00 OTLQ - Deed of Trust & Security Agrmt (B-DT-2017-187658)PREPARED BY AND WHEN
RECORDED RETURN TO:
Cassin & Cassin LLP
711 Third A venue, 20th Floor
New York, New York 10017
Attn: Recording Department
OTLQ,LLC,
DOC # 2017-0187658
05/10/2017 03 :38 PM Fees : $145 .00
Page 1of36
Recorded in Official Records
County of Riverside
Peter Aldana
Assessor-County Clerk-Recorder
**This document was electronically submitted
to the County of Riverside for recording**
Receipted by: ALYCIA #778
a Delaware limited liability company, as grantor
(Borrower)
to
FIRST AMERICAN TITLE INSURANCE COMP ANY, as trustee
(Trustee)
for the benefit of
UBS AG, by and through its branch office at
1285 Avenue of the Americas, New York, New York, as beneficiary
(Lender)
DEED OF TRUST AND
SECURITY AGREEMENT
Dated:
Location:
APN:
County:
As of May ID , 2017
Old Town La Quinta
78100 Main Street
La Quinta, California 92253
770-121-008-0, 770-121-009-1, 770-121-010-1,
770-121-011-2, 770-121-012-3, 770-121-014-5,
770-123-001-9, 770-124-005-6
Riverside
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DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST AND SECURITY AGREEMENT (this "Security
Instrument") is made as of this 10-r* day of May, 2017, by OTLQ, LLC, a Delaware limited
liability company, having its principal place of business at 78100 Main Street, Suite 203 La
Quinta, California 92253, as grantor ("Borrower") to FIRST AMERICAN TITLE
INSURANCE COMPANY, Nebraska corporation, having an address at 1 First American Way,
Santa Ana, California 92707, as trustee ("Trustee"), for the benefit of UBS AG, by and through
its branch office at 1285 Avenue of the Americas, New York, New York (together with its
successors and assigns , collectively, "Lender"), having an address at 1285 Avenue of the
Americas, New York, New York 10019, as beneficiary.
WHEREAS, this Security Instrument is given to secure a loan (the "Loan") in
the principal sum of TWELVE MILLION FOUR HUNDRED THOUSAND AND N0/100
DOLLARS ($12,400,000.00) pursuant to that certain Loan Agreement dated as of the date hereof
between Borrower and Lender (as the same may be amended, restated, replaced, supplemented
or otherwise modified from time to time, the "Loan Agreement") and evidenced by that certain
Promissory Note dated the date hereof made by Borrower to Lender (such Note, together with all
extensions, renewals, replacements, restatements or modifications thereof being hereinafter
referred to as the "Note"); and
WHEREAS, Borrower desires to secure the payment of the Debt and the
performance of all of its obligations under the Note, the Loan Agreement and the other Loan
Documents; and
WHEREAS, this Security Instrument is given pursuant to the Loan Agreement,
and payment, fulfillment, and performance by Borrower of its obligations thereunder and under
the other Loan Documents are secured hereby, and each and every term and provision of the
Loan Agreement and the Note, including the rights, remedies, obligations, covenants, conditions,
agreements, indemnities, representations and warranties of the parties therein, are hereby
incorporated by reference herein as though set forth in full and shall be considered a part of this
Security Instrument.
NOW THEREFORE, in consideration of the making of the Loan by Lender and
the covenants, agreements, representations and warranties set forth in this Security Instrument:
Article 1 -GRANTS OF SECURITY
Section 1.1 PROPERTY CONVEYED . Borrower does hereby irrevocably grant,
bargain, sell, pledge, assign, warrant, transfer and convey and grant a security interest to Trustee
and its successors and assigns, in trust, with Power of Sale for the benefit of Lender as
beneficiary in trust, the following property, rights, interests and estates now owned, or hereafter
acquired by Borrower (collectively, the "Property"):
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(a) Land. The real property described in Exhibit A attached hereto and made
a part hereof (the "Land");
(b) Additional Land. All additional lands, estates and development rights
hereafter acquired by Borrower for use in connection with the Land and the development of the
Land or for any other use and all additional lands and estates therein which may, from time to
time, by supplemental mortgage or otherwise be expressly made subject to the lien of this
Security Instrument regardless of the ownership thereof (the "Additional Land");
( c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements now or
hereafter erected or located on the Land or the Additional Land (collectively, the
"Improvements");
( d) Easements and Other Beneficial Interests. All easements, rights-of-way or
use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all estates, rights, titles,
interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any
nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land, the
Additional Land, and the Improvements and the reversion and reversions, remainder and
remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests,
dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand
whatsoever, both at law and in equity, of Borrower of, in and to the Land or the Additional Land
and the Improvements and every part and parcel thereof, with the appurtenances thereto;
(e) Equipment. All "equipment," as such term is defined in Article 9 of the
Uniform Commercial Code (as hereinafter defined), now owned or hereafter acquired by
Borrower, which is used at or in connection with the Improvements or the Land or the Additional
Land or is located thereon or therein (including, but not limited to, all machinery, equipment,
furnishings, and electronic data-processing and other office equipment now owned or hereafter
acquired by Borrower and any and all additions, substitutions and replacements of any of the
foregoing), together with all attachments, components, parts, equipment and accessories installed
thereon or affixed thereto (collectively, the "Equipment"). Notwithstanding the foregoing,
Equipment shall not include any property belonging to tenants under leases except to the extent
that Borrower shall have any right or interest therein;
(f) Fixtures. All Equipment now owned, or the ownership of which is
hereafter acquired, by Borrower which is so related to the Land or the Additional Land and
Improvements forming part of the Property that it is deemed fixtures or real property under the
law of the particular state in which the Equipment is located, including, without limitation, all
building or construction materials intended for construction, reconstruction, alteration or repair
of or installation on the Property, construction equipment, appliances, machinery, plant
equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed
in or used in connection with (temporarily or permanently) any of the Improvements or the Land
or the Additional Land, including, but not limited to, engines, devices for the operation of
pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and
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e~uipm~nt, hea~ing, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and
air coolmg eqmpment and systems, gas and electric machinery, appurtenances and equipment,
pollution control equipment, . security systems, disposals, dishwashers, refrigerators and ranges,
recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary
sewer facilities, utility lines and equipment (whether owned individually or jointly with others,
and, if owned jointly, to the extent of Borrower's interest therein) and all other utilities whether
or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel
tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions,
replacements, betterments and substitutions for any of the foregoing and the proceeds thereof
(collectively, the "Fixtures"). Notwithstanding the foregoing, "Fixtures" shall not include any
property which tenants are entitled to remove pursuant to leases except to the extent that
Borrower shall have any right or interest therein;
(g) Personal Property. All furniture, furnishings, objects of art, machinery,
goods, tools, supplies, appliances,. general intangibles, contract rights, accounts, accounts
receivable, franchises, licenses, certificates and permits, and all other personal property of any
kind or character whatsoever (as defined in and subject to the provisions of the Uniform
Commercial Code as hereinafter defined), other than Fixtures, which are now or hereafter owned
by Borrower and which are located within or about the Land and the Improvements, together
with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof
(collectively, the "Personal Property"), and the right, title and interest of Borrower in and to
any of the Personal Property which may be subject to any security interests, as defined in the
Uniform Commercial Code, as adopted and enacted by the state or states where any of the
Property is located (the "Uniform Commercial Code"), superior in lien to the lien of this
Security Instrument and all proceeds and products of the above;
(h) Leases and Rents. All leases and other agreements affecting the use,
enjoyment or occupancy of the Land and the Improvements heretofore or hereafter entered into,
whether before or after the filing by or against Borrower of any petition for relief under 11
U.S.C. §101 et seq., as the same may be amended from time to time (the "Bankruptcy Code")
(collectively, the "Leases") and all right, title and interest of Borrower, its successors and assigns
therein and thereunder, including, without limitation, any lease guaranties, letters of credit, cash
or securities deposited thereunder to secure the performance by the lessees of their obligations
thereunder and all rents, additional rents, revenues, fees payable under the Leases (including,
without limitation, any fees or other amounts payable in connection with termination or
cancellation of any Lease with respect to all or a portion of the space demised thereunder), issues
and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and
the Improvements whether paid or accruing before or after the filing by or against Borrower of
any petition for relief under the Bankruptcy Code (collectively, the "Rents") and all proceeds
from the sale or other disposition of the Leases and the right to receive and apply the Rents to the
payment of the Debt;
(i) Condemnation A wards. All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to the Property, whether from
the exercise of the right of eminent domain (including but not limited to any transfer made in lieu
of or in anticipation of the exercise of the right), or for a change of grad~, or for any other injury
to or decrease in the value of the Property;
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. . y) In~urance Proceeds. All proceeds of and any unearned premiums on any
msurance policies covermg the Property, including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage
to the Property; ·
(k) Tax Certiorari. All refunds, rebates or credits in connection with
reduction in real estate taxes and assessments charged against the Property as a result of tax
certiorari or any applications or proceedings for reduction;
(1) Rights. The right, in the name and on behalf of Borrower, to appear in and
defend any action or proceeding brought with respect to the Property and to commence any
action or proceeding to protect the interest of Lender in the Property;
(m) Agreements. All agreements, contracts, certificates, instruments, letters of
credit, franchises, permits, licenses, plans, specifications and other documents, now or hereafter
entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation,
construction, management or operation of the Land and any part thereof and any Improvements
or respecting any business or activity conducted on the Land and any part thereof and all right,
title and interest of Borrower therein and thereunder, including, without limitation, the right,
upon the happening of any default hereunder, to receive and collect any sums payable to
Borrower thereunder;
(n) Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights,
goodwill, books and records and all other general intangibles relating to or used in connection
with the operation of the Property;
( o) Proceeds. All proceeds of any of the foregoing, including, without
limitation, proceeds of insurance and condemnation awards, whether cash, liquidation or other
claims or otherwise; and
(p) Other Rights. Any and all other rights of Borrower in and to the items set
forth in Subsections (a) through (o) above.
AND without limiting any of the other provisions of this Security Instrument, to
the extent permitted by applicable law, Borrower expressly grants to Trustee, as secured party, a
security interest in the portion of the Property which is or may be subject to the provisions of the
Uniform Commercial Code which are applicable to secured transactions; it being understood and
agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the
Improvements and the Fixtures collectively referred to as the "Real Property") appropriated to
the use thereof and, whether affixed or annexed to the Real Property or not, shall for the
purposes of this Security Instrument be deemed conclusively to be real estate and conveyed
hereby.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely and
unconditionally assigns to Lender and Trustee all of Borrower's right, title and interest in and to
all current and future Leases and Rents; it being intended by Borrower that this assignment
constitutes a present, absolute assignment and not an assignment for additional security only.
Nevertheless, subject to the terms of the Assignment of Leases, the Cash Management
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Agreement, and Section 7.l(h) of this Security Instrument, Lender grants to Borrower a
revocable license to collect, receive, use and enjoy the Rents. Borrower shall hold the Rents, or
a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment
of such sums.
Section 1.3 SECURITY AGREEMENT. This Security Instrument is both a real
property deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all other rights
and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing
and delivering this Security Instrument, Borrower hereby grants to Lender, as security for the
Obligations (hereinafter defined), a security interest in the Fixtures, the Equipment, the Personal
Property and other property constituting the Property to the full extent that the Fixtures, the
Equipment, the Personal Property and such other property may be subject to the Uniform
Commercial Code (said portion of the Property so subject to the Uniform Commercial Code
being called the "Collateral"). If an Event of Default shall occur and be continuing, Lender, in
addition to any other rights and remedies which it may have, shall have and may exercise
· immediately and without demand, any and all rights and remedies granted to a secured party
upon default under the Uniform Commercial Code, including, without limiting the generality of
the foregoing, the right to take possession of the Collateral or any part thereof, and to take such
other measures as Lender may deem necessary for the care, protection and preservation of the
Collateral. Upon request or demand of Lender after the occurrence and during the continuance
of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it
available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable
to Lender. Borrower shall pay to Lender on demand any and all expenses, including reasonable
legal expenses and attorneys' fees, incurred or paid by Lender in protecting its interest in the
Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence
and during the continuance of an Event of Default. Any notice of sale, disposition or other
intended action by Lender with respect to the Collateral sent to Borrower in accordance with the
provisions hereof at least ten (10) business days prior to such action, shall, except as otherwise
provided by applicable law, constitute reasonable notice to Borrower. The proceeds of any
disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable
law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender
in its discretion shall deem proper. The principal place of business of Borrower (Debtor) is as set
forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one
hereof.
Section 1.4 FIXTURE FILING. Certain of the Property is or will become
"fixtures" (as that term is defined in the Uniform Commercial Code) on the Land, described or
referred to in this Security Instrument, and this Security Instrument, upon being filed for record
in the real estate records of the city or county wherein such fixtures are situated, shall operate
also as a financing statement naming Borrower as the Debtor and Lender as the Secured Party
filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial
Code upon such of the Property that is or may become fixtures.
Section 1.5 PLEDGES OF MONIES HELD. Borrower hereby pledges to Lender
any and all monies now or hereafter held by Lender or on behalf of Lender in connection with
the Loan, including, without limitation, any Reserve Funds, any sums deposited in the Clearing
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Account or the Cash Management Account and Net Proceeds as additional security for the
Obligations until expended or applied as provided in this Securit; Instrument.
CONDITIONS TO GRANT
TO HA VE AND TO HOLD the above granted and described Property unto and
to the use and benefit of Trustee and its successors and assigns, forever;
IN TRUST, WITH POWER OF SALE, to secure payment to Lender of the
Obligations at the time and in the manner provided for its payment in the Note and in this
Security Instrument.
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in
the Note, the Loan Agreement and this Security Instrument, shall well and truly perform the
Other Obligations as set forth in this Security Instrument and shall well and truly abide by and
comply with each and every covenant and condition set forth herein and in the Note, the Loan
Agreement and the other Loan Documents, these presents and the estate hereby granted shall
cease, terminate and be void; provided, however, that Borrower's obligation to indemnify and
hold harmless Lender pursuant to the provisions hereof shall survive any such payment or
release.
Article 2 -DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants, assignments and
transfers made in Article 1 are given for the purpose of securing the Debt which by its definition
(as set forth in Loan Agreement) includes, but is not limited to, the obligations of Borrower to
pay to Lender the principal and interest owing pursuant to the terms and conditions of the Note.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and the grants,
assignments and transfers made in Article 1 are also given for the purpose of securing the
following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower contained herein
(b) the performance of each obligation of Borrower contained in the Loan
Agreement and any other Loan Document; and
( c) the performance of each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or replacement
for, all or any part of the Note, the Loan Agreement or any other Loan Document.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations may sometimes be referred to
collectively herein as the "Obligations."
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Article 3 -BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3 .1 PAYMENT OF DEBT. Borrower will pay the Debt at the time and in
the manner provided in the Loan Agreement, the Note and this Security Instrument.
Section 3.2 INCORPORATION BY REFERENCE. All the covenants, conditions and
agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any of the other
Loan Documents, are hereby made a part of this Security Instrument to the same extent and with
the same force as if fully set forth herein.
Section 3.3 INSURANCE. Borrower shall obtain and maintain, or cause to be
maintained, in full force and effect at all times insurance with respect to Borrower and the
Property as required pursuant to the Loan Agreement.
Section 3.4 MAINTENANCE OF PROPERTY. Borrower shall cause the Property
to be maintained in a good and safe condition and repair. The Improvements, the Fixtures, the
Equipment and the Personal Property shall not be removed, demolished or materially altered
(except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant
finish and refurbishment of the Improvements) without the consent of Lender. Borrower shall
promptly repair, replace or rebuild any part of the Property which may be destroyed by any
Casualty, or become damaged, worn or dilapidated or which may be affected by any
Condemnation, and shall complete and pay for any structure at any time in the process of
construction or repair on the Land.
Section 3.5 WASTE. Borrower shall not commit or suffer any waste of the
Property or make any change in the use of the Property which will in any way materially
increase the risk of fire or other hazard arising out of the operation of the Property, or take any
action that might invalidate or allow the cancellation of any Policy, or do or permit to be done
thereon anything that may in any way materially impair the value of the Property or the security
of this Security Instrument. Borrower will not, without the prior written consent of Lender,
permit any drilling or exploration for or extraction, removal, or production of any minerals from
the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining
or extraction thereof.
Section 3.6 PAYMENT FOR LABOR AND MATERIALS. (a) Borrower will
promptly pay when due all bills and costs for labor, materials, and specifically fabricated
materials ("Labor and Material Costs") incurred in connection with the Property and never
permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien
or security interest, even though inferior to the liens and the security interests hereof, and in any
event never permit to be created or exist in respect of the Property or any part thereof any other
or additional lien or security interest other than the liens or security interests hereof except for
the Permitted Encumbrances.
(b) After prior written notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with
due diligence, the amount or validity or application in whole or in part of any of the Labor and
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Material Costs, provided that (i) no Event of Default has occurred and is continuing under the
Loan Agr:ement, the Note, this Security Instrument or any of the other Loan Documents, (ii)
Borrower is permitted to dci so under the provisions of any other mortgage, deed of trust or deed
to secure debt affecting the Property, (iii) such proceeding shall suspend the collection of the
Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all
of the Labor and Material Costs under protest, (iv) such proceeding shall be permitted under and
be conducted in accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, and (vi)
Borrower shall have furnished the security as may be required in the proceeding, or as may be
reasonably requested by Lender to insure the payment of any contested Labor and Material
Costs, together with all interest and penalties thereon.
Section 3.7 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall observe
and perform each and every term, covenant and provision to be observed or performed by
Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement
or recorded instrument affecting or pertaining to the Property and any amendments,
modifications or changes thereto.
Section 3.8 CHANGE OF NAME, IDENTITY OR STRUCTURE. Borrower shall not
change Borrower's name, identity (including its trade name or names) or, if not an individual,
Borrower's corporate, partnership or other structure without first (a) notifying Lender of such
change in writing at least thirty (30) days prior to the effective date of such change, (b) taking all
action required by Lender for the purpose of perfecting or protecting the lien and security interest
of Lender and (c) in the case of a change in Borrower's structure, without first obtaining the prior
written consent of Lender. Borrower shall promptly notify Lender in writing of any change in its
organizational identification number. If Borrower does not now have an organizational
identification number and later obtains one, Borrower shall promptly notify Lender in writing of
such organizational identification number. Borrower shall execute and deliver to Lender, prior
to or contemporaneously with the effective date of any such change, any financing statement or
financing statement change required by Lender to establish or maintain the validity, perfection
and priority of the security interest granted herein. At the request of Lender, Borrower shall
execute a certificate in form satisfactory to Lender listing the trade names under which Borrower
intends to operate the Property, and representing and warranting that Borrower does business
under no other trade name with respect to the Property.
Article 4 -OBLIGATIONS AND RELIANCES
Section 4.1 RELATIONSHIP OF BORROWER AND LENDER. The relationship
between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary
or other special relationship with Borrower, and no term or condition of any of the Loan
Agreement, the Note, this Security Instrument and the other Loan Documents shall be construed
so as to deem the relationship between Borrower and Lender to be other than that of debtor and
creditor.
Section 4.2 No RELIANCE ON LENDER. The general partners, officers,
shareholders, members, principals and/ or other beneficial owners of Borrower are experienced
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in the ownership and operation of properties similar to the Property, and Borrower and Lender
are relying solely upon such expertise and business plan in connection with the ownership and
operation of the Property. Borrower is not relying on Lender's expertise, business acumen or
advice in connection with the Property.
Section 4.3 No LENDER OBLIGATIONS. (a) Notwithstanding the provisions of
Subsections l. l(h) and Cm) or Section 1.2, Lender is not undertaking the performance of (i) any
obligations under the Leases; or (ii) any obligations with respect to such agreements, contracts,
certificates, instruments, franchises, permits, trademarks, licenses and other documents.
(b) By accepting or approving anything required to be observed, performed or
fulfilled or to be given to Lender pursuant to this Security Instrument, the Loan Agreement, the
Note or the other Loan Documents, including, without limitation, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or
insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall
not constitute any warranty or affirmation with respect thereto by Lender.
Section 4.4 RELIANCE. Borrower recognizes and acknowledges that in
accepting the Loan Agreement, the Note, this Security Instrument and the other Loan
Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties
and representations set forth in Article III of the Loan Agreement without any obligation to
investigate the Property and notwithstanding any investigation of the Property by Lender; that
such reliance existed on the part of Lender prior to the date hereof, that the warranties and
representations are a material inducement to Lender in making the Loan; and that Lender would
not be willing to make the Loan and accept this Security Instrument in the absence of the
· warranties and representations as set forth in Article III of the Loan Agreement.
Article 5 -FURTHER ASSURANCES
Section 5.1 RECORDING OF SECURITY INSTRUMENT, ETC. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter, from time to time,
will cause this Security Instrument and any of the other Loan Documents creating a lien or
security interest or evidencing the lien hereof upon the Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places as may be
required by any present or future law in order to publish notice of and fully to protect and perfect
the lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower
will pay all taxes, filing, registration or recording fees, and all expenses incident to the
preparation, execution, acknowledgment and/or recording of the Note, this Security Instrument,
the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security
instrument with respect to the Property and any instrument of further assurance, and any
modification or amendment of the foregoing documents, and all federal, state, county and
municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the
execution and delivery of this Security Instrument, any deed of trust or mortgage supplemental
hereto, any security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except where
prohibited by law so to do.
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. Section 5.2 FURTHER ACTS. ETC. Borrower will, at the cost of Borrower, and
without expense to Lender, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, deeds of trust, assignments, notices of assignments, transfers and assurances
as Lender shall, from time to time, reasonably require, for the better assuring, conveying,
assigning, transferring, and confirming unto Lender the property and rights hereby deeded,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or
intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to
convey or assign to Lender, or for carrying out the intention or facilitating the performance of the
terms of this Security Instrument or for filing, registering or recording this Security Instrument,
or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver,
and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the
name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so,
one or more financing statements (including, without limitation, initial financing statements and
amendments thereto and continuation statements) with or without the signature of Borrower as
authorized by applicable law, to evidence more effectively the security interest of Lender in the
Property. Borrower also ratifies its authorization for Lender to have filed any like initial
financing statements, amendments thereto and continuation statements, if filed prior to the date
of this Security Instrument. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights and remedies
available to Lender at law and in equity, including without limitation such rights and remedies
available to Lender pursuant to this Section 5.2. To the extent not prohibited by applicable law,
Borrower hereby ratifies all acts Lender has lawfully done in the past or shall lawfully do or
cause to be done in the future by virtue of such power of attorney.
Section 5.3 CHANGES IN TAX, DEBT. CREDIT AND DOCUMENTARY STAMP
LAWS. (a) If any law is enacted or adopted or amended after the date of this Security Instrument
which deducts the Debt from the value of the Property for the purpose of taxation or which
imposes a tax, either directly or indirectly, on the Debt or Lender's interest in the Property,
Borrower will pay the tax, with interest and penalties thereon, if any. If Lender is advised by
counsel chosen by it that the payment of tax by Borrower would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury then Lender shall have the
option by written notice of not less than one hundred twenty (120) days to declare the Debt
immediately due and payable.
(b) Borrower will not claim or demand or be entitled to any credit or credits
on account of the Debt for any part of the Taxes or Other Charges assessed against the Property,
or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value
of the Property, or any part thereof, for real estate tax purposes by reason of this Security
Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall
have the option, by written notice of not less than one hundred twenty ( 120) days, to declare the
Debt immediately due and payable.
( c) If at any time the United States of America, any State thereof or any
subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this
Security Instrument, or any of the other Loan Documents or impose any other tax or charge on
the same, Borrower will pay for the same, with interest and penalties thereon, if any.
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Section 5.4 SPLITTING OF DEED OF TRUST. This Security Instrument and the
Note shall, at any time until the same shall be fully paid and satisfied, at the sole election of
Lender, be split or divided into two or more notes and two or more security instruments, each of
which shall cover all or a portion of the Property to be more particularly described therein. To
that end, Borrower, upon written request of Lender, shall execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered by the then owner of the Property, to Lender
and/or its designee or designees substitute notes and security instruments in such principal
amounts, aggregating not more than the then unpaid principal amount of the Note, and
containing terms, provisions and clauses similar to those contained herein and in the Note, and
such other documents and instruments as may be required by Lender.
Section 5.5 REPLACEMENT DOCUMENTS. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan
Document which is not of public record, and, in the case of any such mutilation, upon s.urrender
and cancellation of such Note or other Loan Document, Borrower will issue, in lieu thereof, a
replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or
mutilated Note or other Loan Document in the same principal amount thereof and otherwise of
like tenor.
Article 6 -DUE ON SALE/ENCUMBRANCE
Section 6.1 LENDER RELIANCE. Borrower acknowledges that Lender has
examined and relied on the experience of Borrower and its general partners, members, principals
and (if Borrower is a trust) beneficial owners in owning and operating properties such as the
Property in agreeing to make the Loan, and will continue to rely on Borrower's ownership of the
Property as a means of maintaining the value of the Property as security for repayment of the
Debt and the performance of the Other Obligations. Borrower acknowledges that Lender has a
valid interest in maintaining the value of the Property so as to ensure that, should Borrower
default in the repayment of the Debt or the performance of the Other Obligations, Lender can
recover the Debt by a sale of the Property.
Section 6.2 No TRANSFER. Borrower shall not permit or suffer any Transfer to
occur, unless specifically permitted by Article 8 of the Loan Agreement or unless Lender shall
consent thereto in writing.
Section 6.3 TRANSFER DEFINED. As used in this Article 6 "Transfer" shall
mean any voluntary or involuntary sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of: (a) all or any part of the Property or any estate or interest
therein including, but not be limited to, (i) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof for a price to be paid in installments, (ii) an
agreement by Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder and its affiliates or (iii) a sale, assignment or other
transfer of, or the grant of a security interest in, Borrower's right, title and interest in and to any
Leases or any Rents; or (b) any ownership interest in (i) Borrower or (ii) any indemnitor or
guarantor of any Obligations or (iii) any corporation, partnership, limited liability company, trust
or other entity owning, directly or indirectly, any interest in Borrower or any indemnitor or
guarantor of any Obligations.
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Section 6.4 LENDER'S RIGHTS. Without obligating Lender to grant any
consent under Section 6.2 hereof which Lender may grant or withhold in its reasonable
discretion, Lender reserves the right to condition the consent required hereunder upon (a) a
modification of the terms hereof and of the Loan Agreement, the Note or the other Loan
Documents; (b) an assumption of the Loan Agreement, the Note, this Security Instrument and the
other Loan Documents as so modified by the proposed transferee, subject to the provisions of
Section 11.22 of the Loan Agreement; (c) payment of all of Lender's expenses incurred in
connection with such transfer; ( d) the confirmation in writing by the applicable Rating Agencies
that the proposed transfer will not, in and of itself, result in a downgrade, qualification or
withdrawal of the initial, or, if higher, then current ratings assigned in connection with any
Securitization; (e) the delivery of a nonconsolidation opinion reflecting the proposed transfer
satisfactory in form and substance to Lender; (f) the proposed transferee's continued compliance
with the representations and covenants set forth in Section 3.1.24 and 4.2.11 of the Loan
Agreement; (g) the delivery of evidence satisfactory to Lender that the single purpose nature and
bankruptcy remoteness of Borrower, its shareholders, partners or members, as the case may be,
following such transfers are in accordance with the standards of the Rating Agencies; (h) the
proposed transferee's ability to satisfy Lender's then-current underwriting standards; or (i) such
other conditions as Lender shall determine in its reasonable discretion to be in the interest of
Lender, including, without limitation, the creditworthiness, reputation and qualifications of the
transferee with respect to the Loan and the Property. Lender shall not be required to demonstrate
any actual impairment of its security or any increased risk of default hereunder in order to
declare the Debt immediately due and payable upon a Transfer without Lender's consent. This
provision shall apply to every Transfer, other than any Transfer permitted pursuant to the Loan
Agreement, regardless of whether voluntary or not, or whether or not Lender has consented to
any previous Transfer.
Article 7 -RIGHTS AND REMEDIES UPON DEF AULT
Section 7.1 REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, Borrower agrees that Lender or Trustee, or both, may take such action,
without notice or demand, as it deems advisable to protect and enforce its rights against
Borrower and in and to the Property, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such order as Lender or
Trustee may determine, in their sole discretion, without impairing or otherwise affecting the
other rights and remedies of Lender or Trustee:
(a) declare the entire unpaid Debt to be immediately due and payable;
(b) institute proceedings, judicial or otherwise, for the complete foreclosure of
this Security Instrument under any applicable provision of law, in which case the Property or any
interest therein may be sold for cash or upon credit in one or more parcels or in several interests
or portions and in any order or manner;
. (c) with or without entry, to the extent permitted and pursuant to the
procedures provided by applicable law, institute proceedings for the partial foreclosure of this
Security Instrument for the portion of the Debt then due and payable, subject to the continuing
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lien and security interest of this Security Instrument for the balance of the Debt not then due
unimpaired and without loss of priority; '
( d) sell for cash or upon credit the Property or any part thereof and all estate,
claim, demand, right, title and interest of Borrower therein and rights of redemption thereof,
pursuant to power of sale or otherwise, at one or more sales, as an entirety or in parcels, at such
time and place, upon such terms and after such notice thereof, all as may be required or
permitted by law; and, without limiting the foregoing:
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(i) In connection with any sale or sales hereunder, Lender or the
Trustee shall be entitled to elect to treat any of the Property which consists of a
right in action or which is property that can be severed from the Real Property
covered hereby or any improvements without causing structural damage thereto as
if the same were personal property, and dispose of the same in accordance with
applicable law, separate and apart from the sale of Real Property. Where the
Property consists of Real Property, Personal Property, Equipment or Fixtures,
whether or not such Personal Property or Equipment is located on or within the
Real Property, Lender and/or the Trustee shall be entitled to elect to exercise its
rights and remedies against any or all of the Real Property, Personal Property,
Equipment and Fixtures in such order and manner as is now or hereafter permitted
by applicable law;
(ii) Lender and/or the Trustee shall be entitled to elect to proceed
against any or all of the Real Property, Personal Property, Equipment and Fixtures
in any manner permitted under applicable law; and if Lender and/or the Trustee so
elects pursuant to applicable law, the power of sale herein granted shall be
exercisable with respect to all or any of the Real Property, Personal Property,
Equipment and Fixtures covered hereby, as designated by Lender and/or the
Trustee and Trustee is hereby authorized and empowered to conduct any such sale
of any Real Property, Personal Property, Equipment and Fixtures in accordance
with the procedures applicable to Real Property;
(iii) Should Lender and/or the Trustee elect to sell any portion of the
Property which is Real Property or which is Personal Property, Equipment or
Fixtures that the Lender and/or the Trustee has elected under applicable law to
sell together with Real Property in accordance with the laws governing a sale of
Real Property, Lender and/or the Trustee shall give such notice of Event of
Default, if any , and election to sell as may then be required by law. Thereafter,
upon the expiration of such time and the giving of such notice of sale as may then
be required by law, and without the necessity of any demand on Borrower, Lender
and/or the Trustee at the time and place specified in the notice of sale, shall sell
such Real Property or part thereof at public auction to the highest bidder for cash
in lawful money of the United States. Lender or the Trustee may from time to
time postpone any sale hereunder by public announcement thereof at the time and
place noticed therefor;
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(iv) If the Property consists of several lots, parcels or items of property,
Lender or the Trustee shall, subject to applicable law, (A) designate the order in
which such lots, parcels or items shall be offered for sale or sold, or (B) elect to
sell such lots, parcels or items through a single sale, or through two or more
successive sales, or in any other manner Lender or the Trustee designates. Any
Person, other than the Trustee, including Borrower or Lender, may purchase at
any sale hereunder. Should Lender or the Trustee desire that more than one sale
or other disposition of the Property be conducted, Lender or the Trustee shall,
subject to applicable law, cause such sales or dispositions to be conducted
simultaneously, or successively, on the same day, or at such different days or
times and in such order as Lender or the Trustee may designate, and no such sale
shall terminate or otherwise affect the lien of this Security Instrument on any part
of the Property not sold until all the Debt has been paid in full. In the event
Lender or the Trustee elects to dispose of the Property through more than one
sale, except as otherwise provided by applicable law, Borrower agrees to pay the
out-of-pocket costs and expenses of each such sale and of any judicial
proceedings wherein such sale may be made;
( e) institute an action, suit or proceeding in equity for the specific
performance of any covenant, condition or agreement contained herein, in the Note, the Loan
Agreement or in the other Loan Documents;
(f) recover judgment on the Note either before, during or after any
proceedings for the enforcement of this Security Instrument or the other Loan Documents;
(g) apply for the appointment of a receiver, trustee, liquidator or conservator
of the Property, without notice and without regard for the adequacy of the security for the Debt
and without regard for the solvency of Borrower, any guarantor, indemnitor with respect to the
Loan or of any Person, liable for the payment of the Debt;
(h) the license granted to Borrower under Section 1.2 hereof shall
automatically be revoked and Lender may, subject to the terms of the Loan Agreement, enter
into or upon the Property, either personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom, without liability for trespass,
damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and
take possession of all books, records and accounts relating thereto and Borrower agrees to
surrender possession of the Property and of such books, records and accounts to Lender upon
demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair,
restore and otherwise deal with all and every part of the Property and conduct the business
thereat; (ii) complete any construction on the Property in such manner and form as Lender deems
advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on
the Property; (iv) exercise all rights and powers of Borrower with respect to the Property,
whether in the name of Borrower or otherwise, including, without limitation, the right to make,
cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents of the Property and every part thereof; (v) require Borrower to pay monthly in
advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental
value for the use and occupation of such part of the Property as may be occupied by Borrower;
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(vi) require Borrower to vacate and surrender possession of the Property to Lender or to such
receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise;
and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority
and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom
all expenses (including reasonable attorneys' fees) incurred in connection with the aforesaid
operations and all amounts necessary to pay the Taxes, Other Charges, insurance and other
expenses in connection with the Property, as well as just and reasonable compensation for the
services of Lender, its counsel, agents and employees;
· (i) exercise any and all rights and remedies granted to a secured party upon
default under the Uniform Commercial Code, including, without limiting the generality of the
foregoing: (i) the right to take possession of the ·Fixtures, the Equipment and the Personal
Property, or any part thereof, and to take such other measures as Lender may deem necessary for
the care, protection and preservation of the Fixtures, the Equipment and the Personal Property,
and (ii) request Borrower at its expense to assemble the Fixtures, the Equipment and the Personal
Property and make it available to Lender at a convenient place acceptable to Lender. Any notice
of sale, disposition or other intended action by Lender with respect to the Fixtures, the
Equipment and/or the Personal Property sent to Borrower in accordance with the provisions
hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice
to Borrower;
G) apply any sums then deposited or held in escrow or otherwise by or on
behalf of Lender in accordance with the terms of the Loan Agreement, this Security Instrument
or any other Loan Document. to the payment of the following items in any order in its
uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note;
(v) All other sums payable pursuant to the Note, the Loan Agreement,
this Security Instrument and the other Loan Documents, including without
limitation advances made by Lender pursuant to the terms of this Security
Instrument;
(k) pursue such other remedies as Lender may have under applicable law; or
(1) apply the undisbursed balance of any Net Proceeds Deficiency deposit,
together with interest thereon, to the payment of the Debt in such order, priority and proportions
as Lender shall deem to be appropriate in its discretion.
In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this
Security Instrument shall continue as a lien and security interest on the remaining portion of the
Property unimpaired and without loss of priority.
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Section 7.2 APPLICATION OF PROCEEDS. The purchase money, proceeds and
avails of any disposition of the Property, and or any part thereof, or any other sums collected by
Lender pursuant to the Note, this Security Instrument or the other Loan Documents, may be
applied by Lender to the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper, to the extent consistent with law.
Section 7.3 RIGHT TO CURE DEFAULTS. Upon the occurrence and during the
continuance of any Event of Default, Lender may remedy such Event of Default in such manner
and to such extent as Lender may deem necessary to protect the security hereof, but without any
obligation to do so and without notice to or demand on Borrower, and without releasing
Borrower from any obligation hereunder. Lender is authorized, subject to the terms of the Loan
Agreement, to enter upon the Property for such purposes, or appear in, defend, or bring any
action or proceeding to protect its interest in the Property or to foreclose this Security Instrument
or collect the Debt, and the cost and expense thereof (including reasonable attorneys' fees to the
extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion
of the Debt and shall be due and payable to Lender upon demand. All such out-of-pocket costs
and expenses incurred by Lender in remedying such Event of Default or such failed payment or
act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at
the Default Rate, for the period after notice from Lender that such cost or expense was incurred
to the date of payment to Lender. All such out-of-pocket costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to constitute a
portion of the Debt and be secured by this Security Instrument and the other Loan Documents
and shall be immediately due and payable upon demand by Lender therefor.
Section 7.4 ACTIONS AND PROCEEDINGS. Lender or Trustee has the right to
appear in and defend any action or proceeding brought with respect to the Property and to bring
any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion,
decides should be brought to protect its interest in the Property.
Section 7.5 RECOVERY OF SUMS REQUIRED To BE PAID. Lender shall have the
right from time to time to take action to recover any sum or sums which constitute a part of the
Debt as the same become due, without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right of Lender or Trustee thereafter to bring an action of
foreclosure, or any other action, for a default or defaults by Borrower existing at the time such
earlier action was commenced.
Section 7.6 EXAMINATION OF BOOKS AND RECORDS. At reasonable times and
upon reasonable notice , Lender, its agents, accountants and attorneys shall have the right to
examine the records, books, management and other papers of Borrower which reflect upon its
financial condition,. at the Property or at any office regularly maintained by Borrower where the
books and records are located. Lender and its agents shall have the right to make copies and
extracts from the foregoing records and other papers. In addition, at reasonable times and upon
reasonable notice, Lender, its agents, accountants and attorneys shall have the right to examine
and audit the books and records of Borrower pertaining to the income, expenses and operation of
the Property during reasonable business hours at any office of Borrower where the books and
records are located. This Section 7.6 shall apply throughout the term of the Note and without
regard to whether an Event of Default has occurred or is continuing.
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Section 7.7 OTHER RIGHTS, ETC. (a) The failure of Lender or Trustee to insist
upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this
Security Instrument. Borrower shall not be relieved of Borrower's obligations hereunder by
reason of (i) the failure of Lender or Trustee to comply with any request of Borrower or any
guarantor or indemnitor with respect to the Loan to take any action to foreclose this Security
Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan
Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property,
or of any person liable for the Debt or any portion thereof, or (iii) any agreement or stipulation
by Lender extending the time of payment or otherwise modifying or supplementing the terms of
the Note, this Security Instrument or the other Loan Documents.
(b) It is agreed that the risk of loss or damage to the Property is on Borrower,
and Lender shall have no liability whatsoever for decline in value of the Property, for failure to
maintain the Policies, or for failure to determine whether insurance in force is adequate as to the
amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief,
if any such possession is requested or obtained, with respect to any Property or collateral not in
Lender's possession.
( c) Lender may resort for the payment of the Debt to any other security held
by Lender in such order and manner as Lender, in its discretion, may elect. Lender or Trustee
may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender or Trustee thereafter to foreclose this Security
Instrument. The rights of Lender or Trustee under this Security Instrument shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the others. No act of
Lender or Trustee shall be construed as an election to proceed under any one provision herein to
the exclusion of any other provision. Neither Lender nor Trustee shall be limited exclusively to
the rights and remedies herein stated but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
Section 7.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY. Lender may
release any portion of the Property for such consideration as Lender may require without, as to
the remainder of the Property, in any way impairing or affecting the lien or priority of this
Security Instrument, or improving the position of any subordinate lienholder with respect thereto,
except to the extent that the obligations hereunder shall have been reduced by the actual
monetary consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender may require
without being accountable for so doing to any other lienholder. This Security Instrument shall
continue as a lien and security interest in the remaining portion of the Property.
Section 7 .9 VIOLATION OF LA ws. If the Property is not in material compliance
with Legal Requirements, Lender may impose additional requirements upon Borrower m
connection herewith including, without limitation, monetary reserves or financial equivalents.
Section 7.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding any other
prov1s10n of this Security Instrument or the Loan Agreement, including, without limitation,
Section 11.22 of the Loan Agreement, Lender and other Indemnified Parties (as hereinafter
defined) are entitled to enforce the obligations of Borrower, any guarantor and indemnitor
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contained in Sections 9.2 and 9.3 herein and Section 9.2 of the Loan Agreement without first
resorting to or exhausting any security or collateral and without first having recourse to the Note
or any of the Property, through foreclosure, exercise of a power of sale or acceptance of a deed in
lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against
the Property, or otherwise causes Trustee to exercise the power of sale pursuant to this Security
Instrument, Lender is entitled to pursue a deficiency judgment with respect to such obligations
against Borrower and any guarantor or indemnitor with respect to the Loan. The provisions of
Sections 9.2 and 9.3 herein and Section 9.2 of the Loan Agreement are exceptions to any non-
recourse or exculpation provisions in the Loan Agreement, the Note, this Security Instrument or
the other Loan Documents, and Borrower and any guarantor or indemnitor with respect to the
Loan are fully and personally liable for the obligations pursuant to Sections 9.2 and 9.3 herein
and Section 9.2 of the Loan Agreement. The liability of Borrower and any guarantor or
indemnitor with respect to the Loan pursuant to Sections 9.2 and 9.3 herein and Section 9.2 of
the Loan Agreement is not limited to the original principal amount of the Note. Notwithstanding
the foregoing, nothing herein ·shall inhibit or prevent Lender or Trustee from foreclosing or
exercising a power of sale pursuant to this Security Instrument or exercising any other rights and
remedies pursuant to the Loan Agreement, the Note, this Security Instrument and the other Loan
Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A
separate action or actions may be brought and prosecuted against Borrower pursuant to Sections
9.2 and 9.3 herein and Section 9.2 of the Loan Agreement, whether or not action is brought
against any other Person or whether or not any other Person is joined in the action or actions. In
addition, Lender shall have the right but not the obligation to join and participate in, as a party if
it so elects, any administrative or judicial proceedings or actions initiated in connection with any
matter addressed in the Environmental Indemnity.
Section 7.11 RIGHT OF ENTRY. Upon reasonable notice to Borrower, Lender
and its agents shall have the right to enter and inspect the Property at all reasonable times.
Article 8 -INTENTIONALLY OMITTED
Article 9 -INDEMNIFICATION
Section 9.1 GENERAL INDEMNIFICATION. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and
against any and all claims, suits, liabilities (including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses, out-of-pocket costs, expenses,
diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid
in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of
whatever kind or nature (including but not limited to reasonable attorneys' fees and other out-of-
pocket costs of defense) (collectively, the "Losses") imposed upon or incurred by or asserted
against any Indemnified Parties and directly or indirectly arising out of or in any way relating to
any one or more of the following: (a) ownership of this Security Instrument, the Property or any
interest therein or receipt of any Rents; (b) any amendment to, or restructuring of, the Debt, and
the Note, the Loan Agreement, this Security Instrument, or any other Loan Documents; (c) any
and all lawful action that may be taken by Lender in connection with the enforcement of the
provisions of this Security Instrument or the Loan Agreement or the Note or any of the other
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Loan Documents, whether or not suit is filed in connection with same, or in connection with
Borrower, any guarantor or indemnitor and/or any partner, joint venturer or shareholder thereof
becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar
proceeding; (d) any accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs,
adjacent property or adjacent parking areas, streets or ways; (e) any use, nonuse or condition in,
on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (f) any failure on the part of Borrower to
perform or be in compliance with any of the terms of this Security Instrument; (g) performance
of any labor or services or the furnishing of any materials or other property in respect of the
Property or any part thereof; (h) the failure of any person to file timely with the Internal Revenue
Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate,
Broker and Barter Exchange Transactions, which may be required in connection with this
Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the
proceeds of the transaction in connection with which this Security Instrument is made; (i) any
failure of the Property to be in compliance with any Legal Requirements; G) the enforcement by
any Indemnified Party of the provisions of this Article 9; (k) any and all claims and demands
whatsoever which may be asserted against Lender by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or agreements
contained in any Lease; (1) the payment of any commission, charge or brokerage fee to anyone
claiming through Borrower which may be payable in connection with the funding of the Loan; or
(m) any misrepresentation made by Borrower in this Security Instrument or any other Loan
Document. Any amounts payable to Lender by reason of the application of this Section 9.1 shall
become immediately due and payable and shall bear interest at the Default Rate from the date
loss or damage is sustained by Lender until paid. For purposes of this Article 9, the term
"Indemnified Parties" means Lender and any Person who is or will have been involved in the
origination of the Loan, any Person who is or will have been involved in the servicing of the
Loan secured hereby, any Person in whose name the encumbrance created by this Security
Instrument is or will have been recorded, persons and entities who may hold or acquire or will
have held a full or partial interest in the Loan secured hereby (including, but not limited to,
investors or prospective investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan secured hereby for the
benefit of third parties) as well as the respective directors, officers, shareholders, partners,
employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries,
participants, successors and assigns of any and all of the foregoing (including but not limited to
any other Person who holds or acquires or will have held a participation or other full or partial
interest in the Loan, whether during the term of the Loan or as a part of or following a
foreclosure of the Loan and including, but not limited to, any successors by merger,
consolidation or acquisition of all or a substantial portion of Lender's assets and business).
Section 9.2 MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall, at its sole
cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties
from and against any and all Losses imposed upon or incurred by or asserted against any
Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on
the making and/or recording of this Security Instrument, the Note or any of the other Loan
Documents, but excluding any income, franchise or other similar taxes.
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Section 9.3 ERISA INDEMNIFICATION. Borrower shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and
against any and all Losses (including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred in correcting any
prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual
prohibited transaction exemption under ERISA that may be required, in Lender's sole discretion)
that Lender may incur, directly or indirectly, as a result of a default under Sections 3.1.8 or
4.2.10 of the Loan Agreement.
Section 9.4 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES AND
EXPENSES. Upon written request by any Indemnified Party, Borrower shall defend such
Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party)
by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the
foregoing, if the defendants in any such claim or proceeding include both Borrower and any
Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded
that there are any legal defenses available to it and/or other Indemnified Parties that are different
from or additional to those available to Borrower, such Indemnified Party shall have the right to
select separate counsel to assert such legal defenses and to otherwise participate in the defense of
such action on behalf of such Indemnified Party, provided that no compromise or settlement
shall be entered without Borrower's consent, which consent shall not be unreasonably withheld.
Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified
Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements
of attorneys, engineers, environmental consultants, laboratories and other professionals in
connection therewith.
Article 10 -WAIVERS
Section 10.1 w AIYER OF COUNTERCLAIM. To the extent permitted by
applicable law, Borrower hereby waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender
arising out of or in any way connected with this Security Instrument, the Loan Agreement, the
Note, any of the other Loan Documents, or the Obligations.
Section 10.2 MARSHALLING AND OTHER MATTERS. To the extent permitted by
applicable law, Borrower hereby waives the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Property or any part thereof or any interest
therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale
under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and
on behalf of each and every person acquiring any interest in or title to the Property subsequent to
the date of this Security Instrument and on behalf of all persons to the extent permitted by
applicable law.
Section 10.3 WAIVER OF NOTICE. To the extent permitted by applicable law,
Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee
except with respect to matters for which this Security Instrument or the Loan Docuµients
specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower and
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except with respect to matters for which Lender or Trustee is required by applicable law to give
notice , and Borrower hereby expressly waives the right to receive any notice from Lender or
Trustee with respect to any matter for which this Security Instrument does not specifically and
expressly provide for the giving of notice by Lender or Trustee to Borrower.
Section 10.4 WAIVER OF STATUTE OF LIMITATIONS. To the extent permitted by
applicable law, Borrower hereby expressly waives and releases to the fullest extent permitted by
law, the pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section 10.5 SURVIVAL. The indemnifications made pursuant to Section 9.3
herein and the representations and warranties, covenants, and other obligations arising under the
Environmental Indemnity, shall continue indefinitely in full force and effect and shall survive
and shall in no way be impaired by: any sati~faction, release or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this Security Instrument or
Lender's interest in the Property (but, in such case, shall benefit both Indemnified Parties and
any assignee or transferee), any exercise of Lender's rights and remedies pursuant hereto
including but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any
exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other
Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by
Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time),
any amendment to this Security Instrument, the Loan Agreement, the Note or the other Loan
Documents, and any act or omission that might otherwise be construed as a release or discharge
of Borrower from the obligations pursuant hereto.
Article 11 -EXCULPATION
The provisions of Section 11.22 of the Loan Agreement are hereby incorporated
by reference into this Security Instrument to the same extent and with the same force as if fully
set forth herein.
Article 12 -NOTICES
All notices or other written communications hereunder shall be delivered m
accordance with Section 11.6 of the Loan Agreement.
Article 13 -APPLICABLE LAW
Section 13.1 GOVERNING LAW. (A) THIS SECURITY INSTRUMENT
WAS NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY BORROWER
AND ACCEPTED BY LENDER IN THE STATE OF NEW YORK, AND THE
PROCEEDS OF THE NOTE SECURED HEREBY WERE DISBURSED FROM THE
STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING,
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF
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CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY
INSTRUMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED
IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND
ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT
AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND
ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED
PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN DOCUMENTS WITH
RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS
LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW
YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE
OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE FULLEST
EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND
IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS TIDS SECURITY INSTRUMENT OR THE
OTHER LOAN DOCUMENTS, AND THIS SECURITY INSTRUMENT AND THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST
LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS SECURITY
INSTRUMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY FEDERAL
OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK,
PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS
LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HA VE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF
ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND
APPOINT
LA WREN CE MERLIN
MERLIN & KARTER LLC
2005 PALMER A VENUE, #1083
LARCHMONT, NY 10538
AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF
SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW
YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID
AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE MAILED
OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL
BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
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BORROWER IN ANY SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF
NEW YORK. BORROWER (I) SHALL GIVE PROMPT NOTICE TO LENDER OF
ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MA y
AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE
AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH
SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON
AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL PROMPTLY
DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HA VE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT
LEAVING A SUCCESSOR.
Section 13.2 USURY LA ws. Notwithstanding anything to the contrary, (a) all
agreements and communications between Borrower and Lender are hereby and shall
automatically be limited so that, after taking into account all amounts deemed interest, the
interest contracted for, charged or received by Lender shall never exceed the maximum lawful
rate or amount, (b) in calculating whether any interest exceeds the lawful maximum, all such
interest shall be amortized, prorated, allocated and spread over the full amount and term of all
principal indebtedness of Borrower to Lender, and (c) if through any contingency or event,
Lender receives or is deemed to receive interest in excess of the lawful maximum, any such
excess shall be deemed to have been applied toward payment of the principal of any and all then
outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall
immediately be returned to Borrower.
' Section 13.3 PROVISIONS SUBJECT TO APPLICABLE LA w. All rights, powers and
remedies provided in this Security Instrument may be exercised only to the extent that the
exercise thereof does not violate any applicable provisions of law and are intended to be limited
to the extent necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the provisions of any
applicable law. If any term of this Security Instrument or any application thereof shall be invalid
or unenforceable, the remainder of this Security Instrument and any other application of the term
shall not be affected thereby.
Article 14 -DEFINITIONS
All capitalized terms not defined herein shall have the respective meanings set
forth in the Loan Agreement. Unless the context clearly indicates a contrary intent or unless
otherwise specifically provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and the word "Borrower" shall mean "each Borrower
and any subsequent owner or owners of the Property or any part thereof or any interest therein,"
the word "Lender" shall mean "Lender and any subsequent holder of the Note," the word
"Note" shall mean "the Note and any other evidence of indebtedness secured by this Security
Instrument," the word "Property" shall include any portion of the Property and any interest
therein, and the phrases "attorneys' fees'', "legal fees" and "counsel fees" shall include any and
all attorneys', paralegal and law clerk fees and disbursements, including, but not limited to, fees
and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in
protecting its interest in the Property, the Leases and the Rents and enforcing its rights
hereunder.
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Article 15 -MISCELLANEOUS PROVISIONS
Section 15.l No ORAL CHANGE. This Security Instrument, and any provisions
hereof, may not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement
in writing signed by the party against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
Section 15.2 SUCCESSORS AND ASSIGNS. This Security Instrument shall be
binding upon and inure to the benefit of Borrower and Lender and their respective successors
and assigns forever.
Section 15.3 INAPPLICABLE PROVISIONS. If any term, covenant or condition of
the Loan Agreement, the Note or this Security Instrument is held to be invalid, illegal or
unenforceable in any respect, the Loan Agreement, the Note and this Security Instrument shall be
construed without such provision.
Section 15.4 HEADINGS, ETC. The headings and captions of various Sections of
this Security Instrument are for convenience of reference only and are not to be construed as
defining or limiting, in any way , the scope or intent of the provisions hereof.
Section 15.5 NUMBER AND GENDER. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
Section 15.6 SUBROGATION. If any or all of the proceeds of the Note have been
used to extinguish, extend or renew any indebtedness heretofore existing against the Property,
then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims,
liens, titles, and interests existing against the Property heretofore held by, or in favor of, the
holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are
not waived but rather are continued in full force and effect in favor of Lender and are merged
with the lien and security interest created herein as cumulative security for the repayment of the
Debt, the performance and discharge of Borrower's obligations hereunder, under the Loan
Agreement, the Note and the other Loan Documents and the performance and discharge of the
Other Obligations.
Section 15.7 ENTIRE AGREEMENT. The Note, the Loan Agreement, this Security
Instrument and the other Loan Documents constitute the entire understanding and agreement
between Borrower and Lender with respect to the transactions arising in connection with the
Debt and supersede all prior written or oral understandings and agreements between Borrower
and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in
writing in the Note, the Loan Agreement, this Security Instrument and the other Loan
Documents, there are not, and were not, and no persons are or were authorized by Lender to
make, any representations, understandings, stipulations, agreements or promises, oral or written,
with respect to the .transaction which is the subject of the Note, the Loan Agreement, this
Security Instrument and the other Loan Documents.
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. Section 15.8 LIMITATION ON LENDER'S RESPONSIBILITY. No provision of this
Secunty Instrument shall operate to place any obligation or liability for the control care . ' ' management or repair of the Property upon Lender, nor shall it operate to make Lender
responsible or liable for any waste committed on the Property by the tenants or any other Person,
or for any dangerous or defective condition of the Property, or for any negligence in the
management, upkeep, repair or control of the Property resulting in loss or injury or death to any
tenant, licensee, employee or stranger. Nothing herein contained shall be construed as
constituting Lender a "mortgagee in possession."
Article 16 -DEED OF TRUST PROVISIONS
Section 16.1 CONCERNING THE TRUSTEE. Trustee shall be under no duty to take
any action hereunder except as expressly required hereunder or by law, or to perform any act
which would involve Trustee in any expense or liability or to institute or defend any suit in
respect hereof, unless properly indemnified to Trustee's reasonable satisfaction. Trustee, by
acceptance of this Security Instrument, covenants to perform and fulfill the trusts herein created,
being liable, however, only for willful negligence or misconduct, and hereby waives any
statutory fee or other compensation, except as set forth in Section 16.2 hereof, for any services
rendered by Trustee in accordance with the terms hereof. Trustee may resign at any time upon
giving thirty (30) days' notice to Borrower and to Lender. Lender may remove Trustee at any
time or from time to time and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole discretion for any reason
whatsoever Lender may, without notice and without specifying any reason therefor and without
applying to any court, select and appoint a successor trustee, by an instrument recorded wherever
this Security Instrument is recorded and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute trustee shall not be
required to give bond for the faithful performance of the duties of Trustee hereunder unless
required by Lender. The procedure provided for in this paragraph for substitution of Trustee
shall be in addition to and not in exclusion of any other provisions for substitution, by law or
otherwise.
Section 16.2 TRUSTEE'S FEES. Unless required pursuant to applicable Legal
Requirements, no fees, costs or expenses shall be or become payable to Trustee or Trustee:'s
agents and counsel in connection with the performance by Trustee of Trustee's duties hereunder;
provided that, in connection with services rendered by Trustee in connection with any
foreclosure or sale in accordance with the terms hereof or with respect to the release and
discharge of the lien and security interest of this Security Instrument upon the full and final
payment of the Debt, Trustee shall be entitled to reasonable and customary fees and
reimbursement of reasonable out-of-pocket costs and expenses incurred by Trustee. The
foregoing permitted fees, costs and expenses shall be paid by Borrower to Trustee and Trustee's
agents and counsel promptly upon request and such fees, costs and expenses shall be secured by
this Security Instrument.
Section 16.3 CERTAIN RIGHTS. With the approval of Lender, Trustee shall have
the right to take any and all of the following actions: (i) to select, employ, and advise with
counsel (who may be, but need not be, counsel for Lender) upon any matters arising hereunder,
including the preparation, execution, and interpretation of the Loan Agreement, the Note, this
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Security Instrument or the other Loan Documents, and shall be fully protected in relying as to
legal matters on the advice of counsel, (ii) to execute any of the trusts and powers hereof and to
perform any duty hereunder either directly or through his agents or attorneys, (iii) to select and
employ, in and about the execution of his duties hereunder, suitable accountants, engineers and
other experts, agents and attorneys-in-fact, either corporate or individual, not regularly in the
employ of Trustee, and Trustee shall not be answerable for any act, default, negligence, or
misconduct of any such accountant, engineer or other expert, agent or attorney-in-fact, if selected
with reasonable care, or for any error of judgment or act done by Trustee in good faith, or be
otherwise responsible or accountable under any circumstances whatsoever, except for Trustee's
gross negligence or bad faith, and (iv) any and all other lawful action as Lender may instruct
Trustee to take to protect or enforce Lender's rights hereunder. Trustee shall not be personally
liable in case of entry by Trustee, or anyone entering by virtue of the powers herein granted to
Trustee, upon the Property for debts contracted for or liability or damages incurred in the
management or operation of the Property. Trustee shall have the right to rely on any instrument,
document, or signature authorizing or supporting an action taken or proposed to be taken by
Trustee hereunder, believed by Trustee in good faith to be genuine. Trustee shall be entitled to
reimbursement for actual expenses incurred by Trustee in the performance of Trustee's duties
hereunder and to reasonable compensation for such of Trustee's services hereunder as shall be
rendered.
Section 16.4 RETENTION OF MONEY. All moneys received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for which they were
received, but need not be segregated in any manner from any other moneys (except to the extent
required by applicable law) and Trustee shall be under no liability for interest on any moneys
received by Trustee hereunder.
Section 16.5 PERFECTION OF APPOINTMENT. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute trustee to more
fully and certainly vest in and confirm to the Trustee or substitute trustee such estates rights,
powers, and duties, then, upon request by the Trustee or substitute trustee, any and all such
deeds, conveyances and instruments shall be made, executed, acknowledged, and delivered and
shall be caused to be recorded and/or filed by Borrower.
Section 16.6 SUCCESSION INSTRUMENTS. Any substitute trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed, or conveyance,
become vested with all the estates, properties, rights, powers, and trusts of its or his predecessor
in the rights hereunder with like effect as if originally named as Trustee herein; but nevertheless,
upon the written request of Lender or of the substitute trustee, the Trustee ceasing to act shall
execute and deliver any instrument transferring to such substitute trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the Trustee so ceasing to act,
and shall duly assign, transfer and deliver any of the property and moneys held by such Trustee
to the substitute trustee so appointed in the Trustee's place.
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PART II
Article 17 -STATE-SPECIFIC PROVISIONS
Section 17.1 PRINCIPALS OF CONSTRUCTION. In the event of any
inconsistencies between the terms and conditions of this Article 1 7 and the other terms and
conditions of this Security Instrument, the terms and conditions of this Article 17 shall control
and be binding.
Section 17.2 GRANTOR. Any references to "borrower", "mortgagor" or
"grantor" shall be deemed to refer to the party identified herein as "Borrower" in its capacity as
"Grantor" hereunder. ·
Section 17 .3 ASSIGNMENT OF LEASES AND RENTS. Section 1.2 of this Security
Instrument entitled "Assignment of Rents" is hereby deleted in its entirety and the following is
substituted therefore:
This Security Instrument constitutes a present, absolute assignment of the Leases
and Rents from Borrower to Lender. The Leases and Rents are hereby absolutely
and irrevocably assigned by Borrower to Lender. Lender is hereby granted and
assigned by Borrower the right, subject to the terms of the Loan Agreement, to
enter the Property for the purpose of enforcing its right in the Leases and Rents.
Nevertheless, subject to the terms of this Section 1.2, Lender grants to Borrower a
revocable license to operate and manage the Property and to collect Rents and,
provided the license provided for herein has not been revoked to apply such Rents
to the obligations of Borrower with respect to the Property and to distribute any
excess proceeds of the Rents to its owners free of any security interest. Upon or
at any time after the occurrence of and during the continuance of an Event of
Default, the license granted to Borrower herein may be revoked by Lender; and
Lender may, subject to the terms of the Loan Agreement, enter upon the Property,
and collect, retain and apply the Rents toward payment of the Debt in accordance
with the Note. The foregoing assignment shall be fully operative without any
further action on the part of either party and Lender shall be entitled to the Leases
and Rents whether or not Lender takes possession of the Property or any part
thereof.
Section 17.4 SECURITY AGREEMENT. The first two sentences of Section 1.3 of
this Security Instrument entitled "Security Agreement" are hereby deleted and the following is
substituted therefor:
This Security Instrument is both a real property deed of trust and a "security
agreement" within the meaning of the Uniform Commercial Code and is being
recorded as a fixture filing. With respect to said fixture filing, (i) the debtor is
Borrower, and Borrower's name and address appear in the first paragraph of this
Security Instrument, and (ii) the secured party is Lender, and Lender's name and
address appear in the first paragraph of the Security Instrument. The Property
includes both real and personal property and all other rights and interests, whether
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tangible or intangible in nature, of Borrower in the Property, including, but not
limited to, the Leases and Rents and all proceeds thereof and all fixtures.
Section 17.5 CONDITIONS TO GRANT. The portion of the paragraph beginning
"PROVIDED, HOWEVER" appearing at the end of Article 1 of this Security Instrument entitled
"Conditions to Grant" is hereby deleted in its entirety and the following language is substituted
therefor:
PROVIDED, HOWEVER, upon written request of Lender stating that all sums
secured hereby have been paid, that Borrower has well and truly abided by and
complied with each and every covenant and condition set forth herein and in the
Note, and upon the surrendering of this Security Instrument and the Note to
Trustee for cancellation and retention and upon payment by Borrower of Trustee's
fees, Trustee shall reconvey to Borrower, or to the person or persons legally
entitled thereto, without warranty, any portion of the estate hereby granted and
then held hereunder; provided, however, Borrower's obligation to indemnify and
hold harmless Lender pursuant to the terms and provisions hereof shall survive
any such payment or release. The recitals in such reconveyance of any matters or
facts shall be conclusive proof of the truthfulness thereof. The grantee in any
reconveyance may be described as "the person or persons legally entitled thereto".
Section 17 .6 DUE ON SALE/ENCUMBRANCE. Borrower expressly agrees that
upon a violation of ARTICLE 6 of this Security Instrument by Borrower and acceleration of the
principal balance of the Note because of such violation, Borrower will pay all sums required to
be paid in connection with a prepayment, if any, as described in the Note, herein imposed on
prepayment after an Event of Default and acceleration of the principal balance. Borrower
expressly acknowledges that Borrower has received adequate consideration for the foregoing
agreement.
Section 17.7 POWER OF SALE. Upon an Event of Default and acceleration of the
Debt, Lender, its successors and assigns, may elect to cause the Property or any part thereof to be
sold as follows:
(a) Lender may proceed as if all of the Property were real property, in
accordance with subparagraph (d) below, or Lender may elect to treat any of the Property which
consists of a right in action or which is property that can be severed from the Land without
causing structural damage thereto as if the same were personal property, and dispose of the same
in accordance with subparagraph (c) below, separate and apart from the sale of real property, the
remainder of the Property being treated as real property.
(b) Lender may cause any such sale or other disposition to be conducted
immediately following the expiration of any grace period, if any, provided in the Loan
Documents (or immediately upon the expiration of any redemption period required by Legal
Requirements) or Lender may delay any such sale or other disposition for such period of time as
Lender deems to be in its best interest. Should Lender desire that more than one such sale or
other disposition be conducted, Lender may at its option, in accordance with Legal Requirements
{01249891;3}
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cause the same to be conducted simultaneously, or successively on the same day, or at such
different days or times and in such order as Lender may deem to be in its best interest.
( c) Should Lender elect to cause any of the Property to be disposed of as
personal property as permitted by subparagraph (a) above, it may dispose of any part hereof in
any manner now or hereafter permitted by Article 9 of the Uniform Commercial Code or in
accordance with any other remedy provided by law. Both Borrower and Lender shall be eligible
to purchase any part or all of such property at any such disposition. Any such disposition may be
either public or private as Lender may so elect, subject to the provisions of the Uniform
Commercial Code. Lender shall give Borrower at least ten (10) days' prior written notice of the
time and place of any public sale or other disposition of such property or of the time at or after
which any private sale or any other intended disposition is to be made, and if such notice is sent
to Borrower as provided in subparagraph G) hereof, it shall constitute reasonable notice to
Borrower.
( d) Should Lender elect to sell the Property which is real property or which
Lender has elected to treat as real property, Lender shall notify Trustee and shall, if required,
deposit with Trustee a copy of the Loan Agreement, a copy of the Notes, the original or a
certified copy of this Security Instrument, and such other documents, receipts and evidences of
expenditures made and secured hereby as Trustee may require, and Trustee shall give such notice
of default and election to sell as may then be required by Legal Requirements. Thereafter, upon
the expiration of such time and the giving of such notice of sale as may then be required by
Legal Requirements, Trustee, at the time and place specified in the notice of sale, shall sell such
Property, or any portion thereof specified by Lender, at public auction to the highest bidder for
cash in lawful money of the United States, subject, however, to the provisions of subparagraph
(h) hereof. Trustee for good cause may, and upon request of Lender shall, from time to time,
postpone the sale by public announcement thereof at the time and place noticed therefor. If the
Property consists of several lots or parcels, Lender may designate the order in which such lots or
parcels shall be offered for sale or sold. Any person, including Borrower, Trustee or Lender,
may purchase at the sale. Upon any sale Trustee shall execute and deliver to the purchaser or
purchasers a deed or deeds conveying the property so sold, but without any covenant or warranty
whatsoever, express or implied, whereupon such purchaser or purchasers shall be let into
immediate possession.
(e) In the event of a sale or other disposition of any such property, or any part
thereof, and the execution of a deed or other conveyance, pursuant thereto, the recitals therein of
facts, such as a default, the giving of notice of default and notice of sale, demand that such sale
should be made, postponement of sale, terms of sale, sale, purchaser, payment of purchase
money, and any other fact affecting the regularity or validity of such sale or disposition, shall be
conclusive proof of the truth of such facts; and any such deed of conveyance shall be conclusive
against all persons as to such facts recited therein.
(f) Lender and/or Trustee shall apply the proceeds of any sale or disposition
hereunder to payment of the following: (1) the expenses of such sale or disposition together
with Trustee's fees and reasonable attorneys' fees, and the actual cost of publishing, recording,
mailing and posting notice; (2) the cost of any search and/or other evidence of title procured in
connection therewith and transfer tax on any deed or conveyance; (3) all sums expended under
{01249891 ;3}
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the terms hereof, not then repaid, with accrued interest in the amount provided herein; (4) all
other sums secured hereby; and (5) the remainder if any to the person or persons legally entitled
thereto.
(g) Borrower hereby expressly waives any right which it may have to direct
the order in which any of the Property shall be sold in the event of any sale or sales pursuant
hereto.
(h) Upon any sale of the Property, whether made under a power of sale herein
granted or pursuant to judicial proceedings, ifthe holder of the Note is a purchaser at such sale, it
shall be entitled to use and apply all or any portion of the indebtedness then secured hereby for or
in settlement or payment of all or any portion of the purchase price of the property purchased,
and, in such case, this Security Instrument, the Note and documents evidencing expenditures
secured hereby shall be presented to the person conducting the sale in order that the amount of
said indebtedness so used or applied may be credited thereon as having been paid.
(i) No remedy herein conferred upon or reserved to Trustee or Lender is
intended to be exclusive of any other remedy herein or by law provided, but each shall be
cumulative and shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given by this instrument to
Trustee or Lender, or to which either of them may be otherwise entitled, may be exercised from
time to time and as often as may be deemed expedient by Trustee or Lender, and either of them
may pursue inconsistent remedies. If there exists additional security for the performance of the
obligations secured hereby, the holder of the Note, at its sole option and without limiting or
affecting any rights or remedies hereunder, may exercise any of the rights and remedies to which
it may be entitled hereunder either concurrently with whatever other rights it may have in
connection with such other security or in such order as it may determine.
U) Borrower hereby requests that every notice of default and every notice of
sale be given in accordance with the provisions of Section 11.6 of the Loan Agreement except as
otherwise required by Legal Requirements. Borrower may, from time to time, change the address
to which notice of default and sale hereunder shall be sent by both filing a request therefor, in the
manner provided by the California Civil Code, Section 2924b, and sending a copy of such
request to Lender, its successors or assigns in accordance with the provisions of Section 11.6 of
the Loan Agreement.
Section 17. 8 CONCERNING THE TRUSTEE:
(a) Trustee accepts the trust created by this Security Instrument when this
Security Instrument, duly executed and acknowledged, is made a public record as provided by
law.
(b) Trustee is not obligated to notify any party hereto of pending sale under
any other deed of trust or of any action or proceeding in which Borrower, Lender or Trustee shall
be a party (other than with respect to this Security Instrument), unless brought by Trustee.
Section 17.9 FIXTURE FILING. This Security Instrument constitutes a financing
statement filed as a fixture filing pursuant to the provisions of Division 9 of the Uniform
{01249891 ;3}
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Commercial Code with respect to those portions of the Property consisting of goods which are or
are to become fixtures relating to the Land or the Improvements.
Section 17.10 RESERVE FUNDS. By exercising any of Lender's rights or remedies
under the Loan Agreement or this Security Instrument (including, without limitation, taking
possession of the Reserve Funds or other non-real property collateral), Borrower acknowledges
and agrees that Lender shall not be deemed to have exercised any equitable right of setoff,
foreclosed any statutory banker's lien, initiated or prosecuted any "action" to enforce the rights
and obligations secured by this Security Instrument, or the Loan Documents, as the term "action"
is used in California Code of Civil Procedure Section 726 ("Section 726"), or to have violated
the "security first" principle of Section 726. Accordingly, the exercise of any or all of Lender's
rights and remedies with respect to any Reserve Funds or other non-real property collateral shall
not in any way prejudice or affect Lender's right to initiate and complete a judicial or non-
judicial foreclosure under this Security Instrument. This Security Instrument evidences the
consensual granting of a personal property security interest in the Reserve Funds as permitted by
the California Commercial Code; the parties do not intend that the exercise by Lender of any of
its rights or remedies hereunder shall have any different consequences under Section 726 than
the exercise of rights or remedies under any other security agreement under which a secured
party has been granted a security interest in other types of personal property.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been
executed by Borrower as of the day and year first above written.
{01249891;3)
BORROWER:
OTLQ,LLC, a
Delaware limited liability company .
By: OLD TOWN LA QUINT A, LLC, a
California limited liability company,
Its Member
By: MARVIN INVESTMENTS, INC.,
Its Manager
By: llJJ)J LA--
Name: Wells L. Marvin
Title: President
(SEAL)
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ACKNOWLEDGMENT
OF NOTARY PUBLIC
DOC #2017-0187658 Page 34 of 36
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the truthfulness, accuracy, or validi of that document.
State of Cci\ ltDfY\\ ~ )
'l). ,1 .L.. ) SS.
County of t'-b 'V-0r6 \oe:.... )
On 5 / :J. { 11 before me, Htt~ (ar +--e Y--, Notary Public,
personally appeared \}J e,(\ $ C · V{tlvV\ f"\ who proved to me on the basis of
satisfactory evidence to be the person(;1 whose namevef is/a_p( subscribed to the within
instrument and ackt}owledged to me that heurue/t?eY executed the same in his!J/erltgyrt
authorized capacity~s), and that by hisll/e'rlt_!).e(r signature~ on the instrument the person~ or
the entity upon behalf of which the person¢) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the
foregoing paragraph is true and correct.
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EXHIBIT A
LEGAL DESCRIPTION
Real property in the City of La Quinta, County of Riverside, State of california, described as
follows:
PARCEL A:
PARCELS 2, 3, 4 AND 6 OF PARCEL MAP NO. 30850, IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 206 OF PARCEL MAPS, PAGES
60 THROUGH 62, INCLUSIVE, RECORDS OF RIVERSIDE COUNTY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY.
PARCEL B:
PARCEL 5 OF PARCEL MAP NO. 30850, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE,
STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 206 OF PARCEL MAPS, PAGE(S) 60
THROUGH 62, INCLUSIVE, RECORDS OF RIVERSIDE COUNTY, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
PARCEL B-1:
A NON-EXCLUSIVE EASEMENT FOR INGRESS, EGRESS AND CONSTRUCTION AND
MAINTENANCE OF IMPROVEMENTS, OVER A PORTION OF VACATED LOT "D" OF THE DESERT
CLUB TRACT NO. 4, IN THE CITY OF LA QUINTA, COUNTY OF RIVERSIDE, STATE OF
CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 21, PAGE 60 OF MAPS, RECORDS OF SAID
COUNTY, SAID LOT "D" HAVING BEEN VACATED BY RESOLUTION 93-16 A CERTIFIED COPY OF
WHICH WAS RECORDED MARCH 19, 1993 AS INSTRUMENT NO. 101671, OFFICIAL RECORDS,
SAID DRIVEWAY EASEMENT BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
A 10.00 FOOT WIDE STRIP OF LAND OVER A PORTION OF SAID VACATED LOT "D", LYING
10.00 FEET SOUTHERLY OF THE FOLLOWING DESCRIBED CENTERLINE:
BEGINNING AT THE INTERSECTION OF THE CENTERLINE OF SAID VACATED LOT "D" AND THE
NORTHERLY PROLONGATION OF THE WESTERLY LINE OF LOT 41 OF SAID DESERT CLUB
TRACT UNIT NO. 4;
THENCE NORTH 89° 50' 47" EAST ALONG THE CENTERLINE OF SAID VACATED LOT "D", A
DISTANCE OF 75.00 FEET TO THE NORTHERLY PROLONGATION OF THE EASTERLY LINE OF
LOT 43 OF SAID DESERT CLUB TRACT UNIT NO. 4;
THE SOUTHERLY SIDELINE OF SAID 10.00 FOOT STRIP SHALL BE LENGTHENED OR
SHORTENED SO AS TO TERMINATE EASTERLY AT THE NORTHEAST CORNER OF SAID LOT 43
AND WESTERLY AT THE NORTHWEST CORNER OF SAID LOT 41.
PARCEL C:
LOT 61 OF THE DESERT CLUB TRACT NO. 4, IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 21, PAGE 60 OF
MAPS, RECORDS OF SAID COUNTY.
EXCEPT THEREFROM THAT PORTION CONVEYED TO THE CITY OF LA QUINTA, A MUNICIPAL
CORPORATION, BY DEEDS RECORDED JANUARY 23, 1992 AS INSTRUMENT NO. 23653,
OFFICIAL RECORDS AND RE-RECORDED MARCH 17, 1992 AS INSTRUMENT NO. 90772,
OFFICIAL RECORDS, DESCRIBED AS FOLLOWS:
{01249891 ;3}
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BEGINNING AT THE NORTHEAST CORNER OF SAID LOT 61; THENCE SOUTH 00° 12' 40" EAST
ALONG THE EASTERLY LINE OF SAID LOT 61 A DISTANCE OF 20.00 FEET TO A POINT ON A
LINE PARALLEL WITH AND DISTANT 50.00 FEET SOUTHERLY OF THE CENTERLINE OF CALLE
TAMPICO, AS MEASURED AT RIGHT ANGLES; THENCE NORTH ago 5g• 00" WEST ALONG SAID
PARALLEL LINE A DISTANCE OF 70.0g FEET TO AN ANGLE POINT; THENCE, LEAVING SAID
PARALLEL LINE, SOUTH 42° 37' 20" WEST A DISTANCE OF 33,g5 FEET TO A POINT ON A LINE
PARALLEL WITH SAND DISTANT 7.00 FEET EASTERLY AS MEASURED AT RIGHT ANGLES TO
THE WESTERLY LINE OF SAID LOT 61; THENCE NORTH ago 57' 45" WEST A DISTANCE OF 7.00
FEET TO A POINT ON SAID WESTERLY LINE OF SAID LOT 61; THENCE NORTH 00° 02' 15" EAST
ALONG SAID WESTERLY LINE A DISTANCE OF 24,gg FEET TO THE BEGINNING OF A TANGENT
CURVE, CONCAVE SOUTHEASTERLY, HAVING A RADIUS OF 20.00 FEET; THENCE
NORTHEASTERLY ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF ago 56' 45" AN ARC
DISTANCE OF 31.40 FEET TO A POINT ON THE NORTHERLY LINE OF SAID LOT 61; THENCE
NORTH ago 5g• 00" EAST ALONG SAID NORTHERLY LINE TANGENT TO THE LAST DESCRIBED
CURVE A DISTANCE OF a0.00 FEET TO THE POINT OF BEGINNING.
PARCEL D:
LOT 72 OF THE DESERT CLUB TRACT NO. 4, IN THE CITY OF LA QUINTA, COUNTY OF
RIVERSIDE, STATE OF CALIFORNIA, AS SHOWN BY MAP ON FILE IN BOOK 21, PAGE 60 OF
MAPS, RECORDS OF SAID COUNTY.
PARCEL E:
AN EASEMENT FOR INGRESS AND EGRESS OVER THE COMMON AREA (LOTS A THROUGH E) AS
DESCRIBED IN DOCUMENT ENTITLED "DECLARATION OF COVENANTS, CONDmONS,
RESTRICTIONS AND EASEMENTS FOR OLD TOWN LA QUINTA" RECORDED DECEMBER 10, 2003
AS INSTRUMENT NO. 2003-9663a5, OFFICIAL RECORDS OF RIVERSIDE COUNTY, CALIFORNIA.
APN: 770-121-00a-O, 770-121-oog-1, 770-121-010-1, 770-121-011-2, 770-121-012-3, 770-121-
014-5, 770-123-001-g and 770-124-005-6 ·
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