereafter arising or
acquired:
(a) all of the shares of stock and other securities
described in Exhibit A, all of the certificates and/or
instruments representing such shares of stock and other
securities, and all cash equivalents, securities, instruments,
chattel paper, interest, dividends, distributions, rights and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such shares or other securities and all other
proceeds of such shares or other securities;
(b) all additional shares of stock of AIP Tamarac,
Inc. and AIP Northview, Inc. at any time and from time to time
acquired by Pledgor in any manner, all of the certificates
representing such additional shares, and all cash equivalents,
securities, instruments, chattel paper, interest, dividends,
distributions, rights and other property at any time and from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares and all
other proceeds of such shares; and
(c) all other property hereafter delivered to Pledgor
in substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash equivalents, securities, instruments,
chattel paper, interest, dividends, distributions, rights and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all thereof and all other proceeds of such property.
all of the foregoing being herein collectively called the
"Pledged Stock." Pledgor hereby delivers to Pledgee the stock
certificates representing the Pledged Stock identified in Exhibit
A, together with appropriate undated stock powers duly executed
in blank for such Pledged Stock.
2.02 Stock Dividends. If, while this Agreement is in
effect, the Pledgor shall become entitled to receive or shall
receive or shall possess any stock certificate or other
instrument or writing representing any Pledged Stock (including,
without limitation, any certificate issued in connection with or
representing a stock dividend or a distribution in connection
with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization), or any instrument,
certificate or other writing representing or constituting an
option or other right to acquire securities or other interests or
documents, whether as an addition to, in substitution of, or in
exchange for any Pledged Stock, or otherwise, the Pledgor agrees
to accept the same as the Pledgee's agent and to hold the same in
trust on behalf of and for the benefit of the Pledgee and to
deliver the same forthwith to the Pledgee in the exact form
received, with the endorsement of the Pledgor when necessary
and/or appropriate undated stock or bond powers duly executed in
blank, to be held by the Pledgee, subject to the terms of this
Agreement, as additional Pledged Stock.
2.03 Cash Dividends & Distributions. All payments received
by the Pledgor under or in respect of any of the Pledged Stock
arising directly or indirectly out of the sale, finance or
refinance of the Pledged Stock shall be held by the Pledgor in
trust for the Pledgee, shall be segregated from other funds of
the Pledgor and shall, forthwith upon receipt by the Pledgor, be
turned over to the Pledgee, in the same form as received by the
Pledgor (duly endorsed to the Pledgee, if required) to be applied
by the Pledgee to (i) the principal balance of the Subject Notes
on a pro rata basis, and (ii) to the extent provided by the
Option Agreement, to the Option Two Price on a pro rata basis.
Nothing in this Agreement is intended to or shall be construed to
modify in any respect the terms and conditions set forth in the
Option Agreement. The Pledgee shall have the sole and exclusive
right and authority to receive and apply all such dividends,
payments and distributions in accordance with the Settlement
Agreement.
2.04 Voting Rights. At any time after the occurrence of an
Event of Default, the Pledgee, at its option, may have any part
or all of the Pledged Stock registered in its name or that of its
nominee, and the Pledgor hereby covenants that, upon the
Pledgee's request, the Pledgor will cause the issuer, transfer
agent or registrar of the Pledged Stock to effect such
registration. Prior to the occurrence of an Event of Default,
the Pledgor shall retain all voting rights with respect to the
Pledged Stock, and, for that purpose, the Pledgee shall upon
written request execute and deliver to the Pledgor all necessary
proxies (which proxies shall in any event expire automatically
upon the occurrence of an Event of Default). Upon (i) the
occurrence of an Event of Default, and (ii) after delivery of
written notice to Pledgor, the Pledgee or its nominee shall have
the right to exercise all voting rights as to all shares and with
respect to all of the Pledged Stock, all other corporate rights
and all conversion, exchange, subscription or other rights,
privileges or options pertaining thereto as if it were the
absolute owner thereof, including, without limitation, the right
to exchange any or all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other
readjustment of the issuer thereof, or upon the exercise by such
issuer of any right, privilege, or option pertaining to any of
the Pledged Stock, and, in connection therewith, to deliver any
of the Pledged Stock to any committee, depository, transfer
agent, registrar or other designated agency upon such terms and
conditions as it may determine, all without liability except to
account for property actually received by it; but (i) the Pledgee
shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any
failure to do so or delay in so doing; and (ii) Pledgee may by
written notice to Pledgor relinquish, either partially or
completely in accordance with any terms or conditions Pledgee may
set forth in such notice, any or all voting rights Pledgee may
acquire pursuant to this Article 2.04.
The Pledgor shall, upon the written request of the Pledgee,
after the occurrence of an Event of Default, execute and deliver
to Pledgee irrevocable proxies with respect to the Pledged Stock
in a form satisfactory to the Pledgee. Until receipt thereof,
this Agreement shall constitute the Pledgor's proxy to the
Pledgee or its nominee to vote all shares of Pledged Stock then
registered in the Pledgor's name at any and all such times as
Pledgee has the right to vote such shares pursuant to the terms
of this Agreement.
2.05 Possession of Pledged Securities. The Pledgee shall
hold in its possession all Pledged Stock, pledged, assigned or
transferred hereunder, except as from time to time the Pledged
Stock may be required for recordation or for the purpose of
enforcing or realizing upon any right or value thereby
represented. Pledgee may, from time to time, in its sole
discretion, appoint one or more agents or trustees to hold
physical custody, for the account of the Pledgee, of any or all
Pledged Stock, subject to the provisions of the Settlement
Agreement and this Agreement.
ARTICLE III
Waivers; Standard of Care
3.01 Waiver of Certain Rights. The Pledgor to the extent it
may lawfully do so, expressly waives and releases any, every and
all rights to demand or to have all or any portion of the Pledged
Stock marshalled upon any sale, or sold in inverse order of
alienation, in any case whether made under any power of sale
granted herein or pursuant to judicial proceedings or upon any
foreclosure or any enforcement of this Agreement, and consents
and agrees that all the Pledged Stock may at any such sale be
offered and sold as an entirety.
Except as provided in Section 2.04 hereof and the Settlement
Agreement, the Pledgor hereby waives, to the extent it may
lawfully do so, presentment, demand and protest in connection
with this Agreement and any action taken by the Pledgee with
respect to the Pledged Stock.
3.02 Limitation on Duties in Respect of Pledged Stock;
Standard of Care. Beyond the duty of applying and accounting to
the Pledgor for money and other property received by it under
this Agreement, the Pledgee shall not have any duty to the
Pledgor as to any Pledged Stock in its possession or control or
in the possession or control of any agent or nominee of them or
to any income thereon or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The
Pledgor shall not be entitled to any right or remedy against the
Pledgee on account of (i) any failure by the Pledgee to have
exercised reasonable care in the custody and preservation of the
Pledged Stock if the Pledgee shall have taken such action for
that purpose as the Pledgor shall have requested in writing, or
(ii) any failure by the Pledgee to do any act with respect to the
preservation of the Pledged Stock not so requested by the Pledgor
unless such failure constitutes gross negligence or willful
misconduct. The failure of the Pledgee to comply with any
request described in this Section 3.02 shall not of itself be
deemed a failure to exercise reasonable care.
The Pledgee shall not be liable for any failure to enforce
the collection of, or realize on, any Pledged Stock or any
proceeds of Pledged Stock (and no such failure shall be deemed to
be a waiver of any right of the Pledgee hereunder) and the
Pledgee shall have no other responsibility in connection with
such collection or realization, except the responsibility to
account to the Pledgor for funds actually received.
3.03. Certain Actions Permitted to be Taken by the
Pledgee. The Pledgee may, from time to time, without notice to
the Pledgor and without incurring responsibility to, or
discharging or otherwise affecting any liability of the Pledgor
or altering or diminishing the force and effect of Pledgee's
rights hereunder, (i) retain or obtain a security interest in any
property, in addition to the Pledged Stock, to secure payment of
any of the Obligations, (ii) retain or obtain the primary or
secondary liability of any person, with respect to any of the
Obligations, (iii) resort to the Pledged Stock for payment of any
of the Obligations whether or not the Pledgee shall have resorted
to any other property securing payment of the Obligations or
shall have proceeded against any Obligor liable on any of the
Obligations, and (iv) extend, rearrange, renew, increase or
otherwise change in any way other security for any part of the
Obligations.
ARTICLE IV
Remedies on Default
4.01 Remedies. Upon the occurrence of an Event of Default,
the Pledgee shall exercise all rights and remedies of secured
parties under this Agreement, the Uniform Commercial Code and any
other applicable law as in effect in any relevant jurisdiction.
Without limiting the foregoing, the Pledgor expressly agrees that
in any such event the Pledgee may, without demand, presentment or
protest of any kind (except the notice specified below in this
Section 4.01 of time and place of public or private sale or
disposition) to or upon Pledgor or any other Person (all and each
of which demands, presentments and/or protests are hereby
expressly waived), (i) forthwith collect, receive, appropriate
and realize upon the Pledged Stock, or any part thereof, and/or
(ii) forthwith, in a commercially reasonable manner, sell,
assign, give an option or options to purchase, or otherwise
dispose of and deliver said Pledged Stock (or contract to do so),
or any part thereof, in one or more parcels at one or more public
or private sales or other dispositions, at any exchange, any
broker's board, any of the Pledgee's offices, the office of its
counsel, Ware, Snow, Fogel, Jackson & Greene, P.C. or any
premises of the Pledgor or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may
deem best, for cash or other consideration or on credit or for
future delivery without assumption of any credit risk (provided
that such credit risk is secured by the property to be disposed
of), free of any claim or right of whatsoever kind (including any
right or equity of redemption) of the Pledgor which claim, right
and equity are hereby expressly waived and releases. Pledgee, to
the extent permitted by applicable law, upon any such sale or
disposition, public or private, shall have the right to purchase
the whole or any part of said Pledged Stock so sold or conveyed.
The Pledgee will give the Pledgor reasonable written notice
of the time and place of any public sale or other disposition or
of the time after which any private sale or other disposition of
such Pledged Stock is to be made. Pledgor agrees that ten (10)
days written notice to it from the Pledgee of the time and place
of any public sale or other disposition or of the time after
which a private sale or other disposition may take place shall be
commercially reasonable notification of such matters. With
respect to any sale or disposition of any Pledged Stock, no such
written notification need be given to the Pledgor if it has
signed, after the occurrence of an Event of Default, a statement
renouncing any right to notification of sale or other
disposition.
4.02 Application of Proceeds. The proceeds of any
disposition or other action by the Pledgee shall be applied as
follows:
(a) First, to the reasonable and actual costs and
expenses incurred in connection therewith or incidental thereto
or to the care or safekeeping of any of the Pledged Stock or in
any way relating to the rights of the Pledgee hereunder,
including reasonable and actual attorneys' fees and legal
expenses;
(b) Second, to the satisfaction of the Obligations;
(c) Third, to the payment of any other amounts
required by applicable law (including, without limitation,
Section 9-504(a) of the Uniform Commercial Code); and
(c) Fourth, to the Pledgor to the extent of any
surplus proceeds.
4.03 Acknowledgments & Disclaimers regarding Private Sale.
Pledgor acknowledges and agrees that the Pledgee may comply with
limitations or restrictions in connection with any sale or other
disposition of Pledged Stock in order to avoid any violation of
applicable law or in order to obtain any required approval of the
sale or other disposition or of the purchase by any governmental
regulatory authority or official and, without limiting the
generality of the foregoing, the Pledgor acknowledges and agrees
that the Pledgee may be unable to effect a public sale or other
disposition of any or all of the Pledged Stock by reason of
certain prohibitions contained in the federal securities laws and
applicable state securities laws, but may be compelled to resort
to one or more private sales or dispositions thereof to a
restricted group of purchasers or transferees who will be obliged
to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale or other disposition may result
in prices and other terms less favorable to the seller than if
such sale were a public sale or other disposition.
Notwithstanding any such circumstances, the Pledgor acknowledges
and agrees that such compliance shall not result in any such
private sale or other disposition for such reason alone being
deemed to have been made in a commercially unreasonable manner.
The Pledgee shall not be liable or accountable to the Pledgor for
any discount allowed by reason of the fact that any Pledged Stock
is sold or transferred in compliance with any such limitation or
restriction. The Pledgee shall not be under any obligation to
delay a sale or other disposition of any of the Pledged Stock for
the period of time necessary to permit the issuer of such
securities to register such securities for public sale or other
disposition under the federal securities laws, or under
applicable state securities laws, even if the issuer would agree
to do so.
4.04 Additional Duties of Pledgor. If Pledgee elects to
exercise its right to sell or transfer all or any Pledged Stock,
after the occurrence of an Event of Default, upon written
request, the Pledgor shall from time to time furnish to the
Pledgee all such information as the Pledgee may reasonably
request in order to determine which Pledged Stock may be sold or
transferred as exempt transactions under the federal securities
laws.
4.05 Remedies Not Exclusive. No remedy conferred upon or
reserved to the Pledgee herein is intended to be exclusive of any
other remedy or remedies, but every such remedy shall be
cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity
or by statute.
4.06 Non Waiver. No delay or omission of the Pledgee to
exercise any right, remedy or power under this Agreement, the
Settlement Agreement, Collateral Documents and Subject Notes
shall impair any such right, remedy or power or shall be
construed to be a waiver of any Event of Default or an
acquiescence therein; and every right, power and remedy given by
this Agreement, the Settlement Agreement, Collateral Documents
and Subject Notes to the Pledgee may be exercised from time to
time and as often as may reasonably be deemed expedient by the
Pledgee.
4.07 Discontinued Enforcement Proceeding. In case Pledgee
has proceeded to enforce any right, remedy or power under this
Agreement, the Settlement Agreement or any of the Collateral
Documents, and the proceeding for the enforcement thereof shall
have been discontinued or abandoned for any reason or shall have
been determined adversely to the Pledgee, then and in every such
case the Pledgee shall, subject to any determination in such
proceeding and the doctrines of collateral estoppel and res
judicata, severally and respectively be restored to their former
positions and rights hereunder and under such Settlement
Agreement and Subject Notes with respect to the Pledged Stock and
in all other respects, and thereafter all rights, remedies and
powers of the Pledgee shall, subject to any such determination
and such doctrines, continue as though no such proceeding had
been taken.
4.08 Other Remedies. Pledgee shall not be obligated to
pursue or exhaust any rights or remedies as against any other
collateral securing the Obligations before pursuing or enforcing,
any rights or remedies as against any of the Pledged Stock.
ARTICLE V
Representations and Warranties of Pledgor
5.01 The Pledgor Represents and Warrants That:
(a) It has all requisite power and authority to enter
into this Agreement, to pledge the Pledged Stock, and to carry
out the transactions contemplated by this Agreement;
(b) It is the legal and beneficial owner of all of the
Pledged Stock;
(c) The shares of the Pledged Stock constitute all of
the issued and outstanding shares of AIP Tamarac, Inc. and AIP
Northview, Inc.
(d) All of the shares of the Pledged Stock have been
duly and validly issued, are fully paid and nonassessable, and
are owned by the Pledgor free of any pledge, mortgage,
hypothecation, lien, charge, encumbrance or security interest in
such shares or the proceeds thereof, except such as are granted
hereunder;
(e) The execution and delivery of this Agreement, and
the performance of its terms, will not violate or constitute a
default under the terms of any agreement, indenture or other
instrument, license, judgment, decree, order, law, statute,
ordinance or other governmental rule or regulation applicable to
the Pledgor or any of its property; and
(f) Upon delivery of the Pledged Stock to the Pledgee
or its agent, this Agreement shall create a valid first lien
upon, and perfected security interest in, the Pledged Stock and
the proceeds thereof, subject to no prior security interest,
lien, charge, encumbrance or agreement purporting to grant to any
third party a security interest in the property or assets of the
Pledgor which would include the Pledged Stock.
ARTICLE VI
Covenants of Pledgor
6.01 Negative Covenants. The Pledgor hereby covenants that,
until all of the Obligations have been satisfied in full, it will
not:
(a) Except as provided in Section 7.12 below, sell,
convey or otherwise dispose of any of the Pledged Stock, or any
interest therein or create, incur or permit to exist any pledge,
mortgage, lien, charge, encumbrance or any security interest
whatsoever in, or with respect to, any of the Pledged Stock, or
the proceeds thereof, other than that created hereby; or
(b) Except with respect to Pledged Stock which has
been released as provided in Section 7.12 below, consent to, or
approve of, the issuance of any additional shares of the Pledged
Stock; or any securities convertible voluntarily by the holder
thereof or automatically upon the occurrence or nonoccurrence of
any event or condition into, or exchangeable for, any such
shares; or any warrants, options, rights or other commitments
entitling any person to purchase or otherwise acquire any such
shares.
6.02 Affirmative Covenants. Pledgor hereby covenants, that,
until all of the Obligations have been satisfied in full, it
will, at its own expense, defend the Pledgee's right, title,
special property and security interest in and to the Pledged
Stock against the claims of any person, firm, corporation or
other entity.
ARTICLE VII
Miscellaneous
7.01 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall not
invalidate the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
7.02 Amendments and Waivers; Rights Cumulative. None of the
terms of provisions of this Agreement may be waived, altered,
modified or amended except by an instrument in writing which is
duly executed by the Pledgor and the Pledgee. No failure on the
part of the Pledgee to exercise, no course of dealing with
respect to, and no delay in exercising, any right, power or
privilege under this Agreement or the Subject Notes, Collateral
Documents or Settlement Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The rights and remedies under this Agreement are cumulative and
may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by the Settlement Agreement or
any Subject Notes or Collateral Documents or by law or in equity.
7.03 Headings. Article, subsection and other headings used
in this Agreement are for convenience only and shall not affect
the construction of this Agreement.
7.04 Notices. Notices shall be given in accordance with
Section 22.03 of the Settlement Agreement.
7.05 Limitation by Law. All rights, remedies and powers
provided in this Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this agreement are
intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent
necessary so that they will not render this Agreement invalid,
unenforceable in whole or in part, or not entitled to be
recorded, registered, or filed under the provisions of any
applicable law.
7.06 Binding Effect; Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, as provided
in the Settlement Agreement, and nothing herein is intended or
shall be construed to give any other person any right, remedy or
claim under, to or in respect of this Agreement.
7.07 Termination; Survival of Certain Provisions. Promptly
after satisfaction of all of Pledgor's Obligations, the Pledgee
shall return, without recourse or warranty, to the Pledgor the
Pledged Stock in which the Pledgee then has a security interest
and release any documents filed of record. The waivers contained
herein shall survive any reversion of the Pledged Stock to the
Pledgor or termination of this Agreement.
7.08 Applicable Law. This Agreement shall be governed by,
and be construed in accordance with, the laws of the State of
Texas without reference to principles of conflict of laws, except
as required by mandatory provisions of law.
7.09 Proceeds. The security interests granted hereunder
shall include proceeds of the Pledged Stock, whether such
proceeds arise before or after the commencement of a case under
any applicable bankruptcy law.
7.10 Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be an original and all
of which taken together shall constitute one and the same
instrument.
7.11 Further Assurances. The Pledgor will promptly execute
and deliver any and all such further instruments and documents
and take such further action the Pledgee reasonably deems
necessary in obtaining the full benefits of this Agreement and of
the rights and powers herein granted, including, without
limitation, (i) the filing of any financing or continuation
statements under the UCC or any other applicable law in effect in
any jurisdiction with respect to the liens granted hereby, and
(ii) the prompt correction of any defect which may hereafter be
discovered in the execution, delivery and acknowledgment of this
Agreement or the description of any Pledged Stock. The Pledgor
also hereby authorizes the Pledgee to file any such financing or
continuation statement without the signature of the Pledgor to
the extent permitted by applicable law.
7.12 Release. Pledgor shall be entitled to release of the
Pledged Stock subject to and in accordance with the following
provisions:
a. At the time of the release no Event of Default has
occurred.
b. The instruments or documents evidencing such
release shall be prepared at the cost of Pledgor and shall be in
a form and substance reasonably satisfactory to Pledgee.
c. Such other documentation and information relating
to the transaction giving rise to the requested release requested
by Pledgee in connection with such release shall be delivered to
Pledgee.
d. Pledgee shall have received full payment of the
full applicable Release Price in cash or immediately available
funds in accordance with the Settlement Agreement.
e. Pledgor shall not be entitled to exercise the
rights under this Section 7.12 with respect to less than One
Hundred Percent (100%) of either the AIP Tamarac, Inc. stock or
the AIP Northview, Inc. stock.
7.13 Limitation of Liability. Any obligation or liability
of Pledgor under this Agreement shall not be personally binding
upon nor shall there be any resort for the enforcement thereof to
the private property of any of its trust managers, shareholders,
officers, employees or agents, regardless of whether such
obligation or liability is in the nature of contract, tort or
otherwise.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or caused this Agreement to be duly executed and
delivered by their duly authorized officers, as of the date first
above written.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
6220 North Beltline, Suite 205
Irving, Texas 75063-2656
(214)550-6037 (Fax)
MANUFACTURERS LIFE INSURANCE COMPANY
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
200 Bloor Street East
Toronto, Ontario M4W 1E5
(416) 926-5262 (Fax)
MANUFACTURERS LIFE INSURANCE COMPANY, U.S.A.
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
200 Bloor Street East
Toronto, Ontario M4W 1E5
(416) 926-5262 (Fax)
Exhibit A
0. 100 shares of $.01 par value common stock of AIP Tamarac,
Inc., a Texas corporation, represented by Stock Certificate
Number 001, and representing all of the issued and outstanding
common stock of such entity.
1. 100 shares of $.01 par value common stock of AIP Northview,
Inc., a Texas corporation, represented by Stock Certificate
Number 001, and representing all of the issued and outstanding
common stock of such entity.
f:\wsfjgdoc\unit_49\manu0002\stockpl.agr
(SECRETARY OF STATE)
FINANCING STATEMENT
(PARTNERSHIP AND STOCK)
(Presented for filing pursuant to the Uniform Commercial Code)
1. Name and Address of Debtor:
AMERICAN INDUSTRIAL PROPERTIES REIT
6220 North Beltline Road
Suite 205
Irving, Texas 75063
2. Name and Address of Secured Party:
MANUFACTURERS LIFE INSURANCE COMPANY
200 Bloor Street East
Toronto, Ontario M4W 1E5
AND
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
200 Bloor Street East
Toronto, Ontario M4W 1E5
3. This Financing Statement covers all of Debtor's remedies,
powers, privileges, rights, titles and interests (including all
power of Debtor, if any, to pass greater title than it has
itself) of every kind and character now owned or hereafter
acquired by Debtor, created or arising in and to the following:
(a) all of the shares of stock and other securities
described in Exhibit A, all of the certificates and/or
instruments representing such shares of stock and other
securities, and all cash equivalents, securities, instruments,
chattel paper, interest, dividends, distributions, rights and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such shares or other securities and all other
proceeds of such shares or other securities;
(b) all additional shares of stock of AIP Tamarac,
Inc. and AIP Northview, Inc. at any time and from time to time
acquired by Debtor in any manner, all of the certificates
representing such additional shares, and all cash equivalents,
securities, instruments, chattel paper, interest, dividends,
distributions, rights and other property at any time and from
time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such shares and all
other proceeds of such shares;
(c) all other property hereafter delivered to Debtor
in substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such
property and all cash equivalents, securities, instruments,
chattel paper, interest, dividends, distributions, rights and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all thereof and all other proceeds of such property;
(d) the partnership interests described in Exhibit B,
all of the instruments representing such interests, and all cash
equivalents, instruments, chattel paper, interest, distributions,
rights and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of such interests and all other proceeds
of such interests;
(e) any additional interest in AIP Properties #1, L.P.
and AIP Properties #2, L.P. at any time and from time to time
acquired by Debtor in any manner, all instruments representing
such additional interests, and all cash equivalents, instruments,
chattel paper, interest, distributions, rights and other property
at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all
of such interests and all other proceeds of such interests; and
(f) all other property hereafter delivered to Debtor
in substitution for or in addition to any of the foregoing, all
instruments representing or evidencing such property and all cash
equivalents, securities, instruments, chattel paper, interest,
dividends, distributions, rights and other property at any time
and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all thereof
and all other proceeds of such property.
Together with all accessions, appurtenances and additions to and
substitutions for any of the foregoing and all products and
proceeds of any of the foregoing, together with all renewals and
replacements of any of the foregoing, all accounts, receivables,
account receivables, instruments, notes, chattel paper, documents
(including all documents of title), books, records, contract
rights and general intangibles arising in connection with any of
the foregoing.
EXECUTED as of the 22 day of May, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/ Charles W. Wolcott
Name:CHARLES W. WOLCOTT
Title:PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Exhibit A - Description of Stock
Exhibit B - Description of Partnerships
Exhibit A
0. 100 shares of $.01 par value common stock of AIP
Tamarac, Inc., a Texas corporation, represented by Stock
Certificate Number 001, and representing all of the issued and
outstanding common stock of such entity.
1. 100 shares of $.01 par value common stock of AIP
Northview, Inc., a Texas corporation, represented by Stock
Certificate Number 001, and representing all of the issued and
outstanding common stock of such entity.
Exhibit B
1. AIP Properties #1 L.P., a Delaware limited partnership
created pursuant to that certain Agreement of Limited Partnership
of AIP Properties #1 L.P. dated November 3, 1994 between AIP
Tamarac, Inc., as general partner, and Debtor, as limited
partner, and all amendments, modifications and supplements
thereof or substitutions therefore.
2. AIP Properties #2 L.P., a Delaware limited partnership
created pursuant to that certain Agreement of Limited Partnership
of AIP Properties #2 L.P. dated November 3, 1994 between AIP
Northview, Inc., as general partner, and Debtor, as limited
partner, and all amendments, modifications and supplements
thereof or substitutions therefore.
OPTION AGREEMENT
This Option Agreement is entered into as of May 22, 1996,
between The Manufacturers Life Insurance Company ("MLI"), The
Manufacturers Life Insurance Company (U.S.A.) ("MLI USA") and
American Industrial Properties REIT ("AIP").
R E C I T A L S
WHEREAS, AIP and MLI are parties to the Note Purchase
Agreement (defined below);
WHEREAS, pursuant to the Note Purchase Agreement, Promissory
Note B-1 (defined below) and Promissory Note B-2 (defined below)
were executed and delivered by Trammell Crow Real Estate
Investors REIT (now AIP) to MLI;
WHEREAS, MLI is the owner of Promissory Note B-2;
WHEREAS, MLI has assigned and endorsed over to MLI USA
Promissory Note B-1. MLI USA is the owner of Promissory Note B-
1;
WHEREAS, AIP was formerly known as Trammell Crow Real Estate
Investors REIT;
WHEREAS, as of May 22, 1996, the principal balance due and
owing by AIP to MLI USA evidenced by Promissory Note B-1 was
$20,423,153.06;
WHEREAS, as of May 22, 1996, the principal balance due and
owing by AIP to MLI evidenced by Promissory Note B-2 was
$24,816,037.03;
WHEREAS, as of the May 22, 1996, the unpaid accrued interest
due and owing by AIP to MLI USA on Promissory Note B-1 was
$3,223,832.94;
WHEREAS, as of the May 22, 1996, the unpaid accrued interest
due and owing by AIP to MLI on Promissory Note B-2 was
$3,917,257.89;
WHEREAS, AIP has previously defaulted on its obligations
under the terms of the (i) Note Purchase Agreement, and (ii)
Subject Notes (as defined below);
WHEREAS, MLI and MLI USA were entitled to and did in fact
accelerate the maturity of Promissory Note B-1 and Promissory
Note B-2 in accordance with the terms of the Subject Notes and
the Note Purchase Agreement. The indebtedness evidenced by the
Subject Notes is fully matured, due and owing, subject now to the
provisions of the Settlement Agreement;
WHEREAS, on the date of this Agreement, a Settlement
Agreement has been entered into by and between MLI, MLI USA, AIP,
Patapsco #1 Limited Partnership, and Patapsco #2 Limited
Partnership entitled Settlement Agreement ("Settlement
Agreement") which supersedes and replaces certain articles of the
Note Purchase Agreement as provided in the Settlement Agreement;
WHEREAS, AIP's obligations to MLI and MLI USA are secured
pursuant to the Collateral Documents (as defined below);
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
Definitions
1.01 "AIP" shall mean American Industrial Properties REIT.
1.02 "Collateral Documents" shall have the same meaning as
set forth in the Settlement Agreement.
1.03 "Default" shall have the same meaning as set forth in
the Settlement Agreement.
1.04 "Event of Default" shall have the same meaning as set
forth in the Settlement Agreement.
1.05 "Initial Option Exercise Period" shall mean the period
described in Section .4.01
1.06 "MLI" shall mean The Manufacturers Life Insurance
Company.
1.07 "MLI USA" shall mean The Manufacturers Life Insurance
Company (U.S.A.).
1.08 "Option One" shall mean the option described in Article
II.
1.09 "Option Two Extension Period" shall mean the period
described in Section 4.02.
1.10 "Option Two" shall mean the option described in Article
III.
1.11 "Option Two Price" shall mean the sum of Thirty-Six
Million Eight Hundred Thousand and 00/100 Dollars
($36,800,000.00) allocated $16,613,295.49 to Promissory Note B-1
and $20,186,704.51 to Promissory Note B-2..
1.12 "Promissory Note B-1" shall mean a promissory note,
dated February 27, 1992, in the original face amount of Nineteen
Million One Hundred Forty-Three Thousand Six Hundred Forty-Six
and 92/100 Dollars ($19,143,646.92) executed by Trammell Crow
Real Estate Investors (now AIP) in favor of MLI.
1.13 "Promissory Note B-2" shall mean a promissory note,
dated February 27, 1992, in the original face amount of Twenty-
Three Million Two Hundred Sixty-One Thousand Three Hundred
Seventeen and 66/100 Dollars ($23,261,317.66) executed by
Trammell Crow Real Estate Investors (now AIP) in favor of MLI.
1.14 "Second Option Two Extension Period" shall mean the
period described in Section 4.04.
1.15 "Settlement Agreement" shall mean the Settlement
Agreement entered into by and between MLI, MLI USA, AIP, Patapsco
#1 Limited Partnership, and Patapsco #2 Limited Partnership dated
the date of this Agreement.
1.16 "Subject Notes" shall mean Promissory Note B-1 and
Promissory Note B-2.
ARTICLE II
Option One
2.01 Grant of Option. Subject to strict adherence to the
terms and conditions contained in this Agreement, MLI and MLI USA
hereby grant to AIP the option to earn a credit in the amount of
Four Million Two Hundred Nineteen Thousand Five Hundred Ninety-
Five and 5/100 Dollars ($4,219,595.05) against the outstanding
principal balance then due and owing on the Subject Notes.
2.02 Exercise of Option One. To exercise Option One and
earn the credit referenced in Section 2.01 above, AIP, Patapsco
#1 Limited Partnership and Patapsco #2 Limited Partnership must
during the Initial Option Exercise Period make payments to MLI
and MLI USA totaling at least Twenty-Five Million and 00/100
Dollars ($25,000,000.00) exclusive of payments made pursuant to
Sections 3.02, 6.04(d), 7.02 and 7.03 of the Settlement
Agreement. The amount of the payments (other than payments made
pursuant to Sections 3.02, 6.04(d), 7.02 and 7.03 of the
Settlement Agreement) shall be credited pro rata to the principal
balances of the Subject Notes and the Option Two Price as and
when such payments are made. Option One may be exercised at any
time prior to expiration of the Initial Option Exercise Period
provided that each of the following conditions are timely and
fully satisfied by AIP, Patapsco #1 Limited Partnership and
Patapsco #2 Limited Partnership:
(a) Condition No. 1. No Event of Default shall have
occurred during the Initial Option Exercise Period.
(b) Condition No. 2. As of the date of exercise of
Option One, all payments then due and owing pursuant to Sections
7.02, 7.03, 7.04 and 7.05 of the Settlement Agreement must have
been made to MLI and MLI USA by AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership.
2.03 Effect of Exercise of Option One. If the requirements
to exercise Option One are satisfied, a credit of Four Million
Two Hundred Nineteen Thousand Five Hundred Ninety-Five and 5/100
Dollars ($4,219,595.05) shall be applied pro rata to the then
outstanding principal balance of the Subject Notes effective as
of the date AIP has made the required Twenty-Five Million and
00/100 Dollars ($25,000,000.00) in payments in full as provided
in Section 2.02. The effect of the timely and proper exercise of
Option One will be to reduce the outstanding principal balance of
the Subject Notes by Four Million Two Hundred Nineteen Thousand
Five Hundred Ninety-Five and 5/100 Dollars ($4,219,595.05) in
addition to all other principal payments made by AIP, including
the Twenty-Five Million and 00/100 Dollars ($25,000,000.00) paid
by AIP during the Initial Option Exercise Period.
ARTICLE III
Option Two
3.01 Grant of Option. Subject to strict adherence to the
terms and conditions contained in this Agreement, MLI and MLI USA
hereby grant to AIP the option to repay the Subject Notes in full
by paying to MLI and MLI USA the full amount of the applicable
remaining balance of the Option Two Price prior to expiration of
the Initial Option Exercise Period. Provided that the conditions
set forth in Section 4.03 are strictly adhered to and timely and
fully satisfied and provided further that all other terms and
conditions contained in this Agreement are strictly adhered to
and timely and full satisfied, MLI and MLI USA hereby further
grant AIP the option to repay the Subject Notes in full by paying
to MLI and MLI USA the full amount of the applicable remaining
balance of the Option Two Price prior to expiration of the Option
Two Extension Period. Provided that the conditions set forth in
Section 4.05 are strictly adhered to and timely and fully
satisfied and provided further that all other terms and
conditions contained in this Agreement are strictly adhered to
and timely and fully satisfied, MLI and MLI USA hereby grant to
AIP the option to repay the Subject Notes in full by paying to
MLI and MLI USA the full amount of the applicable remaining
balance of the Option Two Price prior to expiration of the Second
Option Two Extension Period.
3.02 Exercise of Option Two. To exercise Option Two AIP
must timely pay to MLI and MLI USA the full amount of the
remaining balance of the Option Two Price as provided in Section
3.01. Option Two may be exercised if and only if each of the
following conditions are timely and fully satisfied by AIP,
Patapsco #1 Limited Partnership and Patapsco #2 Limited
Partnership:
(a) Condition No. 1. No Event of Default shall have
occurred prior to the exercise of Option Two.
(b) Condition No. 2. As of the date of exercise of
Option Two, all payments then due and owing pursuant to Sections
7.02, 7.03, 7.04 and 7.05 of the Settlement Agreement must have
been made by AIP, Patapsco #1 Limited Partnership and Patapsco #2
Limited Partnership to MLI and MLI USA.
3.03 Effect of Exercise of Option Two. Upon payment of the
Option Two Price, in strict compliance with the terms of this
Agreement, the Subject Notes shall be deemed paid in full.
ARTICLE IV
Exercise Periods
4.01 Initial Option Exercise Period. The Initial Option
Exercise Period shall be from the date of this Agreement until
the earlier of (i) 5:00 p.m., Central Standard Time, on November
23, 1996, or (ii) the occurrence of an Event of Default.
4.02 Option Two Extension Period. The Option Two Extension
Period shall be from 5:00 p.m., Central Standard Time, November
23, 1996, until the earlier of (i) 5:00 p.m., Central Standard
Time, March 31, 1997, or (ii) the occurrence of an Event of
Default.
4.03 Conditions to Option Two Extension Period. There shall
be an Option Two Extension Period if and only if each of the
following conditions are strictly adhered to and timely and fully
satisfied by AIP, Patapsco #1 Limited Partnership, and Patapsco
#2 Limited Partnership.
a. Condition No. 1. No Event of Default shall have
occurred during the Initial Option Exercise Period.
b. Condition No. 2. All payments then due and owing
pursuant to Sections 7.02, 7.03, 7.04 and 7.05 of the Settlement
Agreement must have been made to MLI and MLI USA by AIP, Patapsco
#1 Limited Partnership and Patapsco #2 Limited Partnership during
the Initial Option Exercise Period.
c. Condition No. 3. During the Initial Option
Exercise Period, AIP, Patapsco #1 Limited Partnership and
Patapsco #2 Limited Partnership must have made principal payments
to MLI and MLI USA totaling at least Twenty-Five Million and
00/100 Dollars ($25,000,000), exclusive of the payment made
pursuant to Section 6.04(d) of the Settlement Agreement. The
principal payments (excluding the payment made pursuant to
Section 6.04(d) of the Settlement Agreement) shall be applied
against the Option Two Price and the principal balances of the
Subject Notes, dollar for dollar, as and when made. Payments
made pursuant to Sections 3.02, 7.02 and 7.03 of the Settlement
Agreement will not reduce or be applied against the Option Two
Price.
d. Condition No. 4. On or before 5:00 p.m., Central
Standard Time, November 23, 1996, AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership must have made an
additional principal reduction payment to be applied pro rata to
the then outstanding principal balance of the Subject Notes in
the amount of Two Hundred Fifty Thousand and 00/100 Dollars
($250,000.00). This payment is in addition to payments made
pursuant to Sections 3.02, 7.02, 7.03, 7.04 and 7.05 of the
Settlement Agreement. This payment shall not reduce or be
applied against the Option Two Price.
4.04 Second Option Two Extension Period. The Second Option
Two Extension Period shall be from 5:00 p.m., Central Standard
Time, March 31, 1997, until the earlier of (i) 5:00 p.m., Central
Standard Time, June 30, 1997, or (ii) the occurrence of an Event
of Default.
4.05 Conditions to Second Option Two Extension Period.
There shall be a Second Option Two Extension Period if and only
if each of the following conditions are strictly adhered to and
timely and fully satisfied by AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership.
a. Condition No. 1. All of the conditions set forth
in Section 4.03 must have been strictly adhered to and timely and
fully satisfied.
b. Condition No. 2. No Event of Default shall have
occurred during the Option Two Extension Period.
c. Condition No. 3. All payments to be made during
the Option Two Extension Period pursuant to Sections 7.02, 7.03,
7.04 and 7.05 of the Settlement Agreement must have been made to
MLI and MLI USA by AIP, Patapsco #1 Limited Partnership and
Patapsco #2 Limited Partnership.
d. Condition No. 4. On or before 5:00 p.m., Central
Standard Time, March 31, 1997, AIP, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership must have made an
additional principal reduction payment to be applied pro rata to
the then outstanding principal balance of the Subject Notes in
the amount of One Hundred Fifty Thousand and 00/100 Dollars
($150,000.00). This payment is in addition to payments made
pursuant to Sections 3.02, 6.04(d), 7.02, 7.03, 7.04 and 7.05 of
the Settlement Agreement. This payment shall not reduce or be
applied against the Option Two Price.
ARTICLE V
Miscellaneous
5.01 Payments made by AIP pursuant to this Agreement shall
be delivered to MLI and MLI USA in the manner provided in the
Settlement Agreement.
5.02 Time is of the essence with respect to the satisfaction
of the obligations and requirements set forth in this Agreement.
The options granted herein may only be exercised if the
requirements for complete and timely tender and performance are
fully satisfied. No additional credit or discount of the Subject
Notes shall be earned by partial performance of the requirements.
The options created hereunder expire and terminate immediately
upon the occurrence of an Event of Default. Under no
circumstances can AIP exercise an option created hereunder after
the occurrence of an Event of Default.
5.03 This Agreement is not intended by the parties to be an
executory contract within the meaning of 11 U.S.C. 365. This
Agreement and the Settlement Agreement are contracts for the
financial accommodation of AIP within the meaning of 11 U.S.C.
365(c)(2).
5.04 Severability. If any term, provision, or covenant of
this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms,
provisions and covenants of this Agreement shall continue in full
force and effect and shall in no way be affected, impaired or
invalidated thereby.
5.05 Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the
benefit of AIP, MLI and MLI USA and their respective successors
and assigns. This Agreement is not to be construed as granting
any option or right to Patapsco #1 Limited Partnership, Patapsco
#2 Limited Partnership, AIP Properties #1, L.P., AIP Properties
#2, L.P., AIP Tamarac, Inc., AIP Northview, Inc. or any person or
entity other than AIP. AIP may not assign its rights hereunder
as to all or any part of Option One or Option Two to any person
or persons without the prior written consent of MLI and MLI USA.
MLI and MLI USA may not assign their respective rights or
obligations hereunder except in accordance with the Settlement
Agreement.
5.06 Waiver and Amendment. This Agreement may not be
amended, supplemented or modified at any time, except upon the
execution and delivery of an instrument in writing signed on
behalf of each party hereto.
5.07 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be
given (and shall be deemed to have been duly received if so
given) by delivery by cable, telegram, telex, facsimile or by
registered or certified mail, postage prepaid, return receipt
requested, to the respective parties as follows:
If to AIP: American Industrial Properties REIT
6220 North Beltline, Suite 205
Irving, Texas 75063-2656
Attention: Mr. Charles W. Wolcott,
President
Telecopy No.: (214) 550-6037
with copies to: Bryan Goolsby
Liddell, Sapp, Zivley, Hill
& LaBoon, L.L.P.
2200 Ross Avenue, Suite 900
Dallas, Texas 75201
Telecopy No.: (214) 220-4899
If to MLI and MLI USA: Manulife Financial
200 Bloor Street East
Toronto, Ontario M4W 1E5
Attention: Stewart Sprague
Telecopy No.: (416) 926-5262
with copies to: Phil Snow
Ware, Snow, Fogel, Jackson & Greene, P.C.
1111 Bagby, 49th Floor
Houston, Texas 77002
Telecopy No.: (713) 659-6262
or such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall only be effective upon receipt.
5.08 Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of
Texas.
5.09 Entire Agreement. This Agreement and the Settlement
Agreement (a) constitute the entire agreement, and supersede all
prior agreements and understandings, between the parties with
respect to the subject matter hereof, and (b) does not confer
upon any person not a party hereto or an assignee pursuant to the
provisions hereof, any rights or remedies hereunder. To the
extent of any conflict between this Agreement and the Settlement
Agreement, this Agreement shall Control.
5.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
5.11 Headings. The section headings herein are for
convenience and reference only and shall not affect the
construction or interpretation of any term, provision or covenant
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:/s/Charles Wolcott
Name:Charles W. Wolcott
Title:President and Chief Executive Officer
THE MANUFACTURERS LIFE INSURANCE COMPANY
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
THE MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
By:/s/Ray Britt
Name:Raymond L. Britt
Title:Vice President
(SAMPLE-STATE OF CALIFORNIA)
RECORDING REQUESTED BY: )
)
)
WHEN RECORDED MAIL TO: )
)
Ware, Snow, Fogel, Jackson & Greene )
1111 Bagby, 49th Floor )
Houston, TX 77002 )
Attn: Phil F. Snow, Esq. )
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
AND FIXTURE FILING
This instrument ("Deed of Trust"), executed effective as of
May 22, 1996, is a deed of trust from AMERICAN INDUSTRIAL
PROPERTIES REIT, a real estate investment trust duly organized
under the laws of the State of Texas, whose address for purposes
hereof is 6220 North Beltline, Suite 205, Irving, Texas 75063
(called the "Mortgagor", "Debtor" and "Assignor") to Paul
Gallagher, as Trustee (called the "Trustee"), whose address is
200 Bloor Street East, Toronto, Ontario M4W 1E5, for the use and
benefit of MANUFACTURERS LIFE INSURANCE COMPANY, a corporation
duly organized under the laws of Canada, whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5 and MANUFACTURERS
LIFE INSURANCE COMPANY (U.S.A), a corporation organized under the
laws of the State of Michigan, whose address is 200 Bloor Street
East, Toronto, Ontario M4W 1E5. MANUFACTURERS LIFE INSURANCE
COMPANY and MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) are
collectively referred to herein as the "Mortgagee", "Secured
Party", and "Assignee". This instrument is also an assignment of
rents and leases from Assignor to Assignee, and a security
agreement between Debtor and Secured Party.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO THE TRUSTEE
Section 1.1 Mortgagor's Conveyance of the Mortgaged
Property to the Trustee to Secure the Debt. To secure payment of
principal, lawful interest and other elements of the Debt
described and defined in Article 2, in consideration of the uses
and trusts (the "Trust") established and continued by this Deed
of Trust and in consideration of Ten Dollars ($10.00) and other
valuable consideration paid before delivery of this Deed of Trust
by each of Trustee and Mortgagee to Mortgagor, who hereby
acknowledges its receipt and that it is reasonably equivalent
value for this Deed of Trust and all other security and rights
given by Mortgagor, Mortgagor hereby irrevocably Grants, Sells,
Conveys, Transfers, Assigns, Sets Over, Confirms and Delivers
unto the Trustee and to its successors or substitutes in the
Trust, IN TRUST WITH POWER OF SALE, the following
property (collectively, the "Mortgaged Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Mortgagor's estate, right, title and interest in and to
all easements and rights-of-way for utilities, ingress or egress
to or from said property and (ii) all interests of Mortgagor in
and to all streets, rights-of-way, alleys or strips of land
adjoining said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Mortgagor and Mortgagee hereby irrevocably
declare to be real estate and part of the Real Property,
including all water, sewage and drainage facilities, wells,
treatment plants, supply, collection and distribution systems,
paving, landscaping and other improvements (collectively, the
"Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Mortgagor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Mortgagor and
Mortgagee hereby also irrevocably declare to be real estate and
part of the Real Property.
(d) Leases. All Leases (as such term is defined in
Section 9.1 below).
(e) Utilities. All Mortgagor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Mortgagor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Mortgagor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(f) After-acquired Property. All right, title and
interest acquired by Mortgagor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Deed of Trust.
(g) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Mortgagor and
incident or appertaining to the Real Property, Improvements,
Fixtures and Equipment, Leases or Utilities Capacity or any part
of them.
(h) Oil and Gas. All Mortgagor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(i) Reversions and Remainders. Any and all rights and
estates of Mortgagor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(j) Contractual Rights. All Mortgagor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Mortgagor's other
benefits thereunder.
(k) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Mortgagor now has,
or at any time hereafter acquires, in and to any of the
foregoing, including the proceeds from condemnation, or
threatened condemnation, and the proceeds of any and all insur
ance covering any part of the foregoing; and all related parts,
accessions and accessories to any of the foregoing and all
replacements or substitutions therefor, as well as all other
Improvements, Fixtures and Equipment, Leases, Utilities Capacity
and Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. TO HAVE AND TO
HOLD the Mortgaged Property, together with every right,
privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Trustee, his successors or
substitutes in the Trust and his or their assigns, forever.
Mortgagor represents that Mortgagor is the lawful owner of the
Mortgaged Property with good title and has the right and
authority to mortgage and convey the Mortgaged Property, and that
the Mortgaged Property is free and clear of all liens, claims and
encumbrances (except only those expressly referred to or
described in Exhibit B) (collectively the "Permitted
Encumbrances"). Mortgagor hereby binds Mortgagor and Mortgagor's
successors and assigns to forever WARRANT and DEFEND the
Mortgaged Property and every part of it unto the Trustee, his
successors or substitutes in the Trust, and his or their assigns,
against the claims and demands of every person whomsoever
lawfully claiming or to claim it or any part of it (such warranty
to supersede any provision contained in this Deed of Trust
limiting the liability of Mortgagor) by, through and under
Mortgagor, but not otherwise; subject, however, to the Permitted
Encumbrances.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Conveyance in Trust to Secure Designated
Obligations. This conveyance to the Trustee is in trust to
secure all of the following present and future debt and
obligations:
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT),
(ii) a promissory note dated November 27, 1992 in the face amount
of Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by executed by
Trammell Crow Real Estate Investors (now known as American
Industrial Properties REIT) and (iii) any and all past,
concurrent or future modifications, extensions, renewals,
rearrangements, replacements and increases of such notes
(collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership to Mortgagee
which are evidenced by or created or incurred under (i) an
agreement titled Settlement Agreement dated as of May 22, 1996,
entered into by and between Mortgagee, Mortgagor, Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership (the
"Settlement Agreement"). Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership are hereinafter
collectively referred to as "Obligor", (ii) all agreements
provided for in the Settlement Agreement, including any
mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between Mortgagor and Mortgagee and
provided for in the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Deed of Trust.
(d) Advances and Other Obligations Pursuant to this
Deed of Trust's Provisions. Any and all sums and the interest
which accrues on them as provided in this Deed of Trust which
Mortgagee may advance or which Mortgagor may owe Mortgagee
pursuant to this Deed of Trust on account of Mortgagor's failure
to keep, observe or perform any of Mortgagor's covenants under
this Deed of Trust.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Mortgagor or any Obligor pursuant to the Settlement Agreement
("Credit Documents") now or in the future governing, evidencing,
guaranteeing or securing or otherwise relating to payment of all
or any part of the debt evidenced by the Notes, and/or the
Settlement Agreement, or (2) all supplements, amendments,
restatements, renewals, extensions, rearrangements, increases,
expansions or replacements of them.
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Mortgagee, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Mortgagee in enforcing any of the Credit Documents.
All liens, assignments and security interests created,
represented or continued by this Deed of Trust, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Mortgagor or Mortgagor's successors or assigns,
except only statutory super priority liens for nondelinquent
taxes and those other liens (if any) expressly identified and
stated in this Deed of Trust to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Deed of Trust, Mortgagor, as
Debtor, and referred to in this Article as "Debtor" (whether one
or more) hereby grants to Mortgagee, as Secured Party, and
referred to in this Article as "Secured Party" (whether one or
more), a security interest in all of Debtor's remedies, powers,
privileges, rights, titles and interests (including all of
Debtor's power, if any, to pass greater title than it has itself)
of every kind and character now owned or hereafter acquired,
created or arising in and to (i) the Mortgaged Property
(including both that now and that hereafter existing) to the full
extent that the Mortgaged Property may be subject to the Uniform
Commercial Code of the state or states where the Mortgaged
Property is situated (the "UCC"), (ii) all equipment, accounts,
general intangibles, fixtures, inventory, chattel paper, notes,
documents and other personal property owned by Debtor and used,
intended or acquired for use, on, or in connection with the use
or operation of, the Mortgaged Property, or otherwise related to
the Mortgaged Property, and all products and proceeds of it,
including all security deposits under Leases now or at any time
hereafter held by or for Debtor's benefit, all monetary deposits
which Debtor has been required to give to any public or private
utility with respect to utility services furnished to the
Mortgaged Property, all funds, accounts, instruments, accounts
receivable, documents, trademarks, trade names and symbols used
in connection therewith, and notes or chattel paper arising from
or by virtue of any transactions related to the Mortgaged
Property, all permits, licenses, franchises, certificates, and
other rights and privileges obtained in connection with the
Mortgaged Property, and all guaranties and warranties obtained
with respect to all improvements, equipment, furniture,
furnishings, personal property and components of any thereof
located on or installed at the Mortgaged Property and (iii) the
following described property:
(a) Contracts. All contracts now or hereafter entered
into by and between Debtor and any general contractor or between
Debtor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Debtor or any of the Mortgaged Property), as well as all right,
title and interest of Debtor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Debtor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Debtor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Debtor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Debtor's Covenants Concerning Personalty
Subject to the UCC. Debtor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Deed of Trust to Secured Party or the Trustee,
upon or at any time after the occurrence of an Event of Default
(defined in Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Debtor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with
respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to sell or
rent the same for the account of Debtor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Debtor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Debtor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Debtor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Debtor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Debtor resulting from any failure to sell or let the
Collateral, or any part thereof, or from other act or omission of
Secured Party with respect to the Collateral unless such loss is
caused by the gross negligence and willful misconduct of Secured
Party, nor shall Secured Party be obligated to perform or
discharge any obligation, duty, or liability under any sale or
lease agreement covering the Collateral or any part thereof or
under or by reason of this instrument or the exercise of rights
or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Debtor has or may have under any rule of law or statute now
existing or hereafter adopted. To the extent notice is required
by applicable law, Secured Party shall give Debtor written notice
at the address set forth herein (which shall satisfy any
requirement of notice or reasonable notice in any applicable
statute) of Secured Party's intention to make any such public or
private sale. Such notice (if any is required by applicable law)
shall be personally delivered or mailed, postage prepaid, at
least ten (10) calendar days before the date fixed for a public
sale, or at least (10) calendar days before the date after which
the private sale or other disposition is to be made, unless the
Collateral is of a type customarily sold on a recognized market,
is perishable or threatens to decline speedily in value. Such
notice (if any is required by applicable law), in case of public
sale, shall state the time and place fixed for such sale or, in
case of private sale or other disposition other than a public
sale, the time after which the private sale or other such
disposition is to be made. Any public sale shall be held at such
time or times, within the ordinary business hours and at such
place or places, as Secured Party may fix in the notice of such
sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but
Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and
in case of any such failure, such Collateral may again be sold
upon like notice. Each and every method of disposition described
in this Section shall constitute disposition in a commercially
reasonable manner. Mortgagor, to the extent applicable, shall
remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party take
possession of the Collateral or any part thereof before the time
that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of disposition of
the Collateral to the Debt, such proceeds shall be applied to the
reasonable and actual expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and the
reasonable and actual attorneys' fees and legal expenses incurred
by Secured Party, each Obligor, to the extent applicable, to
remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the whole
of the Collateral shall not exhaust the rights of Secured Party
hereunder, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Deed of Trust
and the security interest created hereby shall remain in full
force and effect as to the unsold portion of the Collateral just
as though no sale had been made; and
(v) in the event any sale hereunder is not completed or
is defective in the opinion of Secured Party, such sale shall not
exhaust the rights of Secured Party hereunder and Secured Party
shall have the right to cause a subsequent sale or sales to be
made hereunder; and
(vi) any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument
evidencing any foreclosure sale hereunder as to nonpayment of any
indebtedness or as to the occurrence of any Event of Default, or
as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place and terms of
sale and the Collateral to be sold having been duly given, as to
any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(vii) Secured Party may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but in the name and on behalf
of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Debtor. Debtor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Debtor and agrees that
Secured Party may proceed against any Obligor for the amount of
the Debt owed to Secured Party without taking any action against
any other Obligor or any other person or entity and without
selling or otherwise proceeding against or applying any of the
Collateral in Secured Party's possession.
Section 3.3 UCC Rights are not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Deed of
Trust, such election shall not preclude Secured Party or the
Trustee from exercising any or all of the rights and remedies
granted by the other Articles of this Deed of Trust as to the
remaining personal property or fixtures.
Section 3.4 Deed of Trust is Also Financing Statement.
Secured Party may, at its election, at any time after delivery of
this Deed of Trust, file an original of this Deed of Trust as a
financing statement or sign one or more copies of this Deed of
Trust to use as a UCC financing statement. Secured Party's
signature may be placed between the last sentence of this Deed of
Trust and Debtor's acknowledgment or may follow Debtor's
acknowledgment. Secured Party's signature need not be
acknowledged and is not necessary to the effectiveness of this
Deed of Trust as a deed of trust, mortgage, assignment, pledge,
security agreement or (unless otherwise required by applicable
law) as a financing statement.
Section 3.5 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Debtor will not execute and there will not be filed in any public
office any financing statements affecting the Collateral other
than financing statements in favor of Secured Party under this
Deed of Trust, unless prior written specific consent and approval
of Secured Party shall have been first obtained.
Section 3.6 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Deed of Trust, a financing statement or statements and one
or more continuation statements in any jurisdiction where Secured
Party deems it necessary, and at Secured Party's request, Debtor
will join Secured Party in executing one or more financing
statements, continuation statements or both pursuant to the UCC,
in form satisfactory to Secured Party, and will pay the costs of
filing or recording them, in all public offices at any time and
from time to time whenever filing or recording of this Deed of
Trust, any financing statement or any continuation statement is
deemed by Secured Party or its counsel to be necessary or
desirable.
Section 3.7 Fixtures. Certain of the Collateral is or
will become "fixtures" (as that term is defined in the UCC) on
the Real Property, and when this Deed of Trust is filed for
record in the real estate records of the county where such
fixtures are situated, it shall also automatically operate as a
fixture filing pursuant to the terms of Sections 9313 and 9402 of
the California Commercial Code with respect to such of the
Collateral which is or may become fixtures. In that regard, the
following information is provided:
Name of Debtor: American Industrial Properties
REIT, a Real Estate Investment Trust duly organized under the
laws of the State of Texas
Address of Debtor: 6220 North Beltline, Suite 205
Irving, TX 75063
Name of
Secured Party: Manufacturer's Life Insurance Company,
a corporation duly organized under
the laws of Canada
Address of
Secured Party: 200 Bloor Street, East
Toronto, Ontario M4W 1E5
Name of Additional
Secured Party: Manufacturer's Life Insurance Company
(U.S.A), a corporation organized under
the laws of Michigan
Address of Additional
Secured Party: 200 Bloor Street, East
Toronto, Ontario M4W 1E5
Section 3.8 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Debtor hereby
assigns to Secured Party all of Debtor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Deed of Trust shall automatically terminate this
assignment.
Section 3.9 Debtor's Warranties Concerning Collateral.
Debtor warrants and represents to Secured Party that Debtor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Deed of Trust (such
warranty to supersede any provision contained in this Deed of
Trust limiting the liability of Mortgagor). Debtor agrees to
defend the Collateral and its proceeds against all claims and
demands of any person at any time claiming the Collateral, its
proceeds or any interest in either. Debtor also warrants and
represents that Debtor has not heretofore signed any financing
statement directly or indirectly affecting the Collateral or any
part of it which has not been completely terminated of record,
and no such financing statement signed by Debtor is now on file
in any public office except only those statements (if any) true
and correct copies of which Debtor has actually delivered to
Secured Party.
Section 3.10 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Debtor requests in writing,
but failure of Secured Party to comply with such request shall
not of itself be deemed a failure to exercise reasonable care,
and no failure of Secured Party to take any action not so
requested by Debtor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.11 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Debtor or discharging or otherwise affecting any liability of
Debtor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
MORTGAGOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Mortgagee. To
better secure the Debt, Mortgagor covenants and agrees with the
Trustee and his substitutes and successors in the Trust, for the
use and benefit of Mortgagee and with the intent that the
Trustee, Mortgagee or both may enforce these covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Mortgagee granted in, secured by or ancillary to this Deed of
Trust shall be considered as exclusive, but each shall be
cumulative of all others which Mortgagee or the Trustee may now
or hereafter have.
(b) Mortgagor Waives Marshaling of Assets and Sale in
Inverse Order of Alienation Rights. Mortgagor hereby irrevocably
WAIVES all rights of marshalling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Mortgagor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Mortgagor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this Deed of
Trust should be discovered or arise at any time in the future
then, unless Mortgagee is the only holder of it, or Mortgagee has
given specific prior written consent to it, Mortgagor agrees to
promptly discharge, remove, bond around or insure around it from
the Mortgaged Property. Mortgagor will notify Mortgagee in
writing within five (5) days of the time that Mortgagor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Deed of Trust, Mortgagor agrees to
provide, maintain and keep in force the insurance coverages
relating to the Property substantially similar to those
maintained by Mortgagor as of the date of execution of this Deed
of Trust. Mortgagor agrees to have each such policy modified
within thirty (30) days of the date of this Agreement to (i) name
Mortgagee as additional insured, and (ii) expressly prohibit
cancellation or modification of insurance without the insurer
agreeing to endeavor to give thirty (30) days' written notice to
Mortgagee. Mortgagor agrees to furnish due proof of payment of
the premiums for all such insurance to Mortgagee promptly after
each such payment is made and in any case at least fifteen (15)
days before payment becomes delinquent.
(e) Mortgagee's Rights to Collect Insurance Proceeds.
Mortgagor hereby assigns to Mortgagee the exclusive right to
collect any and all monies that may become payable under any
insurance policies covering any part of the Property, or any risk
to or about the Property. Mortgagee shall fully cooperate with
and assist Mortgagor with respect to the filing of insurance
claims and the collection of insurance proceeds so long as
Mortgagee reasonably concurs with Mortgagor's actions with
respect thereto and all reasonable and actual costs incurred by
Mortgagee in connection with such cooperation and participation
are promptly paid or reimbursed by Mortgagor upon the request of
Mortgagee.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Deed of Trust
shall automatically constitute foreclosure upon all policies of
insurance insuring any part of or risk to the Property and all
claims thereunder arising from post-foreclosure events. The
successful bidder or bidders for the Property at foreclosure, as
their respective interests may appear, shall automatically accede
to all of Mortgagor's rights in, under and to such policies and
all post-foreclosure event claims, and such bidder(s) shall be
named as insured(s) on request, whether or not the trustee's deed
or bill of sale to any such successful bidder mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Mortgagor may, at its option, unless an
Event of Default has occurred, either (i) cause Mortgagee to
apply all such monies or any part thereof toward the payment of
the Debt , whether the same be then due or not, such application
to be made in such manner and order as Mortgagee shall elect, and
any balance of insurance proceeds remaining after such
application shall be delivered to Mortgagor or (ii) cause
Mortgagee to disburse to Mortgagor, from an interest-bearing
account maintained with Mortgagee, any insurance proceeds
received to be used by Mortgagor solely for the repair,
rebuilding and restoration (hereinafter collectively referred to
as the "Restoration Work") of the Property; provided, however,
that the obligation of Mortgagee to disburse to Mortgagor such
insurance proceeds shall be and is hereby made subject to
compliance by Mortgagor with the following terms, conditions and
procedures (hereinafter collectively referred to as the
"Disbursement Procedures"), to wit:
(1) There shall have been submitted to Mortgagee,
and Mortgagee shall have approved, which approval shall not be
unreasonably withheld, the following:
(i) Plans and Specifications for the
Restoration Work prepared by an architect reasonably satisfactory
to Mortgagee (hereinafter referred to as the "Restoration
Architect");
(ii) a cost breakdown and analysis
(hereinafter referred to as the "Estimated Cost") certified to
Mortgagee by the Restoration Architect, stating that the
Restoration Work can be completed in accordance with the above-
mentioned Plans and Specifications at the price set forth in the
"Restoration Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Mortgagee pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work
must not exceed the proceeds of the insurance and other funds of
Mortgagor that are available for application thereto;
(3) After and subject to compliance with all of
the foregoing, the amount held by Mortgagee and available for
restoration shall be disbursed by Mortgagee to Mortgagor
periodically (but not more frequently than monthly) as the
Restoration Work progresses, as follows:
(i) Mortgagee shall have received in
connection with each such requested disbursement a draw request
from the Restoration Contractor certifying that all work
completed to the date of such draw request has been performed in
accordance with the Plans and Specifications as approved by
Mortgagee in a good and workmanlike manner, which draw request
shall have been approved by the Restoration Architect;
(ii) Mortgagee shall have received a
certification from the Restoration Architect that the remaining
amount of funds held by Mortgagee, including funds held pursuant
to subparagraph 2 above, are sufficient to complete the
Restoration Work in accordance with the Plans and Specifications
as approved by Mortgagee;
(iii) Mortgagee shall have also received
evidence satisfactory to Mortgagee (including, without
limitation, title certifications, lien waivers and affidavits)
that all governmental licenses and permits necessary for the
performance of the Restoration Work have been secured and the
first-in-priority status of this Deed of Trust continues without
additional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by
Mortgagee, each periodic disbursement shall be made subject to a
retainage of ten percent (10%) of the amount requested, and the
aggregate of the amount so retained shall be disbursed by
Mortgagee to Mortgagor no earlier than thirty-one (31) days after
the Restoration Work is completed in accordance with said Plans
and Specifications (as evidenced by the certificate of the
Restoration Architect), and Mortgagee shall have received
evidence satisfactory to Mortgagee that all costs incurred in
connection with the Restoration Work have been paid in full and
that no party claims or has a right to claim any lien affecting
the Property and arising out of the Restoration Work; and
(5) Upon termination or expiration of the
moratorium period or any extension thereof as provided for in the
Settlement Agreement, Mortgagee is hereby authorized to apply any
amounts held by Mortgagee pursuant to any subparagraph of this
Section 4.1 against the outstanding Debt.
(h) Application of Insurance Proceeds Collected After
Foreclosure. Unless Mortgagee or Mortgagee's representative
reserves at the foreclosure sale the right to collect any uncol
lected insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Mortgagee, shall have no interest in such proceeds and
Mortgagee shall apply them, if and when collected, to the Debt in
such order and manner as Mortgagee shall then elect and remit any
remaining balance to Mortgagor or to such other person or entity
as is legally entitled to them), all proceeds of all such
insurance which are not so reserved by Mortgagee at the
foreclosure sale and are not actually received by Mortgagee until
after foreclosure shall be the property of the successful bidder
or bidders at foreclosure, as their interests may appear, and
Mortgagor shall have no interest in them and shall receive no
credit for them.
(i) Mortgagee Not Obligated to Require, Provide or
Evaluate Insurance. Mortgagee shall have no duty to Mortgagor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(j) Mortgagee May Elect to Insure Only its Own
Interests. If Mortgagee elects at any time or for any reason to
purchase insurance relating to the Property, it shall have no
obligation to cause Mortgagor or anyone else to be named as an
insured, to cause Mortgagor's or anyone else's interests to be
insured or protected or to inform Mortgagor or anyone else that
his or its interests are uninsured or underinsured.
(k) Mortgagor Will Correct Defects, Provide Further
Assurances and Papers. Upon Mortgagee's reasonable request,
Mortgagor will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Deed of Trust or any Credit Document or in the description
of any of the Property, and will deliver such further assurances
and execute such additional papers as in the opinion of Mortgagee
or its legal counsel shall be necessary, proper or appropriate
(1) to better convey and assign to the Trustee and Mortgagee all
the Property intended or promised to be conveyed or assigned or
(2) to properly evidence or give notice of the Debt or its
intended or promised security.
(l) Mortgagor Will Pay Taxes and Impositions and
Furnish Receipts. Mortgagor agrees at its own cost and expense
to pay and discharge all taxes, assessments, maintenance charges,
permit fees, impact fees, development fees, capital recovery
charges, utility reservation and standby fees and all other
similar and dissimilar impositions of every kind and character
("Impositions") charged, levied, assessed or imposed against any
interest in any of the Property, as they become payable and
before they become delinquent; provided, however, that Mortgagor
shall have the right to actively contest such Impositions in good
faith if Mortgagor shall establish sufficient reserves to pay any
such contested Impositions that are later determined to be
properly owed by Mortgagor; and provided, further, that no
attempts shall be made to foreclose any lien for such
Impositions. Mortgagor agrees to furnish due proof of such
payment to Mortgagee promptly after payment and before
delinquency. Mortgagor also agrees to hereafter file all income,
franchise and other tax returns within the time frames that they
are required to be filed and pay all taxes shown thereon to be
due, including interest and penalties, except for those taxes
which are being diligently contested in good faith and for
payment of which adequate reserves have been set aside by
Mortgagor.
(m) Mortgagor to Pay Monthly Tax and Insurance
Deposits on Request. If and after Mortgagee requests it after
the occurrence of an Event of Default, Mortgagor agrees to pay
the monthly tax and insurance premium deposits required by
Article 8 and to provide Mortgagee any additional sums needed to
pay the taxes and insurance premiums for the Property when due.
(n) Mortgagor Will Maintain Property and Won't Remove
Improvements. Mortgagor agrees to keep, preserve and maintain
all elements of the Property in a good state of repair and
condition and to keep all equipment and stores of supplies needed
for its proper and full operation on the Property, well stocked
and in good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Mortgagor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Mortgagee's prior
written consent. Mortgagor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Deed of Trust, such
Fixtures and Equipment as from time to time become worn out or
obsolete, provided that either (a) simultaneously with or before
such removal any such equipment shall be replaced with other
equipment of a value at least equal to that of the replaced
equipment and free from any title retention or security agreement
or other encumbrance and from any reservation of title, and by
such removal and replacement Mortgagor shall be deemed to have
subjected such equipment to the lien, assignments and security
interests of this Deed of Trust or (b) any net cash proceeds
received from such disposition shall be paid over promptly to
Mortgagee to be applied to the Debt in the order determined by
Mortgagee in its sole discretion. Mortgagor shall not grant, join
in or consent to any lien, security interest, easement, license,
use or other charge or interest covering or affecting all or any
part of the Property or initiate, join in and consent to the
change in any private restrictive covenant, zoning ordinance or
other public or private restrictions limiting or defining the
uses which may be made of the Property or any part thereof
without the prior written consent of Mortgagee.
(o) Mortgagor Will Protect Property from Mechanic's
Liens. Mortgagor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Deed of Trust, for any such bill which may
be legally due and payable; provided, however, that Mortgagor
shall have the right to actively contest any such bills in good
faith if Mortgagor shall provide a bond in form, substance and
amount reasonably satisfactory to Mortgagee covering and
affecting any lien for any such bills.
(p) Mortgagee's Inspection and Discussion Rights.
Mortgagor agrees, after the occurrence of an Event of Default, to
permit Mortgagee and its agents, representatives and employees at
all reasonable times during business hours to go upon, examine,
inspect and remain on the Mortgaged Property, to assist and
cooperate, and require Mortgagor's employees, agents and
contractors to cooperate, with Mortgagee and to furnish to
Mortgagee on request all pertinent information concerning the
physical and economic condition, development and operation of the
Mortgaged Property. Mortgagee may discuss the Mortgaged Property
directly with any of Mortgagor's officers and managers.
(q) Mortgagee May Grant Releases without Impairing
Other Collateral or Rights. At all times, Mortgagee shall have
the right to release any part of the Property or any other
security from this Deed of Trust or any other security instrument
or device without releasing any other part of the Property or any
other security, without affecting Mortgagee's lien, assignment or
security interest as to any property or rights not released and
without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(r) Mortgagor Will Notify Mortgagee of Legal
Proceedings and Defend Lien; Mortgagee May Act if Mortgagor
Doesn't. Mortgagor will notify Mortgagee in writing promptly of
the commencement of any legal proceedings affecting any part of
the Property and will engage and pay legal counsel to answer and
to defend and preserve Mortgagee's liens, rights and interests
and their rank and priority. If Mortgagor fails or refuses to
promptly begin or to diligently continue any such acts, then
Mortgagee may elect to do so and may take such action in behalf
of Mortgagor, in Mortgagor's name and at Mortgagor's expense.
(s) Legal Compliance, Governmental Notices. Mortgagor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Mortgagor or the Property
and will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(t) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Mortgagor will notify Mortgagee
in writing thereof, setting forth the nature of such change in
reasonable detail. Mortgagor will take, and will cause to be
taken, all such steps as are necessary or appropriate to remedy
promptly any such change.
(u) Notice of Default to Mortgagee. Immediately upon
acquiring knowledge thereof, Mortgagor will notify Mortgagee by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by
Mortgagee be deemed a waiver of a Default or of an Event of
Default.
(v) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Mortgagor will notify
Mortgagee in writing of the pendency of such proceedings.
Mortgagor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Mortgagee, in the carrying on
or defense of any such proceedings.
(w) Notice of Name or Address Change. Mortgagor will
not change Mortgagor's name or the location of its chief execu
tive office without first notifying Mortgagee in writing of such
change at least thirty (30) days before its effective date.
(x) Manager. Mortgagor will, or will cause its
managers to, do and perform any and all acts and things relating
to the management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Deed of Trust
and the other Credit Documents.
Section 4.2 Mortgagor Agrees to Pay or Reimburse
Mortgagee's Expenses. To the extent not prohibited by applicable
law, Mortgagor will pay all reasonable and actual costs and
expenses and reimburse Mortgagee for any and all reasonable and
actual expenditures of every character incurred or expended from
time to time, after the occurrence of a Default hereunder, in
connection with:
(a) Mortgagee's realizing upon Mortgagee's security
interest in and liens on the Property, and all reasonable and
actual costs and expenses relating to Mortgagee's exercising any
of its rights and remedies under this Deed of Trust or any Credit
Document or at law, including all appraisal fees, consulting
fees, filing fees, taxes, brokerage fees and commissions, title
review and abstract fees, litigation report fees, UCC search
fees, other fees and expenses incident to title searches, reports
and security interests, escrow fees, attorneys' fees, legal
expenses, court costs, other fees and expenses incurred in
connection with any complete or partial liquidation of the
Property, and all fees and expenses for any professional services
relating to the Property or any operations conducted in
connection with it.
(b) Provided, that no right or option granted by
Mortgagor to Mortgagee or otherwise arising pursuant to any
provision of this Deed of Trust, the Notes or any Credit Document
shall be deemed to impose or admit a duty on Mortgagee to
supervise, monitor or control any aspect of the character or
condition of the Property or any operations conducted in
connection with it for the benefit of Mortgagor or any person or
entity other than Mortgagee. Mortgagor agrees to indemnify,
defend and hold Mortgagee, its shareholders, directors, officers,
agents, attorneys, advisors and employees (collectively
"Indemnified Parties") harmless from and against any and all
loss, liability, obligation, damage, penalty, judgment, claim,
deficiency, expense, action, suit, cost and disbursement of any
kind or nature whatsoever (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement),
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from any Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Mortgagor to Mortgagee shall be a demand
obligation owing by Mortgagor to Mortgagee and shall bear
interest from the date of expenditure until paid at the default
rate provided in the Notes.
ARTICLE 5
MORTGAGOR'S REPRESENTATIONS AND WARRANTIES
To induce Mortgagee to extend financial accommodations,
Mortgagor makes the warranties and representations set forth in
this Article.
Section 5.1 Organization. Mortgagor is (a) duly
organized, validly existing and in good standing under the laws
of the state of its organization and has full legal right, power
and authority to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this Deed
of Trust and any other Credit Documents to which Mortgagor is a
party, and (b) duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business
it conducts makes such qualification necessary or desirable.
Mortgagor's execution, delivery and performance of this Deed of
Trust and any other Credit Documents to which Mortgagor is a
party have been duly authorized by all necessary action under
Mortgagor's organizational documents and otherwise.
Section 5.2 Consents. Mortgagor's execution, delivery
and performance of this Deed of Trust and any other Credit
Documents to which Mortgagor is a party do not and will not
require (i) any consent of any other person or entity or (ii) any
consent, license, permit, authorization or other approval
(including foreign exchange approvals) of any court, arbitrator,
administrative agency or other governmental authority, or any
notice to, exemption by, any registration, declaration or filing
with or the taking of any other action in respect of, any such
court, arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Deed of Trust or any other Credit Document to which
Mortgagor is a party, nor the fulfillment of or compliance with
the terms and provisions hereof or thereof will (i) violate any
constitutional provision, law or rule, or any regulation, order
or decree of any governmental authority or the basic
organizational documents of Mortgagor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Mortgagor is a party or bound.
Section 5.4 Enforceability. Mortgagor has duly and
validly executed, issued and delivered this Deed of Trust and any
other Credit Documents to which Mortgagor is a party. This Deed
of Trust and each other Credit Document to which Mortgagor is a
party is in proper legal form for prompt enforcement and is
Mortgagor's valid and legally binding obligation, enforceable in
accordance with its terms.
Section 5.5 Information Accurate. All information
supplied to Mortgagee, concurrently with Mortgagor's execution
of this Deed of Trust are and will be true, correct and complete
in all material respects.
Section 5.6 Taxes. Mortgagor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Mortgagor or Obligor
has previously disclosed to Mortgagee, there is no condemnation
or other action, suit or proceeding pending--or, to the best of
Mortgagor's knowledge, threatened--against or affecting the
Property, at law or in equity, or before or by any governmental
authority, which might result in any material adverse change in
the condition or operation of the Property.
Section 5.8 Mortgagor Solvent. Mortgagor is now solvent,
and no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Mortgagor's knowledge--against Mortgagor.
Mortgagor's liabilities and obligations under this Deed of Trust
and any other Credit Documents to which Mortgagor is a party do
not and will not render Mortgagor insolvent, cause Mortgagor's
liabilities to exceed Mortgagor's assets or leave Mortgagor with
too little capital to properly conduct all of its business as now
conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Deed of Trust or any other Credit
Document to which Mortgagor is a party and no statement contained
in any certificate, schedule, list, financial statement or other
papers furnished to Mortgagee by or on behalf of Mortgagor
contains--or will contain--any untrue statement of material fact,
or omits--or will omit--to state a material fact necessary to
make the statements contained herein or therein not misleading.
Section 5.10 Title. Mortgagor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Deed of Trust
or other Credit Documents. Except as otherwise expressly
permitted by this Deed of Trust, the lien and security interest
of this Deed of Trust will constitute valid and perfected first
and prior liens and security interests on the Property, subject
to no other liens, security interests or charges whatsoever. The
Property is free from damage caused by fire or other casualty.
Section 5.11 Legal Requirements. To the best of
Mortgagor's knowledge, Mortgagor and the Property are in
compliance with all applicable legal requirements and Mortgagor
manages and operates (and will continue to manage and operate)
the Property and its other businesses in accordance with good
industry practices. Mortgagor has not received any notice that
Mortgagor and the property are not in compliance with all
applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Deed of Trust shall terminate and be of no
further force or effect (and shall be released on Mortgagor's
written request and at Mortgagor's cost and expense) upon full
payment of the Debt and complete performance of all of the obliga
tions of the Obligors under the Settlement Agreement and the
Credit Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Deed of Trust.
Section 6.3 Remedies. Upon the occurrence of any Event
of Default, and at any time thereafter:
(a) Debt Due. All Debt in its entirety is immediately
due and payable without presentment, demand, notice of intention
to accelerate or notice of acceleration, or other notice of any
kind, except as required by the Settlement Agreement, all of
which are hereby expressly WAIVED, and the liens and security
interests created or intended to be created hereby shall be
subject to foreclosure, repossession and sale in any manner
provided for herein or provided for by law, as Mortgagee may
elect, and Mortgagee may exercise any and all of its rights under
this Deed of Trust, the Settlement Agreement, the Notes and any
of the other Credit Documents.
(b) Legal Proceedings. Trustee and Mortgagee shall
have the right and power to proceed by suit or suits in equity or
at law, whether for the specific performance of any covenant or
agreement of Mortgagor contained herein or in aid of the execu
tion of the powers herein granted, or for foreclosure or the sale
of the Property or any part thereof under the judgment or decree
of any court of competent jurisdiction, or for the enforcement of
any other appropriate legal or equitable remedy.
(c) Trustee's Sale. It shall be the duty of the
Trustee and of his successors and substitutes in the Trust, on
Mortgagee's request (which request is hereby presumed) to enforce
the Trust by selling the Mortgaged Property as is provided by
law.
Section 6.4 Time and Place of Sale and Notices.
Mortgagor's request for any such sale shall be made by delivery
to the Trustee of written declaration of default and demand for
sale and of written notice of default and of election to cause to
be sold the Mortgaged Property, which notice the Trustee shall
cause to be filed for record. Mortgagor also shall deposit with
the Trustee this Deed of Trust, the Notes and all documents
evidencing expenditures secured hereby. Trustee shall accept as
true and conclusive all facts and statements contained in the
notice of default and shall cause such notice of default and
election to sell to be recorded as required by applicable law.
After the lapse of such time as may then be required by law
following the recordation of said notice of default, and notice
of sale having been given as then required by law, the Trustee,
without demand on the Mortgagor, shall sell the Mortgaged
Property at the time and place fixed by it in said notice of
sale, either as a whole or in separate parcels, and in such order
as it may determine (all rights to a marshalling of assets or
sale in inverse order of alienation being waived) at public
auction to the highest bidder for cash in lawful money of the
United states, payable at time of sale; provided, however, that
Mortgagee may offset its bid at such sale to the extent of the
full amount owing to Mortgagee which is secured by this Deed of
Trust, including, without limitation, Trustee's fees and expenses
of sale, and costs, expenses, and attorneys' fees incurred by or
on behalf of Mortgagee in connection with collecting, litigating,
or otherwise enforcing any right under this Deed of Trust. The
Trustee may postpone sale of all or any portion of the Mortgaged
Property by public announcement at such time and place of sale,
and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement.
The Trustee shall deliver to such purchaser its deed conveying
the property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or
facts shall be conclusive proof of the truthfulness thereof. Any
person, including the Mortgagor, the Trustor, or the Mortgagee
may purchase at such sale.
Section 6.5 Application of Foreclosure Sale Proceeds.
The proceeds of any sale of the Mortgaged Property, and any rents
and other amounts collected by Mortgagee from Mortgagee's
holding, leasing, operating or making any other use of the
Mortgaged Property, shall be applied by Mortgagee (or by the
receiver, if one is appointed) to the extent that funds are
available therefrom in the following order of priority:
(a) To Expenses and Senior Obligation Payments.
First, to the payment of the reasonable and actual costs and
expenses of taking possession of the Mortgaged Property and of
holding, maintaining, using, leasing, repairing, equipping,
manning, improving, marketing and selling it, including (i)
trustees' and receivers' fees, (ii) court costs, (iii) attorneys'
and accountants' fees, (iv) costs of advertisement and brokers'
commissions and (v) payment of any and all Impositions, liens,
security interests or other rights, titles or interests superior
to the lien and security interest of this Deed of Trust, whether
or not then due and including any prepayment penalties or fees
and any accrued or required interest (except, in the case of
foreclosure proceeds, those senior liens and security interests,
if any, subject to which the Mortgaged Property was sold at such
trustee's sale, and without in any way implying Mortgagee's
consent to the creation or existence of any such prior liens).
(b) To Other Obligations Owed to Mortgagee. Second,
to the payment of all amounts, other than the principal balance
and accrued but unpaid interest, which may be due to Mortgagee
under the Notes, the Settlement Agreement or any other Credit
Document, together with interest thereon as provided therein.
(c) To Accrued Interest on the Debt. Third, to the
payment of all accrued but unpaid interest due on the Debt.
(d) To Debt Principal. Fourth, to the payment of the
principal balance on the Debt and the principal owing under this
Deed of Trust, the Settlement Agreement and any other Credit
Document, irrespective of whether then matured, and if it is
payable in installments and not matured, then to the installments
in such order as Mortgagee shall elect.
(e) To Junior Lienholders. Fifth, to the extent funds
are available therefor out of the sale proceeds or any rents and,
to the extent known by Mortgagee, to the payment of any debt or
obligation secured by a subordinate deed of trust on or security
interest in the Mortgaged Property.
(f) To Mortgagor. Sixth, to Mortgagor, its successors
and assigns, or to whomsoever may be lawfully entitled to receive
such proceeds.
Section 6.6 Mortgagee May Require Abandonment and
Recommencement of Sale. If the Trustee or his substitute or
successor should commence the sale, Mortgagee may at any time
before the sale is completed direct the Trustee to abandon the
sale, and may at any time or times thereafter direct the Trustee
to again commence foreclosure; or, irrespective of whether
foreclosure is commenced by the Trustee, Mortgagee may at any
time after an Event of Default institute suit for collection of
the Debt or foreclosure of this Deed of Trust. If Mortgagee
should institute suit for collection of the Debt or foreclosure
of this Deed of Trust, Mortgagee may at any time before the entry
of final judgment require the Trustee to sell the Mortgaged
Property in accordance with the provisions of this Deed of Trust.
Section 6.7 Multiple Sales; Deed of Trust Continues in
Effect. No single sale or series of sales by the Trustee or by
any substitute or successor and no judicial foreclosure shall
extinguish the lien or exhaust the power of sale under this Deed
of Trust except with respect to the items of property sold, nor
shall it extinguish, terminate or impair Mortgagor's contractual
obligations under this Deed of Trust, but such lien and power
shall exist for so long as, and may be exercised in any manner by
law or in this Deed of Trust provided as often as the
circumstances require to give Mortgagee full relief under this
Deed of Trust, and such contractual obligations shall continue in
full force and effect until final termination of this Deed of
Trust.
Section 6.8 Mortgagee May Bid and Purchase. Mortgagee
shall have the right to become the purchaser at any sale made
under this Deed of Trust, being the highest bidder, and credit
given upon all or any part of the Debt shall be the exact
equivalent of cash paid for the purposes of this Deed of Trust.
Section 6.9 Successor or Substitute Trustee. In case of
absence, death, inability, refusal or failure of the Trustee in
this Deed of Trust named to act, or in case he should resign (and
he is hereby authorized to resign without notice to or consent of
Mortgagor), or if Mortgagee shall desire, with or without cause,
to replace the Trustee in this Deed of Trust named, or to replace
any successor or substitute previously named, Mortgagee or any
agent or attorney-in-fact for Mortgagee may name, constitute and
appoint a successor and substitute trustee (or another one) in
the manner required by applicable law. Upon such appointment,
this conveyance shall automatically vest in such substitute
trustee, as Trustee, the estate in and title to all of the
Mortgaged Property, and such substitute Trustee so appointed and
designated shall thereupon hold, possess and exercise all the
title, rights, powers and duties in this Deed of Trust conferred
on the Trustee named and any previous successor or substitute
Trustee, and his conveyance to the purchaser at any such sale
shall be equally valid and effective as if made by the Trustee
named in this Deed of Trust. Such right to appoint a substitute
Trustee shall exist and may be exercised as often and whenever
from any of said causes, or without cause, as aforesaid,
Mortgagee or Mortgagee's agent or attorney-in-fact elects to
exercise it.
Section 6.10 Right to Receiver. Upon the occurrence of an
Event of Default or at any time after commencement of a Trustee's
foreclosure sale or any legal proceedings under this Deed of
Trust, Mortgagee may, at Mortgagee's election and by or through
the Trustee or otherwise, make application to a court of
competent jurisdiction for appointment of a receiver of the
Property, as a matter of strict right, without notice to
Mortgagor and without regard to the adequacy of the value of the
Property for the repayment of the Debt, and Mortgagor hereby
irrevocably consents to such an appointment. Any receiver shall
have all the usual powers and duties of receivers in similar
cases, including the full power to possess, rent, maintain,
repair and operate the Property upon such terms and conditions as
may be approved by the court, and shall apply the rents realized
in the same manner and order as foreclosure proceeds in
accordance with Section 6.5.
Section 6.11 Tenants at Will. Mortgagor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Mortgagor, or
the parties so holding possession, shall become and be considered
as tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
ARTICLE 7
MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS
Section 7.1 Mortgagee May Elect to Perform Defaulted
Obligations. Except for Mortgagor's failure to maintain the
insurance coverage required by the other provisions of this Deed
of Trust, if Mortgagor should fail to comply with any of its
other agreements, covenants or obligations under this Deed of
Trust, the Settlement Agreement, any of the Notes, or any other
Credit Document so as to cause such failure to constitute an
Event of Default or a Default which is then continuing, then
Mortgagee (in Mortgagor's name or in Mortgagee's own name) may
perform them or cause them to be performed for Mortgagor's
account and at Mortgagor's expense, but shall have no obligation
to perform any of them or cause them to be performed. With
respect to Mortgagor's failure to maintain the insurance coverage
required hereby, however, Mortgagee itself may purchase or secure
such insurance coverage for the Mortgaged Property prior to
providing Mortgagor with any notice of and opportunity to cure or
remedy such failure. Any and all expenses thus incurred or paid
by Mortgagee under the provisions of this paragraph shall be
Mortgagor's obligations to Mortgagee due and payable on demand,
or if no demand is sooner made, then they shall be due on or
before four (4) years after the respective dates on which they
were incurred, and each shall bear interest from the date
Mortgagee pays it until the date Mortgagor repays it to
Mortgagee, at the maximum nonusurious rate of interest from time
to time permitted by whichever of applicable California or
federal law from time to time permits the higher nonusurious
interest rate (the "Ceiling Rate"), or, only if applicable law
imposes no maximum nonusurious rate, then at the same rate as is
provided for in the Notes for interest on past due principal (the
"Past Due Rate"). Upon making any such payment or incurring any
such expense, Mortgagee shall be fully and automatically
subrogated to all of the rights of the person, corporation or
body politic receiving such payment. Any amounts owing by
Mortgagor to Mortgagee pursuant to this or any other provision of
this Deed of Trust shall automatically and without notice be and
become a part of the Debt and shall be secured by this and all
other instruments securing the Debt. The amount and nature of
any such expense and the time when it was paid shall be fully
established by the affidavit of Mortgagee or any of Mortgagee's
officers or agents or by the affidavit of any original,
substitute or successor Trustee acting under this Deed of Trust.
Without notice to Mortgagor or any other person or entity, the
Ceiling Rate and the Past Due Rate shall automatically fluctuate
upward and downward as and in any amount by which the maximum
nonusurious rate of interest permitted by such applicable law and
the rate of interest as provided for in the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Mortgagee in
this Article shall in no event be considered or constitute a cure
of the default or a waiver of Mortgagee's right at any time after
an Event of Default to declare the Debt to be at once due and
payable, but is cumulative of such right and of all other rights
given by this Deed of Trust, the Notes and the Credit Documents
and of all rights given Mortgagee by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Mortgagor agrees that upon the written request of
Mortgagee, Mortgagor will thereafter deposit with Mortgagee each
month an amount equal to one-twelfth (1/12) of the aggregate of
(i) the next succeeding premiums (or payments in respect of them,
if premiums are financed) on all insurance policies which
Mortgagor is required by or pursuant to this Deed of Trust to
maintain on the Property, and (ii) the amount of the next
succeeding annual tax payments, assessment installments,
maintenance charges and other Impositions to become due and
payable with respect to the Property, as reasonably estimated by
Mortgagee, plus, with the first of such monthly deposits, an
additional month's share (a twelfth) of such premiums and taxes
for each month less than twelve remaining before the next payment
thereof falls due. At least fifteen (15) days before the date on
which any such insurance premium (or payment in respect of it, if
premiums are financed) or any of the Impositions must be paid to
avoid delinquency, promptly after Mortgagee's request, Mortgagor
agrees to deliver to Mortgagee a statement or statements showing
the amount of the premium (or payment in respect of it, if
premiums are financed) or Impositions required to be paid and the
name and mailing address of the concern or authority to which it
is payable and, at the same time, Mortgagor agrees to deposit
with Mortgagee such amounts as will, when added to the amount of
such deposits previously made and then remaining available for
the purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Mortgagee by Mortgagor for the payment
of such amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee hereby agrees to apply such
deposits in payment of such insurance obligations and Impositions
prior to delinquency, but only if sufficient funds have been
deposited with Mortgagee by Mortgagor for the payment of such
amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee shall in no way be obligated to
pay any interest to Mortgagor on such deposits, and upon the
occurrence of an Event of Default which is then continuing,
Mortgagee is hereby irrevocably authorized to apply any and all
amounts so deposited with Mortgagee against the amounts due under
the Debt (with such order of application to be at Mortgagee's
discretion) without any further notice to or consent from
Mortgagor or any other person or entity. Additionally, Mortgagor
hereby irrevocably grants to Mortgagee a security interest and
assigns to Mortgagee all such funds so deposited with Mortgagee
as additional security for payment of the Debt and all other
amounts now or hereafter outstanding under any of the Credit
Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. Mortgagor hereby assigns and transfers to Mortgagee all
rents (severed or unsevered), revenues, income, profits and
proceeds of the foregoing ("Rental") payable under each Lease
(hereinafter defined) now or at any time hereinafter existing,
such assignment being upon the terms set forth in Section 9.2
below. The foregoing assignment and transfer is absolute and
unconditional, and not merely as additional collateral security
for the indebtedness secured by this Deed of Trust. The term
"Lease" or "Leases" means any oral or written agreement, now
existing or made later, between Mortgagor and another person or
entity to use or occupy all or any portion of the Property,
together with any guaranties or security for the obligations of
any tenant, lessee, sublessee or other person or entity having
the right to occupy, use or manage any part of the Property under
a Lease. Each time Mortgagor enters into a Lease, such Lease
shall automatically become subject to this Article without
further action.
Section 9.2 Terms of Assignment. Mortgagee grants
permission to Mortgagor to collect and retain the rent, income,
issues, and profits from the Mortgaged Property as they become
due and payable upon the following terms: (a) until the
occurrence of an Event of Default, Mortgagor shall have the right
to collect Rental and each tenant may pay Rental directly to
Mortgagor; but after an Event of Default, Mortgagor may not
collect Rental and to the extent Mortgagor receives any Rent
thereafter accruing or paid, Mortgagor covenants to hold all such
Rental in trust for the use and benefit of Mortgagee; (b) upon
receipt from Mortgagee of notice that an Event of Default exists,
each tenant is hereby authorized and directed to pay directly to
Mortgagee all Rental thereafter accruing or payable and receipt
of Rental by Mortgagee shall be a release of such tenant to the
extent of all amounts so paid; (c) Rental so received by
Mortgagee shall be applied by Mortgagee, first to the expenses,
if any, of collection and then in accordance with Section 6.5
hereof; (d) without impairing its rights hereunder, Mortgagee
may, at its option, at any time and from time to time, release to
Mortgagor Rental so received by Mortgagee, or any part thereof;
(e) Mortgagee shall not be liable for its failure to collect or
its failure to exercise diligence in the collection of Rental,
but shall be accountable only for Rental that it shall actually
receive; and (f) the assignment contained in this Article shall
terminate upon the release of this Deed of Trust, but no tenant
shall be required to take notice of termination until a copy of
such release shall have been delivered to such tenant. Prior to
the occurrence of an Event of Default, the Rental shall be used
to pay expenses associated with owning and operating the Property
and to pay the Debt before being used for any other purpose. It
shall never be necessary for Mortgagee to institute legal
proceedings of any kind whatsoever to enforce the provisions of
this Article. Notwithstanding anything to the contrary in this
document, it is agreed that any Rental will not constitute a
payment by the Mortgagor to Mortgagee of any portion of the Debt
(and hence will not be credited to the Debt) until the Rental is
actually paid to the Mortgagee and received and retained by the
Mortgagee and then, in such event, the Rental so received shall
be applied in accordance with Section 9.2(c). Notwithstanding
anything to the contrary in this document, this Article shall not
make Mortgagee an owner or operator of the Property for the
purposes of environmental liability and this Article shall not
make Mortgagee a partner of Mortgagor. Further, this Article
shall be effective and perfected upon recordation of this
document.
Section 9.3 Remedies. Should an Event of Default occur,
Mortgagor agrees to deliver to Mortgagee possession and control
of all Rental held by Mortgagor in trust for the benefit of
Mortgagee, provided, however, that Mortgagor may apply a portion
of such Rental to no more than one month's normal and actual
operating costs of the Property. Mortgagor specifically agrees
that Mortgagee may upon the occurrence of any Event of Default or
at any time thereafter, and without bringing any action or
proceeding, personally or through an agent selected by Mortgagee
or by receiver to be appointed by the Court, take--or have the
Trustee take--possession and control of all or any part of the
Property and may with or without possession of the Mortgaged
Property receive and collect all Rental theretofore accrued and
all thereafter accruing therefrom until the final termination of
this Deed of Trust applying so much thereof as may be collected
first to the expenses of Mortgagee incurred in obtaining the
Rental and then applying the Rental so received in accordance
with the provisions of Section 6.5 hereof. Any such action by
Mortgagee shall not operate as a waiver of the Event of Default
in question, or as an affirmance of any Lease or of the rights of
any tenant in the event title to that part of the Property
covered by the Lease or held by the tenant should be acquired by
Mortgagee or other purchaser at foreclosure sale. Mortgagee,
Mortgagee's agent or the Trustee may use against Mortgagor or any
other person such lawful or peaceable means as the person acting
may see fit to enforce the collection of any such Rental or to
secure possession of the Property, or any part of it and may
settle or compromise on any terms as Mortgagee, Mortgagee's agent
or the Trustee sees fit, the liability of any person or persons
for any such Rental. In particular, Mortgagee, Mortgagee's agent
or the Trustee may institute and prosecute to final conclusion
actions of forcible entry and detainer, or actions of trespass to
try title, or actions for damages, or any other appropriate
actions, in the name of Mortgagee, Mortgagor, or the Trustee, and
may settle, compromise or abandon any such actions as Mortgagee,
Mortgagee's agent or the Trustee may see fit; and Mortgagor binds
itself and its successors and assigns to take whatever lawful or
peaceable steps Mortgagee, Mortgagee's agent or the Trustee may
ask of it or any such person or concern so claiming to take for
such purposes, including the institution and prosecution of
actions of the character above stated. However, neither
Mortgagee, Mortgagee's agent nor the Trustee shall be obligated
to collect any such Rental or be liable or chargeable for failure
to do so. Upon any sale of the Property or any part thereof in
foreclosure of the lien or security interest created by this Deed
of Trust, such Rental so sold which thereafter accrues shall be
deemed included in such sale and shall pass to the purchaser free
and clear of the assignment made in this Article. Nothing in
this Section is intended to require the Mortgagee to institute
any legal proceedings or engage in any self help remedies in
order to make the absolute assignment of the Rental to Mortgagee
operative.
Section 9.4 Mortgagee in Possession; No Liability of
Mortgagee. Mortgagee's acceptance of this assignment shall not,
before entry upon and taking possession of the Property by
Mortgagee, be deemed to constitute Mortgagee a "mortgagee in
possession," nor obligate Mortgagee to appear in or defend any
proceeding relating to any of the Leases or to the Property, take
any action hereunder, expend any money, incur any expenses or
perform any obligation or liability under the Leases, or assume
any obligation under the Leases including the obligation to
return any deposit delivered to Mortgagor by any tenant.
Mortgagee shall not be liable for any injury or damage to person
or property in or about the Property, except injury or damage
resulting from Mortgagee's wilful misconduct or gross negligence.
Neither the collection of Rental due under the Leases herein
described nor possession of the Property by Mortgagee shall
render Mortgagee liable with respect to any obligations of
Mortgagor under any of the Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Mortgagor
covenants, warrants and represents that:
(a) Neither Mortgagor nor any previous owner has
entered into any prior oral or written assignment, pledge or
reservation of the Rental, entered into any prior assignment or
pledge of Mortgagor's landlord interests in any Lease or
performed any act or executed any other instruments which might
prevent or limit Mortgagee from operating under the terms and
conditions of this Article;
(b) Mortgagor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Mortgagor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Mortgagee's request, execute
an additional assignment to Mortgagee of all Leases then
affecting the Property and all Rental and other sums due
thereunder by assignment(s) in form and substance satisfactory to
Mortgagee and (iii) at the request of Mortgagee, record such
Leases and the assignment(s) thereof to Mortgagee;
(d) Mortgagor shall enforce the tenants' obligations
under the Leases in the ordinary course of Mortgagor's business;
(e) Mortgagor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Deed of Trust and any other encumbrances
permitted by this Deed of Trust;
(f) Mortgagor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Mortgagee;
(g) Mortgagor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Mortgagee's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Deed of Trust;
(i) After the occurrence of an Event of Default,
Mortgagor shall from time to time furnish to Mortgagee, within
thirty (30) days after demand therefor, true, correct and
complete copies of all Leases or any portion of the Leases
specified by Mortgagee; and
(j) Mortgagor shall not in any event collect any
Rental more than one (1) month in advance of the time it will be
earned (and if Mortgagor does so, in addition to any other rights
or remedies available by reason of such Event of Default, all
Rental so collected more than one (1) month in advance of the
time it is earned shall be delivered to Mortgagee to be applied
to the Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Mortgagee.
Section 9.7 Reassignment. By Mortgagee's acceptance of
this Deed of Trust, it is understood and agreed that a full and
complete release of this Deed of Trust shall operate as a full
and complete reassignment to Mortgagor of the Mortgagee's rights
and interests assigned to Mortgagee under this Article (subject
to the automatic reinstatement provisions of Section 10.15
below).
Section 9.8 Subordination of Deed of Trust to Leases. It
is agreed and understood that Mortgagee hereby reserves the right
and shall have the right, at any time and from time to time,
without the consent or joinder of any other party, to subordinate
this Deed of Trust and the liens, assignments and security
interests created by this Deed of Trust to all or any of the
Leases regardless of the respective priority of any of such
Leases and this Deed of Trust. Upon doing so and filing evidence
of such subordination in the real property records in the county
or counties where the Real Property is located, a foreclosure of
Mortgagee's liens, assignments and security interests under this
Deed of Trust shall be subject to and shall not operate to
extinguish any of said Leases as to which such subordination is
operative.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Deed of Trust. Any of the Debt may be extended, rearranged,
renewed, increased or otherwise changed in any way, and any part
of the security described in this Deed of Trust or any other
security for any part of the Debt may be waived or released
without in anyway altering or diminishing the force, effect or
lien of this Deed of Trust, and the lien, assignment and security
interest granted by this Deed of Trust shall continue as a prior
lien, assignment and security interest on all of the Property not
expressly so released, until the final termination of this Deed
of Trust.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Deed of Trust which under applicable laws are or may be
deemed to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable state or federal laws,
whichever permit the higher rate. In this connection, Mortgagor
and Mortgagee stipulate and agree that it is their common and
overriding intent to contract in strict compliance with
applicable usury laws. In furtherance thereof, none of the terms
of this Deed of Trust shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the maximum
rate permitted by applicable laws. Mortgagor shall never be
liable for interest in excess of the maximum rate permitted by
applicable laws. If, for any reason whatever, such interest paid
or received during the full term of the applicable indebtedness
produces a rate which exceeds the maximum rate permitted by
applicable laws, Mortgagee shall credit against the principal of
such indebtedness (or, if such indebtedness shall have been paid
in full, shall refund to the payor of such interest) such portion
of said interest as shall be necessary to cause the interest paid
to produce a rate equal to the maximum rate permitted by
applicable laws. All sums paid or agreed to be paid to Mortgagee
for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of
the applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of
this Section shall control all agreements, whether now or
hereafter existing and whether written or oral, between Mortgagor
and Mortgagee.
Section 10.3 Subrogation to Liens Discharged. Mortgagor
hereby agrees that Mortgagee shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Mortgagee. Irrespective of any formal or informal acknowledgment
of partial or complete satisfaction or release of the Discharged
Obligations, the Subrogated Liens shall be continued, renewed,
extended, brought forward and rearranged as security for the Debt
in addition to and cumulative of the lien and security interest
of this Deed of Trust. Foreclosure under this Deed of Trust shall
constitute foreclosure of the Subrogated Liens.
Section 10.4 Due on Sale. Mortgagor agrees that if,
without Mortgagee's prior written consent (except as otherwise
provided herein or in the Settlement Agreement), (a) any part of
the Property should be directly or indirectly transferred,
conveyed or mortgaged, voluntarily or involuntarily, absolutely
or as security, or (b) Mortgagor should enter into any
contractual arrangement to transfer, convey or mortgage any part
of the Property or any interest either in the Property, the
moratorium provided in ArticleVI of the Settlement Agreement
shall immediately terminate without notice to Obligors.
Mortgagee is under no obligation to consent to the transfer or
encumbrance of the Property except on the terms provided in the
Settlement Agreement irrespective of whether or not the transfer,
conveyance or mortgage would or might (i) diminish the value of
any security for the Debt, or (ii) increase the likelihood of
Mortgagee's having to resort to any security for the Debt after
default. If Mortgagee's consent to a proposed mortgaging is
requested, Mortgagee shall have the right (in addition to its
absolute right to refuse to consent to any such transaction) to
condition its consent upon satisfaction of any one or more of the
following requirements: (1) that the interest rate(s) on all or
any part of the Debt be increased to a rate which is then
acceptable to Mortgagee; (2) that a principal amount deemed
appropriate by Mortgagee be paid against the Debt to reduce to a
level which is then acceptable to Mortgagee the ratio that the
outstanding balance of the Debt bears to the value of the
Property as determined by Mortgagee; (3) that the liability to
Mortgagee of Mortgagor and all makers and guarantors of all or
any part of the Debt will be confirmed by them in writing to be
unaffected and unimpaired by such mortgaging; and (4) that any
proposed junior mortgagee expressly subordinate to all liens and
security interests securing the Debt as to both lien and payment
right priority and consent to the proposed transaction in a
writing addressed to Mortgagee.
Section 10.5 Condemnation. If before final termination of
this Deed of Trust, all or a portion of the Property is taken for
public or quasi-public purposes, either through eminent domain or
condemnation proceedings, by voluntary conveyance under threat of
condemnation with Mortgagee's express written consent and joinder
or otherwise, Mortgagor hereby agrees that any and all sums of
money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Mortgagee, and they are
hereby assigned to Mortgagee, and shall be paid directly to
Mortgagee. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the
Property shall be applied, first, to reimburse Mortgagee or the
Trustee for all costs and expenses, including reasonable
attorneys' fees, incurred in connection with collection of such
proceeds and, second, the remainder of said proceeds shall be
applied, at the reasonable discretion of Mortgagee, to the
payment of the Debt in the order determined by Mortgagee in its
sole discretion, or paid out to repair or restore the Property so
affected by such condemnation, injury or damage in the same
manner as provided in Section 4.1(h) above. Mortgagor agrees to
execute such further assignments of all such proceeds, judgments,
decrees and awards as Mortgagee may request. Mortgagee is hereby
authorized, in the name of Mortgagor, to execute and deliver
valid acquittances for, and to appeal from, any such judgment,
decree or award. Mortgagee shall not be, in any event or
circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any such proceeds,
judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfying the notice requirements set
forth in the Settlement Agreement shall be satisfactory under
this Deed of Trust.
Section 10.7 Mortgagee and Mortgagor. The term
"Mortgagee" as used in this Deed of Trust shall mean and include
the holder or holders of the Debt from time to time, and upon
acquisition of the Debt by any holder or holders other than the
named Mortgagee, effective as of the time of such acquisition,
the term "Mortgagee" shall mean all of the then holders of the
Debt, to the exclusion of all prior holders not then retaining or
reserving an interest in the Debt from time to time, whether such
holder acquires the Debt through succession to or assignment from
a prior Mortgagee. The term "Mortgagor, its successors and
assigns" shall also include the heirs and legal representatives
of each Mortgagor who is a natural person and the receivers,
conservators, custodians and trustees of each Mortgagor. In
general, Mortgagor may not assign or delegate any of its rights,
interests or obligations under this Deed of Trust, the Notes,
the Settlement Agreement or any Credit Document without
Mortgagee's express prior written consent, and any attempted
assignment or delegation without it shall be void or voidable at
Mortgagee's election; provided, however, that Mortgagor may
delegate its obligations under this Deed of Trust and any other
Credit Documents regarding the management, maintenance and
leasing of the Mortgaged Property, as well as the construction of
tenant finish and "cosmetic-type" capital improvements to the
Mortgaged Property, to reputable agents or independent
contractors without the prior written consent of Mortgagee, but
in any and all such events, Mortgagor shall remain fully
obligated to Mortgagee in accordance with the provisions of this
Deed of Trust and all other Credit Documents for the complete and
full compliance with and performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Deed of Trust to
Articles, Sections and Exhibits refer to Articles, Sections and
Exhibits in and to this Deed of Trust unless otherwise specified.
The Article and Section numbers, Exhibit designations and
headings used in this Deed of Trust are included for convenience
of reference only and shall not be considered in interpreting,
applying or enforcing this Deed of Trust.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Deed of Trust are hereby incorporated into it at
that place in the text, to the same effect as if set out there
verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Deed of Trust,
it shall be read as if it were written, "including by way of
example only and without in any way limiting the generality of
the clause or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Deed of Trust each includes the masculine, feminine
and neuter genders.
Section 10.12 Severability. If any provision of this
Deed of Trust is held to be illegal, invalid or unenforceable
under present or future laws, the legality, validity and enforce
ability of the remaining provisions of this Deed of Trust shall
not be affected thereby, and this Deed of Trust shall be
liberally construed so as to carry out the intent of the parties
to it. Each waiver in this Deed of Trust is subject to the
overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable
law and (b) applicable law neither provides for nor allows any
material sanctions to be imposed against Mortgagee for having
bargained for and obtained it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Deed of
Trust, or if the lien, assignments and security interest of this
Deed of Trust cannot be lawfully enforced to pay any part of the
Debt, then and in either such event, at the option of Mortgagee,
all payments on the Debt shall be deemed to have been first
applied against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Deed of Trust is executed by more than one person, corporation,
partnership, joint venture, trust or other legal entity, it shall
be construed as though "Mortgagor" were written "Mortgagors" and
as though the pronouns and verbs in their number were changed to
correspond, and in such case, (a) each of Mortgagors shall be
bound jointly and severally with one another to keep, observe and
perform the covenants, agreements, obligations and liabilities
imposed by this Deed of Trust upon the "Mortgagor", (b) a release
of one or more persons, corporations or other legal entities
comprising "Mortgagor" shall not in any way be deemed a release
of any other person, corporation or other legal entity comprising
"Mortgagor" and (c) a separate action hereunder may be brought
and prosecuted against one or more of the persons, corporations
or other legal entities comprising "Mortgagor" without limiting
any liability of or impairing Mortgagee's right to proceed
against any other person, corporation or other legal entity
comprising "Mortgagor".
Section 10.15 Mortgagor agrees that, if at any time all or
any part of any payment previously applied by Mortgagee to the
Debt is or must be returned by Mortgagee--or recovered from
Mortgagee--for any reason (including the order of any bankruptcy
court)), this Deed of Trust shall automatically be reinstated to
the same effect as if the prior application had not been made,
and, in addition, Mortgagor hereby agrees to indemnify Mortgagee
against, and to save and hold Mortgagee harmless from any
required return by Mortgagee--or recovery from Mortgagee--of any
such payment because of its being deemed preferential under
applicable bankruptcy, receivership or insolvency laws, or for
any other reason.
Section 10.16 Amendments in Writing. This Deed of Trust
shall not be changed orally but shall be changed only by
agreement in writing signed by Mortgagor and Mortgagee. Any
waiver or consent with respect to this Deed of Trust shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between the
parties, no usage of trade and no parole or extrinsic evidence of
any nature shall be used to supplement or modify any of the terms
or provisions of this Deed of Trust.
Section 10.17 Entire Agreement. This Deed of Trust
embodies the entire agreement and understanding between Mortgagor
and Mortgagee with respect to its subject matter and supersedes
all prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Mortgagor
acknowledges and agrees that there is no oral agreement between
Mortgagor and Mortgagee which has not been incorporated in this
Deed of Trust.
Section 10.18 Prior to the occurrence of an Event of
Default, Mortgagor shall be entitled to obtain a release of the
Property from the lien and security interest of this instrument
upon and subject to the terms of the Settlement Agreement. In
addition, Section 10.4 of this Deed of Trust shall not apply to
any transaction which specifically provides for payment of the
applicable release price provided for in the Settlement
Agreement.
Section 10.19 Request for Notice. The undersigned
Mortgagor requests that a copy of any notice of default and any
notice of sale hereunder be mailed to it at its address set forth
above.
Section 10.20 Acceptance by Trustee. Trustee accepts this
Trust when this Deed of Trust, duly executed and acknowledged, is
made a public record as provided by law. The Trustee is not
obligated to notify any party hereto of pending sale under any
other deed of trust or of any action or proceeding in which the
Mortgagor, Beneficiary or the Trustee shall be a party unless
brought by the Trustee.
Section 10.21 Choice of Law. For purposes of enforcement
of the remedies under this Deed of Trust in California,
California law shall apply. Nothing herein shall change the
choice of law agreement between the parties in any other
agreement or instrument or for any other purpose.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Mortgagor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Mortgagee, in
the event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Mortgagor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Mortgagee insuring Mortgagee a
continued first lien priority status against the Mortgaged
Property within sixty (60) days from the date that the lien is
placed against the Mortgaged Property or within such shorter
period of time as the circumstances shall permit (but in all
events at least five (5) days prior to any sale of the Mortgaged
Property to satisfy said lien) in the event that the holder of
such lien takes steps to cause the Mortgaged Property to be sold
pursuant to said lien.
Section 11.2 Representations and Warranties. Mortgagor
represents and warrants to Mortgagee to the best knowledge of
Mortgagor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Mortgagor, in the past been transported, treated and disposed
of only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Mortgagor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Mortgagor
has no material contingent liability in connection with any
release or threatened release of any hazardous substance or solid
waste into the environment.
Section 11.3 Non-Storage and Disposal. Mortgagor shall
not cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Mortgagor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that
Mortgagor (or any of Mortgagor's tenants which have been approved
by Mortgagee) shall be entitled to store and utilize Hazardous
Materials upon the Mortgaged Property in connection with such
person's or entity's normal and ordinary operations so long as
such storage and use fully complies with all Environmental Laws
at all times.
Section 11.4 Indemnity. Mortgagor shall indemnify, defend
and hold all Mortgagee Indemnitees (as defined below) harmless
from and against any and all (i) liabilities, losses, claims,
damages, costs, penalties, funds and judgments resulting from
violation by Mortgagor of any Environmental Laws with respect to
the ownership and operation of the Mortgaged Property, and (ii)
all other liabilities, losses, claims, damages, costs, penalties,
fines, judgements, attorneys' fees, consultants' fees and
expert's fees incurred or suffered by Mortgagee by reason of,
resulting from, in connection with or arising in any manner
whatsoever from a breach by Mortgagor of any representation,
warranty or covenant contained in this Article 11. This
indemnity provision shall expressly survive the payment in full
of the Debt and the release of the Property from this Deed of
Trust. As used in this paragraph, "Mortgagee Indemnitees" shall
mean Mortgagee, any subsequent holder or owner of the Notes or
any interest in it, any affiliate, successor, assign or
subsidiary of Mortgagee and each of their shareholders,
directors, officers, employees, counsel, agents, attorneys and
contractors, and the Trustee and all successor or substitute
trustees, as well as their respective heirs and legal
representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Mortgagor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Mortgagor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or
protection laws, and (b) the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including but
not limited to, those substances, materials and waste listed in
the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. 172.101) or listed by the
Environmental Protection Agency as hazardous substances under or
pursuant to 40 C.F.R. Part 302, or such substances, materials and
wastes which are or become regulated under any Environmental Law.
Section 11.6 The obligations of and liability of Mortgagor
hereunder shall not be personally binding upon nor shall there be
any resort for enforcement thereof to the private property of
Mortgagor's trust managers, shareholders, officers, employees or
agents regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.
Section 11.7 Indemnity Obligations Survive Extinguishment
of Lien. Notwithstanding any contrary provision or implication
in this Deed of Trust, Mortgagor's indemnity obligations under
this Article 11 shall survive upon the extinguishment of the lien
of this Deed of Trust as a result of transfer of title to the
Mortgaged Property upon conclusion of a judicial or non-judicial
foreclosure sale, a conveyance in lieu of foreclosure, or a
reconveyance of this Deed of Trust. Mortgagor agrees that the
Mortgagee Indemnitees may take advantage to the fullest extent
possible of all their rights and remedies under California Code
of Civil Procedure Sections 564, 726.5, and 736 and California
Civil Code Section 2929.5 as currently existing and as may be
amended hereafter. Mortgagor further acknowledges that the
Mortgagor's indemnity obligations set forth in this Section 11.7
are fully enforceable under California law; that the Mortgagee
Indemnitees may bring an action for breach of such an indemnity
obligations against Mortgagor whether or not Mortgagor is in
default in connection with the Debt; and that an action or
failure to foreclose against all or any portion of the Mortgaged
Property shall not constitute an action within the meaning of
subdivision (a) of the California Code of Civil Procedure Section
726, or constitute a money judgment for a deficiency or a
deficiency judgment within the meaning of California Code of
Civil Procedure Sections 580, 580b, or 580d, or subdivision (b)
of Section 726.
Section 11.8 Receiver. Without limiting any of the other
remedies or provisions set forth in this Deed of Trust, Mortgagee
may bring an action for the appointment of a receiver for the
enforcement of the rights provided in Section 2929.5 of the
California Civil Code. Mortgagor acknowledges that any action by
Mortgagee to appoint a receiver pursuant to this Section 11.8
shall not constitute an action within the meaning of subdivision
(a) of the California Code of Civil Procedure Section 7.26.
EXECUTED effective as of ___________________, 1996.
AMERICAN INDUSTRIAL PROPERTIESREIT,
a Texas real estate investment trust
By:
Name:Title:
"Mortgagor"
Exhibit A - Description of the Real Property
Exhibit B - Permitted Encumbrances
THE STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged on the ____ day of
_______________, 1996, by ______________________,
_________________ of AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas
real estate investment trust on behalf of said real estate
investment trust.
Notary Public in and for
the State of
Printed Name:
My Commission expires:
(SAMPLE-STATE OF MARYLAND)
INDEMNITY DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
This Indemnity Deed of Trust, Assignment of Rents and
Security Agreement ("Indemnity Deed of Trust") is a Indemnity
Deed of Trust from PATAPSCO #1 LIMITED PARTNERSHIP, a Texas
limited partnership, whose address for purposes hereof is 6220
North Beltline, Suite 205, Irving, Texas 75063 (called the
"Grantor" and "Assignor") to Paul Gallagher, as Trustee (called
the "Trustee"), whose address is 200 Bloor Street East, Toronto,
Ontario M4W 1E5, for the use and benefit of MANUFACTURERS LIFE
INSURANCE COMPANY, a corporation duly organized under the laws of
Canada, whose address is 200 Bloor Street East, Toronto, Ontario
M4W 1E5 and MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.), a
corporation organized under the laws of the State of Michigan,
whose address is 200 Bloor Street East, Toronto, Ontario M4W 1E5.
MANUFACTURERS LIFE INSURANCE COMPANY and MANUFACTURERS LIFE
INSURANCE COMPANY (U.S.A.) are collectively referred to herein as
the "Lender", "Secured Party", and "Assignee". This instrument
is also an assignment of rents and leases from Assignor to
Assignee, and a security agreement between Grantor and Secured
Party.
WHEREAS, American Industrial Properties REIT (formerly known
as Trammell Crow Real Estate Investors) ("AIP") is now justly
indebted to the Lender, in varying amounts as set forth
hereinafter; and
WHEREAS, the Lender has requested that the Grantor guarantee
payment of the "Debt" (as hereinafter defined) of AIP to Lender
and indemnify Lender against any loss caused by the non-payment
by AIP of the Debt; and
WHEREAS, the Grantor is not primarily liable for the payment
of the Debt.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO THE TRUSTEE
Section 1.1 Grantor's Conveyance of the Property to the
Trustee to Secure the Debt. To secure payment of principal,
lawful interest and other elements of the Debt described and
defined in Article 2, in consideration of the uses and trusts
(the "Trust") established and continued by this Indemnity Deed of
Trust and in consideration of Ten Dollars ($10.00) and other
valuable consideration paid before delivery of this Indemnity
Deed of Trust by each of Trustee and Lender to Grantor, who
hereby acknowledges its receipt and that it is reasonably
equivalent value for this Indemnity Deed of Trust and all other
security and rights given by Grantor, Grantor hereby Grants,
Sells, Conveys, Transfers, Assigns, Sets Over, Confirms and
Delivers unto the Trustee and to his successors or substitutes in
the Trust, the following property (collectively, the "Mortgaged
Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Grantor's estate, right, title and interest in and to all
easements and rights-of-way for utilities, ingress or egress to
or from said property and (ii) all interests of Grantor in and to
all streets, rights-of-way, alleys or strips of land adjoining
said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Grantor and Lender hereby irrevocably declare to
be real estate and part of the Real Property, including all
water, sewage and drainage facilities, wells, treatment plants,
supply, collection and distribution systems, paving, landscaping
and other improvements (collectively, the "Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Grantor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Grantor and Lender
hereby also irrevocably declare to be real estate and part of the
Real Property.
(d) Leases. All Leases (as such term is defined in
Section 9.1 below).
(e) Utilities. All Grantor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Grantor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Grantor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(f) After-acquired Property. All right, title and
interest acquired by Grantor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Indemnity Deed of Trust.
(g) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Grantor and incident
or appertaining to the Real Property, Improvements, Fixtures and
Equipment, Leases or Utilities Capacity or any part of them.
(h) Oil and Gas. All Grantor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(i) Reversions and Remainders. Any and all rights and
estates of Grantor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(j) Contractual Rights. All Grantor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Grantor's other benefits
thereunder.
(k) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Grantor now has, or
at any time hereafter acquires, in and to any of the foregoing,
including the proceeds from condemnation, or threatened
condemnation, and the proceeds of any and all insurance covering
any part of the foregoing; and all related parts, accessions and
accessories to any of the foregoing and all replacements or
substitutions therefor, as well as all other Improvements,
Fixtures and Equipment, Leases, Utilities Capacity and
Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. TO HAVE AND TO
HOLD the Mortgaged Property, together with every right,
privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Trustee, his successors or
substitutes in the Trust and his or their assigns, forever;
provided, however, (a) until the occurrence of a default
hereunder, the Grantor may retain possession of the Mortgaged
Property, and (b) if the Grantor shall pay the obligation in
accordance with the terms of the Notes and shall perform all of
the terms, conditions and provisions of this Indemnity Deed of
Trust and of the Credit Documents (hereinafter defined) and the
Lender shall have no further obligation, commitment or discretion
to make any further advances or loans and the Credit Documents
shall have been terminated, released or of no further force and
effect, then this Indemnity Deed of Trust shall be void. Grantor
represents that Grantor is the lawful owner of the Mortgaged
Property with good title and has the right and authority to
mortgage and convey the Mortgaged Property, and that the
Mortgaged Property is free and clear of all liens, claims and
encumbrances (except only those expressly referred to or
described in Exhibit B) (collectively the "Permitted
Encumbrances"). Grantor warrants specially the Mortgaged
Property and every part of it unto the Trustee, his successors or
substitutes in the Trust, and his or their assigns, (such
warranty to supersede any provision contained in this Indemnity
Deed of Trust limiting the liability of Grantor) subject,
however, to the Permitted Encumbrances.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Conveyance in Trust to Secure Designated
Obligations. This conveyance to the Trustee is in trust to
secure all of the following present and future debt and
obligations (the "Obligation"):
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT),
(ii) a promissory note dated November 27, 1992 in the face amount
of Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by Trammell Crow
Real Estate Investors (now known as American Industrial
Properties REIT) and (iii) any and all past, concurrent or future
modifications, extensions, renewals, rearrangements, replacements
and increases of such notes (collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Grantor, AIP and Patapsco #2
Limited Partnership to Lender which are evidenced by or created
or incurred under (i) an agreement titled Settlement Agreement
dated as of May 22, 1996, entered into by and between Lender,
Grantor, AIP and Patapsco #2 Limited Partnership (the "Settlement
Agreement"). Grantor, AIP and Patapsco #2 Limited Partnership
are hereinafter collectively referred to as "Obligor", (ii) all
agreements provided for in the Settlement Agreement, including
any mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between AIP and Lender and provided for in
the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Indemnity Deed of Trust.
(d) Advances and Other Obligations Pursuant to this
Indemnity Deed of Trust's Provisions. Any and all sums and the
interest which accrues on them as provided in this Indemnity Deed
of Trust which Lender may advance or which Grantor may owe Lender
pursuant to this Indemnity Deed of Trust on account of Grantor's
failure to keep, observe or perform any of Grantor's covenants
under this Indemnity Deed of Trust.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Grantor or any Obligor pursuant to the Settlement Agreement
now or in the future governing, evidencing, guaranteeing or
securing or otherwise relating to payment of all or any part of
the debt evidenced by the Notes, and/or the Settlement Agreement,
or (2) all supplements, amendments, restatements, renewals,
extensions, rearrangements, increases, expansions or replacements
of them (collectively referred to as the "Credit Documents").
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Lender, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Lender in enforcing any of the Credit Documents. All
liens, assignments and security interests created, represented or
continued by this Indemnity Deed of Trust, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Grantor or Grantor's successors or assigns, except
only statutory super priority liens for nondelinquent taxes and
those other liens (if any) expressly identified and stated in
this Indemnity Deed of Trust to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Indemnity Deed of Trust, Grantor,
as Grantor, and referred to in this Article as "Grantor" (whether
one or more) hereby grants to Lender, as Secured Party, and
referred to in this Article as "Secured Party" (whether one or
more), a security interest in all of Grantor's remedies, powers,
privileges, rights, titles and interests (including all of
Grantor's power, if any, to pass greater title than it has
itself) of every kind and character now owned or hereafter
acquired, created or arising in and to (i) the Mortgaged Property
(including both that now and that hereafter existing) to the full
extent that the Mortgaged Property may be subject to the Uniform
Commercial Code of the state or states where the Mortgaged
Property is situated (the "UCC"), (ii) all equipment, accounts,
general intangibles, fixtures, inventory, chattel paper, notes,
documents and other personal property owned by Grantor and used,
intended or acquired for use, on, or in connection with the use
or operation of, the Mortgaged Property, or otherwise related to
the Mortgaged Property, and all products and proceeds of it,
including all security deposits under Leases now or at any time
hereafter held by or for Grantor's benefit, all monetary deposits
which Grantor has been required to give to any public or private
utility with respect to utility services furnished to the
Mortgaged Property, all funds, accounts, instruments, accounts
receivable, documents, trademarks, trade names and symbols used
in connection therewith, and notes or chattel paper arising from
or by virtue of any transactions related to the Mortgaged
Property, all permits, licenses, franchises, certificates, and
other rights and privileges obtained in connection with the
Mortgaged Property, and all guaranties and warranties obtained
with respect to all improvements, equipment, furniture,
furnishings, personal property and components of any thereof
located on or installed at the Mortgaged Property and (iii) the
following described property:
(a) Contracts. All contracts now or hereafter entered
into by and between Grantor and any general contractor or between
Grantor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Grantor or any of the Mortgaged Property), as well as all right,
title and interest of Grantor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Grantor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Grantor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Grantor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Grantor's Covenants Concerning Personalty
Subject to the UCC. Grantor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Indemnity Deed of Trust to Secured Party or the
Trustee, upon or at any time after the occurrence of an Event of
Default (defined in Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Grantor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Grantor any and all rights which Grantor has
with respect to the management, possession, operation, protection
or preservation of the Collateral, including the right to sell or
rent the same for the account of Grantor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Grantor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Grantor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Grantor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Grantor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Grantor resulting from any failure to sell or let
the Collateral, or any part thereof, or from other act or
omission of Secured Party with respect to the Collateral unless
such loss is caused by the gross negligence and willful
misconduct of Secured Party, nor shall Secured Party be obligated
to perform or discharge any obligation, duty, or liability under
any sale or lease agreement covering the Collateral or any part
thereof or under or by reason of this instrument or the exercise
of rights or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Grantor has or may have under any rule of law or statute
now existing or hereafter adopted. To the extent notice is
required by applicable law, Secured Party shall give Grantor
written notice at the address set forth herein (which shall
satisfy any requirement of notice or reasonable notice in any
applicable statute) of Secured Party's intention to make any such
public or private sale. Such notice (if any is required by
applicable law) shall be personally delivered or mailed, postage
prepaid, at least ten (10) calendar days before the date fixed
for a public sale, or at least (10) calendar days before the date
after which the private sale or other disposition is to be made,
unless the Collateral is of a type customarily sold on a
recognized market, is perishable or threatens to decline speedily
in value. Such notice (if any is required by applicable law), in
case of public sale, shall state the time and place fixed for
such sale or, in case of private sale or other disposition other
than a public sale, the time after which the private sale or
other such disposition is to be made. Any public sale shall be
held at such time or times, within the ordinary business hours
and at such place or places, as Secured Party may fix in the
notice of such sale. At any sale the Collateral may be sold in
one lot as an entirety or in separate parcels as Secured Party
may determine. Secured Party shall not be obligated to make any
sale pursuant to any such notice. Secured Party may, without
notice or publication, adjourn any public or private sale or
cause the same to be adjourned from time to time by announcement
at any time and place fixed for the sale, and such sale may be
made at any time or place to which the same may be so adjourned.
In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the selling price is paid by the
purchaser thereof, but Secured Party shall incur no liability in
case of the failure of such purchaser to take up and pay for the
Collateral so sold, and in case of any such failure, such
Collateral may again be sold upon like notice. Each and every
method of disposition described in this Section shall constitute
disposition in a commercially reasonable manner. Grantor, to the
extent applicable, shall remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Grantor to assemble
the Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party
take possession of the Collateral or any part thereof before the
time that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of
disposition of the Collateral to the Debt, such proceeds shall be
applied to the reasonable and actual expenses of retaking,
holding, preparing for sale or lease, selling, leasing and the
like and the reasonable and actual attorneys' fees and legal
expenses incurred by Secured Party, each Obligor, to the extent
applicable, to remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the
whole of the Collateral shall not exhaust the rights of Secured
Party hereunder, and Secured Party is specifically empowered to
make successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Indemnity Deed
of Trust and the security interest created hereby shall remain in
full force and effect as to the unsold portion of the Collateral
just as though no sale had been made; and
(v) in the event any sale hereunder is not
completed or is defective in the opinion of Secured Party, such
sale shall not exhaust the rights of Secured Party hereunder and
Secured Party shall have the right to cause a subsequent sale or
sales to be made hereunder; and
(vi) any and all statements of fact or other
recitals made in any bill of sale or assignment or other
instrument evidencing any foreclosure sale hereunder as to
nonpayment of any indebtedness or as to the occurrence of any
Event of Default, or as to Secured Party having declared all of
such indebtedness to be due and payable, or as to notice of time,
place and terms of sale and the Collateral to be sold having been
duly given, as to any other act or thing having been duly done by
Secured Party, shall be taken as prima facie evidence of the
truth of the facts so stated and recited; and
(vii) Secured Party may appoint or delegate
any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Secured Party,
including the sending of notices and the conduct of sale, but in
the name and on behalf of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Grantor. Grantor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Grantor and agrees
that Secured Party may proceed against any Obligor for the amount
of the Debt owed to Secured Party without taking any action
against any other Obligor or any other person or entity and
without selling or otherwise proceeding against or applying any
of the Collateral in Secured Party's possession.
Section 3.3 UCC Rights are not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Indemnity
Deed of Trust, such election shall not preclude Secured Party or
the Trustee from exercising any or all of the rights and remedies
granted by the other Articles of this Indemnity Deed of Trust as
to the remaining personal property or fixtures.
Section 3.4 Indemnity Deed of Trust is Also Financing
Statement. Secured Party may, at its election, at any time after
delivery of this Indemnity Deed of Trust, file an original of
this Indemnity Deed of Trust as a financing statement or sign one
or more copies of this Indemnity Deed of Trust to use as a UCC
financing statement. Secured Party's signature may be placed
between the last sentence of this Indemnity Deed of Trust and
Grantor's acknowledgment or may follow Grantor's acknowledgment.
Secured Party's signature need not be acknowledged and is not
necessary to the effectiveness of this Indemnity Deed of Trust as
a Indemnity Deed of Trust, mortgage, assignment, pledge, security
agreement or (unless otherwise required by applicable law) as a
financing statement.
Section 3.5 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Grantor will not execute and there will not be filed in any
public office any financing statements affecting the Collateral
other than financing statements in favor of Secured Party under
this Indemnity Deed of Trust, unless prior written specific
consent and approval of Secured Party shall have been first
obtained.
Section 3.6 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Indemnity Deed of Trust, a financing statement or statements
and one or more continuation statements in any jurisdiction where
Secured Party deems it necessary, and at Secured Party's request,
Grantor will join Secured Party in executing one or more
financing statements, continuation statements or both pursuant to
the UCC, in form satisfactory to Secured Party, and will pay the
costs of filing or recording them, in all public offices at any
time and from time to time whenever filing or recording of this
Indemnity Deed of Trust, any financing statement or any
continuation statement is deemed by Secured Party or its counsel
to be necessary or desirable.
Section 3.7 Fixtures. Certain of the Collateral is or
will become "fixtures" (as that term is defined in the UCC) on
the Real Property, and when this Indemnity Deed of Trust is filed
for record in the real estate records of the county where such
fixtures are situated, it shall also automatically operate as a
financing statement upon such of the Collateral which is or may
become fixtures.
Section 3.8 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Grantor hereby
assigns to Secured Party all of Grantor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Indemnity Deed of Trust shall automatically
terminate this assignment.
Section 3.9 Grantor's Warranties Concerning Collateral.
Grantor warrants and represents to Secured Party that Grantor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Indemnity Deed of
Trust (such warranty to supersede any provision contained in this
Indemnity Deed of Trust limiting the liability of Grantor).
Grantor agrees to defend the Collateral and its proceeds against
all claims and demands of any person at any time claiming the
Collateral, its proceeds or any interest in either. Grantor also
warrants and represents that Grantor has not heretofore signed
any financing statement directly or indirectly affecting the
Collateral or any part of it which has not been completely
terminated of record, and no such financing statement signed by
Grantor is now on file in any public office except only those
statements (if any) true and correct copies of which Grantor has
actually delivered to Secured Party.
Section 3.10 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Grantor requests in
writing, but failure of Secured Party to comply with such request
shall not of itself be deemed a failure to exercise reasonable
care, and no failure of Secured Party to take any action not so
requested by Grantor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.11 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Grantor or discharging or otherwise affecting any liability of
Grantor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
GRANTOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Lender. To
better secure the Obligation, Grantor covenants and agrees with
the Trustee and his substitutes and successors in the Trust, for
the use and benefit of Lender and with the intent that the
Trustee, Lender or both may enforce these covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Lender granted in, secured by or ancillary to this Indemnity
Deed of Trust shall be considered as exclusive, but each shall be
cumulative of all others which Lender or the Trustee may now or
hereafter have.
(b) Grantor Waives Marshalling of Assets and Sale in
Inverse Order of Alienation Rights. Grantor hereby irrevocably
WAIVES all rights of marshalling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Grantor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Grantor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this
Indemnity Deed of Trust should be discovered or arise at any time
in the future then, unless Lender is the only holder of it, or
Lender has given specific prior written consent to it, Grantor
agrees to promptly discharge, remove, bond around or insure
around it from the Mortgaged Property. Grantor will notify Lender
in writing within five (5) days of the time that Grantor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Indemnity Deed of Trust, Grantor agrees
to provide, maintain and keep in force the insurance coverages
relating to the Property substantially similar to those
maintained by Grantor as of the date of execution of this
Indemnity Deed of Trust. Grantor agrees to have each such policy
modified within thirty (30) days of the date of this Indemnity
Deed of Trust to (i) name Lender as additional insured, and (ii)
expressly prohibit cancellation or modification of insurance
without the insurer agreeing to endeavor to give thirty (30)
days' written notice to Lender. Grantor agrees to furnish due
proof of payment of the premiums for all such insurance to Lender
promptly after each such payment is made and in any case at least
fifteen (15) days before payment becomes delinquent.
(e) Lender's Rights to Collect Insurance Proceeds.
Grantor hereby assigns to Lender the exclusive right to collect
any and all monies that may become payable under any insurance
policies covering any part of the Property, or any risk to or
about the Property. Lender shall fully cooperate with and assist
Grantor with respect to the filing of insurance claims and the
collection of insurance proceeds so long as Lender reasonably
concurs with Grantor's actions with respect thereto and all
reasonable and actual costs incurred by Lender in connection with
such cooperation and participation are promptly paid or
reimbursed by Grantor upon the request of Lender.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Indemnity
Deed of Trust shall automatically constitute foreclosure upon all
policies of insurance insuring any part of or risk to the
Property and all claims thereunder arising from post-foreclosure
events. The successful bidder or bidders for the Property at
foreclosure, as their respective interests may appear, shall
automatically accede to all of Grantor's rights in, under and to
such policies and all post-foreclosure event claims, and such
bidder(s) shall be named as insured(s) on request, whether or not
the trustee's deed or bill of sale to any such successful bidder
mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Grantor may, at its option, unless an
Event of Default has occurred, either (i) cause Lender to apply
all such monies or any part thereof toward the payment of the
Debt , whether the same be then due or not, such application to
be made in such manner and order as Lender shall elect, and any
balance of insurance proceeds remaining after such application
shall be delivered to Grantor or (ii) cause Lender to disburse to
Grantor, from an interest-bearing account maintained with Lender,
any insurance proceeds received to be used by Grantor solely for
the repair, rebuilding and restoration (hereinafter collectively
referred to as the "Restoration Work") of the Property; provided,
however, that the obligation of Lender to disburse to Grantor
such insurance proceeds shall be and is hereby made subject to
compliance by Grantor with the following terms, conditions and
procedures (hereinafter collectively referred to as the
"Disbursement Procedures"), to wit:
(h) There shall have been submitted to Lender, and
Lender shall have approved, which approval shall not be
unreasonably withheld, the following:
(i) Plans and Specifications for the Restoration
Work prepared by an architect reasonably satisfactory to Lender
(hereinafter referred to as the "Restoration Architect");
(ii) a cost breakdown and analysis (hereinafter
referred to as the "Estimated Cost") certified to Lender by the
Restoration Architect, stating that the Restoration Work can be
completed in accordance with the above-mentioned Plans and
Specifications at the price set forth in the "Restoration
Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Lender pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work must
not exceed the proceeds of the insurance and other funds of
Grantor that are available for application thereto;
(3) After and subject to compliance with all of the
foregoing, the amount held by Lender and available for
restoration shall be disbursed by Lender to Grantor periodically
(but not more frequently than monthly) as the Restoration Work
progresses, as follows:
(i) Lender shall have received in connection with
each such requested disbursement a draw request from the
Restoration Contractor certifying that all work completed to the
date of such draw request has been performed in accordance with
the Plans and Specifications as approved by Lender in a good and
workmanlike manner, which draw request shall have been approved
by the Restoration Architect;
(ii) Lender shall have received a certification
from the Restoration Architect that the remaining amount of funds
held by Lender, including funds held pursuant to subparagraph 2
above, are sufficient to complete the Restoration Work in
accordance with the Plans and Specifications as approved by
Lender;
(iii) Lender shall have also received evidence
satisfactory to Lender (including, without limitation, title
certifications, lien waivers and affidavits) that all
governmental licenses and permits necessary for the performance
of the Restoration Work have been secured and the first-in-
priority status of this Indemnity Deed of Trust continues without
additional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by Lender,
each periodic disbursement shall be made subject to a retainage
of ten percent (10%) of the amount requested, and the aggregate
of the amount so retained shall be disbursed by Lender to Grantor
no earlier than thirty-one (31) days after the Restoration Work
is completed in accordance with said Plans and Specifications (as
evidenced by the certificate of the Restoration Architect), and
Lender shall have received evidence satisfactory to Lender that
all costs incurred in connection with the Restoration Work have
been paid in full and that no party claims or has a right to
claim any lien affecting the Property and arising out of the
Restoration Work; and
(5) Upon termination or expiration of the moratorium
period or any extension thereof as provided for in the Settlement
Agreement, Lender is hereby authorized to apply any amounts held
by Lender pursuant to any subparagraph of this Section 4.1
against the outstanding Debt.
(i) Application of Insurance Proceeds Collected After
Foreclosure. Unless Lender or Lender's representative reserves
at the foreclosure sale the right to collect any uncollected
insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Lender, shall have no interest in such proceeds and Lender
shall apply them, if and when collected, to the Debt in such
order and manner as Lender shall then elect and remit any
remaining balance to Grantor or to such other person or entity as
is legally entitled to them), all proceeds of all such insurance
which are not so reserved by Lender at the foreclosure sale and
are not actually received by Lender until after foreclosure shall
be the property of the successful bidder or bidders at
foreclosure, as their interests may appear, and Grantor shall
have no interest in them and shall receive no credit for them.
(j) Lender Not Obligated to Require, Provide or
Evaluate Insurance. Lender shall have no duty to Grantor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(k) Lender May Elect to Insure Only its Own Interests.
If Lender elects at any time or for any reason to purchase
insurance relating to the Property, it shall have no obligation
to cause Grantor or anyone else to be named as an insured, to
cause Grantor's or anyone else's interests to be insured or
protected or to inform Grantor or anyone else that his or its
interests are uninsured or underinsured.
(l) Grantor Will Correct Defects, Provide Further
Assurances and Papers. Upon Lender's reasonable request, Grantor
will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Indemnity Deed of Trust or any Credit Document or in the
description of any of the Property, and will deliver such further
assurances and execute such additional papers as in the opinion
of Lender or its legal counsel shall be necessary, proper or
appropriate (1) to better convey and assign to the Trustee and
Lender all the Property intended or promised to be conveyed or
assigned or (2) to properly evidence or give notice of the Debt
or its intended or promised security.
(m) Grantor Will Pay Taxes and Impositions and Furnish
Receipts. Grantor agrees at its own cost and expense to pay and
discharge all taxes, assessments, maintenance charges, permit
fees, impact fees, development fees, capital recovery charges,
utility reservation and standby fees and all other similar and
dissimilar impositions of every kind and character
("Impositions") charged, levied, assessed or imposed against any
interest in any of the Property, as they become payable and
before they become delinquent; provided, however, that Grantor
shall have the right to actively contest such Impositions in good
faith if Grantor shall establish sufficient reserves to pay any
such contested Impositions that are later determined to be
properly owed by Grantor; and provided, further, that no attempts
shall be made to foreclose any lien for such Impositions.
Grantor agrees to furnish due proof of such payment to Lender
promptly after payment and before delinquency. Grantor also
agrees to hereafter file all income, franchise and other tax
returns within the time frames that they are required to be filed
and pay all taxes shown thereon to be due, including interest and
penalties, except for those taxes which are being diligently
contested in good faith and for payment of which adequate
reserves have been set aside by Grantor. Grantor shall furnish
written evidence to Lender, upon demand by Lender at any time and
at least once each year, of the amount of taxes that are due and
that they have been paid (a) at the time when they were due and
payable or (b) at least fifteen (15) days prior to the last day
upon which the same could have been paid without penalty.
Grantor's obligation to pay all taxes on all its personal
property shall survive payment of the indebtedness secured hereby
and shall survive termination or release of this Deed of Trust.
(n) Grantor to Pay Monthly Tax and Insurance Deposits
on Request. If and after Lender requests it after the occurrence
of an Event of Default, Grantor agrees to pay the monthly tax and
insurance premium deposits required by Article 8 and to provide
Lender any additional sums needed to pay the taxes and insurance
premiums for the Property when due.
(o) Grantor Will Maintain Property and Won't Remove
Improvements. Grantor agrees to keep, preserve and maintain all
elements of the Property in a good state of repair and condition
and to keep all equipment and stores of supplies needed for its
proper and full operation on the Property, well stocked and in
good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Grantor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Lender's prior
written consent. Grantor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Indemnity Deed of
Trust, such Fixtures and Equipment as from time to time become
worn out or obsolete, provided that either (a) simultaneously
with or before such removal any such equipment shall be replaced
with other equipment of a value at least equal to that of the
replaced equipment and free from any title retention or security
agreement or other encumbrance and from any reservation of title,
and by such removal and replacement Grantor shall be deemed to
have subjected such equipment to the lien, assignments and
security interests of this Indemnity Deed of Trust or (b) any net
cash proceeds received from such disposition shall be paid over
promptly to Lender to be applied to the Debt in the order
determined by Lender in its sole discretion. Grantor shall not
grant, join in or consent to any lien, security interest,
easement, license, use or other charge or interest covering or
affecting all or any part of the Property or initiate, join in
and consent to the change in any private restrictive covenant,
zoning ordinance or other public or private restrictions limiting
or defining the uses which may be made of the Property or any
part thereof without the prior written consent of Lender.
(p) Grantor Will Protect Property from Mechanic's
Liens. Grantor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Indemnity Deed of Trust, for any such bill
which may be legally due and payable; provided, however, that
Grantor shall have the right to actively contest any such bills
in good faith if Grantor shall provide a bond in form, substance
and amount reasonably satisfactory to Lender covering and
affecting any lien for any such bills.
(q) Lender's Inspection and Discussion Rights. Grantor
agrees, after the occurrence of an Event of Default, to permit
Lender and its agents, representatives and employees at all
reasonable times during business hours to go upon, examine,
inspect and remain on the Mortgaged Property, to assist and
cooperate, and require Grantor's employees, agents and
contractors to cooperate, with Lender and to furnish to Lender on
request all pertinent information concerning the physical and
economic condition, development and operation of the Mortgaged
Property. Lender may discuss the Mortgaged Property directly with
any of Grantor's officers and managers.
(r) Lender May Grant Releases without Impairing Other
Collateral or Rights. At all times, Lender shall have the right
to release any part of the Property or any other security from
this Indemnity Deed of Trust or any other security instrument or
device without releasing any other part of the Property or any
other security, without affecting Lender's lien, assignment or
security interest as to any property or rights not released and
without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(s) Grantor Will Notify Lender of Legal Proceedings
and Defend Lien; Lender May Act if Grantor Doesn't. Grantor will
notify Lender in writing promptly of the commencement of any
legal proceedings affecting any part of the Property and will
engage and pay legal counsel to answer and to defend and preserve
Lender's liens, rights and interests and their rank and priority.
If Grantor fails or refuses to promptly begin or to diligently
continue any such acts, then Lender may elect to do so and may
take such action in behalf of Grantor, in Grantor's name and at
Grantor's expense.
(t) Legal Compliance, Governmental Notices. Grantor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Grantor or the Property and
will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(u) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Grantor will notify Lender in
writing thereof, setting forth the nature of such change in
reasonable detail. Grantor will take, and will cause to be taken,
all such steps as are necessary or appropriate to remedy promptly
any such change.
(v) Notice of Default to Lender. Immediately upon
acquiring knowledge thereof, Grantor will notify Lender by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by Lender
be deemed a waiver of a Default or of an Event of Default.
(w) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Grantor will notify
Lender in writing of the pendency of such proceedings. Grantor
shall, at its expense, diligently prosecute any such proceedings,
and shall consult with Lender, in the carrying on or defense of
any such proceedings.
(x) Notice of Name or Address Change. Grantor will
not change Grantor's name or the location of its chief executive
office without first notifying Lender in writing of such change
at least thirty (30) days before its effective date.
(y) Manager. Grantor will, or will cause its managers
to, do and perform any and all acts and things relating to the
management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Indemnity Deed
of Trust and the other Credit Documents.
Section 4.2 Grantor Agrees to Pay or Reimburse Lender's
Expenses. To the extent not prohibited by applicable law,
Grantor will pay all reasonable and actual costs and expenses and
reimburse Lender for any and all reasonable and actual
expenditures of every character incurred or expended from time to
time, after the occurrence of a Default hereunder, in connection
with:
(a) Lender's realizing upon Lender's security interest
in and liens on the Property, and all reasonable and actual costs
and expenses relating to Lender's exercising any of its rights
and remedies under this Indemnity Deed of Trust or any Credit
Document or at law, including all appraisal fees, consulting
fees, filing fees, taxes, brokerage fees and commissions, title
review and abstract fees, litigation report fees, UCC search
fees, other fees and expenses incident to title searches, reports
and security interests, escrow fees, attorneys' fees, legal
expenses, court costs, other fees and expenses incurred in
connection with any complete or partial liquidation of the
Property, and all fees and expenses for any professional services
relating to the Property or any operations conducted in
connection with it.
(b) Provided, that no right or option granted by
Grantor to Lender or otherwise arising pursuant to any provision
of this Indemnity Deed of Trust, the Notes or any Credit Document
shall be deemed to impose or admit a duty on Lender to supervise,
monitor or control any aspect of the character or condition of
the Property or any operations conducted in connection with it
for the benefit of Grantor or any person or entity other than
Lender. Grantor agrees to indemnify, defend and hold Lender, its
shareholders, directors, officers, agents, attorneys, advisors
and employees (collectively "Indemnified Parties") harmless from
and against any and all loss, liability, obligation, damage,
penalty, judgment, claim, deficiency, expense, action, suit, cost
and disbursement of any kind or nature whatsoever (including
interest, penalties, reasonable attorneys' fees and amounts paid
in settlement), REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART
BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from any Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Grantor to Lender shall be a demand
obligation owing by Grantor to Lender and shall bear interest
from the date of expenditure until paid at the default rate
provided in the Notes.
ARTICLE 5
GRANTOR'S REPRESENTATIONS AND WARRANTIES
To induce Lender to extend financial accommodations, Grantor
makes the warranties and representations set forth in this
Article.
Section 5.1 Organization. Grantor is (a) duly organized,
validly existing and in good standing under the laws of the state
of its organization and has full legal right, power and authority
to carry on its business as presently conducted and to execute,
deliver and perform its obligations under this Indemnity Deed of
Trust and any other Credit Documents to which Grantor is a party,
and (b) duly qualified to do business and in good standing in
each jurisdiction in which the nature of the business it conducts
makes such qualification necessary or desirable. Grantor's
execution, delivery and performance of this Indemnity Deed of
Trust and any other Credit Documents to which Grantor is a party
have been duly authorized by all necessary action under Grantor's
organizational documents and otherwise.
Section 5.2 Consents. Grantor's execution, delivery and
performance of this Indemnity Deed of Trust and any other Credit
Documents to which Grantor is a party do not and will not require
(i) any consent of any other person or entity or (ii) any
consent, license, permit, authorization or other approval
(including foreign exchange approvals) of any court, arbitrator,
administrative agency or other governmental authority, or any
notice to, exemption by, any registration, declaration or filing
with or the taking of any other action in respect of, any such
court, arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Indemnity Deed of Trust or any other Credit Document to
which Grantor is a party, nor the fulfillment of or compliance
with the terms and provisions hereof or thereof will (i) violate
any constitutional provision, law or rule, or any regulation,
order or decree of any governmental authority or the basic
organizational documents of Grantor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Grantor is a party or bound.
Section 5.4 Enforceability. Grantor has duly and validly
executed, issued and delivered this Indemnity Deed of Trust and
any other Credit Documents to which Grantor is a party. This
Indemnity Deed of Trust and each other Credit Document to which
Grantor is a party is in proper legal form for prompt enforcement
and is Grantor's valid and legally binding obligation,
enforceable in accordance with its terms.
Section 5.5 Information Accurate. All information
supplied to Lender, concurrently with Grantor's execution of
this Indemnity Deed of Trust are and will be true, correct and
complete in all material respects.
Section 5.6 Taxes. Grantor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Grantor or Obligor has
previously disclosed to Lender, there is no condemnation or other
action, suit or proceeding pending--or, to the best of Grantor's
knowledge, threatened--against or affecting the Property, at law
or in equity, or before or by any governmental authority, which
might result in any material adverse change in the condition or
operation of the Property.
Section 5.8 Grantor Solvent. Grantor is now solvent, and
no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Grantor's knowledge--against Grantor.
Grantor's liabilities and obligations under this Indemnity Deed
of Trust and any other Credit Documents to which Grantor is a
party do not and will not render Grantor insolvent, cause
Grantor's liabilities to exceed Grantor's assets or leave Grantor
with too little capital to properly conduct all of its business
as now conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Indemnity Deed of Trust or any
other Credit Document to which Grantor is a party and no
statement contained in any certificate, schedule, list, financial
statement or other papers furnished to Lender by or on behalf of
Grantor contains--or will contain--any untrue statement of
material fact, or omits--or will omit--to state a material fact
necessary to make the statements contained herein or therein not
misleading.
Section 5.10 Title. Grantor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Indemnity Deed
of Trust or other Credit Documents. Except as otherwise expressly
permitted by this Indemnity Deed of Trust, the lien and security
interest of this Indemnity Deed of Trust will constitute valid
and perfected first and prior liens and security interests on the
Property, subject to no other liens, security interests or
charges whatsoever. The Property is free from damage caused by
fire or other casualty.
Section 5.11 Legal Requirements. To the best of Grantor's
knowledge, Grantor and the Property are in compliance with all
applicable legal requirements and Grantor manages and operates
(and will continue to manage and operate) the Property and its
other businesses in accordance with good industry practices.
Grantor has not received any notice that Grantor and the property
are not in compliance with all applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Indemnity Deed of Trust shall terminate and be
of no further force or effect (and shall be released on Grantor's
written request and at Grantor's cost and expense) upon full
payment of the Debt and complete performance of all of the
obligations of the Obligors under the Settlement Agreement and
the Credit Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Indemnity Deed
of Trust.
Section 6.3 Remedies. Upon the occurrence of any Event
of Default, and at any time thereafter:
(a) Debt Due. All Debt in its entirety is immediately
due and payable without presentment, demand, notice of intention
to accelerate or notice of acceleration, or other notice of any
kind, except as required by the Settlement Agreement, all of
which are hereby expressly WAIVED, and the liens and security
interests created or intended to be created hereby shall be
subject to foreclosure, repossession and sale in any manner
provided for herein or provided for by law, as Lender may elect,
and Lender may exercise any and all of its rights under this
Indemnity Deed of Trust, the Settlement Agreement, the Notes and
any of the other Credit Documents.
(b) Legal Proceedings. Trustee and Lender shall have
the right and power to proceed by suit or suits in equity or at
law, whether for the specific performance of any covenant or
agreement of Grantor contained herein or in aid of the execution
of the powers herein granted, or for foreclosure or the sale of
the Property or any part thereof under the judgment or decree of
any court of competent jurisdiction, or for the enforcement of
any other appropriate legal or equitable remedy.
(c) Trustee's Sale. It shall be the duty of the
Trustee and of his successors and substitutes in the Trust, on
Lender's request (which request is hereby presumed) to enforce
the Trust by selling the Mortgaged Property as is provided in
this Indemnity Deed of Trust, and Grantor does hereby (a)
authorize either or both of the Trustees and each of their
successors and assigns to take possession of and sell the
Mortgaged Property, or any portion thereof, and (b) declare its
assent to the passage of a decree by a court of proper
jurisdiction for the sale of the Mortgaged Property (or any
portion thereof), and the trustees appointed by such decree of
court shall have, subject to the terms of the decree of court,
the same authority and power to sell on the terms and conditions
herein set forth, and for such purposes the word "Trustee" shall
be deemed to include the trustee or trustees so appointed. This
assent to decree shall not be exhausted in the event the
proceeding is dismissed before the indebtedness secured hereby is
paid in full. In connection with any foreclosure, the Trustees
may procure such title reports, surveys, tax histories and
appraisals and they necessary. Any such sale pursuant to (a) or
(b) above to be made in accordance with the applicable provisions
of the Real Property Article of the Annotated Code of Maryland,
with Subtitle W of the Maryland Rules of Procedure, and with any
other general or local laws or rules or regulations of the State
of Maryland relating to mortgages and deeds of trust, and any
amendments or supplements thereto.
(d) Possession of the Mortgaged Property. Grantor
shall, upon demand, forthwith surrender the actual possession,
and, to the extent permitted by law, Lender, by such officers or
agents as it may appoint, may enter and take possession of the
Mortgaged Property and may exclude Grantor, its agents and
servants, wholly therefrom, and having and holding the same, may
use, operate, manage and control the Mortgaged Property or any
part thereof, and upon every such entry Lender, at the expense of
Grantor and of the Mortgaged Property, from time to time may make
all necessary or proper repairs, renewals, replacements and
useful or required alterations, additions, betterments and
improvements to and upon the Mortgaged Property as to it may seem
judicious and pay all costs and expenses of so taking, holding
and managing the same, including reasonable compensation to its
employees and other agents (including, without limitation,
attorney's fees and management and rental commissions) and any
taxes, assessments and other charges prior to the legal operation
and effect of this Indemnity Deed of Trust which Lender may deem
it wise or desirable to pay, and in such case Lender shall have
the right to manage the Mortgaged Property and to carry on the
business and exercise all rights and powers of Grantor, either in
the name of Grantor, or otherwise, as Lender shall deem
advisable; and Lender shall be entitled to collect and receive
all rents thereof and therefrom. The taking of possession and
collection of rents by Lender shall not be construed to be an
affirmation of any lease or acceptance of attornment with respect
to any lease of all or any portion of the Mortgaged Property.
After deducting the expenses of operating the Mortgaged Property
and of conducting the business thereof, and of all repairs,
maintenance, renewals, replacements, alterations, additions,
betterments, improvements and all payments which it may be
required or may elect to make for taxes or other proper charges
on the Mortgaged Property, or any part thereof, as well as just
and reasonable compensation for all its employees and other
agents (including, without limitation, attorney's fees and
management and rental commissions) engaged and employed, the
moneys arising as aforesaid shall be applied to the indebtedness
secured hereby. Whenever all that is due upon the principal of
and interest on the Note and under any of the terms of this Deed
of Trust shall have been paid and all defaults made good, Lender
shall surrender possession to Grantor. The same right of entry,
however, shall exist if any subsequent Event of Default shall
occur.
Section 6.4 Foreclosure Sale.
(a) If one or more of the Events of Default shall
occur, the Trustee, at the direction of Lender, shall sell and in
the case of default of any purchaser or purchasers shall resell
all the Mortgaged Property as an entirety, or in such parcels and
in such order as Lender shall in writing request, or, in the
absence of such request, as the Trustee may determine (Grantor
hereby waiving for itself and for any person claiming by or
through it application of the doctrine of marshalling of assets),
at public auction at some convenient place or places in the
jurisdiction in the State of Maryland where the Mortgaged
Property is situate, or in such other place or places as may be
permitted by law, at such time, in such manner and upon such
terms as the Trustee may fix and briefly specify in each notice
of sale, which notice of sale shall state the time when, and the
place where, the same is to be made, shall contain a brief
general description of the Mortgaged Property to be sold, and
shall be sufficiently given if published as frequently and in
such publication as may be required by law, and Lender or the
Trustee may cause such further public advertisement to be made as
they may deem advisable, and any such sale may be adjourned by
the Trustee by announcement at the time and place appointed for
such sale or for such adjourned sale, and, without further notice
or publication, such sale may be made at the time and place to
which the same shall be so adjourned. If one or more leases are
entered into or recorded subsequent to the recording of this
Indemnity Deed of Trust or are otherwise subordinate to this
Indemnity Deed of Trust, the Trustee shall sell, at the direction
of the Lender, subject to any one or more of such tenancies that
are designated and selected by the Lender.
(b) Upon the completion of any sale and compliance
with all the terms thereof, the Trustee shall execute and deliver
to the purchaser or purchasers a good and sufficient deed of
conveyance, assignment and transfer, lawfully conveying,
assigning and transferring the Mortgaged Property sold. Payment
to the Trustee of the entire purchase money shall be full and
sufficient discharge of any purchaser or purchasers of the
Mortgaged Property, sold as aforesaid, for the purchase money;
and no such purchaser, or his representatives, successors or
assigns, after paying such purchase money and receiving the deed
shall be bound to see to the application of such purchase money.
(c) Immediately upon the filing or docketing of suit
preliminary to a foreclosure sale of the Mortgaged Property, or
any part thereof under this Indemnity Deed of Trust, there shall
be and become due and owing by Grantor, a Trustee's commission on
the total amount of the indebtedness secured hereby equal to two
and one-half percent (2 1/2%), and an auctioneer's commission on
the total amount of the indebtedness of one percent (1%), and
Lender shall not be required to receive the principal and
interest in satisfaction of the indebtedness secured hereby, but
said sale may be proceeded with unless, prior to the day
appointed therefor, tender is made of said principal, interest,
commissions and all expenses and costs incident to such sale and
all other sums that are part of the indebtedness secured hereby.
Section 6.5 Application of Foreclosure Sale Proceeds.
The proceeds of any sale of the Mortgaged Property, whether under
the power of sale herein granted, assent to decree or through
other judicial proceedings and any rents and other amounts
collected by Lender from Lender's holding, leasing, operating or
making any other use of the Mortgaged Property, shall be applied
by Lender (or by the receiver, if one is appointed) to the extent
that funds are available therefrom in the following order of
priority:
(a) To Expenses. First, to pay all proper costs,
charges, fees and expenses, including the fees and costs herein
provided for and to pay the costs of appraisals of the Mortgaged
Property and the costs of title examination; and to pay or repay
to Lender or the Trustee all moneys advanced by them or either of
them for taxes, insurance or otherwise, with interest thereon as
provided herein; and to pay all taxes due upon the Mortgaged
Property at the time of sale; and to pay any other lien or
encumbrance prior to the legal operation and effect of this
Indemnity Deed of Trust unless said sale is made subject to any
such taxes or other lien or encumbrance; and to pay a counsel fee
of One thousand five hundred Dollars ($1,500.00) for conducting
the proceedings if without contest, but if legal services are
rendered to Trustee or to Lender in connection with any contested
matter in the proceedings, then such additional counsel fees and
expenses shall be allowed out of the proceeds of sale or sales as
the court may deem proper; and to pay additional reasonable
counsel fees, if any, incurred as a result of representing
Lender's interest in any proceedings on behalf of any Grantor
before any United States Bankruptcy Court or similar State
insolvency proceedings; and also to pay a commission to the
Trustee or other party making the sale equal to five percent (5%)
of the gross sale price; and also to pay a commission to the
auctioneer conducting the sale of three percent (3%) of the gross
sale price.
(b) To Other Obligations Owed to Lender. Second, to
the payment of all amounts, other than the principal balance and
accrued but unpaid interest, which may be due to Lender under the
Notes, the Settlement Agreement or any other Credit Document,
together with interest thereon as provided therein.
(c) To Accrued Interest on the Debt. Third, to the
payment of all accrued but unpaid interest due on the Debt.
(d) To Debt Principal. Fourth, to the payment of the
principal balance on the Debt and the principal owing under this
Indemnity Deed of Trust, the Settlement Agreement and any other
Credit Document, irrespective of whether then matured, and if it
is payable in installments and not matured, then to the
installments in such order as Lender shall elect.
(e) To Junior Lienholders. Fifth, to the extent funds
are available therefor out of the sale proceeds or any rents and,
to the extent known by Lender, to the payment of any debt or
obligation secured by a subordinate deed of trust on or security
interest in the Mortgaged Property.
(f) To Grantor. Sixth, to Grantor, its successors and
assigns, or to whomsoever may be lawfully entitled to receive
such proceeds.
Section 6.6 Lender May Require Abandonment and
Recommencement of Sale. If the Trustee or his substitute or
successor should commence the sale, Lender may at any time before
the sale is completed direct the Trustee to abandon the sale, and
may at any time or times thereafter direct the Trustee to again
commence foreclosure; or, irrespective of whether foreclosure is
commenced by the Trustee, Lender may at any time after an Event
of Default institute suit for collection of the Debt or
foreclosure of this Indemnity Deed of Trust. If Lender should
institute suit for collection of the Debt or foreclosure of this
Indemnity Deed of Trust, Lender may at any time before the entry
of final judgment dismiss it and require the Trustee to sell the
Mortgaged Property in accordance with the provisions of this
Indemnity Deed of Trust.
Section 6.7 Multiple Sales; Indemnity Deed of Trust
Continues in Effect. No single sale or series of sales by the
Trustee or by any substitute or successor and no judicial
foreclosure shall extinguish the lien or exhaust the power of
sale under this Indemnity Deed of Trust except with respect to
the items of property sold, nor shall it extinguish, terminate or
impair Grantor's contractual obligations under this Indemnity
Deed of Trust, but such lien and power shall exist for so long
as, and may be exercised in any manner by law or in this
Indemnity Deed of Trust provided as often as the circumstances
require to give Lender full relief under this Indemnity Deed of
Trust, and such contractual obligations shall continue in full
force and effect until final termination of this Indemnity Deed
of Trust.
Section 6.8 Lender May Bid and Purchase. Lender shall
have the right to become the purchaser at any sale made under
this Indemnity Deed of Trust, being the highest bidder, and
credit given upon all or any part of the Debt shall be the exact
equivalent of cash paid for the purposes of this Indemnity Deed
of Trust.
Section 6.9 Successor or Substitute Trustee. In case of
absence, death, inability, refusal or failure of the Trustee in
this Indemnity Deed of Trust named to act, or in case he should
resign (and he is hereby authorized to resign without notice to
or consent of Grantor), or if Lender shall desire, with or
without cause, to replace the Trustee in this Indemnity Deed of
Trust named, or to replace any successor or substitute previously
named, Lender or any agent or attorney-in-fact for Lender may
name, constitute and appoint a successor and substitute trustee
(or another one) without other formality than an appointment and
designation in writing, which need not be acknowledged, filed or
recorded to be effective, except only in those circumstances, if
any, where acknowledgment, filing and/or recording is required by
applicable law and such law also precludes Grantor from
effectively waiving such requirement. Upon such appointment,
this conveyance shall automatically vest in such substitute
trustee, as Trustee, the estate in and title to all of the
Mortgaged Property, and such substitute Trustee so appointed and
designated shall thereupon hold, possess and exercise all the
title, rights, powers and duties in this Indemnity Deed of Trust
conferred on the Trustee named and any previous successor or
substitute Trustee, and his conveyance to the purchaser at any
such sale shall be equally valid and effective as if made by the
Trustee named in this Indemnity Deed of Trust. Such right to
appoint a substitute Trustee shall exist and may be exercised as
often and whenever from any of said causes, or without cause, as
aforesaid, Lender or Lender's agent or attorney-in-fact elects to
exercise it.
Section 6.10 Right to Receiver. Upon the occurrence of an
Event of Default or at any time after commencement of a Trustee's
foreclosure sale or any legal proceedings under this Indemnity
Deed of Trust, Lender may, at Lender's election and by or through
the Trustee or otherwise, make application to a court of
competent jurisdiction for appointment of a receiver of the
Property, as a matter of strict right, without notice to Grantor
and without regard to the adequacy of the value of the Property
for the repayment of the Debt, and Grantor hereby irrevocably
consents to such an appointment. Any receiver shall have all the
usual powers and duties of receivers in similar cases, including
the full power to possess, rent, maintain, repair and operate the
Property upon such terms and conditions as may be approved by the
court, and shall apply the rents realized in the same manner and
order as foreclosure proceeds in accordance with Section 6.5.
Section 6.11 Tenants at Will. Grantor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Grantor, or the
parties so holding possession, shall become and be considered as
tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
Section 6.12 Protection of Trustees.
(a) Actions of Trustee. The Trustee shall be
protected in acting upon any notice, request, consent, demand,
statement, note or other paper or document believed by the
Trustee to be genuine and to have been signed by the party or
parties purporting to sign the same. The Trustee shall not be
liable for any error of judgment, nor for any act done or step
taken or omitted, nor for any mistake of law or fact, nor for
anything which they may do or refrain from doing in good faith
nor generally shall a Trustee have any accountability hereunder
except for his own individual willful default.
(b) Trustee as Attorney. The Trustee may act
hereunder and may sell and convey the Property as herein provided
although the Trustee has been, may now be or may hereafter be, an
attorney or agent of Lender, in respect of any matter or business
whatsoever.
(c) Incapacity or Absence From State. It is further
understood and agreed that in the event of the disability of one
of the Trustees, or of such Trustee's absence from the State of
Maryland, the rights, powers, privileges, discretions, duties,
obligations, and trust hereby created and reposed in the Trustees
may be executed by the other Trustee or Trustees with the same
legal force, effect and virtue as though executed by both or all
of them.
ARTICLE 7
LENDER'S RIGHT TO PERFORM GRANTOR'S OBLIGATIONS
Section 7.1 Lender May Elect to Perform Defaulted
Obligations. Except for Grantor's failure to maintain the
insurance coverage required by the other provisions of this
Indemnity Deed of Trust, if Grantor should fail to comply with
any of its other agreements, covenants or obligations under this
Indemnity Deed of Trust, the Settlement Agreement, any of the
Notes, or any other Credit Document so as to cause such failure
to constitute an Event of Default or a Default which is then
continuing, then Lender (in Grantor's name or in Lender's own
name) may perform them or cause them to be performed for
Grantor's account and at Grantor's expense, but shall have no
obligation to perform any of them or cause them to be performed.
With respect to Grantor's failure to maintain the insurance
coverage required hereby, however, Lender itself may purchase or
secure such insurance coverage for the Mortgaged Property prior
to providing Grantor with any notice of and opportunity to cure
or remedy such failure. Any and all expenses thus incurred or
paid by Lender under the provisions of this paragraph shall be
Grantor's obligations to Lender due and payable on demand, or if
no demand is sooner made, then they shall be due on or before
four (4) years after the respective dates on which they were
incurred, and each shall bear interest from the date Lender pays
it until the date Grantor repays it to Lender, at the maximum
nonusurious rate of interest from time to time permitted by
appropriate state or federal law from time to time permits the
higher nonusurious interest rate (the "Ceiling Rate"), or, only
if applicable law imposes no maximum nonusurious rate, then at
the same rate as is provided for in the Notes for interest on
past due principal (the "Past Due Rate"). Upon making any such
payment or incurring any such expense, Lender shall be fully and
automatically subrogated to all of the rights of the person,
corporation or body politic receiving such payment. Any amounts
owing by Grantor to Lender pursuant to this or any other
provision of this Indemnity Deed of Trust shall automatically and
without notice be and become a part of the Debt and shall be
secured by this and all other instruments securing the Debt. The
amount and nature of any such expense and the time when it was
paid shall be fully established by the affidavit of Lender or any
of Lender's officers or agents or by the affidavit of any
original, substitute or successor Trustee acting under this
Indemnity Deed of Trust. Without notice to Grantor or any other
person or entity, the Ceiling Rate and the Past Due Rate shall
automatically fluctuate upward and downward as and in any amount
by which the maximum nonusurious rate of interest permitted by
such applicable law and the rate of interest as provided for in
the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Lender in
this Article shall in no event be considered or constitute a cure
of the default or a waiver of Lender's right at any time after an
Event of Default to declare the Debt to be at once due and
payable, but is cumulative of such right and of all other rights
given by this Indemnity Deed of Trust, the Notes and the Credit
Documents and of all rights given Lender by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Grantor agrees that upon the written request of Lender,
Grantor will thereafter deposit with Lender each month an amount
equal to one-twelfth (1/12) of the aggregate of (i) the next
succeeding premiums (or payments in respect of them, if premiums
are financed) on all insurance policies which Grantor is required
by or pursuant to this Indemnity Deed of Trust to maintain on the
Property, and (ii) the amount of the next succeeding annual tax
payments, assessment installments, maintenance charges and other
Impositions to become due and payable with respect to the
Property, as reasonably estimated by Lender, plus, with the first
of such monthly deposits, an additional month's share (a twelfth)
of such premiums and taxes for each month less than twelve
remaining before the next payment thereof falls due. Any amounts
deposited shall not be, nor be deemed to be, trust funds, and all
amounts may be commingled with the general funds of the depositor
and be deposited with the Lender or at an institution designated
by the Lender; however, the Lender shall not be responsible for
the solvency of such institution if it is insured by the Federal
Deposit Insurance Corporation or other regulatory agency at the
time of designation. At least fifteen (15) days before the date
on which any such insurance premium (or payment in respect of it,
if premiums are financed) or any of the Impositions must be paid
to avoid delinquency, promptly after Lender's request, Grantor
agrees to deliver to Lender a statement or statements showing the
amount of the premium (or payment in respect of it, if premiums
are financed) or Impositions required to be paid and the name and
mailing address of the concern or authority to which it is
payable and, at the same time, Grantor agrees to deposit with
Lender such amounts as will, when added to the amount of such
deposits previously made and then remaining available for the
purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Lender by Grantor for the payment of
such amounts and Lender has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Lender hereby agrees to apply such deposits
in payment of such insurance obligations and Impositions prior to
delinquency, but only if sufficient funds have been deposited
with Lender by Grantor for the payment of such amounts and Lender
has been timely furnished with the requisite statements of the
amounts required to be paid and the names and addresses of the
concerns or authorities to which such amounts are payable.
Lender shall in no way be obligated to pay any interest to
Grantor on such deposits, and upon the occurrence of an Event of
Default which is then continuing, Lender is hereby irrevocably
authorized to apply any and all amounts so deposited with Lender
against the amounts due under the Debt (with such order of
application to be at Lender's discretion) without any further
notice to or consent from Grantor or any other person or entity.
Additionally, Grantor hereby irrevocably grants to Lender a
security interest and assigns to Lender all such funds so
deposited with Lender as additional security for payment of the
Debt and all other amounts now or hereafter outstanding under any
of the Credit Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. Grantor hereby assigns and transfers to Lender all
rents (severed or unsevered), revenues, income, profits and
proceeds of the foregoing ("Rental") payable under each Lease
(hereinafter defined) now or at any time hereinafter existing,
such assignment being upon the terms set forth in Section 9.2
below. The term "Lease" or "Leases" means any oral or written
agreement, now existing or made later, between Grantor and
another person or entity to use or occupy all or any portion of
the Property, together with any guaranties or security for the
obligations of any tenant, lessee, sublessee or other person or
entity having the right to occupy, use or manage any part of the
Property under a Lease. Each time Grantor enters into a Lease,
such Lease shall automatically become subject to this Article
without further action.
Section 9.2 Terms of Assignment. The transfer of Rental
to Lender shall be upon the following terms: (a) until the
occurrence of an Event of Default, Grantor shall have the right
to collect Rental and each tenant may pay Rental directly to
Grantor; but after an Event of Default, Grantor may not collect
Rental and to the extent Grantor receives any Rent thereafter
accruing or paid, Grantor covenants to hold all such Rental in
trust for the use and benefit of Lender; (b) upon receipt from
Lender of notice that an Event of Default exists, each tenant is
hereby authorized and directed to pay directly to Lender all
Rental thereafter accruing or payable and receipt of Rental by
Lender shall be a release of such tenant to the extent of all
amounts so paid; (c) Rental so received by Lender shall be
applied by Lender, first to the expenses, if any, of collection
and then in accordance with Section 6.5 hereof; (d) without
impairing its rights hereunder, Lender may, at its option, at any
time and from time to time, release to Grantor Rental so received
by Lender, or any part thereof; (e) Lender shall not be liable
for its failure to collect or its failure to exercise diligence
in the collection of Rental, but shall be accountable only for
Rental that it shall actually receive; and (f) the assignment
contained in this Article shall terminate upon the release of
this Indemnity Deed of Trust, but no tenant shall be required to
take notice of termination until a copy of such release shall
have been delivered to such tenant. Prior to the occurrence of
an Event of Default, the Rental shall be used to pay expenses
associated with owning and operating the Property and to pay the
Debt before being used for any other purpose. It shall never be
necessary for Lender to institute legal proceedings of any kind
whatsoever to enforce the provisions of this Article.
Notwithstanding anything to the contrary in this document, it is
agreed that any Rental will not constitute a payment by the
Grantor to Lender of any portion of the Debt (and hence will not
be credited to the Debt) until the Rental is actually paid to the
Lender and received and retained by the Lender and then, in such
event, the Rental so received shall be applied in accordance with
Section 9.2(c). Notwithstanding anything to the contrary in this
document, this Article shall not make Lender an owner or operator
of the Property for the purposes of environmental liability and
this Article shall not make Lender a partner of Grantor.
Further, this Article shall be effective and perfected upon
recordation of this document.
Section 9.3 Remedies. Should an Event of Default occur,
Grantor agrees to deliver to Lender possession and control of all
Rental held by Grantor in trust for the benefit of Lender,
provided, however, that Grantor may apply a portion of such
Rental to no more than one month's normal and actual operating
costs of the Property. Grantor specifically agrees that Lender
may upon the occurrence of any Event of Default or at any time
thereafter, personally or through an agent selected by Lender,
take--or have the Trustee take--possession and control of all or
any part of the Property and may receive and collect all Rental
theretofore accrued and all thereafter accruing therefrom until
the final termination of this Indemnity Deed of Trust or until
the foreclosure of the lien of this Indemnity Deed of Trust,
applying so much thereof as may be collected before sale of the
Property by the Trustee or judicial foreclosure of this Indemnity
Deed of Trust first to the expenses of Lender incurred in
obtaining the Rental and then applying the Rental so received in
accordance with the provisions of Section 6.5 hereof. Any such
action by Lender shall not operate as a waiver of the Event of
Default in question, or as an affirmance of any Lease or of the
rights of any tenant in the event title to that part of the
Property covered by the Lease or held by the tenant should be
acquired by Lender or other purchaser at foreclosure sale.
Lender, Lender's agent or the Trustee may use against Grantor or
any other person such lawful or peaceable means as the person
acting may see fit to enforce the collection of any such Rental
or to secure possession of the Property, or any part of it and
may settle or compromise on any terms as Lender, Lender's agent
or the Trustee sees fit, the liability of any person or persons
for any such Rental. In particular, Lender, Lender's agent or
the Trustee may institute and prosecute to final conclusion
actions of forcible entry and detainer, or actions of trespass to
try title, or actions for damages, or any other appropriate
actions, in the name of Lender, Grantor, or the Trustee, and may
settle, compromise or abandon any such actions as Lender,
Lender's agent or the Trustee may see fit; and Grantor binds
itself and its successors and assigns to take whatever lawful or
peaceable steps Lender, Lender's agent or the Trustee may ask of
it or any such person or concern so claiming to take for such
purposes, including the institution and prosecution of actions of
the character above stated. However, neither Lender, Lender's
agent nor the Trustee shall be obligated to collect any such
Rental or be liable or chargeable for failure to do so. Upon any
sale of the Property or any part thereof in foreclosure of the
lien or security interest created by this Indemnity Deed of
Trust, such Rental so sold which thereafter accrues shall be
deemed included in such sale and shall pass to the purchaser free
and clear of the assignment made in this Article. Nothing in
this Section is intended to require the Lender to institute any
legal proceedings or engage in any self help remedies in order to
make the absolute assignment of the Rental to Lender operative.
Section 9.4 Lender in Possession; No Liability of Lender.
Lender's acceptance of this assignment shall not, before entry
upon and taking possession of the Property by Lender, be deemed
to constitute Lender a "Lender in possession," nor obligate
Lender to appear in or defend any proceeding relating to any of
the Leases or to the Property, take any action hereunder, expend
any money, incur any expenses or perform any obligation or
liability under the Leases, or assume any obligation under the
Leases including the obligation to return any deposit delivered
to Grantor by any tenant. Neither Lender nor Trustee shall not
be liable for any injury or damage to person or property in or
about the Property, except injury or damage resulting from
Lender's wilful misconduct or gross negligence. Neither the
collection of Rental due under the Leases herein described nor
possession of the Property by Lender shall render Lender liable
with respect to any obligations of Grantor under any of the
Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Grantor covenants,
warrants and represents that:
(a) Neither Grantor nor any previous owner has entered
into any prior oral or written assignment, pledge or reservation
of the Rental, entered into any prior assignment or pledge of
Grantor's landlord interests in any Lease or performed any act or
executed any other instruments which might prevent or limit
Lender from operating under the terms and conditions of this
Article;
(b) Grantor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Grantor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Lender's request, execute an
additional assignment to Lender of all Leases then affecting the
Property and all Rental and other sums due thereunder by
assignment(s) in form and substance satisfactory to Lender and
(iii) at the request of Lender, record such Leases and the
assignment(s) thereof to Lender;
(d) Grantor shall enforce the tenants' obligations
under the Leases in the ordinary course of Grantor's business;
(e) Grantor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Indemnity Deed of Trust and any other
encumbrances permitted by this Indemnity Deed of Trust;
(f) Grantor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Lender;
(g) Grantor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Lender's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Indemnity Deed of Trust;
(i) After the occurrence of an Event of Default,
Grantor shall from time to time furnish to Lender, within thirty
(30) days after demand therefor, true, correct and complete
copies of all Leases or any portion of the Leases specified by
Lender; and
(j) Grantor shall not in any event collect any Rental
more than one (1) month in advance of the time it will be earned
(and if Grantor does so, in addition to any other rights or
remedies available by reason of such Event of Default, all Rental
so collected more than one (1) month in advance of the time it is
earned shall be delivered to Lender to be applied to the Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Lender.
Section 9.7 Reassignment. By Lender's acceptance of this
Indemnity Deed of Trust, it is understood and agreed that a full
and complete release of this Indemnity Deed of Trust shall
operate as a full and complete reassignment to Grantor of the
Lender's rights and interests assigned to Lender under this
Article (subject to the automatic reinstatement provisions of
Section 10.15 below).
Section 9.8 Subordination of Indemnity Deed of Trust to
Leases. It is agreed and understood that Lender hereby reserves
the right and shall have the right, at any time and from time to
time, without the consent or joinder of any other party, to
subordinate this Indemnity Deed of Trust and the liens,
assignments and security interests created by this Indemnity Deed
of Trust to all or any of the Leases regardless of the respective
priority of any of such Leases and this Indemnity Deed of Trust.
Upon doing so and filing evidence of such subordination in the
real property records in the county or counties where the Real
Property is located, a foreclosure of Lender's liens, assignments
and security interests under this Indemnity Deed of Trust shall
be subject to and shall not operate to extinguish any of said
Leases as to which such subordination is operative.
Section 9.9 Assignment of Bankruptcy Awards. Grantor
hereby assigns to the Trustee for the benefit of Lender any award
made hereafter to it in any court procedure involving any of the
tenants in any bankruptcy, insolvency or reorganization
proceeding in any state or federal court and any and all payments
by any tenant in lieu of rent.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Indemnity Deed of Trust. Any of the Debt may be extended,
rearranged, renewed, or otherwise changed in any way, and any
part of the security described in this Indemnity Deed of Trust or
any other security for any part of the Debt may be waived or
released without in anyway altering or diminishing the force,
effect or lien of this Indemnity Deed of Trust, and the lien,
assignment and security interest granted by this Indemnity Deed
of Trust shall continue as a prior lien, assignment and security
interest on all of the Property not expressly so released, until
the final termination of this Indemnity Deed of Trust.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Indemnity Deed of Trust which under applicable laws are
or may be deemed to constitute interest ever exceed the maximum
nonusurious interest rate permitted by applicable state or
federal laws, whichever permit the higher rate. In this
connection, Grantor and Lender stipulate and agree that it is
their common and overriding intent to contract in strict
compliance with applicable usury laws. In furtherance thereof,
none of the terms of this Indemnity Deed of Trust shall ever be
construed to create a contract to pay, as consideration for the
use, forbearance or detention of money, interest at a rate in
excess of the maximum rate permitted by applicable laws. Grantor
shall never be liable for interest in excess of the maximum rate
permitted by applicable laws. If, for any reason whatever, such
interest paid or received during the full term of the applicable
indebtedness produces a rate which exceeds the maximum rate
permitted by applicable laws, Lender shall credit against the
principal of such indebtedness (or, if such indebtedness shall
have been paid in full, shall refund to the payor of such
interest) such portion of said interest as shall be necessary to
cause the interest paid to produce a rate equal to the maximum
rate permitted by applicable laws. All sums paid or agreed to be
paid to Lender for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full
term of the applicable indebtedness, so that the interest rate is
uniform throughout the full term of such indebtedness. The
provisions of this Section shall control all agreements, whether
now or hereafter existing and whether written or oral, between
Grantor and Lender.
Section 10.3 Subrogation to Liens Discharged. Grantor
hereby agrees that Lender shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Lender. Irrespective of any formal or informal acknowledgment of
partial or complete satisfaction or release of the Discharged
Obligations, the Subrogated Liens shall be continued, renewed,
extended, brought forward and rearranged as security for the Debt
in addition to and cumulative of the lien and security interest
of this Indemnity Deed of Trust. Foreclosure under this Indemnity
Deed of Trust shall constitute foreclosure of the Subrogated
Liens.
Section 10.4 Due on Sale. Grantor agrees that if, without
Lender's prior written consent (except as otherwise provided
herein or in the Settlement Agreement), (a) any part of the
Property should be directly or indirectly transferred, conveyed
or mortgaged, voluntarily or involuntarily, absolutely or as
security, or (b) Grantor should enter into any contractual
arrangement to transfer, convey or mortgage any part of the
Property or any interest either in the Property, the moratorium
provided in Article VI of the Settlement Agreement shall
immediately terminate without notice to Obligors. Lender is
under no obligation to consent to the transfer or encumbrance of
the Property except on the terms provided in the Settlement
Agreement irrespective of whether or not the transfer, conveyance
or mortgage would or might (i) diminish the value of any security
for the Debt, or (ii) increase the likelihood of Lender's having
to resort to any security for the Debt after default. If
Lender's consent to a proposed mortgaging is requested, Lender
shall have the right (in addition to its absolute right to refuse
to consent to any such transaction) to condition its consent upon
satisfaction of any one or more of the following requirements:
(1) that the interest rate(s) on all or any part of the Debt be
increased to a rate which is then acceptable to Lender; (2) that
a principal amount deemed appropriate by Lender be paid against
the Debt to reduce to a level which is then acceptable to Lender
the ratio that the outstanding balance of the Debt bears to the
value of the Property as determined by Lender; (3) that the
liability to Lender of Grantor and all makers and guarantors of
all or any part of the Debt will be confirmed by them in writing
to be unaffected and unimpaired by such mortgaging; and (4) that
any proposed junior Lender expressly subordinate to all liens
and security interests securing the Debt as to both lien and
payment right priority and consent to the proposed transaction in
a writing addressed to Lender.
Section 10.5 Condemnation. If before final termination of
this Indemnity Deed of Trust, all or a portion of the Property is
taken for public or quasi-public purposes, either through eminent
domain or condemnation proceedings, by voluntary conveyance under
threat of condemnation with Lender's express written consent and
joinder or otherwise, Grantor hereby agrees that any and all sums
of money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Lender, and they are hereby
assigned to Lender, and shall be paid directly to Lender. All
proceeds of condemnation awards or proceeds of sale in lieu of
condemnation with respect to the Property and all judgments,
decrees and awards for injury or damage to the Property shall be
applied, first, to reimburse Lender or the Trustee for all costs
and expenses, including reasonable attorneys' fees, incurred in
connection with collection of such proceeds and, second, the
remainder of said proceeds shall be applied, at the reasonable
discretion of Lender, to the payment of the Debt in the order
determined by Lender in its sole discretion, or paid out to
repair or restore the Property so affected by such condemnation,
injury or damage in the same manner as provided in Section 4.1(g)
above. Grantor agrees to execute such further assignments of all
such proceeds, judgments, decrees and awards as Lender may
request. Lender is hereby authorized, in the name of Grantor, to
execute and deliver valid acquittances for, and to appeal from,
any such judgment, decree or award. Lender shall not be, in any
event or circumstances, liable or responsible for failure to
collect, or exercise diligence in the collection of, any such
proceeds, judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfying the notice requirements set
forth in the Settlement Agreement shall be satisfactory under
this Indemnity Deed of Trust.
Section 10.7 Lender and Grantor. The term "Lender" as
used in this Indemnity Deed of Trust shall mean and include the
holder or holders of the Debt from time to time, and upon
acquisition of the Debt by any holder or holders other than the
named Lender, effective as of the time of such acquisition, the
term "Lender" shall mean all of the then holders of the Debt, to
the exclusion of all prior holders not then retaining or
reserving an interest in the Debt from time to time, whether such
holder acquires the Debt through succession to or assignment from
a prior Lender. The term "Grantor, its successors and assigns"
shall also include the heirs and legal representatives of each
Grantor who is a natural person and the receivers, conservators,
custodians and trustees of each Grantor. In general, Grantor may
not assign or delegate any of its rights, interests or
obligations under this Indemnity Deed of Trust, the Notes, the
Settlement Agreement or any Credit Document without Lender's
express prior written consent, and any attempted assignment or
delegation without it shall be void or voidable at Lender's
election; provided, however, that Grantor may delegate its
obligations under this Indemnity Deed of Trust and any other
Credit Documents regarding the management, maintenance and
leasing of the Mortgaged Property, as well as the construction of
tenant finish and "cosmetic-type" capital improvements to the
Mortgaged Property, to reputable agents or independent
contractors without the prior written consent of Lender, but in
any and all such events, Grantor shall remain fully obligated to
Lender in accordance with the provisions of this Indemnity Deed
of Trust and all other Credit Documents for the complete and full
compliance with and performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Indemnity Deed of Trust
to Articles, Sections and Exhibits refer to Articles, Sections
and Exhibits in and to this Indemnity Deed of Trust unless
otherwise specified. The Article and Section numbers, Exhibit
designations and headings used in this Indemnity Deed of Trust
are included for convenience of reference only and shall not be
considered in interpreting, applying or enforcing this Indemnity
Deed of Trust.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Indemnity Deed of Trust are hereby incorporated into
it at that place in the text, to the same effect as if set out
there verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Indemnity Deed
of Trust, it shall be read as if it were written, "including by
way of example only and without in any way limiting the
generality of the clause or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Indemnity Deed of Trust each includes the masculine,
feminine and neuter genders.
Section 10.12 Severability. If any provision of this
Indemnity Deed of Trust is held to be illegal, invalid or
unenforceable under present or future laws, the legality,
validity and enforceability of the remaining provisions of this
Indemnity Deed of Trust shall not be affected thereby, and this
Indemnity Deed of Trust shall be liberally construed so as to
carry out the intent of the parties to it. Each waiver in this
Indemnity Deed of Trust is subject to the overriding and
controlling rule that it shall be effective only if and to the
extent that (a) it is not prohibited by applicable law and (b)
applicable law neither provides for nor allows any material
sanctions to be imposed against Lender for having bargained for
and obtained it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Indemnity
Deed of Trust, or if the lien, assignments and security interest
of this Indemnity Deed of Trust cannot be lawfully enforced to
pay any part of the Debt, then and in either such event, at the
option of Lender, all payments on the Debt shall be deemed to
have been first applied against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Indemnity Deed of Trust is executed by more than one person,
corporation, partnership, joint venture, trust or other legal
entity, it shall be construed as though "Grantor" were written
"Grantors" and as though the pronouns and verbs in their number
were changed to correspond, and in such case, (a) each of
Grantors shall be bound jointly and severally with one another to
keep, observe and perform the covenants, agreements, obligations
and liabilities imposed by this Indemnity Deed of Trust upon the
"Grantor", (b) a release of one or more persons, corporations or
other legal entities comprising "Grantor" shall not in any way be
deemed a release of any other person, corporation or other legal
entity comprising "Grantor" and (c) a separate action hereunder
may be brought and prosecuted against one or more of the persons,
corporations or other legal entities comprising "Grantor" without
limiting any liability of or impairing Lender's right to proceed
against any other person, corporation or other legal entity
comprising "Grantor".
Section 10.15 Grantor agrees that, if at any time all or
any part of any payment previously applied by Lender to the Debt
is or must be returned by Lender--or recovered from Lender--for
any reason (including the order of any bankruptcy court), this
Indemnity Deed of Trust shall automatically be reinstated to the
same effect as if the prior application had not been made, and,
in addition, Grantor hereby agrees to indemnify Lender against,
and to save and hold Lender harmless from any required return by
Lender--or recovery from Lender--of any such payment because of
its being deemed preferential under applicable bankruptcy,
receivership or insolvency laws, or for any other reason.
Section 10.16 Amendments in Writing. This Indemnity Deed
of Trust shall not be changed orally but shall be changed only by
agreement in writing signed by Grantor and Lender. Any waiver or
consent with respect to this Indemnity Deed of Trust shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between the
parties, no usage of trade and no parole or extrinsic evidence of
any nature shall be used to supplement or modify any of the terms
or provisions of this Indemnity Deed of Trust.
Section 10.17 Entire Agreement. This Indemnity Deed of
Trust embodies the entire agreement and understanding between
Grantor and Lender with respect to its subject matter and
supersedes all prior conflicting or inconsistent agreements,
consents and understandings relating to such subject matter.
Grantor acknowledges and agrees that there is no oral agreement
between Grantor and Lender which has not been incorporated in
this Indemnity Deed of Trust.
Section 10.18 Prior to the occurrence of an Event of
Default, Grantor shall be entitled to obtain a release of the
Property from the lien and security interest of this instrument
upon and subject to the terms of the Settlement Agreement. In
addition, Section 10.4 of this Indemnity Deed of Trust shall not
apply to any transaction which specifically provides for payment
of the applicable release price provided for in the Settlement
Agreement.
Section 10.19 This Indemnity Deed of Trust shall be
construed according to the laws of the State of Maryland
(excluding Maryland conflict of laws) and any court of competent
jurisdiction of the State of Maryland shall have jurisdiction in
any proceeding instituted to enforce this Deed of Trust and any
objections to venue are hereby waived.
Section 10.20 Waiver of Jury Trial. Lender and Grantor
each, on behalf of itself and its successors and assigns, WAIVES
to the fullest extent permitted by law all right to TRIAL BY JURY
of any and all claims between them arising under this Indemnity
Deed of Trust, or any other documents and agreements executed in
connection, directly or indirectly, with the loan transaction,
and any and all claims arising under common law or under any
statute of any state or the United States of America, whether any
such claims be now existing or hereafter arising, now known or
unknown. In making this waiver Lender and Grantor acknowledge
and agree that any and all claims made by Lender and all claims
made against Lender shall be heard by a judge of a court of
proper jurisdiction, and shall not be heard by a jury. Lender
and Grantor acknowledge and agree that THIS WAIVER OF TRIAL BY
JURY IS A MATERIAL ELEMENT OF THE CONSIDERATION FOR THIS
TRANSACTION. Lender and Grantor, with advice of counsel, each
acknowledges that it is knowingly and voluntarily waiving a legal
right by agreeing to this waiver provision.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Grantor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Lender, in the
event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Grantor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Lender insuring Lender a continued
first lien priority status against the Mortgaged Property within
sixty (60) days from the date that the lien is placed against the
Mortgaged Property or within such shorter period of time as the
circumstances shall permit (but in all events at least five (5)
days prior to any sale of the Mortgaged Property to satisfy said
lien) in the event that the holder of such lien takes steps to
cause the Mortgaged Property to be sold pursuant to said lien.
Section 11.2 Representations and Warranties. Grantor
represents and warrants to Lender to the best knowledge of
Grantor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Grantor, in the past been transported, treated and disposed of
only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Grantor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Grantor has
no material contingent liability in connection with any release
or threatened release of any hazardous substance or solid waste
into the environment.
Section 11.3 Non-Storage and Disposal. Grantor shall not
cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Grantor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that Grantor
(or any of Grantor's tenants which have been approved by Lender)
shall be entitled to store and utilize Hazardous Materials upon
the Mortgaged Property in connection with such person's or
entity's normal and ordinary operations so long as such storage
and use fully complies with all Environmental Laws at all times.
Section 11.4 Indemnity. Grantor shall indemnify, defend
and hold all Lender Indemnitees (as defined below) harmless from
and against any and all (i) liabilities, losses, claims, damages,
costs, penalties, funds and judgments resulting from violation by
Grantor of any Environmental Laws with respect to the ownership
and operation of the Mortgaged Property, and (ii) all other
liabilities, losses, claims, damages, costs, penalties, fines,
judgments, attorneys' fees, consultants' fees and expert's fees
incurred or suffered by Lender by reason of, resulting from, in
connection with or arising in any manner whatsoever from a breach
by Grantor of any representation, warranty or covenant contained
in this Article 11. This indemnity provision shall expressly
survive the payment in full of the Debt and the release of the
Property from this Indemnity Deed of Trust. As used in this
paragraph, "Lender Indemnitees" shall mean Lender, any subsequent
holder or owner of the Notes or any interest in it, any
affiliate, successor, assign or subsidiary of Lender and each of
their shareholders, directors, officers, employees, counsel,
agents, attorneys and contractors, and the Trustee and all
successor or substitute trustees, as well as their respective
heirs and legal representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Grantor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Grantor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or
protection laws, and (b) the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including but
not limited to, those substances, materials and waste listed in
the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. 172.101) or listed by the
Environmental Protection Agency as hazardous substances under or
pursuant to 40 C.F.R. Part 302, or such substances, materials and
wastes which are or become regulated under any Environmental Law.
Section 11.6 The obligations of and liability of Grantor
hereunder shall not be personally binding upon nor shall there be
any resort for enforcement thereof to the private property of
Grantor's trust managers, shareholders, officers, employees or
agents regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.
EXECUTED effective as of ___________________, 1996.
PATAPSCO #1 LIMITED PARTNERSHIP,
a Texas limited partnership
By:
Name:
Title:
Exhibit A - Description of the Real Property
Exhibit B - Permitted Encumbrances
STATE OF ______________________
CITY/COUNTY OF _______________
I HEREBY CERTIFY that on this __________ day of ___________,
19____, before me, the undersigned officer, personally appeared
____________________, who acknowledged himself/herself to be the
General Partner of Patapsco #1 Limited Partnership, a Texas
limited partnership, and that (s)he, in such capacity, being
authorized to do so, executed the foregoing instrument for the
purposes therein contained, by signing the name of Patapsco #1
Limited Partnership, a Texas limited partnership, as General
Partner.
IN WITNESS WHEREOF, I hereunto set my hand and Notarial
Seal.
_____________________________
Notary Public
My Commission expires:
I certify that this instrument was prepared by me or under
my supervision and that I am an attorney duly admitted to
practice before the Court of Appeals of Maryland.
_________________________________
Anne-Therese Bechamps
(SAMPLE-STATE OF MINNESOTA)
MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT,
BY
AMERICAN INDUSTRIAL PROPERTIES REIT
AS MORTGAGOR,
TO
MANUFACTURERS LIFE INSURANCE COMPANY
AND
MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.)
AS MORTGAGEE.
Dated: May 22, 1996
Tax statements for the real This instrument was drafted by:
property described in this
instrument should be sent to: Maslon Edelman Borman & Brand (PRH)
American Industrial Properties REIT a Professional Limited
Liability Partnership
6220 N. Beltline,Suite 205 3300 Norwest Center, 90 S. Seventh St.
Irving, TX 75063 Minneapolis, MN 55402
THE MAXIMUM PRINCIPAL AMOUNT
OF DEBT SECURED BY THIS
MORTGAGE IS $3,000,000
PLUS INTEREST, COSTS AND
PROTECTIVE ADVANCES
MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
This instrument ("Mortgage") is a mortgage from AMERICAN
INDUSTRIAL PROPERTIES REIT, a real estate investment trust duly
organized under the laws of the State of Texas, whose address for
purposes hereof is 6220 North Beltline, Suite 205, Irving, Texas
75063 (called the "Mortgagor", "Debtor" and "Assignor") to
MANUFACTURERS LIFE INSURANCE COMPANY, a corporation duly
organized under the laws of Canada, whose address is 200 Bloor
Street East, Toronto, Ontario M4W 1E5 and MANUFACTURERS LIFE
INSURANCE COMPANY (U.S.A.), a corporation organized under the
laws of the State of Michigan, whose address is 200 Bloor Street
East, Toronto, Ontario M4W 1E5, MANUFACTURERS LIFE INSURANCE
COMPANY and MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) are
collectively referred to herein as the "Mortgagee", "Secured
Party", and "Assignee". This instrument is also an assignment of
rents and leases from Assignor to Assignee, and a security
agreement between Debtor and Secured Party.
RECITALS
The "Debt" as defined in Article 2, Section 2.2 hereof is
secured not only by the property described on Exhibit A attached
hereto, but also by properties located in additional states as
follows: improved tracts of land in Dallas County, Texas; Harris
County, Texas; Tarrant County, Texas; Anne Arundel County,
Maryland; King County, Washington; Los Angeles County,
California; and Waukesha County, Wisconsin. Said properties
being more fully described as Exhibit B attached hereto. The
maximum principal amount of the Debt secured by this Mortgage is
$3,000,000 plus interest, costs and protective advances.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO THE TRUSTEE
Section 1.1 Mortgagor's Grant of Mortgage. To secure
payment of principal, lawful interest and other elements of the
Debt described and defined in Article 2, in consideration of the
Debt and sums advanced to Mortgagor by Mortgagee and other
valuable consideration paid before delivery of this Mortgage by
Mortgagor to Mortgagee, who hereby acknowledges its receipt; and
all other security and rights given by Mortgagor, Mortgagor
hereby Mortgages, Grants, Bargains, Sells, Conveys, Transfers,
Assigns, Sets Over, Confirms and Delivers unto the Mortgagee, its
successors and assigns, forever, and does hereby grant a mortgage
lien and security interest to the Mortgagee, its successors and
assigns, forever, in and to the following property (collectively,
the "Mortgaged Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Mortgagor's estate, right, title and interest in and to
all easements and rights-of-way for utilities, ingress or egress
to or from said property and (ii) all interests of Mortgagor in
and to all streets, rights-of-way, alleys or strips of land
adjoining said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Mortgagor and Mortgagee hereby irrevocably
declare to be real estate and part of the Real Property,
including all water, sewage and drainage facilities, wells,
treatment plants, supply, collection and distribution systems,
paving, landscaping and other improvements (collectively, the
"Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Mortgagor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Mortgagor and
Mortgagee hereby also irrevocably declare to be real estate and
part of the Real Property.
(d) Rents and Profits and Leases. The immediate and
continuing right to receive and collect all rents, revenues,
income, issues, profits, accounts receivable, instruments,
security and other types of deposits and other payments or rights
to the payment of money and benefits in any form, each as now due
and which may hereafter arise from or that may become due under
or by virtue of any of the Mortgaged Property (as hereinafter
defined) or as may be payable to the Mortgagor with respect to
its interest therein (collectively, the "Rental"), including,
without limitation, by virtue of All Leases (as such term is
defined in Section 9.1 below), together with any and all cash and
non-cash proceeds therefrom;
(e) all of the leases and agreements described in
above, together with all guarantees therefor and any renewals,
extensions or substitutions thereof;.
(f) Utilities. All Mortgagor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Mortgagor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Mortgagor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(g) After-acquired Property. All right, title and
interest acquired by Mortgagor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Mortgage.
(h) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Mortgagor and
incident or appertaining to the Real Property, Improvements,
Fixtures and Equipment, Leases or Utilities Capacity or any part
of them.
(i) Oil and Gas. All Mortgagor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(j) Reversions and Remainders. Any and all rights and
estates of Mortgagor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(k) Contractual Rights. All Mortgagor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Mortgagor's other
benefits thereunder.
(l) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Mortgagor now has,
or at any time hereafter acquires, in and to any of the
foregoing, including the proceeds from condemnation, or
threatened condemnation, and the proceeds of any and all insur
ance covering any part of the foregoing; and all related parts,
accessions and accessories to any of the foregoing and all
replacements or substitutions therefor, as well as all other
Improvements, Fixtures and Equipment, Leases, Utilities Capacity
and Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. TO HAVE AND TO
HOLD the Mortgaged Property, together with every right,
privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Mortgagee, its successors or
assigns, forever. Mortgagor represents that Mortgagor is the
lawful owner of the Mortgaged Property with good title and has
the right and authority to mortgage and convey the Mortgaged
Property, and that the Mortgaged Property is free and clear of
all liens, claims and encumbrances (except only those expressly
referred to or described in Exhibit C) (collectively the
"Permitted Encumbrances"). Mortgagor hereby binds Mortgagor and
Mortgagor's successors and assigns to forever WARRANT and DEFEND
the Mortgaged Property and every part of it unto the Mortgagee,
its successors or assigns, against the claims and demands of
every person whomsoever lawfully claiming or to claim it or any
part of it (such warranty to supersede any provision contained in
this Mortgage limiting the liability of Mortgagor) by, through
and under Mortgagor, but not otherwise; subject, however, to the
Permitted Encumbrances.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Mortgage to Secure Designated Obligations.
This Mortgage secures all of the following present and future
debt and obligations:
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT),
(ii) a promissory note dated November 27, 1992 in the face amount
of Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by executed by
Trammell Crow Real Estate Investors (now known as American
Industrial Properties REIT) and (iii) any and all past,
concurrent or future modifications, extensions, renewals,
rearrangements, replacements and increases of such notes
(collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership to Mortgagee
which are evidenced by or created or incurred under (i) an
agreement titled Settlement Agreement dated as of May 22, 1996,
entered into by and between Mortgagee, Mortgagor, Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership (the
"Settlement Agreement"). Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership, are hereinafter
collectively referred to as "Obligor", (ii) all agreements
provided for in the Settlement Agreement, including any
mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between Mortgagor and Mortgagee and
provided for in the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Mortgage.
(d) Advances and Other Obligations Pursuant to this
Mortgage's Provisions. Any and all sums and the interest which
accrues on them as provided in this Mortgage which Mortgagee may
advance or which Mortgagor may owe Mortgagee pursuant to this
Mortgage on account of Mortgagor's failure to keep, observe or
perform any of Mortgagor's covenants under this Mortgage.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Mortgagor or any Obligor pursuant to the Settlement Agreement
("Credit Documents") now or in the future governing, evidencing,
guaranteeing or securing or otherwise relating to payment of all
or any part of the debt evidenced by the Notes, and/or the
Settlement Agreement, or (2) all supplements, amendments,
restatements, renewals, extensions, rearrangements, increases,
expansions or replacements of them.
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Mortgagee, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Mortgagee in enforcing any of the Credit Documents.
All liens, assignments and security interests created,
represented or continued by this Mortgage, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Mortgagor or Mortgagor's successors or assigns,
except only statutory super priority liens for nondelinquent
taxes and those other liens (if any) expressly identified and
stated in this Mortgage to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Mortgage, Mortgagor, as Debtor, and
referred to in this Article as "Debtor" (whether one or more)
hereby grants to Mortgagee, as Secured Party, and referred to in
this Article as "Secured Party" (whether one or more), a security
interest in all of Debtor's remedies, powers, privileges, rights,
titles and interests (including all of Debtor's power, if any, to
pass greater title than it has itself) of every kind and
character now owned or hereafter acquired, created or arising in
and to (i) the Mortgaged Property (including both that now and
that hereafter existing) to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code of the
state or states where the Mortgaged Property is situated (the
"UCC"), (ii) all equipment, accounts, general intangibles,
fixtures, inventory, chattel paper, notes, documents and other
personal property owned by Debtor and used, intended or acquired
for use, on, or in connection with the use or operation of, the
Mortgaged Property, or otherwise related to the Mortgaged
Property, and all products and proceeds of it, including all
security deposits under Leases now or at any time hereafter held
by or for Debtor's benefit, all monetary deposits which Debtor
has been required to give to any public or private utility with
respect to utility services furnished to the Mortgaged Property,
all funds, accounts, instruments, accounts receivable, documents,
trademarks, trade names and symbols used in connection therewith,
and notes or chattel paper arising from or by virtue of any
transactions related to the Mortgaged Property, all permits,
licenses, franchises, certificates, and other rights and
privileges obtained in connection with the Mortgaged Property,
and all guaranties and warranties obtained with respect to all
improvements, equipment, furniture, furnishings, personal
property and components of any thereof located on or installed at
the Mortgaged Property and (iii) the following described
property:
(a) Contracts. All contracts now or hereafter entered
into by and between Debtor and any general contractor or between
Debtor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Debtor or any of the Mortgaged Property), as well as all right,
title and interest of Debtor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Debtor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Debtor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Debtor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Debtor's Covenants Concerning Personalty
Subject to the UCC. Debtor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Mortgage to Secured Party, upon or at any time
after the occurrence of an Event of Default (defined in
Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Debtor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with
respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to sell or
rent the same for the account of Debtor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Debtor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Debtor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Debtor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Debtor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Debtor resulting from any failure to sell or let the
Collateral, or any part thereof, or from other act or omission of
Secured Party with respect to the Collateral unless such loss is
caused by the gross negligence and willful misconduct of Secured
Party, nor shall Secured Party be obligated to perform or
discharge any obligation, duty, or liability under any sale or
lease agreement covering the Collateral or any part thereof or
under or by reason of this instrument or the exercise of rights
or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Debtor has or may have under any rule of law or statute now
existing or hereafter adopted. To the extent notice is required
by applicable law, Secured Party shall give Debtor written notice
at the address set forth herein (which shall satisfy any
requirement of notice or reasonable notice in any applicable
statute) of Secured Party's intention to make any such public or
private sale. Such notice (if any is required by applicable law)
shall be personally delivered or mailed, postage prepaid, at
least ten (10) calendar days before the date fixed for a public
sale, or at least (10) calendar days before the date after which
the private sale or other disposition is to be made, unless the
Collateral is of a type customarily sold on a recognized market,
is perishable or threatens to decline speedily in value. Such
notice (if any is required by applicable law), in case of public
sale, shall state the time and place fixed for such sale or, in
case of private sale or other disposition other than a public
sale, the time after which the private sale or other such
disposition is to be made. Any public sale shall be held at such
time or times, within the ordinary business hours and at such
place or places, as Secured Party may fix in the notice of such
sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but
Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and
in case of any such failure, such Collateral may again be sold
upon like notice. Each and every method of disposition described
in this Section shall constitute disposition in a commercially
reasonable manner. Mortgagor, to the extent applicable, shall
remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party take
possession of the Collateral or any part thereof before the time
that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of disposition of
the Collateral to the Debt, such proceeds shall be applied to the
reasonable and actual expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and the
reasonable and actual attorneys' fees and legal expenses incurred
by Secured Party, each Obligor, to the extent applicable, to
remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the whole
of the Collateral shall not exhaust the rights of Secured Party
hereunder, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Mortgage and
the security interest created hereby shall remain in full force
and effect as to the unsold portion of the Collateral just as
though no sale had been made; and
(v) in the event any sale hereunder is not completed or
is defective in the opinion of Secured Party, such sale shall not
exhaust the rights of Secured Party hereunder and Secured Party
shall have the right to cause a subsequent sale or sales to be
made hereunder; and
(vi) any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument
evidencing any foreclosure sale hereunder as to nonpayment of any
indebtedness or as to the occurrence of any Event of Default, or
as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place and terms of
sale and the Collateral to be sold having been duly given, as to
any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(vii) Secured Party may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but in the name and on behalf
of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Debtor. Debtor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Debtor and agrees that
Secured Party may proceed against any Obligor for the amount of
the Debt owed to Secured Party without taking any action against
any other Obligor or any other person or entity and without
selling or otherwise proceeding against or applying any of the
Collateral in Secured Party's possession.
Section 3.3 UCC Rights are not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Mortgage,
such election shall not preclude Secured Party from exercising
any or all of the rights and remedies granted by the other
Articles of this Mortgage as to the remaining personal property
or fixtures.
Section 3.4 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Debtor will not execute and there will not be filed in any public
office any financing statements affecting the Collateral other
than financing statements in favor of Secured Party under this
Mortgage, unless prior written specific consent and approval of
Secured Party shall have been first obtained.
Section 3.5 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Mortgage, a financing statement or statements and one or
more continuation statements in any jurisdiction where Secured
Party deems it necessary, and at Secured Party's request, Debtor
will join Secured Party in executing one or more financing
statements, continuation statements or both pursuant to the UCC,
in form satisfactory to Secured Party, and will pay the costs of
filing or recording them, in all public offices at any time and
from time to time whenever filing or recording of this Mortgage,
any financing statement or any continuation statement is deemed
by Secured Party or its counsel to be necessary or desirable.
Section 3.6 Mortgage is Also Financing Statement. This
instrument is intended to be a security agreement pursuant to the
UCC covering any of the items or types of property included as
part of the Mortgaged Property that may be subject to a security
interest pursuant to the UCC and Mortgagor hereby grants
Mortgagee a security interest in such property. This Mortgage or
a reproduction is sufficient as a financing statement. This
Mortgage shall also be effective as a financing statement filed
as a fixture filing from the date of the filing in the real
estate records of the County where the Real Property is situated.
The name of the record owner of said real estate is Mortgagor set
forth in page one of this Mortgage. Information concerning the
security interest created by this instrument may be obtained from
Mortgagee, as secured party, at its address as set forth in page
one of this Mortgage. The address of Mortgagor, as Debtor, is as
set forth in page one of this Mortgage. This document covers
goods which are to become fixtures. Mortgagor's Federal Tax
Identification Number is 76-6335572.
Section 3.7 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Debtor hereby
assigns to Secured Party all of Debtor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Mortgage shall automatically terminate this
assignment.
Section 3.8 Debtor's Warranties Concerning Collateral.
Debtor warrants and represents to Secured Party that Debtor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Mortgage (such
warranty to supersede any provision contained in this Mortgage
limiting the liability of Mortgagor). Debtor agrees to defend
the Collateral and its proceeds against all claims and demands of
any person at any time claiming the Collateral, its proceeds or
any interest in either. Debtor also warrants and represents that
Debtor has not heretofore signed any financing statement directly
or indirectly affecting the Collateral or any part of it which
has not been completely terminated of record, and no such
financing statement signed by Debtor is now on file in any public
office except only those statements (if any) true and correct
copies of which Debtor has actually delivered to Secured Party.
Section 3.9 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Debtor requests in writing,
but failure of Secured Party to comply with such request shall
not of itself be deemed a failure to exercise reasonable care,
and no failure of Secured Party to take any action not so
requested by Debtor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.10 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Debtor or discharging or otherwise affecting any liability of
Debtor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
MORTGAGOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Mortgagee. To
better secure the Debt, Mortgagor covenants and agrees with the
Mortgagee, its successors and assigns, and with the intent that
the Mortgagee may enforce these covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Mortgagee granted in, secured by or ancillary to this Mortgage
shall be considered as exclusive, but each shall be cumulative of
all others which Mortgagee may now or hereafter have.
(b) Mortgagor Waives Marshaling of Assets and Sale in
Inverse Order of Alienation Rights. Mortgagor hereby irrevocably
WAIVES all rights of marshaling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Mortgagor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Mortgagor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this
Mortgage should be discovered or arise at any time in the future
then, unless Mortgagee is the only holder of it, or Mortgagee has
given specific prior written consent to it, Mortgagor agrees to
promptly discharge, remove, bond around or insure around it from
the Mortgaged Property. Mortgagor will notify Mortgagee in
writing within five (5) days of the time that Mortgagor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Mortgage, Mortgagor agrees to provide,
maintain and keep in force the insurance coverages relating to
the Property substantially similar to those maintained by
Mortgagor as of the date of execution of this Mortgage.
Mortgagor agrees to have each such policy modified within thirty
(30) days of the date of this Agreement to (i) name Mortgagee as
additional insured, and (ii) expressly prohibit cancellation or
modification of insurance without the insurer agreeing to
endeavor to give thirty (30) days' written notice to Mortgagee.
Mortgagor agrees to furnish due proof of payment of the premiums
for all such insurance to Mortgagee promptly after each such
payment is made and in any case at least fifteen (15) days before
payment becomes delinquent.
(e) Mortgagee's Rights to Collect Insurance Proceeds.
Mortgagor hereby assigns to Mortgagee the exclusive right to
collect any and all monies that may become payable under any
insurance policies covering any part of the Property, or any risk
to or about the Property. Mortgagee shall fully cooperate with
and assist Mortgagor with respect to the filing of insurance
claims and the collection of insurance proceeds so long as
Mortgagee reasonably concurs with Mortgagor's actions with
respect thereto and all reasonable and actual costs incurred by
Mortgagee in connection with such cooperation and participation
are promptly paid or reimbursed by Mortgagor upon the request of
Mortgagee.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Mortgage
shall automatically constitute foreclosure upon all policies of
insurance insuring any part of or risk to the Property and all
claims thereunder arising from post-foreclosure events. The
successful bidder or bidders for the Property at foreclosure, as
their respective interests may appear, shall automatically accede
to all of Mortgagor's rights in, under and to such policies and
all post-foreclosure event claims, and such bidder(s) shall be
named as insured(s) on request, whether or not the Sheriff's
Certificate or bill of sale to any such successful bidder
mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Mortgagor may, at its option, unless an
Event of Default has occurred, either (i) cause Mortgagee to
apply all such monies or any part thereof toward the payment of
the Debt , whether the same be then due or not, such application
to be made in such manner and order as Mortgagee shall elect, and
any balance of insurance proceeds remaining after such
application shall be delivered to Mortgagor or (ii) cause
Mortgagee to disburse to Mortgagor, from an interest-bearing
account maintained with Mortgagee, any insurance proceeds
received to be used by Mortgagor solely for the repair,
rebuilding and restoration (hereinafter collectively referred to
as the "Restoration Work") of the Property; provided, however,
that the obligation of Mortgagee to disburse to Mortgagor such
insurance proceeds shall be and is hereby made subject to
compliance by Mortgagor with the following terms, conditions and
procedures (hereinafter collectively referred to as the
"Disbursement Procedures"), to wit:
(1) There shall have been submitted to Mortgagee,
and Mortgagee shall have approved, which approval shall not be
unreasonably withheld, the following:
(i) Plans and Specifications for the
Restoration Work prepared by an architect reasonably satisfactory
to Mortgagee (hereinafter referred to as the "Restoration
Architect");
(ii) a cost breakdown and analysis
(hereinafter referred to as the "Estimated Cost") certified to
Mortgagee by the Restoration Architect, stating that the
Restoration Work can be completed in accordance with the above-
mentioned Plans and Specifications at the price set forth in the
"Restoration Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Mortgagee pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work
must not exceed the proceeds of the insurance and other funds of
Mortgagor that are available for application thereto;
(3) After and subject to compliance with all of
the foregoing, the amount held by Mortgagee and available for
restoration shall be disbursed by Mortgagee to Mortgagor
periodically (but not more frequently than monthly) as the
Restoration Work progresses, as follows:
(i) Mortgagee shall have received in
connection with each such requested disbursement a draw request
from the Restoration Contractor certifying that all work
completed to the date of such draw request has been performed in
accordance with the Plans and Specifications as approved by
Mortgagee in a good and workmanlike manner, which draw request
shall have been approved by the Restoration Architect;
(ii) Mortgagee shall have received a
certification from the Restoration Architect that the remaining
amount of funds held by Mortgagee, including funds held pursuant
to subparagraph 2 above, are sufficient to complete the
Restoration Work in accordance with the Plans and Specifications
as approved by Mortgagee;
(iii) Mortgagee shall have also received
evidence satisfactory to Mortgagee (including, without
limitation, title certifications, lien waivers and affidavits)
that all governmental licenses and permits necessary for the
performance of the Restoration Work have been secured and the
first-in-priority status of this Mortgage continues without addi
tional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by
Mortgagee, each periodic disbursement shall be made subject to a
retainage of ten percent (10%) of the amount requested, and the
aggregate of the amount so retained shall be disbursed by
Mortgagee to Mortgagor no earlier than thirty-one (31) days after
the Restoration Work is completed in accordance with said Plans
and Specifications (as evidenced by the certificate of the
Restoration Architect), and Mortgagee shall have received
evidence satisfactory to Mortgagee that all costs incurred in
connection with the Restoration Work have been paid in full and
that no party claims or has a right to claim any lien affecting
the Property and arising out of the Restoration Work; and
(5) Upon termination or expiration of the
moratorium period or any extension thereof as defined and
provided for in the Settlement Agreement, Mortgagee is hereby
authorized to apply any amounts held by Mortgagee pursuant to any
subparagraph of this Section 4.1 against the outstanding Debt.
(h) Application of Insurance Proceeds Collected After
Foreclosure. Unless Mortgagee or Mortgagee's representative
reserves at the foreclosure sale the right to collect any uncol
lected insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Mortgagee, shall have no interest in such proceeds and
Mortgagee shall apply them, if and when collected, to the Debt in
such order and manner as Mortgagee shall then elect and remit any
remaining balance to Mortgagor or to such other person or entity
as is legally entitled to them), all proceeds of all such
insurance which are not so reserved by Mortgagee at the
foreclosure sale and are not actually received by Mortgagee until
after foreclosure shall be the property of the successful bidder
or bidders at foreclosure, as their interests may appear, and
Mortgagor shall have no interest in them and shall receive no
credit for them.
(i) Mortgagee Not Obligated to Require, Provide or
Evaluate Insurance. Mortgagee shall have no duty to Mortgagor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(j) Mortgagee May Elect to Insure Only its Own
Interests. If Mortgagee elects at any time or for any reason to
purchase insurance relating to the Property, it shall have no
obligation to cause Mortgagor or anyone else to be named as an
insured, to cause Mortgagor's or anyone else's interests to be
insured or protected or to inform Mortgagor or anyone else that
his or its interests are uninsured or underinsured.
(k) Mortgagor Will Correct Defects, Provide Further
Assurances and Papers. Upon Mortgagee's reasonable request,
Mortgagor will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Mortgage or any Credit Document or in the description of any
of the Property, and will deliver such further assurances and
execute such additional papers as in the opinion of Mortgagee or
its legal counsel shall be necessary, proper or appropriate (1)
to better convey and assign to the Trustee and Mortgagee all the
Property intended or promised to be conveyed or assigned or (2)
to properly evidence or give notice of the Debt or its intended
or promised security.
(l) Mortgagor Will Pay Taxes and Impositions and
Furnish Receipts. Mortgagor agrees at its own cost and expense
to pay and discharge all taxes, assessments, maintenance charges,
permit fees, impact fees, development fees, capital recovery
charges, utility reservation and standby fees and all other
similar and dissimilar impositions of every kind and character
("Impositions") charged, levied, assessed or imposed against any
interest in any of the Property, as they become payable and
before they become delinquent; provided, however, that Mortgagor
shall have the right to actively contest such Impositions in good
faith if Mortgagor shall establish sufficient reserves to pay any
such contested Impositions that are later determined to be
properly owed by Mortgagor; and provided, further, that no
attempts shall be made to foreclose any lien for such
Impositions. Mortgagor agrees to furnish due proof of such
payment to Mortgagee promptly after payment and before
delinquency. Mortgagor also agrees to hereafter file all income,
franchise and other tax returns within the time frames that they
are required to be filed and pay all taxes shown thereon to be
due, including interest and penalties, except for those taxes
which are being diligently contested in good faith and for
payment of which adequate reserves have been set aside by
Mortgagor.
(m) Mortgagor to Pay Monthly Tax and Insurance
Deposits on Request. If and after Mortgagee requests it after
the occurrence of an Event of Default, Mortgagor agrees to pay
the monthly tax and insurance premium deposits required by
Article 8 and to provide Mortgagee any additional sums needed to
pay the taxes and insurance premiums for the Property when due.
(n) Mortgagor Will Maintain Property and Won't Remove
Improvements. Mortgagor agrees to keep, preserve and maintain
all elements of the Property in a good state of repair and
condition and to keep all equipment and stores of supplies needed
for its proper and full operation on the Property, well stocked
and in good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Mortgagor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Mortgagee's prior
written consent. Mortgagor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Mortgage, such
Fixtures and Equipment as from time to time become worn out or
obsolete, provided that either (a) simultaneously with or before
such removal any such equipment shall be replaced with other
equipment of a value at least equal to that of the replaced
equipment and free from any title retention or security agreement
or other encumbrance and from any reservation of title, and by
such removal and replacement Mortgagor shall be deemed to have
subjected such equipment to the lien, assignments and security
interests of this Mortgage or (b) any net cash proceeds received
from such disposition shall be paid over promptly to Mortgagee to
be applied to the Debt in the order determined by Mortgagee in
its sole discretion. Mortgagor shall not grant, join in or
consent to any lien, security interest, easement, license, use or
other charge or interest covering or affecting all or any part of
the Property or initiate, join in and consent to the change in
any private restrictive covenant, zoning ordinance or other
public or private restrictions limiting or defining the uses
which may be made of the Property or any part thereof without the
prior written consent of Mortgagee.
(o) Mortgagor Will Protect Property from Mechanic's
Liens. Mortgagor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Mortgage, for any such bill which may be
legally due and payable; provided, however, that Mortgagor shall
have the right to actively contest any such bills in good faith
if Mortgagor shall provide a bond in form, substance and amount
reasonably satisfactory to Mortgagee covering and affecting any
lien for any such bills.
(p) Mortgagee's Inspection and Discussion Rights.
Mortgagor agrees, after the occurrence of an Event of Default, to
permit Mortgagee and its agents, representatives and employees at
all reasonable times during business hours to go upon, examine,
inspect and remain on the Mortgaged Property, to assist and
cooperate, and require Mortgagor's employees, agents and
contractors to cooperate, with Mortgagee and to furnish to
Mortgagee on request all pertinent information concerning the
physical and economic condition, development and operation of the
Mortgaged Property. Mortgagee may discuss the Mortgaged Property
directly with any of Mortgagor's officers and managers.
(q) Mortgagee May Grant Releases without Impairing
Other Collateral or Rights. At all times, Mortgagee shall have
the right to release any part of the Property or any other
security from this Mortgage or any other security instrument or
device without releasing any other part of the Property or any
other security, without affecting Mortgagee's lien, assignment or
security interest as to any property or rights not released and
without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(r) Mortgagor Will Notify Mortgagee of Legal
Proceedings and Defend Lien; Mortgagee May Act if Mortgagor
Doesn't. Mortgagor will notify Mortgagee in writing promptly of
the commencement of any legal proceedings affecting any part of
the Property and will engage and pay legal counsel to answer and
to defend and preserve Mortgagee's liens, rights and interests
and their rank and priority. If Mortgagor fails or refuses to
promptly begin or to diligently continue any such acts, then
Mortgagee may elect to do so and may take such action in behalf
of Mortgagor, in Mortgagor's name and at Mortgagor's expense.
(s) Legal Compliance, Governmental Notices. Mortgagor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Mortgagor or the Property
and will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(t) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Mortgagor will notify Mortgagee
in writing thereof, setting forth the nature of such change in
reasonable detail. Mortgagor will take, and will cause to be
taken, all such steps as are necessary or appropriate to remedy
promptly any such change.
(u) Notice of Default to Mortgagee. Immediately upon
acquiring knowledge thereof, Mortgagor will notify Mortgagee by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by
Mortgagee be deemed a waiver of a Default or of an Event of
Default.
(v) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Mortgagor will notify
Mortgagee in writing of the pendency of such proceedings.
Mortgagor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Mortgagee, in the carrying on
or defense of any such proceedings.
(w) Notice of Name or Address Change. Mortgagor will
not change Mortgagor's name or the location of its chief execu
tive office without first notifying Mortgagee in writing of such
change at least thirty (30) days before its effective date.
(x) Manager. Mortgagor will, or will cause its
managers to, do and perform any and all acts and things relating
to the management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Mortgage and
the other Credit Documents.
Section 4.2 Mortgagor Agrees to Pay or Reimburse
Mortgagee's Expenses. To the extent not prohibited by applicable
law, Mortgagor will pay all reasonable and actual costs and
expenses and reimburse Mortgagee for any and all reasonable and
actual expenditures of every character incurred or expended from
time to time, after the occurrence of a Default hereunder, in
connection with:
(a) Mortgagee's realizing upon Mortgagee's security
interest in and liens on the Property, and all reasonable and
actual costs and expenses relating to Mortgagee's exercising any
of its rights and remedies under this Mortgage or any Credit
Document or at law, including all appraisal fees, consulting
fees, filing fees, taxes, brokerage fees and commissions, title
review and abstract fees, litigation report fees, UCC search
fees, other fees and expenses incident to title searches, reports
and security interests, escrow fees, attorneys' fees, legal
expenses, court costs, other fees and expenses incurred in
connection with any complete or partial liquidation of the
Property, and all fees and expenses for any professional services
relating to the Property or any operations conducted in
connection with it.
(b) Provided, that no right or option granted by
Mortgagor to Mortgagee or otherwise arising pursuant to any
provision of this Mortgage, the Notes or any Credit Document
shall be deemed to impose or admit a duty on Mortgagee to
supervise, monitor or control any aspect of the character or
condition of the Property or any operations conducted in
connection with it for the benefit of Mortgagor or any person or
entity other than Mortgagee. Mortgagor agrees to indemnify,
defend and hold Mortgagee, its shareholders, directors, officers,
agents, attorneys, advisors and employees (collectively
"Indemnified Parties") harmless from and against any and all
loss, liability, obligation, damage, penalty, judgment, claim,
deficiency, expense, action, suit, cost and disbursement of any
kind or nature whatsoever (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement),
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from any Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Mortgagor to Mortgagee shall be a demand
obligation owing by Mortgagor to Mortgagee and shall bear
interest from the date of expenditure until paid at the default
rate provided in the Notes.
ARTICLE 5
MORTGAGOR'S REPRESENTATIONS AND WARRANTIES
To induce Mortgagee to extend financial accommodations,
Mortgagor makes the warranties and representations set forth in
this Article.
Section 5.1 Organization. Mortgagor is (a) duly
organized, validly existing and in good standing under the laws
of the state of its organization and has full legal right, power
and authority to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this
Mortgage and any other Credit Documents to which Mortgagor is a
party, and (b) duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business
it conducts makes such qualification necessary or desirable.
Mortgagor's execution, delivery and performance of this Mortgage
and any other Credit Documents to which Mortgagor is a party have
been duly authorized by all necessary action under Mortgagor's
organizational documents and otherwise.
Section 5.2 Consents. Mortgagor's execution, delivery
and performance of this Mortgage and any other Credit Documents
to which Mortgagor is a party do not and will not require (i) any
consent of any other person or entity or (ii) any consent, li
cense, permit, authorization or other approval (including foreign
exchange approvals) of any court, arbitrator, administrative
agency or other governmental authority, or any notice to,
exemption by, any registration, declaration or filing with or the
taking of any other action in respect of, any such court,
arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Mortgage or any other Credit Document to which Mortgagor
is a party, nor the fulfillment of or compliance with the terms
and provisions hereof or thereof will (i) violate any
constitutional provision, law or rule, or any regulation, order
or decree of any governmental authority or the basic
organizational documents of Mortgagor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Mortgagor is a party or bound.
Section 5.4 Enforceability. Mortgagor has duly and
validly executed, issued and delivered this Mortgage and any
other Credit Documents to which Mortgagor is a party. This
Mortgage and each other Credit Document to which Mortgagor is a
party is in proper legal form for prompt enforcement and is
Mortgagor's valid and legally binding obligation, enforceable in
accordance with its terms.
Section 5.5 Information Accurate. All information
supplied to Mortgagee, concurrently with Mortgagor's execution
of this Mortgage are and will be true, correct and complete in
all material respects.
Section 5.6 Taxes. Mortgagor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Mortgagor or Obligor
has previously disclosed to Mortgagee, there is no condemnation
or other action, suit or proceeding pending--or, to the best of
Mortgagor's knowledge, threatened--against or affecting the
Property, at law or in equity, or before or by any governmental
authority, which might result in any material adverse change in
the condition or operation of the Property.
Section 5.8 Mortgagor Solvent. Mortgagor is now solvent,
and no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Mortgagor's knowledge--against Mortgagor.
Mortgagor's liabilities and obligations under this Mortgage and
any other Credit Documents to which Mortgagor is a party do not
and will not render Mortgagor insolvent, cause Mortgagor's
liabilities to exceed Mortgagor's assets or leave Mortgagor with
too little capital to properly conduct all of its business as now
conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Mortgage or any other Credit
Document to which Mortgagor is a party and no statement contained
in any certificate, schedule, list, financial statement or other
papers furnished to Mortgagee by or on behalf of Mortgagor
contains--or will contain--any untrue statement of material fact,
or omits--or will omit--to state a material fact necessary to
make the statements contained herein or therein not misleading.
Section 5.10 Title. Mortgagor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Mortgage or
other Credit Documents. Except as otherwise expressly permitted
by this Mortgage, the lien and security interest of this Mortgage
will constitute valid and perfected first and prior liens and
security interests on the Property, subject to no other liens,
security interests or charges whatsoever. The Property is free
from damage caused by fire or other casualty.
Section 5.11 Legal Requirements. To the best of
Mortgagor's knowledge, Mortgagor and the Property are in
compliance with all applicable legal requirements and Mortgagor
manages and operates (and will continue to manage and operate)
the Property and its other businesses in accordance with good
industry practices. Mortgagor has not received any notice that
Mortgagor and the property are not in compliance with all
applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Mortgage shall terminate and be of no further
force or effect (and shall be released on Mortgagor's written
request and at Mortgagor's cost and expense) upon full payment of
the Debt and complete performance of all of the obligations of
the Obligors under the Settlement Agreement and the Credit
Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Mortgage.
Section 6.3 Remedies. Upon the occurrence of any Event
of Default, and at any time thereafter:
(a) Debt Due. All Debt in its entirety is immediately
due and payable without presentment, demand, notice of intention
to accelerate or notice of acceleration, or other notice of any
kind, except as required by the Settlement Agreement, all of
which are hereby expressly WAIVED, and the liens and security
interests created or intended to be created hereby shall be
subject to foreclosure, repossession and sale in any manner
provided for herein or provided for by law, as Mortgagee may
elect, and Mortgagee may exercise any and all of its rights under
this Mortgage, the Settlement Agreement, the Notes and any of the
other Credit Documents.
(b) Legal Proceedings. Mortgagee shall have the right
and power to proceed by suit or suits in equity or at law,
whether for the specific performance of any covenant or agreement
of Mortgagor contained herein or in aid of the execution of the
powers herein granted, or for foreclosure or the sale of the Prop
erty or any part thereof under the judgment or decree of any
court of competent jurisdiction, or for the enforcement of any
other appropriate legal or equitable remedy.
Section 6.4 Remedies of Mortgagee and Right to Foreclose.
Upon the occurrence of an Event of Default, Mortgagor hereby
authorizes and fully empowers Mortgagee to foreclose this
Mortgage by judicial proceedings or by advertisement with full
authority to sell the Property at public auction and convey the
same to the purchaser in fee simple, either in one parcel or
separate lots and parcels, all in accordance with and in the
manner prescribed by law, and out of the proceeds arising from
sale and foreclosure to retain the principal, prepayment fee, if
any, and interest due on the Notes and all other Debt together
with all sums of money as Mortgagee shall have expended or
advanced pursuant to this Mortgage or pursuant to statute
together with interest thereon as herein provided and all costs
and expenses of such foreclosure, including lawful attorneys'
fees, with the balance, if any, to be paid to the persons
entitled thereto by law.
Section 6.5 Receiver. The Mortgagor does hereby
irrevocably appoint the Mortgagee its true and lawful attorney in
its name, place and stead, with or without taking possession of
the Mortgaged Property, to rent, lease, sublease, let or sublet
all or any portion of the Mortgaged Property to any party or
parties at such rental and upon such terms, as it in its
discretion may determine, and to collect all of said avails,
rents, income, issues and profits arising from or accruing at any
time hereafter under each and all of such leases and agreements,
with the same rights and powers and subject to the same
immunities, exoneration of liability and rights of recourse and
indemnity as the Mortgagee would have upon taking possession of
the Mortgaged Property.
The Mortgagor waives any right of setoff against any person
in possession of all or, any portion of the Mortgaged Property.
The Mortgagor represents that it has not assigned any of said
rents or profits to any third party and agrees that it will not
so assign any of said rents or profits without the prior written
consent of the Mortgagee.
Nothing contained herein shall be construed as constituting
the Mortgagee "a mortgagee in possession" in the absence of the
taking of actual possession of the Mortgaged Property by the
Mortgagee. In the exercise of the powers herein granted to the
Mortgagee, no liability shall be asserted or enforced against the
Mortgagee, all such liability being expressly waived and released
by the Mortgagor.
The Mortgagor further agrees to assign and transfer to the
Mortgagee all rents from future leases or subleases upon all or
any part of the Mortgaged Property and to execute and deliver,
immediately upon request of the Mortgagee, such further
assurances and assignments in the Mortgaged Property as the
Mortgagee from time to time shall require.
Although it is the intention of the parties that this
Assignment of Rents shall be a present assignment, it is
expressly understood and agreed that, anything herein contained
to the contrary notwithstanding, the Mortgagee hereby grants to
the Mortgagor a revocable license to operate and manage the
Mortgaged Property and to collect all related rental amounts and
Mortgagee shall not exercise any of the rights and powers
conferred upon it herein, unless and until an "Event of Default,"
shall occur at which time such license may be revoked by
Mortgagee and Mortgagee shall be entitled to exercise any and all
such rights and powers; and nothing herein contained shall be
deemed to affect or impair any rights which the Mortgagee may
have under the Note, the Loan Agreement, this Mortgage or any
other document or agreement related hereto or thereto.
Mortgagor acknowledges and agrees that this assignment of
leases of rents, and the Mortgagee's rights and remedies
hereunder, may be enforced by the Mortgagee throughout the entire
redemption period provided by applicable law following any
foreclosure sale of all or any portion of the Mortgaged Property.
At any time after the occurrence of an Event of Default, the
Mortgagee, without in any way waiving such default, may:
(1) at the Mortgagee's option without notice to the
Mortgagor and without regard to the adequacy of the security for
the Note, either in person or by agent, with or without any
action or proceeding, or by a receiver appointed by a court of
competent jurisdiction pursuant to Minnesota Statutes, Section
559.17, Subd. 2, and/or other applicable law, peaceably take
possession of the Mortgaged Property and have, hold, manage,
lease, sublease and operate the same as a mortgagee in
possession; or
(2) the Mortgagee, without taking possession of the
Mortgaged Property, may sue for or otherwise collect and receive
all rents, income and profits from the Mortgaged Property to
which the Mortgagor would otherwise be entitled, including those
past due and unpaid with full power to make from time to time all
adjustments thereto, as may seem proper to the Mortgagee.
The Mortgagee shall not be obligated to perform or
discharge, nor does it hereby undertake to perform or discharge,
any obligation, duty or liability under any leases, sublease or
rental agreements relating to the Mortgaged Property, and the
Mortgagor shall and does hereby agree to indemnify and hold the
Mortgagee harmless from and against any and all liability, loss
or damage which it may or might incur under any such lease,
sublease or agreement or under or by reason of the assignment of
the rents thereof and from and against any and all claims and
demands whatsoever which may be asserted against it by reason of
any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in
any of such leases, provided that the Mortgagor shall not
indemnify and hold harmless the Mortgagee from any liability loss
or damage resulting from acts or omissions of the Mortgagee which
occur on or after the date the Mortgagee takes possession of the
Mortgaged Property or acts or omissions which constitute gross
negligence or willful misconduct which occurs before Mortgagee
takes possession of the Mortgaged Property. Should the Mortgagee
incur any liability, loss or damage by reason of this assignment
of leases and rents, or in the defense of any claim or demand
other than that which is caused by the gross negligence or
willful misconduct of Mortgagee, the Mortgagor agrees to
reimburse the Mortgagee for the amount thereof, including costs,
expenses and attorney's fees, immediately upon demand.
The Mortgagee, or such agent or, receiver, in the exercise
of the rights and powers conferred upon it by this assignment of
leases and rents shall after an Event of Default have the full
power to use and apply the avails, rents, issues, income and
profits of the Mortgaged Property to which the Mortgagor would
otherwise be entitled to the payment of or on account of the
following in the order listed below:
(1) reasonable receiver's fees;
(2) application of tenant security deposits as required by
Minnesota Statutes, Section 504.20;
(3) payment, when due, of prior or current real estate
taxes or special assessments with respect to the Mortgaged
Property, or the periodic escrow for the payment of the taxes or
special assessments;
(4) payment, when due, of premiums for insurance of the
type required by this Mortgage, or the periodic escrow for the
payment of the premiums;
(5) payment for the keeping of the covenants required of a
lessor or licensor purchase to Minnesota Statutes, Section
504.18, subdivision 1; and
(6) all expenses for normal maintenance of the Mortgaged
Property;
provided, however, that nothing herein shall prohibit the right
to reinstate pursuant to Minnesota Statutes, Section 580.30, or
the right to redeem granted pursuant to Minnesota Statutes,
Sections 580.23 and 581.10.
Any excess cash remaining after paying the expenses listed
in clauses (1) through (6) above shall be applied to the payment
of the Note; provided that if the Mortgaged Property shall be
foreclosed by the Mortgagee and sold at a subsequent foreclosure
sale, then:
(1) if the Mortgaged Property shall be purchased by the
Mortgagee at the Foreclosure Sale, the Rental shall first be
applied to any deficiency amount arising from such sale and any
remaining balance shall be retained by the Mortgagee, provided
further, that if the Mortgaged Property is redeemed by the
Mortgagor or any party that shall have the right to redeem, any
amount remaining after the payment of the deficiency balance
shall be applied as a credit against the amount required to be
paid to effect a redemption and any remaining excess Rental shall
be retained by the Mortgagee, and if the Mortgaged Property is
not redeemed, any remaining excess Rental at the end of such
redemption shall belong to the Mortgagee, whether or not a
deficiency exists; and
(2) if the Mortgaged Property is not purchased by the
Mortgagee at the Foreclosure Sale, the Rental shall first be
applied to any deficiency amount arising from such foreclosure
sale, and the balance shall be retained by the purchaser, and if
the Mortgaged Property shall be redeemed by the Mortgagor or any
other party entitled to redeem, any amount remaining after
payment of the deficiency balance shall be applied as a credit
against the amount required to be paid to effect a redemption
with any remaining balance to be retained by the Mortgagor,
provided, if the Mortgaged Property is not redeemed, then at the
end of such redemption any remaining excess Rental shall be paid
first to the purchaser at the foreclosure sale in an amount equal
to the interest accrued upon the sale price pursuant to Minn.
Stat. Section 580.23 or Section 581.10, then to the Mortgagee to
the extent of any deficiency remaining unpaid and the balance, if
any, to the purchaser.
Assignee shall have the right, at any time and without
limitation as provided in Minnesota Statutes, Section 582.03, to
advance money to the receiver to pay any part or all of the items
which the receiver should otherwise pay if cash were available
from the Mortgaged Property and sums so advanced, with interest
at the rate set forth in the Note, shall be secured hereby, or if
advanced during the period of redemption shall be a part of the
sum required to be paid to redeem from the sale.
The Mortgagor does further specifically authorize and
instruct each and every present and future lessee, sublessee,
tenant or subtenant of the whole or any part of the Mortgaged
Property to pay all unpaid rental agreed upon in any lease or
sublease to the Mortgagee upon receipt of demand from the
Mortgagee so to pay the same.
Any tenants, subtenants or other occupants of all or any
part of the Mortgaged Property are hereby authorized to recognize
the claims of the Mortgagee hereunder without investigating the
reason for any action taken by the Mortgagee, or the validity or
the amount of indebtedness owing to the Mortgagee, or, the
occurrence or existence of any Event of Default, or the
application to be made by the Mortgagee of any amounts to be paid
to the Mortgagee. The sole signature of any officer or attorney
of the Mortgagee shall be sufficient for the exercise of any
rights under this assignment of leases and rents and the sole
receipt of the Mortgagee for any sums received by such tenants,
subtenants or other occupants shall be a full discharge and
release therefor. Checks for all or any part of the rentals
collected under this Assignment of Leases and Rents shall be
drawn to the exclusive order of the Mortgagee.
Section 6.6 Rights Under Uniform Commercial Code. In
addition to the rights available to a mortgagee of real property,
Mortgagee shall also have all the rights, remedies and recourse
available to a secured party under the Code including the right
to proceed under the provisions of the Code governing default as
to any Collateral as defined in this Mortgage which may be
included on the Property or which may be deemed nonrealty in a
foreclosure of this Mortgage or to proceed as to such Collateral
in accordance with the procedures and remedies available pursuant
to a foreclosure of real estate.
Section 6.7 Right to Discontinue Proceedings. In the
event Mortgagee shall have proceeded to invoke any right, remedy
or recourse permitted under this Mortgage and shall thereafter
elect to discontinue or abandon the same for any reason,
Mortgagee shall have the unqualified right to do so and in such
event Mortgagor and Mortgagee shall be restored to their former
positions with respect to the Indebtedness in which case this
Mortgage and all rights, remedies and recourse of Mortgagee shall
continue as if such action or exercise of a right had not been
invoked.
Section 6.8 Waivers. Mortgagor also waives the benefit
of all laws now existing or that may hereinafter be enacted
providing for (a) any appraisal before sale of any portion of the
Property, and (b) in any way extending the time for the
enforcement and collection of the Notes or this Mortgage or
creating or extending a period of redemption from any sale made
in collecting said debt. To the full extent Mortgagor may do so,
Mortgagor agrees that Mortgagor will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or
hereafter enforced providing for any appraisal, evaluation, stay,
extension or redemption and Mortgagor, to the extent permitted by
law, waives and releases all rights of redemption, valuation,
appraisal, stay of execution, notice of election to mature or
declare due the whole of this Mortgage and marshaling in the
event of foreclosure of the liens hereby created.
Section 6.9 Acknowledgment of Waiver of Hearing Before
Sale. Mortgagor understands and agrees that if an Event of
Default shall occur, Mortgagee has the right, inter alia, to
foreclose this Mortgage by advertisement pursuant to Minn. Stat.
Chapter 580, as hereafter amended, or pursuant to any similar or
replacement statute hereafter enacted; that if Mortgagee elects
to foreclose by advertisement, it may cause the Property, or any
part thereof, to be sold at public auction; that notice of such
sale must be published for six (6) successive weeks at least once
a week in a newspaper of general circulation and that no personal
notice is required to be served upon Mortgagor. Mortgagor
further understands that upon the occurrence of an Event of
Default, Mortgagee may also elect its rights under the Uniform
Commercial Code and take possession of the Collateral and dispose
of the same by sale or otherwise in one or more parcels provided
that at least ten (10) days' prior notice of such disposition
must be given, all as provided for by the Uniform Commercial
Code, as hereafter amended or by any similar or replacement
statute hereafter enacted. Mortgagor further understands that
under the Constitution of the United States and the Constitution
of the State of Minnesota it may have the right to notice and
hearing before the Property may be sold and that the procedure
for foreclosure by advertisement described above does not insure
that notice will be given to Mortgagor and neither said procedure
for foreclosure by advertisement nor the Uniform Commercial Code
requires any hearing or other judicial proceeding. MORTGAGOR
HEREBY EXPRESSLY CONSENTS AND AGREES THAT THE PROPERTY MAY BE
FORECLOSED BY ADVERTISEMENT AND THAT THE PERSONAL PROPERTY MAY BE
DISPOSED OF PURSUANT TO THE UNIFORM COMMERCIAL CODE, ALL AS
DESCRIBED ABOVE. MORTGAGOR ACKNOWLEDGES THAT IT IS REPRESENTED
BY LEGAL COUNSEL; THAT BEFORE SIGNING THIS DOCUMENT THIS SECTION
AND MORTGAGOR'S CONSTITUTIONAL RIGHTS WERE FULLY EXPLAINED BY
SUCH COUNSEL AND THAT MORTGAGOR UNDERSTANDS THE NATURE AND EXTENT
OF THE RIGHTS WAIVED HEREBY AND THE EFFECT OF SUCH WAIVER.
Section 6.10 Tenants at Will. Mortgagor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Mortgagor, or
the parties so holding possession, shall become and be considered
as tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
ARTICLE 7
MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS
Section 7.1 Mortgagee May Elect to Perform Defaulted
Obligations. Except for Mortgagor's failure to maintain the
insurance coverage required by the other provisions of this
Mortgage, if Mortgagor should fail to comply with any of its
other agreements, covenants or obligations under this Mortgage,
the Settlement Agreement, any of the Notes, or any other Credit
Document so as to cause such failure to constitute an Event of
Default or a Default which is then continuing, then Mortgagee (in
Mortgagor's name or in Mortgagee's own name) may perform them or
cause them to be performed for Mortgagor's account and at
Mortgagor's expense, but shall have no obligation to perform any
of them or cause them to be performed. With respect to
Mortgagor's failure to maintain the insurance coverage required
hereby, however, Mortgagee itself may purchase or secure such
insurance coverage for the Mortgaged Property prior to providing
Mortgagor with any notice of and opportunity to cure or remedy
such failure. Any and all expenses thus incurred or paid by
Mortgagee under the provisions of this paragraph shall be
Mortgagor's obligations to Mortgagee due and payable on demand,
or if no demand is sooner made, then they shall be due on or
before four (4) years after the respective dates on which they
were incurred, and each shall bear interest from the date
Mortgagee pays it until the date Mortgagor repays it to
Mortgagee, at the maximum nonusurious rate of interest from time
to time permitted by whichever of applicable Minnesota or federal
law from time to time permits the higher nonusurious interest
rate (the "Ceiling Rate"), or, only if applicable law imposes no
maximum nonusurious rate, then at the same rate as is provided
for in the Notes for interest on past due principal (the "Past
Due Rate"). At all times, if any, as Minnesota Statutes shall
establish the Ceiling Rate for any purpose under this Mortgage,
the Ceiling Rate shall be the "indicated rate ceiling" as defined
in Chapter One from time to time in effect. Upon making any such
payment or incurring any such expense, Mortgagee shall be fully
and automatically subrogated to all of the rights of the person,
corporation or body politic receiving such payment. Any amounts
owing by Mortgagor to Mortgagee pursuant to this or any other
provision of this Mortgage shall automatically and without notice
be and become a part of the Debt and shall be secured by this and
all other instruments securing the Debt. The amount and nature
of any such expense and the time when it was paid shall be fully
established by the affidavit of Mortgagee or any of Mortgagee's
officers or agents. Without notice to Mortgagor or any other
person or entity, the Ceiling Rate and the Past Due Rate shall
automatically fluctuate upward and downward as and in any amount
by which the maximum nonusurious rate of interest permitted by
such applicable law and the rate of interest as provided for in
the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Mortgagee in
this Article shall in no event be considered or constitute a cure
of the default or a waiver of Mortgagee's right at any time after
an Event of Default to declare the Debt to be at once due and
payable, but is cumulative of such right and of all other rights
given by this Mortgage, the Notes and the Credit Documents and of
all rights given Mortgagee by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Mortgagor agrees that upon the written request of
Mortgagee, Mortgagor will thereafter deposit with Mortgagee each
month an amount equal to one-twelfth (1/12) of the aggregate of
(i) the next succeeding premiums (or payments in respect of them,
if premiums are financed) on all insurance policies which
Mortgagor is required by or pursuant to this Mortgage to maintain
on the Property, and (ii) the amount of the next succeeding
annual tax payments, assessment installments, maintenance charges
and other Impositions to become due and payable with respect to
the Property, as reasonably estimated by Mortgagee, plus, with
the first of such monthly deposits, an additional month's share
(a twelfth) of such premiums and taxes for each month less than
twelve remaining before the next payment thereof falls due. At
least fifteen (15) days before the date on which any such
insurance premium (or payment in respect of it, if premiums are
financed) or any of the Impositions must be paid to avoid
delinquency, promptly after Mortgagee's request, Mortgagor agrees
to deliver to Mortgagee a statement or statements showing the
amount of the premium (or payment in respect of it, if premiums
are financed) or Impositions required to be paid and the name and
mailing address of the concern or authority to which it is
payable and, at the same time, Mortgagor agrees to deposit with
Mortgagee such amounts as will, when added to the amount of such
deposits previously made and then remaining available for the
purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Mortgagee by Mortgagor for the payment
of such amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee hereby agrees to apply such
deposits in payment of such insurance obligations and Impositions
prior to delinquency, but only if sufficient funds have been
deposited with Mortgagee by Mortgagor for the payment of such
amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee shall in no way be obligated to
pay any interest to Mortgagor on such deposits, and upon the
occurrence of an Event of Default which is then continuing,
Mortgagee is hereby irrevocably authorized to apply any and all
amounts so deposited with Mortgagee against the amounts due under
the Debt (with such order of application to be at Mortgagee's
discretion) without any further notice to or consent from
Mortgagor or any other person or entity. Additionally, Mortgagor
hereby irrevocably grants to Mortgagee a security interest and
assigns to Mortgagee all such funds so deposited with Mortgagee
as additional security for payment of the Debt and all other
amounts now or hereafter outstanding under any of the Credit
Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. The Mortgagor does hereby sell, assign and transfer
unto the Mortgagee (i) the immediate and continuing right to
receive and collect all rents, income, issues and profits now due
and which may hereafter become due under or by virtue of each
Lease (hereinafter defined)for the leasing, subleasing, use or
occupancy of all or any part of the Mortgaged Property now,
heretofore or hereafter made or agreed to by the Mortgagor, and
(ii) all of such leases and agreements, together with all
guarantees therefor and any renewals or extensions thereof, for
the purpose of securing payment of the indebtedness of the
Mortgagor under the Note and the documents related thereto. Such
assignment being upon the terms set forth in Section 9.2 below
(collectively referred to herein as "Rental"). The term "Lease"
or "Leases" means any oral or written agreement, now existing or
made later, between Mortgagor and another person or entity to use
or occupy all or any portion of the Property, together with any
guaranties or security for the obligations of any tenant, lessee,
sublessee or other person or entity having the right to occupy,
use or manage any part of the Property under a Lease. Each time
Mortgagor enters into a Lease, such Lease shall automatically
become subject to this Article without further action.
Section 9.2 Terms of Assignment. The transfer of Rental
to Mortgagee shall be upon the following terms: (a) until the
occurrence of an Event of Default, Mortgagor shall have the right
to collect Rental and each tenant may pay Rental directly to
Mortgagor; but after an Event of Default, Mortgagor may not
collect Rental and to the extent Mortgagor receives any Rent
thereafter accruing or paid, Mortgagor covenants to hold all such
Rental in trust for the use and benefit of Mortgagee; (b) upon
receipt from Mortgagee of notice that an Event of Default exists,
each tenant is hereby authorized and directed to pay directly to
Mortgagee all Rental thereafter accruing or payable and receipt
of Rental by Mortgagee shall be a release of such tenant to the
extent of all amounts so paid; (c) Rental so received by
Mortgagee shall be applied by Mortgagee, first to the expenses,
if any, of collection and then in accordance with Section 6.5
hereof; (d) without impairing its rights hereunder, Mortgagee
may, at its option, at any time and from time to time, release to
Mortgagor Rental so received by Mortgagee, or any part thereof;
(e) Mortgagee shall not be liable for its failure to collect or
its failure to exercise diligence in the collection of Rental,
but shall be accountable only for Rental that it shall actually
receive; and (f) the assignment contained in this Article shall
terminate upon the release of this Mortgage, but no tenant shall
be required to take notice of termination until a copy of such
release shall have been delivered to such tenant. Prior to the
occurrence of an Event of Default, the Rental shall be used to
pay expenses associated with owning and operating the Property
and to pay the Debt before being used for any other purpose. It
shall never be necessary for Mortgagee to institute legal
proceedings of any kind whatsoever to enforce the provisions of
this Article. Notwithstanding anything to the contrary in this
document, it is agreed that any Rental will not constitute a
payment by the Mortgagor to Mortgagee of any portion of the Debt
(and hence will not be credited to the Debt) until the Rental is
actually paid to the Mortgagee and received and retained by the
Mortgagee and then, in such event, the Rental so received shall
be applied in accordance with Section 9.2(c). Notwithstanding
anything to the contrary in this document, this Article shall not
make Mortgagee an owner or operator of the Property for the
purposes of environmental liability and this Article shall not
make Mortgagee a partner of Mortgagor. Further, this Article
shall be effective and perfected upon recordation of this
document.
Section 9.3 Remedies. Should an Event of Default occur,
Mortgagor agrees to deliver to Mortgagee possession and control
of all Rental held by Mortgagor in trust for the benefit of
Mortgagee, provided, however, that Mortgagor may apply a portion
of such Rental to no more than one month's normal and actual
operating costs of the Property. Mortgagor specifically agrees
that Mortgagee may upon the occurrence of any Event of Default or
at any time thereafter, personally or through an agent selected
by Mortgagee, take possession and control of all or any part of
the Property and may receive and collect all Rental theretofore
accrued and all thereafter accruing therefrom until the final
termination of this Mortgage or until the foreclosure of the lien
of this Mortgage, applying so much thereof as may be collected
before sale of the Property by the Mortgagee or judicial foreclo
sure of this Mortgage first to the expenses of Mortgagee incurred
in obtaining the Rental and then applying the Rental so received
in accordance with the provisions of Section 6.5 hereof. Any
such action by Mortgagee shall not operate as a waiver of the
Event of Default in question, or as an affirmance of any Lease or
of the rights of any tenant in the event title to that part of
the Property covered by the Lease or held by the tenant should be
acquired by Mortgagee or other purchaser at foreclosure sale.
Mortgagee or Mortgagee's agent may use against Mortgagor or any
other person such lawful or peaceable means as the person acting
may see fit to enforce the collection of any such Rental or to
secure possession of the Property, or any part of it and may
settle or compromise on any terms as Mortgagee or Mortgagee's
agent sees fit, the liability of any person or persons for any
such Rental. In particular, Mortgagee or Mortgagee's agent may
institute and prosecute to final conclusion actions of forcible
entry and detainer, or actions of trespass to try title, or
actions for damages, or any other appropriate actions, in the
name of Mortgagee or Mortgagor, and may settle, compromise or
abandon any such actions as Mortgagee or Mortgagee's agent may
see fit; and Mortgagor binds itself and its successors and
assigns to take whatever lawful or peaceable steps Mortgagee or
Mortgagee's agent may ask of it or any such person or concern so
claiming to take for such purposes, including the institution and
prosecution of actions of the character above stated. However,
neither Mortgagee nor Mortgagee's agent shall be obligated to
collect any such Rental or be liable or chargeable for failure to
do so. Upon any sale of the Property or any part thereof in
foreclosure of the lien or security interest created by this
Mortgage, such Rental so sold which thereafter accrues shall be
deemed included in such sale and shall pass to the purchaser free
and clear of the assignment made in this Article. Nothing in
this Section is intended to require the Mortgagee to institute
any legal proceedings or engage in any self help remedies in
order to make the absolute assignment of the Rental to Mortgagee
operative.
Section 9.4 Mortgagee in Possession; No Liability of
Mortgagee. Mortgagee's acceptance of this assignment shall not,
before entry upon and taking possession of the Property by
Mortgagee, be deemed to constitute Mortgagee a "mortgagee in
possession," nor obligate Mortgagee to appear in or defend any
proceeding relating to any of the Leases or to the Property, take
any action hereunder, expend any money, incur any expenses or
perform any obligation or liability under the Leases, or assume
any obligation under the Leases including the obligation to
return any deposit delivered to Mortgagor by any tenant.
Mortgagee shall not be liable for any injury or damage to person
or property in or about the Property, except injury or damage
resulting from Mortgagee's wilful misconduct or gross negligence.
Neither the collection of Rental due under the Leases herein
described nor possession of the Property by Mortgagee shall
render Mortgagee liable with respect to any obligations of
Mortgagor under any of the Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Mortgagor
covenants, warrants and represents that:
(a) Neither Mortgagor nor any previous owner has
entered into any prior oral or written assignment, pledge or
reservation of the Rental, entered into any prior assignment or
pledge of Mortgagor's landlord interests in any Lease or
performed any act or executed any other instruments which might
prevent or limit Mortgagee from operating under the terms and
conditions of this Article;
(b) Mortgagor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Mortgagor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Mortgagee's request, execute
an additional assignment to Mortgagee of all Leases then
affecting the Property and all Rental and other sums due
thereunder by assignment(s) in form and substance satisfactory to
Mortgagee and (iii) at the request of Mortgagee, record such
Leases and the assignment(s) thereof to Mortgagee;
(d) Mortgagor shall enforce the tenants' obligations
under the Leases in the ordinary course of Mortgagor's business;
(e) Mortgagor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Mortgage and any other encumbrances permitted by
this Mortgage;
(f) Mortgagor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Mortgagee;
(g) Mortgagor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Mortgagee's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Mortgage;
(i) After the occurrence of an Event of Default,
Mortgagor shall from time to time furnish to Mortgagee, within
thirty (30) days after demand therefor, true, correct and
complete copies of all Leases or any portion of the Leases
specified by Mortgagee; and
(j) Mortgagor shall not in any event collect any
Rental more than one (1) month in advance of the time it will be
earned (and if Mortgagor does so, in addition to any other rights
or remedies available by reason of such Event of Default, all
Rental so collected more than one (1) month in advance of the
time it is earned shall be delivered to Mortgagee to be applied
to the Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Mortgagee.
Section 9.7 Satisfaction and Release. By Mortgagee's
acceptance of this Mortgage, it is understood and agreed that a
full and complete satisfaction and release of this Mortgage shall
operate as a full and complete satisfaction and release to
Mortgagor of the Mortgagee's rights and interests assigned to
Mortgagee under this Article (subject to the automatic
reinstatement provisions of Section 10.15 below).
Section 9.8 Subordination of Mortgage to Leases. It is
agreed and understood that Mortgagee hereby reserves the right
and shall have the right, at any time and from time to time,
without the consent or joinder of any other party, to subordinate
this Mortgage and the liens, assignments and security interests
created by this Mortgage to all or any of the Leases regardless
of the respective priority of any of such Leases and this
Mortgage. Upon doing so and filing evidence of such
subordination in the real property records in the county or
counties where the Real Property is located, a foreclosure of
Mortgagee's liens, assignments and security interests under this
Mortgage shall be subject to and shall not operate to extinguish
any of said Leases as to which such subordination is operative.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Mortgage. Any of the Debt may be extended, rearranged, renewed,
increased or otherwise changed in any way, and any part of the
security described in this Mortgage or any other security for any
part of the Debt may be waived or released without in anyway
altering or diminishing the force, effect or lien of this
Mortgage, and the lien, assignment and security interest granted
by this Mortgage shall continue as a prior lien, assignment and
security interest on all of the Property not expressly so
released, until the final satisfaction of this Mortgage.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Mortgage which under applicable laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable state or federal laws,
whichever permit the higher rate. In this connection, Mortgagor
and Mortgagee stipulate and agree that it is their common and
overriding intent to contract in strict compliance with
applicable usury laws. In furtherance thereof, none of the terms
of this Mortgage shall ever be construed to create a contract to
pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the maximum rate permitted
by applicable laws. Mortgagor shall never be liable for interest
in excess of the maximum rate permitted by applicable laws. If,
for any reason whatever, such interest paid or received during
the full term of the applicable indebtedness produces a rate
which exceeds the maximum rate permitted by applicable laws,
Mortgagee shall credit against the principal of such indebtedness
(or, if such indebtedness shall have been paid in full, shall
refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid to
produce a rate equal to the maximum rate permitted by applicable
laws. All sums paid or agreed to be paid to Mortgagee for the
use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated
and spread in equal parts throughout the full term of the
applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of
this Section shall control all agreements, whether now or
hereafter existing and whether written or oral, between Mortgagor
and Mortgagee.
Section 10.3 Subrogation to Liens Discharged. Mortgagor
hereby agrees that Mortgagee shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Mortgagee. Irrespective of any formal or informal acknowledgment
of partial or complete satisfaction or release of the Discharged
Obligations, the Subrogated Liens shall be continued, renewed,
extended, brought forward and rearranged as security for the Debt
in addition to and cumulative of the lien and security interest
of this Mortgage. Foreclosure under this Mortgage shall
constitute foreclosure of the Subrogated Liens.
Section 10.4 Due on Sale. Mortgagor agrees that if,
without Mortgagee's prior written consent (except as otherwise
provided herein or in the Settlement Agreement), (a) any part of
the Property should be directly or indirectly transferred,
conveyed or mortgaged, voluntarily or involuntarily, absolutely
or as security, or (b) Mortgagor should enter into any
contractual arrangement to transfer, convey or mortgage any part
of the Property or any interest either in the Property, the
moratorium provided in Article VI of the Settlement Agreement
shall immediately terminate without notice to Obligors.
Mortgagee is under no obligation to consent to the transfer or
encumbrance of the Property except on the terms provided in the
Settlement Agreement irrespective of whether or not the transfer,
conveyance or mortgage would or might (i) diminish the value of
any security for the Debt, or (ii) increase the likelihood of
Mortgagee's having to resort to any security for the Debt after
default. If Mortgagee's consent to a proposed mortgaging is
requested, Mortgagee shall have the right (in addition to its
absolute right to refuse to consent to any such transaction) to
condition its consent upon satisfaction of any one or more of the
following requirements: (1) that the interest rate(s) on all or
any part of the Debt be increased to a rate which is then
acceptable to Mortgagee; (2) that a principal amount deemed
appropriate by Mortgagee be paid against the Debt to reduce to a
level which is then acceptable to Mortgagee the ratio that the
outstanding balance of the Debt bears to the value of the
Property as determined by Mortgagee; (3) that the liability to
Mortgagee of Mortgagor and all makers and guarantors of all or
any part of the Debt will be confirmed by them in writing to be
unaffected and unimpaired by such mortgaging; and (4) that any
proposed junior mortgagee expressly subordinate to all liens and
security interests securing the Debt as to both lien and payment
right priority and consent to the proposed transaction in a
writing addressed to Mortgagee.
Section 10.5 Condemnation. If before final termination of
this Mortgage, all or a portion of the Property is taken for
public or quasi-public purposes, either through eminent domain or
condemnation proceedings, by voluntary conveyance under threat of
condemnation with Mortgagee's express written consent and joinder
or otherwise, Mortgagor hereby agrees that any and all sums of
money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Mortgagee, and they are
hereby assigned to Mortgagee, and shall be paid directly to
Mortgagee. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the
Property shall be applied, first, to reimburse Mortgagee or the
Trustee for all costs and expenses, including reasonable
attorneys' fees, incurred in connection with collection of such
proceeds and, second, the remainder of said proceeds shall be
applied, at the reasonable discretion of Mortgagee, to the
payment of the Debt in the order determined by Mortgagee in its
sole discretion, or paid out to repair or restore the Property so
affected by such condemnation, injury or damage in the same
manner as provided in Section 4.1(h) above. Mortgagor agrees to
execute such further assignments of all such proceeds, judgments,
decrees and awards as Mortgagee may request. Mortgagee is hereby
authorized, in the name of Mortgagor, to execute and deliver
valid acquittances for, and to appeal from, any such judgment,
decree or award. Mortgagee shall not be, in any event or
circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any such proceeds,
judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfying the notice requirements set
forth in the Settlement Agreement shall be satisfactory under
this Mortgage.
Section 10.7 Mortgagee and Mortgagor. The term
"Mortgagee" as used in this Mortgage shall mean and include the
holder or holders of the Debt from time to time, and upon
acquisition of the Debt by any holder or holders other than the
named Mortgagee, effective as of the time of such acquisition,
the term "Mortgagee" shall mean all of the then holders of the
Debt, to the exclusion of all prior holders not then retaining or
reserving an interest in the Debt from time to time, whether such
holder acquires the Debt through succession to or assignment from
a prior Mortgagee. The term "Mortgagor, its successors and
assigns" shall also include the heirs and legal representatives
of each Mortgagor who is a natural person and the receivers,
conservators, custodians and trustees of each Mortgagor. In
general, Mortgagor may not assign or delegate any of its rights,
interests or obligations under this Mortgage, the Notes, the
Settlement Agreement or any Credit Document without Mortgagee's
express prior written consent, and any attempted assignment or
delegation without it shall be void or voidable at Mortgagee's
election; provided, however, that Mortgagor may delegate its
obligations under this Mortgage and any other Credit Documents
regarding the management, maintenance and leasing of the
Mortgaged Property, as well as the construction of tenant finish
and "cosmetic-type" capital improvements to the Mortgaged
Property, to reputable agents or independent contractors without
the prior written consent of Mortgagee, but in any and all such
events, Mortgagor shall remain fully obligated to Mortgagee in
accordance with the provisions of this Mortgage and all other
Credit Documents for the complete and full compliance with and
performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Mortgage to Articles,
Sections and Exhibits refer to Articles, Sections and Exhibits in
and to this Mortgage unless otherwise specified. The Article and
Section numbers, Exhibit designations and headings used in this
Mortgage are included for convenience of reference only and shall
not be considered in interpreting, applying or enforcing this
Mortgage.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Mortgage are hereby incorporated into it at that
place in the text, to the same effect as if set out there
verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Mortgage, it
shall be read as if it were written, "including by way of example
only and without in any way limiting the generality of the clause
or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Mortgage each includes the masculine, feminine and
neuter genders.
Section 10.12 Severability. If any provision of this
Mortgage is held to be illegal, invalid or unenforceable under
present or future laws, the legality, validity and enforceability
of the remaining provisions of this Mortgage shall not be
affected thereby, and this Mortgage shall be liberally construed
so as to carry out the intent of the parties to it. Each waiver
in this Mortgage is subject to the overriding and controlling
rule that it shall be effective only if and to the extent that
(a) it is not prohibited by applicable law and (b) applicable law
neither provides for nor allows any material sanctions to be
imposed against Mortgagee for having bargained for and obtained
it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Mortgage,
or if the lien, assignments and security interest of this
Mortgage cannot be lawfully enforced to pay any part of the Debt,
then and in either such event, at the option of Mortgagee, all
payments on the Debt shall be deemed to have been first applied
against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Mortgage is executed by more than one person, corporation,
partnership, joint venture, trust or other legal entity, it shall
be construed as though "Mortgagor" were written "Mortgagors" and
as though the pronouns and verbs in their number were changed to
correspond, and in such case, (a) each of Mortgagors shall be
bound jointly and severally with one another to keep, observe and
perform the covenants, agreements, obligations and liabilities
imposed by this Mortgage upon the "Mortgagor", (b) a release of
one or more persons, corporations or other legal entities
comprising "Mortgagor" shall not in any way be deemed a release
of any other person, corporation or other legal entity comprising
"Mortgagor" and (c) a separate action hereunder may be brought
and prosecuted against one or more of the persons, corporations
or other legal entities comprising "Mortgagor" without limiting
any liability of or impairing Mortgagee's right to proceed
against any other person, corporation or other legal entity
comprising "Mortgagor".
Section 10.15 Mortgagor agrees that, if at any time all or
any part of any payment previously applied by Mortgagee to the
Debt is or must be returned by Mortgagee--or recovered from
Mortgagee--for any reason (including the order of any bankruptcy
court)), this Mortgage shall automatically be reinstated to the
same effect as if the prior application had not been made, and,
in addition, Mortgagor hereby agrees to indemnify Mortgagee
against, and to save and hold Mortgagee harmless from any
required return by Mortgagee--or recovery from Mortgagee--of any
such payment because of its being deemed preferential under
applicable bankruptcy, receivership or insolvency laws, or for
any other reason.
Section 10.16 Amendments in Writing. This Mortgage shall
not be changed orally but shall be changed only by agreement in
writing signed by Mortgagor and Mortgagee. Any waiver or consent
with respect to this Mortgage shall be effective only in the
specific instance and for the specific purpose for which given.
No course of dealing between the parties, no usage of trade and
no parole or extrinsic evidence of any nature shall be used to
supplement or modify any of the terms or provisions of this
Mortgage.
Section 10.17 Entire Agreement. This Mortgage embodies
the entire agreement and understanding between Mortgagor and
Mortgagee with respect to its subject matter and supersedes all
prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Mortgagor
acknowledges and agrees that there is no oral agreement between
Mortgagor and Mortgagee which has not been incorporated in this
Mortgage.
Section 10.18 Prior to the occurrence of an Event of
Default, Mortgagor shall be entitled to obtain a release of the
Property from the lien and security interest of this instrument
upon and subject to the terms of the Settlement Agreement. In
addition, Section 10.4 of this Mortgage shall not apply to any
transaction which specifically provides for payment of the
applicable release price provided for in the Settlement
Agreement.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Mortgagor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Mortgagee, in
the event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Mortgagor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Mortgagee insuring Mortgagee a
continued first lien priority status against the Mortgaged
Property within sixty (60) days from the date that the lien is
placed against the Mortgaged Property or within such shorter
period of time as the circumstances shall permit (but in all
events at least five (5) days prior to any sale of the Mortgaged
Property to satisfy said lien) in the event that the holder of
such lien takes steps to cause the Mortgaged Property to be sold
pursuant to said lien.
Section 11.2 Representations and Warranties. Mortgagor
represents and warrants to Mortgagee to the best knowledge of
Mortgagor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Mortgagor, in the past been transported, treated and disposed
of only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Mortgagor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Mortgagor
has no material contingent liability in connection with any
release or threatened release of any hazardous substance or solid
waste into the environment.
Section 11.3 Non-Storage and Disposal. Mortgagor shall
not cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Mortgagor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that
Mortgagor (or any of Mortgagor's tenants which have been approved
by Mortgagee) shall be entitled to store and utilize Hazardous
Materials upon the Mortgaged Property in connection with such
person's or entity's normal and ordinary operations so long as
such storage and use fully complies with all Environmental Laws
at all times.
Section 11.4 Indemnity. Mortgagor shall indemnify, defend
and hold all Mortgagee Indemnitees (as defined below) harmless
from and against any and all (i) liabilities, losses, claims,
damages, costs, penalties, funds and judgments resulting from
violation by Mortgagor of any Environmental Laws with respect to
the ownership and operation of the Mortgaged Property, and (ii)
all other liabilities, losses, claims, damages, costs, penalties,
fines, judgements, attorneys' fees, consultants' fees and
expert's fees incurred or suffered by Mortgagee by reason of,
resulting from, in connection with or arising in any manner
whatsoever from a breach by Mortgagor of any representation,
warranty or covenant contained in this Article 11. This
indemnity provision shall expressly survive the payment in full
of the Debt and the release of the Property from this Mortgage.
As used in this paragraph, "Mortgagee Indemnitees" shall mean
Mortgagee, any subsequent holder or owner of the Notes or any
interest in it, any affiliate, successor, assign or subsidiary of
Mortgagee and each of their shareholders, directors, officers,
employees, counsel, agents, attorneys and contractors, as well as
their respective heirs and legal representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Mortgagor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Mortgagor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or
protection laws, and (b) the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including but
not limited to, those substances, materials and waste listed in
the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. 172.101) or listed by the
Environmental Protection Agency as hazardous substances under or
pursuant to 40 C.F.R. Part 302, or such substances, materials and
wastes which are or become regulated under any Environmental Law.
Section 11.6 The obligations of and liability of Mortgagor
hereunder shall not be personally binding upon nor shall there be
any resort for enforcement thereof to the private property of
Mortgagor's trust managers, shareholders, officers, employees or
agents regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.
EXECUTED effective as of ___________________, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By:
Name:
Title:
"Mortgagor"
THE STATE OF ______________
COUNTY OF _________________
This instrument was acknowledged on the ____ day of
_______________, 1996, by ______________________,
_________________ of AMERICAN INDUSTRIAL PROPERTIES, REIT, a
Texas real estate investment trust on behalf of said real estate
investment trust.
Notary Public in and for
the State of
Printed Name:
My Commission expires:
Exhibit A - Description of the Real Property
Exhibit B - Descriptions of Other Mortgaged Properties
Exhibit C - Permitted Encumbrances
(SAMPLE-STATE OF TEXAS)
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(____________PROPERTY)
THE STATE OF TEXAS
COUNTY OF _______
This instrument ("Deed of Trust") is a deed of trust from
AMERICAN INDUSTRIAL PROPERTIES REIT, a real estate investment
trust duly organized under the laws of the State of Texas, whose
address for purposes hereof is 6220 North Beltline, Suite 205,
Irving, Texas 75063 (called the "Mortgagor", "Debtor" and
"Assignor") to Paul Gallagher, Trustee, whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5, Paul Gallagher, as
Trustee (called the "Trustee"), for the use and benefit of
MANUFACTURERS LIFE INSURANCE COMPANY, a corporation duly
organized under the laws of Canada, whose address is 200 Bloor
Street East, Toronto, Ontario M4W 1E5 and MANUFACTURERS LIFE
INSURANCE COMPANY, U.S.A., a corporation organized under the laws
of the State of Michigan, whose address is 200 Bloor Street East,
Toronto, Ontario M4W 1E5. MANUFACTURERS LIFE INSURANCE COMPANY
and MANUFACTURERS LIFE INSURANCE COMPANY, U.S.A. are collectively
referred to herein as the "Mortgagee", "Secured Party", and
"Assignee". This instrument is also an assignment of rents and
leases from Assignor to Assignee, and a security agreement
between Debtor and Secured Party.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO THE TRUSTEE
Section 1.1 Mortgagor's Conveyance of the Mortgaged
Property to the Trustee to Secure the Debt. To secure payment of
principal, lawful interest and other elements of the Debt
described and defined in Article 2, in consideration of the uses
and trusts (the "Trust") established and continued by this Deed
of Trust and in consideration of Ten Dollars ($10.00) and other
valuable consideration paid before delivery of this Deed of Trust
by each of Trustee and Mortgagee to Mortgagor, who hereby
acknowledges its receipt and that it is reasonably equivalent
value for this Deed of Trust and all other security and rights
given by Mortgagor, Mortgagor hereby Grants, Sells, Conveys,
Transfers, Assigns, Sets Over, Confirms and Delivers unto the
Trustee and to his successors or substitutes in the Trust, the
following property (collectively, the "Mortgaged Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Mortgagor's estate, right, title and interest in and to
all easements and rights-of-way for utilities, ingress or egress
to or from said property and (ii) all interests of Mortgagor in
and to all streets, rights-of-way, alleys or strips of land
adjoining said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Mortgagor and Mortgagee hereby irrevocably
declare to be real estate and part of the Real Property,
including all water, sewage and drainage facilities, wells,
treatment plants, supply, collection and distribution systems,
paving, landscaping and other improvements (collectively, the
"Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Mortgagor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Mortgagor and
Mortgagee hereby also irrevocably declare to be real estate and
part of the Real Property.
(d) Leases. All Leases (as such term is defined in
Section 9.1 below).
(e) Utilities. All Mortgagor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Mortgagor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Mortgagor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(f) After-acquired Property. All right, title and
interest acquired by Mortgagor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Deed of Trust.
(g) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Mortgagor and
incident or appertaining to the Real Property, Improvements,
Fixtures and Equipment, Leases or Utilities Capacity or any part
of them.
(h) Oil and Gas. All Mortgagor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(i) Reversions and Remainders. Any and all rights and
estates of Mortgagor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(j) Contractual Rights. All Mortgagor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Mortgagor's other
benefits thereunder.
(k) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Mortgagor now has,
or at any time hereafter acquires, in and to any of the
foregoing, including the proceeds from condemnation, or
threatened condemnation, and the proceeds of any and all insur
ance covering any part of the foregoing; and all related parts,
accessions and accessories to any of the foregoing and all
replacements or substitutions therefor, as well as all other
Improvements, Fixtures and Equipment, Leases, Utilities Capacity
and Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. TO HAVE AND TO
HOLD the Mortgaged Property, together with every right,
privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Trustee, his successors or
substitutes in the Trust and his or their assigns, forever.
Mortgagor represents that Mortgagor is the lawful owner of the
Mortgaged Property with good title and has the right and
authority to mortgage and convey the Mortgaged Property, and that
the Mortgaged Property is free and clear of all liens, claims and
encumbrances (except only those expressly referred to or
described in Exhibit B) (collectively the "Permitted
Encumbrances"). Mortgagor hereby binds Mortgagor and Mortgagor's
successors and assigns to forever WARRANT and DEFEND the
Mortgaged Property and every part of it unto the Trustee, his
successors or substitutes in the Trust, and his or their assigns,
against the claims and demands of every person whomsoever
lawfully claiming or to claim it or any part of it (such warranty
to supersede any provision contained in this Deed of Trust
limiting the liability of Mortgagor) by, through and under
Mortgagor, but not otherwise; subject, however, to the Permitted
Encumbrances.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Conveyance in Trust to Secure Designated
Obligations. This conveyance to the Trustee is in trust to
secure all of the following present and future debt and
obligations:
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT),
(ii) a promissory note dated November 27, 1992 in the face amount
of Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by executed by
Trammell Crow Real Estate Investors (now known as American
Industrial Properties REIT) and (iii) any and all past,
concurrent or future modifications, extensions, renewals,
rearrangements, replacements and increases of such notes
(collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership to Mortgagee
which are evidenced by or created or incurred under (i) an
agreement titled Settlement Agreement dated as of May 22, 1996,
entered into by and between Mortgagee, Mortgagor, Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership (the
"Settlement Agreement"). Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership are hereinafter
collectively referred to as "Obligor", (ii) all agreements
provided for in the Settlement Agreement, including any
mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between AIP, MLI and MLI USA and provided
for in the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Deed of Trust.
(d) Advances and Other Obligations Pursuant to this
Deed of Trust's Provisions. Any and all sums and the interest
which accrues on them as provided in this Deed of Trust which
Mortgagee may advance or which Mortgagor may owe Mortgagee
pursuant to this Deed of Trust on account of Mortgagor's failure
to keep, observe or perform any of Mortgagor's covenants under
this Deed of Trust.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Mortgagor or any Obligor pursuant to the Settlement Agreement
("Credit Documents") now or in the future governing, evidencing,
guaranteeing or securing or otherwise relating to payment of all
or any part of the debt evidenced by the Notes, and/or the
Settlement Agreement, or (2) all supplements, amendments,
restatements, renewals, extensions, rearrangements, increases,
expansions or replacements of them.
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Mortgagee, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Mortgagee in enforcing any of the Credit Documents.
All liens, assignments and security interests created,
represented or continued by this Deed of Trust, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Mortgagor or Mortgagor's successors or assigns,
except only statutory super priority liens for nondelinquent
taxes and those other liens (if any) expressly identified and
stated in this Deed of Trust to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Deed of Trust, Mortgagor, as
Debtor, and referred to in this Article as "Debtor" (whether one
or more) hereby grants to Mortgagee, as Secured Party, and
referred to in this Article as "Secured Party" (whether one or
more), a security interest in all of Debtor's remedies, powers,
privileges, rights, titles and interests (including all of
Debtor's power, if any, to pass greater title than it has itself)
of every kind and character now owned or hereafter acquired,
created or arising in and to (i) the Mortgaged Property
(including both that now and that hereafter existing) to the full
extent that the Mortgaged Property may be subject to the Uniform
Commercial Code of the state or states where the Mortgaged
Property is situated (the "UCC"), (ii) all equipment, accounts,
general intangibles, fixtures, inventory, chattel paper, notes,
documents and other personal property owned by Debtor and used,
intended or acquired for use, on, or in connection with the use
or operation of, the Mortgaged Property, or otherwise related to
the Mortgaged Property, and all products and proceeds of it,
including all security deposits under Leases now or at any time
hereafter held by or for Debtor's benefit, all monetary deposits
which Debtor has been required to give to any public or private
utility with respect to utility services furnished to the
Mortgaged Property, all funds, accounts, instruments, accounts
receivable, documents, trademarks, trade names and symbols used
in connection therewith, and notes or chattel paper arising from
or by virtue of any transactions related to the Mortgaged
Property, all permits, licenses, franchises, certificates, and
other rights and privileges obtained in connection with the
Mortgaged Property, and all guaranties and warranties obtained
with respect to all improvements, equipment, furniture,
furnishings, personal property and components of any thereof
located on or installed at the Mortgaged Property and (iii) the
following described property:
(a) Contracts. All contracts now or hereafter entered
into by and between Debtor and any general contractor or between
Debtor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Debtor or any of the Mortgaged Property), as well as all right,
title and interest of Debtor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Debtor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Debtor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Debtor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Debtor's Covenants Concerning Personalty
Subject to the UCC. Debtor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Deed of Trust to Secured Party or the Trustee,
upon or at any time after the occurrence of an Event of Default
(defined in Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Debtor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with
respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to sell or
rent the same for the account of Debtor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Debtor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Debtor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Debtor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Debtor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Debtor resulting from any failure to sell or let the
Collateral, or any part thereof, or from other act or omission of
Secured Party with respect to the Collateral unless such loss is
caused by the gross negligence and willful misconduct of Secured
Party, nor shall Secured Party be obligated to perform or
discharge any obligation, duty, or liability under any sale or
lease agreement covering the Collateral or any part thereof or
under or by reason of this instrument or the exercise of rights
or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Debtor has or may have under any rule of law or statute now
existing or hereafter adopted. To the extent notice is required
by applicable law, Secured Party shall give Debtor written notice
at the address set forth herein (which shall satisfy any
requirement of notice or reasonable notice in any applicable
statute) of Secured Party's intention to make any such public or
private sale. Such notice (if any is required by applicable law)
shall be personally delivered or mailed, postage prepaid, at
least ten (10) calendar days before the date fixed for a public
sale, or at least (10) calendar days before the date after which
the private sale or other disposition is to be made, unless the
Collateral is of a type customarily sold on a recognized market,
is perishable or threatens to decline speedily in value. Such
notice (if any is required by applicable law), in case of public
sale, shall state the time and place fixed for such sale or, in
case of private sale or other disposition other than a public
sale, the time after which the private sale or other such
disposition is to be made. Any public sale shall be held at such
time or times, within the ordinary business hours and at such
place or places, as Secured Party may fix in the notice of such
sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but
Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and
in case of any such failure, such Collateral may again be sold
upon like notice. Each and every method of disposition described
in this Section shall constitute disposition in a commercially
reasonable manner. Mortgagor, to the extent applicable, shall
remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party take
possession of the Collateral or any part thereof before the time
that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of disposition of
the Collateral to the Debt, such proceeds shall be applied to the
reasonable and actual expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and the
reasonable and actual attorneys' fees and legal expenses incurred
by Secured Party, each Obligor, to the extent applicable, to
remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the whole
of the Collateral shall not exhaust the rights of Secured Party
hereunder, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Deed of Trust
and the security interest created hereby shall remain in full
force and effect as to the unsold portion of the Collateral just
as though no sale had been made; and
(v) in the event any sale hereunder is not completed or
is defective in the opinion of Secured Party, such sale shall not
exhaust the rights of Secured Party hereunder and Secured Party
shall have the right to cause a subsequent sale or sales to be
made hereunder; and
(vi) any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument
evidencing any foreclosure sale hereunder as to nonpayment of any
indebtedness or as to the occurrence of any Event of Default, or
as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place and terms of
sale and the Collateral to be sold having been duly given, as to
any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(vii) Secured Party may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but in the name and on behalf
of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Debtor. Debtor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Debtor and agrees that
Secured Party may proceed against any Obligor for the amount of
the Debt owed to Secured Party without taking any action against
any other Obligor or any other person or entity and without
selling or otherwise proceeding against or applying any of the
Collateral in Secured Party's possession.
Section 3.3 UCC Rights are not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Deed of
Trust, such election shall not preclude Secured Party or the
Trustee from exercising any or all of the rights and remedies
granted by the other Articles of this Deed of Trust as to the
remaining personal property or fixtures.
Section 3.4 Deed of Trust is Also Financing Statement.
Secured Party may, at its election, at any time after delivery of
this Deed of Trust, file an original of this Deed of Trust as a
financing statement or sign one or more copies of this Deed of
Trust to use as a UCC financing statement. Secured Party's
signature may be placed between the last sentence of this Deed of
Trust and Debtor's acknowledgment or may follow Debtor's
acknowledgment. Secured Party's signature need not be
acknowledged and is not necessary to the effectiveness of this
Deed of Trust as a deed of trust, mortgage, assignment, pledge,
security agreement or (unless otherwise required by applicable
law) as a financing statement.
Section 3.5 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Debtor will not execute and there will not be filed in any public
office any financing statements affecting the Collateral other
than financing statements in favor of Secured Party under this
Deed of Trust, unless prior written specific consent and approval
of Secured Party shall have been first obtained.
Section 3.6 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Deed of Trust, a financing statement or statements and one
or more continuation statements in any jurisdiction where Secured
Party deems it necessary, and at Secured Party's request, Debtor
will join Secured Party in executing one or more financing
statements, continuation statements or both pursuant to the UCC,
in form satisfactory to Secured Party, and will pay the costs of
filing or recording them, in all public offices at any time and
from time to time whenever filing or recording of this Deed of
Trust, any financing statement or any continuation statement is
deemed by Secured Party or its counsel to be necessary or
desirable.
Section 3.7 Fixtures. Certain of the Collateral is or
will become "fixtures" (as that term is defined in the UCC) on
the Real Property, and when this Deed of Trust is filed for
record in the real estate records of the county where such
fixtures are situated, it shall also automatically operate as a
financing statement upon such of the Collateral which is or may
become fixtures.
Section 3.8 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Debtor hereby
assigns to Secured Party all of Debtor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Deed of Trust shall automatically terminate this
assignment.
Section 3.9 Debtor's Warranties Concerning Collateral.
Debtor warrants and represents to Secured Party that Debtor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Deed of Trust (such
warranty to supersede any provision contained in this Deed of
Trust limiting the liability of Mortgagor). Debtor agrees to
defend the Collateral and its proceeds against all claims and
demands of any person at any time claiming the Collateral, its
proceeds or any interest in either. Debtor also warrants and
represents that Debtor has not heretofore signed any financing
statement directly or indirectly affecting the Collateral or any
part of it which has not been completely terminated of record,
and no such financing statement signed by Debtor is now on file
in any public office except only those statements (if any) true
and correct copies of which Debtor has actually delivered to
Secured Party.
Section 3.10 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Debtor requests in writing,
but failure of Secured Party to comply with such request shall
not of itself be deemed a failure to exercise reasonable care,
and no failure of Secured Party to take any action not so
requested by Debtor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.11 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Debtor or discharging or otherwise affecting any liability of
Debtor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
MORTGAGOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Mortgagee. To
better secure the Debt, Mortgagor covenants and agrees with the
Trustee and his substitutes and successors in the Trust, for the
use and benefit of Mortgagee and with the intent that the
Trustee, Mortgagee or both may enforce these covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Mortgagee granted in, secured by or ancillary to this Deed of
Trust shall be considered as exclusive, but each shall be
cumulative of all others which Mortgagee or the Trustee may now
or hereafter have.
(b) Mortgagor Waives Marshalling of Assets and Sale in
Inverse Order of Alienation Rights. Mortgagor hereby irrevocably
WAIVES all rights of marshalling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Mortgagor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Mortgagor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this Deed of
Trust should be discovered or arise at any time in the future
then, unless Mortgagee is the only holder of it, or Mortgagee has
given specific prior written consent to it, Mortgagor agrees to
promptly discharge, remove, bond around or insure around it from
the Mortgaged Property. Mortgagor will notify Mortgagee in
writing within five (5) days of the time that Mortgagor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Deed of Trust, Mortgagor agrees to
provide, maintain and keep in force the insurance coverages
relating to the Property substantially similar to those
maintained by Mortgagor as of the date of execution of this Deed
of Trust, including but not limited to liability coverage of at
least $2,000,000. Mortgagor agrees to have each such policy
modified within thirty (30) days of the date of this Agreement to
(i) name Mortgagee as additional insured, and (ii) expressly
prohibit cancellation or modification of insurance without the
insurer agreeing to endeavor to give thirty (30) days' written
notice to Mortgagee. Mortgagor agrees to furnish due proof of
payment of the premiums for all such insurance to Mortgagee
promptly after each such payment is made and in any case at least
fifteen (15) days before payment becomes delinquent.
(e) Mortgagee's Rights to Collect Insurance Proceeds.
Mortgagor hereby assigns to Mortgagee the exclusive right to
collect any and all monies that may become payable under any
insurance policies covering any part of the Property, or any risk
to or about the Property. Mortgagee shall fully cooperate with
and assist Mortgagor with respect to the filing of insurance
claims and the collection of insurance proceeds so long as
Mortgagee reasonably concurs with Mortgagor's actions with
respect thereto and all reasonable and actual costs incurred by
Mortgagee in connection with such cooperation and participation
are promptly paid or reimbursed by Mortgagor upon the request of
Mortgagee.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Deed of Trust
shall automatically constitute foreclosure upon all policies of
insurance insuring any part of or risk to the Property and all
claims thereunder arising from post-foreclosure events. The
successful bidder or bidders for the Property at foreclosure, as
their respective interests may appear, shall automatically accede
to all of Mortgagor's rights in, under and to such policies and
all post-foreclosure event claims, and such bidder(s) shall be
named as insured(s) on request, whether or not the trustee's deed
or bill of sale to any such successful bidder mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Mortgagor may, at its option, unless an
Event of Default has occurred, either (i) cause Mortgagee to
apply all such monies or any part thereof toward the payment of
the Debt , whether the same be then due or not, such application
to be made in such manner and order as Mortgagee shall elect, and
any balance of insurance proceeds remaining after such
application shall be delivered to Mortgagor or (ii) cause
Mortgagee to disburse to Mortgagor, from an interest-bearing
account maintained with Mortgagee, any insurance proceeds
received to be used by Mortgagor solely for the repair,
rebuilding and restoration (hereinafter collectively referred to
as the "Restoration Work") of the Property; provided, however,
that the obligation of Mortgagee to disburse to Mortgagor such
insurance proceeds shall be and is hereby made subject to
compliance by Mortgagor with the following terms, conditions and
procedures (hereinafter collectively referred to as the
"Disbursement Procedures"), to wit:
(1) There shall have been submitted to Mortgagee,
and Mortgagee shall have approved, which approval shall not be
unreasonably withheld, the following:
(i) Plans and Specifications for the
Restoration Work prepared by an architect reasonably satisfactory
to Mortgagee (hereinafter referred to as the "Restoration
Architect");
(ii) a cost breakdown and analysis
(hereinafter referred to as the "Estimated Cost") certified to
Mortgagee by the Restoration Architect, stating that the
Restoration Work can be completed in accordance with the above-
mentioned Plans and Specifications at the price set forth in the
"Restoration Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Mortgagee pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work
must not exceed the proceeds of the insurance and other funds of
Mortgagor that are available for application thereto;
(3) After and subject to compliance with all of
the foregoing, the amount held by Mortgagee and available for
restoration shall be disbursed by Mortgagee to Mortgagor
periodically (but not more frequently than monthly) as the
Restoration Work progresses, as follows:
(i) Mortgagee shall have received in
connection with each such requested disbursement a draw request
from the Restoration Contractor certifying that all work
completed to the date of such draw request has been performed in
accordance with the Plans and Specifications as approved by
Mortgagee in a good and workmanlike manner, which draw request
shall have been approved by the Restoration Architect;
(ii) Mortgagee shall have received a
certification from the Restoration Architect that the remaining
amount of funds held by Mortgagee, including funds held pursuant
to subparagraph 2 above, are sufficient to complete the
Restoration Work in accordance with the Plans and Specifications
as approved by Mortgagee;
(iii) Mortgagee shall have also received
evidence satisfactory to Mortgagee (including, without
limitation, title certifications, lien waivers and affidavits)
that all governmental licenses and permits necessary for the
performance of the Restoration Work have been secured and the
first-in-priority status of this Deed of Trust continues without
additional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by
Mortgagee, each periodic disbursement shall be made subject to a
retainage of ten percent (10%) of the amount requested, and the
aggregate of the amount so retained shall be disbursed by
Mortgagee to Mortgagor no earlier than thirty-one (31) days after
the Restoration Work is completed in accordance with said Plans
and Specifications (as evidenced by the certificate of the
Restoration Architect), and Mortgagee shall have received
evidence satisfactory to Mortgagee that all costs incurred in
connection with the Restoration Work have been paid in full and
that no party claims or has a right to claim any lien affecting
the Property and arising out of the Restoration Work; and
(5) Upon termination or expiration of the
moratorium period or any extension thereof as provided for in the
Settlement Agreement, Mortgagee is hereby authorized to apply any
amounts held by Mortgagee pursuant to any subparagraph of this
Section 4.1 against the outstanding Debt.
(h) Application of Insurance Proceeds Collected After
Foreclosure. Unless Mortgagee or Mortgagee's representative
reserves at the foreclosure sale the right to collect any uncol
lected insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Mortgagee, shall have no interest in such proceeds and
Mortgagee shall apply them, if and when collected, to the Debt in
such order and manner as Mortgagee shall then elect and remit any
remaining balance to Mortgagor or to such other person or entity
as is legally entitled to them), all proceeds of all such
insurance which are not so reserved by Mortgagee at the
foreclosure sale and are not actually received by Mortgagee until
after foreclosure shall be the property of the successful bidder
or bidders at foreclosure, as their interests may appear, and
Mortgagor shall have no interest in them and shall receive no
credit for them.
(i) Mortgagee Not Obligated to Require, Provide or
Evaluate Insurance. Mortgagee shall have no duty to Mortgagor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(j) Mortgagee May Elect to Insure Only its Own
Interests. If Mortgagee elects at any time or for any reason to
purchase insurance relating to the Property, it shall have no
obligation to cause Mortgagor or anyone else to be named as an
insured, to cause Mortgagor's or anyone else's interests to be
insured or protected or to inform Mortgagor or anyone else that
his or its interests are uninsured or underinsured.
(k) Mortgagor Will Correct Defects, Provide Further
Assurances and Papers. Upon Mortgagee's reasonable request,
Mortgagor will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Deed of Trust or any Credit Document or in the description
of any of the Property, and will deliver such further assurances
and execute such additional papers as in the opinion of Mortgagee
or its legal counsel shall be necessary, proper or appropriate
(1) to better convey and assign to the Trustee and Mortgagee all
the Property intended or promised to be conveyed or assigned or
(2) to properly evidence or give notice of the Debt or its
intended or promised security.
(l) Mortgagor Will Pay Taxes and Impositions and
Furnish Receipts. Mortgagor agrees at its own cost and expense
to pay and discharge all taxes, assessments, maintenance charges,
permit fees, impact fees, development fees, capital recovery
charges, utility reservation and standby fees and all other
similar and dissimilar impositions of every kind and character
("Impositions") charged, levied, assessed or imposed against any
interest in any of the Property, as they become payable and
before they become delinquent; provided, however, that Mortgagor
shall have the right to actively contest such Impositions in good
faith if Mortgagor shall establish sufficient reserves to pay any
such contested Impositions that are later determined to be
properly owed by Mortgagor; and provided, further, that no
attempts shall be made to foreclose any lien for such
Impositions. Mortgagor agrees to furnish due proof of such
payment to Mortgagee promptly after payment and before
delinquency. Mortgagor also agrees to hereafter file all income,
franchise and other tax returns within the time frames that they
are required to be filed and pay all taxes shown thereon to be
due, including interest and penalties, except for those taxes
which are being diligently contested in good faith and for
payment of which adequate reserves have been set aside by
Mortgagor.
(m) Mortgagor to Pay Monthly Tax and Insurance
Deposits on Request. If and after Mortgagee requests it after
the occurrence of an Event of Default, Mortgagor agrees to pay
the monthly tax and insurance premium deposits required by
Article 8 and to provide Mortgagee any additional sums needed to
pay the taxes and insurance premiums for the Property when due.
(n) Mortgagor Will Maintain Property and Won't Remove
Improvements. Mortgagor agrees to keep, preserve and maintain
all elements of the Property in a good state of repair and
condition and to keep all equipment and stores of supplies needed
for its proper and full operation on the Property, well stocked
and in good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Mortgagor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Mortgagee's prior
written consent. Mortgagor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Deed of Trust, such
Fixtures and Equipment as from time to time become worn out or
obsolete, provided that either (a) simultaneously with or before
such removal any such equipment shall be replaced with other
equipment of a value at least equal to that of the replaced
equipment and free from any title retention or security agreement
or other encumbrance and from any reservation of title, and by
such removal and replacement Mortgagor shall be deemed to have
subjected such equipment to the lien, assignments and security
interests of this Deed of Trust or (b) any net cash proceeds
received from such disposition shall be paid over promptly to
Mortgagee to be applied to the Debt in the order determined by
Mortgagee in its sole discretion. Mortgagor shall not grant, join
in or consent to any lien, security interest, easement, license,
use or other charge or interest covering or affecting all or any
part of the Property or initiate, join in and consent to the
change in any private restrictive covenant, zoning ordinance or
other public or private restrictions limiting or defining the
uses which may be made of the Property or any part thereof
without the prior written consent of Mortgagee.
(o) Mortgagor Will Protect Property from Mechanic's
Liens. Mortgagor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Deed of Trust, for any such bill which may
be legally due and payable; provided, however, that Mortgagor
shall have the right to actively contest any such bills in good
faith if Mortgagor shall provide a bond in form, substance and
amount reasonably satisfactory to Mortgagee covering and
affecting any lien for any such bills.
(p) Mortgagee's Inspection and Discussion Rights.
Mortgagor agrees, after the occurrence of an Event of Default, to
permit Mortgagee and its agents, representatives and employees at
all reasonable times during business hours to go upon, examine,
inspect and remain on the Mortgaged Property, to assist and
cooperate, and require Mortgagor's employees, agents and
contractors to cooperate, with Mortgagee and to furnish to
Mortgagee on request all pertinent information concerning the
physical and economic condition, development and operation of the
Mortgaged Property. Mortgagee may discuss the Mortgaged Property
directly with any of Mortgagor's officers and managers.
(q) Mortgagee May Grant Releases without Impairing
Other Collateral or Rights. At all times, Mortgagee shall have
the right to release any part of the Property or any other
security from this Deed of Trust or any other security instrument
or device without releasing any other part of the Property or any
other security, without affecting Mortgagee's lien, assignment or
security interest as to any property or rights not released and
without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(r) Mortgagor Will Notify Mortgagee of Legal
Proceedings and Defend Lien; Mortgagee May Act if Mortgagor
Doesn't. Mortgagor will notify Mortgagee in writing promptly of
the commencement of any legal proceedings affecting any part of
the Property and will engage and pay legal counsel to answer and
to defend and preserve Mortgagee's liens, rights and interests
and their rank and priority. If Mortgagor fails or refuses to
promptly begin or to diligently continue any such acts, then
Mortgagee may elect to do so and may take such action in behalf
of Mortgagor, in Mortgagor's name and at Mortgagor's expense.
(s) Legal Compliance, Governmental Notices. Mortgagor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Mortgagor or the Property
and will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(t) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Mortgagor will notify Mortgagee
in writing thereof, setting forth the nature of such change in
reasonable detail. Mortgagor will take, and will cause to be
taken, all such steps as are necessary or appropriate to remedy
promptly any such change.
(u) Notice of Default to Mortgagee. Immediately upon
acquiring knowledge thereof, Mortgagor will notify Mortgagee by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by
Mortgagee be deemed a waiver of a Default or of an Event of
Default.
(v) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Mortgagor will notify
Mortgagee in writing of the pendency of such proceedings.
Mortgagor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Mortgagee, in the carrying on
or defense of any such proceedings.
(w) Notice of Name or Address Change. Mortgagor will
not change Mortgagor's name or the location of its chief execu
tive office without first notifying Mortgagee in writing of such
change at least thirty (30) days before its effective date.
(x) Manager. Mortgagor will, or will cause its
managers to, do and perform any and all acts and things relating
to the management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Deed of Trust
and the other Credit Documents.
Section 4.2 Mortgagor Agrees to Pay or Reimburse
Mortgagee's Expenses. To the extent not prohibited by applicable
law, Mortgagor will pay all reasonable and actual costs and
expenses and reimburse Mortgagee for any and all reasonable and
actual expenditures of every character incurred or expended from
time to time, after the occurrence of an Event of Default
hereunder, in connection with:
(a) Mortgagee's realizing upon Mortgagee's security
interest in and liens on the Property, and all reasonable and
actual costs and expenses relating to Mortgagee's exercising any
of its rights and remedies under this Deed of Trust or any Credit
Document or at law, including all appraisal fees, consulting
fees, filing fees, taxes, brokerage fees and commissions, title
review and abstract fees, litigation report fees, UCC search
fees, other fees and expenses incident to title searches, reports
and security interests, escrow fees, attorneys' fees, legal
expenses, court costs, other fees and expenses incurred in
connection with any complete or partial liquidation of the
Property, and all fees and expenses for any professional services
relating to the Property or any operations conducted in
connection with it.
(b) Provided, that no right or option granted by
Mortgagor to Mortgagee or otherwise arising pursuant to any
provision of this Deed of Trust, the Notes or any Credit Document
shall be deemed to impose or admit a duty on Mortgagee to
supervise, monitor or control any aspect of the character or
condition of the Property or any operations conducted in
connection with it for the benefit of Mortgagor or any person or
entity other than Mortgagee. Mortgagor agrees to indemnify,
defend and hold Mortgagee, its shareholders, directors, officers,
agents, attorneys, advisors and employees (collectively
"Indemnified Parties") harmless from and against any and all
loss, liability, obligation, damage, penalty, judgment, claim,
deficiency, expense, action, suit, cost and disbursement of any
kind or nature whatsoever (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement),
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from any Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Mortgagor to Mortgagee shall be a demand
obligation owing by Mortgagor to Mortgagee and shall bear
interest from the date of expenditure until paid at the default
rate provided in the Notes.
ARTICLE 5
MORTGAGOR'S REPRESENTATIONS AND WARRANTIES
To induce Mortgagee to extend financial accommodations,
Mortgagor makes the warranties and representations set forth in
this Article.
Section 5.1 Organization. Mortgagor is (a) duly
organized, validly existing and in good standing under the laws
of the state of its organization and has full legal right, power
and authority to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this Deed
of Trust and any other Credit Documents to which Mortgagor is a
party, and (b) duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business
it conducts makes such qualification necessary or desirable.
Mortgagor's execution, delivery and performance of this Deed of
Trust and any other Credit Documents to which Mortgagor is a
party have been duly authorized by all necessary action under
Mortgagor's organizational documents and otherwise.
Section 5.2 Consents. Mortgagor's execution, delivery
and performance of this Deed of Trust and any other Credit
Documents to which Mortgagor is a party do not and will not
require (i) any consent of any other person or entity or (ii) any
consent, license, permit, authorization or other approval
(including foreign exchange approvals) of any court, arbitrator,
administrative agency or other governmental authority, or any
notice to, exemption by, any registration, declaration or filing
with or the taking of any other action in respect of, any such
court, arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Deed of Trust or any other Credit Document to which
Mortgagor is a party, nor the fulfillment of or compliance with
the terms and provisions hereof or thereof will (i) violate any
constitutional provision, law or rule, or any regulation, order
or decree of any governmental authority or the basic
organizational documents of Mortgagor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Mortgagor is a party or bound.
Section 5.4 Enforceability. Mortgagor has duly and
validly executed, issued and delivered this Deed of Trust and any
other Credit Documents to which Mortgagor is a party. This Deed
of Trust and each other Credit Document to which Mortgagor is a
party is in proper legal form for prompt enforcement and is
Mortgagor's valid and legally binding obligation, enforceable in
accordance with its terms.
Section 5.5 Information Accurate. All information
supplied to Mortgagee, concurrently with Mortgagor's execution
of this Deed of Trust are and will be true, correct and complete
in all material respects.
Section 5.6 Taxes. Mortgagor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Mortgagor or Obligor
has previously disclosed to Mortgagee, there is no condemnation
or other action, suit or proceeding pending--or, to the best of
Mortgagor's knowledge, threatened--against or affecting the
Property, at law or in equity, or before or by any governmental
authority, which might result in any material adverse change in
the condition or operation of the Property.
Section 5.8 Mortgagor Solvent. Mortgagor is now solvent,
and no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Mortgagor's knowledge--against Mortgagor.
Mortgagor's liabilities and obligations under this Deed of Trust
and any other Credit Documents to which Mortgagor is a party do
not and will not render Mortgagor insolvent, cause Mortgagor's
liabilities to exceed Mortgagor's assets or leave Mortgagor with
too little capital to properly conduct all of its business as now
conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Deed of Trust or any other Credit
Document to which Mortgagor is a party and no statement contained
in any certificate, schedule, list, financial statement or other
papers furnished to Mortgagee by or on behalf of Mortgagor
contains--or will contain--any untrue statement of material fact,
or omits--or will omit--to state a material fact necessary to
make the statements contained herein or therein not misleading.
Section 5.10 Title. Mortgagor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Deed of Trust
or other Credit Documents. Except as otherwise expressly
permitted by this Deed of Trust, the lien and security interest
of this Deed of Trust will constitute valid and perfected first
and prior liens and security interests on the Property, subject
to no other liens, security interests or charges whatsoever. The
Property is free from damage caused by fire or other casualty.
Section 5.11 Legal Requirements. To the best of
Mortgagor's knowledge, Mortgagor and the Property are in
compliance with all applicable legal requirements and Mortgagor
manages and operates (and will continue to manage and operate)
the Property and its other businesses in accordance with good
industry practices. Mortgagor has not received any notice that
Mortgagor and the property are not in compliance with all
applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Deed of Trust shall terminate and be of no
further force or effect (and shall be released on Mortgagor's
written request and at Mortgagor's cost and expense) upon full
payment of the Debt and complete performance of all of the obliga
tions of the Obligors under the Settlement Agreement and the
Credit Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Deed of Trust.
Section 6.3 Remedies. Upon the occurrence of any Event
of Default, and at any time thereafter:
(a) Debt Due. All Debt in its entirety is immediately
due and payable without presentment, demand, notice of intention
to accelerate or notice of acceleration, or other notice of any
kind, except as required by the Settlement Agreement, all of
which are hereby expressly WAIVED, and the liens and security
interests created or intended to be created hereby shall be
subject to foreclosure, repossession and sale in any manner
provided for herein or provided for by law, as Mortgagee may
elect, and Mortgagee may exercise any and all of its rights under
this Deed of Trust, the Settlement Agreement, the Notes and any
of the other Credit Documents.
(b) Legal Proceedings. Trustee and Mortgagee shall
have the right and power to proceed by suit or suits in equity or
at law, whether for the specific performance of any covenant or
agreement of Mortgagor contained herein or in aid of the execu
tion of the powers herein granted, or for foreclosure or the sale
of the Property or any part thereof under the judgment or decree
of any court of competent jurisdiction, or for the enforcement of
any other appropriate legal or equitable remedy.
(c) Trustee's Sale. It shall be the duty of the
Trustee and of his successors and substitutes in the Trust, on
Mortgagee's request (which request is hereby presumed) to enforce
the Trust by selling the Mortgaged Property as is provided in
this Deed of Trust.
Section 6.4 Time and Place of Sale and Notices. The sale
shall be a public sale at auction held between 10 A.M. and 4 P.M.
of the first Tuesday of a month. The sale shall take place at
the county courthouse in the county in which the Real Property is
located, or if it is located in more than one county, the sale
will be made at the courthouse in one of those counties. The
sale shall occur at the area at that courthouse which the
commissioners' court of that county has designated as the place
where such sales are to take place by designation recorded in the
real property records of that county, or if no area is so
designated, then the notice of sale shall designate the area at
the courthouse where the sale covered by that notice is to take
place, and the sale shall occur in that area. Notice of the sale
shall include a statement of the earliest time at which the sale
will occur and shall be given at least twenty-one (21) days
before the date of the sale (1) by posting at the courthouse door
of each county in which the Real Property is located a written
notice designating the county in which the Real Property will be
sold, (2) by filing in the Office of the County Clerk of each
county in which the Real Property is located a copy of the notice
posted under subsection (1) above and (3) by the holder of the
Debt to which the power of sale is related serving written notice
of the sale by certified mail on each debtor who, according to
the records of a holder of the Debt, is obligated to pay that
Debt. The sale shall begin at the time stated in the notice of
sale or not later than three (3) hours after that time. Service
of any notice under this Section by certified mail is complete
when the notice is deposited in the United States mail, postage
prepaid and addressed to the debtor entitled to it at that
debtor's last known address as shown by the records of a holder
of the Debt. The affidavit of a person knowledgeable of the
facts to the effect that service was completed is prima facie
evidence of service. After such written notice shall have been
posted and filed, as aforesaid, and such notice shall have been
served upon such debtor or debtors, as aforesaid, the Trustee (or
his successor or substitute then acting) shall perform his duty
to enforce the Trust by selling the Mortgaged Property, either as
an entirety or in parcels as the Trustee acting may elect, all
rights to a marshalling of assets or sale in inverse order of
alienation being waived, as aforesaid to the highest bidder or
bidders for cash, and make due conveyance to the purchaser or
purchasers, with special warranty, and the title to such
purchaser or purchasers, when so made by the Trustee acting,
Mortgagor binds itself, its successors and assigns, to warrant
and forever defend against the claims and demands of every person
whomsoever lawfully claiming or to claim the same or any part
thereof (such warranty to supersede any provision contained in
this Deed of Trust limiting the liability of Mortgagor). The
provisions of this Deed of Trust with respect to posting and
giving notices of sale are intended to comply with the provisions
of Section 51.002 of the Texas Property Code as in force and
effect on January 1, 1991, and in the event the requirement for
any notice under such Section 51.002 shall be eliminated or the
prescribed manner of giving it shall be modified by future
amendment to, or adoption of any statute superseding, such
Section 51.002, the requirement for such particular notice shall
be deemed stricken from or modified in of this Deed of Trust in
conformity with such amendment or superseding statute, effective
as of its effective date. The manner prescribed in this Deed of
Trust for serving or giving any notice, other than that to be
posted or caused to be posted by the Trustee acting, shall not be
deemed exclusive but such notice or notices may be given in any
other manner permitted by applicable law. Said sale shall
forever be a bar against Mortgagor, its heirs, legal
representatives, successors and assigns, and all other persons
claiming under it. It is expressly agreed that the recitals in
each conveyance to the purchaser shall be full evidence of the
truth of the matters therein stated and all lawful prerequisites
to said sale shall be conclusively presumed to have been
performed. Trustee may require minimum bids at any foreclosure
sale and may cancel and abandon the sale if no bid is received
equal to or greater than any such minimum bid.
Section 6.5 Application of Foreclosure Sale Proceeds.
The proceeds of any sale of the Mortgaged Property, and any rents
and other amounts collected by Mortgagee from Mortgagee's
holding, leasing, operating or making any other use of the
Mortgaged Property, shall be applied by Mortgagee (or by the
receiver, if one is appointed) to the extent that funds are
available therefrom in the following order of priority:
(a) To Expenses and Senior Obligation Payments.
First, to the payment of the reasonable and actual costs and
expenses of taking possession of the Mortgaged Property and of
holding, maintaining, using, leasing, repairing, equipping,
manning, improving, marketing and selling it, including (i)
trustees' and receivers' fees, (ii) court costs, (iii) attorneys'
and accountants' fees, (iv) costs of advertisement and brokers'
commissions and (v) payment of any and all Impositions, liens,
security interests or other rights, titles or interests superior
to the lien and security interest of this Deed of Trust, whether
or not then due and including any prepayment penalties or fees
and any accrued or required interest (except, in the case of
foreclosure proceeds, those senior liens and security interests,
if any, subject to which the Mortgaged Property was sold at such
trustee's sale, and without in any way implying Mortgagee's
consent to the creation or existence of any such prior liens).
(b) To Other Obligations Owed to Mortgagee. Second,
to the payment of all amounts, other than the principal balance
and accrued but unpaid interest, which may be due to Mortgagee
under the Notes, the Settlement Agreement or any other Credit
Document, together with interest thereon as provided therein.
(c) To Accrued Interest on the Debt. Third, to the
payment of all accrued but unpaid interest due on the Debt.
(d) To Debt Principal. Fourth, to the payment of the
principal balance on the Debt and the principal owing under this
Deed of Trust, the Settlement Agreement and any other Credit
Document, irrespective of whether then matured, and if it is
payable in installments and not matured, then to the installments
in such order as Mortgagee shall elect.
(e) To Junior Lienholders. Fifth, to the extent funds
are available therefor out of the sale proceeds or any rents and,
to the extent known by Mortgagee, to the payment of any debt or
obligation secured by a subordinate deed of trust on or security
interest in the Mortgaged Property.
(f) To Mortgagor. Sixth, to Mortgagor, its successors
and assigns, or to whomsoever may be lawfully entitled to receive
such proceeds.
Section 6.6 Mortgagee May Require Abandonment and
Recommencement of Sale. If the Trustee or his substitute or
successor should commence the sale, Mortgagee may at any time
before the sale is completed direct the Trustee to abandon the
sale, and may at any time or times thereafter direct the Trustee
to again commence foreclosure; or, irrespective of whether
foreclosure is commenced by the Trustee, Mortgagee may at any
time after an Event of Default institute suit for collection of
the Debt or foreclosure of this Deed of Trust. If Mortgagee
should institute suit for collection of the Debt or foreclosure
of this Deed of Trust, Mortgagee may at any time before the entry
of final judgment dismiss it and require the Trustee to sell the
Mortgaged Property in accordance with the provisions of this Deed
of Trust.
Section 6.7 Multiple Sales; Deed of Trust Continues in
Effect. No single sale or series of sales by the Trustee or by
any substitute or successor and no judicial foreclosure shall
extinguish the lien or exhaust the power of sale under this Deed
of Trust except with respect to the items of property sold, nor
shall it extinguish, terminate or impair Mortgagor's contractual
obligations under this Deed of Trust, but such lien and power
shall exist for so long as, and may be exercised in any manner by
law or in this Deed of Trust provided as often as the
circumstances require to give Mortgagee full relief under this
Deed of Trust, and such contractual obligations shall continue in
full force and effect until final termination of this Deed of
Trust.
Section 6.8 Mortgagee May Bid and Purchase. Mortgagee
shall have the right to become the purchaser at any sale made
under this Deed of Trust, being the highest bidder, and credit
given upon all or any part of the Debt shall be the exact
equivalent of cash paid for the purposes of this Deed of Trust.
Section 6.9 Successor or Substitute Trustee. In case of
absence, death, inability, refusal or failure of the Trustee in
this Deed of Trust named to act, or in case he should resign (and
he is hereby authorized to resign without notice to or consent of
Mortgagor), or if Mortgagee shall desire, with or without cause,
to replace the Trustee in this Deed of Trust named, or to replace
any successor or substitute previously named, Mortgagee or any
agent or attorney-in-fact for Mortgagee may name, constitute and
appoint a successor and substitute trustee (or another one)
without other formality than an appointment and designation in
writing, which need not be acknowledged, filed or recorded to be
effective, except only in those circumstances, if any, where
acknowledgment, filing and/or recording is required by applicable
law and such law also precludes Mortgagor from effectively
waiving such requirement. Upon such appointment, this conveyance
shall automatically vest in such substitute trustee, as Trustee,
the estate in and title to all of the Mortgaged Property, and
such substitute Trustee so appointed and designated shall
thereupon hold, possess and exercise all the title, rights,
powers and duties in this Deed of Trust conferred on the Trustee
named and any previous successor or substitute Trustee, and his
conveyance to the purchaser at any such sale shall be equally
valid and effective as if made by the Trustee named in this Deed
of Trust. Such right to appoint a substitute Trustee shall exist
and may be exercised as often and whenever from any of said
causes, or without cause, as aforesaid, Mortgagee or Mortgagee's
agent or attorney-in-fact elects to exercise it.
Section 6.10 Right to Receiver. Upon the occurrence of an
Event of Default or at any time after commencement of a Trustee's
foreclosure sale or any legal proceedings under this Deed of
Trust, Mortgagee may, at Mortgagee's election and by or through
the Trustee or otherwise, make application to a court of
competent jurisdiction for appointment of a receiver of the
Property, as a matter of strict right, without notice to
Mortgagor and without regard to the adequacy of the value of the
Property for the repayment of the Debt, and Mortgagor hereby
irrevocably consents to such an appointment. Any receiver shall
have all the usual powers and duties of receivers in similar
cases, including the full power to possess, rent, maintain,
repair and operate the Property upon such terms and conditions as
may be approved by the court, and shall apply the rents realized
in the same manner and order as foreclosure proceeds in
accordance with Section 6.5.
Section 6.11 Tenants at Will. Mortgagor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Mortgagor, or
the parties so holding possession, shall become and be considered
as tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
ARTICLE 7
MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS
Section 7.1 Mortgagee May Elect to Perform Defaulted
Obligations. Except for Mortgagor's failure to maintain the
insurance coverage required by the other provisions of this Deed
of Trust, if Mortgagor should fail to comply with any of its
other agreements, covenants or obligations under this Deed of
Trust, the Settlement Agreement, any of the Notes, or any other
Credit Document so as to cause such failure to constitute an
Event of Default or a Default which is then continuing, then
Mortgagee (in Mortgagor's name or in Mortgagee's own name) may
perform them or cause them to be performed for Mortgagor's
account and at Mortgagor's expense, but shall have no obligation
to perform any of them or cause them to be performed. With
respect to Mortgagor's failure to maintain the insurance coverage
required hereby, however, Mortgagee itself may purchase or secure
such insurance coverage for the Mortgaged Property prior to
providing Mortgagor with any notice of and opportunity to cure or
remedy such failure. Any and all expenses thus incurred or paid
by Mortgagee under the provisions of this paragraph shall be
Mortgagor's obligations to Mortgagee due and payable on demand,
or if no demand is sooner made, then they shall be due on or
before four (4) years after the respective dates on which they
were incurred, and each shall bear interest from the date
Mortgagee pays it until the date Mortgagor repays it to
Mortgagee, at the maximum nonusurious rate of interest from time
to time permitted by whichever of applicable Texas or federal law
from time to time permits the higher nonusurious interest rate
(the "Ceiling Rate"), or, only if applicable law imposes no
maximum nonusurious rate, then at the same rate as is provided
for in the Notes for interest on past due principal (the "Past
Due Rate"). At all times, if any, as Chapter One ("Chapter One")
of Title 79, Texas Revised Civil Statutes shall establish the
Ceiling Rate for any purpose under this Deed of Trust, the
Ceiling Rate shall be the "indicated rate ceiling" as defined in
Chapter One from time to time in effect. Upon making any such
payment or incurring any such expense, Mortgagee shall be fully
and automatically subrogated to all of the rights of the person,
corporation or body politic receiving such payment. Any amounts
owing by Mortgagor to Mortgagee pursuant to this or any other
provision of this Deed of Trust shall automatically and without
notice be and become a part of the Debt and shall be secured by
this and all other instruments securing the Debt. The amount and
nature of any such expense and the time when it was paid shall be
fully established by the affidavit of Mortgagee or any of
Mortgagee's officers or agents or by the affidavit of any
original, substitute or successor Trustee acting under this Deed
of Trust. Without notice to Mortgagor or any other person or
entity, the Ceiling Rate and the Past Due Rate shall
automatically fluctuate upward and downward as and in any amount
by which the maximum nonusurious rate of interest permitted by
such applicable law and the rate of interest as provided for in
the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Mortgagee in
this Article shall in no event be considered or constitute a cure
of the default or a waiver of Mortgagee's right at any time after
an Event of Default to declare the Debt to be at once due and
payable, but is cumulative of such right and of all other rights
given by this Deed of Trust, the Notes and the Credit Documents
and of all rights given Mortgagee by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Mortgagor agrees that upon the written request of
Mortgagee, Mortgagor will thereafter deposit with Mortgagee each
month an amount equal to one-twelfth (1/12) of the aggregate of
(i) the next succeeding premiums (or payments in respect of them,
if premiums are financed) on all insurance policies which
Mortgagor is required by or pursuant to this Deed of Trust to
maintain on the Property, and (ii) the amount of the next
succeeding annual tax payments, assessment installments,
maintenance charges and other Impositions to become due and
payable with respect to the Property, as reasonably estimated by
Mortgagee, plus, with the first of such monthly deposits, an
additional month's share (a twelfth) of such premiums and taxes
for each month less than twelve remaining before the next payment
thereof falls due. At least fifteen (15) days before the date on
which any such insurance premium (or payment in respect of it, if
premiums are financed) or any of the Impositions must be paid to
avoid delinquency, promptly after Mortgagee's request, Mortgagor
agrees to deliver to Mortgagee a statement or statements showing
the amount of the premium (or payment in respect of it, if
premiums are financed) or Impositions required to be paid and the
name and mailing address of the concern or authority to which it
is payable and, at the same time, Mortgagor agrees to deposit
with Mortgagee such amounts as will, when added to the amount of
such deposits previously made and then remaining available for
the purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Mortgagee by Mortgagor for the payment
of such amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee hereby agrees to apply such
deposits in payment of such insurance obligations and Impositions
prior to delinquency, but only if sufficient funds have been
deposited with Mortgagee by Mortgagor for the payment of such
amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee shall in no way be obligated to
pay any interest to Mortgagor on such deposits, and upon the
occurrence of an Event of Default which is then continuing,
Mortgagee is hereby irrevocably authorized to apply any and all
amounts so deposited with Mortgagee against the amounts due under
the Debt (with such order of application to be at Mortgagee's
discretion) without any further notice to or consent from
Mortgagor or any other person or entity. Additionally, Mortgagor
hereby irrevocably grants to Mortgagee a security interest and
assigns to Mortgagee all such funds so deposited with Mortgagee
as additional security for payment of the Debt and all other
amounts now or hereafter outstanding under any of the Credit
Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. Mortgagor hereby assigns and transfers to Mortgagee all
rents (severed or unsevered), revenues, income, profits and
proceeds of the foregoing ("Rental") payable under each Lease
(hereinafter defined) now or at any time hereinafter existing,
such assignment being upon the terms set forth in Section 9.2
below. The term "Lease" or "Leases" means any oral or written
agreement, now existing or made later, between Mortgagor and
another person or entity to use or occupy all or any portion of
the Property, together with any guaranties or security for the
obligations of any tenant, lessee, sublessee or other person or
entity having the right to occupy, use or manage any part of the
Property under a Lease. Each time Mortgagor enters into a Lease,
such Lease shall automatically become subject to this Article
without further action.
Section 9.2 Terms of Assignment. The transfer of Rental
to Mortgagee shall be upon the following terms: (a) until the
occurrence of an Event of Default, Mortgagor shall have the right
to collect Rental and each tenant may pay Rental directly to
Mortgagor; but after an Event of Default, Mortgagor may not
collect Rental and to the extent Mortgagor receives any Rent
thereafter accruing or paid, Mortgagor covenants to hold all such
Rental in trust for the use and benefit of Mortgagee; (b) upon
receipt from Mortgagee of notice that an Event of Default exists,
each tenant is hereby authorized and directed to pay directly to
Mortgagee all Rental thereafter accruing or payable and receipt
of Rental by Mortgagee shall be a release of such tenant to the
extent of all amounts so paid; (c) Rental so received by
Mortgagee shall be applied by Mortgagee, first to the expenses,
if any, of collection and then in accordance with Section 6.5
hereof; (d) without impairing its rights hereunder, Mortgagee
may, at its option, at any time and from time to time, release to
Mortgagor Rental so received by Mortgagee, or any part thereof;
(e) Mortgagee shall not be liable for its failure to collect or
its failure to exercise diligence in the collection of Rental,
but shall be accountable only for Rental that it shall actually
receive; and (f) the assignment contained in this Article shall
terminate upon the release of this Deed of Trust, but no tenant
shall be required to take notice of termination until a copy of
such release shall have been delivered to such tenant. Prior to
the occurrence of an Event of Default, the Rental shall be used
to pay expenses associated with owning and operating the Property
and to pay the Debt before being used for any other purpose. It
shall never be necessary for Mortgagee to institute legal
proceedings of any kind whatsoever to enforce the provisions of
this Article. Notwithstanding anything to the contrary in this
document, it is agreed that any Rental will not constitute a
payment by the Mortgagor to Mortgagee of any portion of the Debt
(and hence will not be credited to the Debt) until the Rental is
actually paid to the Mortgagee and received and retained by the
Mortgagee and then, in such event, the Rental so received shall
be applied in accordance with Section 9.2(c). Notwithstanding
anything to the contrary in this document, this Article shall not
make Mortgagee an owner or operator of the Property for the
purposes of environmental liability and this Article shall not
make Mortgagee a partner of Mortgagor. Further, this Article
shall be effective and perfected upon recordation of this
document.
Section 9.3 Remedies. Should an Event of Default occur,
Mortgagor agrees to deliver to Mortgagee possession and control
of all Rental held by Mortgagor in trust for the benefit of
Mortgagee, provided, however, that Mortgagor may apply a portion
of such Rental to no more than one month's normal and actual
operating costs of the Property. Mortgagor specifically agrees
that Mortgagee may upon the occurrence of any Event of Default or
at any time thereafter, personally or through an agent selected
by Mortgagee, take--or have the Trustee take--possession and
control of all or any part of the Property and may receive and
collect all Rental theretofore accrued and all thereafter
accruing therefrom until the final termination of this Deed of
Trust or until the foreclosure of the lien of this Deed of Trust,
applying so much thereof as may be collected before sale of the
Property by the Trustee or judicial foreclosure of this Deed of
Trust first to the expenses of Mortgagee incurred in obtaining
the Rental and then applying the Rental so received in
accordance with the provisions of Section 6.5 hereof. Any such
action by Mortgagee shall not operate as a waiver of the Event of
Default in question, or as an affirmance of any Lease or of the
rights of any tenant in the event title to that part of the
Property covered by the Lease or held by the tenant should be
acquired by Mortgagee or other purchaser at foreclosure sale.
Mortgagee, Mortgagee's agent or the Trustee may use against
Mortgagor or any other person such lawful or peaceable means as
the person acting may see fit to enforce the collection of any
such Rental or to secure possession of the Property, or any part
of it and may settle or compromise on any terms as Mortgagee,
Mortgagee's agent or the Trustee sees fit, the liability of any
person or persons for any such Rental. In particular, Mortgagee,
Mortgagee's agent or the Trustee may institute and prosecute to
final conclusion actions of forcible entry and detainer, or
actions of trespass to try title, or actions for damages, or any
other appropriate actions, in the name of Mortgagee, Mortgagor,
or the Trustee, and may settle, compromise or abandon any such
actions as Mortgagee, Mortgagee's agent or the Trustee may see
fit; and Mortgagor binds itself and its successors and assigns to
take whatever lawful or peaceable steps Mortgagee, Mortgagee's
agent or the Trustee may ask of it or any such person or concern
so claiming to take for such purposes, including the institution
and prosecution of actions of the character above stated.
However, neither Mortgagee, Mortgagee's agent nor the Trustee
shall be obligated to collect any such Rental or be liable or
chargeable for failure to do so. Upon any sale of the Property
or any part thereof in foreclosure of the lien or security inter
est created by this Deed of Trust, such Rental so sold which
thereafter accrues shall be deemed included in such sale and
shall pass to the purchaser free and clear of the assignment made
in this Article. Nothing in this Section is intended to require
the Mortgagee to institute any legal proceedings or engage in any
self help remedies in order to make the absolute assignment of
the Rental to Mortgagee operative.
Section 9.4 Mortgagee in Possession; No Liability of
Mortgagee. Mortgagee's acceptance of this assignment shall not,
before entry upon and taking possession of the Property by
Mortgagee, be deemed to constitute Mortgagee a "mortgagee in
possession," nor obligate Mortgagee to appear in or defend any
proceeding relating to any of the Leases or to the Property, take
any action hereunder, expend any money, incur any expenses or
perform any obligation or liability under the Leases, or assume
any obligation under the Leases including the obligation to
return any deposit delivered to Mortgagor by any tenant.
Mortgagee shall not be liable for any injury or damage to person
or property in or about the Property, except injury or damage
resulting from Mortgagee's wilful misconduct or gross negligence.
Neither the collection of Rental due under the Leases herein
described nor possession of the Property by Mortgagee shall
render Mortgagee liable with respect to any obligations of
Mortgagor under any of the Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Mortgagor
covenants, warrants and represents that:
(a) Neither Mortgagor nor any previous owner has
entered into any prior oral or written assignment, pledge or
reservation of the Rental, entered into any prior assignment or
pledge of Mortgagor's landlord interests in any Lease or
performed any act or executed any other instruments which might
prevent or limit Mortgagee from operating under the terms and
conditions of this Article;
(b) Mortgagor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Mortgagor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Mortgagee's request, execute
an additional assignment to Mortgagee of all Leases then
affecting the Property and all Rental and other sums due
thereunder by assignment(s) in form and substance satisfactory to
Mortgagee and (iii) at the request of Mortgagee, record such
Leases and the assignment(s) thereof to Mortgagee;
(d) Mortgagor shall enforce the tenants' obligations
under the Leases in the ordinary course of Mortgagor's business;
(e) Mortgagor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Deed of Trust and any other encumbrances
permitted by this Deed of Trust;
(f) Mortgagor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Mortgagee;
(g) Mortgagor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Mortgagee's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Deed of Trust;
(i) After the occurrence of an Event of Default,
Mortgagor shall from time to time furnish to Mortgagee, within
thirty (30) days after demand therefor, true, correct and
complete copies of all Leases or any portion of the Leases
specified by Mortgagee; and
(j) Mortgagor shall not in any event collect any
Rental more than one (1) month in advance of the time it will be
earned (and if Mortgagor does so, in addition to any other rights
or remedies available by reason of such Event of Default, all
Rental so collected more than one (1) month in advance of the
time it is earned shall be delivered to Mortgagee to be applied
to the Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Mortgagee.
Section 9.7 Reassignment. By Mortgagee's acceptance of
this Deed of Trust, it is understood and agreed that a full and
complete release of this Deed of Trust shall operate as a full
and complete reassignment to Mortgagor of the Mortgagee's rights
and interests assigned to Mortgagee under this Article (subject
to the automatic reinstatement provisions of Section 10.15
below).
Section 9.8 Subordination of Deed of Trust to Leases. It
is agreed and understood that Mortgagee hereby reserves the right
and shall have the right, at any time and from time to time,
without the consent or joinder of any other party, to subordinate
this Deed of Trust and the liens, assignments and security
interests created by this Deed of Trust to all or any of the
Leases regardless of the respective priority of any of such
Leases and this Deed of Trust. Upon doing so and filing evidence
of such subordination in the real property records in the county
or counties where the Real Property is located, a foreclosure of
Mortgagee's liens, assignments and security interests under this
Deed of Trust shall be subject to and shall not operate to
extinguish any of said Leases as to which such subordination is
operative.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Deed of Trust. Any of the Debt may be extended, rearranged,
renewed, increased or otherwise changed in any way, and any part
of the security described in this Deed of Trust or any other
security for any part of the Debt may be waived or released
without in anyway altering or diminishing the force, effect or
lien of this Deed of Trust, and the lien, assignment and security
interest granted by this Deed of Trust shall continue as a prior
lien, assignment and security interest on all of the Property not
expressly so released, until the final termination of this Deed
of Trust.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Deed of Trust which under applicable laws are or may be
deemed to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable state or federal laws,
whichever permit the higher rate. In this connection, Mortgagor
and Mortgagee stipulate and agree that it is their common and
overriding intent to contract in strict compliance with
applicable usury laws. In furtherance thereof, none of the terms
of this Deed of Trust shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the maximum
rate permitted by applicable laws. Mortgagor shall never be
liable for interest in excess of the maximum rate permitted by
applicable laws. If, for any reason whatever, such interest paid
or received during the full term of the applicable indebtedness
produces a rate which exceeds the maximum rate permitted by
applicable laws, Mortgagee shall credit against the principal of
such indebtedness (or, if such indebtedness shall have been paid
in full, shall refund to the payor of such interest) such portion
of said interest as shall be necessary to cause the interest paid
to produce a rate equal to the maximum rate permitted by
applicable laws. All sums paid or agreed to be paid to Mortgagee
for the use, forbearance or detention of money shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread in equal parts throughout the full term of
the applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of
this Section shall control all agreements, whether now or
hereafter existing and whether written or oral, between Mortgagor
and Mortgagee.
Section 10.3 Subrogation to Liens Discharged. Mortgagor
hereby agrees that Mortgagee shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Mortgagee. Irrespective of any formal or informal acknowledgment
of partial or complete satisfaction or release of the Discharged
Obligations, the Subrogated Liens shall be continued, renewed,
extended, brought forward and rearranged as security for the Debt
in addition to and cumulative of the lien and security interest
of this Deed of Trust. Foreclosure under this Deed of Trust shall
constitute foreclosure of the Subrogated Liens.
Section 10.4 Due on Sale. Mortgagor agrees that if,
without Mortgagee's prior written consent (except as otherwise
provided herein or in the Settlement Agreement), (a) any part of
the Property should be directly or indirectly transferred,
conveyed or mortgaged, voluntarily or involuntarily, absolutely
or as security, or (b) Mortgagor should enter into any
contractual arrangement to transfer, convey or mortgage any part
of the Property or any interest either in the Property, the
moratorium provided in Article VI of the Settlement Agreement
shall immediately terminate without notice to Obligors.
Mortgagee is under no obligation to consent to the transfer or
encumbrance of the Property except on the terms provided in the
Settlement Agreement irrespective of whether or not the transfer,
conveyance or mortgage would or might (i) diminish the value of
any security for the Debt, or (ii) increase the likelihood of
Mortgagee's having to resort to any security for the Debt after
default. If Mortgagee's consent to a proposed mortgaging is
requested, Mortgagee shall have the right (in addition to its
absolute right to refuse to consent to any such transaction) to
condition its consent upon satisfaction of any one or more of the
following requirements: (1) that the interest rate(s) on all or
any part of the Debt be increased to a rate which is then
acceptable to Mortgagee; (2) that a principal amount deemed
appropriate by Mortgagee be paid against the Debt to reduce to a
level which is then acceptable to Mortgagee the ratio that the
outstanding balance of the Debt bears to the value of the
Property as determined by Mortgagee; (3) that the liability to
Mortgagee of Mortgagor and all makers and guarantors of all or
any part of the Debt will be confirmed by them in writing to be
unaffected and unimpaired by such mortgaging; and (4) that any
proposed junior mortgagee expressly subordinate to all liens and
security interests securing the Debt as to both lien and payment
right priority and consent to the proposed transaction in a
writing addressed to Mortgagee.
Section 10.5 Condemnation. If before final termination of
this Deed of Trust, all or a portion of the Property is taken for
public or quasi-public purposes, either through eminent domain or
condemnation proceedings, by voluntary conveyance under threat of
condemnation with Mortgagee's express written consent and joinder
or otherwise, Mortgagor hereby agrees that any and all sums of
money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Mortgagee, and they are
hereby assigned to Mortgagee, and shall be paid directly to
Mortgagee. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the
Property shall be applied, first, to reimburse Mortgagee or the
Trustee for all costs and expenses, including reasonable
attorneys' fees, incurred in connection with collection of such
proceeds and, second, the remainder of said proceeds shall be
applied, at the reasonable discretion of Mortgagee, to the
payment of the Debt in the order determined by Mortgagee in its
sole discretion, or paid out to repair or restore the Property so
affected by such condemnation, injury or damage in the same
manner as provided in Section 4.1(h) above. Mortgagor agrees to
execute such further assignments of all such proceeds, judgments,
decrees and awards as Mortgagee may request. Mortgagee is hereby
authorized, in the name of Mortgagor, to execute and deliver
valid acquittances for, and to appeal from, any such judgment,
decree or award. Mortgagee shall not be, in any event or
circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any such proceeds,
judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfaction of the notice
requirements provided in the Settlement Agreement.
Section 10.7 Mortgagee and Mortgagor. The term
"Mortgagee" as used in this Deed of Trust shall mean and include
the holder or holders of the Debt from time to time, and upon
acquisition of the Debt by any holder or holders other than the
named Mortgagee, effective as of the time of such acquisition,
the term "Mortgagee" shall mean all of the then holders of the
Debt, to the exclusion of all prior holders not then retaining or
reserving an interest in the Debt from time to time, whether such
holder acquires the Debt through succession to or assignment from
a prior Mortgagee. The term "Mortgagor, its successors and
assigns" shall also include the heirs and legal representatives
of each Mortgagor who is a natural person and the receivers,
conservators, custodians and trustees of each Mortgagor. In
general, Mortgagor may not assign or delegate any of its rights,
interests or obligations under this Deed of Trust, the Notes,
the Settlement Agreement or any Credit Document without
Mortgagee's express prior written consent, and any attempted
assignment or delegation without it shall be void or voidable at
Mortgagee's election; provided, however, that Mortgagor may
delegate its obligations under this Deed of Trust and any other
Credit Documents regarding the management, maintenance and
leasing of the Mortgaged Property, as well as the construction of
tenant finish and "cosmetic-type" capital improvements to the
Mortgaged Property, to reputable agents or independent
contractors without the prior written consent of Mortgagee, but
in any and all such events, Mortgagor shall remain fully
obligated to Mortgagee in accordance with the provisions of this
Deed of Trust and all other Credit Documents for the complete and
full compliance with and performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Deed of Trust to
Articles, Sections and Exhibits refer to Articles, Sections and
Exhibits in and to this Deed of Trust unless otherwise specified.
The Article and Section numbers, Exhibit designations and
headings used in this Deed of Trust are included for convenience
of reference only and shall not be considered in interpreting,
applying or enforcing this Deed of Trust.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Deed of Trust are hereby incorporated into it at
that place in the text, to the same effect as if set out there
verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Deed of Trust,
it shall be read as if it were written, "including by way of
example only and without in any way limiting the generality of
the clause or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Deed of Trust each includes the masculine, feminine
and neuter genders.
Section 10.12 Severability. If any provision of this Deed
of Trust is held to be illegal, invalid or unenforceable under
present or future laws, the legality, validity and enforceability
of the remaining provisions of this Deed of Trust shall not be
affected thereby, and this Deed of Trust shall be liberally
construed so as to carry out the intent of the parties to it.
Each waiver in this Deed of Trust is subject to the overriding
and controlling rule that it shall be effective only if and to
the extent that (a) it is not prohibited by applicable law and
(b) applicable law neither provides for nor allows any material
sanctions to be imposed against Mortgagee for having bargained
for and obtained it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Deed of
Trust, or if the lien, assignments and security interest of this
Deed of Trust cannot be lawfully enforced to pay any part of the
Debt, then and in either such event, at the option of Mortgagee,
all payments on the Debt shall be deemed to have been first
applied against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Deed of Trust is executed by more than one person, corporation,
partnership, joint venture, trust or other legal entity, it shall
be construed as though "Mortgagor" were written "Mortgagors" and
as though the pronouns and verbs in their number were changed to
correspond, and in such case, (a) each of Mortgagors shall be
bound jointly and severally with one another to keep, observe and
perform the covenants, agreements, obligations and liabilities
imposed by this Deed of Trust upon the "Mortgagor", (b) a release
of one or more persons, corporations or other legal entities
comprising "Mortgagor" shall not in any way be deemed a release
of any other person, corporation or other legal entity comprising
"Mortgagor" and (c) a separate action hereunder may be brought
and prosecuted against one or more of the persons, corporations
or other legal entities comprising "Mortgagor" without limiting
any liability of or impairing Mortgagee's right to proceed
against any other person, corporation or other legal entity
comprising "Mortgagor".
Section 10.15 Mortgagor agrees that, if at any time all or
any part of any payment previously applied by Mortgagee to the
Debt is or must be returned by Mortgagee--or recovered from
Mortgagee--for any reason (including the order of any bankruptcy
court), this Deed of Trust shall automatically be reinstated to
the same effect as if the prior application had not been made,
and, in addition, Mortgagor hereby agrees to indemnify Mortgagee
against, and to save and hold Mortgagee harmless from any
required return by Mortgagee--or recovery from Mortgagee--of any
such payment because of its being deemed preferential under
applicable bankruptcy, receivership or insolvency laws, or for
any other reason.
Section 10.16 Amendments in Writing. This Deed of Trust
shall not be changed orally but shall be changed only by
agreement in writing signed by Mortgagor and Mortgagee. Any
waiver or consent with respect to this Deed of Trust shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between the
parties, no usage of trade and no parole or extrinsic evidence of
any nature shall be used to supplement or modify any of the terms
or provisions of this Deed of Trust.
Section 10.17 Entire Agreement. This Deed of Trust
embodies the entire agreement and understanding between Mortgagor
and Mortgagee with respect to its subject matter and supersedes
all prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Mortgagor
acknowledges and agrees that there is no oral agreement between
Mortgagor and Mortgagee which has not been incorporated in this
Deed of Trust.
Section 10.18 Prior to the occurrence of an Event of
Default, Mortgagor shall be entitled to obtain a release of the
Property from the lien and security interest of this instrument
upon and subject to the terms of the Settlement Agreement. In
addition, Section 10.4 of this Deed of Trust shall not apply to
any transaction which specifically provides for payment of the
applicable release price provided for in the Settlement
Agreement.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Mortgagor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Mortgagee, in
the event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Mortgagor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Mortgagee insuring Mortgagee a
continued first lien priority status against the Mortgaged
Property within sixty (60) days from the date that the lien is
placed against the Mortgaged Property or within such shorter
period of time as the circumstances shall permit (but in all
events at least five (5) days prior to any sale of the Mortgaged
Property to satisfy said lien) in the event that the holder of
such lien takes steps to cause the Mortgaged Property to be sold
pursuant to said lien.
Section 11.2 Representations and Warranties. Mortgagor
represents and warrants to Mortgagee to the best knowledge of
Mortgagor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Mortgagor, in the past been transported, treated and disposed
of only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Mortgagor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Mortgagor
has no material contingent liability in connection with any
release or threatened release of any hazardous substance or solid
waste into the environment.
Section 11.3 Non-Storage and Disposal. Mortgagor shall
not cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Mortgagor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that
Mortgagor (or any of Mortgagor's tenants which have been approved
by Mortgagee) shall be entitled to store and utilize Hazardous
Materials upon the Mortgaged Property in connection with such
person's or entity's normal and ordinary operations so long as
such storage and use fully complies with all Environmental Laws
at all times.
Section 11.4 Indemnity. Mortgagor shall indemnify, defend
and hold all Mortgagee Indemnitees (as defined below) harmless
from and against any and all (i) liabilities, losses, claims,
damages, costs, penalties, funds and judgments resulting from
violation by Mortgagor of any Environmental Laws with respect to
the ownership and operation of the Mortgaged Property, and (ii)
all other liabilities, losses, claims, damages, costs, penalties,
fines, judgements, attorneys' fees, consultants' fees and
expert's fees incurred or suffered by Mortgagee by reason of,
resulting from, in connection with or arising in any manner
whatsoever from a breach by Mortgagor of any representation,
warranty or covenant contained in this Article 11. This
indemnity provision shall expressly survive the payment in full
of the Debt and the release of the Property from this Deed of
Trust. As used in this paragraph, "Mortgagee Indemnitees" shall
mean Mortgagee, any subsequent holder or owner of the Notes or
any interest in it, any affiliate, successor, assign or
subsidiary of Mortgagee and each of their shareholders,
directors, officers, employees, counsel, agents, attorneys and
contractors, and the Trustee and all successor or substitute
trustees, as well as their respective heirs and legal
representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Mortgagor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Mortgagor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or
protection laws, and (b) the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including but
not limited to, those substances, materials and waste listed in
the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. 172.101) or listed by the
Environmental Protection Agency as hazardous substances under or
pursuant to 40 C.F.R. Part 302, or such substances, materials and
wastes which are or become regulated under any Environmental Law.
Section 11.6 The obligations of and liability of Mortgagor
hereunder shall not be personally binding upon nor shall there be
any resort for enforcement thereof to the private property of
Mortgagor's trust managers, shareholders, officers, employees or
agents regardless of whether such obligation or liability is in
the nature of contract, tort or otherwise.
EXECUTED effective as of ___________________, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT
By:
Name:
Title:
"Mortgagor"
Exhibit A - Description of the Real Property
Exhibit B - Permitted Encumbrances
THE STATE OF TEXAS
COUNTY OF HARRIS
This instrument was acknowledged on the ____ day of
_______________, 1996, by ___________________________,
______________________ of AMERICAN INDUSTRIAL PROPERTIES REIT, a
real estate investment trust duly organized under the laws of the
State of Texas, on behalf of said AMERICAN INDUSTRIAL PROPERTIES
REIT.
__________________________________
Notary Public in and for
the State of Texas
Printed Name: ____________________
My Commission expires: ___________
(SAMPLE-STATE OF WASHINGTON)
AFTER RECORDING RETURN TO:
Bullivant, Houser, Bailey, Pendergrass
& Hoffman
2400 Westlake Office Tower
1601 Fifth Avenue
Seattle, WA 98101-1618
Attention: Douglas A. Luetjen
DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(PROPERTY NAME)
This instrument ("Deed of Trust") is a deed of trust from
AMERICAN INDUSTRIAL PROPERTIES REIT, a real estate investment
trust duly organized under the laws of the State of Texas, whose
address for purposes hereof is 6220 North Beltline, Suite 205,
Irving, Texas 75063 (called the "Grantor", "Debtor" and
"Assignor") to Paul Gallagher, Trustee, whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5, Paul Gallagher, as
Trustee (called the "Trustee"), for the use and benefit of
MANUFACTURERS LIFE INSURANCE COMPANY, a corporation duly
organized under the laws of Canada, whose address is 200 Bloor
Street East, Toronto, Ontario M4W 1E5 and MANUFACTURERS LIFE
INSURANCE COMPANY (U.S.A.), a corporation organized under the
laws of the State of Michigan, whose address is 200 Bloor Street
East, Toronto, Ontario M4W 1E5. MANUFACTURERS LIFE INSURANCE
COMPANY and MANUFACTURERS LIFE INSURANCE COMPANY (U.S.A.) are
collectively referred to herein as the "Beneficiary", "Secured
Party", and "Assignee". This instrument is also an assignment of
rents and leases from Assignor to Assignee, and a security
agreement between Debtor and Secured Party.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO THE TRUSTEE
Section 1.1 Grantor's Conveyance of the Mortgaged
Property to the Trustee to Secure the Debt. To secure payment of
principal, lawful interest and other elements of the Debt
described and defined in Article 2, in consideration of the uses
and trusts (the "Trust") established and continued by this Deed
of Trust and in consideration of Ten Dollars ($10.00) and other
valuable consideration paid before delivery of this Deed of Trust
by each of Trustee and Beneficiary to Grantor, who hereby
acknowledges its receipt and that it is reasonably equivalent
value for this Deed of Trust and all other security and rights
given by Grantor, Grantor hereby Grants, Sells, Conveys,
Transfers, Assigns, Sets Over, Confirms and Delivers unto the
Trustee and to Trustee's successors or substitutes in the Trust,
with power of sale, the following property (collectively, the
"Mortgaged Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Grantor's estate, right, title and interest in and to all
easements and rights-of-way for utilities, ingress or egress to
or from said property and (ii) all interests of Grantor in and to
all streets, rights-of-way, alleys or strips of land adjoining
said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Grantor and Beneficiary hereby irrevocably
declare to be real estate and part of the Real Property,
including all water, sewage and drainage facilities, wells,
treatment plants, supply, collection and distribution systems,
paving, landscaping and other improvements (collectively, the
"Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Grantor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Grantor and
Beneficiary hereby also irrevocably declare to be real estate and
part of the Real Property.
(d) Leases. All Leases (as such term is defined in
Section 9.1 below).
(e) Utilities. All Grantor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Grantor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Grantor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(f) After-acquired Property. All right, title and
interest acquired by Grantor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Deed of Trust.
(g) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Grantor and incident
or appertaining to the Real Property, Improvements, Fixtures and
Equipment, Leases or Utilities Capacity or any part of them.
(h) Oil and Gas. All Grantor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(i) Reversions and Remainders. Any and all rights and
estates of Grantor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(j) Contractual Rights. All Grantor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Grantor's other benefits
thereunder.
(k) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Grantor now has, or
at any time hereafter acquires, in and to any of the foregoing,
including the proceeds from condemnation, or threatened
condemnation, and the proceeds of any and all insurance covering
any part of the foregoing; and all related parts, accessions and
accessories to any of the foregoing and all replacements or
substitutions therefor, as well as all other Improvements,
Fixtures and Equipment, Leases, Utilities Capacity and
Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. TO HAVE AND TO
HOLD the Mortgaged Property, together with every right,
privilege, hereditament and appurtenance belonging or
appertaining to it, unto the Trustee, the Trustee's successors or
substitutes in the Trust and the Trustee's or their assigns,
forever. Grantor represents that Grantor is the lawful owner of
the Mortgaged Property with good title and has the right and
authority to mortgage and convey the Mortgaged Property, and that
the Mortgaged Property is free and clear of all liens, claims and
encumbrances (except only those expressly referred to or
described in Exhibit B) (collectively the "Permitted
Encumbrances"). Grantor hereby binds Grantor and Grantor's
successors and assigns to forever WARRANT and DEFEND the
Mortgaged Property and every part of it unto the Trustee, the
Trustee's successors or substitutes in the Trust, and the
Trustee's or their assigns, against the claims and demands of
every person whomsoever lawfully claiming or to claim it or any
part of it (such warranty to supersede any provision contained in
this Deed of Trust limiting the liability of Grantor) by, through
and under Grantor, but not otherwise; subject, however, to the
Permitted Encumbrances.
Section 1.3 Non-Agricultural Use. The Mortgaged Property
is not used principally or primarily for agricultural or farming
purposes.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Conveyance in Trust to Secure Designated
Obligations. This conveyance to the Trustee is in trust to
secure all of the following present and future debt and
obligations:
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT, the
Debtor herein), (ii) a promissory note dated November 27, 1992 in
the face amount of Nineteen Million One Hundred Forty-Three
Thousand Six Hundred Forty-Six and 92/100 Dollars
($19,143,646.92), bearing interest at the rate or rates therein
stated, executed by Trammell Crow Real Estate Investors (now
known as American Industrial Properties REIT, the Debtor herein)
and (iii) any and all past, concurrent or future modifications,
extensions, renewals, rearrangements, replacements and increases
of such notes (collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Grantor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership to Beneficiary
which are evidenced by or created or incurred under (i) an
agreement titled Settlement Agreement dated as of May 22, 1996,
entered into by and between Beneficiary, Grantor, Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership (the
"Settlement Agreement"). Grantor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership are hereinafter
collectively referred to as "Obligor", (ii) all agreements
provided for in the Settlement Agreement, including any
mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between Grantor and Beneficiary and
provided for in the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Deed of Trust.
(d) Advances and Other Obligations Pursuant to this
Deed of Trust's Provisions. Any and all sums and the interest
which accrues on them as provided in this Deed of Trust which
Beneficiary may advance or which Grantor may owe Beneficiary
pursuant to this Deed of Trust on account of Grantor's failure to
keep, observe or perform any of Grantor's covenants under this
Deed of Trust.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Grantor or any Obligor pursuant to the Settlement Agreement
("Credit Documents") now or in the future governing, evidencing,
guaranteeing or securing or otherwise relating to payment of all
or any part of the debt evidenced by the Notes, and/or the
Settlement Agreement, or (2) all supplements, amendments,
restatements, renewals, extensions, rearrangements, increases,
expansions or replacements of them.
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Beneficiary, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Beneficiary in enforcing any of the Credit Documents.
All liens, assignments and security interests created,
represented or continued by this Deed of Trust, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Grantor or Grantor's successors or assigns, except
only statutory super priority liens for nondelinquent taxes and
those other liens (if any) expressly identified and stated in
this Deed of Trust to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Deed of Trust, Grantor, as Debtor,
and referred to in this Article as "Debtor" (whether one or more)
hereby grants to Beneficiary, as Secured Party, and referred to
in this Article as "Secured Party" (whether one or more), a
security interest in all of Debtor's remedies, powers,
privileges, rights, titles and interests (including all of
Debtor's power, if any, to pass greater title than it has itself)
of every kind and character now owned or hereafter acquired,
created or arising in and to (i) the Mortgaged Property
(including both that now and that hereafter exist) to the full
extent that the Mortgaged Property may be subject to the Uniform
Commercial Code of the state or states where the Mortgaged
Property is situated (the "UCC"), (ii) all equipment, accounts,
general intangibles, fixtures, inventory, chattel paper, notes,
documents and other personal property owned by Debtor and used,
intended or acquired for use, on, or in connection with the use
or operation of, the Mortgaged Property, or otherwise related to
the Mortgaged Property, and all products and proceeds of it,
including all security deposits under Leases now or at any time
hereafter held by or for Debtor's benefit, all monetary deposits
which Debtor has been required to give to any public or private
utility with respect to utility services furnished to the
Mortgaged Property, all funds, accounts, instruments, accounts
receivable, documents, trademarks, trade names and symbols used
in connection therewith, and notes or chattel paper arising from
or by virtue of any transactions related to the Mortgaged
Property, all permits, licenses, franchises, certificates, and
other rights and privileges obtained in connection with the
Mortgaged Property, and all guaranties and warranties obtained
with respect to all improvements, equipment, furniture,
furnishings, personal property and components of any thereof
located on or installed at the Mortgaged Property and (iii) the
following described property:
(a) Contracts. All contracts now or hereafter entered
into by and between Debtor and any general contractor or between
Debtor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Debtor or any of the Mortgaged Property), as well as all right,
title and interest of Debtor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Debtor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Debtor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Debtor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Debtor's Covenants Concerning Personalty
Subject to the UCC. Debtor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Deed of Trust to Secured Party or the Trustee,
upon or at any time after the occurrence of an Event of Default
(defined in Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Debtor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with
respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to sell or
rent the same for the account of Debtor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Debtor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Debtor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Debtor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Debtor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Debtor resulting from any failure to sell or let the
Collateral, or any part thereof, or from other act or omission of
Secured Party with respect to the Collateral unless such loss is
caused by the gross negligence and willful misconduct of Secured
Party, nor shall Secured Party be obligated to perform or
discharge any obligation, duty, or liability under any sale or
lease agreement covering the Collateral or any part thereof or
under or by reason of this instrument or the exercise of rights
or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Debtor has or may have under any rule of law or statute now
existing or hereafter adopted. To the extent notice is required
by applicable law, Secured Party shall give Debtor written notice
at the address set forth herein (which shall satisfy any
requirement of notice or reasonable notice in any applicable
statute) of Secured Party's intention to make any such public or
private sale. Such notice (if any is required by applicable law)
shall be personally delivered or mailed, postage prepaid, at
least ten (10) calendar days before the date fixed for a public
sale, or at least (10) calendar days before the date after which
the private sale or other disposition is to be made, unless the
Collateral is of a type customarily sold on a recognized market,
is perishable or threatens to decline speedily in value. Such
notice (if any is required by applicable law), in case of public
sale, shall state the time and place fixed for such sale or, in
case of private sale or other disposition other than a public
sale, the time after which the private sale or other such
disposition is to be made. Any public sale shall be held at such
time or times, within the ordinary business hours and at such
place or places, as Secured Party may fix in the notice of such
sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but
Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and
in case of any such failure, such Collateral may again be sold
upon like notice. Each and every method of disposition described
in this Section shall constitute disposition in a commercially
reasonable manner. Grantor, to the extent applicable, shall
remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party take
possession of the Collateral or any part thereof before the time
that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of disposition of
the Collateral to the Debt, such proceeds shall be applied to the
reasonable and actual expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and the
reasonable and actual attorneys' fees and legal expenses incurred
by Secured Party, each Obligor, to the extent applicable, to
remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the whole
of the Collateral shall not exhaust the rights of Secured Party
hereunder, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Deed of Trust
and the security interest created hereby shall remain in full
force and effect as to the unsold portion of the Collateral just
as though no sale had been made; and
(v) in the event any sale hereunder is not completed or
is defective in the opinion of Secured Party, such sale shall not
exhaust the rights of Secured Party hereunder and Secured Party
shall have the right to cause a subsequent sale or sales to be
made hereunder; and
(vi) any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument
evidencing any foreclosure sale hereunder as to nonpayment of any
indebtedness or as to the occurrence of any Event of Default, or
as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place and terms of
sale and the Collateral to be sold having been duly given, as to
any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(vii) Secured Party may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but in the name and on behalf
of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Debtor. Debtor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Debtor and agrees that
Secured Party may proceed against any Obligor for the amount of
the Debt owed to Secured Party without taking any action against
any other Obligor or any other person or entity and without
selling or otherwise proceeding against or applying any of the
Collateral in Secured Party's possession.
Section 3.3 UCC Rights Are Not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Deed of
Trust, such election shall not preclude Secured Party or the
Trustee from exercising any or all of the rights and remedies
granted by the other Articles of this Deed of Trust as to the
remaining personal property or fixtures.
Section 3.4 Deed of Trust Is Also Financing Statement.
Secured Party may, at its election, at any time after delivery of
this Deed of Trust, file an original of this Deed of Trust as a
financing statement or sign one or more copies of this Deed of
Trust to use as a UCC financing statement. Secured Party's
signature may be placed between the last sentence of this Deed of
Trust and Debtor's acknowledgment or may follow Debtor's
acknowledgment. Secured Party's signature need not be
acknowledged and is not necessary to the effectiveness of this
Deed of Trust as a deed of trust, mortgage, assignment, pledge,
security agreement or (unless otherwise required by applicable
law) as a financing statement.
Section 3.5 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Debtor will not execute and there will not be filed in any public
office any financing statements affecting the Collateral other
than financing statements in favor of Secured Party under this
Deed of Trust, unless prior written specific consent and approval
of Secured Party shall have been first obtained.
Section 3.6 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Deed of Trust, a financing statement or statements and one
or more continuation statements in any jurisdiction where Secured
Party deems it necessary, and at Secured Party's request, Debtor
will join Secured Party in executing one or more financing
statements, continuation statements or both pursuant to the UCC,
in form satisfactory to Secured Party, and will pay the costs of
filing or recording them, in all public offices at any time and
from time to time whenever filing or recording of this Deed of
Trust, any financing statement or any continuation statement is
deemed by Secured Party or its counsel to be necessary or
desirable.
Section 3.7 Fixtures. Certain of the Collateral is or
will become "fixtures" (as that term is defined in the UCC) on
the Real Property, and when this Deed of Trust is filed for
record in the real estate records of the county where such
fixtures are situated, it shall also automatically operate as a
financing statement upon such of the Collateral which is or may
become fixtures.
Section 3.8 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Debtor hereby
assigns to Secured Party all of Debtor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Deed of Trust shall automatically terminate this
assignment.
Section 3.9 Debtor's Warranties Concerning Collateral.
Debtor warrants and represents to Secured Party that Debtor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Deed of Trust (such
warranty to supersede any provision contained in this Deed of
Trust limiting the liability of Grantor). Debtor agrees to
defend the Collateral and its proceeds against all claims and
demands of any person at any time claiming the Collateral, its
proceeds or any interest in either. Debtor also warrants and
represents that Debtor has not heretofore signed any financing
statement directly or indirectly affecting the Collateral or any
part of it which has not been completely terminated of record,
and no such financing statement signed by Debtor is now on file
in any public office except only those statements (if any) true
and correct copies of which Debtor has actually delivered to
Secured Party.
Section 3.10 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Debtor requests in writing,
but failure of Secured Party to comply with such request shall
not of itself be deemed a failure to exercise reasonable care,
and no failure of Secured Party to take any action not so
requested by Debtor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.11 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Debtor or discharging or otherwise affecting any liability of
Debtor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
GRANTOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Beneficiary. To
better secure the Debt, Grantor covenants and agrees with the
Trustee and the Trustee's substitutes and successors in the
Trust, for the use and benefit of Beneficiary and with the intent
that the Trustee, Beneficiary or both may enforce these
covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Beneficiary granted in, secured by or ancillary to this Deed
of Trust shall be considered as exclusive, but each shall be
cumulative of all others which Beneficiary or the Trustee may now
or hereafter have.
(b) Grantor Waives Marshalling of Assets and Sale in
Inverse Order of Alienation Rights. Grantor hereby irrevocably
WAIVES all rights of marshalling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Grantor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Grantor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this Deed of
Trust should be discovered or arise at any time in the future
then, unless Beneficiary is the only holder of it, or Beneficiary
has given specific prior written consent to it, Grantor agrees to
promptly discharge, remove, bond around or insure around it from
the Mortgaged Property. Grantor will notify Beneficiary in
writing within five (5) days of the time that Grantor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Deed of Trust, Grantor agrees to
provide, maintain and keep in force the insurance coverages
relating to the Property substantially similar to those
maintained by Grantor as of the date of execution of this Deed of
Trust. Grantor agrees to have each such policy modified within
thirty (30) days of the date of this Agreement to (i) name
Beneficiary as additional insured, and (ii) expressly prohibit
cancellation or modification of insurance without the insurer
agreeing to endeavor to give thirty (30) days' written notice to
Beneficiary. Grantor agrees to furnish due proof of payment of
the premiums for all such insurance to Beneficiary promptly after
each such payment is made and in any case at least fifteen (15)
days before payment becomes delinquent.
(e) Beneficiary's Rights to Collect Insurance
Proceeds. Grantor hereby assigns to Beneficiary the exclusive
right to collect any and all monies that may become payable under
any insurance policies covering any part of the Property, or any
risk to or about the Property. Beneficiary shall fully cooperate
with and assist Grantor with respect to the filing of insurance
claims and the collection of insurance proceeds so long as
Beneficiary reasonably concurs with Grantor's actions with
respect thereto and all reasonable and actual costs incurred by
Beneficiary in connection with such cooperation and participation
are promptly paid or reimbursed by Grantor upon the request of
Beneficiary.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Deed of Trust
shall automatically constitute foreclosure upon all policies of
insurance insuring any part of or risk to the Property and all
claims thereunder arising from post-foreclosure events. The
successful bidder or bidders for the Property at foreclosure, as
their respective interests may appear, shall automatically accede
to all of Grantor's rights in, under and to such policies and all
post-foreclosure event claims, and such bidder(s) shall be named
as insured(s) on request, whether or not the trustee's deed or
bill of sale to any such successful bidder mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Grantor may, at its option, unless an
Event of Default has occurred, either (i) cause Beneficiary to
apply all such monies or any part thereof toward the payment of
the Debt, whether the same be then due or not, such application
to be made in such manner and order as Beneficiary shall elect,
and any balance of insurance proceeds remaining after such
application shall be delivered to Grantor or (ii) cause
Beneficiary to disburse to Grantor, from an interest-bearing
account maintained with Beneficiary, any insurance proceeds
received to be used by Grantor solely for the repair, rebuilding
and restoration (hereinafter collectively referred to as the
"Restoration Work") of the Property; provided, however, that the
obligation of Beneficiary to disburse to Grantor such insurance
proceeds shall be and is hereby made subject to compliance by
Grantor with the following terms, conditions and procedures
(hereinafter collectively referred to as the "Disbursement
Procedures"), to wit:
(1) There shall have been submitted to
Beneficiary, and Beneficiary shall have approved, which approval
shall not be unreasonably withheld, the following:
(i) Plans and Specifications for the
Restoration Work prepared by an architect reasonably satisfactory
to Beneficiary (hereinafter referred to as the "Restoration
Architect");
(ii) a cost breakdown and analysis
(hereinafter referred to as the "Estimated Cost") certified to
Beneficiary by the Restoration Architect, stating that the
Restoration Work can be completed in accordance with the above-
mentioned Plans and Specifications at the price set forth in the
"Restoration Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Beneficiary pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work
must not exceed the proceeds of the insurance and other funds of
Grantor that are available for application thereto;
(3) After and subject to compliance with all of
the foregoing, the amount held by Beneficiary and available for
restoration shall be disbursed by Beneficiary to Grantor
periodically (but not more frequently than monthly) as the
Restoration Work progresses, as follows:
(i) Beneficiary shall have received in
connection with each such requested disbursement a draw request
from the Restoration Contractor certifying that all work
completed to the date of such draw request has been performed in
accordance with the Plans and Specifications as approved by
Beneficiary in a good and workmanlike manner, which draw request
shall have been approved by the Restoration Architect;
(ii) Beneficiary shall have received a
certification from the Restoration Architect that the remaining
amount of funds held by Beneficiary, including funds held
pursuant to subparagraph 2 above, are sufficient to complete the
Restoration Work in accordance with the Plans and Specifications
as approved by Beneficiary;
(iii) Beneficiary shall have also received
evidence satisfactory to Beneficiary (including, without
limitation, title certifications, lien waivers and affidavits)
that all governmental licenses and permits necessary for the
performance of the Restoration Work have been secured and the
first-in-priority status of this Deed of Trust continues without
additional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by
Beneficiary, each periodic disbursement shall be made subject to
a retainage of ten percent (10%) of the amount requested, and the
aggregate of the amount so retained shall be disbursed by
Beneficiary to Grantor no earlier than thirty-one (31) days after
the Restoration Work is completed in accordance with said Plans
and Specifications (as evidenced by the certificate of the
Restoration Architect), and Beneficiary shall have received
evidence satisfactory to Beneficiary that all costs incurred in
connection with the Restoration Work have been paid in full and
that no party claims or has a right to claim any lien affecting
the Property and arising out of the Restoration Work; and
(5) Upon termination or expiration of the
moratorium period or any extension thereof as provided for in the
Settlement Agreement, Beneficiary is hereby authorized to apply
any amounts held by Beneficiary pursuant to any subparagraph of
this Section 4.1 against the outstanding Debt.
(h) Application of Insurance Proceeds Collected After
Foreclosure. Unless Beneficiary or Beneficiary's representative
reserves at the foreclosure sale the right to collect any uncol
lected insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Beneficiary, shall have no interest in such proceeds and
Beneficiary shall apply them, if and when collected, to the Debt
in such order and manner as Beneficiary shall then elect and
remit any remaining balance to Grantor or to such other person or
entity as is legally entitled to them), all proceeds of all such
insurance which are not so reserved by Beneficiary at the
foreclosure sale and are not actually received by Beneficiary
until after foreclosure shall be the property of the successful
bidder or bidders at foreclosure, as their interests may appear,
and Grantor shall have no interest in them and shall receive no
credit for them.
(i) Beneficiary Not Obligated to Require, Provide or
Evaluate Insurance. Beneficiary shall have no duty to Grantor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(j) Beneficiary May Elect to Insure Only its Own
Interests. If Beneficiary elects at any time or for any reason
to purchase insurance relating to the Property, it shall have no
obligation to cause Grantor or anyone else to be named as an
insured, to cause Grantor's or anyone else's interests to be
insured or protected or to inform Grantor or anyone else that
Grantor's or its interests are uninsured or underinsured.
(k) Grantor Will Correct Defects, Provide Further
Assurances and Papers. Upon Beneficiary's reasonable request,
Grantor will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Deed of Trust or any Credit Document or in the description
of any of the Property, and will deliver such further assurances
and execute such additional papers as in the opinion of
Beneficiary or its legal counsel shall be necessary, proper or
appropriate (1) to better convey and assign to the Trustee and
Beneficiary all the Property intended or promised to be conveyed
or assigned or (2) to properly evidence or give notice of the
Debt or its intended or promised security.
(l) Grantor Will Pay Taxes and Impositions and Furnish
Receipts. Grantor agrees at its own cost and expense to pay and
discharge all taxes, assessments, maintenance charges, permit
fees, impact fees, development fees, capital recovery charges,
utility reservation and standby fees and all other similar and
dissimilar impositions of every kind and character ("Imposi
tions") charged, levied, assessed or imposed against any interest
in any of the Property, as they become payable and before they
become delinquent; provided, however, that Grantor shall have the
right to actively contest such Impositions in good faith if
Grantor shall establish sufficient reserves to pay any such
contested Impositions that are later determined to be properly
owed by Grantor; and provided, further, that no attempts shall be
made to foreclose any lien for such Impositions. Grantor agrees
to furnish due proof of such payment to Beneficiary promptly
after payment and before delinquency. Grantor also agrees to
hereafter file all income, franchise and other tax returns within
the time frames that they are required to be filed and pay all
taxes shown thereon to be due, including interest and penalties,
except for those taxes which are being diligently contested in
good faith and for payment of which adequate reserves have been
set aside by Grantor.
(m) Grantor to Pay Monthly Tax and Insurance Deposits
on Request. If and after Beneficiary requests it after the
occurrence of an Event of Default, Grantor agrees to pay the
monthly tax and insurance premium deposits required by Article 8
and to provide Beneficiary any additional sums needed to pay the
taxes and insurance premiums for the Property when due.
(n) Grantor Will Maintain Property and Won't Remove
Improvements. Grantor agrees to keep, preserve and maintain all
elements of the Property in a good state of repair and condition
and to keep all equipment and stores of supplies needed for its
proper and full operation on the Property, well stocked and in
good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Grantor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Beneficiary's prior
written consent. Grantor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Deed of Trust, such
Fixtures and Equipment as from time to time become worn out or
obsolete, provided that either (a) simultaneously with or before
such removal any such equipment shall be replaced with other
equipment of a value at least equal to that of the replaced
equipment and free from any title retention or security agreement
or other encumbrance and from any reservation of title, and by
such removal and replacement Grantor shall be deemed to have
subjected such equipment to the lien, assignments and security
interests of this Deed of Trust or (b) any net cash proceeds
received from such disposition shall be paid over promptly to
Beneficiary to be applied to the Debt in the order determined by
Beneficiary in its sole discretion. Grantor shall not grant, join
in or consent to any lien, security interest, easement, license,
use or other charge or interest covering or affecting all or any
part of the Property or initiate, join in and consent to the
change in any private restrictive covenant, zoning ordinance or
other public or private restrictions limiting or defining the
uses which may be made of the Property or any part thereof
without the prior written consent of Beneficiary.
(o) Grantor Will Protect Property from Mechanic's
Liens. Grantor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Deed of Trust, for any such bill which may
be legally due and payable; provided, however, that Grantor shall
have the right to actively contest any such bills in good faith
if Grantor shall provide a bond in form, substance and amount
reasonably satisfactory to Beneficiary covering and affecting any
lien for any such bills.
(p) Beneficiary's Inspection and Discussion Rights.
Grantor agrees, after the occurrence of an Event of Default, to
permit Beneficiary and its agents, representatives and employees
at all reasonable times during business hours to go upon,
examine, inspect and remain on the Mortgaged Property, to assist
and cooperate, and require Grantor's employees, agents and
contractors to cooperate, with Beneficiary and to furnish to
Beneficiary on request all pertinent information concerning the
physical and economic condition, development and operation of the
Mortgaged Property. Beneficiary may discuss the Mortgaged
Property directly with any of Grantor's officers and managers.
(q) Beneficiary May Grant Releases Without Impairing
Other Collateral or Rights. At all times, Beneficiary shall have
the right to release any part of the Property or any other
security from this Deed of Trust or any other security instrument
or device without releasing any other part of the Property or any
other security, without affecting Beneficiary's lien, assignment
or security interest as to any property or rights not released
and without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(r) Grantor Will Notify Beneficiary of Legal
Proceedings and Defend Lien; Beneficiary May Act if Grantor
Doesn't. Grantor will notify Beneficiary in writing promptly of
the commencement of any legal proceedings affecting any part of
the Property and will engage and pay legal counsel to answer and
to defend and preserve Beneficiary's liens, rights and interests
and their rank and priority. If Grantor fails or refuses to
promptly begin or to diligently continue any such acts, then
Beneficiary may elect to do so and may take such action in behalf
of Grantor, in Grantor's name and at Grantor's expense.
(s) Legal Compliance, Governmental Notices. Grantor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Grantor or the Property and
will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(t) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Grantor will notify Beneficiary
in writing thereof, setting forth the nature of such change in
reasonable detail. Grantor will take, and will cause to be taken,
all such steps as are necessary or appropriate to remedy promptly
any such change.
(u) Notice of Default to Beneficiary. Immediately upon
acquiring knowledge thereof, Grantor will notify Beneficiary by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by
Beneficiary be deemed a waiver of a Default or of an Event of
Default.
(v) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Grantor will notify
Beneficiary in writing of the pendency of such proceedings.
Grantor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Beneficiary, in the carrying
on or defense of any such proceedings.
(w) Notice of Name or Address Change. Grantor will
not change Grantor's name or the location of its chief executive
office without first notifying Beneficiary in writing of such
change at least thirty (30) days before its effective date.
(x) Manager. Grantor will, or will cause its managers
to, do and perform any and all acts and things relating to the
management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Deed of Trust
and the other Credit Documents.
Section 4.2 Grantor Agrees to Pay or Reimburse
Beneficiary's Expenses. To the extent not prohibited by
applicable law, Grantor will pay all reasonable and actual costs
and expenses and reimburse Beneficiary for any and all reasonable
and actual expenditures of every character incurred or expended
from time to time, after the occurrence of a Default hereunder,
in connection with:
(a) Beneficiary's realizing upon Beneficiary's
security interest in and liens on the Property, and all
reasonable and actual costs and expenses relating to
Beneficiary's exercising any of its rights and remedies under
this Deed of Trust or any Credit Document or at law, including
all appraisal fees, consulting fees, filing fees, taxes,
brokerage fees and commissions, title review and abstract fees,
litigation report fees, UCC search fees, other fees and expenses
incident to title searches, reports and security interests,
escrow fees, attorneys' fees, legal expenses, court costs, other
fees and expenses incurred in connection with any complete or
partial liquidation of the Property, and all fees and expenses
for any professional services relating to the Property or any
operations conducted in connection with it.
(b) Provided, that no right or option granted by
Grantor to Beneficiary or otherwise arising pursuant to any
provision of this Deed of Trust, the Notes or any Credit Document
shall be deemed to impose or admit a duty on Beneficiary to
supervise, monitor or control any aspect of the character or
condition of the Property or any operations conducted in
connection with it for the benefit of Grantor or any person or
entity other than Beneficiary. Grantor agrees to indemnify,
defend and hold Beneficiary, its shareholders, directors,
officers, agents, attorneys, advisors and employees (collectively
"Indemnified Parties") harmless from and against any and all
loss, liability, obligation, damage, penalty, judgment, claim,
deficiency, expense, action, suit, cost and disbursement of any
kind or nature whatsoever (including interest, penalties,
reasonable attorneys' fees and amounts paid in settlement),
REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART BY THE
NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from any Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Grantor to Beneficiary shall be a demand
obligation owing by Grantor to Beneficiary and shall bear
interest from the date of expenditure until paid at the default
rate provided in the Notes.
ARTICLE 5
GRANTOR'S REPRESENTATIONS AND WARRANTIES
To induce Beneficiary to extend financial accommodations,
Grantor makes the warranties and representations set forth in
this Article.
Section 5.1 Organization. Grantor is (a) duly organized,
validly existing and in good standing under the laws of the state
of its organization and has full legal right, power and authority
to carry on its business as presently conducted and to execute,
deliver and perform its obligations under this Deed of Trust and
any other Credit Documents to which Grantor is a party, and (b)
duly qualified to do business and in good standing in each
jurisdiction in which the nature of the business it conducts
makes such qualification necessary or desirable. Grantor's
execution, delivery and performance of this Deed of Trust and any
other Credit Documents to which Grantor is a party have been duly
authorized by all necessary action under Grantor's organizational
documents and otherwise.
Section 5.2 Consents. Grantor's execution, delivery and
performance of this Deed of Trust and any other Credit Documents
to which Grantor is a party do not and will not require (i) any
consent of any other person or entity or (ii) any consent, li
cense, permit, authorization or other approval (including foreign
exchange approvals) of any court, arbitrator, administrative
agency or other governmental authority, or any notice to,
exemption by, any registration, declaration or filing with or the
taking of any other action in respect of, any such court,
arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Deed of Trust or any other Credit Document to which
Grantor is a party, nor the fulfillment of or compliance with the
terms and provisions hereof or thereof will (i) violate any
constitutional provision, law or rule, or any regulation, order
or decree of any governmental authority or the basic
organizational documents of Grantor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Grantor is a party or bound.
Section 5.4 Enforceability. Grantor has duly and validly
executed, issued and delivered this Deed of Trust and any other
Credit Documents to which Grantor is a party. This Deed of Trust
and each other Credit Document to which Grantor is a party is in
proper legal form for prompt enforcement and is Grantor's valid
and legally binding obligation, enforceable in accordance with
its terms.
Section 5.5 Information Accurate. All information
supplied to Beneficiary, concurrently with Grantor's execution
of this Deed of Trust are and will be true, correct and complete
in all material respects.
Section 5.6 Taxes. Grantor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Grantor or Obligor has
previously disclosed to Beneficiary, there is no condemnation or
other action, suit or proceeding pending--or, to the best of
Grantor's knowledge, threatened--against or affecting the
Property, at law or in equity, or before or by any governmental
authority, which might result in any material adverse change in
the condition or operation of the Property.
Section 5.8 Grantor Solvent. Grantor is now solvent, and
no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Grantor's knowledge--against Grantor.
Grantor's liabilities and obligations under this Deed of Trust
and any other Credit Documents to which Grantor is a party do not
and will not render Grantor insolvent, cause Grantor's
liabilities to exceed Grantor's assets or leave Grantor with too
little capital to properly conduct all of its business as now
conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Deed of Trust or any other Credit
Document to which Grantor is a party and no statement contained
in any certificate, schedule, list, financial statement or other
papers furnished to Beneficiary by or on behalf of Grantor
contains--or will contain--any untrue statement of material fact,
or omits--or will omit--to state a material fact necessary to
make the statements contained herein or therein not misleading.
Section 5.10 Title. Grantor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Deed of Trust
or other Credit Documents. Except as otherwise expressly
permitted by this Deed of Trust, the lien and security interest
of this Deed of Trust will constitute valid and perfected first
and prior liens and security interests on the Property, subject
to no other liens, security interests or charges whatsoever. The
Property is free from damage caused by fire or other casualty.
Section 5.11 Legal Requirements. To the best of Grantor's
knowledge, Grantor and the Property are in compliance with all
applicable legal requirements and Grantor manages and operates
(and will continue to manage and operate) the Property and its
other businesses in accordance with good industry practices.
Grantor has not received any notice that Grantor and the property
are not in compliance with all applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Deed of Trust shall terminate and be of no
further force or effect (and shall be released on Grantor's
written request and at Grantor's cost and expense) upon full
payment of the Debt and complete performance of all of the obliga
tions of the Obligors under the Settlement Agreement and the
Credit Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Deed of Trust.
Section 6.3 Remedies. Upon default by Grantor in
payment of any indebtedness secured hereby or in performance of
any agreement hereunder, and upon the expiration of the
applicable grace period, if any, for curing of such default
specified in the Note, Settlement Agreement, and/or Credit
Documents, Beneficiary may declare all sums secured hereby
immediately due and payable in full and/or exercise any of the
following remedies: (i) Foreclose this Deed of Trust judicially,
in the same manner as a mortgage; (ii) Cause the Trustee to
exercise the Trustee's power of sale in accordance with the Deed
of Trust Act of the State of Washington (RCW Chap. 61.24) and the
provisions set forth below; (iii) Sue on the Note in accordance
with applicable law; and/or (iv) Take any other action permitted
under the Note, Settlement Agreement, Credit Documents and/or
applicable law. The remedies available to Beneficiary shall be
cumulative and may be pursued concurrently, independently or
successively and Beneficiary may pursue inconsistent remedies.
The only limitation upon such remedies is that there should be
but one full and complete satisfaction of the indebtedness and
obligations under the Note, Settlement Agreement and Credit
Documents.
Section 6.4 Procedure For Exercise of Remedies. The
procedure for exercise of the Trustee's power of sale shall be as
follows:
Upon written request therefor by Beneficiary specifying the
nature of the default, or the nature of the several defaults, and
the amount or amounts due and owing, Trustee shall execute a
written notice of breach and of its election to cause the
Property to be sold to satisfy the obligation secured hereby, and
shall cause such notice to be recorded and otherwise given
according to law.
Notice of sale having been given as then required by law and
not less than the time then required by law having elapsed after
recordation of such notice of breach, Trustee, without demand on
Grantor, shall sell the Property at the time and place of sale
specified in the statute, either as a whole or in separate
parcels and in such order as it may determine, at public auction
to the highest and best bidder for cash in lawful money of the
United States, payable at the time of sale. Trustee may postpone
sale of all or any portion of the property, and from time to time
thereafter may postpone such sale, as provided by statute.
Trustee shall deliver to the purchaser its deed conveying the
property so sold, but without any covenant or warranty, express
or implied. The recital in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. Any
person other than Trustee, including Grantor or Beneficiary, may
purchase at such sale.
Section 6.5 Application Of Foreclosure Sale Proceeds.
Subject to the provisions of RCW 61.24.080, the proceeds of any
sale of the Mortgaged Property, and any rents and other amounts
collected by Beneficiary from Beneficiary's holding, leasing,
operating or making any other use of the Mortgaged Property,
shall be applied by Beneficiary (or by the receiver, if one is
appointed) to the extent that funds are available therefrom in
the following order of priority:
(a) To Expenses and Senior Obligation Payments.
First, to the payment of the reasonable and actual costs and
expenses of taking possession of the Mortgaged Property and of
holding, maintaining, using, leasing, repairing, equipping,
manning, improving, marketing and selling it, including (i)
trustees' and receivers' fees, (ii) court costs, (iii) attorneys'
fees and accountants' fees, (iv) costs of advertisement and
brokers' commissions and (v) payment of any and all Impositions,
liens, security interests or other rights, titles, or interests
superior to the lien and security interest of this Deed of Trust,
whether or not then due and including any prepayment penalties or
fees and any accrued or required interest (except, in the case of
foreclosure proceeds, those senior liens and security interests,
if any, subject to which the Mortgaged Property was sold at such
trustee's sale, and without in any way implying Beneficiary's
consent to the creation or existence of any such prior liens).
(b) To Other Obligations Owed to Beneficiary. Second,
to the payment of all amounts, other than the principal balance
and accrued but unpaid interest, which may be due to Beneficiary
under the Notes, the Settlement Agreement or any other Credit
Document, together with interest thereon as provided therein.
(c) To Accrued Interest on the Debt. Third, to the
payment of all accrued but unpaid interest due on the Debt.
(d) To Debt Principal. Fourth, to the payment of the
principal balance on the Debt and the principal owing under this
Deed of Trust, the Settlement Agreement and any other Credit
Document, irrespective of whether then matured, and if it is
payable in installments and not matured, then to the installments
in such order as Beneficiary shall elect.
(e) To Junior Lienholders. Fifth, to the extent funds
are available therefor out of the sale proceeds or any rents and,
to the extent known by Beneficiary, to the payment of any debt or
obligation secured by a subordinate deed of trust on or security
interest in the Mortgaged Property.
(f) To Mortgagor. Sixth, to Grantor, its successors
and assigns, or to whomsoever may be lawfully entitled to receive
such proceeds.
Section 6.6 Beneficiary May Require Abandonment and
Recommencement of Sale. If the Trustee or the Trustee's
substitute or successor should commence the sale, Beneficiary may
at any time before the sale is completed direct the Trustee to
abandon the sale, and may at any time or times thereafter direct
the Trustee to again commence foreclosure; or, irrespective of
whether foreclosure is commenced by the Trustee, Beneficiary may
at any time after an Event of Default institute suit for
collection of the Debt or foreclosure of this Deed of Trust. If
Beneficiary should institute suit for collection of the Debt or
foreclosure of this Deed of Trust, Beneficiary may at any time
before the entry of final judgment dismiss it and require the
Trustee to sell the Mortgaged Property in accordance with the
provisions of this Deed of Trust.
Section 6.7 Multiple Sales; Deed of Trust Continues in
Effect. No single sale or series of sales by the Trustee or by
any substitute or successor and no judicial foreclosure shall
extinguish the lien or exhaust the power of sale under this Deed
of Trust except with respect to the items of property sold, nor
shall it extinguish, terminate or impair Grantor's contractual
obligations under this Deed of Trust, but such lien and power
shall exist for so long as, and may be exercised in any manner by
law or in this Deed of Trust provided as often as the
circumstances require to give Beneficiary full relief under this
Deed of Trust, and such contractual obligations shall continue in
full force and effect until final termination of this Deed of
Trust.
Section 6.8 Beneficiary May Bid and Purchase. Grantor
shall have the right to become the purchaser at any sale made
under this Deed of Trust, being the highest bidder, and credit
given upon all or any part of the Debt shall be the exact
equivalent of cash paid for the purposes of this Deed of Trust.
Section 6.9 Successor or Substitute Trustee. In case of
absence, death, inability, refusal or failure of the Trustee in
this Deed of Trust named to act, or in case the Trustee should
resign (and the Trustee is hereby authorized to resign without
notice to or consent of Grantor), or if Beneficiary shall desire,
with or without cause, to replace the Trustee in this Deed of
Trust named, or to replace any successor or substitute previously
named, Beneficiary or any agent or attorney-in-fact for
Beneficiary may name, constitute and appoint a successor and
substitute trustee (or another one) without other formality than
an appointment and designation in writing, which need not be
acknowledged, filed or recorded to be effective, except only in
those circumstances, if any, where acknowledgment, filing and/or
recording is required by applicable law and such law also
precludes Grantor from effectively waiving such requirement.
Upon such appointment, this conveyance shall automatically vest
in such substitute trustee, as Trustee, the estate in and title
to all of the Mortgaged Property, and such substitute Trustee so
appointed and designated shall thereupon hold, possess and
exercise all the title, rights, powers and duties in this Deed of
Trust conferred on the Trustee named and any previous successor
or substitute Trustee, and the Trustee's conveyance to the
purchaser at any such sale shall be equally valid and effective
as if made by the Trustee named in this Deed of Trust. Such
right to appoint a substitute Trustee shall exist and may be
exercised as often and whenever from any of said causes, or
without cause, as aforesaid, Beneficiary or Beneficiary's agent
or attorney-in-fact elects to exercise it.
Section 6.10 Right to Receiver. Upon the occurrence of an
Event of Default or at any time after commencement of a judicial
or nonjudicial foreclosure or any legal proceedings under this
Deed of Trust, or at any other time permitted by applicable law,
Beneficiary may, at Beneficiary's election and by or through the
Trustee or otherwise, make application to a court of competent
jurisdiction for appointment of a receiver of the Property, as a
matter of strict right, without notice to Grantor and without
regard to the adequacy of the value of the Property for the
repayment of the Debt, and Grantor hereby irrevocably consents to
such an appointment. Any receiver shall have all the usual
powers and duties of receivers in similar cases, including the
full power to possess, rent, maintain, repair and operate the
Property upon such terms and conditions as may be approved by the
court, and shall apply the rents realized in the same manner and
order as foreclosure proceeds in accordance with Section 6.5.
Section 6.11 Tenants at Will. Grantor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Grantor, or the
parties so holding possession, shall become and be considered as
tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
ARTICLE 7
BENEFICIARY'S RIGHT TO PERFORM GRANTOR'S OBLIGATIONS
Section 7.1 Beneficiary May Elect to Perform Defaulted
Obligations. Except for Grantor's failure to maintain the
insurance coverage required by the other provisions of this Deed
of Trust, if Grantor should fail to comply with any of its other
agreements, covenants or obligations under this Deed of Trust,
the Settlement Agreement, any of the Notes, or any other Credit
Document so as to cause such failure to constitute an Event of
Default or a Default which is then continuing, then Beneficiary
(in Grantor's name or in Beneficiary's own name) may perform them
or cause them to be performed for Grantor's account and at
Grantor's expense, but shall have no obligation to perform any of
them or cause them to be performed. With respect to Grantor's
failure to maintain the insurance coverage required hereby,
however, Beneficiary itself may purchase or secure such insurance
coverage for the Mortgaged Property prior to providing Grantor
with any notice of and opportunity to cure or remedy such
failure. Any and all expenses thus incurred or paid by
Beneficiary under the provisions of this paragraph shall be
Grantor's obligations to Beneficiary due and payable on demand,
or if no demand is sooner made, then they shall be due on or
before four (4) years after the respective dates on which they
were incurred, and each shall bear interest from the date
Beneficiary pays it until the date Grantor repays it to
Beneficiary, at the same rate as is provided for in the Notes for
interest on past due principal (the "Past Due Rate"). Upon
making any such payment or incurring any such expense,
Beneficiary shall be fully and automatically subrogated to all of
the rights of the person, corporation or body politic receiving
such payment. Any amounts owing by Grantor to Beneficiary
pursuant to this or any other provision of this Deed of Trust
shall automatically and without notice be and become a part of
the Debt and shall be secured by this and all other instruments
securing the Debt. The amount and nature of any such expense and
the time when it was paid shall be fully established by the
affidavit of Beneficiary or any of Beneficiary's officers or
agents or by the affidavit of any original, substitute or
successor Trustee acting under this Deed of Trust. Without
notice to Grantor or any other person or entity, the Ceiling Rate
and the Past Due Rate shall automatically fluctuate upward and
downward as and in any amount by which the maximum nonusurious
rate of interest permitted by such applicable law and the rate of
interest as provided for in the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Beneficiary
in this Article shall in no event be considered or constitute a
cure of the default or a waiver of Beneficiary's right at any
time after an Event of Default to declare the Debt to be at once
due and payable, but is cumulative of such right and of all other
rights given by this Deed of Trust, the Notes and the Credit
Documents and of all rights given Beneficiary by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Grantor agrees that upon the written request of
Beneficiary, Grantor will thereafter deposit with Beneficiary
each month an amount equal to one-twelfth (1/12) of the aggregate
of (i) the next succeeding premiums (or payments in respect of
them, if premiums are financed) on all insurance policies which
Grantor is required by or pursuant to this Deed of Trust to
maintain on the Property, and (ii) the amount of the next
succeeding annual tax payments, assessment installments,
maintenance charges and other Impositions to become due and
payable with respect to the Property, as reasonably estimated by
Beneficiary, plus, with the first of such monthly deposits, an
additional month's share (a twelfth) of such premiums and taxes
for each month less than twelve remaining before the next payment
thereof falls due. At least fifteen (15) days before the date on
which any such insurance premium (or payment in respect of it, if
premiums are financed) or any of the Impositions must be paid to
avoid delinquency, promptly after Beneficiary's request, Grantor
agrees to deliver to Beneficiary a statement or statements
showing the amount of the premium (or payment in respect of it,
if premiums are financed) or Impositions required to be paid and
the name and mailing address of the concern or authority to which
it is payable and, at the same time, Grantor agrees to deposit
with Beneficiary such amounts as will, when added to the amount
of such deposits previously made and then remaining available for
the purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Beneficiary by Grantor for the payment
of such amounts and Beneficiary has been timely furnished with
the requisite statements of the amounts required to be paid and
the names and addresses of the concerns or authorities to which
such amounts are payable. Beneficiary hereby agrees to apply
such deposits in payment of such insurance obligations and
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Beneficiary by Grantor for the payment
of such amounts and Beneficiary has been timely furnished with
the requisite statements of the amounts required to be paid and
the names and addresses of the concerns or authorities to which
such amounts are payable. Beneficiary shall in no way be
obligated to pay any interest to Grantor on such deposits, and
upon the occurrence of an Event of Default which is then
continuing, Beneficiary is hereby irrevocably authorized to apply
any and all amounts so deposited with Beneficiary against the
amounts due under the Debt (with such order of application to be
at Beneficiary's discretion) without any further notice to or
consent from Grantor or any other person or entity.
Additionally, Grantor hereby irrevocably grants to Beneficiary a
security interest and assigns to Beneficiary all such funds so
deposited with Beneficiary as additional security for payment of
the Debt and all other amounts now or hereafter outstanding under
any of the Credit Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. Grantor hereby assigns and transfers to Beneficiary all
rents (severed or unsevered), revenues, income, profits and
proceeds of the foregoing ("Rental") payable under each Lease
(hereinafter defined) now or at any time hereinafter existing,
such assignment being upon the terms set forth in Section 9.2
below. The term "Lease" or "Leases" means any oral or written
agreement, now existing or made later, between Grantor and
another person or entity to use or occupy all or any portion of
the Property, together with any guaranties or security for the
obligations of any tenant, lessee, sublessee or other person or
entity having the right to occupy, use or manage any part of the
Property under a Lease. Each time Grantor enters into a Lease,
such Lease shall automatically become subject to this Article
without further action.
Section 9.2 Terms of Assignment. The transfer of Rental
to Beneficiary shall be upon the following terms: (a) until the
occurrence of an Event of Default, Grantor shall have the right
to collect Rental and each tenant may pay Rental directly to
Grantor; but after an Event of Default, Grantor may not collect
Rental and to the extent Grantor receives any Rent thereafter
accruing or paid, Grantor covenants to hold all such Rental in
trust for the use and benefit of Beneficiary; (b) upon receipt
from Beneficiary of notice that an Event of Default exists, each
tenant is hereby authorized and directed to pay directly to
Beneficiary all Rental thereafter accruing or payable and receipt
of Rental by Beneficiary shall be a release of such tenant to the
extent of all amounts so paid; (c) Rental so received by
Beneficiary shall be applied by Beneficiary, first to the
expenses, if any, of collection and then in accordance with
Section 6.5 hereof; (d) without impairing its rights hereunder,
Beneficiary may, at its option, at any time and from time to
time, release to Grantor Rental so received by Beneficiary, or
any part thereof; (e) Beneficiary shall not be liable for its
failure to collect or its failure to exercise diligence in the
collection of Rental, but shall be accountable only for Rental
that it shall actually receive; and (f) the assignment contained
in this Article shall terminate upon the release of this Deed of
Trust, but no tenant shall be required to take notice of
termination until a copy of such release shall have been
delivered to such tenant. Prior to the occurrence of an Event of
Default, the Rental shall be used to pay expenses associated with
owning and operating the Property and to pay the Debt before
being used for any other purpose. It shall never be necessary
for Beneficiary to institute legal proceedings of any kind
whatsoever to enforce the provisions of this Article.
Notwithstanding anything to the contrary in this document, it is
agreed that any Rental will not constitute a payment by the
Grantor to Beneficiary of any portion of the Debt (and hence will
not be credited to the Debt) until the Rental is actually paid to
the Beneficiary and received and retained by the Beneficiary and
then, in such event, the Rental so received shall be applied in
accordance with Section 9.2(c). Notwithstanding anything to the
contrary in this Deed of Trust, this Article shall not make
Beneficiary an owner or operator of the Property for the purposes
of environmental liability and this Article shall not make
Beneficiary a partner of Grantor. Further, this Article shall be
effective and perfected upon recordation of this Deed of Trust.
Section 9.3 Remedies. Should an Event of Default occur,
Grantor agrees to deliver to Beneficiary possession and control
of all Rental held by Grantor in trust for the benefit of
Beneficiary, provided, however, that Grantor may apply a portion
of such Rental to no more than one month's normal and actual
operating costs of the Property. Grantor specifically agrees
that Beneficiary may upon the occurrence of any Event of Default
or at any time thereafter, personally or through an agent
selected by Beneficiary, take--or have the Trustee take--
possession and control of all or any part of the Property and
may receive and collect all Rental theretofore accrued and all
thereafter accruing therefrom until the final termination of this
Deed of Trust or until the foreclosure of the lien of this Deed
of Trust, applying so much thereof as may be collected before
sale of the Property by the Trustee or judicial foreclosure of
this Deed of Trust first to the expenses of Beneficiary incurred
in obtaining the Rental and then applying the Rental so received
in accordance with the provisions of Section 6.5 hereof. Any
such action by Beneficiary shall not operate as a waiver of the
Event of Default in question, or as an affirmance of any Lease or
of the rights of any tenant in the event title to that part of
the Property covered by the Lease or held by the tenant should be
acquired by Beneficiary or other purchaser at foreclosure sale.
Beneficiary, Beneficiary's agent or the Trustee may use against
Grantor or any other person such lawful or peaceable means as the
person acting may see fit to enforce the collection of any such
Rental or to secure possession of the Property, or any part of it
and may settle or compromise on any terms as Beneficiary,
Beneficiary's agent or the Trustee sees fit, the liability of any
person or persons for any such Rental. In particular,
Beneficiary, Beneficiary's agent or the Trustee may institute and
prosecute to final conclusion actions of forcible entry and
detainer, or actions of trespass to try title, or actions for
damages, or any other appropriate actions, in the name of
Beneficiary, Grantor, or the Trustee, and may settle, compromise
or abandon any such actions as Beneficiary, Beneficiary's agent
or the Trustee may see fit; and Grantor binds itself and its
successors and assigns to take whatever lawful or peaceable steps
Beneficiary, Beneficiary's agent or the Trustee may ask of it or
any such person or concern so claiming to take for such purposes,
including the institution and prosecution of actions of the
character above stated. However, neither Beneficiary,
Beneficiary's agent nor the Trustee shall be obligated to collect
any such Rental or be liable or chargeable for failure to do so.
Upon any sale of the Property or any part thereof in foreclosure
of the lien or security interest created by this Deed of Trust,
such Rental so sold which thereafter accrues shall be deemed
included in such sale and shall pass to the purchaser free and
clear of the assignment made in this Article. Nothing in this
Section is intended to require the Beneficiary to institute any
legal proceedings or engage in any self help remedies in order to
make the absolute assignment of the Rental to Beneficiary
operative.
Section 9.4 Mortgagee in Possession; No Liability of
Beneficiary. Beneficiary's acceptance of this assignment shall
not, before entry upon and taking possession of the Property by
Beneficiary, be deemed to constitute Beneficiary a "mortgagee in
possession," nor obligate Beneficiary to appear in or defend any
proceeding relating to any of the Leases or to the Property, take
any action hereunder, expend any money, incur any expenses or
perform any obligation or liability under the Leases, or assume
any obligation under the Leases including the obligation to
return any deposit delivered to Grantor by any tenant.
Beneficiary shall not be liable for any injury or damage to
person or property in or about the Property, except injury or
damage resulting from Beneficiary's wilful misconduct or gross
negligence. Neither the collection of Rental due under the
Leases herein described nor possession of the Property by
Beneficiary shall render Beneficiary liable with respect to any
obligations of Grantor under any of the Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Grantor covenants,
warrants and represents that:
(a) Neither Grantor nor any previous owner has entered
into any prior oral or written assignment, pledge or reservation
of the Rental, entered into any prior assignment or pledge of
Grantor's landlord interests in any Lease or performed any act or
executed any other instruments which might prevent or limit
Beneficiary from operating under the terms and conditions of this
Article;
(b) Grantor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Grantor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Beneficiary's request,
execute an additional assignment to Beneficiary of all Leases
then affecting the Property and all Rental and other sums due
thereunder by assignment(s) in form and substance satisfactory to
Beneficiary and (iii) at the request of Beneficiary, record such
Leases and the assignment(s) thereof to Beneficiary;
(d) Grantor shall enforce the tenants' obligations
under the Leases in the ordinary course of Grantor's business;
(e) Grantor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Deed of Trust and any other encumbrances
permitted by this Deed of Trust;
(f) Grantor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Beneficiary;
(g) Grantor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Beneficiary's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Deed of Trust;
(i) After the occurrence of an Event of Default,
Grantor shall from time to time furnish to Beneficiary, within
thirty (30) days after demand therefor, true, correct and
complete copies of all Leases or any portion of the Leases
specified by Beneficiary; and
(j) Grantor shall not in any event collect any Rental
more than one (1) month in advance of the time it will be earned
(and if Grantor does so, in addition to any other rights or
remedies available by reason of such Event of Default, all Rental
so collected more than one (1) month in advance of the time it is
earned shall be delivered to Beneficiary to be applied to the
Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Beneficiary.
Section 9.7 Reassignment. By Beneficiary's acceptance of
this Deed of Trust, it is understood and agreed that a full and
complete release of this Deed of Trust shall operate as a full
and complete reassignment to Grantor of the Beneficiary's rights
and interests assigned to Beneficiary under this Article (subject
to the automatic reinstatement provisions of Section 10.15
below).
Section 9.8 Subordination of Deed of Trust to Leases. It
is agreed and understood that Beneficiary hereby reserves the
right and shall have the right, at any time and from time to
time, without the consent or joinder of any other party, to
subordinate this Deed of Trust and the liens, assignments and
security interests created by this Deed of Trust to all or any of
the Leases regardless of the respective priority of any of such
Leases and this Deed of Trust. Upon doing so and filing evidence
of such subordination in the real property records in the county
or counties where the Real Property is located, a foreclosure of
Beneficiary's liens, assignments and security interests under
this Deed of Trust shall be subject to and shall not operate to
extinguish any of said Leases as to which such subordination is
operative.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Deed of Trust. Any of the Debt may be extended, rearranged,
renewed, increased or otherwise changed in any way, and any part
of the security described in this Deed of Trust or any other
security for any part of the Debt may be waived or released
without in anyway altering or diminishing the force, effect or
lien of this Deed of Trust, and the lien, assignment and security
interest granted by this Deed of Trust shall continue as a prior
lien, assignment and security interest on all of the Property not
expressly so released, until the final termination of this Deed
of Trust.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Deed of Trust which under applicable laws are or may be
deemed to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable state or federal laws,
whichever permit the higher rate. In this connection, Grantor and
Beneficiary stipulate and agree that it is their common and
overriding intent to contract in strict compliance with
applicable usury laws. In furtherance thereof, none of the terms
of this Deed of Trust shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the maximum
rate permitted by applicable laws. Grantor shall never be liable
for interest in excess of the maximum rate permitted by
applicable laws. If, for any reason whatever, such interest paid
or received during the full term of the applicable indebtedness
produces a rate which exceeds the maximum rate permitted by
applicable laws, Beneficiary shall credit against the principal
of such indebtedness (or, if such indebtedness shall have been
paid in full, shall refund to the payor of such interest) such
portion of said interest as shall be necessary to cause the
interest paid to produce a rate equal to the maximum rate
permitted by applicable laws. All sums paid or agreed to be paid
to Beneficiary for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full
term of the applicable indebtedness, so that the interest rate is
uniform throughout the full term of such indebtedness. The
provisions of this Section shall control all agreements, whether
now or hereafter existing and whether written or oral, between
Grantor and Beneficiary.
Section 10.3 Subrogation to Liens Discharged. Grantor
hereby agrees that Beneficiary shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Beneficiary. Irrespective of any formal or informal
acknowledgment of partial or complete satisfaction or release of
the Discharged Obligations, the Subrogated Liens shall be
continued, renewed, extended, brought forward and rearranged as
security for the Debt in addition to and cumulative of the lien
and security interest of this Deed of Trust. Foreclosure under
this Deed of Trust shall constitute foreclosure of the Subrogated
Liens.
Section 10.4 Due on Sale. Grantor agrees that if, without
Beneficiary's prior written consent (except as otherwise provided
herein or in the Settlement Agreement), (a) any part of the
Property should be directly or indirectly transferred, conveyed
or mortgaged, voluntarily or involuntarily, absolutely or as
security, or (b) Grantor should enter into any contractual
arrangement to transfer, convey or mortgage any part of the
Property or any interest either in the Property, the moratorium
provided in Article VI of the Settlement Agreement shall
immediately terminate without notice to Obligors. Beneficiary is
under no obligation to consent to the transfer or encumbrance of
the Property except on the terms provided in the Settlement
Agreement irrespective of whether or not the transfer, conveyance
or mortgage would or might (i) diminish the value of any security
for the Debt, or (ii) increase the likelihood of Beneficiary's
having to resort to any security for the Debt after default. If
Beneficiary's consent to a proposed mortgaging is requested,
Beneficiary shall have the right (in addition to its absolute
right to refuse to consent to any such transaction) to condition
its consent upon satisfaction of any one or more of the following
requirements: (1) that the interest rate(s) on all or any part of
the Debt be increased to a rate which is then acceptable to
Beneficiary; (2) that a principal amount deemed appropriate by
Beneficiary be paid against the Debt to reduce to a level which
is then acceptable to Beneficiary the ratio that the outstanding
balance of the Debt bears to the value of the Property as
determined by Beneficiary; (3) that the liability to Beneficiary
of Grantor and all makers and guarantors of all or any part of
the Debt will be confirmed by them in writing to be unaffected
and unimpaired by such mortgaging; and (4) that any proposed
junior mortgagee expressly subordinate to all liens and security
interests securing the Debt as to both lien and payment right
priority and consent to the proposed transaction in a writing
addressed to Beneficiary.
Section 10.5 Condemnation. If before final termination of
this Deed of Trust, all or a portion of the Property is taken for
public or quasi-public purposes, either through eminent domain or
condemnation proceedings, by voluntary conveyance under threat of
condemnation with Beneficiary's express written consent and
joinder or otherwise, Grantor hereby agrees that any and all sums
of money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Beneficiary, and they are
hereby assigned to Beneficiary, and shall be paid directly to
Beneficiary. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the
Property shall be applied, first, to reimburse Beneficiary or the
Trustee for all costs and expenses, including reasonable
attorneys' fees, incurred in connection with collection of such
proceeds and, second, the remainder of said proceeds shall be
applied, at the reasonable discretion of Beneficiary, to the
payment of the Debt in the order determined by Beneficiary in its
sole discretion, or paid out to repair or restore the Property so
affected by such condemnation, injury or damage in the same
manner as provided in Section 4.1(h) above. Grantor agrees to
execute such further assignments of all such proceeds, judgments,
decrees and awards as Beneficiary may request. Beneficiary is
hereby authorized, in the name of Grantor, to execute and deliver
valid acquittances for, and to appeal from, any such judgment,
decree or award. Beneficiary shall not be, in any event or
circumstances, liable or responsible for failure to collect, or
exercise diligence in the collection of, any such proceeds,
judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfying the notice requirements set
forth in the Settlement Agreement shall be satisfactory under
this Deed of Trust.
Section 10.7 Beneficiary and Grantor. The term
"Beneficiary" as used in this Deed of Trust shall mean and
include the holder or holders of the Debt from time to time, and
upon acquisition of the Debt by any holder or holders other than
the named Beneficiary, effective as of the time of such
acquisition, the term "Beneficiary" shall mean all of the then
holders of the Debt, to the exclusion of all prior holders not
then retaining or reserving an interest in the Debt from time to
time, whether such holder acquires the Debt through succession to
or assignment from a prior Beneficiary. The term "Grantor, its
successors and assigns" shall also include the heirs and legal
representatives of each Grantor who is a natural person and the
receivers, conservators, custodians and trustees of each Grantor.
In general, Grantor may not assign or delegate any of its
rights, interests or obligations under this Deed of Trust, the
Notes, the Settlement Agreement or any Credit Document without
Beneficiary's express prior written consent, and any attempted
assignment or delegation without it shall be void or voidable at
Beneficiary's election; provided, however, that Grantor may
delegate its obligations under this Deed of Trust and any other
Credit Documents regarding the management, maintenance and
leasing of the Mortgaged Property, as well as the construction of
tenant finish and "cosmetic-type" capital improvements to the
Mortgaged Property, to reputable agents or independent
contractors without the prior written consent of Beneficiary, but
in any and all such events, Grantor shall remain fully obligated
to Beneficiary in accordance with the provisions of this Deed of
Trust and all other Credit Documents for the complete and full
compliance with and performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Deed of Trust to
Articles, Sections and Exhibits refer to Articles, Sections and
Exhibits in and to this Deed of Trust unless otherwise specified.
The Article and Section numbers, Exhibit designations and
headings used in this Deed of Trust are included for convenience
of reference only and shall not be considered in interpreting,
applying or enforcing this Deed of Trust.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Deed of Trust are hereby incorporated into it at
that place in the text, to the same effect as if set out there
verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Deed of Trust,
it shall be read as if it were written, "including by way of
example only and without in any way limiting the generality of
the clause or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Deed of Trust each includes the masculine, feminine
and neuter genders.
Section 10.12 Severability. If any provision of this Deed
of Trust is held to be illegal, invalid or unenforceable under
present or future laws, the legality, validity and enforceability
of the remaining provisions of this Deed of Trust shall not be
affected thereby, and this Deed of Trust shall be liberally
construed so as to carry out the intent of the parties to it.
Each waiver in this Deed of Trust is subject to the overriding
and controlling rule that it shall be effective only if and to
the extent that (a) it is not prohibited by applicable law and
(b) applicable law neither provides for nor allows any material
sanctions to be imposed against Beneficiary for having bargained
for and obtained it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Deed of
Trust, or if the lien, assignments and security interest of this
Deed of Trust cannot be lawfully enforced to pay any part of the
Debt, then and in either such event, at the option of
Beneficiary, all payments on the Debt shall be deemed to have
been first applied against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Deed of Trust is executed by more than one person, corporation,
partnership, joint venture, trust or other legal entity, it shall
be construed as though "Grantor" were written "Grantors" and as
though the pronouns and verbs in their number were changed to
correspond, and in such case, (a) each of Grantors shall be bound
jointly and severally with one another to keep, observe and
perform the covenants, agreements, obligations and liabilities
imposed by this Deed of Trust upon the "Grantor", (b) a release
of one or more persons, corporations or other legal entities
comprising "Grantor" shall not in any way be deemed a release of
any other person, corporation or other legal entity comprising
"Grantor" and (c) a separate action hereunder may be brought and
prosecuted against one or more of the persons, corporations or
other legal entities comprising "Grantor" without limiting any
liability of or impairing Beneficiary's right to proceed against
any other person, corporation or other legal entity comprising
"Grantor".
Section 10.15 Automatic Reinstatement. Grantor agrees
that, if at any time all or any part of any payment previously
applied by Beneficiary to the Debt is or must be returned by
Beneficiary--or recovered from Beneficiary--for any reason
(including the order of any bankruptcy court)), this Deed of
Trust shall automatically be reinstated to the same effect as if
the prior application had not been made, and, in addition,
Grantor hereby agrees to indemnify Beneficiary against, and to
save and hold Beneficiary harmless from any required return by
Beneficiary--or recovery from Beneficiary--of any such payment
because of its being deemed preferential under applicable
bankruptcy, receivership or insolvency laws, or for any other
reason.
Section 10.16 Amendments in Writing. This Deed of Trust
shall not be changed orally but shall be changed only by
agreement in writing signed by Grantor and Beneficiary. Any
waiver or consent with respect to this Deed of Trust shall be
effective only in the specific instance and for the specific
purpose for which given. No course of dealing between the
parties, no usage of trade and no parole or extrinsic evidence of
any nature shall be used to supplement or modify any of the terms
or provisions of this Deed of Trust.
Section 10.17 Entire Agreement. This Deed of Trust
embodies the entire agreement and understanding between Grantor
and Beneficiary with respect to its subject matter and supersedes
all prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Grantor
acknowledges and agrees that there is no oral agreement between
Grantor and Beneficiary which has not been incorporated in this
Deed of Trust.
Section 10.18 Release From Lien And Security Interest.
Prior to the occurrence of an Event of Default, Grantor shall be
entitled to obtain a release of the Property from the lien and
security interest of this Deed of Trust upon and subject to the
terms of the Settlement Agreement. In addition, Section 10.4 of
this Deed of Trust shall not apply to any transaction which
specifically provides for payment of the applicable release price
provided for in the Settlement Agreement.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Grantor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Beneficiary, in
the event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Grantor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Beneficiary insuring Beneficiary a
continued first lien priority status against the Mortgaged
Property within sixty (60) days from the date that the lien is
placed against the Mortgaged Property or within such shorter
period of time as the circumstances shall permit (but in all
events at least five (5) days prior to any sale of the Mortgaged
Property to satisfy said lien) in the event that the holder of
such lien takes steps to cause the Mortgaged Property to be sold
pursuant to said lien.
Section 11.2 Representations and Warranties. Grantor
represents and warrants to Beneficiary to the best knowledge of
Grantor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Grantor, in the past been transported, treated and disposed of
only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Grantor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Grantor has
no material contingent liability in connection with any release
or threatened release of any hazardous substance or solid waste
into the environment.
Section 11.3 Non-Storage and Disposal. Grantor shall not
cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Grantor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that Grantor
(or any of Grantor's tenants which have been approved by
Beneficiary) shall be entitled to store and utilize Hazardous
Materials upon the Mortgaged Property in connection with such
person's or entity's normal and ordinary operations so long as
such storage and use fully complies with all Environmental Laws
at all times.
Section 11.4 Indemnity. Grantor shall indemnify, defend
and hold all Beneficiary Indemnitees (as defined below) harmless
from and against any and all (i) liabilities, losses, claims,
damages, costs, penalties, funds and judgments resulting from
violation by Grantor of any Environmental Laws with respect to
the ownership and operation of the Mortgaged Property, and (ii)
all other liabilities, losses, claims, damages, costs, penalties,
fines, judgments, attorneys' fees, consultants' fees and expert's
fees incurred or suffered by Beneficiary by reason of, resulting
from, in connection with or arising in any manner whatsoever from
a breach by Grantor of any representation, warranty or covenant
contained in this Article 11. This indemnity provision shall
expressly survive the payment in full of the Debt and the release
of the Property from this Deed of Trust. As used in this
paragraph, "Beneficiary Indemnitees" shall mean Beneficiary, any
subsequent holder or owner of the Notes or any interest in it,
any affiliate, successor, assign or subsidiary of Beneficiary and
each of their shareholders, directors, officers, employees,
counsel, agents, attorneys and contractors, and the Trustee and
all successor or substitute trustees, as well as their respective
heirs and legal representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Grantor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Grantor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or
protection laws enacted by federal or state legislatures or
governmental authorities or agencies, and (b) the term "Hazardous
Material" means any hazardous or toxic substance, material or
waste, including but not limited to, those substances, materials
and waste listed in the United States Department of
Transportation Hazardous Materials Table (49 C.F.R. 172.101) or
listed by the Environmental Protection Agency as hazardous
substances under or pursuant to 40 C.F.R. Part 302, or such
substances, materials and wastes which are or become regulated
under any Environmental Law.
Section 11.6 Obligation Not Personally Binding. The
obligations of and liability of Grantor hereunder shall not be
personally binding upon nor shall there be any resort for
enforcement thereof to the private property of Grantor's trust
managers, shareholders, officers, employees or agents regardless
of whether such obligation or liability is in the nature of
contract, tort or otherwise.
PLEASE BE ADVISED THAT ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LEND MONEY, EXTEND CREDIT OR FORBEAR FROM ENFORCING REPAYMENT OF
A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
EXECUTED effective as of ___________________, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By:
Name:
Title:
MANUFACTURERS LIFE INSURANCE COMPANY,
a Canadian corporation
By:
Name:
Title:
MANUFACTURERS LIFE INSURANCE COMPANY,U.S.A.,
a Michigan corporation
By:
Name:
Title:
THE STATE OF TEXAS
COUNTY OF HARRIS
I certify that I know or have satisfactory evidence that
_______________________ is the person who appeared before me, and
said person acknowledged that said person signed this instrument,
on oath stated that said person was authorized to execute the
instrument and acknowledged it as the _________________________
of AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate
investment trust, to be the free and voluntary act of such party
for the uses and purposes mentioned in the instrument.
Dated: ____________________________.
_____________________________
(Signature of Notary)
_______________________
(Legibly Print or Stamp Name of Notary)
[SEAL OR STAMP] Notary Public in and for the State of
Texas,
THE STATE OF TEXAS
COUNTY OF HARRIS
I certify that I know or have satisfactory evidence that
_______________________ is the person who appeared before me, and
said person acknowledged that said person signed this instrument,
on oath stated that said person was authorized to execute the
instrument and acknowledged it as the _________________________
of MANUFACTURERS LIFE INSURANCE COMPANY, a Canadian corporation,
to be the free and voluntary act of such party for the uses and
purposes mentioned in the instrument.
Dated: ____________________________.
___________________________________________
(Signature of Notary)
_____________________________________________
(Legibly Print or Stamp Name of Notary)
[SEAL OR STAMP] Notary Public in and for the State of
Texas,
THE STATE OF TEXAS
COUNTY OF HARRIS
I certify that I know or have satisfactory evidence that
_______________________ is the person who appeared before me, and
said person acknowledged that said person signed this instrument,
on oath stated that said person was authorized to execute the
instrument and acknowledged it as the _________________________
of MANUFACTURERS LIFE INSURANCE COMPANY, U.S.A., a Michigan
corporation, to be the free and voluntary act of such party for
the uses and purposes mentioned in the instrument.
Dated: ____________________________.
___________________________________________
(Signature of Notary)
_____________________________________________
(Legibly Print or Stamp Name of Notary)
[SEAL OR STAMP] Notary Public in and for the State of
Texas,
EXHIBIT A
Legal Description
EXHIBIT B
Permitted Exceptions
(SAMPLE-STATE OF WISCONSIN)
MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THE STATE OF WISCONSIN
COUNTY OF WAUKESHA
THIS IS NON-HOMESTEAD PROPERTY
Parcel
No.__________________________
This instrument ("Mortgage") is a mortgage from AMERICAN
INDUSTRIAL PROPERTIES REIT, a real estate investment trust duly
organized under the laws of the State of Texas, whose address for
purposes hereof is 6220 North Beltline, Suite 205, Irving, Texas
75063 (called the "Mortgagor", "Debtor" and "Assignor") to Paul
Gallagher, Trustee (called the "Trustee"), whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5, for the use and
benefit of MANUFACTURERS LIFE INSURANCE COMPANY, a corporation
duly organized under the laws of Canada, whose address is 200
Bloor Street East, Toronto, Ontario M4W 1E5 and MANUFACTURERS
LIFE INSURANCE COMPANY, U.S.A., a corporation organized under the
laws of the State of Michigan, whose address is 200 Bloor Street
East, Toronto, Ontario M4W 1E5, MANUFACTURERS LIFE INSURANCE
COMPANY and MANUFACTURERS LIFE INSURANCE COMPANY, U.S.A. are
collectively referred to herein as the "Mortgagee", "Secured
Party", and "Assignee". This instrument is also an assignment of
rents and leases from Assignor to Assignee, and a security
agreement between Debtor and Secured Party.
W I T N E S S E T H:
ARTICLE 1
IDENTIFICATION OF THE MORTGAGED PROPERTY
AND ITS CONVEYANCE TO MORTGAGEE
Section 1.1 Mortgagor's Mortgage of the Mortgaged
Property to Secure the Debt. To secure payment of principal,
lawful interest and other elements of the Debt described and
defined in Article 2, and in consideration of Ten Dollars
($10.00) and other valuable consideration paid before delivery of
this Mortgage by Mortgagee to Mortgagor, who hereby acknowledges
its receipt and that it is reasonably equivalent value for this
Mortgage and all other security and rights given by Mortgagor,
Mortgagor hereby Mortgages, Warrants, Grants, Sells, Conveys,
Transfers, Assigns, Sets Over, Confirms and Delivers unto the
Mortgagee, the following property (collectively, the "Mortgaged
Property"):
(a) Real Property. All of the real estate and
premises described or referred to on Exhibit A, together with (i)
all of Mortgagor's estate, right, title and interest in and to
all easements and rights-of-way for utilities, ingress or egress
to or from said property and (ii) all interests of Mortgagor in
and to all streets, rights-of-way, alleys or strips of land
adjoining said property (collectively, the "Real Property").
(b) Buildings and Improvements. All existing and all
future buildings on the Real Property and other improvements to
it, all of which Mortgagor and Mortgagee hereby irrevocably
declare to be real estate and part of the Real Property,
including all water, sewage and drainage facilities, wells,
treatment plants, supply, collection and distribution systems,
paving, landscaping and other improvements (collectively, the
"Improvements").
(c) Fixtures, Equipment and Supplies. All fixtures,
equipment and supplies (the "Fixtures and Equipment") now or
hereafter owned by Mortgagor and attached to, used, intended or
acquired for use for, or in connection with, the construction,
maintenance, operation or repair of the Real Property or
Improvements, or for the present or future replacement or
replenishment of used portions of it, and all related parts,
filters and supplies, including but not limited to, all heating,
lighting, cooling, ventilating, air conditioning, environment
control, refrigeration, plumbing, incinerating, water-heating,
cooking, computing, monitoring, measuring, controlling,
distributing and other equipment and fixtures, and all renewals
and replacements of them, all substitutions for them and all
additions and accessions to them, all of which Mortgagor and
Mortgagee hereby also irrevocably declare to be real estate and
part of the Real Property.
(d) Leases. All Leases (as such term is defined in
Section 9.1 below).
(e) Utilities. All Mortgagor's right, title and
interest in and to all wastewater, fresh water and other
utilities capacity and facilities (the "Utilities Capacity")
available or allocable to the Real Property and Improvements or
dedicated to or reserved for them pursuant to any system,
program, contract or other arrangement with any public or private
utility, and all related or incidental licenses, rights and
interests, whether considered to be real, personal or mixed
property, including the right and authority to transfer or
relinquish any or all such rights and the right to any credit,
refund, reimbursement or rebate for utilities facilities
construction or installation or for any reservation fee, standby
fee or capital recovery charge promised, provided or paid for by
Mortgagor, to the full extent now allocated or allocable to the
Real Property or Improvements, plus all additional Utilities
Capacity, if any, not dedicated or reserved to the Real Property
or Improvements but which is now or hereafter owned or controlled
by Mortgagor, to the full extent that such additional Utilities
Capacity is necessary to allow development, marketing and use of
the Real Property or Improvements for their highest and best use.
(f) After-acquired Property. All right, title and
interest acquired by Mortgagor in or to the Real Property,
Improvements, Fixtures and Equipment, Leases and Utilities
Capacity after execution of this Mortgage.
(g) Appurtenances. Any and all rights and
appurtenances (the "Appurtenances") owned by Mortgagor and
incident or appertaining to the Real Property, Improvements,
Fixtures and Equipment, Leases or Utilities Capacity or any part
of them.
(h) Oil and Gas. All Mortgagor's right, title and
interest in and to all existing and future minerals, oil, gas and
other hydrocarbon substances in, upon, under or through the Real
Property.
(i) Reversions and Remainders. Any and all rights and
estates of Mortgagor in reversion or remainder to the Real
Property, Improvements, Fixtures and Equipment, Leases, Utilities
Capacity or Appurtenances or any part of them.
(j) Contractual Rights. All Mortgagor's right, title
and interest in and to all contracts (including contracts for the
sale or exchange of all or any portion of the Real Property or
the Improvements), franchises, licenses and permits whether
executed, granted or issued by a private person or entity or a
governmental or quasi-governmental agency, which are directly or
indirectly related to or connected with the development or sale
of the Real Property or the Improvements, whether now or at any
time hereafter existing, and all amendments and supplements
thereto and renewals and extensions thereof at any time made, and
all rebates, refunds, escrow accounts and funds, or deposits and
all other sums due or to become due under and pursuant thereto
and all powers, privileges, options and Mortgagor's other
benefits thereunder.
(k) Other Estates and Interests. All other estates,
easements, interests, licenses, rights, titles, powers or
privileges of every kind and character which Mortgagor now has,
or at any time hereafter acquires, in and to any of the
foregoing, including the proceeds from condemnation, or
threatened condemnation, and the proceeds of any and all insur
ance covering any part of the foregoing; and all related parts,
accessions and accessories to any of the foregoing and all
replacements or substitutions therefor, as well as all other
Improvements, Fixtures and Equipment, Leases, Utilities Capacity
and Appurtenances now or hereafter placed thereon or accruing
thereto.
Section 1.2 Habendum and Title Warranty. Mortgagor
represents that Mortgagor is the lawful owner of the Mortgaged
Property with good title and has the right and authority to
mortgage and convey the Mortgaged Property, and that the
Mortgaged Property is free and clear of all liens, claims and
encumbrances (except only those expressly referred to or
described in Exhibit B) (collectively the "Permitted
Encumbrances"). Mortgagor hereby binds Mortgagor and Mortgagor's
successors and assigns to forever WARRANT and DEFEND the
Mortgaged Property and every part of it unto the Mortgagee, its
successors and assigns, against the claims and demands of every
person whomsoever lawfully claiming or to claim it or any part of
it (such warranty to supersede any provision contained in this
Mortgage limiting the liability of Mortgagor) by, through and
under Mortgagor, but not otherwise; subject, however, to the
Permitted Encumbrances.
ARTICLE 2
THE DEBT SECURED
Section 2.1 Mortgage to Secure Designated Obligations.
This Mortgage secures all of the following present and future
debt and obligations:
(a) Notes. All indebtedness now or hereafter
evidenced and to be evidenced by (i) a promissory note dated
November 27, 1992 in the face amount of Twenty-Three Million Two
Hundred Sixty-One Thousand Three Hundred Seventeen and 66/100
Dollars ($23,261,317.66), executed by Trammell Crow Real Estate
Investors (now known as American Industrial Properties REIT),
(ii) a promissory note dated November 27, 1992 in the face amount
of Nineteen Million One Hundred Forty-Three Thousand Six Hundred
Forty-Six and 92/100 Dollars ($19,143,646.92), bearing interest
at the rate or rates therein stated, executed by Trammell Crow
Real Estate Investors (now known as American Industrial
Properties REIT) and (iii) any and all past, concurrent or future
modifications, extensions, renewals, rearrangements, replacements
and increases of such notes (collectively, the "Notes").
(b) Settlement Agreement and Related Agreements. All
obligations and indebtedness of Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership to Mortgagee
which are evidenced by or created or incurred under (i) an
agreement titled Settlement Agreement dated as of May 22, 1996,
entered into by and between Mortgagee, Mortgagor, Patapsco #1
Limited Partnership and Patapsco #2 Limited Partnership (the
"Settlement Agreement"). Mortgagor, Patapsco #1 Limited
Partnership and Patapsco #2 Limited Partnership are hereinafter
collectively referred to as "Obligor", (ii) all agreements
provided for in the Settlement Agreement, including any
mortgages, deeds of trust, security agreements and pledge
agreements, and (iii) the Release Agreement, dated as of May 22,
1996, executed by and between Mortgagor and Mortgagee and
provided for in the Settlement Agreement.
(c) Other Specified Obligations. All other
obligations, if any, described or referred to in any other place
in this Mortgage.
(d) Advances and Other Obligations Pursuant to this
Mortgage's Provisions. Any and all sums and the interest which
accrues on them as provided in this Mortgage which Mortgagee may
advance or which Mortgagor may owe Mortgagee pursuant to this
Mortgage on account of Mortgagor's failure to keep, observe or
perform any of Mortgagor's covenants under this Mortgage.
(e) Obligations under Credit Documents. All present
and future debts and obligations under or pursuant to (1) any
instruments, including but not limited to any agreement executed
by Mortgagor or any Obligor pursuant to the Settlement Agreement
("Credit Documents") now or in the future governing, evidencing,
guaranteeing or securing or otherwise relating to payment of all
or any part of the debt evidenced by the Notes, and/or the
Settlement Agreement, and (2) all supplements, amendments,
restatements, renewals, extensions, rearrangements, increases,
expansions or replacements of them.
(f) All Other Debt. All other present and future debt
or other obligations of any Obligor now or hereafter held or
owned by Mortgagee, whether direct or indirect, primary or
secondary, fixed or contingent, several, joint or joint and
several, and regardless of how incurred, evidenced, guaranteed or
otherwise secured, which absolutely or contingently creates any
financial obligation.
Section 2.2 Debt Defined. The term "Debt" means and
includes the Notes and all other debt and obligations described
or referred to in Section 2.1. The Debt includes interest and
other obligations accruing or arising after (a) commencement of
any case under any bankruptcy or similar laws by or against any
Obligor or (b) the obligations of any Obligor shall cease to
exist by operation of law or for any other reason. The Debt also
includes all reasonable attorneys' fees and any other expenses
incurred by Mortgagee in enforcing any of the Credit Documents.
All liens, assignments and security interests created,
represented or continued by this Mortgage, both present and
future, shall be first, prior and superior to any lien,
assignment, security interest, charge, reservation of title or
other interest heretofore, concurrently or subsequently suffered
or granted by Mortgagor or Mortgagor's successors or assigns,
except only statutory super priority liens for nondelinquent
taxes and those other liens (if any) expressly identified and
stated in this Mortgage to be senior.
ARTICLE 3
SECURITY AGREEMENT
Section 3.1 Grant of Security Interest. Without limiting
any of the provisions of this Mortgage, Mortgagor, as Debtor, and
referred to in this Article as "Debtor" (whether one or more)
hereby grants to Mortgagee, as Secured Party, and referred to in
this Article as "Secured Party" (whether one or more), a security
interest in all of Debtor's remedies, powers, privileges, rights,
titles and interests (including all of Debtor's power, if any, to
pass greater title than it has itself) of every kind and
character now owned or hereafter acquired, created or arising in
and to (i) the Mortgaged Property (including both that now and
that hereafter existing) to the full extent that the Mortgaged
Property may be subject to the Uniform Commercial Code of the
state or states where the Mortgaged Property is situated (the
"UCC"), (ii) all equipment, accounts, general intangibles,
fixtures, inventory, chattel paper, notes, documents and other
personal property owned by Debtor and used, intended or acquired
for use, on, or in connection with the use or operation of, the
Mortgaged Property, or otherwise related to the Mortgaged
Property, and all products and proceeds of it, including all
security deposits under Leases now or at any time hereafter held
by or for Debtor's benefit, all monetary deposits which Debtor
has been required to give to any public or private utility with
respect to utility services furnished to the Mortgaged Property,
all funds, accounts, instruments, accounts receivable, documents,
trademarks, trade names and symbols used in connection therewith,
and notes or chattel paper arising from or by virtue of any
transactions related to the Mortgaged Property, all permits,
licenses, franchises, certificates, and other rights and
privileges obtained in connection with the Mortgaged Property,
and all guaranties and warranties obtained with respect to all
improvements, equipment, furniture, furnishings, personal
property and components of any thereof located on or installed at
the Mortgaged Property and (iii) the following described
property:
(a) Contracts. All contracts now or hereafter entered
into by and between Debtor and any general contractor or between
Debtor and any other party (other than any commitment or
agreement by any lender or investor to finance or invest in
Debtor or any of the Mortgaged Property), as well as all right,
title and interest of Debtor under any subcontracts, providing
for the construction (original, restorative or otherwise) of any
improvements to or on any of the Mortgaged Property or the
furnishing of any materials, supplies, equipment or labor in
connection with any such construction;
(b) Plans. All of the plans, specifications and
drawings (including plot plans, foundation plans, floor plans,
elevations, framing plans, cross-sections of walls, mechanical
plans, electrical plans and architectural and engineering plans
and architectural and engineering studies and analyses)
heretofore or hereafter prepared by any architect, engineer or
other design professional and owned by and in the possession of
Debtor, in respect of any of the Mortgaged Property;
(c) Design, Agreements. All agreements now or
hereafter entered into by Debtor with any person or entity in
respect of architectural, engineering, design, management,
development or consulting services rendered or to be rendered in
respect of planning, design, inspection or supervision of the
construction, management or development of any of the Mortgaged
Property; and
(d) Bonds. Any completion bond, performance bond and
labor and material payment bond and any other bond relating to
the Mortgaged Property or to any contract providing for
construction of improvements to any of the Mortgaged Property,
together with all substitutions for and proceeds of any of the
foregoing received upon the rental, sale, exchange, transfer,
collection or other disposition or substitution of it and
together with all general intangibles related to any of the
foregoing Property now owned by Debtor or existing or hereafter
acquired, created or arising. All the property described or
referred to in this Section is collectively referred to as the
"Collateral". The Mortgaged Property and the Collateral are
collectively referred to as the "Property". In the event of any
express inconsistency between the provisions of this Section and
Article 9 regarding any Lease, the provisions of Article 9, to
the extent valid, enforceable and in effect, shall govern and
control.
Section 3.2 Debtor's Covenants Concerning Personalty
Subject to the UCC. Debtor covenants and agrees with Secured
Party that in addition to and cumulative of any other remedies
granted in this Mortgage to Secured Party, upon or at any time
after the occurrence of an Event of Default (defined in
Article 6):
(a) Secured Party is authorized, in any legal manner
and without breach of the peace, to take possession of the
Collateral (Debtor hereby WAIVING all claims for damages arising
from or connected with any such taking) and of all books, records
and accounts relating thereto and to exercise without
interference from Debtor any and all rights which Debtor has with
respect to the management, possession, operation, protection or
preservation of the Collateral, including the right to sell or
rent the same for the account of Debtor and to deduct from such
sale proceeds or such rents all costs, expenses and liabilities
of every character incurred by Secured Party in collecting such
sale proceeds or such rents and in managing, operating,
maintaining, protecting or preserving the Collateral and to apply
the remainder of such sales proceeds or such rents on the Debt in
such manner as Secured Party may elect. Secured Party may take
possession of Debtor's premises to store any Collateral and to
conduct any sale as provided for herein, all without compensation
to Debtor. All reasonable and actual costs, expenses, and
liabilities incurred by Secured Party in collecting such sales
proceeds or such rents, or in managing, operating, maintaining,
protecting or preserving such properties, if not paid out of such
sales proceeds or such rents as hereinabove provided, shall
constitute a demand obligation owing by Debtor and shall bear
interest from the date of expenditure until paid at the Past Due
Rate (as defined in Article 7 below), all of which shall
constitute a portion of the Debt. If necessary to obtain the
possession provided for above, Secured Party may invoke any and
all legal remedies to dispossess Debtor, including specifically
one or more actions for forcible entry and detainer. In
connection with any action taken by Secured Party pursuant to
this Section, Secured Party shall not be liable for any loss
sustained by Debtor resulting from any failure to sell or let the
Collateral, or any part thereof, or from other act or omission of
Secured Party with respect to the Collateral unless such loss is
caused by the gross negligence or willful misconduct of Secured
Party, nor shall Secured Party be obligated to perform or
discharge any obligation, duty, or liability under any sale or
lease agreement covering the Collateral or any part thereof or
under or by reason of this instrument or the exercise of rights
or remedies hereunder.
(b) Secured Party may, without notice except as
hereinafter provided, sell the Collateral or any part thereof at
public or private sale (with or without appraisal or having the
Collateral at the place of sale) for cash, upon credit, or for
future delivery, and at such price or prices as Secured Party may
deem best, and Secured Party may be the purchaser of any and all
of the Collateral so sold and may apply upon the purchase price
therefor any of the Debt and thereafter hold the same absolutely
free from any right or claim of whatsoever kind. Upon any such
sale Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the property sold
absolutely free from any claim or right of whatsoever kind,
including any equity or right of redemption, stay or appraisal
which Debtor has or may have under any rule of law or statute now
existing or hereafter adopted. To the extent notice is required
by applicable law, Secured Party shall give Debtor written notice
at the address set forth herein (which shall satisfy any
requirement of notice or reasonable notice in any applicable
statute) of Secured Party's intention to make any such public or
private sale. Such notice (if any is required by applicable law)
shall be personally delivered or mailed, postage prepaid, at
least ten (10) calendar days before the date fixed for a public
sale, or at least (10) calendar days before the date after which
the private sale or other disposition is to be made, unless the
Collateral is of a type customarily sold on a recognized market,
is perishable or threatens to decline speedily in value. Such
notice (if any is required by applicable law), in case of public
sale, shall state the time and place fixed for such sale or, in
case of private sale or other disposition other than a public
sale, the time after which the private sale or other such
disposition is to be made. Any public sale shall be held at such
time or times, within the ordinary business hours and at such
place or places, as Secured Party may fix in the notice of such
sale. At any sale the Collateral may be sold in one lot as an
entirety or in separate parcels as Secured Party may determine.
Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at any time and
place fixed for the sale, and such sale may be made at any time
or place to which the same may be so adjourned. In case of any
sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party
until the selling price is paid by the purchaser thereof, but
Secured Party shall incur no liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold, and
in case of any such failure, such Collateral may again be sold
upon like notice. Each and every method of disposition described
in this Section shall constitute disposition in a commercially
reasonable manner. Mortgagor, to the extent applicable, shall
remain liable for any deficiency.
(c) Secured Party shall have all the rights of a
secured party after default under the UCC and in conjunction
with, in addition to or in substitution for those rights and
remedies:
(i) Secured Party may require Debtor to assemble the
Collateral and make it available at a place Secured Party
designates which is mutually convenient to allow Secured Party to
take possession or dispose of the Collateral; and
(ii) it shall not be necessary that Secured Party take
possession of the Collateral or any part thereof before the time
that any sale pursuant to the provisions of this Article is
conducted and it shall not be necessary that the Collateral or
any part thereof be present at the location of such sale; and
(iii) before application of proceeds of disposition of
the Collateral to the Debt, such proceeds shall be applied to the
reasonable and actual expenses of retaking, holding, preparing
for sale or lease, selling, leasing and the like and the
reasonable and actual attorneys' fees and legal expenses incurred
by Secured Party, each Obligor, to the extent applicable, to
remain liable for any deficiency; and
(iv) the sale by Secured Party of less than the whole
of the Collateral shall not exhaust the rights of Secured Party
hereunder, and Secured Party is specifically empowered to make
successive sale or sales hereunder until the whole of the
Collateral shall be sold; and, if the proceeds of such sale of
less than the whole of the Collateral shall be less than the
aggregate of the indebtedness secured hereby, this Mortgage and
the security interest created hereby shall remain in full force
and effect as to the unsold portion of the Collateral just as
though no sale had been made; and
(v) in the event any sale hereunder is not completed or
is defective in the opinion of Secured Party, such sale shall not
exhaust the rights of Secured Party hereunder and Secured Party
shall have the right to cause a subsequent sale or sales to be
made hereunder; and
(vi) any and all statements of fact or other recitals
made in any bill of sale or assignment or other instrument
evidencing any foreclosure sale hereunder as to nonpayment of any
indebtedness or as to the occurrence of any Event of Default, or
as to Secured Party having declared all of such indebtedness to
be due and payable, or as to notice of time, place and terms of
sale and the Collateral to be sold having been duly given, as to
any other act or thing having been duly done by Secured Party,
shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(vii) Secured Party may appoint or delegate any one or
more persons as agent to perform any act or acts necessary or
incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but in the name and on behalf
of Secured Party; and
(viii) demand of performance, advertisement and
presence of property at sale are hereby WAIVED and Secured Party
is hereby authorized to sell hereunder any evidence of Debt it
may hold as security for the secured indebtedness. All demands
and presentments of any kind or nature are expressly WAIVED by
Debtor. Debtor WAIVES the right to require Secured Party to
pursue any other remedy for the benefit of Debtor and agrees that
Secured Party may proceed against any Obligor for the amount of
the Debt owed to Secured Party without taking any action against
any other Obligor or any other person or entity and without
selling or otherwise proceeding against or applying any of the
Collateral in Secured Party's possession.
Section 3.3 UCC Rights are not Exclusive. Should Secured
Party elect to exercise its rights under the UCC as to part of
the personal property or fixtures described in this Mortgage,
such election shall not preclude Secured Party from exercising
any or all of the rights and remedies granted by the other
Articles of this Mortgage as to the remaining personal property
or fixtures.
Section 3.4 Mortgage is Also Financing Statement. This
Mortgage is intended to be a security agreement pursuant to the
Uniform Commercial Code for any of the items specified above as
part of the Mortgaged Property and Collateral which, under
applicable law, may be subject to a security interest pursuant to
the Uniform Commercial Code, and Mortgagor hereby grants
Mortgagee a security interest in said items. This Mortgage shall
also be deemed to be a fixture financing statement within the
meaning of Wis. Stat. Section 409.402. For such purposes the
following information is set forth:
(a) Name and Address American Industrial Properties REIT
of Debtor: 6220 North Beltline, Suite 205
Irving, Texas 75063
(b) Name and Address Manufacturers Life Insurance Company &
of Secured Party: Manufacturers Life Insurance
Company, U.S.A.
200 Bloor Street East
Toronto, Ontario M4W 1E5
(c) Description of the Any fixtures described or referred
types (or items) to herein and included as the
of property Property.
covered by this
Financing Statement:
(d) Description of real See Exhibit A.
estate to which
collateral is
attached or upon
which it is located:
(e) Some of the above-described collateral are or are to
become fixtures upon which the real estate described in Exhibit
A, the record owner of which is Borrower, and this Financing
Statement is to be filed for record in the real estate records.
(f) Products of the foregoing collateral are also covered.
Mortgagor agrees that Mortgagee may file this Mortgage, or a
reproduction thereof, in the real estate records or other
appropriate index, as a financing statement for any of the items
specified above as part of the Mortgaged Property. Any
reproduction of this Mortgage or of any other security agreement
or financing statement shall be sufficient as a financing
statement.
Section 3.5 No other Financing Statements on the
Collateral. So long as any amount remains unpaid on the Debt,
Debtor will not execute and there will not be filed in any public
office any financing statements affecting the Collateral other
than financing statements in favor of Secured Party under this
Mortgage, unless prior written specific consent and approval of
Secured Party shall have been first obtained.
Section 3.6 Secured Party May File Financing and
Continuation Statements. Secured Party is authorized to file
this Mortgage, a financing statement or statements and one or
more continuation statements in any jurisdiction where Secured
Party deems it necessary, and at Secured Party's request, Debtor
will join Secured Party in executing one or more financing
statements, continuation statements or both pursuant to the UCC,
in form satisfactory to Secured Party, and will pay the costs of
filing or recording them, in all public offices at any time and
from time to time whenever filing or recording of this Mortgage,
any financing statement or any continuation statement is deemed
by Secured Party or its counsel to be necessary or desirable.
Section 3.7 Fixtures. Certain of the Collateral is or
will become "fixtures" (as that term is defined in the UCC) on
the Real Property, and when this Mortgage is filed for record in
the real estate records of the county where such fixtures are
situated, it shall also automatically operate as a financing
statement upon such of the Collateral which is or may become
fixtures.
Section 3.8 Assignment of Non-UCC Personal Property. To
the extent that any of the Collateral is not subject to the UCC
of the state or states where it is situated, Debtor hereby
assigns to Secured Party all of Debtor's right, title and
interest in the Collateral to secure the Debt. Release of the
lien of this Mortgage shall automatically terminate this
assignment.
Section 3.9 Debtor's Warranties Concerning Collateral.
Debtor warrants and represents to Secured Party that Debtor is
the legal and equitable owner and holder of the Collateral free
of any adverse claim and free of any security interest or
encumbrance, except only for the security interest granted hereby
in the Collateral and those other security interests (if any)
expressly referred to or described in this Mortgage (such
warranty to supersede any provision contained in this Mortgage
limiting the liability of Mortgagor). Debtor agrees to defend
the Collateral and its proceeds against all claims and demands of
any person at any time claiming the Collateral, its proceeds or
any interest in either. Debtor also warrants and represents that
Debtor has not heretofore signed any financing statement directly
or indirectly affecting the Collateral or any part of it which
has not been completely terminated of record, and no such
financing statement signed by Debtor is now on file in any public
office except only those statements (if any) true and correct
copies of which Debtor has actually delivered to Secured Party.
Section 3.10 Standard of Care. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of any of the Collateral in its possession if it
takes such action for that purpose as Debtor requests in writing,
but failure of Secured Party to comply with such request shall
not of itself be deemed a failure to exercise reasonable care,
and no failure of Secured Party to take any action not so
requested by Debtor shall be deemed a failure to exercise
reasonable care in the custody or preservation of any such
Collateral.
Section 3.11 Change Terms, Release Collateral. Secured
Party may extend the time of payment, arrange for payment in
installments, otherwise modify the terms of, or release, any of
the Collateral, without thereby incurring responsibility to
Debtor or discharging or otherwise affecting any liability of
Debtor. Secured Party shall not be required to take steps
necessary to preserve any rights against prior parties to any of
the Collateral.
ARTICLE 4
MORTGAGOR'S COVENANTS
Section 4.1 Covenants for the Benefit of Mortgagee. To
better secure the Debt, Mortgagor covenants and agrees with the
Mortgagee and its successors and assigns for the use and benefit
of Mortgagee and with the intent that the Mortgagee may enforce
these covenants, that:
(a) Liens, etc. and Remedies Cumulative. No lien,
assignment, security interest, guaranty, right or remedy in favor
of Mortgagee granted in, secured by or ancillary to this Mortgage
shall be considered as exclusive, but each shall be cumulative of
all others which Mortgagee may now or hereafter have.
(b) Mortgagor Waives Marshaling of Assets and Sale in
Inverse Order of Alienation Rights. Mortgagor hereby irrevocably
WAIVES all rights of marshaling of assets or sale in inverse
order of alienation in the event of foreclosure of this or any
other security.
(c) Mortgagor Will Correct Title Defects. If at any
future time any material and adverse defect should be found to
exist in the title to any of the Property, Mortgagor agrees to
promptly commence and thereafter diligently proceed to cure the
defect and defend the title. If any lien or encumbrance junior,
equal or superior in rank or priority to the lien of this
Mortgage should be discovered or arise at any time in the future
then, unless Mortgagee is the only holder of it, or Mortgagee has
given specific prior written consent to it, Mortgagor agrees to
promptly discharge, remove, bond around or insure around it from
the Mortgaged Property. Mortgagor will notify Mortgagee in
writing within five (5) days of the time that Mortgagor becomes
aware of the filing of any mortgage, lien, security interest,
financing statement or other security device whatsoever against
the Property.
(d) Insurance Requirements. At all times before the
final termination of this Mortgage, Mortgagor agrees to provide,
maintain and keep in force the insurance coverages relating to
the Property substantially similar to those maintained by
Mortgagor as of the date of execution of this Mortgage, including
but not limited to liability coverage of at least $2,000,000.
Mortgagor agrees to have each such policy modified within thirty
(30) days of the date of this Agreement to (i) name Mortgagee as
additional insured, and (ii) expressly prohibit cancellation or
modification of insurance without the insurer agreeing to
endeavor to give thirty (30) days' written notice to Mortgagee.
Mortgagor agrees to furnish due proof of payment of the premiums
for all such insurance to Mortgagee promptly after each such
payment is made and in any case at least fifteen (15) days before
payment becomes delinquent.
(e) Mortgagee's Rights to Collect Insurance Proceeds.
Mortgagor hereby assigns to Mortgagee the exclusive right to
collect any and all monies that may become payable under any
insurance policies covering any part of the Property, or any risk
to or about the Property. Mortgagee shall fully cooperate with
and assist Mortgagor with respect to the filing of insurance
claims and the collection of insurance proceeds so long as
Mortgagee reasonably concurs with Mortgagor's actions with
respect thereto and all reasonable and actual costs incurred by
Mortgagee in connection with such cooperation and participation
are promptly paid or reimbursed by Mortgagor upon the request of
Mortgagee.
(f) Effects of Foreclosure on Insurance Policies and
Post-foreclosure Event Claims. Foreclosure of this Mortgage
shall automatically constitute foreclosure upon all policies of
insurance insuring any part of or risk to the Property and all
claims thereunder arising from post-foreclosure events. The
successful bidder or bidders for the Property at foreclosure, as
their respective interests may appear, shall automatically accede
to all of Mortgagor's rights in, under and to such policies and
all post-foreclosure event claims, and such bidder(s) shall be
named as insured(s) on request, whether or not the sheriff's deed
or bill of sale to any such successful bidder mentions insurance.
(g) Application of Insurance Proceeds Collected Before
Foreclosure. In the event of loss or destruction of all or any
portion of the Property, Mortgagor may, at its option, unless an
Event of Default has occurred, either (i) cause Mortgagee to
apply all such monies or any part thereof toward the payment of
the Debt , whether the same be then due or not, such application
to be made in such manner and order as Mortgagee shall elect, and
any balance of insurance proceeds remaining after such
application shall be delivered to Mortgagor or (ii) cause
Mortgagee to disburse to Mortgagor, from an interest-bearing
account maintained with Mortgagee, any insurance proceeds
received to be used by Mortgagor solely for the repair,
rebuilding and restoration (hereinafter collectively referred to
as the "Restoration Work") of the Property; provided, however,
that the obligation of Mortgagee to disburse to Mortgagor such
insurance proceeds shall be and is hereby made subject to
compliance by Mortgagor with the following terms, conditions and
procedures (hereinafter collectively referred to as the
"Disbursement Procedures"), to wit:
(1) There shall have been submitted to Mortgagee,
and Mortgagee shall have approved, which approval shall not be
unreasonably withheld, the following:
(i) Plans and Specifications for the
Restoration Work prepared by an architect reasonably satisfactory
to Mortgagee (hereinafter referred to as the "Restoration
Architect");
(ii) a cost breakdown and analysis
(hereinafter referred to as the "Estimated Cost") certified to
Mortgagee by the Restoration Architect, stating that the
Restoration Work can be completed in accordance with the above-
mentioned Plans and Specifications at the price set forth in the
"Restoration Contract" referred to herein;
(iii) a general construction contract (herein-
after referred to as the "Restoration Contract") with a general
contractor (hereinafter referred to as the "Restoration
Contractor") acceptable to Mortgagee pursuant to which the
Restoration Work will be performed;
(iv) reasonably satisfactory evidence of the
compliance of the Restoration Work with all zoning ordinances,
restrictive covenants and other use restrictions and of the
availability of all governmental licenses and permits necessary
for the performance of the Restoration Work;
(2) The Estimated Cost of the Restoration Work
must not exceed the proceeds of the insurance and other funds of
Mortgagor that are available for application thereto;
(3) After and subject to compliance with all of
the foregoing, the amount held by Mortgagee and available for
restoration shall be disbursed by Mortgagee to Mortgagor
periodically (but not more frequently than monthly) as the
Restoration Work progresses, as follows:
(i) Mortgagee shall have received in
connection with each such requested disbursement a draw request
from the Restoration Contractor certifying that all work
completed to the date of such draw request has been performed in
accordance with the Plans and Specifications as approved by
Mortgagee in a good and workmanlike manner, which draw request
shall have been approved by the Restoration Architect;
(ii) Mortgagee shall have received a
certification from the Restoration Architect that the remaining
amount of funds held by Mortgagee, including funds held pursuant
to subparagraph 2 above, are sufficient to complete the
Restoration Work in accordance with the Plans and Specifications
as approved by Mortgagee;
(iii) Mortgagee shall have also received
evidence satisfactory to Mortgagee (including, without
limitation, title certifications, lien waivers and affidavits)
that all governmental licenses and permits necessary for the
performance of the Restoration Work have been secured and the
first-in-priority status of this Mortgage continues without addi
tional exceptions and that no party claims or has a right to
claim any lien by virtue of the Restoration Work theretofore
completed (except such lien or claim as will be dissolved by
payment of the requested disbursement);
(4) Unless otherwise agreed to in writing by
Mortgagee, each periodic disbursement shall be made subject to a
retainage of ten percent (10%) of the amount requested, and the
aggregate of the amount so retained shall be disbursed by
Mortgagee to Mortgagor no earlier than thirty-one (31) days after
the Restoration Work is completed in accordance with said Plans
and Specifications (as evidenced by the certificate of the
Restoration Architect), and Mortgagee shall have received
evidence satisfactory to Mortgagee that all costs incurred in
connection with the Restoration Work have been paid in full and
that no party claims or has a right to claim any lien affecting
the Property and arising out of the Restoration Work; and
(5) Upon termination or expiration of the
moratorium period or any extension thereof as provided for in the
Settlement Agreement, Mortgagee is hereby authorized to apply any
amounts held by Mortgagee pursuant to any subparagraph of this
Section 4.1 against the outstanding Debt.
(h) Application of Insurance Proceeds Collected After
Foreclosure. Unless Mortgagee or Mortgagee's representative
reserves at the foreclosure sale the right to collect any uncol
lected insurance proceeds recoverable for events occurring before
foreclosure (in which event the successful bidder at the sale, if
not Mortgagee, shall have no interest in such proceeds and
Mortgagee shall apply them, if and when collected, to the Debt in
such order and manner as Mortgagee shall then elect and remit any
remaining balance to Mortgagor or to such other person or entity
as is legally entitled to them), all proceeds of all such
insurance which are not so reserved by Mortgagee at the
foreclosure sale and are not actually received by Mortgagee until
after foreclosure shall be the property of the successful bidder
or bidders at foreclosure, as their interests may appear, and
Mortgagor shall have no interest in them and shall receive no
credit for them.
(i) Mortgagee Not Obligated to Require, Provide or
Evaluate Insurance. Mortgagee shall have no duty to Mortgagor or
anyone else to either require or provide any insurance or to
determine the adequacy or disclose any inadequacy of any
insurance.
(j) Mortgagee May Elect to Insure Only its Own
Interests. If Mortgagee elects at any time or for any reason to
purchase insurance relating to the Property, it shall have no
obligation to cause Mortgagor or anyone else to be named as an
insured, to cause Mortgagor's or anyone else's interests to be
insured or protected or to inform Mortgagor or anyone else that
his or its interests are uninsured or underinsured.
(k) Mortgagor Will Correct Defects, Provide Further
Assurances and Papers. Upon Mortgagee's reasonable request,
Mortgagor will promptly correct any defect which hereafter may be
discovered in the text, execution or acknowledgment of the Notes,
this Mortgage or any Credit Document or in the description of any
of the Property, and will deliver such further assurances and
execute such additional papers as in the opinion of Mortgagee or
its legal counsel shall be necessary, proper or appropriate (1)
to better convey and assign to Mortgagee all the Property
intended or promised to be conveyed or assigned or (2) to
properly evidence or give notice of the Debt or its intended or
promised security.
(l) Mortgagor Will Pay Taxes and Impositions and
Furnish Receipts. Mortgagor agrees at its own cost and expense
to pay and discharge all taxes, assessments, maintenance charges,
permit fees, impact fees, development fees, capital recovery
charges, utility reservation and standby fees and all other
similar and dissimilar impositions of every kind and character
("Impositions") charged, levied, assessed or imposed against any
interest in any of the Property, as they become payable and
before they become delinquent; provided, however, that Mortgagor
shall have the right to actively contest such Impositions in good
faith if Mortgagor shall establish sufficient reserves to pay any
such contested Impositions that are later determined to be
properly owed by Mortgagor; and provided, further, that no
attempts shall be made to foreclose any lien for such
Impositions. Mortgagor agrees to furnish due proof of such
payment to Mortgagee promptly after payment and before
delinquency. Mortgagor also agrees to hereafter file all income,
franchise and other tax returns within the time frames that they
are required to be filed and pay all taxes shown thereon to be
due, including interest and penalties, except for those taxes
which are being diligently contested in good faith and for
payment of which adequate reserves have been set aside by
Mortgagor.
(m) Mortgagor to Pay Monthly Tax and Insurance
Deposits on Request. If and after Mortgagee requests it after
the occurrence of an Event of Default, Mortgagor agrees to pay
the monthly tax and insurance premium deposits required by
Article 8 and to provide Mortgagee any additional sums needed to
pay the taxes and insurance premiums for the Property when due.
(n) Mortgagor Will Maintain Property and Won't Remove
Improvements. Mortgagor agrees to keep, preserve and maintain
all elements of the Property in a good state of repair and
condition and to keep all equipment and stores of supplies needed
for its proper and full operation on the Property, well stocked
and in good operating condition. Except for the demolition and
construction of new Improvements reasonably necessary to
construct and complete tenant finish improvements required under
any Lease of all or any portion of the Mortgaged Property or to
ready existing space for leasing, Mortgagor will not tear down,
damage or attempt to remove, demolish or materially alter or
enlarge any elements of the Property, without Mortgagee's prior
written consent. Mortgagor shall have the right, without such
consent, to remove and dispose of, free from the lien,
assignments and security interests of this Mortgage, such
Fixtures and Equipment as from time to time become worn out or
obsolete, provided that either (a) simultaneously with or before
such removal any such equipment shall be replaced with other
equipment of a value at least equal to that of the replaced
equipment and free from any title retention or security agreement
or other encumbrance and from any reservation of title, and by
such removal and replacement Mortgagor shall be deemed to have
subjected such equipment to the lien, assignments and security
interests of this Mortgage or (b) any net cash proceeds received
from such disposition shall be paid over promptly to Mortgagee to
be applied to the Debt in the order determined by Mortgagee in
its sole discretion. Mortgagor shall not grant, join in or
consent to any lien, security interest, easement, license, use or
other charge or interest covering or affecting all or any part of
the Property or initiate, join in and consent to the change in
any private restrictive covenant, zoning ordinance or other
public or private restrictions limiting or defining the uses
which may be made of the Property or any part thereof without the
prior written consent of Mortgagee.
(o) Mortgagor Will Protect Property from Mechanic's
Liens. Mortgagor agrees to promptly pay all bills for labor and
materials incurred in connection with the Property and to prevent
the fixing of any lien against any part of the Property, even if
it is inferior to this Mortgage, for any such bill which may be
legally due and payable; provided, however, that Mortgagor shall
have the right to actively contest any such bills in good faith
if Mortgagor shall provide a bond in form, substance and amount
reasonably satisfactory to Mortgagee covering and affecting any
lien for any such bills.
(p) Mortgagee's Inspection and Discussion Rights.
Mortgagor agrees, after the occurrence of an Event of Default, to
permit Mortgagee and its agents, representatives and employees at
all reasonable times during business hours to go upon, examine,
inspect and remain on the Mortgaged Property, to assist and
cooperate, and require Mortgagor's employees, agents and
contractors to cooperate, with Mortgagee and to furnish to
Mortgagee on request all pertinent information concerning the
physical and economic condition, development and operation of the
Mortgaged Property. Mortgagee may discuss the Mortgaged Property
directly with any of Mortgagor's officers and managers.
(q) Mortgagee May Grant Releases without Impairing
Other Collateral or Rights. At all times, Mortgagee shall have
the right to release any part of the Property or any other
security from this Mortgage or any other security instrument or
device without releasing any other part of the Property or any
other security, without affecting Mortgagee's lien, assignment or
security interest as to any property or rights not released and
without affecting or impairing the liability of any maker,
guarantor or surety on the Debt or other obligation.
(r) Mortgagor Will Notify Mortgagee of Legal
Proceedings and Defend Lien; Mortgagee May Act if Mortgagor
Doesn't. Mortgagor will notify Mortgagee in writing promptly of
the commencement of any legal proceedings affecting any part of
the Property and will engage and pay legal counsel to answer and
to defend and preserve Mortgagee's liens, rights and interests
and their rank and priority. If Mortgagor fails or refuses to
promptly begin or to diligently continue any such acts, then
Mortgagee may elect to do so and may take such action on behalf
of Mortgagor, in Mortgagor's name and at Mortgagor's expense.
(s) Legal Compliance, Governmental Notices. Mortgagor
will operate the Property and conduct any repairs and renovation
of all or any portion of the Real Property in full compliance
with all requirements of governmental and quasi-governmental
authorities having jurisdiction over Mortgagor or the Property
and will comply with and punctually perform all of the covenants,
agreements and obligations imposed upon it or the Property.
(t) Notice of Material Change. Immediately upon
acquiring knowledge of any material adverse change in the assets,
liabilities, financial condition, business, operations, affairs
or circumstances of any Obligor, Mortgagor will notify Mortgagee
in writing thereof, setting forth the nature of such change in
reasonable detail. Mortgagor will take, and will cause to be
taken, all such steps as are necessary or appropriate to remedy
promptly any such change.
(u) Notice of Default to Mortgagee. Immediately upon
acquiring knowledge thereof, Mortgagor will notify Mortgagee by
telephone (and confirm such notice in writing within two (2)
days) of the existence of any Event of Default, specifying the
nature and duration thereof. In no event shall silence by
Mortgagee be deemed a waiver of a Default or of an Event of
Default.
(v) Notice of Condemnation and Other Proceedings.
Promptly upon obtaining written notice of the institution of any
proceedings for the condemnation of the Property or any portion
thereof, or any other proceedings arising out of injury or damage
to the Property, or any portion thereof, Mortgagor will notify
Mortgagee in writing of the pendency of such proceedings.
Mortgagor shall, at its expense, diligently prosecute any such
proceedings, and shall consult with Mortgagee, in the carrying on
or defense of any such proceedings.
(w) Notice of Name or Address Change. Mortgagor will
not change Mortgagor's name or the location of its chief execu
tive office without first notifying Mortgagee in writing of such
change at least thirty (30) days before its effective date.
(x) Manager. Mortgagor will, or will cause its
managers to, do and perform any and all acts and things relating
to the management, upkeep and operation of the Property as are
customarily performed by managing agents and owners of properties
comparable to the Property, similarly situated, and shall
otherwise operate the Property, or cause the Property to be
operated, in an efficient manner and in accordance with all legal
requirements and the terms and conditions of this Mortgage and
the other Credit Documents.
Section 4.2 Mortgagor Agrees to Pay or Reimburse
Mortgagee's Expenses. To the extent not prohibited by applicable
law, Mortgagor will pay all reasonable and actual costs and
expenses and reimburse Mortgagee for any and all reasonable and
actual expenditures of every character incurred or expended from
time to time, after the occurrence of an Event of Default
hereunder, in connection with Mortgagee's realizing upon
Mortgagee's security interest in and liens on the Property, and
all reasonable and actual costs and expenses relating to
Mortgagee's exercising any of its rights and remedies under this
Mortgage or any Credit Document or at law, including all
appraisal fees, consulting fees, filing fees, taxes, brokerage
fees and commissions, title review and abstract fees, litigation
report fees, UCC search fees, other fees and expenses incident to
title searches, reports and security interests, escrow fees,
attorneys' fees, legal expenses, court costs, other fees and
expenses incurred in connection with any complete or partial
liquidation of the Property, and all fees and expenses for any
professional services relating to the Property or any operations
conducted in connection with it. Provided, that no right or
option granted by Mortgagor to Mortgagee or otherwise arising
pursuant to any provision of this Mortgage, the Notes or any
Credit Document shall be deemed to impose or admit a duty on
Mortgagee to supervise, monitor or control any aspect of the
character or condition of the Property or any operations
conducted in connection with it for the benefit of Mortgagor or
any person or entity other than Mortgagee. Mortgagor agrees to
indemnify, defend and hold Mortgagee, its shareholders,
directors, officers, agents, attorneys, advisors and employees
(collectively "Indemnified Parties") harmless from and against
any and all loss, liability, obligation, damage, penalty,
judgment, claim, deficiency, expense, action, suit, cost and
disbursement of any kind or nature whatsoever (including
interest, penalties, reasonable attorneys' fees and amounts paid
in settlement), REGARDLESS OF WHETHER CAUSED IN WHOLE OR IN PART
BY THE NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES, imposed on,
incurred by or asserted against the Indemnified Parties growing
out of or resulting from this Mortgage, the Settlement Agreement,
any of the Notes, or any other Credit Document or any transaction
or event contemplated therein (except that such indemnity shall
not be paid to any Indemnified Party to the extent that such
loss, etc. directly results from the gross negligence or willful
misconduct of that Indemnified Party). Any amount to be paid
under this Section by Mortgagor to Mortgagee shall be a demand
obligation owing by Mortgagor to Mortgagee and shall bear
interest from the date of expenditure until paid at the default
rate provided in the Notes. This indemnity provision shall
expressly survive the payment in full of the Debt and the release
of the Property from this Mortgage.
ARTICLE 5
MORTGAGOR'S REPRESENTATIONS AND WARRANTIES
To induce Mortgagee to extend financial accommodations,
Mortgagor makes the warranties and representations set forth in
this Article.
Section 5.1 Organization. Mortgagor is (a) duly
organized, validly existing and in good standing under the laws
of the state of its organization and has full legal right, power
and authority to carry on its business as presently conducted and
to execute, deliver and perform its obligations under this
Mortgage and any other Credit Documents to which Mortgagor is a
party, and (b) duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business
it conducts makes such qualification necessary or desirable.
Mortgagor's execution, delivery and performance of this Mortgage
and any other Credit Documents to which Mortgagor is a party have
been duly authorized by all necessary action under Mortgagor's
organizational documents and otherwise.
Section 5.2 Consents. Mortgagor's execution, delivery
and performance of this Mortgage and any other Credit Documents
to which Mortgagor is a party do not and will not require (i) any
consent of any other person or entity or (ii) any consent, li
cense, permit, authorization or other approval (including foreign
exchange approvals) of any court, arbitrator, administrative
agency or other governmental authority, or any notice to,
exemption by, any registration, declaration or filing with or the
taking of any other action in respect of, any such court,
arbitrator, administrative agency or other governmental
authority.
Section 5.3 No Conflict. Neither execution or delivery
of this Mortgage or any other Credit Document to which Mortgagor
is a party, nor the fulfillment of or compliance with the terms
and provisions hereof or thereof will (i) violate any
constitutional provision, law or rule, or any regulation, order
or decree of any governmental authority or the basic
organizational documents of Mortgagor or (ii) conflict with or
result in a breach of the terms, conditions or provisions of, or
cause a default under, any agreement, instrument, franchise,
license or concession to which Mortgagor is a party or bound.
Section 5.4 Enforceability. Mortgagor has duly and
validly executed, issued and delivered this Mortgage and any
other Credit Documents to which Mortgagor is a party. This
Mortgage and each other Credit Document to which Mortgagor is a
party is in proper legal form for prompt enforcement and is
Mortgagor's valid and legally binding obligation, enforceable in
accordance with its terms.
Section 5.5 Information Accurate. All information
supplied to Mortgagee, concurrently with Mortgagor's execution
of this Mortgage are and will be true, correct and complete in
all material respects.
Section 5.6 Taxes. Mortgagor has filed all tax returns
required to be filed and paid all taxes shown thereon to be due,
including interest and penalties, except for taxes being
diligently contested in good faith and for payment of which
adequate reserves have been set aside.
Section 5.7 Litigation. Except as Mortgagor or Obligor
has previously disclosed to Mortgagee, there is no condemnation
or other action, suit or proceeding pending--or, to the best of
Mortgagor's knowledge, threatened--against or affecting the
Property, at law or in equity, or before or by any governmental
authority, which might result in any material adverse change in
the condition or operation of the Property.
Section 5.8 Mortgagor Solvent. Mortgagor is now solvent,
and no bankruptcy or insolvency proceedings are pending or
contemplated by or--to Mortgagor's knowledge--against Mortgagor.
Mortgagor's liabilities and obligations under this Mortgage and
any other Credit Documents to which Mortgagor is a party do not
and will not render Mortgagor insolvent, cause Mortgagor's
liabilities to exceed Mortgagor's assets or leave Mortgagor with
too little capital to properly conduct all of its business as now
conducted or contemplated to be conducted.
Section 5.9 No False Representation. No representation
or warranty contained in this Mortgage or any other Credit
Document to which Mortgagor is a party and no statement contained
in any certificate, schedule, list, financial statement or other
papers furnished to Mortgagee by or on behalf of Mortgagor
contains--or will contain--any untrue statement of material fact,
or omits--or will omit--to state a material fact necessary to
make the statements contained herein or therein not misleading.
Section 5.10 Title. Mortgagor has good and indefeasible
title to the Property, free and clear of any lien or security
interest except only for liens and security interests which are
either established or expressly permitted by this Mortgage or
other Credit Documents. Except as otherwise expressly permitted
by this Mortgage, the lien and security interest of this Mortgage
will constitute valid and perfected first and prior liens and
security interests on the Property, subject to no other liens,
security interests or charges whatsoever. The Property is free
from damage caused by fire or other casualty.
Section 5.11 Legal Requirements. To the best of
Mortgagor's knowledge, Mortgagor and the Property are in
compliance with all applicable legal requirements and Mortgagor
manages and operates (and will continue to manage and operate)
the Property and its other businesses in accordance with good
industry practices. Mortgagor has not received any notice that
Mortgagor and the property are not in compliance with all
applicable legal requirements.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1 Release for Full Payment and Performance.
Subject to the automatic reinstatement provisions of Section
10.15 below, this Mortgage shall terminate and be of no further
force or effect (and shall be released on Mortgagor's written
request and at Mortgagor's cost and expense) upon full payment of
the Debt and complete performance of all of the obligations of
the Obligors under the Settlement Agreement and the Credit
Documents.
Section 6.2 Events of Default. The occurrence of an
Event of Default under the Settlement Agreement shall constitute
an Event of Default (herein so called) under this Mortgage.
Section 6.3 Remedies. Upon the occurrence of any
Event of Default, and at any time thereafter:
(a) Debt Due. All Debt in its entirety is immediately
due and payable without presentment, demand, notice of intention
to accelerate or notice of acceleration, or other notice of any
kind, except as required by the Settlement Agreement, all of
which are hereby expressly WAIVED, and the liens and security
interests created or intended to be created hereby shall be
subject to foreclosure, repossession and sale in any manner
provided for herein or provided for by law, as Mortgagee may
elect, and Mortgagee may exercise any and all of its rights under
this Mortgage, the Settlement Agreement, the Notes and any of the
other Credit Documents.
(b) Legal Proceedings. Mortgagee shall have the right
and power to proceed by suit or suits in equity or at law,
whether for the specific performance of any covenant or agreement
of Mortgagor contained herein or in aid of the execution of the
powers herein granted, or for foreclosure or the sale of the Prop
erty or any part thereof under the judgment or decree of any
court of competent jurisdiction, or for the enforcement of any
other appropriate legal or equitable remedy.
(c) Foreclosure. Mortgagee may cause the Mortgaged
Property to be sold at a foreclosure sale pursuant to Chapter
846, Wis. Stats.
Section 6.4 Application of Foreclosure Sale Proceeds.
The proceeds of any sale of the Mortgaged Property, and any rents
and other amounts collected by Mortgagee from Mortgagee's
holding, leasing, operating or making any other use of the
Mortgaged Property, shall be applied by Mortgagee (or by the
receiver, if one is appointed) to the extent that funds are
available therefrom in the following order of priority:
(a) To Expenses and Senior Obligation Payments.
First, to the payment of the reasonable and actual costs and
expenses of taking possession of the Mortgaged Property and of
holding, maintaining, using, leasing, repairing, equipping,
manning, improving, marketing and selling it, including (i)
trustees' and receivers' fees, (ii) court costs, (iii) attorneys'
and accountants' fees, (iv) costs of advertisement and brokers'
commissions and (v) payment of any and all Impositions, liens,
security interests or other rights, titles or interests superior
to the lien and security interest of this Mortgage, whether or
not then due and including any prepayment penalties or fees and
any accrued or required interest (except, in the case of
foreclosure proceeds, those senior liens and security interests,
if any, subject to which the Mortgaged Property was sold at such
trustee's sale, and without in any way implying Mortgagee's
consent to the creation or existence of any such prior liens).
(b) To Other Obligations Owed to Mortgagee. Second,
to the payment of all amounts, other than the principal balance
and accrued but unpaid interest, which may be due to Mortgagee
under the Notes, the Settlement Agreement or any other Credit
Document, together with interest thereon as provided therein.
(c) To Accrued Interest on the Debt. Third, to the
payment of all accrued but unpaid interest due on the Debt.
(d) To Debt Principal. Fourth, to the payment of the
principal balance on the Debt and the principal owing under this
Mortgage, the Settlement Agreement and any other Credit Document,
irrespective of whether then matured, and if it is payable in
installments and not matured, then to the installments in such
order as Mortgagee shall elect.
(e) To Junior Lienholders. Fifth, to the extent funds
are available therefor out of the sale proceeds or any rents and,
to the extent known by Mortgagee, to the payment of any debt or
obligation secured by a subordinate mortgage on or security
interest in the Mortgaged Property.
(f) To Mortgagor. Sixth, to Mortgagor, its successors
and assigns, or to whomsoever may be lawfully entitled to receive
such proceeds.
Section 6.5 Mortgagee May Require Abandonment and
Recommencement of Sale. If Mortgagee should commence foreclosure
proceedings, Mortgagee may at any time before the sale is
completed abandon the sale, and may at any time or times
thereafter again commence foreclosure; or, irrespective of
whether foreclosure is commenced by the Mortgagee, Mortgagee may
at any time after an Event of Default institute suit for
collection of the Debt, foreclosure of this Mortgage or any other
remedy or combination of remedies available to Mortgagee. If
Mortgagee should institute suit for collection of the Debt and/or
foreclosure of this Mortgage, Mortgagee may at any time before
the entry of final judgment dismiss it and commence foreclosure
proceedings in accordance with the provisions of this Mortgage.
Section 6.6 Multiple Sales; Mortgage Continues in Effect.
No judicial foreclosure shall extinguish the lien or exhaust the
power of sale under this Mortgage except with respect to the
items of property sold, nor shall it extinguish, terminate or
impair Mortgagor's contractual obligations under this Mortgage,
but such lien and power shall exist for so long as, and may be
exercised in any manner by law or in this Mortgage provided as
often as the circumstances require to give Mortgagee full relief
under this Mortgage, and such contractual obligations shall
continue in full force and effect until final termination of this
Mortgage.
Section 6.7 Mortgagee May Bid and Purchase. Mortgagee
shall have the right to become the purchaser at any sale made
under this Mortgage, being the highest bidder, and credit given
upon all or any part of the Debt shall be the exact equivalent of
cash paid for the purposes of this Mortgage.
Section 6.8 Accelerated Redemption. Mortgagor agrees to
the provisions of 846.103, Wis. Stats., and as the same may be
amended or renumbered from time to time. If Mortgagee in an
action to foreclose its Mortgage waives all right to a judgment
for deficiency and consents to Mortgagor's remaining in
possession of the Mortgaged Property, then the sale of the
Mortgaged Property may be three (3) months from the date after a
foreclosure judgment is entered. In any case, if the Mortgaged
Property has been abandoned, then the sale of the Mortgaged
Property may be two (2) months from the date judgment is entered.
Section 6.9 Right to Receiver. Notwithstanding any other
remedy available to Mortgagee, upon the occurrence of an Event of
Default or at any time after commencement of foreclosure or any
legal proceedings under this Mortgage, Mortgagee may, at
Mortgagee's election, make application to a court of competent
jurisdiction for appointment of a receiver of the Property, as a
matter of strict right, without notice to Mortgagor, without bond
and without regard to the adequacy of the value of the Property
for the repayment of the Debt, and Mortgagor hereby irrevocably
consents to such an appointment. Any receiver shall have all the
usual powers and duties of receivers in similar cases, including
the full power to possess, rent, maintain, repair and operate the
Property upon such terms and conditions as may be approved by the
court, and shall apply the rents realized in the same manner and
order as foreclosure proceeds in accordance with Section 6.4.
Section 6.10 Tenants at Will. Mortgagor agrees for itself
and its heirs, legal representatives, successors and assigns,
that if any of them shall hold possession of the Property or any
part thereof subsequent to foreclosure hereunder, Mortgagor, or
the parties so holding possession, shall become and be considered
as tenants at will of the purchaser or purchasers at such
foreclosure sale; and any such tenant failing or refusing to
surrender possession upon demand shall be guilty of forcible
detainer and shall be liable to such purchaser or purchasers for
rental on said premises, and shall be subject to eviction and
removal, forcible or otherwise, with or without process of law,
all damages which may be sustained by any such tenant as a result
thereof being hereby expressly waived.
ARTICLE 7
MORTGAGEE'S RIGHT TO PERFORM MORTGAGOR'S OBLIGATIONS
Section 7.1 Mortgagee May Elect to Perform Defaulted
Obligations. Except for Mortgagor's failure to maintain the
insurance coverage required by the other provisions of this
Mortgage, if Mortgagor should fail to comply with any of its
other agreements, covenants or obligations under this Mortgage,
the Settlement Agreement, any of the Notes, or any other Credit
Document so as to cause such failure to constitute an Event of
Default or a Default which is then continuing, then Mortgagee (in
Mortgagor's name or in Mortgagee's own name) may perform them or
cause them to be performed for Mortgagor's account and at
Mortgagor's expense, but shall have no obligation to perform any
of them or cause them to be performed. With respect to
Mortgagor's failure to maintain the insurance coverage required
hereby, however, Mortgagee itself may purchase or secure such
insurance coverage for the Mortgaged Property prior to providing
Mortgagor with any notice of and opportunity to cure or remedy
such failure. Any and all expenses thus incurred or paid by
Mortgagee under the provisions of this paragraph shall be
Mortgagor's obligations to Mortgagee due and payable on demand,
or if no demand is sooner made, then they shall be due on or
before four (4) years after the respective dates on which they
were incurred, and each shall bear interest from the date
Mortgagee pays it until the date Mortgagor repays it to
Mortgagee, at the same rate as is provided for in the Notes for
interest on past due principal (the "Past Due Rate"). Upon
making any such payment or incurring any such expense, Mortgagee
shall be fully and automatically subrogated to all of the rights
of the person, corporation or body politic receiving such
payment. Any amounts owing by Mortgagor to Mortgagee pursuant to
this or any other provision of this Mortgage shall automatically
and without notice be and become a part of the Debt and shall be
secured by this and all other instruments securing the Debt. The
amount and nature of any such expense and the time when it was
paid shall be fully established by the affidavit of Mortgagee or
any of Mortgagee's officers or agents acting under this Mortgage.
Without notice to Mortgagor or any other person or entity, the
Past Due Rate shall automatically fluctuate upward and downward
as and in any amount by which the maximum nonusurious rate of
interest permitted by such applicable law and the rate of
interest as provided for in the Notes, respectively.
Section 7.2 Exercise of Rights is not Waiver or Cure of
Default. The exercise of the privileges granted to Mortgagee in
this Article shall in no event be considered or constitute a cure
of the default or a waiver of Mortgagee's right at any time after
an Event of Default to declare the Debt to be at once due and
payable, but is cumulative of such right and of all other rights
given by this Mortgage, the Notes and the Credit Documents and of
all rights given Mortgagee by law.
ARTICLE 8
TAX AND INSURANCE DEPOSITS
In addition to the Debt payments, if an Event of Default has
occurred, Mortgagor agrees that upon the written request of
Mortgagee, Mortgagor will thereafter deposit with Mortgagee each
month an amount equal to one-twelfth (1/12) of the aggregate of
(i) the next succeeding premiums (or payments in respect of them,
if premiums are financed) on all insurance policies which
Mortgagor is required by or pursuant to this Mortgage to maintain
on the Property, and (ii) the amount of the next succeeding
annual tax payments, assessment installments, maintenance charges
and other Impositions to become due and payable with respect to
the Property, as reasonably estimated by Mortgagee, plus, with
the first of such monthly deposits, an additional month's share
(a twelfth) of such premiums and taxes for each month less than
twelve remaining before the next payment thereof falls due. At
least fifteen (15) days before the date on which any such
insurance premium (or payment in respect of it, if premiums are
financed) or any of the Impositions must be paid to avoid
delinquency, promptly after Mortgagee's request, Mortgagor agrees
to deliver to Mortgagee a statement or statements showing the
amount of the premium (or payment in respect of it, if premiums
are financed) or Impositions required to be paid and the name and
mailing address of the concern or authority to which it is
payable and, at the same time, Mortgagor agrees to deposit with
Mortgagee such amounts as will, when added to the amount of such
deposits previously made and then remaining available for the
purpose, be sufficient to pay such insurance obligations or
Impositions prior to delinquency, but only if sufficient funds
have been deposited with Mortgagee by Mortgagor for the payment
of such amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee hereby agrees to apply such
deposits in payment of such insurance obligations and Impositions
prior to delinquency, but only if sufficient funds have been
deposited with Mortgagee by Mortgagor for the payment of such
amounts and Mortgagee has been timely furnished with the
requisite statements of the amounts required to be paid and the
names and addresses of the concerns or authorities to which such
amounts are payable. Mortgagee shall in no way be obligated to
pay any interest to Mortgagor on such deposits, and upon the
occurrence of an Event of Default which is then continuing,
Mortgagee is hereby irrevocably authorized to apply any and all
amounts so deposited with Mortgagee against the amounts due under
the Debt (with such order of application to be at Mortgagee's
discretion) without any further notice to or consent from
Mortgagor or any other person or entity. Additionally, Mortgagor
hereby irrevocably grants to Mortgagee a security interest and
assigns to Mortgagee all such funds so deposited with Mortgagee
as additional security for payment of the Debt and all other
amounts now or hereafter outstanding under any of the Credit
Documents.
ARTICLE 9
ASSIGNMENT OF RENTS
Section 9.1 Assignment of Rents, Revenues, Income and
Profits. Mortgagor hereby assigns and transfers to Mortgagee all
rents (severed or unsevered), revenues, income, profits and
proceeds of the foregoing ("Rental") payable under each Lease
(hereinafter defined) now or at any time hereinafter existing,
such assignment being upon the terms set forth in Section 9.2
below. The term "Lease" or "Leases" means any oral or written
agreement, now existing or made later, between Mortgagor and
another person or entity to use or occupy all or any portion of
the Property, together with any guaranties or security for the
obligations of any tenant, lessee, sublessee or other person or
entity having the right to occupy, use or manage any part of the
Property under a Lease. Each time Mortgagor enters into a Lease,
such Lease shall automatically become subject to this Article
without further action.
Section 9.2 Terms of Assignment. The transfer of Rental
to Mortgagee shall be upon the following terms: (a) until the
occurrence of an Event of Default, Mortgagor shall have the right
to collect Rental and each tenant may pay Rental directly to
Mortgagor; but after an Event of Default, Mortgagor may not
collect Rental and to the extent Mortgagor receives any Rent
thereafter accruing or paid, Mortgagor covenants to hold all such
Rental in trust for the use and benefit of Mortgagee; (b) upon
receipt from Mortgagee of notice that an Event of Default exists,
each tenant is hereby authorized and directed to pay directly to
Mortgagee all Rental thereafter accruing or payable and receipt
of Rental by Mortgagee shall be a release of such tenant to the
extent of all amounts so paid; (c) Rental so received by
Mortgagee shall be applied by Mortgagee, first to the expenses,
if any, of collection and then in accordance with Section 6.4
hereof; (d) without impairing its rights hereunder, Mortgagee
may, at its option, at any time and from time to time, release to
Mortgagor Rental so received by Mortgagee, or any part thereof;
(e) Mortgagee shall not be liable for its failure to collect or
its failure to exercise diligence in the collection of Rental,
but shall be accountable only for Rental that it shall actually
receive; and (f) the assignment contained in this Article shall
terminate upon the release of this Mortgage, but no tenant shall
be required to take notice of termination until a copy of such
release shall have been delivered to such tenant. Prior to the
occurrence of an Event of Default, the Rental shall be used to
pay expenses associated with owning and operating the Property
and to pay the Debt before being used for any other purpose. It
shall never be necessary for Mortgagee to institute legal
proceedings of any kind whatsoever to enforce the provisions of
this Article. Notwithstanding anything to the contrary in this
document, it is agreed that any Rental will not constitute a
payment by the Mortgagor to Mortgagee of any portion of the Debt
(and hence will not be credited to the Debt) until the Rental is
actually paid to the Mortgagee and received and retained by the
Mortgagee and then, in such event, the Rental so received shall
be applied in accordance with Section 9.2(c). Notwithstanding
anything to the contrary in this document, this Article shall not
make Mortgagee an owner or operator of the Property for the
purposes of environmental liability and this Article shall not
make Mortgagee a partner of Mortgagor. Further, this Article
shall be effective and perfected upon recordation of this
document.
Section 9.3 Remedies. Notwithstanding any other remedy
available to Mortgagee, should an Event of Default occur,
Mortgagor agrees to deliver to Mortgagee possession and control
of all Rental held by Mortgagor in trust for the benefit of
Mortgagee, provided, however, that Mortgagor may apply a portion
of such Rental to no more than one month's normal and actual
operating costs of the Property. Mortgagor specifically agrees
that Mortgagee may upon the occurrence of any Event of Default or
at any time thereafter, personally or through an agent selected
by Mortgagee, take possession and control of all or any part of
the Property and may receive and collect all Rental theretofore
accrued and all thereafter accruing therefrom until the final
termination of this Mortgage or until the foreclosure of the lien
of this Mortgage, applying so much thereof as may be collected
before judicial foreclosure of this Mortgage first to the
expenses of Mortgagee incurred in obtaining the Rental and then
applying the Rental so received in accordance with the
provisions of Section 6.4 hereof. Any such action by Mortgagee
shall not operate as a waiver of the Event of Default in
question, or as an affirmance of any Lease or of the rights of
any tenant in the event title to that part of the Property
covered by the Lease or held by the tenant should be acquired by
Mortgagee or other purchaser at foreclosure sale. Mortgagee may
use against Mortgagor or any other person such lawful or
peaceable means as the person acting may see fit to enforce the
collection of any such Rental or to secure possession of the
Property, or any part of it and may settle or compromise on any
terms as Mortgagee sees fit, the liability of any person or
persons for any such Rental. In particular, Mortgagee may
institute and prosecute to final conclusion actions of forcible
entry and detainer, or actions of trespass to try title, or
actions for damages, or any other appropriate actions, and may
settle, compromise or abandon any such actions as Mortgagee may
see fit; and Mortgagor binds itself and its successors and
assigns to take whatever lawful or peaceable steps Mortgagee may
ask of it or any such person or concern so claiming to take for
such purposes, including the institution and prosecution of
actions of the character above stated. However, Mortgagee, shall
not be obligated to collect any such Rental or be liable or
chargeable for failure to do so. Upon any sale of the Property
or any part thereof in foreclosure of the lien or security inter
est created by this Mortgage, such Rental so sold which
thereafter accrues shall be deemed included in such sale and
shall pass to the purchaser free and clear of the assignment made
in this Article. Nothing in this Section is intended to require
the Mortgagee to institute any legal proceedings or engage in any
self help remedies in order to make the absolute assignment of
the Rental to Mortgagee operative.
Section 9.4 Mortgagee in Possession; No Liability of
Mortgagee. Mortgagee's acceptance of this assignment shall not,
before entry upon and taking possession of the Property by
Mortgagee, be deemed to constitute Mortgagee a "mortgagee in
possession," nor obligate Mortgagee to appear in or defend any
proceeding relating to any of the Leases or to the Property, take
any action hereunder, expend any money, incur any expenses or
perform any obligation or liability under the Leases, or assume
any obligation under the Leases including the obligation to
return any deposit delivered to Mortgagor by any tenant.
Mortgagee shall not be liable for any injury or damage to person
or property in or about the Property, except injury or damage
resulting from Mortgagee's gross negligence or willful
misconduct. Neither the collection of Rental due under the
Leases herein described nor possession of the Property by
Mortgagee shall render Mortgagee liable with respect to any
obligations of Mortgagor under any of the Leases.
Section 9.5 Additional Covenants, Warranties and
Representations Concerning Leases and Rental. Mortgagor
covenants, warrants and represents that:
(a) Neither Mortgagor nor any previous owner has
entered into any prior oral or written assignment, pledge or
reservation of the Rental, entered into any prior assignment or
pledge of Mortgagor's landlord interests in any Lease or
performed any act or executed any other instruments which might
prevent or limit Mortgagee from operating under the terms and
conditions of this Article;
(b) Mortgagor has good title to the Leases and Rental
hereby assigned and the authority to assign same, and no other
person or entity has any right, title or interest in and to the
landlord's interests therein;
(c) Mortgagor shall (i) perform all material terms and
conditions of the Leases, (ii) upon Mortgagee's request, execute
an additional assignment to Mortgagee of all Leases then
affecting the Property and all Rental and other sums due
thereunder by assignment(s) in form and substance satisfactory to
Mortgagee and (iii) at the request of Mortgagee, record such
Leases and the assignment(s) thereof to Mortgagee;
(d) Mortgagor shall enforce the tenants' obligations
under the Leases in the ordinary course of Mortgagor's business;
(e) Mortgagor shall neither create nor permit any
encumbrance upon its interest as landlord under the Leases,
except for this Mortgage and any other encumbrances permitted by
this Mortgage;
(f) Mortgagor shall not encumber or assign, or permit
the encumbrance or assignment of, any Leases or Rental without
the prior written consent of Mortgagee;
(g) Mortgagor shall not outside the ordinary course of
business waive or release any material obligation of any tenant
under the Leases without Mortgagee's prior written consent;
(h) Each Lease executed after the date hereof shall
contain a provision effectively subordinating such Lease to this
Mortgage;
(i) After the occurrence of an Event of Default,
Mortgagor shall from time to time furnish to Mortgagee, within
thirty (30) days after demand therefor, true, correct and
complete copies of all Leases or any portion of the Leases
specified by Mortgagee; and
(j) Mortgagor shall not in any event collect any
Rental more than one (1) month in advance of the time it will be
earned (and if Mortgagor does so, in addition to any other rights
or remedies available by reason of such Event of Default, all
Rental so collected more than one (1) month in advance of the
time it is earned shall be delivered to Mortgagee to be applied
to the Debt).
Section 9.6 Merger. There shall be no merger of the
leasehold estates created by the Leases with the fee or any other
estate in the Property without the prior written consent of
Mortgagee.
Section 9.7 Reassignment. By Mortgagee's acceptance of
this Mortgage it is understood and agreed that a full and
complete satisfaction of this Mortgage shall operate as a full
and complete reassignment to Mortgagor of the Mortgagee's rights
and interests assigned to Mortgagee under this Article (subject
to the automatic reinstatement provisions of Section 10.15
below).
Section 9.8 Subordination of Mortgage to Leases. It is
agreed and understood that Mortgagee hereby reserves the right
and shall have the right, at any time and from time to time,
without the consent or joinder of any other party, to subordinate
this Mortgage and the liens, assignments and security interests
created by this Mortgage to all or any of the Leases regardless
of the respective priority of any of such Leases and this
Mortgage. Upon doing so and filing evidence of such
subordination in the real property records in the county or
counties where the Real Property is located, a foreclosure of
Mortgagee's liens, assignments and security interests under this
Mortgage shall be subject to and shall not operate to extinguish
any of said Leases as to which such subordination is operative.
ARTICLE 10
GENERAL AND MISCELLANEOUS PROVISIONS
Section 10.1 Debt May be Changed without Affecting this
Mortgage. Any of the Debt may be extended, rearranged, renewed,
increased or otherwise changed in any way, and any part of the
security described in this Mortgage or any other security for any
part of the Debt may be waived or released without in anyway
altering or diminishing the force, effect or lien of this
Mortgage, and the lien, assignment and security interest granted
by this Mortgage shall continue as a prior lien, assignment and
security interest on all of the Property not expressly so
released, until the final termination of this Mortgage.
Section 10.2 Usury Not Intended; Savings Provisions.
Notwithstanding any provision to the contrary contained in any
Credit Document, it is expressly provided that in no case or
event shall the aggregate of any amounts accrued or paid pursuant
to this Mortgage which under applicable laws are or may be deemed
to constitute interest ever exceed the maximum nonusurious
interest rate permitted by applicable state or federal laws,
whichever permit the higher rate. In this connection, Mortgagor
and Mortgagee stipulate and agree that it is their common and
overriding intent to contract in strict compliance with
applicable usury laws. In furtherance thereof, none of the terms
of this Mortgage shall ever be construed to create a contract to
pay, as consideration for the use, forbearance or detention of
money, interest at a rate in excess of the maximum rate permitted
by applicable laws. Mortgagor shall never be liable for interest
in excess of the maximum rate permitted by applicable laws. If,
for any reason whatever, such interest paid or received during
the full term of the applicable indebtedness produces a rate
which exceeds the maximum rate permitted by applicable laws,
Mortgagee shall credit against the principal of such indebtedness
(or, if such indebtedness shall have been paid in full, shall
refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid to
produce a rate equal to the maximum rate permitted by applicable
laws. All sums paid or agreed to be paid to Mortgagee for the
use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated
and spread in equal parts throughout the full term of the
applicable indebtedness, so that the interest rate is uniform
throughout the full term of such indebtedness. The provisions of
this Section shall control all agreements, whether now or
hereafter existing and whether written or oral, between Mortgagor
and Mortgagee.
Section 10.3 Subrogation to Liens Discharged. Mortgagor
hereby agrees that Mortgagee shall be subrogated to all rights,
titles, interests, liens, benefits, remedies, equities, superior
title and security interests (the "Subrogated Liens") owned,
claimed or held as security for any debt or other obligation (the
"Discharged Obligations") directly or indirectly satisfied,
discharged or paid with money or other property advanced by
Mortgagee. Irrespective of any formal or informal acknowledgment
of partial or complete satisfaction or release of the Discharged
Obligations, the Subrogated Liens shall be continued, renewed,
extended, brought forward and rearranged as security for the Debt
in addition to and cumulative of the lien and security interest
of this Mortgage. Foreclosure under this Mortgage shall
constitute foreclosure of the Subrogated Liens.
Section 10.4 Due on Sale. Mortgagor agrees that if,
without Mortgagee's prior written consent (except as otherwise
provided herein or in the Settlement Agreement), (a) any part of
the Property should be directly or indirectly transferred,
conveyed or mortgaged, voluntarily or involuntarily, absolutely
or as security, or (b) Mortgagor should enter into any
contractual arrangement to transfer, convey or mortgage any part
of the Property or any interest either in the Property, the
moratorium provided in Article VI of the Settlement Agreement
shall immediately terminate without notice to Obligors.
Mortgagee is under no obligation to consent to the transfer or
encumbrance of the Property except on the terms provided in the
Settlement Agreement irrespective of whether or not the transfer,
conveyance or mortgage would or might (i) diminish the value of
any security for the Debt, or (ii) increase the likelihood of
Mortgagee's having to resort to any security for the Debt after
default. If Mortgagee's consent to a proposed mortgaging is
requested, Mortgagee shall have the right (in addition to its
absolute right to refuse to consent to any such transaction) to
condition its consent upon satisfaction of any one or more of the
following requirements: (1) that the interest rate(s) on all or
any part of the Debt be increased to a rate which is then
acceptable to Mortgagee; (2) that a principal amount deemed
appropriate by Mortgagee be paid against the Debt to reduce to a
level which is then acceptable to Mortgagee the ratio that the
outstanding balance of the Debt bears to the value of the
Property as determined by Mortgagee; (3) that the liability to
Mortgagee of Mortgagor and all makers and guarantors of all or
any part of the Debt will be confirmed by them in writing to be
unaffected and unimpaired by such mortgaging; and (4) that any
proposed junior mortgagee expressly subordinate to all liens and
security interests securing the Debt as to both lien and payment
right priority and consent to the proposed transaction in a
writing addressed to Mortgagee.
Section 10.5 Condemnation. If before final termination of
this Mortgage all or a portion of the Property is taken for
public or quasi-public purposes, either through eminent domain or
condemnation proceedings, by voluntary conveyance under threat of
condemnation with Mortgagee's express written consent and joinder
or otherwise, Mortgagor hereby agrees that any and all sums of
money awarded or allowed as damages, payments in lieu of
condemnation awards or otherwise to or for the account of the
owner of the Property or any portion of it on account of such
taking shall be paid and delivered to Mortgagee, and they are
hereby assigned to Mortgagee, and shall be paid directly to
Mortgagee. All proceeds of condemnation awards or proceeds of
sale in lieu of condemnation with respect to the Property and all
judgments, decrees and awards for injury or damage to the
Property shall be applied, first, to reimburse Mortgagee for all
costs and expenses, including reasonable attorneys' fees,
incurred in connection with collection of such proceeds and,
second, the remainder of said proceeds shall be applied, at the
reasonable discretion of Mortgagee, to the payment of the Debt in
the order determined by Mortgagee in its sole discretion, or paid
out to repair or restore the Property so affected by such
condemnation, injury or damage in the same manner as provided in
Section 4.1(g) above. Mortgagor agrees to execute such further
assignments of all such proceeds, judgments, decrees and awards
as Mortgagee may request. Mortgagee is hereby authorized, in the
name of Mortgagor, to execute and deliver valid acquittances for,
and to appeal from, any such judgment, decree or award.
Mortgagee shall not be, in any event or circumstances, liable or
responsible for failure to collect, or exercise diligence in the
collection of, any such proceeds, judgments, decrees or awards.
Section 10.6 Notices. Unless otherwise required by
applicable law, any notice satisfying the notice requirements set
forth in the Settlement Agreement shall be satisfactory under
this Mortgage.
Section 10.7 Mortgagee and Mortgagor. The term
"Mortgagee" as used in this Mortgage shall mean and include the
holder or holders of the Debt from time to time, and upon
acquisition of the Debt by any holder or holders other than the
named Mortgagee, effective as of the time of such acquisition,
the term "Mortgagee" shall mean all of the then holders of the
Debt, to the exclusion of all prior holders not then retaining or
reserving an interest in the Debt from time to time, whether such
holder acquires the Debt through succession to or assignment from
a prior Mortgagee. The term "Mortgagor, its successors and
assigns" shall also include the heirs and legal representatives
of each Mortgagor who is a natural person and the receivers,
conservators, custodians and trustees of each Mortgagor. In
general, Mortgagor may not assign or delegate any of its rights,
interests or obligations under this Mortgage, the Notes, the
Settlement Agreement or any Credit Document without Mortgagee's
express prior written consent, and any attempted assignment or
delegation without it shall be void or voidable at Mortgagee's
election; provided, however, that Mortgagor may delegate its
obligations under this Mortgage and any other Credit Documents
regarding the management, maintenance and leasing of the
Mortgaged Property, as well as the construction of tenant finish
and "cosmetic-type" capital improvements to the Mortgaged
Property, to reputable agents or independent contractors without
the prior written consent of Mortgagee, but in any and all such
events, Mortgagor shall remain fully obligated to Mortgagee in
accordance with the provisions of this Mortgage and all other
Credit Documents for the complete and full compliance with and
performance of all such obligations.
Section 10.8 Article, Section and Exhibit References,
Numbers and Headings. References in this Mortgage to Articles,
Sections and Exhibits refer to Articles, Sections and Exhibits in
and to this Mortgage unless otherwise specified. The Article and
Section numbers, Exhibit designations and headings used in this
Mortgage are included for convenience of reference only and shall
not be considered in interpreting, applying or enforcing this
Mortgage.
Section 10.9 Exhibits Incorporated. All exhibits,
annexes, appendices and schedules referred to any place in the
text of this Mortgage are hereby incorporated into it at that
place in the text, to the same effect as if set out there
verbatim.
Section 10.10 "Including" is not Limiting. Wherever the
term "including" or a similar term is used in this Mortgage, it
shall be read as if it were written, "including by way of example
only and without in any way limiting the generality of the clause
or concept referred to."
Section 10.11 Gender. The masculine and neuter pronouns
used in this Mortgage each includes the masculine, feminine and
neuter genders.
Section 10.12 Severability. If any provision of this
Mortgage is held to be illegal, invalid or unenforceable under
present or future laws, the legality, validity and enforceability
of the remaining provisions of this Mortgage shall not be
affected thereby, and this Mortgage shall be liberally construed
so as to carry out the intent of the parties to it. Each waiver
in this Mortgage is subject to the overriding and controlling
rule that it shall be effective only if and to the extent that
(a) it is not prohibited by applicable law and (b) applicable law
neither provides for nor allows any material sanctions to be
imposed against Mortgagee for having bargained for and obtained
it.
Section 10.13 Any Unsecured Debt is Deemed Paid First. If
any part of the Debt cannot lawfully be secured by this Mortgage
or if the lien, assignments and security interest of this
Mortgage cannot be lawfully enforced to pay any part of the Debt,
then and in either such event, at the option of Mortgagee, all
payments on the Debt shall be deemed to have been first applied
against that part of the Debt.
Section 10.14 Noun, Pronoun and Verb Numbers. When this
Mortgage is executed by more than one person, corporation,
partnership, joint venture, trust or other legal entity, it shall
be construed as though "Mortgagor" were written "Mortgagors" and
as though the pronouns and verbs in their number were changed to
correspond, and in such case, (a) each of Mortgagors shall be
bound jointly and severally with one another to keep, observe and
perform the covenants, agreements, obligations and liabilities
imposed by this Mortgage upon the "Mortgagor", (b) a release of
one or more persons, corporations or other legal entities
comprising "Mortgagor" shall not in any way be deemed a release
of any other person, corporation or other legal entity comprising
"Mortgagor" and (c) a separate action hereunder may be brought
and prosecuted against one or more of the persons, corporations
or other legal entities comprising "Mortgagor" without limiting
any liability of or impairing Mortgagee's right to proceed
against any other person, corporation or other legal entity
comprising "Mortgagor".
Section 10.15 Reinstatement of Mortgage. Mortgagor agrees
that, if at any time all or any part of any payment previously
applied by Mortgagee to the Debt is or must be returned by
Mortgagee--or recovered from Mortgagee--for any reason (including
the order of any bankruptcy court)), this Mortgage shall
automatically be reinstated to the same effect as if the prior
application had not been made, and, in addition, Mortgagor hereby
agrees to indemnify Mortgagee against, and to save and hold
Mortgagee harmless from any required return by Mortgagee--or
recovery from Mortgagee--of any such payment because of its being
deemed preferential under applicable bankruptcy, receivership or
insolvency laws, or for any other reason.
Section 10.16 Amendments in Writing. This Mortgage shall
not be changed orally but shall be changed only by agreement in
writing signed by Mortgagor and Mortgagee. Any waiver or consent
with respect to this Mortgage shall be effective only in the
specific instance and for the specific purpose for which given,
in writing signed by the party to be charged. No course of
dealing between the parties, no usage of trade and no parole or
extrinsic evidence of any nature shall be used to supplement or
modify any of the terms or provisions of this Mortgage.
Section 10.17 Entire Agreement. This Mortgage embodies
the entire agreement and understanding between Mortgagor and
Mortgagee with respect to its subject matter and supersedes all
prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Mortgagor
acknowledges and agrees that there is no oral agreement between
Mortgagor and Mortgagee which has not been incorporated in this
Mortgage.
Section 10.18 Release Payment. Prior to the occurrence of
an Event of Default, Mortgagor shall be entitled to obtain a
release of the Property from the lien and security interest of
this instrument upon and subject to the terms of the Settlement
Agreement. In addition, Section 10.4 of this Mortgage shall not
apply to any transaction which specifically provides for payment
of the applicable release price provided for in the Settlement
Agreement.
Section 10.19. Applicable Law. This Mortgage shall be
governed by, construed under and interpreted in accordance with
the internal laws (as opposed to choice of law provisions) of
Wisconsin.
ARTICLE 11
ENVIRONMENTAL MATTERS
Section 11.1 Full Compliance. Mortgagor will comply with
all federal, state and local environmental or ecological
protection laws, acts, restrictions, rules, regulations and
orders applicable to or affecting the Mortgaged Property.
Without limiting any other rights and remedies of Mortgagee, in
the event that there shall be filed a lien against the Mortgaged
Property by any governmental or quasi-governmental entity with
respect to any violation of environmental or ecological
protection laws, acts, ordinances, restrictions, rules,
regulations or orders attributable to events or circumstances
occurring after the date hereof, then Mortgagor agrees to either
cause said lien to be removed from the Mortgaged Property or
provide a bond satisfactory to Mortgagee insuring Mortgagee a
continued first lien priority status against the Mortgaged
Property within sixty (60) days from the date that the lien is
placed against the Mortgaged Property or within such shorter
period of time as the circumstances shall permit (but in all
events at least five (5) days prior to any sale of the Mortgaged
Property to satisfy said lien) in the event that the holder of
such lien takes steps to cause the Mortgaged Property to be sold
pursuant to said lien.
Section 11.2 Representations and Warranties. Mortgagor
represents and warrants to Mortgagee to the best knowledge of
Mortgagor, as follows: (a) the Mortgaged Property and the
operations conducted thereon do not violate any order of any
court or governmental authority or Environmental Laws (as
hereinafter defined); (b) without limitation of clause (a) above,
the Mortgaged Property and the operations currently conducted
thereon, are not in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or
proceeding by or before any court or governmental authority or to
any remedial obligations under Environmental Laws; (c) all
notices, permits, licenses or similar items in connection with
the operation or use of the Mortgaged Property have been duly
obtained or filed; (d) all hazardous substances or solid wastes
generated at the Mortgaged Property have, to the best knowledge
of Mortgagor, in the past been transported, treated and disposed
of only by carriers maintaining valid permits under RCRA (as
hereinafter defined) and any other Environmental Law, which
carriers and facilities have been and are operating in compliance
with such permits; (e) Mortgagor has no knowledge that there has
been a release of any hazardous substances on or to the Mortgaged
Property, in violation of Environmental Laws; and (f) Mortgagor
has no material contingent liability in connection with any
release or threatened release of any hazardous substance or solid
waste into the environment.
Section 11.3 Non-Storage and Disposal. Mortgagor shall
not cause, knowingly permit or knowingly suffer any Hazardous
Material (as hereinafter defined) to be brought upon, treated,
stored, disposed of, discharged, released, produced or used upon,
about or beneath the Mortgaged Property by Mortgagor, its agents,
employees, lessees, contractors, invitees or any other person in
violation of Environmental Laws; provided, however, that
Mortgagor (or any of Mortgagor's tenants which have been approved
by Mortgagee) shall be entitled to store and utilize Hazardous
Materials upon the Mortgaged Property in connection with such
person's or entity's normal and ordinary operations so long as
such storage and use fully complies with all Environmental Laws
at all times.
Section 11.4 Indemnity. Mortgagor shall indemnify, defend
and hold all Mortgagee Indemnitees (as defined below) harmless
from and against any and all (i) liabilities, losses, claims,
damages, costs, penalties, funds and judgments resulting from
violation by Mortgagor of any Environmental Laws with respect to
the ownership and operation of the Mortgaged Property, and (ii)
all other liabilities, losses, claims, damages, costs, penalties,
fines, judgements, attorneys' fees, consultants' fees and
expert's fees incurred or suffered by Mortgagee by reason of,
resulting from, in connection with or arising in any manner
whatsoever from a breach by Mortgagor of any representation,
warranty or covenant contained in this Article 11. This
indemnity provision shall expressly survive the payment in full
of the Debt and the release of the Property from this Mortgage.
As used in this paragraph, "Mortgagee Indemnitees" shall mean
Mortgagee, any subsequent holder or owner of the Notes or any
interest in any of them, any affiliate, successor, assign or
subsidiary of Mortgagee and each of their shareholders,
directors, officers, employees, counsel, agents, attorneys and
contractors, as well as their respective heirs and legal
representatives.
Section 11.5 Definitions. As used in this Article 11, (a)
the term "Environmental Laws" shall mean any and all laws,
statutes, ordinances, rules, regulations, orders or
determinations of any governmental authority pertaining to health
or the environment in effect in any and all jurisdictions in
which Mortgagor is conducting or at any time have conducted
business or where the Mortgaged Property or where any Hazardous
Materials generated by or disposed of by Mortgagor, if any, are
located, including without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Conservation
and Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other federal, state or local environmental
conservation or protection laws, regulations, ordinances, codes
or rules and (b) the term "Hazardous Material" means any
hazardous or toxic substance, material or waste, including but
not limited to, those substances, materials and waste listed in
the United States Department of Transportation Hazardous
Materials Table (49 C.F.R. 172.101) or listed by the
Environmental Protection Agency as hazardous substances under or
pursuant to 40 C.F.R. Part 302, or such substances, materials and
wastes which are or become regulated under any Environmental Law.
Section 11.6 The obligations of and liability of Mortgagor
under this Article 11 shall not be personally binding upon nor
shall there be any resort for enforcement thereof to the private
property of Mortgagor's trust managers, shareholders, officers,
employees or agents regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.
EXECUTED effective as of May 22, 1996.
AMERICAN INDUSTRIAL PROPERTIES REIT,
a Texas real estate investment trust
By:
Name:
Title:
"Mortgagor"
Exhibit A - Description of the Real Property
Exhibit B - Permitted Encumbrances
THE STATE OF ______________
COUNTY OF ________________
This instrument was acknowledged on the ____ day of
_______________, 1996, by ______________________,
_________________ of AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas
real estate investment trust, on behalf of said real estate
investment trust.
Notary Public in and for
the State of
Printed Name:
My Commission expires:
Drafted By And After Recording Should Be Returned To:
Attorney Phil F. Snow
Ware, Snow, Fogel, Jackson & Greene
Texaco Heritage Plaza
49th Floor, 1111 Bagby
Houston, Texas 77002
