Document:

Unassociated Document

 

NOTICE OF CONFIDENTIALITY RIGHTS

IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER’S LICENSE NUMBER.

DEED OF TRUST AND SECURITY AGREEMENT

(With Assignment of Rents)

	
THE STATE OF MONTANA

	
§

	  	
§

	
COUNTY OF SILVER BOW

	
§

Effective Date:  October 31, 2011

INTRODUCTION

 

This instrument (“Deed of Trust”) is a deed of trust from:

 

	 	
Mortgagor Name(s): 

	
ARC FEBTTMT001, LLC

	 	
Address(es): 

	
405 Park Avenue, 15th Floor

New York, New York  10022

(called the “Mortgagor”, “Debtor” and “Assignor”, whether one or more) to:

 

	 	
Trustee Name: 

	
Alan C. Bryan, Esq.

	 	
Address: 

	
490 N. 31st Street, Suite 500 TW2

Billings, Montana  59101

as trustee (called the “Trustee”), for the use and benefit of:

 

	 	
Mortgagee Name: 

	
BOKF, NA, doing business as Bank of Texas

	 	
Address(es): 

	
500 Chimney Rock, 2nd Floor

Houston, Texas  77056

Attention:  Manager, Real Estate Group

(called the “Mortgagee”, “Secured Party” and “Assignee”), a security agreement between Debtor and Secured Party and an assignment of rents from Assignor to Assignee.

 

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 $10 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”).  Pursuant to Mont. Code Ann. § 71-1-304(4), Mortgagor hereby certifies that the Real Property does not exceed forty (40) acres.

 

(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 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, pollution control, gas, electric, solar, nuclear, 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 wastewater, fresh water, appropriated water, water shares or stock 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 or any of Mortgagor’s predecessors or Affiliates (defined below), 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 or by anyone (an “Affiliate”, whether a natural person or an entity) who directly or through one or more intermediaries controls, is controlled by or is under common control with 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 estate, 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”) belonging, 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 of Mortgagor’s right, title and interest, if any, to existing and future minerals, oil, gas and other hydrocarbon substances in, upon, under or through the Real Property.

 

  

2

  

 

(i)           Reversions and Remainders.  Any and all rights and estates in reversion or remainder held by Mortgagor to the Real Property, Improvements, Fixtures and Equipment, Leases, Utilities Capacity or Appurtenances or any part of them.

 

(j)           Contractual Rights.  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 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.  Mortgagor represents that Mortgagor is the lawful owner of the Mortgaged Property with good right and authority to mortgage and convey it, 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.  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).

 

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)           Note.  All indebtedness now or hereafter evidenced and to be evidenced by (i) the promissory note dated concurrently herewith in the face amount of Five Million Sixty Thousand and No/100 Dollars ($5,060,000.00), bearing interest at the rate or rates therein stated, principal and interest payable to the order of Mortgagee on the dates therein stated, with final payment due on October 31, 2016, executed by Mortgagor and (ii) any and all past, concurrent or future modifications, extensions, renewals, rearrangements, replacements and increases of such note (collectively, the “Note”).

 

(b)           Loan Agreement.  All obligations and indebtedness of Mortgagor now or hereafter created or incurred under the Acquisition Loan Agreement dated concurrently herewith between Mortgagor and Mortgagee, as the same may be amended, supplemented, restated or replaced from time to time (collectively, the “Loan Agreement”).  Each capitalized term used but not otherwise defined herein shall have the meaning given to such term in the Loan Agreement.

 

(c)           Other Specified Obligations.  All other obligations, if any, described or referred to in any other place in this Deed of Trust.

 

(d)           Swap Agreements.  All existing and future obligations under or in connection with any and all Swap Agreements.

 

  

3

  

 

(e)           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.

 

(f)           Obligations under Credit Documents.  All present and future debts and obligations under or pursuant to (1) any papers (“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 Note or (2) all supplements, amendments, restatements, renewals, extensions, rearrangements, increases, expansions or replacements of them.

 

(g)           Related Indebtedness.  All other loans or advances not otherwise specifically described in this Section now or hereafter held or owned by Mortgagee for the purpose of paying costs of developing, constructing, improving or operating all or any part of the Mortgaged Property.

 

(h)           All Other Debt.  All of Mortgagor’s other present and future debt or other obligations 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, including any present or future debt under any credit or loan agreement, any letter of credit application, any reimbursement, repurchase, reverse repurchase, swap or other agreement which absolutely or contingently creates any financial obligation, any guaranty or any other papers previously, concurrently or later executed by Mortgagor, or accepted by Mortgagor as binding upon Mortgagor.  Mortgagor and Mortgagee presently contemplate that Mortgagee may at Mortgagee’s election lend sums or extend other financial accommodations to Mortgagor or for Mortgagor’s account or benefit in the future and may acquire and become the owner and holder of other debt or obligations of Mortgagor from time to time, but that Mortgagee has no obligation to do so.  Mortgagor agrees that if Mortgagor should thus become indebted to Mortgagee in any such additional sums (except in cases where Mortgagor and Mortgagee have expressly agreed in writing to a different rate, a different maturity or both) all such other or future debt shall be due and payable on demand, the principal of such debt shall bear interest at the Past Due Rate (as defined in Article 7 below) from the date of its accrual, however it accrues, until paid, and all such other debt, both principal and interest, shall be secured by this Deed of Trust as well as by any and all other security which Mortgagee may now or hereafter hold for it.

 

Section 2.2      Debt Defined.  The term “Debt” means and includes every Note 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 Mortgagor or any other person or entity now or hereafter primarily or secondarily obligated to pay all or any part of the Debt (Mortgagor and each such other person or entity being herein called an “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 Montana (the “UCC”), (ii) all equipment, accounts, general intangibles, fixtures, inventory, chattel paper, notes, documents and other personal property used, intended or acquired for use, on--or in connection with the use, operation, development or construction 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:

 

  

4

  

 

(a)           Contracts.  All contracts now or hereafter entered into by and between Debtor and any general contractor or between Debtor and any other party, 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, in respect of any of the Mortgaged Property.

 

(c)           Design, etc. Agreements.  All agreements now or hereafter entered into 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.

 

(d)           Lender or Investor Commitments.  Any commitment issued by any lender or investor other than Mortgagee to finance or invest in any of the Mortgaged Property.

 

(e)           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.

 

(f)           Development Contracts.  All contracts now or hereafter entered into by and between Debtor and any party, as well as all right, title, interest and beneficial interest of Debtor under any other contract or subcontract (including any right, title and interest assigned to Debtor), providing for the development of all or any portion of the Real Property.

 

(g)           Insurance Claims.  Any and all rights to or claims under insurance policies benefitting Debtor or the Mortgaged Property.

 

(h)           Reimbursements.  Any right to reimbursements, rebates, credits, refunds, tax credits, tax abatements, or other consideration or monies, with respect to the Mortgaged Property, to be received pursuant to any tax credits, tax abatement agreements or municipal utility district reimbursement agreements (or any similar writings);

 

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 now owned by Debtor or existing or hereafter acquired, created or arising (whether or not related to any of the foregoing Property).  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.

 

  

5

  

 

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 and during the continuance 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.  Before any sale, Secured Party may, at its option, complete the processing of any of the Collateral and/or repair or recondition the same to such extent as Secured Party may deem advisable and any sums expended therefor by Secured Party shall be reimbursed by Debtor.  Secured Party may take possession of Debtor’s premises to complete such processing, repairing and/or reconditioning, using the facilities and other property of Debtor to do so, to store any Collateral and to conduct any sale as provided for herein, all without compensation to Debtor.  All costs, expenses, and liabilities incurred by Secured Party in collecting such sales proceeds or such rents, or in managing, operating, maintaining, protecting or preserving the Collateral, or in processing, repairing and/or reconditioning the Collateral 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 willful misconduct and/or bad faith 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.  Secured Party is authorized at any such sale, if Secured Party deems it advisable or is required by applicable law so to do, to disclaim and to refuse to give any warranty, and to impose such other limitations or conditions in connection with any such sale as Secured Party deems necessary or advisable in order to comply with applicable law.  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.  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 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 ten (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, 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.  Each Obligor, to the extent applicable, shall remain liable for any deficiency.

 

  

6

  

 

(c)           Secured Party shall have all the rights of a secured party after default under the Uniform Commercial Code of Montana 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 expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable 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 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.

 

  

7

  

 

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 Debtor, 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 without need for further documentation of such release; provided, however, Secured Party agrees, at Debtor’s expense, to execute a release of the assignment if requested by Debtor, in form reasonably satisfactory to Debtor and Secured Party.

 

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 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     Certain Powers of Secured Party.  Debtor hereby authorizes and directs each account debtor and each other person or entity obligated to make payment in respect of any of the Collateral (each a “Collateral Obligor”) to pay over to Secured Party, its officers, agents or assigns, upon demand by Secured Party during the existence and continuation of an Event of Default, all or any part of the Collateral without making any inquiries as to the status or balance of the secured indebtedness and without any notice to or further consent of Debtor.  Debtor hereby agrees to indemnify each Collateral Obligor and hold each Collateral Obligor harmless from all expenses and losses which it may incur or suffer as a result of any payment it makes to Secured Party pursuant to this paragraph.  To facilitate the rights of Secured Party hereunder, Debtor hereby authorizes Secured Party, its officers, employees, agents or assigns during the existence and continuation of an Event of Default:

 

  

8

  

 

(a)           to notify Collateral Obligors of Secured Party’s security interest in the Collateral and to collect all or any part of the Collateral without further notice to or further consent by Debtor, and Debtor hereby constitutes and appoints Secured Party the true and lawful attorney of Debtor (such agency being coupled with an interest), irrevocably, with power of substitution, in the name of Debtor or in its own name or otherwise, to take any of the actions described in the following clauses (b), (c), (d), (e), (f) and (g);

 

(b)           to ask, demand, collect, receive, receipt for, sue for, compound and give acquittance for any and all amounts which may be or become due or payable under the Collateral and to settle and/or adjust all disputes and/or claims directly with any Collateral Obligor and to compromise, extend the time for payment, arrange for payment in installments, otherwise modify the terms of, or release, any of the Collateral, on such terms and conditions as Secured Party may determine (without thereby incurring responsibility to or discharging or otherwise affecting the liability of Debtor to Secured Party under this Deed of Trust or otherwise);

 

(c)           to direct delivery of, receive, open and dispose of all mail addressed to Debtor and to execute, sign, endorse, transfer and deliver (in the name of Debtor or in its own name or otherwise) any and all receipts or other orders for the payment of money drawn on the Collateral and all notes, acceptances,  commercial paper, drafts, checks, money orders and other instruments given in payment or in part payment thereof and all invoices, freight and express bills and bills of lading, storage receipts, warehouse receipts and other instruments and documents in respect of any of the Collateral and any other documents necessary to evidence, perfect and realize upon the security interests and obligations of this Deed of Trust;

 

(d)           in its discretion to file any claim or take any other action or proceeding which Secured Party may deem necessary or appropriate to protect and preserve the rights, titles and interests of Secured Party hereunder;

 

(e)           to sign the name of Debtor to financing statements, drafts against Collateral Obligors, assignments or verifications of any of the Collateral and notices to Collateral Obligors;

 

(f)           to station one or more representatives of Secured Party on Debtor’s premises for the purpose of exercising any rights, benefits or privileges available to Secured Party hereunder or under any of the Credit Documents or at law or in equity, including receiving collections and taking possession of books and records relating to the Collateral; and

 

(g)           to cause title to any or all of the Collateral to be transferred into the name of Secured Party or any nominee or nominees of Secured Party.

 

The powers conferred on Secured Party pursuant to this Section are conferred solely to protect Secured Party’s interest in the Collateral and shall not impose any duty or obligation on Secured Party to perform any of the powers herein conferred.  No exercise of any of the rights provided for in this Section shall constitute a retention of the Collateral in full or partial satisfaction of the indebtedness as provided for in the Uniform Commercial Code of Montana.

 

Section 3.11      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 3.12      Change Terms, Release Collateral.  During the existence and continuation of an Event of Default, 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.

 

  

9

  

 

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 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 and remove 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 will maintain the following specifically described insurance coverages (or cause any tenant of the Property to maintain):

 

(i)           Casualty Coverage.  An all-risk policy (i.e. Causes of Loss Special Form or equivalent) of permanent property insurance insuring the Property against all risks of any kind or character except those permitted by Mortgagee in writing to be excluded from coverage thereunder.

 

(ii)           Boiler Coverage.  A boiler and machinery insurance policy covering loss or damage to all portions of the Property comprised of air-conditioning and heating systems, other pressure vessels, machinery, boilers or high pressure piping.

 

(iii)           Loss of Earnings Coverage.  An all-risk policy of insurance covering loss of earnings and/or rents from the Property in the event that the Property is not available for use or occupancy due to casualty, damage or destruction required to be covered by the policies of insurance described in (1) and (2) above.

 

(iv)           Liability Insurance.  Commercial general liability, auto liability, umbrella or excess liability and worker’s compensation insurance against claims for bodily injury, death or property damage occurring on, in or about the Mortgaged Property with combined single limits of $5,000,000 per occurrence.

 

(v)           Coverage During Construction.  If all or any portion of the Property consists of improvements under construction: (i) a builder’s all-risk form insurance policy on a completed value, non-reporting form, insuring the Property against all risks of any kind or character except those permitted by Mortgagee in writing to be excluded from coverage thereunder, and an all-risk policy of insurance covering loss of future earnings and/or rents from the Property in the event the Property is not ready or available for use or occupancy due to casualty, damage or destruction required to be covered by such builder’s all-risk insurance policy, (ii) policies of insurance to be carried by each contractor performing work in connection with the Property covering worker’s compensation, employers’ liability, commercial general liability and comprehensive automobile liability, including a broad form umbrella/excess liability insurance policy and (iii) policies of professional liability insurance to be carried by each design professional performing work in connection with the Property covering each such party against claims for actual or alleged errors, omissions or negligent acts in the performance of their respective services rendered in respect of the Property.

 

  

10

  

 

(vi)           Mortgagee agrees that the amounts and type of insurance coverage set forth in the Fed Ex Lease are satisfactory to Mortgagee.

 

(vii)           Other Insurance Required.  Such other insurance against other insurable hazards, risks or casualties which at the time are commonly insured against in the case of owners and premises similarly situated, due regard being given to the financial condition of Mortgagor, the height and type of the Property, its construction, location, use and occupancy.

 

TEXAS FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE NOTICE: (A) MORTGAGOR IS REQUIRED TO: (I) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT MORTGAGEE SPECIFIES; (II) PURCHASE THE INSURANCE FROM AN INSURER THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS LINES INSURER; AND (III) NAME MORTGAGEE AS THE PERSON TO BE PAID UNDER THE POLICY IN THE EVENT OF A LOSS; (B) MORTGAGOR MUST, IF REQUIRED BY MORTGAGEE, DELIVER TO MORTGAGEE A COPY OF THE POLICY AND PROOF OF THE PAYMENT OF PREMIUMS; AND (C) IF MORTGAGOR FAILS TO MEET ANY REQUIREMENT LISTED IN PARAGRAPH (A) OR (B), MORTGAGEE MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF MORTGAGOR AT MORTGAGOR’S EXPENSE.

(e)           Insurance Companies, Policies, Endorsements and Premium Payments.  Mortgagor agrees that all required insurance will be written on forms acceptable to Mortgagee and by companies having a Best’s Insurance Guide Rating of not less than A or A- and which are otherwise acceptable to Mortgagee, and that such insurance (other than third party liability insurance) shall be written or endorsed so that all losses are payable to Mortgagee.  Certificates evidencing such insurance shall be delivered by Mortgagor to Mortgagee.  Each such policy shall expressly prohibit cancellation or modification of insurance without 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.

 

(f)           Mortgagee’s Rights to Collect Insurance Proceeds.  Except as permitted in Section 4.1(h) below, 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.

 

(g)           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.

 

(h)           Application of Insurance Proceeds Collected Before Foreclosure.  Unless an Event of Default has occurred and is continuing, so long as Mortgagee is satisfied that the applicable proceeds (together with other funds deposited with Mortgagee by or on behalf of Mortgagor for the purpose of repair and restoration of the applicable damage or destruction) are sufficient to pay all costs of repair and restoration of the applicable damage or destruction, Mortgagee will hold all proceeds of insurance which was paid for by Mortgagor or by anyone other than Mortgagee or another holder of any of the Debt and which proceeds are actually received by Mortgagee before foreclosure (and such other funds deposited with Mortgagee) and will disburse the same as such repairs or restoration are made, upon such terms and conditions as Mortgagee may elect, and upon presentation of satisfactory evidence to Mortgagee that payment is being requested for permissible repair and restoration and without the imposition of any lien on the Property.  Any insurance proceeds remaining if Mortgagor and Mortgagee do not agree to the terms of the advance of the funds for repair and restoration within thirty (30) days after the event producing such funds, or if an Event of Default occurs and is continuing, shall be applied in payment of the Debt or, at the option of Mortgagee, shall be paid to Mortgagor or to such other person as is legally entitled to them.  Any insurance proceeds held by Mortgagee remaining after Mortgagee is reasonably satisfied that completion of repair and restoration has occurred, that bills therefor have been fully paid, and that all mechanic’s and materialman’s lien rights have been released, shall be paid promptly to Mortgagor.  Notwithstanding anything herein to the contrary, and provided no Event of Default exists, Mortgagor shall have the right to make proof of loss, to adjust or compromise any claims under policies of property damage insurance and to collect, receive and use the proceeds to restore the Property for an event of loss where total claims for such loss are equal to $150,000 or less.  Mortgagor shall provide Mortgagee with written evidence of the nature of the claim, the amount of proceeds actually received, and shall promptly use the proceeds to repair and restore the damaged portions of the Property.

 

  

11

  

 

(i)           Application of Insurance Proceeds Collected After Foreclosure.  Unless Mortgagee or Mortgagee’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 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.

 

(j)           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.

 

(k)           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.

 

(l)           Mortgagor Will Correct Defects, Provide Further Assurances and Papers.  Upon Mortgagee’s request, Mortgagor will promptly correct any defect which hereafter may be discovered in the text, execution or acknowledgment of the Note, 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.

 

(m)           Mortgagor Will Pay Taxes and Impositions and Furnish Receipts.  At Mortgagor’s own cost and expense, Mortgagor agrees 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 adequate reserves or shall deposit with Mortgagee, if requested by Mortgagee, sufficient cash 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, and Mortgagor shall continue to diligently and actively contest such Impositions.  Mortgagor agrees to furnish due proof of such payment to Mortgagee promptly after payment and before delinquency.

 

(n)           Mortgagor to Pay Monthly Tax and Insurance Deposits on Request.  If and after Mortgagee requests it, following the occurrence and continuance of any 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.

 

  

12

  

 

(o)           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.  Mortgagor  will not tear down, damage or attempt to remove, demolish or materially alter or enlarge any elements of the Property, or construct any new Improvements, without Mortgagee’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed (except that Mortgagor’s consent shall not be required for any such item which is permitted under the Leases or the cost of which does not exceed $500,000 and which is done in the ordinary course of Mortgagor’s operation of the Property).  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 (after replacement of the item as set forth in subparagraph (a) above) 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, which shall not be unreasonably withheld, conditioned or delayed.

 

(p)           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 or a tenant under a Lease shall have the right to actively contest such liens in good faith if Mortgagor or such tenant shall establish adequate reserves or shall deposit with Mortgagee sufficient cash to pay any such contested liens that are later determined to be properly owed by Mortgagor or tenant, or Mortgagor or tenant has posted a bond or other collateral reasonably satisfactory in all respects to Mortgagee, and provided, further, that no attempts shall be made to foreclose any such liens, and Mortgagor or tenant shall continue to diligently and actively contest such liens.  Mortgagor agrees to furnish due proof of such payment to Mortgagee after payment and before delinquency.

 

(q)           Mortgagee’s Inspection and Discussion Rights.  Mortgagor agrees to permit Mortgagee and its agents, representatives and employees at all reasonable times upon at least three business days notice 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.

 

(r)           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 Note or other obligation.

 

(s)           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.

 

(t)           If Mortgagor is not a Natural Person.  If Mortgagor has represented to Mortgagee that Mortgagor is not a natural person, then it and its directors, partners, venturers, trustee(s) or principals agree to maintain its existence as such and to obtain and maintain all franchises and permits necessary for it continuously to be in good standing in the State of Montana and in the state of its organization (if not Montana) with full power and authority to conduct its regular business and to own and operate the Mortgaged Property until final termination of this Deed of Trust.

 

  

13

  

 

(u)           Vendor’s Lien and Purchase Money Security Interest.  Mortgagor agrees that to the full extent that any of the proceeds of the Note have been or are paid or applied towards the purchase of any real or personal property, it shall be conclusively presumed to have been done at Mortgagor’s special instance and request, and Mortgagor hereby acknowledges and recognizes the existence of a vendor’s lien and a purchase money security interest in favor of Mortgagee against such property, as security for the Note in addition to and cumulative of the lien, assignments and security interest of this Deed of Trust, in the same manner in the case of real property as if an express vendor’s lien and the superior title had been reserved in the deed from the seller of such property and expressly therein assigned by the seller to Mortgagee.  Foreclosure under this Deed of Trust shall also constitute foreclosure of said vendor’s lien or purchase money security interest.

 

(v)           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 and what action Mortgagor has taken, is taking and proposes to take with respect thereto.  In no event shall silence by Mortgagee be deemed a waiver of a default or of an Event of Default.  Mortgagor will take all such steps as are necessary or appropriate to remedy promptly any such default or Event of Default.

 

(w)           Notice of Condemnation and Other Proceedings.  Immediately upon obtaining knowledge 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.  Mortgagee may participate in any such proceedings, and Mortgagor shall from time to time deliver to Mortgagee all instruments requested by it to permit such participation.  Mortgagor shall, at its expense, diligently prosecute any such proceedings, and shall consult with Mortgagee, its attorneys and experts, and cooperate with them in the carrying on or defense of any such proceedings.

 

(x)           Notice of Name or Address Change.  Mortgagor will not change Mortgagor’s name or the location of its chief executive office (or residence if a natural person) without first notifying Mortgagee in writing of such change at least thirty (30) days before its effective date.

 

(y)           Additional Information.  Mortgagor shall furnish to Mortgagee from time to time such information relating to the Property or Mortgagor’s financial condition and affairs as Mortgagee may from time to time request or as may be required from time to time by any Credit Document.

 

(z)           Proper Books.  Mortgagor shall at all times maintain proper books of record and account in accordance with sound accounting practice in which true, full and correct entries will be made of all its dealings and business affairs, and will set aside on its books adequate reserves for depletion, depreciation, obsolescence and/or amortization of its property, and all other reserves which, in accordance with sound accounting practice, should be set aside, and will write down, to the estimated salvage value thereof, all property not useful in its business.  Mortgagee shall be entitled to have such books examined and audited at any time upon reasonable prior notice to Mortgagor by Mortgagee’s agents.

 

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 costs and expenses and reimburse Mortgagee for any and all expenditures of every character incurred or expended from time to time, regardless of whether an Event of Default shall have occurred, in connection with:

 

(a)           the preparation, negotiation, documentation, closing, renewal, revision, modification, increase, review or restructuring of any loan or credit facility secured by this Deed of Trust, including legal, accounting, auditing, architectural, engineering and inspection services and disbursements, or in connection with collecting or attempting to enforce or collect the Note or this Deed of Trust.

 

(b)           Mortgagee’s evaluating, monitoring, administering and protecting the Property.

 

(c)           Mortgagee’s creating, perfecting and realizing upon Mortgagee’s security interest in and liens on the Property, and all 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.

 

  

14

  

 

Provided, that no right or option granted by Mortgagor to Mortgagee or otherwise arising pursuant to any provision of this Deed of Trust, the Note 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, 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 UNLESS SPECIFICALLY STATED HEREIN, 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, liability, obligation, damage, penalty, judgment, claim, deficiency, expense, action, suit, cost and disbursement of any kind or nature whatsoever directly results from the gross negligence or willful misconduct of that Indemnified Party).  If any person or entity (including Mortgagor or any of its affiliates) ever alleges gross negligence or willful misconduct by an Indemnified Party, the full amount of indemnification provided for in this Section shall nonetheless be paid upon demand, subject to later adjustment or reimbursement at such time, if any, as a court of competent jurisdiction enters a final judgment as to the extent and effect of the alleged gross negligence or willful misconduct.  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 Past Due Rate.

 

ARTICLE 5

MORTGAGOR’S REPRESENTATIONS AND WARRANTIES

 

To induce Mortgagee to extend financial accommodations, including credit under the Note, Mortgagor makes the warranties and representations set forth in this Article.

 

Section 5.1      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 5.2      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 5.3      Mortgagor Has All Necessary Rights.  Mortgagor possesses all permits, licenses, patents, trademarks, trade names and copyrights required to conduct its business.  All easements, rights-of-way, utilities and other rights necessary to the maintenance and operation of the Property have been obtained and are in full force and effect.

 

  

15

  

 

ARTICLE 6

RELEASE, DEFAULTS AND REMEDIES

 

Section 6.1      Release for Full Payment and Performance.  Subject to the automatic reinstatement provision 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, complete performance of all of the obligations of the Obligors under the Credit Documents and final termination of Mortgagee’s obligations--if any--to make any further advances under the Note or to provide any other financial accommodations to any Obligor.

 

Section 6.2      Events of Default.  The occurrence of any Event of Default under the Loan Agreement or any other Credit Document 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 shall, at the option of Mortgagee, become immediately due and payable without presentment, demand, notice of intention to accelerate or notice of acceleration, or other notice of any kind, 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 Note 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 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 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 foreclosure sale conducted in any manner consistent with the Small Tract Financing Act of Montana, Mont. Code Ann. § 71-1-301, et seq., and any other applicable law.  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 general 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).  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 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);

 

  

16

  

 

(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 Note 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 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; and

 

(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.

 

  

17

  

 

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 and waives any notice or hearing with respect thereto.  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.

 

Section 6.12      Lifting of Automatic Stay.  In the event that Mortgagor or any other Obligor is the subject of any insolvency, bankruptcy, receivership, dissolution, reorganization or similar proceeding, federal or state, voluntary or involuntary, under any present or future law or act, Mortgagee is entitled to the automatic and absolute lifting of any automatic stay as to the enforcement of its remedies under the Credit Documents against the security for the Debt, including specifically the stay imposed by Section 362 of the United States Federal Bankruptcy Code, as amended.  Mortgagor hereby consents to the immediate lifting of any such automatic stay, and will not contest any motion by Mortgagee to lift such stay.  Mortgagor expressly acknowledges that the security for the Debt is not now and will never be necessary to any plan of reorganization of any type.

 

ARTICLE 7

MORTGAGEE’S RIGHT TO PERFORM MORTGAGOR’S OBLIGATIONS

 

Section 7.1      Mortgagee May Elect to Perform Defaulted Obligations.  If Mortgagor should fail to comply with any of its agreements, covenants or obligations under this Deed of Trust, the Note, or any other Credit Document, 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.  Any and all expenses thus incurred or paid by Mortgagee 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 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.

 

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 Note and the Credit Documents and of all rights given Mortgagee by law.

 

  

18

  

 

ARTICLE 8

TAX AND INSURANCE DEPOSITS

 

In addition to the Debt payments, promptly after Mortgagee requests it at any time after the occurrence of an Event of Default, Mortgagor agrees to 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 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.  Mortgagee shall have the right to and will, if, as and when requested by Mortgagor to do so, apply such deposits in payment of such insurance obligations and Impositions.  Mortgagor hereby waives the limitations imposed by Mont. Code Ann. § 71-1-113, and Mortgagor and Mortgagee hereby agree, in accordance with Mont. Code Ann. § 71-1-114, that funds on reserve pursuant to this Deed of Trust for the payment of taxes, insurance premiums, or other expenses may exceed 110% of the reasonable amount needed to pay such expenses.

 

ARTICLE 9

ASSIGNMENT OF RENTS

 

Section 9.1      Assignment of Rents, Revenues, Income and Profits.  Mortgagor hereby assigns and transfers to Mortgagee all rents, revenues, income and profits (“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 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       Assignment is Absolute; Grant of Revocable License to Mortgagor to Collect Rental before an Event of Default.  The transfer of Rental to Mortgagee shall be upon the following terms: (a) until receipt from Mortgagee of notice of the occurrence of an Event of Default, Mortgagor shall have the right under a retained and reserved license (but limited as provided herein) to collect Rental and each tenant may pay Rental directly to Mortgagor; but after an Event of Default, Mortgagor’s license shall automatically terminate and be revoked and to the extent Mortgagor collects any Rental 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.  The assignment contained in this Article is intended to be absolute, unconditional and presently effective.  It shall never be necessary for Mortgagee to institute legal proceedings of any kind whatsoever to enforce the provisions of this Article.  It is agreed that any Rental retained and reserved by Mortgagor pursuant to the aforementioned license 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 retained by the Mortgagee and then, in such event, the Rental so received shall be applied in accordance with this Section 9.2.

 

  

19

  

 

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.  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 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.  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)           To Mortgagor’s knowledge as of the date of this Deed of Trust, 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;

 

  

20

  

 

(c)           All existing Leases are valid, unmodified and in full force and effect, except as disclosed in writing to Mortgagee, and no default exists thereunder;

 

(d)           No Rental has been, nor does Mortgagor anticipate that any Rental will be, waived, released, discounted, set off or compromised, except as disclosed to Mortgagee in writing before the date hereof;

 

(e)           Except as disclosed to Mortgagee in writing before the date hereof, Mortgagor has not received any funds or deposits from any tenant for which credit has not already been made on account of accrued Rental;

 

(f)           Mortgagor shall (i) perform all of the 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.  Mortgagor will not, without the prior written consent of Mortgagee, amend, modify, extend, renew, terminate, cancel or surrender any Lease or suffer or permit any of the foregoing, orally or in writing;

 

(g)           Mortgagor shall not execute any Lease unless the form of the Lease has been approved by Mortgagee and the tenant under such Lease and the terms of such Lease shall comply with leasing standards for the Property from time to time approved by Mortgagee in writing;

 

(h)           Mortgagor shall give immediate notice to Mortgagee of any notice Mortgagor received from any tenant or subtenant under any Leases specifying any claimed default by any party under such Leases;

 

(i)           Mortgagor shall enforce the tenants’ obligations under the Leases;

 

(j)           Mortgagor shall defend, at Mortgagor’s expense, any proceeding pertaining to the Leases, including, if Mortgagee so requests, any such proceeding to which Mortgagee is a party;

 

(k)           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;

 

(l)           Mortgagor shall not encumber or assign, or permit the encumbrance or assignment of, any Leases or Rental without the prior written consent of Mortgagee;

 

(m)           Mortgagor shall not waive or release any obligation of any tenant under the Leases without Mortgagee’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed;

 

(n)           Each Lease executed after the date hereof shall contain a statement signed by the Mortgagor that such Lease is subject to this Deed of Trust;

 

(o)           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

 

(p)           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 under this Article (subject to the automatic reinstatement provisions of Section 10.21 below).

 

  

21

  

 

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     Security is Cumulative.  No other security now existing or hereafter taken to secure any part of the Debt or the performance of any obligation or liability whatever shall in any manner affect or impair the security given by this Deed of Trust.  All security for any part of the Debt and the performance of any obligation or liability shall be taken, considered and held as cumulative.

 

Section 10.3     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 Texas 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 required to avoid or minimize usury and to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term of the applicable indebtedness so that the interest rate does not exceed the Ceiling Rate.  The provisions of this Section shall control all agreements, whether now or hereafter existing and whether written or oral, between Mortgagor and Mortgagee.

 

Section 10.4      Mortgagor Waives All Stay, Extension, Appraisement and Redemption Rights.  Mortgagor will not at any time insist upon or plead or in any manner whatever claim or take the benefit or advantage of any stay or extension law now or at any time hereafter in force in any locality where the Property or any part thereof may or shall be situated, nor will Mortgagor claim, take or insist on any benefit or advantage from any law now or hereafter in force providing for the valuation or appraisement of the Property or any part thereof before any sale or sales thereof to be made pursuant to any provision of this Deed of Trust, or to decree of any court of competent jurisdiction, nor after any such sale or sales made pursuant to any provision of this Deed of Trust, or to decree of any court of competent jurisdiction, nor after any such sale or sales will Mortgagor claim or exercise any right conferred by any law now or at any time hereafter in force to redeem the property so sold or any part of it, and Mortgagor hereby WAIVES all benefit and advantage of any such law or laws and WAIVES the appraisement of the Property or any part of it and covenants that Mortgagor will not hinder, delay or impede the execution of any power in this Deed of Trust granted and delegated to the Trustee or Mortgagee, but that Mortgagor will suffer and permit the execution of every such power as though no such law or laws had been made or enacted.

 

  

22

  

 

Section 10.5      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 10.6      Construction Mortgage.  If funds are to be advanced by Mortgagee against the Note as construction progresses on the Real Property, then this is a construction mortgage, as such term is defined in the Texas Business and Commerce Code, and such funds are to be used to pay the costs of such construction, which may with the express prior written consent of Mortgagee include the acquisition costs of the Real Property.

 

Section 10.7      Due on Sale.  Mortgagor agrees that if, without Mortgagee’s prior written consent, (a) any part of the Property or any interest either in the Property or in the beneficial equity ownership of any Mortgagor which is not a natural person (an “Equity Interest”) 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 or in an Equity Interest, Mortgagee shall have the right and option (except only in those circumstances, if any, where the exercise of such right is expressly prohibited by applicable law and such law also precludes Mortgagor from effectively waiving such prohibition) to declare the Note or the entire amount of the Debt to be due and payable.  Mortgagee shall have such right and option absolutely and irrespective of whether or not the transfer, conveyance or mortgage would or might (i) diminish the value of any security for the Debt, (ii) increase the risk of default under this Deed of Trust, (iii) increase the likelihood of Mortgagee’s having to resort to any security for the Debt after default or (iv) add or remove the liability of any person or entity for payment of the Debt or performance of any covenant or obligation under this Deed of Trust.  To exercise such right and option, Mortgagee shall give written notice to Mortgagor and to the person or entity to whom such property was transferred, conveyed or mortgaged that the Note or Debt has been declared due and payable and that Mortgagee demands that its maker pay it.  If Mortgagee’s consent to a proposed transfer, conveyance or 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 reasonable transfer fee, in an amount determined by Mortgagee, be paid; (3) that a principal amount deemed appropriate by Mortgagee be paid against the Debt to reduce the ratio that the outstanding balance of the Debt bears to the value of the Property as determined by Mortgagee to a level which is then acceptable to Mortgagee; (4) that Mortgagor and each proposed transferee execute an assumption agreement and such other instruments as Mortgagee or its counsel shall reasonably require and in form and substance satisfactory to Mortgagee and its counsel; (5) that the proposed transferee’s creditworthiness and experience in owning and operating similar properties be demonstrable and proven to Mortgagee’s reasonable satisfaction to be at least as good as Mortgagor’s and Mortgagor’s managers’ at the time the Note was first funded; (6) 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 transfer, conveyance or mortgaging and (7) that any existing or 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 10.8      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 (collectively, the “Proceeds”) 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, provided (i) no Event of Default has occurred and is continuing, (ii) the Fed Ex Lease is in full force and effect, without default, and (iii) the tenant under the Fed Ex Lease has agreed in writing not to terminate the Fed Ex Lease as a result of the condemnation, the remainder of said Proceeds shall be paid out to the extent required under the Fed Ex Lease 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.  If the conditions to disbursement set forth in the immediately preceding sentence are not satisfied, the Proceeds may be applied, at the discretion of Mortgagee, to the payment of the Debt in the order determined by Mortgagee in its sole discretion.  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.

 

  

23

  

 

Section 10.9      Appraisals and Reports to be Provided.  Mortgagee (by its officers, employees, directors or agents) at any time and from time to time but not more than once during the term of the Loan unless an Event of Default exists or unless required by any Governmental Authority, and at Mortgagor’s sole cost and expense (to the extent not prohibited by applicable law), may contract for the services of an appraiser approved by Mortgagee in its sole discretion to perform a written appraisal of the Property (or such parts of it as are designated in Mortgagee’s request).  Any such appraisal may be performed at any time or times upon reasonable notice to Mortgagor, as long as it does not unreasonably interfere with Mortgagor’s use of the Property.  Specifically, upon at least three business days’ prior notice, any such appraiser is authorized to enter upon, and Mortgagor shall allow such appraiser access to, the Property as may be necessary in the reasonable opinion of such appraiser to perform its professional services.  Mortgagor will also furnish such appraiser such historical and operational information in Mortgagor’s possession regarding the Property as may be reasonably requested by such appraiser to facilitate preparation of an appraisal and will make available for meetings with such appraiser appropriate personnel having knowledge of such matters.  Mortgagor will permit Mortgagee and its agents, independent contractors, representatives, employees and officers at all reasonable times upon at least three business days’ prior notice to go upon, examine, inspect and remain on the Property for any lawful purpose and will furnish to Mortgagee on request all pertinent information in Mortgagor’s possession in regard to the development, operation, use and status of the Property.  Promptly upon Mortgagee’s reasonable request (but not more than once during the term of the Loan unless an Event of Default exists or unless required by any Governmental Authority), Mortgagor agrees, at Mortgagor’s sole cost and expense (to the extent not prohibited by applicable law):

 

(a)           to cause an inspection and written appraisal of the Property (or such parts of it as are designated in Mortgagee’s request) to be made by a qualified appraiser approved by Mortgagee; and

 

(b)           to cause to be conducted or prepared any other written report, summary, opinion, inspection, review, survey, audit or other professional service relating to the Property or any operations in connection with it (all as designated in Mortgagee’s request), including any accounting, architectural, consulting, engineering, design, legal, management, pest control, surveying, toxic or hazardous materials survey, inspection, removal or cleanup work, title abstracting or other technical, managerial or professional service relating to the Property or its operations.

 

(c)           Mortgagee may elect to deliver any such request orally, by telegram, telex or telefax, by mail or by hand delivery addressed to Mortgagor as provided in the Introduction to this Deed of Trust or by any other legally effective method, and it may be given at any time and from time to time before the complete and final release and discharge of this Deed of Trust.  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 at the Past Due Rate.

 

Section 10.10     Notices.  Except where certified or registered mail notice is required by applicable law, service of any notice to Mortgagor required or permitted under this Deed of Trust shall be completed upon deposit of the notice, enclosed in a first class postage prepaid wrapper, properly addressed to Mortgagor at Mortgagor’s address designated in the Introduction to this Deed of Trust (or if no address is so designated, or such address has changed, to Mortgagor’s most recent address as shown by the records of Mortgagee) in a post office or official depository under the care and custody of the United States Postal Service, and the affidavit of any person having knowledge of the facts concerning such mailing shall be conclusive evidence of the fact of such service.  Such method of giving notice shall not be exclusive, but instead any notice may be given to Mortgagor in any manner permitted or recognized by law.

 

  

24

  

 

Section 10.11      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, provided that no Mortgagor may assign or delegate any of its or his rights, interests or obligations under this Deed of Trust, the Note 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.

 

Section 10.12      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 10.13      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 10.14      “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 10.15      Gender.  The masculine and neuter pronouns used in this Deed of Trust each includes the masculine, feminine and neuter genders.

 

Section 10.16      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 10.17      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 10.18      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”.

 

  

25

  

 

Section 10.19      Homestead Disclaimer.  Mortgagor warrants and represents that at the time of execution and delivery of this Deed of Trust, no part of the Mortgaged Property forms any part of any property owned, used or claimed by Mortgagor or Mortgagor’s spouse or children either as a residence or a business homestead, or as otherwise exempt from forced sale under the laws of the State of Montana or the United States.

 

Section 10.20       Household Goods Not Covered.  If Mortgagee is a state or national bank and if any natural person executing this Deed of Trust is a “consumer” as defined in Regulation AA of the Board of Governors of the Federal Reserve System, no lien or security interest created or evidenced by this Deed of Trust shall extend to, cover or affect “household goods” as also defined therein and no waiver of the rights of Mortgagor contained in this or any other instrument shall extend to, or be effective as to, any right the waiver of which is prohibited by Regulation AA.  If Mortgagee is not a state or national bank and if any natural person executing this Deed of Trust is a “consumer” as defined in 16 C.F.R. § 444.1(d), as amended, no lien or security interest created or evidenced by this Deed of Trust shall extend to, cover or affect “household goods” as defined in 16 C.F.R. § 444.1(a), as amended and no waiver of the rights of Mortgagor contained in this or any other instrument shall extend to, or be effective as to, any right the waiver of which is prohibited by 16 C.F.R. § 444.

 

Section 10.21       Payments Returned.  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 10.22       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 10.23        Mortgagee’s Offset Rights.  Mortgagee is hereby authorized at any time and from time to time, without notice to any person or entity (and Mortgagor hereby WAIVES any such notice) to the fullest extent permitted by law, to set-off and apply any and all monies, securities and other properties of Mortgagor now or in the future in the possession, custody or control of Mortgagee, or on deposit with or otherwise owed to Mortgagor by Mortgagee--including all such monies, securities and other properties held in general, special, time, demand, provisional or final accounts or for safekeeping or as collateral or otherwise (but excluding those accounts clearly designated as escrow or trust accounts held by Mortgagor for others unaffiliated with Mortgagor)--against any and all of Mortgagor’s obligations to Mortgagee now or hereafter existing under this Deed of Trust, irrespective of whether Mortgagee shall have made any demand under this Deed of Trust.  Mortgagee agrees to use reasonable efforts to promptly notify Mortgagor after any such set-off and application, provided that failure to give--or delay in giving--any such notice shall not affect the validity of such set-off and application or impose any liability on Mortgagee.  Mortgagee’s rights under this Section are in addition to other rights and remedies (including other rights of set-off) which Mortgagee may have.

 

Section 10.24        Venue.  This Deed of Trust is performable in Harris County, Texas, which shall be a proper place of venue for suit on or in respect of this Deed of Trust.  Mortgagor irrevocably agrees that any legal proceeding in respect of this Deed of Trust shall be brought in the district courts of Harris County, Texas or the United States District Court for the Southern District of Texas, Houston Division, or, at the sole option of Beneficiary, in any state or federal court located in Silver Bow County, Montana (collectively, the “Specified Courts”).  Mortgagor hereby irrevocably submits to the nonexclusive jurisdiction of the state and federal courts of the State of Texas, or at the sole option of Beneficiary, to the nonexclusive jurisdiction of the state and federal courts of the State of Montana.  Mortgagor hereby irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to any Credit Document brought in any Specified Court, and hereby further irrevocably waives any claims that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  Mortgagor further irrevocably consents to the service of process out of any of the Specified Courts in any such suit, action or proceeding by the mailing of copies thereof by certified mail, return receipt requested, postage prepaid, or by overnight courier to Mortgagor at its address as provided in this Deed of Trust.  Nothing herein shall affect the right of Mortgagee to commence legal proceedings or otherwise proceed against Mortgagor in any jurisdiction or to serve process in any manner permitted by applicable law.  Mortgagor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  THIS DEED OF TRUST SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT (a) OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO THE CREATION, PERFECTION AND FORECLOSURE OF LIENS, AND ENFORCEMENT OF RIGHTS AND REMEDIES AGAINST THE MORTGAGED PROPERTY, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MONTANA, AND (b) THAT THE LAWS OF THE UNITED STATES OF AMERICA AND ANY RULES, REGULATIONS, OR ORDERS ISSUED OR PROMULGATED THEREUNDER, APPLICABLE TO THE AFFAIRS AND TRANSACTIONS ENTERED INTO BY MORTGAGEE, OTHERWISE PRE-EMPT MONTANA OR TEXAS LAW, IN WHICH EVENT SUCH FEDERAL LAW SHALL CONTROL.

 

  

26

  

 

Section 10.25      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 10.26      Environmental Risk Agreement.  Reference is hereby made to the Environmental Risk Agreement dated concurrently herewith from Mortgagor and certain other persons party thereto for the benefit of Mortgagee, as the same may be amended, supplemented, restated or replaced from time to time (the “Environmental Risk Agreement”).  The Environmental Risk Agreement shall constitute a Credit Document for all purposes hereunder and all obligations thereunder shall be secured by the liens and security interests of this Deed of Trust.

 

[Signature Page Follows]

  

27

  

EXECUTED on October 28, 2011, to be effective as of the date first set forth above.

 

ARC FEBTTMT001, LLC,

a Delaware limited liability company

By:  /s/ William M. Kahane                                   

Name:  William M. Kahane

Title:  President

	
STATE OF NEW YORK

	
§

	  	
§

	
COUNTY OF NEW YORK

	
§

This instrument was acknowledged before me on October 28, 2011, by William M. Kahane, President of ARC FEBTTMT001, LLC, a Delaware limited liability company, on behalf of said limited liability company.

 

[STAMP]

/s/ Eve LaMonica                                                   

Notary Public in and for the State of New York

Attached:

Exhibit A -- description of the Real Property

Exhibit B -- permitted title exceptions

 

 

[Signature Page to Deed of Trust and Security Agreement (With Assignment of Rents)]

 

  

  

  

 

EXHIBIT A

Legal Description of Land:

 

 

 

 

 

EXHIBIT A

 

  

  

  

 

EXHIBIT B

Permitted Exceptions

 

 

 

 

EXHIBIT BUnassociated Document

 

AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY

 

ADVANCE AUTO – 2 Pack - Texas

 

THIS AGREEMENT (“Agreement”) is made and entered into as of the Effective Date by and between AMERICAN REALTY CAPITAL II, LLC (“Buyer”), and OAKLEY INVESTMENTS, LLC (Jones Rd) and COIT PROPERTIES, LLC (Tomball Pkwy.)(hereinafter collectively and individually referred to as “Seller”).

 

BACKGROUND

 

A.           Each Seller is the Owner of each of the Properties listed on Exhibit A1 attached hereto.

 

B.           Buyer desires to purchase the Property and Seller desires to sell the Property to Buyer on the terms and conditions set forth in this Agreement.

In consideration of the mutual promises set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

 

1.           Terms and Definitions.  The terms listed below shall have the respective meaning given them as set forth adjacent to each term.

 

(a)           “Brokers” shall mean Chad Byerly/The Net Lease Authority and Stan Johnson Company, acting as Seller’s agent.

 

(b)           “Closing” shall mean the consummation of the transaction contemplated herein, which shall occur, subject to any applicable extension periods set forth in this Agreement, on the later of September 27, 2011or the day following the expiration of the Due Diligence Period.  The date of Closing is sometimes hereinafter referred to as the “Closing Date.”  Neither party will need to be present at Closing, it being anticipated that the parties will deliver all Closing documents and deliverables in escrow to the Escrow Agent prior to the date of Closing.

 

(c)           “Due Diligence Period” shall mean the period beginning upon the Effective Date and extending until 11:59 PM EST on the date that is twenty-eight (28) days thereafter.  Seller shall deliver to Buyer all of the Due Diligence Materials within five (5) business days after the Effective Date, and for each day that passes thereafter until all of the Due Diligence Materials are delivered to Buyer, the Due Diligence Period and the Closing Date shall be extended by one (1) business day.  If Seller fails to deliver to Buyer any material item required to be delivered under Section 6(b) hereunder, the Due Diligence Period will be extended one (1) day for each day that said delivery is delayed up to a maximum of ten (10) days.

 

(d)           “Earnest Money” shall mean One Hundred Fifty-Seven Thousand Dollars ($157,000.00).  The Earnest Money shall be delivered to Escrow Agent within three (3) business days after the Effective Date.  The Earnest Money shall be deposited by Buyer in escrow with Escrow Agent, to be applied as part payment of the Purchase Price at the time the sale is closed, or disbursed as agreed upon in accordance with the terms of this Agreement.  Seller and Buyer each shall pay one-half of all reasonable escrow fees charged by Escrow Agent.

 

  

  

  

 

(e)            “Effective Date” This Agreement shall be signed by both Seller and Buyer.  The date that is one (1) business day after the date of the last execution and acceptance by both parties shall be the “Effective Date” of this Agreement.

 

(f)           “Escrow Agent” shall mean Chicago Title Insurance Company, whose address is Suite 1325, 1515 Market Street, Philadelphia, PA 19102-1930, Attention:  Edwin G. Ditlow, Telephone: 215-875-4184; Telecopy: 215-732-1203; E-mail: ditlowE@ctt.com.   The parties agree that the Escrow Agent shall be responsible for (x) organizing the issuance of the Commitment and Title Policy, (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

 

(g)            “Lease” or “Leases” shall mean those certain Leases described on Exhibit A2 attached hereto and made a part hereof  and referred to in  Section 6(b)(i) of this Agreement between each Seller, as landlord, and Advance Stores Company, Incorporated, as tenant (“Tenant”), as amended.

 

(h)            “Property” shall collectively mean (i) those certain parcels of real property, all of which are listed on Exhibit A1, together with all right, title and interest of the Seller, if any, in and to the land lying in the bed of any street or highway in front of or adjoining such real property, and all appurtenances and all the estate and rights of the Seller, if any, in and appurtenant to such parcels of real property, including, without limitation, all appurtenant easements and rights-of-way, and Buildings (as hereinafter defined) and all other improvements thereon, and all air and subsurface rights appurtenant to such parcels of real property, as the case may be (such parcels of real property, together with all such rights and appurtenances, being collectively referred to herein as the “Land”); (ii) all of the buildings and improvements (each individually called a “Building” and collectively called the “Buildings”) situated on the Land (the Land and Buildings collectively referred to herein as the “Real Property”); (iii) all right, title and interest of the Seller, if any, in and to the lighting, electrical, mechanical, plumbing and heating, ventilation and air conditioning systems used in connection with the Land and the Buildings, and all carpeting, draperies, appliances and other fixtures and equipment attached or appurtenant to the Land together with all personal property (other than furniture, equipment not necessary to operate the Buildings or building systems and not permanently affixed to the Buildings or Land, trade fixtures and inventory) owned by the Seller and located on the Land or on and/or in the Buildings (collectively, the “Personal Property”); (iv) all right, title and interest of the Seller in and to all warranties and guaranties respecting the Buildings and Personal Property; (v) to the extent not otherwise described in subsection (i), all right, title and interest of the Seller in and to all leases respecting the Buildings and Personal Property, including, without limitation, all prepaid rent or security or other deposits thereunder; (vi) all right, title and interest of Seller in and to all licenses, permits, authorizations and approvals issued by any governmental agency or authority which pertain to the Land and the Buildings, to the extent they exist and are transferable and assignable; and (vii) to the extent the same are assignable, all site plans, surveys, and plans which relate to the Land.  Any references to “Property” in the singular, such as references to “a Property” or “each Property”, refer to an individual parcel of Land and all matters described in (ii)-(vii) in connection with such Land.

 

  

  

  

 

(i)           “Purchase Price” shall mean the amount listed for each Property as set forth opposite the designation of such Property on Exhibit A1 attached hereto.

 

(j)           Seller and Buyer’s Notice address

 

(i)           “Seller’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

 

Oakley Investments, LLC and

Coit Properties, LLC

915 Enterprise Drive

Jonesboro, AR 72401

Tel. No.: (870) 935-1624

Fax No.:  (870) 935-7011

Email: stevec@raincox.com

 

And to:

 

Skip Smith

915 Enterprise Drive

Jonesboro, AR 72401

Tel. No.: (870) 935-1624

Fax No.:  (870) 935-7011

Email: skip@raincox.com

 

(ii)           “Buyer’s Notice Address” shall be as follows, except as same may be changed pursuant to the Notice section herein:

 

William Kahane

American Realty Capital II, LLC

405 Park Avenue, 15th Floor

New York, NY 10022

Tel. No.: (215) 887-3054

Fax No.:  (646) 861-7751

Email: wkahane@arlcap.com

 

And to:

 

Jesse Galloway

American Realty Capital II, LLC

405 Park Avenue, 15th Floor

New York, NY 10022

Tel. No.: (212) 415-6516

Fax No.: (646) 861-7751

Email: jgalloway@arlcap.com

 

And Due Diligence Materials (if provided by email) to:

 

  

  

  

duediligence@arlcap.com

 

With hard copies and/or cds to:

 

James A. (Jim) Mezzanotte

American Realty Capital, LLC

202 E Franklin Street

Monroe, NC  28112

Tel. No.: (212) 415-6570

Fax No.: (212) 415-6507

Email: jmezzanotte@arlcap.com

 

2.           Purchase and Sale of the Property.  Subject to the terms of this Agreement, Seller agrees to sell, to Buyer the Property for the Purchase Price set forth above.

 

3.           Purchase Price.

 

(a)           The Purchase Price to be paid by Buyer to Seller shall be paid by wire transfer of immediately available funds to Escrow Agent, at the time of Closing, or as otherwise agreed to between Buyer and Seller.

 

(b) In the event this Agreement is terminated in accordance with the provisions of Sections 7 or 9(b) hereof with respect to one Property, this Agreement shall continue in full force and effect with respect to the remaining Property and the Purchase Price shall be reduced by the amount shown on Exhibit A1 with respect to such terminated Property.

 

4.           Proration of Expenses and Payment of Costs and Recording Fees.

 

(a)           All real estate taxes, rollback taxes, personal property taxes, water and sewer use charges, and any other charges and assessments constituting a lien on the Property (collectively “Taxes and Assessments”) due and payable on or before the Closing Date shall be remitted to the collecting authorities or to the Escrow Agent by Seller prior to or at Closing. There shall be no closing adjustments between the parties for Taxes and Assessments not yet due and payable at Closing unless Tenant is not responsible for all such Taxes and Assessments due in accordance with the provisions of the Leases.

 

(b)           All rents shall be prorated as of the Closing Date with Buyer being credited for rent attributable to the day of Closing through and including the last day of the calendar month in which the Closing Date occurs; provided, however, if the Closing Date shall occur within ten (10) days of the end of the month in which Closing occurs, Buyer and Seller agree that Buyer shall be credited with the following month’s rent at Closing and Seller shall be entitled to retain any rents received by Seller that are attributable to the month following the month in which the Closing Date occurs and Buyer agrees to the extent that it receives any rent attributable to such month which was adjusted at Closing, it will refund such amount to Seller as soon as reasonably possible.

 

  

  

  

 

(c)           Seller shall pay or be charged with the following costs and expenses in connection with this transaction which costs shall be referred to as “Seller’s Closing Costs”:

 

(i)           100% of all Owner’s Title Insurance policy premiums, including search costs and a survey endorsement, but excluding any other endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any;

(ii)           Transfer taxes and conveyance fees on the sale and transfer of the Property shall be paid by Seller;

(iii)           Broker’s commission payments (for both leasing and sales commissions earned), in accordance with Section 23 of this Agreement; and

(iv)           All fees relating to the granting and executing  of the Deed for each Property and for any costs incurred in connection with the release of existing debt, including, but not limited to, prepayment penalty fees and recording fees for documents providing for the release of the applicable Property from the existing debt.

(d)           Buyer shall pay or be charged with the following costs and expenses in connection with this transaction, which costs shall be referred to as “Buyer’s Closing Costs”:

 

(i)           Title Insurance policy premiums for any endorsements issued in connection with such policies other than endorsements that Seller elects to purchase to cover title issues, if any, and other than a survey endorsement;

(ii)           all costs and expenses in connection with Buyer’s financing, including appraisal, points, commitment fees and the like and costs for the filing of all documents necessary to complete such financing and related documentary stamp tax and intangibles tax;

(iii)           Buyer shall pay for the cost of its own survey, Phase 1 environmental study and due diligence investigations; and

(iv)           The cost of recording the Deed for each Property.

(e)          Each party shall pay its own legal fees incidental to the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby.

 

5.           Title.  At Closing, Seller agrees to convey to Buyer fee simple marketable title to each Property by special warranty deed, free and clear of all liens, defects of title, conditions, easements, assessments, restrictions, and encumbrances except for Permitted Exceptions (as hereinafter defined).

 

6.           Examination of Property.  Seller and Buyer hereby agree as follows:

 

  

  

  

 

(a)           Buyer shall order a title commitment (the “Title Commitment”) for each Property from Escrow Agent promptly after the date hereof.  All matters shown in the Title Commitment with respect to which Buyer fails to object prior to the expiration of the Due Diligence Period shall be deemed “Permitted Exceptions”.  However, Permitted Exceptions shall not include any mechanic’s lien or any monetary lien, or any deeds of trust, mortgage, or other loan documents secured by the Property, (collectively, “Liens”).  Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent).   Seller agrees to remove or cure any objections of Buyer which are of a nature that are capable of being cured with reasonable efforts prior to Closing.  Seller shall have no obligation to cure any title matter objected to, except as aforesaid, provided Seller notifies Buyer of any objections which Seller elects not to remove or cure for each Property within five (5) business days following receipt of Buyer’s objections.  In the event that Seller refuses to remove or cure any objections, Buyer shall have the right to terminate this Agreement with respect to such Property upon written notice to Seller given within five (5) business days after receipt of Seller’s notice, upon which termination the Earnest Money shall be returned to Buyer and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.  If any matter not revealed in the Title Commitment is discovered by Buyer or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Buyer shall have until the earlier of (i) ten (10) days after the Buyer’s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the date of Closing, to provide Seller with written notice of its objection to any such new title exception (an “Objection”).  If Seller does not remove or cure such Objection prior to the date of Closing, Buyer may terminate this Agreement, in which case the Earnest Money shall be returned to Buyer, Seller shall reimburse Buyer for all out of pocket costs and expenses incurred  with respect to the Title Commitment and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

 

(b)           Within five (5) business days following the Effective Date, Seller shall provide to Buyer copies of the following documents and materials pertaining to each Property to the extent within Seller’s possession or reasonably obtainable by Seller or Seller’s counsel: (i) a complete copy of all leases affecting the Property and all amendments thereto and of all material correspondence relating thereto; (ii) a copy of all surveys and site plans of the Property, including without limitation any as-built survey obtained or delivered to tenants of the Property in connection with its construction; (iii) a copy of all architectural plans and specifications and construction drawings and contracts for improvements located on the Property; (iv) a copy of Seller’s title insurance commitments and policies relating to the Property; (v) a copy of the certificate of occupancy and zoning reports for the Property; and of all governmental permits/approvals; (vi) a copy of all environmental, engineering and physical condition reports for the Property; (vii) copies of the Property’s real estate tax bills for the current and prior two (2) tax years or, if the Property has been owned by Seller for less than two (2) tax years, for the period of ownership; (viii) a copy of each tenant sales reports for the previous twenty four (24) calendar months; (ix) the operating statements of the Property for the twenty four (24) calendar months immediately preceding the Effective Date or if the Tenant has been operating for less than twenty-four (24) months, for the period of operation; (x) all service contracts and insurance policies which affect the Property, if any; (xi) a copy of all warranties relating to the improvements constructed on the Property, including without limitation any roof warranties; and (xii) a written inventory of all items of personal property to be conveyed to Buyer, if any (the “Due Diligence Materials”).  Seller shall deliver any other documents relating to each Property reasonably requested by Buyer within three (3) business days following such request.

 

  

  

  

Additionally, during the term of this Agreement, Buyer, its agents and designees, shall have the right to enter the Property for the purposes of inspecting the Property, conducting soil tests, and making surveys, mechanical and structural engineering studies, inspecting construction, and conducting any other investigations and inspections as Buyer may reasonably require to assess the condition and suitability of the Property; provided, however, that such activities by or on behalf of Buyer on the Property shall not damage the Property nor interfere with construction on the Property or the conduct of business by Tenant under the Lease; and provided further, however, that Buyer shall indemnify and hold Seller harmless from and against any and all claims or damages to the extent resulting from the activities of Buyer on the Property, and Buyer shall repair any and all damage caused, in whole or in part, by Buyer and return the Property to its condition prior to such damage, which obligation shall survive Closing or any termination of this Agreement.  Seller shall reasonably cooperate with the efforts of Buyer and the Buyer’s representatives to inspect the Property.  After the Effective Date, Buyer shall be permitted to speak and meet with Tenant in connection with Buyer’s due diligence.  Upon signing this agreement, Seller shall provide Buyer with the name of a contact person(s) for the purpose of arranging site visits.  Buyer shall give Seller reasonable written notice (which in any event shall not be less than two (2) business days) before entering the Property, and Seller may have a representative present during any and all examinations, inspections and/or studies on the Property.  Buyer shall have the unconditional right, for any reason or no reason, to terminate this Agreement by giving written notice thereof to Seller prior to the expiration of the Due Diligence Period, in which event this Agreement shall become null and void, Buyer shall receive a refund of the Earnest Money, and all rights, liabilities and obligations of the parties under this Agreement shall expire, except as otherwise expressly set forth herein.

 

(c)           Within five (5) business days following the Effective Date Seller shall request Estoppel Certificates certified to Buyer, the Approved Assignees and their Lender, successors and assigns (and simultaneously provide Buyer with a copy of such request) .  It shall be a condition of Closing that Seller shall have obtained an estoppel certificate from Tenant in the form attached  to the Leases for each Property (the “Tenant Estoppel Certificate”), and Seller shall use good faith efforts to obtain the same.  Seller shall promptly deliver to Buyer photocopies or pdf files of the executed estoppel certificates when Seller receives the same.

 

(d)           Seller shall use good faith efforts to obtain estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer.

 

7.           Risk of Loss/Condemnation.  Upon an occurrence of a casualty, condemnation or taking with respect to any Property, Seller shall notify Buyer in writing of same.  Until Closing, the risk of loss or damage to the Property, except as otherwise expressly provided herein, shall be borne by Seller.  In the event all or any portion of any Property is damaged in any casualty or condemned or taken (or notice of any condemnation or taking is issued) so that:  (a) Tenant has a right of termination or abatement of rent under the Lease for such Property, or (b) with respect to any casualty, if the cost to repair such casualty would exceed $50,000, or (c) with respect to any condemnation, any Improvements or access to the Property or more than five percent (5%) of the Property is (or will be) condemned or taken, then, Buyer may elect to terminate this Agreement with respect to each such Property by providing written notice of such termination to Seller within ten (10) business days after Buyer’s receipt of notice of such condemnation, taking or damage, upon which termination a proportionate part of  the Earnest Money shall be returned to the Buyer in accordance with the Purchase Price as set forth in Exhibit A1 and neither party hereto shall have any further rights, obligations or liabilities under this Agreement with respect to such Property, except as otherwise expressly set forth herein.  With respect to any condemnation or taking (of any notice thereof), if Buyer does not elect to cancel this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing the rights of Seller to the awards, if any, for the condemnation or taking, and Buyer shall be entitled to receive and keep all such awards.  With respect to a casualty, if Buyer does not elect to terminate this Agreement with respect to any such Property or does not have the right to terminate this Agreement as aforesaid, there shall be no abatement of the Purchase Price and Seller shall assign to Buyer at the Closing the rights of Seller to the proceeds under Seller’s insurance policies covering such Property with respect to such damage or destruction (or pay to Buyer any such proceeds received prior to Closing) and pay to Buyer the amount of  any deductible with respect thereto, and Buyer shall be entitled to receive and keep any monies received from such insurance policies.

 

  

  

  

 

8.           Earnest Money Disbursement.  The Earnest Money shall be held by Escrow Agent, in trust, and disposed of only in accordance with the following provisions:

 

(a)           If the Closing occurs, Escrow Agent shall deliver the Earnest Money to, or upon the instructions of, Seller and Buyer on the Closing Date to be applied as part payment of the Purchase Price.  If for any reason the Closing does not occur, Escrow Agent shall deliver the Earnest Money to Seller or Buyer only upon receipt of a written demand therefor from such party, subject to the following provisions of this clause (a).  Subject to the last sentence of this clause (a), if for any reason the Closing does not occur and either party makes a written demand (the “Demand”) upon Escrow Agent for payment of the Earnest Money, Escrow Agent shall give written notice to the other party of the Demand within one business day after receipt of the Demand.  If Escrow Agent does not receive a written objection from the other party to the proposed payment within five (5) business days after the giving of such notice by Escrow Agent, Escrow Agent is hereby authorized to make the payment set forth in the Demand.  If Escrow Agent does receive such written objection within such period, Escrow Agent shall continue to hold such amount until otherwise directed by written instructions signed by Seller and Buyer or a final judgment of a court.  Notwithstanding the foregoing provisions of this clause (a) if Buyer delivers a notice to Escrow Agent stating that Buyer has terminated this Agreement on or prior to the expiration of the Due Diligence Period, then Escrow Agent shall immediately return the Earnest Money to Buyer without the necessity of delivering any notice to, or receiving any notice from Seller.

 

(b)           The parties acknowledge that Escrow Agent is acting solely as a stakeholder at their request and for their convenience, that Escrow Agent shall not be deemed to be the agent of either of the parties, and that Escrow Agent shall not be liable to either of the parties for any action or omission on its part taken or made in good faith, and not in disregard of this Agreement, but shall be liable for its negligent acts and for any liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred by Seller or Buyer resulting from Escrow Agent’s mistake of law respecting Escrow Agent scope or nature of its duties.  Seller and Buyer shall jointly and severally indemnify and hold Escrow Agent harmless from and against all liabilities (including reasonable attorneys’ fees, expenses and disbursements) incurred in connection with the performance of Escrow Agent’s duties hereunder, except with respect to actions or omissions taken or made by Escrow Agent in bad faith, in disregard of this Agreement or involving negligence on the part of Escrow Agent.  Escrow Agent has executed this Agreement in the place indicated on the signature page hereof in order to confirm that Escrow Agent has received and shall hold the Earnest Money in escrow, and shall disburse the Earnest Money pursuant to the provisions of this Section 8.

 

  

  

  

 

9.           Default

 

(a)           In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and Buyer defaults in any of its obligations undertaken in this Agreement, Seller shall be entitled to, as its sole and exclusive remedy to either:  (i) if Buyer is willing to proceed to Closing, waive such default and proceed to Closing in accordance with the terms and provisions hereof; or (ii) declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Earnest Money as liquidated damages as and for Seller’s sole remedy.  Upon such termination, neither Buyer nor Seller shall have any further rights, obligations or liabilities hereunder, except as otherwise expressly provided herein.  Seller and Buyer agree that (a) actual damages due to Buyer’s default hereunder would be difficult and inconvenient to ascertain and that such amount is not a penalty and is fair and reasonable in light of all relevant circumstances, (b) the amount specified as liquidated damages is not disproportionate to the damages that would be suffered and the costs that would be incurred by Seller as a result of having withdrawn the Property from the market, and (c) Buyer desires to limit its liability under this Agreement to the amount of the Earnest Money paid in the event Buyer fails to complete Closing.  Seller hereby waives any right to recover the balance of the Purchase Price, or any part thereof, and the right to pursue any other remedy permitted at law or in equity against Buyer.  In no event under this Section or otherwise shall Buyer be liable to Seller for any punitive, speculative or consequential damages.

 

(b)           In the event of a default in the obligations herein taken by Seller, or in the event of the failure of a condition precedent set forth in Section 13 of this Agreement, with respect to any or all of the Properties, Buyer may, as its sole and exclusive remedy, either:  (i) waive any unsatisfied conditions and proceed to Closing in accordance with the terms and provisions hereof; (ii) terminate this Agreement with respect to any or all Properties by delivering written notice thereof to Seller no later than Closing, upon which termination the Earnest Money shall be refunded to Buyer, Seller shall pay to Buyer all of the out-of-pocket costs and expenses incurred by Buyer in connection with this Agreement, which return and payment shall operate to terminate this Agreement and release Seller and Buyer from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller’s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period”) to permit Seller to remedy any such default, and the “Closing Date” shall be moved to the last day of the Closing Extension Period.  If Buyer so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period.  If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Buyer shall have the remedies set forth in Section 9(b)(i) through (iii) above except that the term “Closing” shall be revised to reflect the Buyer’s election of remedies under this Section 9(b).

 

  

  

  

 

Notwithstanding the foregoing, in the event of a willful or intentional default of Seller hereunder, Buyer shall, in addition to the foregoing remedies, be permitted to pursue any and all rights and remedies available to Buyer at law or in equity.

 

10.           Closing.  The Closing shall consist of the execution and delivery of documents by Seller and Buyer with respect to each Property as set forth below, and delivery by Buyer to Seller of the Purchase Price in accordance with the terms of this Agreement.  Seller shall deliver to Escrow Agent for the benefit of Buyer at Closing the following executed documents for each Property:

 

(a)           A Special Warranty Deed in the form attached hereto as Exhibit B;

 

(b)           An Assignment and Assumption of Lease and Security Deposits, in the form attached hereto as Exhibit C;

 

(c)           A Bill of Sale in the form attached hereto as Exhibit D;

 

(d)           An Assignment of Contracts, Permits, Licenses and Warranties in the form of Exhibit E;

 

(e)           An original Tenant Estoppel Certificate dated no earlier than 30 days prior to the date of Closing.  In addition, the business terms of the Tenant Estoppel Certificate must be in accordance with and not contradict the Lease;

 

(f)           To the extent obtained by Seller, estoppel certificates with respect to reciprocal easement agreements as may be reasonably requested by Buyer;

 

(g)           A settlement statement setting forth the Purchase Price, all prorations and other adjustments to be made pursuant to the terms hereof, and the funds required for Closing as contemplated hereunder;

 

(h)           All transfer tax statements, declarations and filings as may be necessary or appropriate for purposes of recordation of the deed;

 

(i)           Good standing certificates and corporate resolutions or member or partner consents, as applicable, and such other documents as reasonably requested by Escrow Agent;

 

(j)           Originals of the Warranties (as hereinafter defined) ;

 

(k)           To the extent not previously delivered to Buyer, the Leases and any amendments, bearing the original signatures of the landlord and tenant thereunder, or a copy thereof verified in writing by an original signature on behalf of Tenant to be true, correct and complete ;  and copies of all books and records applicable to the Property which are identified by Buyer by written notice to Seller and reasonably necessary for the orderly transition of operation of the Property;

 

  

  

  

 

(l)           A certificate pursuant to Section 1445 of the Internal Revenue Code of 1986, as amended, or the regulations issued pursuant thereto, certifying the non foreign status of Seller;

 

(m)           An owner’s title affidavit as to mechanics’ liens and possession and other matters in customary form reasonably acceptable to Buyer and Escrow Agent;

 

(n)           Letter to Tenant in form of Exhibit H attached hereto;

 

(o)           A certificate of insurance or other evidence reasonably satisfactory to Buyer memorializing and confirming that Tenant is then maintaining policies of insurance of the types and in the amounts required by the Lease; and

 

(p)           Such other instruments as are reasonably required by Buyer or Escrow Agent to close the escrow and consummate the purchase of the Property in accordance with the terms hereof.

 

At Closing, Buyer shall instruct Escrow Agent to deliver the Earnest Money to Seller which shall be applied to the Purchase Price, shall deliver the balance of the Purchase Price to Seller and shall execute and deliver execution counterparts of the closing documents referenced in clauses (b) and (i) above.  Buyer shall have the right to advance the Closing upon five (5) business days prior written notice to Seller; provided that all conditions precedent to both Buyer’s and Seller’s respective obligations to proceed with Closing under this Agreement have been satisfied (or, if there are conditions to a party’s obligation to proceed with Closing that remain unsatisfied, such conditions have been waived by such party).  Buyer shall have a one time right to extend the Closing for up to fifteen (15) days upon written notice to Seller to be received by Seller on or prior to the date scheduled for the Closing.  The Closing shall be held through the mail by delivery of the closing documents to the Escrow Agent on or prior to the Closing or such other place or manner as the parties hereto may mutually agree.

 

11.           Representations by Seller.  For the purpose of inducing Buyer to enter into this Agreement and to consummate the sale and purchase of the Property in accordance herewith, each Seller makes the following representations and warranties to Buyer as of the date hereof and as of the Closing Date with respect to such Seller’s Property:

 

(a)           Seller is duly organized (or formed), validly existing and in good standing under the laws of its state of organization, and to the extent required by law, the State in which the Property is located.  Seller has the power and authority to execute and deliver this Agreement and all closing documents to be executed by Seller, and to perform all of Seller’s obligations hereunder and thereunder.  Neither the execution and delivery of this Agreement and all closing documents to be executed by Seller, nor the performance of the obligations of Seller hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Seller or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Seller is bound;

 

  

  

  

 

(b)           Seller has not received any written notice of any current or pending litigation, condemnation proceeding or tax appeals affecting Seller or the Property and Seller does not have any knowledge of any pending litigation or tax appeals against Seller or the Property; Seller has not initiated, nor is Seller participating in, any action for a change or modification in the current subdivision, site plan, zoning or other land use permits for the Property;

 

(c)           Seller has not entered into any contracts, subcontracts or agreements affecting the Property which will be binding upon Buyer after the Closing other than the Lease;

 

(d)           Except for violations cured or remedied on or before the date hereof, Seller has not received any written notice from (or delivered any notice to) any governmental authority regarding any violation of any law applicable to the Property and Seller does not have knowledge of any such violations;

 

(e)           Seller has fee simple title to the Property free and clear of all liens and encumbrances except for Permitted Exceptions and Seller is the sole owner of the entire lessor’s interest in the Lease.  The Property constitutes one or more separate tax parcels for purposes of ad valorem taxation;

 

(f)           With respect to the Leases:  (i) the Leases forwarded to Buyer under Section 6(b)(i) are true, correct and complete copies of the Leases; (ii) the Leases are in full force and effect and there is no default thereunder; (iii) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Leases or any extension or renewal thereof; (iv) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; and (v) the rent for each Property is as set forth on Exhibit A2;

 

(g)           There are no occupancy rights, leases or tenancies affecting the Property other than the Lease.  Neither this Agreement nor the consummation of the transactions contemplated hereby is subject to any first right of refusal or other purchase right in favor of any other person or entity; and apart from this Agreement, Seller has not entered into any written agreements for the purchase or sale of the Property, or any interest therein which has not been terminated;

 

(h)           To Seller’s knowledge, except as set forth in the environmental reports  to be delivered by Seller to Buyer, no hazardous substances have been generated, stored, released, or disposed of on or about the Property in violation of any law, rule or regulation applicable to the Property which regulates or controls matters relating to the environment or public health or safety (collectively, “Environmental Laws”).  Seller has not received any written notice from (nor delivered any notice to) any federal, state, county, municipal or other governmental department, agency or authority concerning any petroleum product or other hazardous substance discharge or seepage.  For purposes of this Subsection, “hazardous substances” shall mean any substance or material which is defined or deemed to be hazardous or toxic pursuant to any Environmental Laws.  To Seller’s knowledge, there are no underground storage tanks located on the Property;

 

  

  

  

 

(i)           Exhibit I attached hereto is a true, correct and complete listing of all warranties in effect for the Property (the “Warranties”).

 

The representations and warranties of Seller shall survive Closing for a period of one (1) year.

 

12.           Representations by Buyer.  Buyer represents and warrants to, and covenants with, Seller as follows:

 

(a)           Buyer is duly formed, validly existing and in good standing under the laws of Delaware, is authorized to consummate the transaction set forth herein and fulfill all of its obligations hereunder and under all closing documents to be executed by Buyer, and has all necessary power to execute and deliver this Agreement and all closing documents to be executed by Buyer, and to perform all of Buyer’s obligations hereunder and thereunder.  This Agreement and all closing documents to be executed by Buyer have been duly authorized by all requisite corporate or other required action on the part of Buyer and are the valid and legally binding obligation of Buyer, enforceable in accordance with their respective terms.  Neither the execution and delivery of this Agreement and all closing documents to be executed by Buyer, nor the performance of the obligations of Buyer hereunder or thereunder will result in the violation of any law or any provision of the organizational documents of Buyer or will conflict with any order or decree of any court or governmental instrumentality of any nature by which Buyer is bound.

 

The representations and warranties of Buyer shall survive Closing for a period of one (1) year.

 

13.           Conditions Precedent to Buyer’s Obligations.    Buyer’s obligation to pay the Purchase Price, and to accept title to the Property, shall be subject to compliance by Seller with the following conditions precedent for each Property on and as of the date of Closing:

 

(a)           Seller shall deliver to Buyer on or before the Closing the items set forth in Section 10 above;

 

(b)           Buyer shall receive from Escrow Agent or any other title insurer approved by Buyer in its judgment and discretion, a current ALTA owner’s form of title insurance policy, or irrevocable and unconditional binder to issue the same, with extended coverage for the Real Property in the amount of the Purchase Price, dated, or updated to, the date of the Closing, insuring, or committing to insure, at its ordinary premium rates Buyer’s good and marketable title in fee simple to the Real Property and otherwise in such form and with such endorsements as provided in the title commitment approved by Buyer pursuant to Section 6 hereof and subject only to the Permitted Exceptions (the “Title Policy”);

 

(c)           Buyer shall have received a valid and permanent final certificate of occupancy (or the equivalent thereof) for the Property which shall not contain any contingencies or require any additional work to be completed;

 

  

  

  

 

(d)           Tenant shall be in possession of the premises demised under the Leases, open for business to the public and paying full and unabated rent under the Leases and Tenant shall not have assigned or sublet any of the Property;

 

(e)           The representations and warranties of Seller contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Seller shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Seller prior to or at the Closing;

 

(f)           Seller shall have delivered to Buyer a written waiver by Tenant of any right of first refusal, right of first offer or other purchase option that Tenant has pursuant to the Leases to purchase the Property from Seller; and

 

(g)           Seller shall have made all contributions, payments and/or reimbursements and completed any and all work required by any governmental authority in connection with the construction and development of the Property, including, without limitation, as required by any variance or site plan approval.

 

In the event that the foregoing conditions precedent have not been satisfied as of Closing, Buyer shall have the rights and remedies set forth in Section 9(b) of this Agreement.

 

14.           Conditions Precedent to Seller’s Obligations.  Seller’s obligation to deliver title to the Property shall be subject to compliance by Buyer with the following conditions precedent on and as of the date of Closing:

 

(a)           Buyer shall deliver to Seller on the Closing Date the remainder of the Purchase Price, subject to adjustment of such amount pursuant to Section 3(b) hereof; and

 

(b)           The representations and warranties of Buyer contained in this Agreement shall have been true when made and shall be true in all material respects at and as of the date of Closing as if such representations and warranties were made at and as of the Closing, and Buyer shall have performed and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed or complied with by Buyer prior to or at the Closing.

 

(c)           Closing shall occur with respect to each Property, as opposed to only one Property, unless this Agreement shall have been terminated with respect to one Property in accordance with Section 9(b) hereof.

 

15.           Notices.  Unless otherwise provided herein, all notices and other communications which may be or are required to be given or made by any party to the other in connection herewith shall be in writing and shall be deemed to have been properly given and received on the date: (i) delivered by facsimile transmission or by electronic mail (e.g. email), (ii) delivered in person, (iii) deposited in the United States mail, registered or certified, return receipt requested, or (iv) deposited with a nationally recognized overnight courier, to the addresses set out in Section 1, or at such other addresses as specified by written notice delivered in accordance herewith.  Notwithstanding the foregoing, Seller and Buyer agree that notice may be given on behalf of each party by the counsel for each party and notice by such counsel in accordance with this Section 15 shall constitute notice under this Agreement.

 

  

  

  

 

16.           Seller Covenants.  Each Seller agrees with respect to each Seller’s Respective Property:  (a) shall continue to operate and manage each Property in the same manner in which Seller has previously operated and maintained such Property; (b) shall, subject to Section 7 hereof and subject to reasonable wear and tear, maintain each Property in the same (or better) condition as exists on the date hereof; and (c) shall not, without Buyer’s prior written consent, which, after the expiration of the Due Diligence Period may be withheld in Buyer’s sole discretion:  (i) amend the Leases in any manner, nor enter into any new lease, license agreement or other occupancy agreement with respect to any Property; (ii) consent to an assignment of the Leases or a sublease of the premises demised thereunder or a termination or surrender thereof; (iii) terminate the Leases nor release any guarantor of or security for the Leases unless required by the express terms of the Leases; and/or (iv) cause, permit or consent to an alteration of the premises demised thereunder (unless such consent is non-discretionary).  Seller shall promptly inform Buyer in writing of any material event adversely affecting the ownership, use, occupancy or maintenance of any Property, whether insured or not.

 

17.           Performance on Business Days.  A "business day" is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government.  Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day.

 

18.           Entire Agreement.  This Agreement constitutes the sole and entire agreement among the parties hereto and no modification of this Agreement shall be binding unless in writing and signed by all parties hereto.   No prior agreement or understanding pertaining to the subject matter hereof (including, without limitation, any letter of intent executed prior to this Agreement) shall be valid or of any force or effect from and after the date hereof.

 

19.           Severability. If any provision of this Agreement, or the application thereof to any person or circumstance, shall be invalid or unenforceable, at any time or to any extent, then the remainder of this Agreement, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby.  Each provision of this Agreement shall be valid and enforced to the fullest extent permitted by law

 

20.           No Representations or Warranties.  Buyer hereby acknowledges, understands and agrees that it has an opportunity to inspect the Property as set forth in Section 6 herein, and except as set forth in this Agreement, the Property shall be conveyed at Closing to Buyer in “as-is” condition with no representation or warranties whatsoever.

 

21.           Applicable Law.  This Agreement shall be construed under the laws of the State or Commonwealth in which the Property is located, without giving effect to any state's conflict of laws principles.

 

  

  

  

 

22.           Tax-Deferred Exchange.  Buyer and Seller respectively acknowledge that the purchase and sale of the Property contemplated hereby may be part of a separate exchange (an “Exchange”) being made by each party pursuant to Section 1031 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated with respect thereto.  In the event that either party (the “Exchanging Party”) desires to effectuate such an exchange, then the other party (the “Non-Exchanging Party”) agrees to cooperate fully with the Exchanging Party in order that the Exchanging Party may effectuate such an exchange; provided, however, that with respect to such Exchange (a) all additional costs, fees and expenses related thereto shall be the sole responsibility of, and borne by, the Exchanging Party; (b) the Non-Exchanging Party shall incur no additional liability as a result of such exchange; (c) the contemplated exchange shall not delay any of the time periods or other obligations of the Exchanging Party hereby, and without limiting the foregoing, the scheduled date for Closing shall not be delayed or adversely affected by reason of the Exchange; (d) the accomplishment of the Exchange shall not be a condition precedent or condition subsequent to the Exchanging Party's obligations under the Agreement; and (e) the Non-Exchanging Party shall not be required to hold title to any land other than the Property for purposes of the Exchange.  The Exchanging Party agrees to defend, indemnify and hold the Non-Exchanging Party harmless from any and all liability, damage or cost, including, without limitation, reasonable attorney's fees that may result from Non-Exchanging Party's cooperation with the Exchange. The Non-Exchanging Party shall not, by reason of the Exchange, (i) have its rights under this Agreement, including, without limitation, any representations, warranties and covenants made by the Exchanging Party in this Agreement (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller), or in any of the closing documents (including but not limited to any warranties of title, which, if Seller is the Exchanging Party, shall remain warranties of Seller) contemplated hereby, adversely affected or diminished in any manner, or (ii) be responsible for compliance with or deemed to have warranted to the Exchanging Party that the Exchange complies with Section 1031 of the Code.

 

23.           Broker’s Commissions.  Buyer and Seller each hereby represent that, except for the Broker listed herein, there are no other brokers involved or that have a right to proceeds in this transaction.  Seller shall be responsible for payment of commissions to the Broker pursuant to a separate written agreement executed by Seller.  Seller and Buyer each hereby agree to indemnify and hold the other harmless from all loss, cost, damage or expense (including reasonable attorneys' fees at both trial and appellate levels) incurred by the other as a result of any claim arising out of the acts of the indemnifying party (or others on its behalf) for a commission, finder's fee or similar compensation made by any broker, finder or any party who claims to have dealt with such party (except that Buyer shall have no obligations hereunder with respect to any claim by Broker).  The representations, warranties and indemnity obligations contained in this section shall survive the Closing or the earlier termination of this Agreement.

 

24.           Assignment.  Buyer may assign its rights under this Agreement, provided, however, that no such assignment shall relieve Buyer of any of its obligations hereunder until Closing is complete.  Buyer is entering into this Agreement for and on behalf of related special purpose entities as set forth on Exhibit A1 (each an “Approved Assignee”) and intends to assign each respective Approved Assignee its rights hereunder prior to Closing.

 

  

  

  

 

25.           Attorneys’ Fees.  In any action between Buyer and Seller as a result of failure to perform or a default under this Agreement, the prevailing party shall be entitled to recover from the other party, and the other party shall pay to the prevailing party, the prevailing party’s attorneys’ fees and disbursements and court costs incurred in such action.

 

26.           Time of the Essence.  Time is of the essence with respect to each of Buyer’s and Seller’s obligations hereunder.

 

27.           Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.  Signatures on this Agreement which are transmitted by electronically shall be valid for all purposes, however any party shall deliver an original signature on this Agreement to the other party upon request.

 

28.           Anti-Terrorism.  Neither Buyer or Seller, nor any of their affiliates, are in violation of any Anti-Terrorism Law (as hereinafter defined) or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law. “Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including: Executive Order No. 13224; the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or may hereafter be, renewed, extended, amended or replaced; the applicable laws comprising or implementing the Bank Secrecy Act; and the applicable laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing may from time to time be amended, renewed, extended, or replaced).

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGES]

 

  

  

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date.

 

 

 

	
BUYER:

	  	
SELLER:

	
AMERICAN REALTY CAPITAL II, LLC,

	  	
OAKLEY INVESTMENTS, LLC

	
a Delaware limited liability company

	  	  	  
	
By:

	
/s/ William M. Kahane

	  	
By:

	
/s/ Stephen E. Cox

	  	
Name:

	
William M. Kahane

	  	  	
Name:

	
Stephen E. Cox

	  	
Title:

	
President

	  	  	
Title:

	
Member/Manager

	  	  	  	  	  	  	  
	
Date:

	
September 6, 2011

	  	
Date:

	
September 7, 2011

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  
	  	  	  	  	
COIT PROPERTIES, LLC

 

	  	  	  	  	  	  	  
	  	  	  	  	
By:

	
/s/ Stephen E. Cox

	  	  	  	  	  	
Name:

	
Stephen E. Cox

	  	  	  	  	  	
Title:

	
Member/Manager

	  	  	  	  	  	  	  
	  	  	  	  	
Date:

	
September 7, 2011

 

THE UNDERSIGNED HEREBY ACKNOWLEDGES AND AGREES TO BE BOUND BY THE TERMS OF THIS AGREEMENT RELATING TO ESCROW AGENT AND THE DEPOSIT.

 

ESCROW AGENT:

 

CHICAGO TITLE INSURANCE COMPANY

 

	
By:

	
/s/ Edwin G. Ditlow

	
Name:

	
Edwin G. Ditlow

	
Title:

	
Vice President

	
Date:

	
September 7, 2011

  

  

  

EXHIBITS

 

	
Exhibit A1

	
-

	
List of Properties

	
Exhibit A2

	
-

	
List of Leases and Rents

	
Exhibit B

	
-

	
Form of Special Warranty Deed

	
Exhibit C

	
-

	
Form of Assignment and Assumption of Lease

	
Exhibit D

	
-

	
Form of Bill of Sale

	
Exhibit E

	
-

	
Form of Assignment of Contracts, Permits, Licenses and Warranties

	
Exhibit F

	
-

	
 Intentionally Deleted

	
Exhibit G

	
-

	
Intentionally Deleted

	
Exhibit H

	
-

	
Form of Tenant Notice

	
Exhibit I

	
-

	
Warranties

 

  

  

  

EXHIBIT A1

 

LIST OF PROPERTIES

 

	
Advance Auto 2 Pk -TX

	  	  	 	 	 	 	 	 	  	 	 	 	 	 	 
	
Owner Name

	
City

	
ST

	 	
Acres

	 	 	
Bldg sq.ft.

	 	
Approved Assignee

	 	
Deposit

	 	 	
Purchase Price

	 
	
Oakley Investments, LLC

	
Houston

	
TX

	 	 	0.757	 	 	 	6,694	 	
ARC AAHUSTX001, LLC

	 	$	78,500.00	 	 	$	1,598,050	 
	
Coit Properties, LLC

	
Houston

	
TX

	 	 	1.02	 	 	 	6,777	 	
ARC AAHUSTX002, LLC

	 	$	78,500.00	 	 	$	1,546,200	 
	
Totals

	  	  	 	 	 	 	 	 	 	 	  	 	$	157,000.00	 	 	$	3,144,250	 

 

  

A1-1

  

 

 

EXHIBIT A2

 

LIST OF LEASES AND RENTS

 

	
Advance Auto 2 Pk - TX

	  	  	  	  	  	 	 	 	  	 	 	 
	
Tenant Name

	
Address

	
City

	
ST

	
Lease Start Date

	
Lease Term Date

	 	
Rent as of

Effective Date

	 	
Annual Bump

	 	
Cap Rate

	 
	
Advance Stores Company, Inc

	
12026 Jones Road

	
Houston

	
TX

	
10/26/2006

	
10/31/2021

	 	$	127,844	 	
None

	 	 	8.00	%
	
Advance Stores Company, Inc

	
13402 Tomball Pkwy

	
Houston

	
TX

	
8/31/2006

	
8/31/2021

	 	$	123,696	 	
None

	 	 	8.00	%
	  	  	  	  	
Totals

	  	 	$	251,540	 	  	 	 	 	 

 

 

 

 

  

  

  

EXHIBIT B

 

FORM OF SPECIAL WARRANTY DEED

 

[Subject to Local Counsel Review]

 

This document prepared by:

 

(and return to :)

 

___________________________

 

___________________________

 

___________________________

 

___________________________

 

 

 

Tax Parcel No. ______________________________

 

SPECIAL WARRANTY DEED

 

THIS INDENTURE, made on the _____ day of ______________, 2011, by and between ___________________________________, a ___________________________ ("Grantor"), and ________________________________________, a ______________, whose address is ________________________________ ("Grantee")

 

WITNESSETH:

 

THAT Grantor, in consideration of the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt of which is hereby acknowledged, does by these presents, sell and convey unto the said Grantee, its successors and assigns, the lots, tracts or parcels of land lying, being and situated in the County of ____________, State of _____________, and more fully described on Exhibit "A" attached hereto and incorporated herein by reference, together with all buildings, facilities and other improvements, located thereon.

 

TO HAVE AND TO HOLD the premises aforesaid with all and singular, the rights, easements, privileges, appurtenances and immunities thereto belonging or in any wise appertaining unto the said Grantee and unto Grantee's successors and assigns forever, the said Grantor hereby covenanting that Grantor will warrant and defend the title to said premises unto the said Grantee and unto Grantee's successors and assigns, against the lawful claims and demands of all persons claiming under or through Grantor, but not otherwise.

 

  

B-1

  

IN WITNESS WHEREOF, Grantor has executed this Special Warranty Deed the day and year first above written.

 

GRANTOR:

 

 

 

By:                                                                

 

Name:

 

Its:

 

 

[ACKNOWLEDGMENT]

 

  

B-2

  

 

EXHIBIT C

 

FORM OF

 

ASSIGNMENT AND ASSUMPTION OF LEASE [, GUARANTY] AND SECURITY DEPOSIT

 

______________________________ ("Assignor"), in consideration of the sum of Ten and No/100 Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to ______________________________ ("Assignee"), all of Assignor's right, title and interest in and to that certain Lease dated _________________________________, between Assignor and _____________________________ (as amended from time to time, the “Lease”), including any and all security deposits under the Lease. [together with all of Assignor’s right, title and interest in and to that certain Guaranty of Lease dated _________________________________, between Assignor and _____________________________ (as amended from time to time, the “Guaranty”).]

 

Subject to the limitations set forth below, Assignor does hereby agree to defend, indemnify and hold harmless Assignee from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignee by reason of the failure of Assignor to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the lessor, or landlord under and by virtue of the Lease prior to the date of this Assignment.  Subject to the limitations set forth below, Assignee does hereby agree to defend, indemnify and hold harmless Assignor from any liability, damages (excluding speculative damages, consequential damages and lost profits), causes of action, expenses and reasonable attorneys' fees incurred by Assignor by reason of the failure of Assignee to have fulfilled, performed and discharged all of the various commitments, obligations and liabilities of the Landlord under and by virtue of the Lease on and after the date of this Assignment.

 

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this ______ day of ______________, 2011, which Assignment is effective this date.  This Assignment may be executed in counterparts, which when taken together shall be deemed one agreement.

 

ASSIGNOR:

 

_______________________________

 

	
  

	
By:

	 	 

	
  

	
 
Name:

	 	 

	
  

	
Title:

	 	 

ASSIGNEE:

  

3

  

_______________________________

 

 

	
  

	
By:

	 	 

	
  

	
 
Name:

	 	 

	
  

	
Title:

	 	 

  

4

  

EXHIBIT D

 

FORM OF BILL OF SALE

 

For valuable consideration, the receipt and sufficiency of which is hereby acknowledged, ______________________________, a ___________________________, having an address at ____________________________ (“Seller”), hereby bargains, sells, conveys and transfers to ____________________________ (“Buyer”), a _______________________________, all of Seller’s right, title and interest in and to those certain items of personal and intangible property (including any warranty made by third parties in connection with the same and the right to sue on any claim for relief under such warranties) (the “Personal Property”) located at or held in connection with that certain real property located in the State of __________________________, as more particularly described on Schedule A attached hereto and made a part hereof.

 

Seller has not made and does not make any express or implied warranty or representation of any kind whatsoever with respect to the Personal Property, including, without limitation, with respect to title, merchantability of the Personal Property or its fitness for any particular purpose, the design or condition of the Personal Property; the quality or capacity of the Personal Property; workmanship or compliance of the Personal Property with the requirements of any law, rule, specification or contract pertaining thereto; patent infringement or latent defects.  Buyer accepts the Personal Property on an “as is, where is” basis.

 

IN WITNESS WHEREOF, Seller has caused this instrument to be executed and delivered as of this ___ day of _______, 2011

 

SELLER:

 

 

By:                                                                

 

Name:                                                                          

 

Title:                                                               

 

  

D-1

  

SCHEDULE A

 

TO BILL OF SALE

 

(Add legal description of Real Property]

 

  

D-2

  

EXHIBIT E

 

FORM OF ASSIGNMENT OF CONTRACTS,

PERMITS, LICENSES AND WARRANTIES

 

THIS ASSIGNMENT, made as of the ___ day of ________, 2011 by _________________, a __________________________ (“Assignor”), to _____________________________, a __________________________________________(“Assignee”).

 

WITNESSETH:

 

WHEREAS, by Agreement of Purchase and Sale (the “Purchase Agreement”) dated as of ________, 2010, between Assignor and Assignee, Assignee has agreed to purchase from Assignor as of the date hereof, and Assignor has agreed to sell to Assignee, that certain property located at ________________________ (the “Property”); and

 

WHEREAS, Assignor desires to assign to Assignee as of the date hereof all of Assignor’s right, title and interest in contracts, permits, trademarks, licenses and warranties held by Assignor in connection with the Property, including without limitation any and all guaranties of leases relating to the Property (collectively, the “Contracts”).

 

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Assignor hereby assigns, sets over and transfers unto Assignee to have and to hold from and after the date hereof all of the right, title and interest of Assignor in, to and under the Contracts.  Assignor agrees without additional consideration to execute and deliver to Assignee any and all additional forms of assignment and other instruments and documents that may be reasonably necessary or desirable to transfer or evidence the transfer to Assignee of any of Assignor's right, title and interest to any of the Contracts.

 

This Assignment shall be governed by the laws of the State of _____________, applicable to agreements made and to be performed entirely within said State.

 

IN WITNESS WHEREOF, Assignor has duly executed this Assignment as of the date first above written.

 

ASSIGNOR:

a                                                                

By:                                                               

Name:                                                                          

Title:                                                               

  

E-1

  

  

F-1

  

  

G-1

  

EXHIBIT H

 

FORM OF NOTICE TO TENANT

 

TO:           [Tenant]

 

 

Re:           Notice of Change of Ownership of ______________________________

 

Ladies and Gentlemen:

 

YOU ARE HEREBY NOTIFIED AS FOLLOWS:

 

That as of the date hereof, the undersigned has transferred, sold, assigned, and conveyed all of its right, title and interest in and to the above-described property, (the “Property”) to [INSERT NAME OF BUYER] (the “New Owner”) and assigned to New Owner, all of the undersigned’s right, title and interest under that certain Lease, dated _________, between ________as tenant and ____________as landlord (the “Lease”), together with any security deposits or letters of credit held thereunder.

 

Accordingly, New Owner is the landlord under the Lease and future notices and correspondence with respect to your leased premises at the Property should be made to the New Owner at the following address:

 

 

 

 

  

You will receive a separate notification from New Owner regarding the new address for the payment of rent.  In addition, to the extent required by the Lease, please amend all insurance policies you are required to maintain pursuant to the Lease to name New Owner as an additional insured thereunder and promptly provide New Owner with evidence thereof.

 

Very truly yours,

[PRIOR LANDLORD)

By:                                                     

Name:                                                               

Title:                                                     

 

  

  

  

EXHIBIT I

 

 

Firestone Building Products Company – Red Shield Roofing System Limited Warranty No. RD063356 (Jones Rd.)

 

Firestone Building Products Company – Red Shield Roofing System Limited Warranty No. RD063131 (Tomball Pkwy.)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}]]