PROMISSORY NOTE
$7,250,000.00 New York, New York
As of November 1, 1996
FOR VALUE RECEIVED CAMELBACK PLAZA DEVELOPMENT L.C., an
Arizona limited liability company, as maker, having its principal place of
business c/o Performance Industries, Inc., 2425 Camelback Road, Suite 620,
Phoenix, Arizona 85016 ("Borrower"), hereby unconditionally promises to pay to
the order of BOSTON CAPITAL MORTGAGE COMPANY LIMITED PARTNERSHIP, a
Massachusetts limited partnership, as payee, having an address at One Boston
Place, Suite 2100, Boston, Massachusetts 02108 ("Lender"), or at such other
place as the holder hereof may from time to time designate in writing, the
principal sum of SEVEN MILLION TWO HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($7,250,000.00), in lawful money of the United States of America with interest
thereon to be computed from the date of this Note at the Applicable Interest
Rate (defined below), and to be paid in installments as follows:
ARTICLE 1: PAYMENT TERMS
(a) A payment of interest only on November 1, 1996;
(b) A constant payment of $60,148.19 on the first day of
December, 1996 and on the first day of each calendar month thereafter up to and
including the first day of October, 2003;
each of the payments to be applied as follows:
(i) first, to the payment of interest computed at the
Applicable Interest Rate; and
(ii) the balance toward the reduction of the principal
sum;
and the balance of the principal sum and all interest thereon shall be due and
payable on the first day of November, 2003 (the "Maturity Date"). Interest on
the principal sum of this Note shall be calculated on the basis of a three
hundred sixty (360) day year based on twelve (12) thirty (30) day months except
that interest due and payable for a period of less than a full month shall be
calculated by multiplying the actual number of days elapsed in such period by a
daily rate based on said 360-day year.
ARTICLE 2: INTEREST
The term "Applicable Interest Rate" as used in the Security
Instrument (defined below) and this Note shall mean an interest rate equal to
eight and eighty-six hundredths percent (8.86%) per annum.
ARTICLE 3: DEFAULT AND ACCELERATION
(a) The whole of the principal sum of this Note, (b) interest,
default interest, late charges and other sums, as provided in this Note, the
Security Instrument or the Other Security Documents (defined below), (c) all
other monies agreed or provided to be paid by Borrower in this Note, the
Security Instrument or the Other Security Documents, (d) all sums advanced
pursuant to the Security Instrument to protect and preserve the Property
(defined below) and the lien and the security interest created thereby, and (e)
all sums advanced and costs and expenses incurred by Lender in connection with
the Debt (defined below) or any part thereof, any renewal, extension, or change
of or substitution for the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender (all the sums referred to in (a) through (e) above shall
collectively be referred to as the "Debt") shall without notice become
immediately due and payable at the option of Lender if any payment required in
this Note is not paid prior to the tenth (10th) day after the date when due or
on the Maturity Date or on the happening of any other default, after the
expiration of any applicable notice and grace periods, herein or under the terms
of the Security Instrument or any of the Other Security Documents (collectively,
an "Event of Default").
ARTICLE 4: DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an
Event of Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate equal to the lesser of (a)
five percent (5%) plus the Applicable Interest Rate and (b) the maximum interest
rate which Borrower may by law pay (the "Default Rate"). The Default Rate shall
be computed from the occurrence of the Event of Default until the earlier of the
date upon which the Event of Default is cured or the date upon which the Debt is
paid in full. Interest calculated at the Default Rate shall be added to the
Debt, and shall be deemed secured by the Security Instrument. This clause,
however, shall not be construed as an agreement or privilege to extend the date
of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.
ARTICLE 5: PREPAYMENT
(a) The principal balance of this Note may be prepaid, in whole, but
not in part, at anytime during the term of the Loan, provided the Borrower has
not breached any covenant or agreement of the Borrower in the Instrument. The
principal balance of this Note may be prepaid on any scheduled payment date
under this Note upon not less than thirty (30) days' prior written notice to
Lender specifying the scheduled payment date on which prepayment is to be made
(the "Prepayment Date") and the amount which is to be prepaid and upon payment
of (a) interest accrued and unpaid on the principal balance of this Note to and
including the Prepayment Date, (b) all other sums then due under this Note, the
Instrument and any of the other Loan Documents, and (c) a prepayment
consideration in an amount equal to the product of (A) the ratio of the amount
of the principal balance of the Note being prepaid over the outstanding
principal balance of the Note on the Prepayment Date (after subtracting the
scheduled principal payment on such Prepayment Date), multiplied by (B) the
present value as of the Prepayment
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Date of the remaining scheduled payments of principal and interest from the
Prepayment Date through the Maturity Date (including any balloon payment)
determined by discounting such payments at the Discount Rate (as hereinafter
defined) less the amount of the outstanding principal balance of the Note on the
Prepayment Date (after subtracting the scheduled principal payment on such
Prepayment Date). The "Discount Rate" is the rate which, when compounded
monthly, is equivalent to the Treasury Rate (as hereinafter defined), when
compounded semi-annually. The "Treasury Rate" is the yield calculated by the
linear interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rates under the heading U.S. Government
Securities/Treasury constant maturities for the week ending prior to the
Prepayment Date, of U.S. Treasury constant maturities for the week ending prior
to the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. (In
the event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate). Lender shall notify Borrower of the
amount and the basis of determination of the required prepayment consideration.
Notwithstanding the foregoing, Borrower shall have the additional privilege to
prepay the entire principal balance of this Note, together with all interest
accrued and unpaid thereon and all other sums due under this Note, the
Instrument and any of the other Loan Documents, on any date during the six (6)
months preceding the Maturity Date without any fee or consideration for such
privilege. If any notice of prepayment is given, the amount specified in such
notice and the other sums required under this paragraph shall be due and payable
on the Prepayment Date. Lender shall not be obligated to accept any prepayment
of the principal balance of this Note unless it is accompanied by the prepayment
consideration due in connection therewith.
(b) If any notice of prepayment is given under this Section 5, the
principal balance of this Note and the other sums required under this prepayment
section shall be due and payable on the Prepayment Date. Lender shall not be
obligated to accept any prepayment of the principal balance of this Note unless
it is accompanied by all sums due in connection therewith. Notwithstanding
anything contained in this Section 5 to the contrary, provided no Event of
Default exists, no Prepayment Consideration shall be due in connection with a
complete or partial prepayment resulting from the application of insurance
proceeds or condemnation awards pursuant to Sections 3.3 and 3.6 of the Security
Instrument, but Borrower shall be required to pay all other sums due hereunder.
(c) If a Default Prepayment (defined below) occurs, Borrower shall pay
to Lender the entire Debt, including, without limitation, the Prepayment
Consideration.
For purposes of this Note, the term "Default Prepayment" shall mean a prepayment
of the principal amount of this Note made after the occurrence of any Event of
Default or an acceleration of the Maturity Date under any circumstances,
including, without limitation, a prepayment occurring in connection with
reinstatement of the Security Instrument provided by statute under foreclosure
proceedings or exercise of a power of sale, any statutory right of redemption
exercised by Borrower or any other party having a statutory right to redeem or
prevent foreclosure, any sale in foreclosure or under exercise of a power of
sale or otherwise.
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ARTICLE 6: SECURITY
This Note is secured by the Security Instrument and the Other
Security Documents. The term "Security Instrument" as used in this Note shall
mean the deed of trust and security agreement dated the date hereof in the
principal sum of $7,250,000.00 given by Borrower to (or for the benefit of)
Lender covering the leasehold estate of Borrower in certain premises located in
Maricopa County, State (Commonwealth) of Arizona, and other property, as more
particularly described therein (collectively, the "Property") and intended to be
duly recorded in said County. The term "Other Security Documents" as used in
this Note shall mean all and any of the documents other than this Note or the
Security Instrument now or hereafter executed by Borrower and/or others and by
or in favor of Lender, which wholly or partially secure or guarantee payment of
this Note. Whenever used, the singular number shall include the plural, the
plural number shall include the singular, and the words "Lender" and "Borrower"
shall include their respective successors, assigns, heirs, executors and
administrators.
All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this Note to
the same extent and with the same force as if they were fully set forth herein.
ARTICLE 7: SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance due
hereunder at a rate which could subject Lender to either civil or criminal
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by the
terms of this Note, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate or the Default Rate, as the case may
be, shall be deemed to be immediately reduced to such maximum rate and all
previous payments in excess of the maximum rate shall be deemed to have been
payments in reduction of principal and not on account of the interest due
hereunder. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
ARTICLE 8: LATE CHARGE
If any sum payable under this Note is not paid prior to the tenth
(10th) day after the date on which it is due, Borrower shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of the unpaid sum or
the maximum amount permitted by applicable law to defray the expenses incurred
by Lender in handling and processing the delinquent payment and to compensate
Lender for the loss of the use of the delinquent payment and the amount shall be
secured by the Security Instrument and the Other Security Documents.
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ARTICLE 9: NO ORAL CHANGE
This Note 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.
ARTICLE 10: JOINT AND SEVERAL LIABILITY
If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.
ARTICLE 11: WAIVERS
Borrower and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind. No release of any security for the Debt or
extension of time for payment of this Note or any installment hereof, and no
alteration, amendment or waiver of any provision of this Note, the Security
Instrument or the Other Security Documents made by agreement between Lender or
any other person or party shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower, and any other person
or entity who may become liable for the payment of all or any part of the Debt,
under this Note, the Security Instrument or the Other Security Documents. No
notice to or demand on Borrower shall be deemed to be a waiver of the obligation
of Borrower or of the right of Lender to take further action without further
notice or demand as provided for in this Note, the Security Instrument or the
Other Security Documents. If Borrower is a partnership, the agreements contained
herein shall remain in full force and effect, notwithstanding any changes in the
individuals or entities comprising the partnership, and the term "Borrower," as
used herein, shall include any alternate or successor partnership, but any
predecessor partnership and its partners shall not thereby be released from any
liability. If Borrower is a corporation, the agreements contained herein shall
remain in full force and effect notwithstanding any changes in the shareholders
comprising, or the officers and directors relating to, the corporation, and the
term "Borrower" as used herein, shall include any alternate or successor
corporation, but any predecessor corporation shall not be relieved of liability
hereunder. If Borrower is a limited liability company, the agreements herein
contained shall remain in full force and effect, notwithstanding any changes in
the individuals or entities comprising the limited liability company and the
term "Borrower," as used herein, shall include any alternate or successor
limited liability company, but any predecessor limited liability company and its
members shall not be released from any liability. (Nothing in the foregoing
sentence shall be construed as a consent to, or a waiver of, any prohibition or
restriction on transfers of interests in such partnership, corporation or
limited liability company which may be set forth in the Security Instrument or
any Other Security Document.)
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ARTICLE 12: TRANSFER
Upon the transfer of this Note, Borrower hereby waiving notice of any
such transfer, Lender may deliver all the collateral mortgaged, granted, pledged
or assigned pursuant to the Security Instrument and the Other Security
Documents, or any part thereof, to the transferee who shall thereupon become
vested with all the rights herein or under applicable law given to Lender with
respect thereto, and Lender shall thereafter forever be relieved and fully
discharged from any liability or responsibility in the matter; but Lender shall
retain all rights hereby given to it with respect to any liabilities and the
collateral not so transferred.
ARTICLE 13: WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS NOTE,
THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS
OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.
ARTICLE 14: EXCULPATION
(a) Except as otherwise provided herein, in the Security Instrument or
in the Other Security Documents, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in this
Note or the Security Instrument by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the Other Security Documents, and the interest in the
Property, the Rents (as defined in the Security Instrument) and any other
collateral given to Lender created by this Note, the Security Instrument and the
Other Security Documents; provided, however, that any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower's interest in the Property, in the Rents and in any other collateral
given to Lender. Lender, by accepting this Note and the Security Instrument,
agrees that it shall not, except as otherwise provided in Section 11.10 of the
Security Instrument, sue for, seek or demand any deficiency judgment against
Borrower in any such action or proceeding, under or by reason of or under or in
connection with this Note, the Other Security Documents or the Security
Instrument. The provisions of this Section shall not, however, (i) constitute a
waiver, release or impairment of any obligation evidenced or secured by this
Note, the Other Security Documents or the Security Instrument; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under the Security Instrument; (iii) affect the
validity or enforceability of any indemnity, guaranty, master lease or similar
instrument made in connection with this Note, the Security Instrument, or the
Other Security Documents; (iv) impair the right of Lender to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment
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of Leases and Rents executed in connection herewith; or (vi) impair the right of
Lender to enforce the provisions of Sections 11.10, 13.2, 13.3 and 13.4 of the
Security Instrument.
(b) Notwithstanding the provisions of this Article to the contrary,
Borrower and Joseph Hrudka shall be personally liable to Lender for the Losses
(as defined in the Security Instrument) it incurs due to: (i) fraud or
intentional misrepresentation by Borrower or any other person or entity in
connection with the execution and the delivery of this Note, the Security
Instrument or the Other Security Documents; (ii) Borrower's misapplication or
misappropriation of Rents received by Borrower after the occurrence of an Event
of Default; (iii) Borrower's misapplication or misappropriation of tenant
security deposits or Rents collected in advance; (iv) the misapplication or the
misappropriation of insurance proceeds or condemnation awards; (v) Borrower's
failure to pay Taxes (as defined in the Security Instrument), Insurance Premiums
(as defined in the Security Instrument), Other Charges (as defined in the
Security Instrument) (except to the extent that sums sufficient to pay such
amounts have been deposited in escrow with Lender pursuant to the terms of the
Security Instrument), charges for labor or materials or other charges that can
create liens on the Property; (vi) Borrower's failure to maintain, repair or
restore the Property in accordance with the Security Instrument and the Other
Security Documents; (vii) Borrower's failure to return or to reimburse Lender
for all Personal Property (as defined in the Security Instrument) taken from the
Property by or on behalf of Borrower and not replaced with Personal Property of
the same utility and of the same or greater value; (viii) any act of actual
waste or arson by Borrower, any principal, affiliate, member or general partner
thereof or by any Indemnitor (as defined in the Security Instrument) or
Guarantor (as defined in the Security Instrument); (ix) any fees or commissions
paid by Borrower to any principal, affiliate, member or general partner of
Borrower, Indemnitor or Guarantor in violation of the terms of this Note, the
Security Instrument or the Other Security Documents; or (x) Borrower's failure
to comply with the provisions of Sections 4.2, 7.1, 12.1 and 12.2 of the
Security Instrument.
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect in the event of Borrower's
default under Sections 3.11, 4.3 or 8.1, 8.2, 8.3 or 8.4 of the Security
Instrument, or if the Property or any part thereof shall become an asset in (i)
a voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary
bankruptcy or insolvency proceeding which is not dismissed within ninety (90)
days of filing.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provision of
the U.S. Bankruptcy Code to file a claim for the full amount of the indebtedness
secured by the Security Instrument or to require that all collateral shall
continue to secure all of the indebtedness owing to Lender in accordance with
this Note, the Security Instrument and the Other Security Documents.
ARTICLE 15: AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security
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Instrument and the Other Security Documents and that this Note, the Security
Instrument and the Other Security Documents constitute valid and binding
obligations of Borrower.
ARTICLE 16: APPLICABLE LAW
This Note shall be deemed to be a contract entered into pursuant to the
laws of the State of New York and shall in all respects be governed, construed,
applied and enforced in accordance with the laws of the State of New York.
ARTICLE 17: SERVICE OF PROCESS
(a) (i) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to Lender of the
address of such place of business and of the name and address of any new agent
appointed by it, as appropriate. Borrower further agrees that the failure of its
agent for service of process to give it notice of any service of process will
not impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for service
of process of Borrower available to be served, and if it at that time has no
place of business in New York, New York, then Borrower irrevocably consents to
service of process by registered or certified mail, postage prepaid, to it at
its address given in or pursuant to the first paragraph hereof.
(ii) Borrower initially and irrevocably designates C.T.
Corporation, with offices on the date hereof at 1633 Broadway, New York, New
York 10019, to receive for and on behalf of Borrower service of process in New
York, New York with respect to this Note.
(b) With respect to any claim or action arising hereunder or under the
Security Instrument or the Other Security Documents, Borrower (a) irrevocably
submits to the nonexclusive jurisdiction of the courts of the State of New York
and the United States District Court located in the Borough of Manhattan in New
York, New York, and appellate courts from any thereof, and (b) irrevocably
waives any objection which it may have at any time to the laying on venue of any
suit, action or proceeding arising out of or relating to this Note brought in
any such court, irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.
(c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other jurisdiction.
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ARTICLE 18: COUNSEL FEES
In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower also
agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.
ARTICLE 19: NOTICES
All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof and
confirmed by telephone by sender, (ii) one (1) Business Day (defined below)
after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: Camelback Plaza Development L.C.
2401 West 1st Street
Tempe, Arizona 85281
Attention: James W. Brown
Facsimile No. (602) 912-0480
With a copy to: Ridenour, Swenson, Cleere & Evans, P.C.
302 North First Avenue, Suite 900
Phoenix, Arizona 85003
Attention: Gerard R. Cleere, Esq.
Facsimile No. (602) 254-8670
If to Lender: Boston Capital Mortgage Company Limited Partnership
One Boston Place, Suite 2100
Boston, Massachusetts 02108
Attention: Ms. Kathie Valyeau
Facsimile No. (617) 624-8999
With a copy to: Thacher Proffitt & Wood
2 World Trade Center, 40th Floor
New York, New York 10048
Attention: Donald F. Simone, Esq.
Facsimile No. (212) 912-7751
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
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"Business Day" shall mean a day upon which commercial banks
are not authorized or required by law to close in New York, New York.
ARTICLE 20: MISCELLANEOUS
(a) Wherever pursuant to this Note (i) Lender exercises any
right given to it to approve or disapprove, (ii) any arrangement or term is to
be satisfactory to Lender, or (iii) any other decision or determination is to be
made by Lender, the decision of Lender to approve or disapprove, all decisions
that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and absolute
discretion of Lender and shall be final and conclusive, except as may be
otherwise expressly and specifically provided herein.
(b) Wherever pursuant to this Note it is provided that Borrower pay any
costs and expenses, such costs and expenses shall include, but not be limited
to, legal fees and disbursements of Lender, whether with respect to retained
firms, the reimbursement for the expenses of in-house staff, or otherwise.
ARTICLE 21: DEFINITIONS
The terms set forth below are defined in the following
Sections of this Note:
(a) Applicable Interest Rate: Article 2;
------------------------
(b) Borrower: Preamble, Articles 6 and 11;
--------
(c) Business Day: Article 19;
------------
(d) Calculated Payments: Article 5, Section (b);
-------------------
(e) Debt: Article 3;
----
(f) Default Prepayment: Article 5, Section (d);
------------------
(g) Default Rate: Article 4;
------------
(h) Discount Rate: Article 5, Section (b);
-------------
(i) Event of Default: Article 3;
----------------
(j) Interest Shortfall Payment: Article 5, Subsection (a)(ii);
--------------------------
(k) Lender: Preamble and Article 6;
------
(l) Loan Year: Article 5, Section (b);
---------
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(m) Maturity Date: Article 1, Section (b);
-------------
(n) Other Security Documents: Article 6;
------------------------
(o) Prepayment Consideration: Article 5, Subsection (a)(iv);
------------------------
(p) Prepayment Date: Article 5, Section (a);
---------------
(q) Property: Article 6;
--------
(r) Security Instrument: Article 6; and
-------------------
(s) Treasury Rate: Article 5, Section (b).
-------------
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IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day
and year first above written.
CAMELBACK PLAZA DEVELOPMENT L.C., an
Arizona limited liability company
By: PERFORMANCE CAMELBACK
DEVELOPMENT CORP., an Arizona
corporation, its managing member
By: _____________________________
Name:
Title:
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STATE OF_______ )
SS.
COUNTY OF_________ )
This instrument was acknowledged before me the undersigned
notary public this ____day of_____________, 1996, by______________________as
President of PERFORMANCE CAMELBACK DEVELOPMENT CORP., an Arizona corporation, as
Managing Member of CAMELBACK PLAZA DEVELOPMENT, L.C., an Arizona limited
liability company with full powers to so do.
-------------
Notary Public
My commission expires:___________________
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================================================================================
CAMELBACK PLAZA DEVELOPMENT L.C., as grantor
(Borrower)
to
LAWYERS TITLE OF ARIZONA, INC., as trustee
(Trustee)
and
BOSTON CAPITAL MORTGAGE COMPANY LIMITED PARTNERSHIP, as beneficiary
(Lender)
-----------------------------------
DEED OF TRUST AND
SECURITY AGREEMENT
-----------------------------------
Dated: As of November 1, 1996
Location: Camelback Plaza
2621 East Camelback Road
Phoenix, Arizona
County: Maricopa
PREPARED BY AND UPON
RECORDATION RETURN TO:
MESSRS. THACHER PROFFITT & WOOD
Two World Trade Center
New York, New York 10048
Attention: Donald F. Simone, Esq.
File No.: 18001-00003
Title No.: 601228
================================================================================
THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the first day of November, 1996, by CAMELBACK PLAZA
DEVELOPMENT L.C., an Arizona limited liability company, having its principal
place of business c/o Performance Industries, Inc., 2425 Camelback Road, Suite
620, Phoenix, Arizona 85016, as grantor ("Borrower") and LAWYERS TITLE OF
ARIZONA, INC., an Arizona corporation, having its principal place of business at
40 East Mitchell Drive, Phoenix, Arizona 85011, as trustee ("Trustee") for the
benefit of BOSTON CAPITAL MORTGAGE COMPANY LIMITED PARTNERSHIP, a Massachusetts
limited partnership, having its principal place of business at One Boston Place,
Suite 2100, Boston, Massachusetts 02108 as beneficiary ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of SEVEN MILLION TWO HUNDRED
FIFTY THOUSAND AND 00/100 DOLLARS ($7,250,000.00) in lawful money of the United
States of America (the note together with all extensions, renewals,
modifications, substitutions and amendments thereof shall collectively be
referred to as the "Note"), with interest from the date thereof at the rates set
forth in the Note, principal and interest to be payable in accordance with the
terms and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as defined
in Article 2) and the performance of all of its obligations under the Note and
the Other Obligations (as defined in Article ).
Article 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY MORTGAGED. Borrower does hereby
irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant, transfer
and convey to Trustee, its successors and assigns, for the benefit of Lender,
and grant a security interest to Lender and Trustee in, the following property,
rights, interests and estates (including the leasehold interest in the Land
(defined below) created by that certain instrument dated December 15, 1976
between Bill J. Davis, Betty Davis and Ida E. Davis, as owner ("Owner") and
Douglas P. Simpson and Janice C. Simpson, d/b/a Bayshore Development Company, as
tenant recorded on February 3, 1977 in Docket 12063 at Page 1032, as amended and
assigned (the "Ground Lease")); now owned, or hereafter acquired by Borrower
(collectively, the "Property"):
(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
and all additional lands and estates therein which may, from
time to time, by supplemental mortgage or otherwise be
expressly made subject to the lien of this Security
Instrument;
(c) Improvements. The buildings, structures,
fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter
erected or located on the Land (the "Improvements");
(d) Easements. All easements, rights-of-way or use,
rights, strips and gores of land, streets, ways, alleys,
passages, sewer rights, water, water courses, water rights and
powers, air rights and development rights, and all estates,
rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature
whatsoever, in any way now or hereafter belonging, relating or
pertaining to the Land and the Improvements under and by
virtue of the Ground Lease 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 and the Improvements under and by virtue of
the Ground Lease and every part and parcel thereof, with the
appurtenances thereto;
(e) Fixtures and Personal Property. All machinery,
equipment, fixtures (including, but not limited to, all
heating, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other property of every kind and
nature whatsoever owned by Borrower, or in which Borrower has
or shall have an interest, now or hereafter located upon the
Land and the Improvements, or appurtenant thereto, and usable
in connection with the present or future operation and
occupancy of the Land and the Improvements and all building
equipment, materials and supplies of any nature whatsoever
owned by Borrower, or in which Borrower has or shall have an
interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, or usable in connection
with the present or future operation and occupancy of the Land
and the Improvements (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;
(f) 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 (the
"Leases") and all right, title and interest of Borrower, its
successors and assigns therein and thereunder, including,
without limitation, cash or securities deposited thereunder to
secure the performance by the lessees of their obligations
thereunder and all rents, additional rents, revenues, issues
and profits (including all oil and gas or other mineral
royalties and bonuses) from the Land and the Improvements (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;
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(g) Condemnation Awards. 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 grade, or for
any other injury to or decrease in the value of the Property;
(h) Insurance Proceeds. All proceeds of and any
unearned premiums on any insurance policies covering the
Property, including, without limitation, the right to receive
and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;
(i) Tax Certiorari. All refunds, rebates or credits
in connection with a reduction in real estate taxes and
assessments charged against the Property as a result of tax
certiorari or any applications or proceedings for reduction;
(j) Conversion. All proceeds of the conversion,
voluntary or involuntary, of any of the foregoing including,
without limitation, proceeds of insurance and condemnation
awards, into cash or liquidation claims;
(k) 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;
(l) Agreements. All agreements, contracts,
certificates, instruments, franchises, permits, licenses,
plans, specifications and other documents, now or hereafter
entered into, and all rights therein and thereto, respecting
or pertaining to the use, occupation, construction, management
or operation of the Land and any part thereof and any
Improvements or 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;
(m) 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;
(n) The Ground Lease and the leasehold estate created
thereby;
(o) all modifications, extensions and renewals of the
Ground Lease and all credits, deposits, options, privileges
and rights of Borrower as tenant under the Ground Lease,
including, but not limited to, the right, if any, to renew or
extend the Ground Lease for a succeeding term or terms;
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(p) all the estate, right, title, claim or demand
whatsoever of Borrower either in law or in equity, in
possession or expectancy, of, in and to the Land or the
Improvements or any part thereof, and Borrower's right, as
tenant under the Ground Lease, to elect under Section
365(h)(1) of Title 11 U.S.C.A. Section 101 et seq. (the
"Bankruptcy Code") to terminate or treat the Ground Lease as
terminated in the event of a bankruptcy, reorganization or
insolvency of the Owner or the rejection of the Ground Lease
by the Owner, as debtor in possession or by a trustee in
bankruptcy, pursuant to Section 365 of the Bankruptcy Code;
and
(q) Other Rights. Any and all other rights of
Borrower in and to the items set forth in Subsections (a)
through (p) above.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby absolutely
and unconditionally assigns to Lender and Trustee Borrower's right, title and
interest in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section and Section , Lender and Trustee grants to Borrower a revocable
license to collect and receive 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 mortgage and a "security agreement" within the meaning of
the Uniform Commercial Code. The Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Borrower in the Property. By executing and delivering this Security
Instrument, Borrower hereby grants to Lender and Trustee, as security for the
Obligations (defined in Section ), a security interest in the Personal Property
to the full extent that the Personal Property may be subject to the Uniform
Commercial Code.
Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby pledges to
Lender any and all monies now or hereafter held by Lender, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section ), Net
Proceeds (as defined in Section 4.4) and condemnation awards or payments
described in Section 3.6, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the Ground Lease and the renewals therein
provided for, and the above granted and described Property unto and to the use
and benefit of Lender and Trustee, and the successors and assigns of Lender and
Trustee, forever;
IN TRUST, WITH POWER OF SALE, to secure payment to Lender of
the Debt at the time and in the manner provided for its payment in the Note and
in this Security Agreement, and with respect to that portion of the Land subject
to the Ground Lease, for and during the rest, residue and remainder of the term
of years yet to come and unexpired in the
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Ground Lease and the renewals therein provided for; subject nevertheless to the
rents, covenants, conditions and provisions in the Ground Lease.
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 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, these presents and the
estate hereby granted shall cease, terminate and be void.
Article 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the grants,
assignments and transfers made in Article are given for the purpose of securing
the following, in such order of priority as Lender may determine in its sole
discretion (the "Debt"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges
and other sums, as provided in the Note, this Security Instrument or
the Other Security Documents (defined below);
(c) the payment of all other moneys agreed or provided to be
paid by Borrower in the Note, this Security Instrument or the Other
Security Documents;
(d) the payment of all sums advanced pursuant to this Security
Instrument to protect and preserve the Property and the lien and the
security interest created hereby; and
(e) the payment of all sums advanced and costs and expenses
incurred by Lender in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any
part thereof, or the acquisition or perfection of the security
therefor, whether made or incurred at the request of Borrower or
Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument and
the grants, assignments and transfers made in Article 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 any other agreement given by Borrower to Lender which is for the
purpose of further securing the obligations secured hereby, and any
amendments, modifications and changes thereto; and
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(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, this Security Instrument or the Other Security Documents.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's obligations
for the payment of the Debt and the performance of the Other Obligations shall
be referred to collectively below as the "Obligations."
Section 2.4 PAYMENTS. Unless payments are made in the required
amount in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default (defined below).
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 Note and in this Security Instrument.
Section 3.2 INCORPORATION BY REFERENCE. All the covenants,
conditions and agreements contained in (a) the Note and (b) all and any of the
documents other than the Note or this Security Instrument now or hereafter
executed by Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guaranty payment of the Note (the "Other Security
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.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least
the following coverages:
(i) comprehensive all risk insurance on the
Improvements and the Personal Property, including contingent
liability from Operation of Building Laws, Demolition Costs
and Increased Cost of Construction Endorsements, in each case
(A) in an amount equal to 100% of the "Full Replacement Cost,"
which for purposes of this Security Instrument shall mean
actual replacement value (exclusive of costs of excavations,
foundations, underground utilities and footings)
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with a waiver of depreciation, but the amount shall in no
event be less than the outstanding principal balance of the
Note; (B) containing an agreed amount endorsement with respect
to the Improvements and Personal Property waiving all
co-insurance provisions; (C) providing for no deductible in
excess of $100,000; and (D) containing an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the
Improvements or the use of the Property shall at any time
constitute legal non-conforming structures or uses. The Full
Replacement Cost shall be redetermined from time to time (but
not more frequently than once in any twelve (12) calendar
months) at the request of Lender by an appraiser or contractor
designated and paid by Borrower and approved by Lender, or by
an engineer or appraiser in the regular employ of the insurer.
After the first appraisal, additional appraisals may be based
on construction cost indices customarily employed in the
trade. No omission on the part of Lender to request any such
ascertainment shall relieve Borrower of any of its obligations
under this Subsection;
(ii) commercial general liability insurance against
claims for personal injury, bodily injury, death or property
damage occurring upon, in or about the Property, such
insurance (A) to be on the so-called "occurrence" form with a
combined single limit of not less than $2,000,000; (B) to
continue at not less than the aforesaid limit until required
to be changed by Lender in writing by reason of changed
economic conditions making such protection inadequate; and (C)
to cover at least the following hazards: (1) premises and
operations; (2) products and completed operations on an "if
any" basis; (3) independent contractors; (4) blanket
contractual liability for all written and oral contracts; and
(5) contractual liability covering the indemnities contained
in Article hereof to the extent the same is available;
(iii) business income insurance (A) with loss payable
to Lender; (B) covering all risks required to be covered by
the insurance provided for in Subsection (a)(i); (C)
containing an extended period of indemnity endorsement which
provides that after the physical loss to the Improvements and
Personal Property has been repaired, the continued loss of
income will be insured until such income either returns to the
same level it was at prior to the loss, or the expiration of
twelve (12) months from the date of the loss, whichever first
occurs, and notwithstanding that the policy may expire prior
to the end of such period; and (D) in an amount equal to 100%
of the projected gross income from the Property for a period
of twelve (12) months. The amount of such business income
insurance shall be determined prior to the date hereof and at
least once each year thereafter based on Borrower's reasonable
estimate of the gross income from the Property for the
succeeding twelve-month period. All insurance proceeds payable
to Lender pursuant to this Subsection shall be held by Lender
and shall be applied to the obligations secured hereunder from
time to time due and payable hereunder and under the Note;
provided, however, that nothing herein contained shall be
deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of
payment provided for in
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the Note except to the extent such amounts are actually paid
out of the proceeds of such business income insurance;
(iv) at all times during which structural
construction, repairs or alterations are being made with
respect to the Improvements (A) owner's contingent or
protective liability insurance covering claims not covered by
or under the terms or provisions of the above mentioned
commercial general liability insurance policy; and (B) the
insurance provided for in Subsection (a)(i) written in a
so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against
pursuant to Subsection (a)(i), (3) including permission to
occupy the Property, and (4) with an agreed amount endorsement
waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory
limits of the state in which the Property is located, and
employer's liability insurance with a limit of at least
$1,000,000 per accident and per disease per employee, and
$1,000,000 for disease aggregate in respect of any work or
operations on or about the Property, or in connection with the
Property or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by
Lender;
(vii) flood hazard insurance if any portion of the
Improvements is currently or at any time in the future located
in a federally designated "special flood hazard area"; and
(viii) such other insurance and in such amounts as
Lender from time to time may reasonably request against such
other insurable hazards which at the time are commonly insured
against for property similar to the Property located in or
around the region in which the Property is located.
(b) All insurance provided for in Subsection (a)
hereof shall be obtained under valid and enforceable policies (the
"Policies" or in the singular, the "Policy"), in such forms and, from
time to time after the date hereof, in such amounts as may from time to
time be satisfactory to Lender, issued by financially sound and
responsible insurance companies authorized to do business in the state
in which the Property is located and approved by Lender. The insurance
companies must have a general policy rating of A or better and a
financial class of VI or better by A.M. Best Company, Inc., and if
there are any Securities (defined in Section 19.1 below) issued which
have been assigned a rating by a credit rating agency approved by
Lender (a "Rating Agency"), the insurance company shall have a claims
paying ability rating by such Rating Agency equal to or greater than
the rating of the highest class of the Securities (each such insurer
shall be referred to below as a "Qualified Insurer"). Not less than
thirty (30) days prior to the expiration dates of the Policies
theretofore furnished to Lender pursuant to Subsection (a), certified
copies of the Policies marked "premium paid" or accompanied by evidence
satisfactory to Lender of payment of the premiums due thereunder (the
"Insurance Premiums"), shall be delivered by Borrower
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to Lender; provided, however, that in the case of renewal Policies,
Borrower may furnish Lender with binders therefor to be followed by the
original Policies when issued.
(c) Borrower shall not obtain (i) any umbrella or
blanket liability or casualty Policy unless, in each case, such Policy
is approved in advance in writing by Lender and Lender's interest is
included therein as provided in this Security Instrument and such
Policy is issued by a Qualified Insurer, or (ii) separate insurance
concurrent in form or contributing in the event of loss with that
required in Subsection (a) to be furnished by, or which may be
reasonably required to be furnished by, Borrower. In the event Borrower
obtains separate insurance or an umbrella or a blanket Policy, Borrower
shall notify Lender of the same and shall cause certified copies of
each Policy to be delivered as required in Subsection (a). Any blanket
insurance Policy shall specifically allocate to the Property the amount
of coverage from time to time required hereunder and shall otherwise
provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Subsection (a).
(d) All Policies of insurance provided for or contemplated by
Subsection (a), except for the Policy referenced in Subsection (a)(v),
shall name Lender and Borrower as the insured or additional insured, as
their respective interests may appear, and in the case of property
damage, boiler and machinery, and flood insurance, shall contain a
so-called New York standard non-contributing mortgagee clause in favor
of Lender providing that the loss thereunder shall be payable to
Lender.
(e) All Policies of insurance provided for in Subsection (a)
shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone
acting for Borrower, or of any tenant under any Lease or other
occupant, or failure to comply with the provisions of any
Policy which might otherwise result in a forfeiture of the
insurance or any part thereof, shall in any way affect the
validity or enforceability of the insurance insofar as Lender
is concerned;
(ii) the Policy shall not be materially changed
(other than to increase the coverage provided thereby) or
cancelled without at least 30 days' written notice to Lender
and any other party named therein as an insured; and
(iii) each Policy shall provide that the issuers
thereof shall give written notice to Lender if the Policy has
not been renewed thirty (30) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance
Premiums thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before
thirty (30) days after the close of each of Borrower's fiscal years, a
statement certified by Borrower or a duly authorized officer of
Borrower of the amounts of insurance maintained in compliance herewith,
of the risks covered by such insurance and of the insurance
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company or companies which carry such insurance and, if requested by
Lender, verification of the adequacy of such insurance by an
independent insurance broker or appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt of
written evidence that all insurance required hereunder is in full force
and effect, Lender shall have the right, without notice to Borrower to
take such action as Lender deems necessary to protect its interest in
the Property, including, without limitation, the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate,
and all expenses incurred by Lender in connection with such action or
in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and until paid shall be secured by this
Security Instrument and shall bear interest in accordance with Section
10.3 hereof.
(h) If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty, Borrower shall give prompt
notice of such damage to Lender and shall promptly commence and
diligently prosecute the completion of the repair and restoration of
the Property as nearly as possible to the condition the Property was in
immediately prior to such fire or other casualty, with such alterations
as may be approved by Lender (the "Restoration") and otherwise in
accordance with Section of this Security Instrument. Borrower shall pay
all costs of such Restoration whether or not such costs are covered by
insurance.
Section 3.4 PAYMENT OF TAXES, ETC.
(a) Borrower shall promptly pay all taxes, assessments, water
rates, sewer rents, governmental impositions, and other charges,
including without limitation vault charges and license fees for the use
of vaults, chutes and similar areas adjoining the Land, now or
hereafter levied or assessed or imposed against the Property or any
part thereof (the "Taxes"), all ground rents, maintenance charges and
similar charges, now or hereafter levied or assessed or imposed against
the Property or any part thereof (the "Other Charges"), and all charges
for utility services provided to the Property as same become due and
payable. Borrower will deliver to Lender, promptly upon Lender's
request, evidence satisfactory to Lender that the Taxes, Other Charges
and utility service charges have been so paid or are not then
delinquent. Borrower shall not suffer and shall promptly cause to be
paid and discharged any lien or charge whatsoever which may be or
become a lien or charge against the Property. Except to the extent sums
sufficient to pay all Taxes and Other Charges have been deposited with
Lender in accordance with the terms of this Security Instrument,
Borrower shall furnish to Lender paid receipts for the payment of the
Taxes and Other Charges prior to the date the same shall become
delinquent.
(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
Taxes, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other
Security Documents, (ii) Borrower
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is permitted to do 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 Taxes from Borrower and
from the Property or Borrower shall have paid all of the Taxes 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, cancelled or lost, (vi)
Borrower shall have deposited with Lender adequate reserves for the
payment of the Taxes, together with all interest and penalties thereon,
unless Borrower has paid all of the Taxes under protest, and (vii)
Borrower shall have furnished the security as may be required in the
proceeding, or as may be requested by Lender to insure the payment of
any contested Taxes, together with all interest and penalties thereon.
Section 3.5 ESCROW FUND. In addition to the initial deposits
with respect to Taxes and Insurance Premiums made by Borrower to Lender on the
date hereof to be held by Lender in escrow, Borrower shall pay to Lender on the
first day of each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Lender to be payable,
during the next ensuing twelve (12) months and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (the amounts
in (a) and (b) above shall be called the "Escrow Fund"). Borrower agrees to
notify Lender immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has or
obtains knowledge and authorizes Lender or its agent to obtain the bills for
Taxes and Other Charges directly from the appropriate taxing authority. The
Escrow Fund and the payments of interest or principal or both, payable pursuant
to the Note shall be added together and shall be paid as an aggregate sum by
Borrower to Lender. Lender will apply the Escrow Fund to payments of Taxes and
Insurance Premiums required to be made by Borrower pursuant to Sections and
hereof. If the amount of the Escrow Fund shall exceed the amounts due for Taxes
and Insurance Premiums pursuant to Sections and hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against future
payments to be made to the Escrow Fund. In allocating such excess, Lender may
deal with the person shown on the records of Lender to be the owner of the
Property. If the Escrow Fund is not sufficient to pay the items set forth in (a)
and (b) above, Borrower shall promptly pay to Lender, upon demand, an amount
which Lender shall estimate as sufficient to make up the deficiency. The Escrow
Fund shall not constitute a trust fund and may be commingled with other monies
held by Lender. No earnings or interest on the Escrow Fund shall be payable to
Borrower. With respect to that portion of the Land subject to the Ground Lease,
compliance by Borrower with any provisions of the Ground Lease relating to the
deposit of funds by Borrower for the payment of all taxes, assessments, water
and sewer rents and/or insurance premiums shall constitute compliance with this
Section 3.5 to the extent such Ground Lease provisions cover each of said items;
provided that Borrower shall in any event be required to deliver to Lender
evidence of such payments and receipted bills for all such items.
Section 3.6 CONDEMNATION. Borrower shall promptly give Lender
notice of the actual or threatened commencement of any condemnation or eminent
domain proceeding and shall deliver to Lender copies of any and all papers
served in connection with such proceedings. Notwithstanding any taking by any
public or quasi-public authority through eminent domain or
- 11 -
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Borrower shall continue to pay the
Debt at the time and in the manner provided for its payment in the Note and in
this Security Instrument and the Debt shall not be reduced until any award or
payment therefor shall have been actually received and applied by Lender, after
the deduction of expenses of collection, to the reduction or discharge of the
Debt. Lender shall not be limited to the interest paid on the award by the
condemning authority but shall be entitled to receive out of the award interest
at the rate or rates provided herein or in the Note. Lender may apply any award
or payment to the reduction or discharge of the Debt whether or not then due and
payable. If the Property is sold, through foreclosure or otherwise, prior to the
receipt by Lender of the award or payment, Lender shall have the right, whether
or not a deficiency judgment on the Note shall have been sought, recovered or
denied, to receive the award or payment, or a portion thereof sufficient to pay
the Debt.
Section 3.7 LEASES AND RENTS.
(a) Except as otherwise consented to by Lender, all Leases
shall be written on the standard form of lease which shall have been
approved by Lender. Upon request, Borrower shall furnish Lender with
executed copies of all Leases. No material changes may be made to the
Lender-approved standard lease without the prior written consent of
Lender. In addition, all renewals of Leases and all proposed Leases
shall provide for rental rates and terms comparable to existing local
market rates and terms and shall be arms-length transactions with bona
fide, independent third party tenants. All proposed Leases and renewals
of existing Leases (other than residential Leases relating to a
residential multifamily property) shall be subject to the prior
approval of Lender and its counsel, at Borrower's expense. All Leases
shall provide that they are subordinate to this Security Instrument and
that the lessee agrees to attorn to Lender. Borrower (i) shall observe
and perform all the obligations imposed upon the lessor under the
Leases and shall not do or permit to be done anything to impair the
value of any of the Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all notices of default which Borrower
shall send or receive thereunder; (iii) shall enforce all of the terms,
covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed, short of termination
thereof; provided however, with respect to multifamily residential
property, a residential Lease may be terminated in the event of a
default by the tenant thereunder; (iv) shall not collect any of the
Rents more than one (1) month in advance; (v) shall not execute any
other assignment of the lessor's interest in any of the Leases or the
Rents; (vi) shall not alter, modify or change the terms of any Leases
without the prior written consent of Lender, or cancel or terminate any
Leases or accept a surrender thereof or convey or transfer or suffer or
permit a conveyance or transfer of the Land or of any interest therein
so as to effect a merger of the estates and rights of or a termination
or diminution of the obligations of, lessees thereunder; (vii) shall
not alter, modify or change the terms of any guaranty, letter of credit
or other credit support with respect to any of the Leases (the "Lease
Guaranty") or cancel or terminate such Lease Guaranty without the prior
written consent of Lender; and (viii) shall not consent to any
assignment of or subletting under any Leases not in accordance with
their terms, without the prior written consent of Lender.
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(b) Notwithstanding the provisions of Subsection (a) above,
renewals of existing Leases and Leases for commercial space for in-line
stores (as determined by Lender) shall not be subject to the prior
approval of Lender provided all of the following conditions are
satisfied: (i) the rental income pursuant to the renewal or proposed
Lease is not more than ten percent (10%) of the total rental income for
the in-line stores, (ii) the renewal or proposed Lease covers less than
ten percent (10%) of the in-line store space, in the aggregate, (iii)
the renewal or proposed Lease shall have a lease term not to exceed
eight (8) years including options to renew, (iv) no rent credits, free
rents or concessions have been granted under the renewal or proposed
Lease, (v) the renewal or proposed Lease shall provide for rental rates
and terms comparable to existing local market rates and terms, (vi) the
renewal or proposed Lease shall be an arms-length transaction with a
bona fide, independent third party tenant and (vii) the renewal or
proposed Lease shall satisfy other criteria as shall be required by
Lender in its sole discretion. Borrower shall deliver to Lender copies
of all Leases which are entered into pursuant to this Subsection (b)
together with Borrower's certification that it has satisfied all of the
conditions of the preceding sentence within thirty (30) days after the
execution of the Lease.
(c) To the extent permitted by law, Borrower shall promptly
deposit with Lender any and all monies representing security deposits
under the Leases, whether or not Borrower actually received such monies
(the "Security Deposits"). Lender shall hold the Security Deposits in
accordance with the terms of the respective Lease, and shall only
release the Security Deposits in order to return a tenant's Security
Deposit to such tenant if such tenant is entitled to the return of the
Security Deposit under the terms of the Lease and is not otherwise in
default under the Lease. To the extent required by Applicable Laws
(defined below), Lender shall hold the Security Deposits in an interest
bearing account selected by Lender in its sole discretion. In the event
Lender is not permitted by law to hold the Security Deposits, Borrower
shall deposit the Security Deposits into an account with a federally
insured institution as approved by Lender.
Section 3.8 MAINTENANCE OF PROPERTY. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property)
without the consent of Lender. Notwithstanding the provisions of the Ground
Lease, 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 proceeding of the character referred
to in Section hereof and shall complete and pay for any structure at any time in
the process of construction or repair on the Land. Borrower shall not initiate,
join in, acquiesce in, or consent to any change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Property or any part thereof. If
under applicable zoning provisions the use of all or any portion of the Property
is or shall become a nonconforming use, Borrower will not cause or permit the
nonconforming use to be discontinued or abandoned without the express written
consent of Lender.
Section 3.9 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
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increase the risk of fire or other hazard arising out of the operation of the
Property, or take any action that might invalidate or give cause for
cancellation of any Policy, or do or permit to be done thereon anything that may
in any way 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 3.10 COMPLIANCE WITH LAWS.
(a) Borrower shall promptly comply with all existing and
future federal, state and local laws, orders, ordinances, governmental
rules and regulations or court orders affecting or which may be
interpreted to affect the Property, or the use thereof ("Applicable
Laws").
(b) Borrower shall from time to time, upon Lender's request,
provide Lender with evidence satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with
Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would
increase Borrower's responsibilities for compliance with Applicable
Laws without the prior written approval of Lender. Lender's approval of
the plans, specifications, or working drawings for alterations of the
Property shall create no responsibility or liability on behalf of
Lender for their completeness, design, sufficiency or their compliance
with Applicable Laws. The foregoing shall apply to tenant improvements
constructed by Borrower or by any of its tenants. Lender may condition
any such approval upon receipt of a certificate of compliance with
Applicable Laws from an independent architect, engineer, or other
person acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt
by Borrower of any notice related to a violation of any Applicable Laws
and of the commencement of any proceedings or investigations which
relate to compliance with Applicable Laws.
Section 3.11 BOOKS AND RECORDS.
(a) Borrower and any Guarantors (defined in Subsection (f))
and Indemnitor(s) (defined in Subsection (q)), if any, shall keep
adequate books and records of account in accordance with generally
accepted accounting principles ("GAAP"), or in accordance with other
methods acceptable to Lender in its sole discretion, consistently
applied and furnish to Lender:
(i) quarterly certified rent rolls signed and dated
by Borrower, detailing the names of all tenants of the
Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each
Lease and the term of each Lease, including the expiration
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date, and any other information as is reasonably required by
Lender, within twenty (20) days after the end of each calendar
quarter;
(ii) quarterly operating statements of the Property,
prepared and certified by Borrower in the form required by
Lender, detailing the revenues received, the expenses incurred
and the net operating income before and after debt service
(principal and interest) and major capital improvements for
that quarter and containing appropriate year to date
information, within thirty (30) days after the end of each
fiscal quarter;
(iii) an annual operating statement of the Property
detailing the total revenues received, total expenses
incurred, total cost of all capital improvements, total debt
service and total cash flow, to be prepared and certified by
Borrower in the form required by Lender, or if required by
Lender, an audited annual operating statement prepared and
certified by an independent certified public accountant
acceptable to Lender, within ninety (90) days after the close
of each fiscal year of Borrower;
(iv) an annual balance sheet and profit and loss
statement of Borrower in the form required by Lender, prepared
and certified by the respective Borrower, Guarantors and/or
Indemnitor(s), or if required by Lender, audited financial
statements prepared by an independent certified public
accountant acceptable to Lender, within sixty (60) days after
the close of each fiscal year of Borrower, Guarantors and
Indemnitor(s), as the case may be;
(v) an annual operating budget presented on a monthly
basis consistent with the annual operating statement described
above for the Property, including cash flow projections for
the upcoming year, and all proposed capital replacements and
improvements at least fifteen (15) days prior to the start of
each fiscal year; and
(vi) annual year-end certified rent rolls signed and
dated by Borrower, detailing the names of all tenants of the
Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each
Lease and the term of each Lease, including the expiration
date, and any other information as is reasonably required by
Lender, within thirty (30) days after the end of each calendar
year.
To the extent any of the foregoing documents are required to
be certified, such certification may come from the Property manager.
(b) Upon request from Lender, Borrower, its affiliates, any
Guarantor and any Indemnitor shall furnish in a timely manner to
Lender:
(i) a property management report for the Property,
showing the number of inquiries made and/or rental
applications received from tenants or prospective tenants and
deposits received from tenants and any other information
- 15 -
requested by Lender, in reasonable detail and certified by
Borrower (or an officer, general partner, member or principal
of Borrower if Borrower is not an individual) under penalty of
perjury to be true and complete, but no more frequently than
quarterly; and
(ii) an accounting of all security deposits held in
connection with any Lease of any part of the Property,
including the name and identification number of the accounts
in which such security deposits are held, the name and address
of the financial institutions in which such security deposits
are held and the name of the person to contact at such
financial institution, along with any authority or release
necessary for Lender to obtain information regarding such
accounts directly from such financial institutions.
(c) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish Lender with such other additional financial or management
information (including State and Federal tax returns) as may, from time
to time, be reasonably required by Lender in form and substance
satisfactory to Lender.
(d) Borrower, its affiliates, any Guarantor and any Indemnitor
shall furnish to Lender and its agents convenient facilities for the
examination and audit of any such books and records.
Section 3.12 PAYMENT FOR LABOR AND MATERIALS. Borrower will
promptly pay when due all bills and costs for labor, materials, and specifically
fabricated materials 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 Exceptions (defined below).
Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower shall
observe and perform each and every term to be observed or performed by Borrower
pursuant to the terms of any agreement or recorded instrument affecting or
pertaining to the Property, or given by Borrower to Lender for the purpose of
further securing an obligation secured hereby and any amendments, modifications
or changes thereto.
Section 3.14 OWNER'S BANKRUPTCY. Borrower shall not, in any
event, including the bankruptcy, reorganization or insolvency of Borrower or
Owner, (i) surrender its leasehold estate created under the Ground Lease, or any
portion thereof, nor terminate, cancel or acquiesce in the rejection of the
Ground Lease; or (ii) modify, change, supplement, alter or amend the Ground
Lease in any respect, either orally or in writing. Borrower does hereby
expressly release, assign, relinquish and surrender unto the Lender all its
right, power and authority to terminate, cancel, acquiesce in the rejection of,
modify, change, supplement, alter or amend the Ground Lease in any respect,
either orally or in writing, at any time, including in the event of the
bankruptcy, reorganization or insolvency of Borrower or Owner under the
- 16 -
Ground Lease, and any attempt on the part of Borrower to exercise any such right
without the consent of the Lender shall be null and void. Notwithstanding the
foregoing, in the event of a threatened termination of the Ground Lease due to
the bankruptcy, reorganization or insolvency of Borrower, Borrower shall, at
Lender's election, absolutely assign to Lender, in lieu of such termination, all
of Borrower's right, title and interest in and to the Ground Lease.
In the event the Ground Lease is rejected by Owner, as debtor
in possession, or by a trustee for Owner, pursuant to Section 365 of the
Bankruptcy Code, Borrower shall not exercise its right to elect under Section
365(h)(1) of the Bankruptcy Code to terminate or treat the Ground Lease as
terminated. Any such election made shall be null and void. In any event,
Borrower hereby waives, for the benefit of the Lender, its successors and
assigns only, and not enforceable by anyone else, the provisions of section 365
of the Bankruptcy Code, or of any statute or rule of law now or hereafter in
effect which gives or purports to give Borrower any right of election to
terminate the Ground Lease, to acquiesce in the termination of the Ground Lease
or to surrender possession of the Property in the event of the bankruptcy,
reorganization or insolvency of Borrower or any other party including, without
limitation, Owner.
Article 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 PROPERTY USE. The Property shall be used only for
a retail complex and uses incidental thereto, and for no other use without the
prior written consent of Lender, which consent may be withheld in Lender's sole
and absolute discretion.
Section 4.2 ERISA.
(a) It shall not engage in any transaction which would cause
any obligation, or action taken or to be taken, hereunder (or the
exercise by Lender of any of its rights under the Note, this Security
Instrument and the Other Security Documents) to be a non-exempt (under
a statutory or administrative class exemption) prohibited transaction
under the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(b) Borrower further covenants and agrees to deliver to Lender
such certifications or other evidence from time to time throughout the
term of the Security Instrument, as requested by Lender in its sole
discretion, that (i) Borrower is not an "employee benefit plan" as
defined in Section 3(3) of ERISA, which is subject to Title I of ERISA,
or a "governmental plan" within the meaning of Section 3(3) of ERISA;
(ii) Borrower is not subject to state statutes regulating investments
and fiduciary obligations with respect to governmental plans; and (iii)
one or more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. ss.
2510.3-101(b)(2);
- 17 -
(B) Less than 25 percent of each outstanding class of
equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. ss.
2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29
C.F.R. ss. 2510.3-101(c) or (e) or an investment company
registered under The Investment Company Act of 1940.
Section 4.3 SINGLE PURPOSE ENTITY. It has not and shall not:
(a) engage in any business or activity other than the
ownership, operation and maintenance of the Property, and activities
incidental thereto;
(b) acquire or own any material assets other than (i) the
Property, and (ii) such incidental Personal Property as may be
necessary for the operation of the Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or
otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under
the laws of the jurisdiction of its organization or formation, or
without the prior written consent of Lender, amend, modify, terminate
or fail to comply with the provisions of Borrower's Partnership
Agreement, Articles or Certificate of Incorporation, Articles of
Organization or similar organizational documents, as the case may be,
as same may be further amended or supplemented, if such amendment,
modification, termination or failure to comply would adversely affect
the ability of Borrower to perform its obligations hereunder, under the
Note or under the Other Security Documents;
(e) own any subsidiary or make any investment in, any person
or entity without the consent of Lender;
(f) commingle its assets with the assets of any of its
members, general partners, affiliates, principals or of any other
person or entity;
(g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt, except
for trade payables in the ordinary course of its business of owning and
operating the Property, provided that such debt is paid when due;
(h) become insolvent and fail to pay its debts and liabilities
from its assets as the same shall become due;
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the members, general
partners, principals and affiliates of
- 18 -
Borrower, the affiliates of a member, general partner or principal of
Borrower, and any other person or entity;
(j) enter into any contract or agreement with any member,
general partner, principal or affiliate of Borrower, Guarantor or
Indemnitor, or any member, general partner, principal or affiliate
thereof, except upon terms and conditions that are intrinsically fair
and substantially similar to those that would be available on an
arms-length basis with third parties other than any member, general
partner, principal or affiliate of Borrower, Guarantor or Indemnitor,
or any member, general partner, principal or affiliate thereof;
(k) seek the dissolution or winding up in whole, or in part,
of Borrower;
(l) maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual
assets from those of any member, general partner, principal or
affiliate of Borrower, or any member, general partner, principal or
affiliate thereof or any other person;
(m) hold itself out to be responsible for the debts of another
person;
(n) make any loans or advances to any third party, including
any member, general partner, principal or affiliate of Borrower, or any
member, general partner, principal or affiliate thereof;
(o) fail to file its own tax returns;
(p) agree to, enter into or consummate any transaction which
would render Borrower unable to furnish the certification or other
evidence referred to in Section (b) hereof;
(q) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to
conduct its business solely in its own name in order not (i) to mislead
others as to the identity with which such other party is transacting
business, or (ii) to suggest that Borrower is responsible for the debts
of any third party (including any member, general partner, principal or
affiliate of Borrower, or any member, general partner, principal or
affiliate thereof);
(r) fail to maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations; or
(s) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute, or make
an assignment for the benefit of creditors.
Section 4.4 RESTORATION. The following provisions shall apply
in connection with the Restoration of the Property:
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(a) If the Net Proceeds (defined below) shall be less than
$25,000 and the costs of completing the Restoration shall be less than
$25,000, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Subsection
(b)(i) are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due
diligence the Restoration in accordance with the terms of this Security
Instrument.
(b) If the Net Proceeds are equal to or greater than $25,000
or the costs of completing the Restoration is equal to or greater than
$25,000, Lender shall make the net amount of all insurance proceeds
received by Lender pursuant to Subsections (a)(i), (iv), (vi) and (vii)
of this Security Instrument as a result of such damage or destruction,
after deduction of its reasonable costs and expenses (including, but
not limited to, reasonable counsel fees), if any, in collecting the
same (the "Net Proceeds") available for the Restoration in accordance
with the provisions of this Subsection (b).
(i) The Net Proceeds shall be made available to
Borrower for the Restoration provided that each of the
following conditions are met:
(A) no Event of Default shall have occurred
and be continuing under the Note, this Security
Instrument or any of the Other Security Documents;
(B) less than fifty percent (50%) of the
total floor area of the Improvements has been
damaged, destroyed or rendered unusable as a result
of such fire or other casualty;
(C) Leases demising in the aggregate at
least 50% of the total rentable space in the Property
which has been demised under executed and delivered
Leases in effect as of the date of the occurrence of
such fire or other casualty shall remain in full
force and effect during and after the completion of
the Restoration;
(D) Borrower shall commence the Restoration
as soon as reasonably practicable (but in no event
later than thirty (30) days after such damage or
destruction occurs) and shall diligently pursue the
same to satisfactory completion;
(E) Lender shall be satisfied that any
operating deficits which will be incurred with
respect to the Property as a result of the occurrence
of any such fire or other casualty will be covered
out of (1) the Net Proceeds, (2) the insurance
coverage referred to in Subsection (a)(iii), or (3)
by other funds of Borrower;
(F) Lender shall be satisfied that, upon the
completion of the Restoration, the gross cash flow
and the net cash flow of the Property will be
restored to a level sufficient to cover all carrying
costs and operating expenses of the Property,
including, without limitation, debt service on the
- 20 -
Note at a coverage ratio (after deducting all
required reserves as required by Lender from net
operating income) of at least 1.3 to 1.0, which
coverage ratio shall be determined by Lender in its
sole and absolute discretion on the basis of the
Applicable Interest Rate (as defined in the Note);
(G) Lender shall be satisfied that the
Restoration will be completed on or before the
earliest to occur of (1) six (6) months prior to the
Maturity Date (as defined in the Note), (2) six (6)
months after the occurrence of such fire or other
casualty, (3) the earliest date required for such
completion under the terms of any Leases which are
required in accordance with the provisions of this
Subsection (b) to remain in effect subsequent to the
occurrence of such fire or other casualty and the
completion of the Restoration or under the terms of
[specify key Leases] or (4) such time as may be
required under applicable zoning law, ordinance, rule
or regulation in order to repair and restore the
Property to the condition it was in immediately prior
to such fire or other casualty;
(H) the Property and the use thereof after
the Restoration will be in compliance with and
permitted under all applicable zoning laws,
ordinances, rules and regulations; and
(I) the Restoration shall be done and
completed by Borrower in an expeditious and diligent
fashion and in compliance with all applicable
governmental laws, rules and regulations (including,
without limitation, all applicable Environmental Laws
(defined below).
(ii) The Net Proceeds shall be held by Lender and,
until disbursed in accordance with the provisions of this
Subsection (b), shall constitute additional security for the
Obligations. The Net Proceeds shall be disbursed by Lender to,
or as directed by, Borrower from time to time during the
course of the Restoration, upon receipt of evidence
satisfactory to Lender that (A) all materials installed and
work and labor performed (except to the extent that they are
to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full,
and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to
file same, or any other liens or encumbrances of any nature
whatsoever on the Property arising out of the Restoration
which have not either been fully bonded to the satisfaction of
Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company
insuring the lien of this Security Instrument.
(iii) All plans and specifications required in
connection with the Restoration shall be subject to prior
review and acceptance in all respects by Lender and by an
independent consulting engineer selected by Lender (the
"Casualty Consultant"). Lender shall have the use of the plans
and specifications and all permits, licenses and approvals
required or obtained in connection with
- 21 -
the Restoration. The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as
well as the contracts under which they have been engaged,
shall be subject to prior review and acceptance by Lender and
the Casualty Consultant. All costs and expenses incurred by
Lender in connection with making the Net Proceeds available
for the Restoration including, without limitation, reasonable
counsel fees and disbursements and the Casualty Consultant's
fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal
to the costs actually incurred from time to time for work in
place as part of the Restoration, as certified by the Casualty
Consultant, minus the Casualty Retainage. The term "Casualty
Retainage" as used in this Subsection (b) shall mean an amount
equal to 10% of the costs actually incurred for work in place
as part of the Restoration, as certified by the Casualty
Consultant, until such time as the Casualty Consultant
certifies to Lender that Net Proceeds representing 50% of the
required Restoration have been disbursed. There shall be no
Casualty Retainage with respect to costs actually incurred by
Borrower for work in place in completing the last 50% of the
required Restoration. The Casualty Retainage shall in no
event, and notwithstanding anything to the contrary set forth
above in this Subsection (b), be less than the amount actually
held back by Borrower from contractors, subcontractors and
materialmen engaged in the Restoration. The Casualty Retainage
shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in
accordance with the provisions of this Subsection (b) and that
all approvals necessary for the re-occupancy and use of the
Property have been obtained from all appropriate governmental
and quasi-governmental authorities, and Lender receives
evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out
of the Casualty Retainage, provided, however, that Lender will
release the portion of the Casualty Retainage being held with
respect to any contractor, subcontractor or materialman
engaged in the Restoration as of the date upon which the
Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all
work and has supplied all materials in accordance with the
provisions of the contractor's, subcontractor's or
materialman's contract, and the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment
in full of all sums due to the contractor, subcontractor or
materialman as may be reasonably requested by Lender or by the
title company insuring the lien of this Security Instrument.
If required by Lender, the release of any such portion of the
Casualty Retainage shall be approved by the surety company, if
any, which has issued a payment or performance bond with
respect to the contractor, subcontractor or materialman.
(v) Lender shall not be obligated to make
disbursements of the Net Proceeds more frequently than once
every calendar month.
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(vi) If at any time the Net Proceeds or the
undisbursed balance thereof shall not, in the opinion of
Lender, be sufficient to pay in full the balance of the costs
which are estimated by the Casualty Consultant to be incurred
in connection with the completion of the Restoration, Borrower
shall deposit the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited
with Lender shall be held by Lender and shall be disbursed for
costs actually incurred in connection with the Restoration on
the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Subsection
(b) shall constitute additional security for the Obligations.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency
deposited with Lender after the Casualty Consultant certifies
to Lender that the Restoration has been completed in
accordance with the provisions of this Subsection (b), and the
receipt by Lender of evidence satisfactory to Lender that all
costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be
continuing under the Note, this Security Instrument or any of
the Other Security Documents.
(c) All Net Proceeds not required (i) to be made available for
the Restoration or (ii) to be returned to Borrower as excess Net
Proceeds pursuant to Subsection (b)(vii) may be retained and applied by
Lender toward the payment of the Debt whether or not then due and
payable in such order, priority and proportions as Lender in its
discretion shall deem proper or, at the discretion of Lender, the same
may be paid, either in whole or in part, to Borrower for such purposes
as Lender shall designate, in its discretion. If Lender shall receive
and retain Net Proceeds, the lien of this Security Instrument shall be
reduced only by the amount thereof received and retained by Lender and
actually applied by Lender in reduction of the Debt.
Article 5 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 WARRANTY OF TITLE. Borrower has good title to the
Property and has the right to mortgage, grant, bargain, sell, pledge, assign,
warrant, transfer and convey the same and that Borrower possesses an
unencumbered leasehold estate in the Land and the Improvements created by and
pursuant to the provisions of the Ground Lease and that it owns the Property
free and clear of all liens, encumbrances and charges whatsoever except for
those exceptions shown in the title insurance policy insuring the lien of this
Security Instrument (the "Permitted Exceptions"). In addition, Borrower
represents and warrants that (a) the Ground Lease is in full force and effect
and has not been modified or amended in any manner whatsoever, (b) there are no
defaults under the Ground Lease and no event has occurred, which but for the
passage of time, or notice, or both, would constitute a default under the Ground
Lease, (c) all rents, additional rents and other sums due and payable under the
Ground Lease
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have been paid in full, and (d) neither Borrower nor the landlord under the
Ground Lease has commenced any action or given or received any notice for the
purpose of terminating the Ground Lease. Borrower shall forever warrant, defend
and preserve the title and the validity and priority of the lien of this
Security Instrument and shall forever warrant and defend the same to Lender
and/or Trustee against the claims of all persons whomsoever.
Section 5.2 AUTHORITY. Borrower (and the undersigned
representative of Borrower, if any) has full power, authority and legal right to
execute this Security Instrument, and to mortgage, grant, bargain, sell, pledge,
assign, warrant, transfer and convey the Property pursuant to the terms hereof
and to keep and observe all of the terms of this Security Instrument on
Borrower's part to be performed.
Section 5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (b) is duly qualified to transact business and is
in good standing in the State where the Property is located; and (c) has all
necessary approvals, governmental and otherwise, and full power and authority to
own the Property and carry on its business as now conducted and proposed to be
conducted. Borrower now has and shall continue to have the full right, power and
authority to operate and lease the Property, to encumber the Property as
provided herein and to perform all of the other obligations to be performed by
Borrower under the Note, this Security Instrument and the Other Security
Documents.
Section 5.4 VALIDITY OF DOCUMENTS. (a) The execution, delivery
and performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the
corporate/partnership/company power of Borrower; (ii) have been authorized by
all requisite corporate/partnership/company action; (iii) have received all
necessary approvals and consents, corporate, governmental or otherwise; (iv)
will not violate, conflict with, result in a breach of or constitute (with
notice or lapse of time, or both) a default under any provision of law, any
order or judgment of any court or governmental authority, the articles of
incorporation, by-laws, partnership or trust agreement, articles of
organization, operating agreement, or other governing instrument of Borrower, or
any indenture, agreement or other instrument to which Borrower is a party or by
which it or any of its assets or the Property is or may be bound or affected;
(v) will not result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of its assets, except the lien and security
interest created hereby; and (vi) will not require any authorization or license
from, or any filing with, any governmental or other body (except for the
recordation of this instrument in appropriate land records in the State where
the Property is located and except for Uniform Commercial Code filings relating
to the security interest created hereby); and (b) the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid and
binding obligations of Borrower.
Section 5.5 LITIGATION. There is no action, suit or
proceeding, judicial, administrative or otherwise (including any condemnation or
similar proceeding), pending or, to the best of Borrower's knowledge, threatened
or contemplated against, or affecting, Borrower, a Guarantor, if any, an
Indemnitor, if any, or the Property.
Section 5.6 STATUS OF PROPERTY.
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(a) No portion of the Improvements is located in an area
identified by the Secretary of Housing and Urban Development or any
successor thereto as an area having special flood hazards pursuant to
the National Flood Insurance Act of 1968 or the Flood Disaster
Protection Act of 1973, as amended, or any successor law, or, if
located within any such area, Borrower has obtained and will maintain
the insurance prescribed in Section hereof.
(b) Borrower has obtained all necessary certificates, licenses
and other approvals, governmental and otherwise, necessary for the
operation of the Property and the conduct of its business and all
required zoning, building code, land use, environmental and other
similar permits or approvals, all of which are in full force and effect
as of the date hereof and not subject to revocation, suspension,
forfeiture or modification.
(c) The Property and the present and contemplated use and
occupancy thereof are in full compliance with all applicable zoning
ordinances, building codes, land use and environmental laws and other
similar laws.
(d) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by
public utilities and the Property has accepted or is equipped to accept
such utility service.
(e) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have
been completed, are serviceable and all-weather and are physically and
legally open for use by the public.
(f) The Property is served by public water and sewer systems.
(g) The Property is free from damage caused by fire or other
casualty.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements
have been paid in full.
(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used
in connection with the operation of the Property, free and clear of any
and all security interests, liens or encumbrances, except the lien and
security interest created hereby.
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are in a good and safe condition and
repair and in compliance with all Applicable Laws.
Section 5.7 NO FOREIGN PERSON. Borrower is not a "foreign
person" within the meaning of Sections 1445(f)(3) of the Internal Revenue Code
of 1986, as amended and the related Treasury Department regulations, including
temporary regulations.
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Section 5.8 SEPARATE TAX LOT. The Property is assessed for
real estate tax purposes as one or more wholly independent tax lot or lots,
separate from any adjoining land or improvements not constituting a part of such
lot or lots, and no other land or improvements is assessed and taxed together
with the Property or any portion thereof.
Section 5.9 ERISA COMPLIANCE.
(a) As of the date hereof and throughout the term of this
Security Instrument, (i) Borrower is not and will not be an "employee
benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, and (ii) the assets of Borrower do not and will not
constitute "plan assets" of one or more such plans for purposes of
Title I of ERISA; and
(b) As of the date hereof and throughout the term of this
Security Instrument (i) Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(3) of ERISA and (ii) transactions
by or with Borrower are not and will not be subject to state statutes
applicable to Borrower regulating investments of and fiduciary
obligations with respect to governmental plans.
Section 5.10 LEASES. (a) Borrower is the sole owner of the
entire lessor's interest in the Leases; (b) the Leases are valid and
enforceable; (c) the terms of all alterations, modifications and amendments to
the Leases are reflected in the certified occupancy statement delivered to and
approved by Lender; (d) none of the Rents reserved in the Leases have been
assigned or otherwise pledged or hypothecated; (e) none of the Rents have been
collected for more than one (1) month in advance; (f) the premises demised under
the Leases have been completed and the tenants under the Leases have accepted
the same and have taken possession of the same on a rent-paying basis; and (g)
there exist no offsets or defenses to the payment of any portion of the Rents.
Section 5.11 FINANCIAL CONDITION. (a) Borrower is solvent, and
no bankruptcy, reorganization, insolvency or similar proceeding under any state
or federal law with respect to Borrower has been initiated, and (b) it has
received reasonably equivalent value for the granting of this Security
Instrument.
Section 5.12 BUSINESS PURPOSES. The loan evidenced by the Note
secured by the Security Instrument and the Other Security Documents (the "Loan")
is solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
Section 5.13 TAXES. Borrower, any Guarantor and any Indemnitor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years.
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Section 5.14 MAILING ADDRESS. Borrower's mailing address, as
set forth in the opening paragraph hereof or as changed in accordance with the
provisions hereof, is true and correct.
Section 5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All
information in the application for the Loan submitted to Lender (the "Loan
Application") and in all financing statements, rent rolls, reports, certificates
and other documents submitted in connection with the Loan Application or in
satisfaction of the terms thereof, are accurate, complete and correct in all
respects. There has been no adverse change in any condition, fact, circumstance
or event that would make any such information inaccurate, incomplete or
otherwise misleading.
Section 5.16 DISCLOSURE. Borrower has disclosed to Lender all
material facts and has not failed to disclose any material fact that could cause
any representation or warranty made herein to be materially misleading.
Section 5.17 THIRD PARTY REPRESENTATIONS. Each of the
representations and the warranties made by each Guarantor and Indemnitor herein
or in any Other Security Document(s) is true and correct in all material
respects.
Article 6 - OBLIGATIONS AND RELIANCES
Section 6.1 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 Note, this Security Instrument and the Other
Security Documents shall be construed so as to deem the relationship between
Borrower and Lender to be other than that of debtor and creditor.
Section 6.2 NO RELIANCE ON LENDER. The members, general
partners, principals and (if Borrower is a trust) beneficial owners of Borrower
are experienced 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 6.3 NO LENDER OBLIGATIONS. (a) Notwithstanding the
provisions of Subsections (f) and (l) or Section , 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 Note or the Other Security 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.
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Section 6.4 RELIANCE. Borrower recognizes and acknowledges
that in accepting the Note, this Security Instrument and the Other Security
Documents, Lender is expressly and primarily relying on the truth and accuracy
of the warranties and representations set forth in Article 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 accepting the Note, this Security Instrument and the
Other Security Documents; 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 5.
Article 7 - FURTHER ASSURANCES
Section 7.1 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 Security 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
Security 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.
Section 7.2 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, mortgages,
assignments, notices of assignments, transfers and assurances as Lender shall,
from time to time, require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender and Trustee the property and rights
hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing, registering or recording
this Security Instrument, or for complying with all Applicable Laws. Borrower,
on demand, will execute and deliver and 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, chattel mortgages or other
instruments, to evidence more effectively the security interest of Lender in the
Property. Borrower grants to Lender an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all
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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
.
Section 7.3 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 ninety (90)
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 ninety (90) 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 Security Documents or impose any other tax or charge
on the same, Borrower will pay for the same, with interest and
penalties thereon, if any.
Section 7.4 ESTOPPEL CERTIFICATES.
(a) After request by Lender, Borrower, within ten (10) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the amount of the
original principal amount of the Note, (ii) the unpaid principal amount
of the Note, (iii) the rate of interest of the Note, (iv) the terms of
payment and maturity date of the Note, (v) the date installments of
interest and/or principal were last paid, (v) that, except as provided
in such statement, there are no defaults or events which with the
passage of time or the giving of notice or both, would constitute an
event of default under the Note or the Security Instrument, (vi) that
the Note and this Security Instrument are valid, legal and binding
obligations and have not been modified or if modified, giving
particulars of such modification, (vii) whether any offsets or defenses
exist against the obligations secured hereby and, if any are alleged to
exist, a detailed description thereof, (viii) that all Leases are in
full force and effect and (provided the Property is not a residential
multifamily property) have not been modified (or if modified, setting
forth all modifications), (ix) the date to which the Rents thereunder
have been paid pursuant to the Leases, (x) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in
default under the
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Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xi) the amount of security
deposits held by Borrower under each Lease and that such amounts are
consistent with the amounts required under each Lease, and (xii) as to
any other matters reasonably requested by Lender and reasonably related
to the Leases, the obligations secured hereby, the Property or this
Security Instrument.
(b) Borrower shall deliver to Lender, promptly upon request,
duly executed estoppel certificates from any one or more lessees as
required by Lender attesting to such facts regarding the Lease as
Lender may require, including but not limited to attestations that each
Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been
paid more than one month in advance, and that the lessee claims no
defense or offset against the full and timely performance of its
obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated by
Section hereof, at Lender's request, Borrower, any Guarantors and any
Indemnitor(s) shall provide an estoppel certificate to the Investor
(defined in Section ) or any prospective Investor in such form,
substance and detail as Lender, such Investor or prospective Investor
may require.
Section 7.5 FLOOD INSURANCE. After Lender's request, Borrower
shall deliver evidence satisfactory to Lender that no portion of the
Improvements is situated in a federally designated "special flood hazard area."
Section 7.6 SPLITTING OF SECURITY INSTRUMENT. This Security
Instrument and the Note shall, at any time until the same shall be fully paid
and satisfied, at the sole election of 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 this Security Instrument, 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 7.7 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 Security Document which is not of public
record, and, in the case of any such mutilation, upon surrender and cancellation
of such Note or Other Security Document, Borrower will issue, in lieu thereof, a
replacement Note or Other Security Document, dated the date of such lost,
stolen, destroyed or mutilated Note or Other Security Document in the same
principal amount thereof and otherwise of like tenor.
Article 8 - DUE ON SALE/ENCUMBRANCE
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Section 8.1 LENDER RELIANCE. Borrower acknowledges that Lender
has examined and relied on the experience of Borrower and its members, general
partners, principals and (if Borrower is a trust) beneficial owners in owning
and operating properties such as the Property in agreeing to make the loan
secured hereby, 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 8.2 NO SALE/ENCUMBRANCE. Borrower agrees that Borrower
shall not, without the prior written consent of Lender, sell, convey, mortgage,
grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or
any part thereof or permit the Property or any part thereof to be sold,
conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or
otherwise transferred.
Section 8.3 SALE/ENCUMBRANCE DEFINED. A sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within
the meaning of this Article 8 shall be deemed to include, but not limited to,
(a) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; (b) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or 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; (c) if Borrower, any Guarantor, any
Indemnitor, or any general partner or member of Borrower, any Guarantor or any
Indemnitor is a corporation, the voluntary or involuntary sale, conveyance,
transfer or pledge of such corporation's stock (or the stock of any corporation
directly or indirectly controlling such corporation by operation of law or
otherwise) or the creation or issuance of new stock by which an aggregate of
more than 10% of such corporation's stock shall be vested in a party or parties
who are not now stockholders; (d) if Borrower, any Guarantor or any Indemnitor
or any general partner or member of Borrower, any Guarantor or any Indemnitor is
a limited or general partnership or joint venture, the change, removal or
resignation of a general partner or managing partner or the transfer or pledge
of the partnership interest of any general partner or managing partner or any
profits or proceeds relating to such partnership interest; and (e) if Borrower,
any Guarantor, any Indemnitor or any general or member of Borrower, any
Guarantor or any Indemnitor is a limited liability company, the change, removal
or resignation of a managing member or the transfer of the membership interest
of any managing member or any profits or proceeds relating to such membership
interest. Notwithstanding the foregoing, the following transfer shall not be
deemed to be a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer within the meaning of this Article 8: transfer by devise
or descent or by operation of law upon the death of a member, partner or
stockholder of Borrower, any Guarantor or any Indemnitor or any general partner
or member thereof.
Section 8.4 LENDER'S RIGHTS. Lender reserves the right to
condition the consent required hereunder upon a modification of the terms hereof
and on assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
of not less than one percent (1%) of the principal balance
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of the Note and all of Lender's expenses incurred in connection with such
transfer, the approval by a Rating Agency of the proposed transferee, the
proposed transferee's continued compliance with the covenants set forth in
Section hereof, or such other conditions as Lender shall determine in its sole
discretion to be in the interest of Lender. 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
Borrower's sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property without Lender's consent. This provision
shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Property regardless of whether voluntary
or not, or whether or not Lender has consented to any previous sale, conveyance,
mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the
Property.
Article 9 - PREPAYMENT
Section 9.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt may
be prepaid only in strict accordance with the express terms and conditions of
the Note including the payment of any prepayment consideration.
Section 9.2 PREPAYMENT ON CASUALTY AND CONDEMNATION. Provided
no Event of Default exists under the Note, this Security Instrument or the Other
Security Documents, in the event of any prepayment of the Debt pursuant to the
terms of Sections or hereof, no Prepayment Consideration (defined in the Note)
shall be due in connection therewith, but Borrower shall be responsible for the
Interest Shortfall Payment (defined in the Note), if any, and all other amounts
due under the Note, this Security Instrument and the Other Security Documents.
Section 9.3 PREPAYMENT AFTER EVENT OF DEFAULT. If a Default
Prepayment (defined below) occurs, Borrower shall pay to Lender the entire Debt,
including without limitation, the following amounts:
(a) if the Default Prepayment occurs prior to the time when
prepayment of the principal balance of the Note is permitted, an amount
equal to the sum of (i) the present value of the interest payments
which would have accrued on the principal balance of the Note
(outstanding as of the date of such Default Prepayment) at the
Applicable Interest Rate (as defined in the Note) from the date of such
Default Prepayment to the first day prepayment is permitted pursuant to
the Note discounted at a rate equal to the Treasury Rate (as defined in
the Note) except that such Treasury Rate shall be based on the U.S.
Treasury constant maturity most nearly approximating the date upon
which prepayment is first permitted pursuant to the Note, and (ii) the
Prepayment Consideration (defined in the Note) which would have been
payable to Lender as of the first day of the [third (3rd)] Loan Year
(as defined in the Note) based on the Treasury Rate in effect at the
time of such Default Prepayment; and
(b) if the Default Prepayment occurs at a time when prepayment
of the principal balance of the Note is permitted, the Prepayment
Consideration and the Interest Shortfall Payment (defined in the Note),
if applicable.
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For purposes of this Section 9.3, the term "Default Prepayment" shall mean a
prepayment of the principal amount of the Note made after the occurrence of any
Event of Default or an acceleration of the Maturity Date (as defined in the
Note) under any circumstances, including, without limitation, a prepayment
occurring in connection with reinstatement of this Security Instrument provided
by statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party having a
statutory right to redeem or prevent foreclosure, any sale in foreclosure or
under exercise of a power of sale or otherwise.
Article 10 - DEFAULT
Section 10.1 EVENTS OF DEFAULT. The occurrence of any one or
more of the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the tenth
(10th) day after the same is due or if the entire Debt is not paid on
or before the Maturity Date;
(b) if any of the Taxes or Other Charges is not paid when the
same is due and payable except to the extent sums sufficient to pay
such Taxes and Other Charges have been deposited with Lender in
accordance with the terms of this Security Instrument;
(c) if the Policies are not kept in full force and effect, or
if the Policies are not delivered to Lender upon request;
(d) if the Property is subject to actual waste or hazardous
nuisance;
(e) if Borrower violates or does not comply with any of the
provisions of Sections and and Articles 8, and ;
(f) if any representation or warranty of Borrower, any
Indemnitor or any person guaranteeing payment of the Debt or any
portion thereof or performance by Borrower of any of the terms of this
Security Instrument (a "Guarantor"), or any member, general partner,
principal or beneficial owner of any of the foregoing, made herein or
in the Environmental Indemnity (defined below) or any guaranty, or in
any certificate, report, financial statement or other instrument or
document furnished to Lender shall have been false or misleading in any
material respect when made;
(g) if (i) Borrower or any managing member or general partner
of Borrower, or any Guarantor or Indemnitor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have
an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its
assets, or the Borrower or any managing
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member or general partner of Borrower, or any Guarantor or Indemnitor
shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against Borrower or any managing member
or general partner of Borrower, or any Guarantor or Indemnitor any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of sixty (60) days; or (iii) there shall be
commenced against the Borrower or any managing member or general
partner of Borrower, or any Guarantor or Indemnitor any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of any order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(iv) the Borrower or any managing member or general partner of
Borrower, or any Guarantor or Indemnitor shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) the Borrower or any managing member or general
partner of Borrower, or any Guarantor or Indemnitor shall generally
not, or shall be unable to, or shall admit in writing its inability to,
pay its debts as they become due;
(h) if Borrower shall be in default under any other mortgage,
deed of trust, deed to secure debt or other security agreement covering
any part of the Property whether it be superior or junior in lien to
this Security Instrument;
(i) if the Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate
taxes and assessments not then due and payable and the lien shall
remain undischarged of record (by payment, bonding or otherwise) for a
period of thirty (30) days;
(j) if any federal tax lien is filed against Borrower, any
member or general partner of Borrower, any Guarantor, any Indemnitor or
the Property and same is not discharged of record within thirty (30)
days after same is filed;
(k) if Borrower fails to cure promptly any violations of
Applicable Laws;
(l) if any condemnation proceeding is instituted which would,
in Lender's reasonable judgment, materially impair the use and
enjoyment of the Property for its intended purposes;
(m) if (i) Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section hereof, or
(ii) Borrower consummates a transaction which would cause the Security
Instrument or Lender's exercise of its rights under this Security
Instrument, the Note or the Other Security Documents to constitute a
nonexempt prohibited transaction under ERISA or result in a violation
of a state statute regulating governmental plans, subjecting Lender to
liability for a violation of ERISA or a state statute;
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(n) if Borrower shall fail to reimburse Lender on demand, with
interest calculated at the Default Rate, for all Insurance Premiums or
Taxes, together with interest and penalties imposed thereon, paid by
Lender pursuant to this Security Instrument;
(o) if Borrower shall fail to deliver to Lender, after request
by Lender, the estoppel certificates required pursuant to the terms of
Subsections (a) and (c);
(p) if Borrower shall fail to deliver to Lender, after request
by Lender, the statements referred to in Section in accordance with the
terms thereof;
(q) if any default occurs under that certain environmental
indemnity agreement dated the date hereof given by Borrower and Joe
Hrudka ("Indemnitor(s)") to Lender (the "Environmental Indemnity") and
such default continues after the expiration of applicable notice and
grace periods, if any;
(r) if any default occurs under any guaranty or indemnity
executed in connection herewith and such default continues after the
expiration of applicable grace periods, if any; or
(s) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant
or condition of the Note, this Security Instrument or the Other
Security Documents in the case of any default which can be cured by the
payment of a sum of money or for thirty (30) days after notice from
Lender in the case of any other default, provided that if such default
cannot reasonably be cured within such thirty (30) day period and
Borrower shall have commenced to cure such default within such thirty
(30) day period and thereafter diligently and expeditiously proceeds to
cure the same, such thirty (30) day period shall be extended for so
long as it shall require Borrower in the exercise of due diligence to
cure such default, it being agreed that no such extension shall be for
a period in excess of sixty (60) days.
(t) if Borrower shall fail in the payment of any rent,
additional rent or other charge mentioned in or made payable by the
Ground Lease when said rent or other charge is due and payable; or
(u) if there shall occur any default by Borrower, as lessee
under the Ground Lease, in the observance or performance of any term,
covenant or condition of the Ground Lease on the part of Borrower; to
be observed or performed, and said default is not cured within ten (10)
days prior to the expiration of any applicable grace period therein
provided, or if any one or more of the events referred to in the Ground
Lease shall occur which would cause the Ground Lease to terminate
without notice or action by the landlord under the Ground Lease or
which would entitle the landlord under the Ground Lease to terminate
the Ground Lease and the term thereof by giving notice to Borrower, as
tenant thereunder, or if the leasehold estate created by the Ground
Lease shall be surrendered or the Ground Lease shall be terminated or
cancelled for any reason or under any circumstances whatsoever, or if
any of the terms, covenants or conditions of the Ground Lease shall in
any manner be modified, changed, supplemented, altered,
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or amended without the consent of Lender, or if Borrower shall fail to
exercise any option to renew the Ground Lease contained therein or
shall fail or neglect to pursue diligently all actions necessary to
exercise such renewal rights pursuant to the terms of the Ground Lease.
Section 10.2 LATE PAYMENT CHARGE. If any monthly installment
of principal and interest is not paid prior to the tenth (10th) day after the
date on which it is due, Borrower shall pay to Lender upon demand an amount
equal to the lesser of five percent (5%) of such unpaid portion of the
outstanding monthly installment of principal and interest then due or the
maximum amount permitted by applicable law, to defray the expense incurred by
Lender in handling and processing such delinquent payment and to compensate
Lender for the loss of the use of such delinquent payment, and such amount shall
be secured by this Security Instrument and the Other Security Documents.
Section 10.3 DEFAULT INTEREST. Borrower will pay, from the
date of an Event of Default through the earlier of the date upon which the Event
of Default is cured or the date upon which the Debt is paid in full, interest on
the unpaid principal balance of the Note at a per annum rate equal to the lesser
of (a) five percent (5%) plus the Applicable Interest Rate (as defined in the
Note), and (b) the maximum interest rate which Borrower may by law pay or Lender
may charge and collect (the "Default Rate").
Article 11 - RIGHTS AND REMEDIES
Section 11.1 REMEDIES. Upon the occurrence of any Event of
Default, Borrower agrees that Lender may or acting by or through Trustee may,
take such action, without notice or demand, as it deems advisable to protect and
enforce its rights against Borrower and in and to the Property, including, but
not limited to, the following actions, each of which may be pursued concurrently
or otherwise, at such time and in such order as Lender may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Lender:
(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or 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
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
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thereof, pursuant to power of sale or otherwise, at one or more sales,
as an entity or in parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law;
(e) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement contained
herein, in the Note or in the Other Security Documents;
(f) recover judgment on the Note either before, during or
after any proceedings for the enforcement of this Security Instrument
or the Other Security 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 or of any
person, firm or other entity liable for the payment of the Debt;
(h) subject to any applicable law, the license granted to
Borrower under Section shall automatically be revoked and Lender may
enter into or upon the Property, either personally or by its agents,
nominees or attorneys and dispossess Borrower and its agents and
servants therefrom, without liability for trespass, damages or
otherwise and exclude Borrower and its agents or servants wholly
therefrom, and take possession of all books, records and accounts
relating thereto and Borrower agrees to surrender possession of the
Property and of such books, records and accounts to Lender upon demand,
and thereupon Lender may (i) use, operate, manage, control, insure,
maintain, repair, restore and otherwise deal with all and every part of
the Property and conduct the business thereat; (ii) complete any
construction on the Property in such manner and form as Lender deems
advisable; (iii) make alterations, additions, renewals, replacements
and improvements to or on the Property; (iv) exercise all rights and
powers of Borrower with respect to the Property, whether in the name of
Borrower or otherwise, including, without limitation, the right to
make, cancel, enforce or modify Leases, obtain and evict tenants, and
demand, sue for, collect and receive all Rents of the Property and
every part thereof; (v) require Borrower to pay monthly in advance to
Lender, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such part of the
Property as may be occupied by Borrower; (vi) require Borrower to
vacate and surrender possession of the Property to Lender or to such
receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise; and (vii) apply the receipts from the
Property to the payment of the Debt, in such order, priority and
proportions as Lender shall deem appropriate in its sole discretion
after deducting therefrom all expenses (including reasonable attorneys'
fees) incurred in connection with the aforesaid operations and all
amounts necessary to pay the Taxes, Other Charges, insurance and other
expenses in connection with the Property, as well as just and
reasonable compensation for the services of Lender, its counsel, agents
and employees;
(i) exercise any and all rights and remedies granted to a
secured party upon default under the Uniform Commercial Code,
including, without limiting the generality
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of the foregoing: (i) the right to take possession of the Personal
Property or any part thereof, and to take such other measures as Lender
or Trustee may deem necessary for the care, protection and preservation
of the Personal Property, and (ii) request Borrower at its expense to
assemble 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 or Trustee with respect to 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;
(j) apply any sums then deposited in the Escrow Fund and any
other sums held in escrow or otherwise by Lender in accordance with the
terms of this Security Instrument or any Other Security 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, this
Security Instrument and the Other Security Documents,
including without limitation advances made by Lender pursuant
to the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant to Article
hereof, collect the unearned Insurance Premiums and apply such sums as
a credit on the Debt in such priority and proportion as Lender in its
discretion shall deem proper, and in connection therewith, Borrower
hereby appoints Lender as agent and attorney-in-fact (which is coupled
with an interest and is therefore irrevocable) for Borrower to collect
such Insurance Premiums;
(l) pursue such other remedies as Lender may have under
applicable law; or
(m) 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 the 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. Notwithstanding the provisions of this Section to the
contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection (g) shall occur, the entire unpaid Debt shall be automatically due
and payable, without any further notice, demand or other action by Lender.
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Section 11.2 APPLICATION OF PROCEEDS. The purchase money,
proceeds and avails of any disposition of the Property, or any part thereof, or
any other sums collected by Lender pursuant to the Note, this Security
Instrument or the Other Security Documents, may be applied by Lender to the
payment of the Debt in such priority and proportions as Lender in its discretion
shall deem proper.
Section 11.3 RIGHT TO CURE DEFAULTS. Upon the occurrence of
any Event of Default or if Borrower fails to make any payment or to do any act
as herein provided, Lender may, but without any obligation to do so and without
notice to or demand on Borrower and without releasing Borrower from any
obligation hereunder, make or do the same in such manner and to such extent as
Lender may deem necessary to protect the security hereof. Lender or Trustee is
authorized to enter upon the Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in the Property or to
foreclose this Security Instrument or collect the Debt, and the cost and expense
thereof (including reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this Section , shall constitute a portion of the
Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender or Trustee 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 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
Security Documents and shall be immediately due and payable upon demand by
Lender therefor.
Section 11.4 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 11.5 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 11.6 EXAMINATION OF BOOKS AND RECORDS. Lender, its
agents, accountants and attorneys shall have the right to examine the records,
books, management and other papers of Borrower and its affiliates or of any
Guarantor or Indemnitor which reflect upon their financial condition, at the
Property or at any office regularly maintained by Borrower, its affiliates or
any Guarantor or Indemnitor 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, Lender, its agents, accountants and
attorneys shall have the right to examine and audit the books and records of
Borrower and its affiliates or of any Guarantor or Indemnitor pertaining to the
income, expenses and operation of the Property during reasonable business hours
at any office of Borrower, its affiliates or any Guarantor or Indemnitor where
the books and records are located.
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Section 11.7 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, any Guarantor or any
Indemnitor to take any action to foreclose this Security Instrument or otherwise
enforce any of the provisions hereof or of the Note or the Other Security
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 Security 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 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 11.8 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 11.9 VIOLATION OF LAWS. If the Property is not in
compliance with Applicable Laws, Lender may impose additional requirements upon
Borrower in connection herewith including, without limitation, monetary reserves
or financial equivalents.
Section 11.10 RECOURSE AND CHOICE OF REMEDIES. Notwithstanding
any other provision of this Security Instrument, including but not limited to
Article 15 hereof, Lender and other Indemnified Parties (defined in Section
below) are entitled to enforce the obligations of Borrower, Guarantor and
Indemnitor contained in Sections , and without first
- 40 -
resorting to or exhausting any security or collateral and without first having
recourse to the Note or any of the Property, through foreclosure, sale pursuant
to 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 hereto, Lender
is entitled to pursue a deficiency judgment with respect to such obligations
against Borrower, any Guarantor and/or Indemnitor. The provisions of Sections ,
and
are exceptions to any non-recourse or exculpation provisions in the Note, this
Security Instrument or the Other Security Documents, and Borrower, Guarantor and
Indemnitor are fully and personally liable for the obligations pursuant to
Subsections , and . The liability of Borrower, Guarantor and Indemnitor 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 Note, this Security
Instrument and the Other Security Documents, whether simultaneously with
foreclosure proceedings or in any other sequence. A separate action or actions
may be brought and prosecuted against Borrower, whether or not action is brought
against any other person or entity or whether or not any other person or entity
is joined in the action or actions. In addition, Lender and Trustee 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 Article or Section .
Section 11.11 RIGHT OF ENTRY. Lender and its agents shall have
the right to enter and inspect the Property at all reasonable times.
Article 12 - ENVIRONMENTAL HAZARDS
Section 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants, based upon an environmental assessment of the
Property and information that Borrower knows or should reasonably have known,
that: (a) there are no Hazardous Substances (defined below) or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws (defined below) and with permits issued
pursuant thereto and (ii) fully disclosed to Lender in writing pursuant to the
written reports resulting from the environmental assessments of the Property
delivered to Lender (the "Environmental Report"); (b) there are no past, present
or threatened Releases (defined below) of Hazardous Substances in, on, under or
from the Property except as described in the Environmental Report; (c) there is
no threat of any Release of Hazardous Substances migrating to the Property
except as described in the Environmental Report; (d) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Property except as described in the Environmental Report;
(e) Borrower does not know of, and has not received, any written or oral notice
or other communication from any person or entity (including but not limited to a
governmental entity) relating to Hazardous Substances or Remediation (defined
below) thereof, of possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with any of the foregoing; and (f) Borrower has truthfully and fully
provided to Lender, in writing, any and all information relating to conditions
in, on, under or from the Property that is known to
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Borrower and that is contained in Borrower's files and records, including but
not limited to any reports relating to Hazardous Substances in, on, under or
from the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to Hazardous
Substances, relating to liability for or costs of Remediation or prevention of
Releases of Hazardous Substances or relating to liability for or costs of other
actual or threatened danger to human health or the environment. "Environmental
Law" includes, but is not limited to, the following statutes, as amended, any
successor thereto, and any regulations promulgated pursuant thereto, and any
state or local statutes, ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response, Compensation and
Liability Act; the Emergency Planning and Community Right-to-Know Act; the
Hazardous Substances Transportation Act; the Resource Conservation and Recovery
Act (including but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act;
the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control Act; the Federal
Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors Appropriation Act.
"Environmental Law" also includes, but is not limited to, any present and future
federal, state and local laws, statutes, ordinances, rules, regulations and the
like, as well as common law: conditioning transfer of property upon a negative
declaration or other approval of a governmental authority of the environmental
condition of the property; requiring notification or disclosure of Releases of
Hazardous Substances or other environmental condition of the Property to any
governmental authority or other person or entity, whether or not in connection
with transfer of title to or interest in property; imposing conditions or
requirements in connection with permits or other authorization for lawful
activity; relating to nuisance, trespass or other causes of action related to
the Property; and relating to wrongful death, personal injury, or property or
other damage in connection with any physical condition or use of the Property.
"Hazardous Substances" include but are not limited to any and all substances
(whether solid, liquid or gas) defined, listed, or otherwise classified as
pollutants, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect
under any present or future Environmental Laws or that may have a negative
impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives. "Release" of any Hazardous Substance includes but is not limited to
any release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Substances. "Remediation" includes but is not
limited to any response, remedial, removal, or corrective action, any activity
to cleanup, detoxify, decontaminate, contain or otherwise remediate any
Hazardous Substance, any actions to prevent, cure or mitigate any Release of any
Hazardous Substance, any action to comply with any Environmental Laws or with
any permits issued pursuant thereto, any inspection, investigation, study,
monitoring, assessment, audit, sampling and testing, laboratory or other
analysis, or evaluation relating to any Hazardous Substances or to anything
referred to in Article .
Section 12.2 ENVIRONMENTAL COVENANTS. Borrower covenants and
agrees that: (a) all uses and operations on or of the Property, whether by
Borrower or any other person
- 42 -
or entity, shall be in compliance with all Environmental Laws and permits issued
pursuant thereto; (b) there shall be no Releases of Hazardous Substances in, on,
under or from the Property; (c) there shall be no Hazardous Substances in, on,
or under the Property, except those that are both (i) in compliance with all
Environmental Laws and with permits issued pursuant thereto and (ii) fully
disclosed to Lender in writing; (d) Borrower shall keep the Property free and
clear of all liens and other encumbrances imposed pursuant to any Environmental
Law, whether due to any act or omission of Borrower or any other person or
entity (the "Environmental Liens"); (e) Borrower shall, at its sole cost and
expense, fully and expeditiously cooperate in all activities pursuant to Section
below, including but not limited to providing all relevant information and
making knowledgeable persons available for interviews; (f) Borrower shall, at
its sole cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of Lender (including but not limited
to sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share with
Lender the reports and other results thereof, and Lender and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof; (g)
Borrower shall, at its sole cost and expense, comply with all reasonable written
requests of Lender to (i) reasonably effectuate Remediation of any condition
(including but not limited to a Release of a Hazardous Substance) in, on, under
or from the Property; (ii) comply with any Environmental Law; (iii) comply with
any directive from any governmental authority; and (iv) take any other
reasonable action necessary or appropriate for protection of human health or the
environment; (h) Borrower shall not do or allow any tenant or other user of the
Property to do any act that materially increases the dangers to human health or
the environment, poses an unreasonable risk of harm to any person or entity
(whether on or off the Property), impairs or may impair the value of the
Property, is contrary to any requirement of any insurer, constitutes a public or
private nuisance, constitutes waste, or violates any covenant, condition,
agreement or easement applicable to the Property; and (i) Borrower shall
immediately notify Lender in writing of (A) any presence or Releases or
threatened Releases of Hazardous Substances in, on, under, from or migrating
towards the Property; (B) any non-compliance with any Environmental Laws related
in any way to the Property; (C) any actual or potential Environmental Lien; (D)
any required or proposed Remediation of environmental conditions relating to the
Property; and (E) any written or oral notice or other communication which
Borrower becomes aware from any source whatsoever (including but not limited to
a governmental entity) relating in any way to Hazardous Substances or
Remediation thereof, possible liability of any person or entity pursuant to any
Environmental Law, other environmental conditions in connection with the
Property, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Article . Any failure of Borrower
to perform its obligations pursuant to this Section
shall constitute bad faith waste with respect to the Property.
Section 12.3 LENDER'S RIGHTS. Lender and any other person or
entity designated by Lender, including but not limited to any receiver, any
representative of a governmental entity, and any environmental consultant, shall
have the right, but not the obligation, to enter upon the Property at all
reasonable times to assess any and all aspects of the environmental condition of
the Property and its use, including but not limited to conducting any
environmental assessment or audit (the scope of which shall be determined in
Lender's sole and absolute discretion) and taking samples of soil, groundwater
or other water, air, or building
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materials, and conducting other invasive testing. Borrower shall cooperate with
and provide access to Lender and any such person or entity designated by Lender.
Article 13 - INDEMNIFICATION
Section 13.1 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, 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 attorneys'
fees and other costs of defense) (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, this
Security Instrument, or any Other Security 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 Note or any of the Other Security
Documents, whether or not suit is filed in connection with same, or in
connection with Borrower, any Guarantor or Indemnitor and/or any member,
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 the 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
Applicable Laws; (j) the enforcement by any Indemnified Party of the provisions
of this Article ; (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; (l) the payment of any commission, charge or brokerage
fee to anyone which may be payable in connection with the funding of the Loan
evidenced by the Note and secured by this Security Instrument; or (m) any
misrepresentation made by Borrower in this Security Instrument or any Other
Security Document. Any amounts payable to Lender by reason of the application of
this Section 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 , the term "Indemnified Parties" means Lender and
any person or entity who is or will have been involved in the origination of the
Loan, any person or entity who is or will have been involved in the servicing of
the Loan, any person or entity
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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 (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 for the benefit of third parties) as well as the respective
directors, officers, shareholders, partners, members, 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 or entity who holds or
acquires or will have held a participation or other full or partial interest in
the Loan or the Property, 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 13.2 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 Security
Documents.
Section 13.3 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, 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 or or Subsection (p).
Section 13.4 ENVIRONMENTAL 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 and costs of
Remediation (whether or not performed voluntarily), engineers' fees,
environmental consultants' fees, and costs of investigation (including but not
limited to sampling, testing, and analysis of soil, water, air, building
materials and other materials and substances whether solid, liquid or gas)
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) any presence of any Hazardous Substances in, on, above, or
under the Property; (b) any past, present or threatened Release of Hazardous
Substances in, on, above, under or from the Property; (c) any activity by
Borrower, any person or entity affiliated with Borrower or any tenant or other
user of the Property in connection with any actual, proposed or threatened use,
treatment, storage, holding, existence, disposition or other Release,
generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Property of any Hazardous Substances at any time located in, under, on or
above the Property; (d) any activity by Borrower, any person or entity
affiliated with Borrower or any tenant or other user of the Property in
connection with any actual or proposed Remediation of any Hazardous Substances
at any time located in, under, on or above the Property, whether or not such
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Remediation is voluntary or pursuant to court or administrative order, including
but not limited to any removal, remedial or corrective action; (e) any past,
present or threatened non-compliance or violations of any Environmental Laws (or
permits issued pursuant to any Environmental Law) in connection with the
Property or operations thereon, including but not limited to any failure by
Borrower, any person or entity affiliated with Borrower or any tenant or other
user of the Property to comply with any order of any governmental authority in
connection with any Environmental Laws; (f) the imposition, recording or filing
or the threatened imposition, recording or filing of any Environmental Lien
encumbering the Property; (g) any administrative processes or proceedings or
judicial proceedings in any way connected with any matter addressed in Article
and this Section ; (h) any past, present or threatened injury to, destruction of
or loss of natural resources in any way connected with the Property, including
but not limited to costs to investigate and assess such injury, destruction or
loss; (i) any acts of Borrower or other users of the Property in arranging for
disposal or treatment, or arranging with a transporter for transport for
disposal or treatment, of Hazardous Substances owned or possessed by such
Borrower or other users, at any facility or incineration vessel owned or
operated by another person or entity and containing such or similar Hazardous
Materials; (j) any acts of Borrower or other users of the Property, in accepting
any Hazardous Substances for transport to disposal or treatment facilities,
incineration vessels or sites selected by Borrower or such other users, from
which there is a Release, or a threatened Release of any Hazardous Substance
which causes the incurrence of costs for Remediation; (k) any personal injury,
wrongful death, or property damage arising under any statutory or common law or
tort law theory, including but not limited to damages assessed for the
maintenance of a private or public nuisance or for the conducting of an
abnormally dangerous activity on or near the Property; and (l) any
misrepresentation or inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other obligations pursuant to
Article .
Section 13.5 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, any Indemnified Parties
may, in their sole and absolute discretion, engage their own attorneys and other
professionals to defend or assist them, and, at the option of Indemnified
Parties, their attorneys shall control the resolution of claim or proceeding.
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 14 - WAIVERS
Section 14.1 WAIVER OF COUNTERCLAIM. 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 Note, any of
the Other Security Documents, or the Obligations.
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Section 14.2 MARSHALLING AND OTHER MATTERS. Borrower hereby
waives, to the extent permitted by law, 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 14.3 WAIVER OF NOTICE. 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 specifically and expressly
provides for the giving of notice by Lender or Trustee to Borrower and 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 14.4 WAIVER OF STATUTE OF LIMITATIONS. 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 14.5 SOLE DISCRETION OF LENDER. Wherever pursuant to
this Security Instrument (a) Lender exercises any right given to it to approve
or disapprove, (b) any arrangement or term is to be satisfactory to Lender, or
(c) any other decision or determination is to be made by Lender, the decision of
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations made
by Lender, shall be in the sole and absolute discretion of Lender and shall be
final and conclusive, except as may be otherwise expressly and specifically
provided herein.
Section 14.6 SURVIVAL. The indemnifications made pursuant to
Subsections and and the representations and warranties, covenants, and other
obligations arising under Article , shall continue indefinitely in full force
and effect and shall survive and shall in no way be impaired by: any
satisfaction 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 Note or any of the Other Security 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 Note or the Other Security
Documents, and any act or omission that might otherwise be construed as a
release or discharge of Borrower from the obligations pursuant hereto.
SECTION 14.7 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
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CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE
NOTE, THIS SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR
OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH.
Article 15 - EXCULPATION
Section 15.1 EXCULPATION. Except as otherwise provided, Lender
shall not enforce the liability and obligation of Borrower to perform and
observe the obligations contained in the Note or this Security Instrument by any
action or proceeding wherein a money judgment shall be sought against Borrower,
except that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Security Instrument, the Other Security Documents,
and the interest in the Property, the Rents and any other collateral given to
Lender created by this Security Instrument and the Other Security Documents;
provided, however, that any judgment in any action or proceeding shall be
enforceable against Borrower only to the extent of Borrower's interest in the
Property, in the Rents and in any other collateral given to Lender. Lender, by
accepting the Note and this Security Instrument, agrees that it shall not,
except as otherwise provided in Section , sue for, seek or demand any deficiency
judgment against Borrower in any action or proceeding, under or by reason of or
under or in connection with the Note, the Other Security Documents or this
Security Instrument.
Section 15.2 RESERVATION OF CERTAIN RIGHTS. The provisions of
Section 15.1 shall not (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by the Note, the Other Security Documents or
this Security Instrument; (b) impair the right of Lender to name Borrower as a
party defendant in any action or suit for judicial foreclosure and sale under
this Security Instrument; (c) affect the validity or enforceability of any
indemnity, guaranty, master lease or similar instrument made in connection with
the Note, this Security Instrument, or the Other Security Documents; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases and Rents executed in connection
herewith; or (f) impair the right of Lender to enforce the provisions of
Sections , , and of this Security Instrument.
Section 15.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the
provisions of this Article to the contrary, Borrower and Joseph Hrudka shall be
personally liable to Lender for the Losses it incurs due to: (i) fraud or
intentional misrepresentation by Borrower or any other person or entity in
connection with the execution and the delivery of the Note, this Security
Instrument or the Other Security Documents; (ii) Borrower's misapplication or
misappropriation of Rents received by Borrower after the occurrence of an Event
of Default; (iii) Borrower's misappropriation of tenant security deposits or
Rents collected in advance; (iv) the misapplication or the misappropriation of
insurance proceeds or condemnation awards; (v) Borrower's failure to pay Taxes,
Insurance Premiums, Other Charges (except to the extent that sums sufficient to
pay such amounts have been deposited in escrow with Lender pursuant to the terms
of this Security Instrument), charges for labor or materials or other charges
that can create liens on the Property; (vi) Borrower's failure to maintain,
repair or restore the Property in
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accordance with the Security Instrument and the Other Security Documents; (vii)
Borrower's failure to return or to reimburse Lender for all Personal Property
taken from the Property by or on behalf of Borrower and not replaced with
Personal Property of the same utility and of the same or greater value; (viii)
any act of actual waste or arson by Borrower, any principal, affiliate, member
or general partner thereof or by any Indemnitor or Guarantor; (ix) any fees or
commissions paid by Borrower to any principal, affiliate, member or general
partner of Borrower, Indemnitor or Guarantor in violation of the terms of the
Note, this Security Instrument or the Other Security Documents; or (x)
Borrower's failure to comply with the provisions of Sections , , and of this
Security Instrument.
Section 15.4 RECOURSE. Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in Section
15.1 above SHALL BECOME NULL AND VOID and shall be of no further force and
effect in the event of Borrower's default under Sections , , or , 8.2, 8.3 or ,
or if the Property or any part thereof shall become an asset in (i) a voluntary
bankruptcy or insolvency proceeding, or (ii) an involuntary bankruptcy or
insolvency proceeding which is not dismissed within ninety (90) days of filing.
Section 15.5 BANKRUPTCY CLAIMS. Nothing herein shall be deemed
to be a waiver of any right which Lender may have under Sections 506(a), 506(b),
1111(b) or any other provisions of the U.S. Bankruptcy Code to file a claim for
the full amount of the Debt secured by this Security Instrument or to require
that all collateral shall continue to secure all of the Debt owing to Lender in
accordance with the Note, this Security Instrument and the Other Security
Documents.
Article 16 - NOTICES
Section 16.1 NOTICES. All notices or other written
communications hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof and confirmed by telephone by sender, (ii)
one (1) Business Day (defined below) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail depository
regularly maintained by the U.S. Postal Service and sent by registered or
certified mail, postage prepaid, return receipt requested, addressed as follows:
If to Borrower: Camelback Plaza Development L.C.
2401 West 1st Street
Tempe, Arizona 85281
Attention: James W. Brown
Facsimile No. (602) 912-0480
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With a copy to: Ridenour, Swenson, Cleere & Evans, P.C.
302 North First Avenue, Suite 900
Phoenix, Arizona 85003
Attention: Gerard R. Cleere, Esq.
Facsimile No. (602) 254-8670
If to Lender: Boston Capital Mortgage Company Limited Partnership
One Boston Place, Suite 2100
Boston, Massachusetts 02108
Attention: Ms. Kathie Valyeau
Facsimile No. (617) 624-8999
With a copy to: Thacher Proffitt & Wood
2 World Trade Center, 40th Floor
New York, New York 10048
Attention: Donald F. Simone, Esq.
Facsimile No. (212) 912-7751
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to close in
New York, New York.
Article 17 - SERVICE OF PROCESS
Section 17.1 CONSENT TO SERVICE.
(a) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to
Lender of the address of such place of business and of the name and
address of any new agent appointed by it, as appropriate. Borrower
further agrees that the failure of its agent for service of process to
give it notice of any service of process will not impair or affect the
validity of such service or of any judgment based thereon. If, despite
the foregoing, there is for any reason no agent for service of process
of Borrower available to be served, and if it at that time has no place
of business in New York, New York, then Borrower irrevocably consents
to service of process by registered or certified mail, postage prepaid,
to it at its address given in or pursuant to the first paragraph
hereof.
(b) Borrower initially and irrevocably designates C.T.
Corporation, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, to receive
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for and on behalf of Borrower service of process in New York, New York
with respect to this Security Instrument.
Section 17.2 SUBMISSION TO JURISDICTION. With respect to any
claim or action arising hereunder or under the Note or the Other Security
Documents, Borrower (a) irrevocably submits to the nonexclusive jurisdiction of
the courts of the State of New York and the United States District Court located
in the Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (b) irrevocably waives any objection which it may have at any time
to the laying on venue of any suit, action or proceeding arising out of or
relating to this Security Instrument brought in any such court, irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 17.3 JURISDICTION NOT EXCLUSIVE. Nothing in this
Security Instrument will be deemed to preclude Lender from bringing an action or
proceeding with respect hereto in any other jurisdiction.
Article 18 - APPLICABLE LAW
Section 18.1 CHOICE OF LAW. THIS SECURITY INSTRUMENT SHALL BE
DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW
YORK AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH
RESPECT TO THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF
THIS SECURITY INSTRUMENT, AND THE DETERMINATION OF DEFICIENCY JUDGMENTS, THE
LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED SHALL APPLY.
Section 18.2 USURY LAWS. This Security Instrument and the Note
are subject to the express condition that at no time shall Borrower be obligated
or required to pay interest on the Debt at a rate which could subject the holder
of the Note to either civil or criminal liability as a result of being in excess
of the maximum interest rate which Borrower is permitted by applicable law to
contract or agree to pay. If by the terms of this Security Instrument or the
Note, Borrower is at any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of interest under the
Security Instrument and the Note shall be deemed to be immediately reduced to
such maximum rate and the interest payable shall be computed at such maximum
rate and all prior interest payments in excess of such maximum rate shall be
applied and shall be deemed to have been payments in reduction of the principal
balance of the Note. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
full stated term of the Note until payment in full so that the rate or amount of
interest on account of the Debt does not exceed the maximum lawful rate of
interest from time to time in effect and applicable to the Debt for so long as
the Debt is outstanding.
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Section 18.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All rights,
powers and remedies provided in this Security Instrument may be exercised only
to the extent that the exercise thereof does not violate any applicable
provisions of law and are intended to be limited to the extent necessary so that
they will not render this Security Instrument invalid, unenforceable or not
entitled to be recorded, registered or filed under the provisions of any
applicable law. If any term of this Security Instrument or any application
thereof shall be invalid or unenforceable, the remainder of this Security
Instrument and any other application of the term shall not be affected thereby.
Article 19 - SECONDARY MARKET
Section 19.1 TRANSFER OF LOAN. Lender may, at any time, sell,
transfer or assign the Note, this Security Instrument and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to each
purchaser, transferee, assignee, servicer, participant, or investor in such
Securities (collectively, the "Investor") or any Rating Agency rating such
Securities and each prospective Investor, all documents and information which
Lender now has or may hereafter acquire relating to the Debt and to Borrower,
any Guarantor, any Indemnitor(s) and the Property, whether furnished by
Borrower, any Guarantor, any Indemnitor(s) or otherwise, as Lender determines
necessary or desirable. Borrower, any Guarantor and any Indemnitor agree to
cooperate with Lender in connection with any transfer made or any Securities
created pursuant to this Section, including, without limitation, the delivery of
an estoppel certificate required in accordance with Subsection 7.4(c) hereof and
such other documents as may be reasonably requested by Lender. Borrower shall
also furnish and Borrower, any Guarantor and any Indemnitor consent to Lender
furnishing to such Investors or such prospective Investors or such Rating Agency
any and all information concerning the Property, the Leases, the financial
condition of Borrower, any Guarantor and any Indemnitor as may be requested by
Lender, any Investor, any prospective Investor or any Rating Agency in
connection with any sale, transfer or participation interest.
Article 20 - COSTS
Section 20.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower
acknowledges and confirms that Lender shall impose certain administrative
processing and/or commitment fees in connection with (a) the extension, renewal,
modification, amendment and termination of the Loan, (b) the release or
substitution of collateral therefor, (c) obtaining certain consents, waivers and
approvals with respect to the Property, or (d) the review of any Lease or
proposed Lease or the preparation or review of any subordination,
non-disturbance agreement (the occurrence of any of the above shall be called an
"Event"). Borrower further acknowledges and confirms that it shall be
responsible for the payment of all costs of reappraisal of the Property or any
part thereof, whether required by law, regulation, Lender or any governmental or
quasi-governmental authority. Borrower hereby acknowledges and agrees to pay,
immediately, with or without demand, all such fees (as the same may be increased
or decreased from time to time), and any additional fees of a similar type or
nature which may be imposed by Lender from time to time,
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upon the occurrence of any Event or otherwise. Wherever it is provided for
herein that Borrower pay any costs and expenses, such costs and expenses shall
include, but not be limited to, all legal fees and disbursements of Lender,
whether with respect to retained firms, the reimbursement for the expenses of
in-house staff or otherwise.
Section 20.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a) Borrower
shall pay all legal fees incurred by Lender in connection with (i) the
preparation of the Note, this Security Instrument and the Other Security
Documents and (ii) the items set forth in Section above, and (b) Borrower shall
pay to Lender on demand any and all expenses, including legal expenses and
attorneys' fees, incurred or paid by Lender in protecting its interest in the
Property or Personal Property or in collecting any amount payable hereunder or
in enforcing its rights hereunder with respect to the Property or Personal
Property, whether or not any legal proceeding is commenced hereunder or
thereunder and whether or not any default or Event of Default shall have
occurred and is continuing, together with interest thereon at the Default Rate
from the date paid or incurred by Lender until such expenses are paid by
Borrower.
Article 21 - DEFINITIONS
Section 21.1 GENERAL DEFINITIONS. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Security Instrument may be used interchangeably in singular
or plural form and the word "Borrower" shall mean "each Borrower and any
subsequent owner or owners of the Property or any part thereof or any interest
therein, including, but not limited to the leasehold estate created by the
Ground Lease," the word "Lender" shall mean "Lender and any subsequent holder of
the Note," the word "Trustee" shall mean "Trustee and any substitute trustee of
the estates, properties, powers, trusts and rights conferred upon Trustee
pursuant to this Security Instrument," the word "Note" shall mean "the Note and
any other evidence of indebtedness secured by this Security Instrument," the
word "person" shall include an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government, governmental
authority, and any other entity, the word "Property" shall include any portion
of the Property and any interest therein, and the phrases "attorneys' 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.
Article 22 - MISCELLANEOUS PROVISIONS
Section 22.1 NO ORAL CHANGE. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
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Section 22.2 LIABILITY. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Security Instrument shall be binding upon and inure to
the benefit of Borrower and Lender and their respective successors and assigns
forever.
Section 22.3 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid, illegal
or unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 22.4 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 22.5 DUPLICATE ORIGINALS; COUNTERPARTS. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all of which together shall constitute a
single Security Instrument. The failure of any party hereto to execute this
Security Instrument, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
Section 22.6 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 22.7 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 Note and the Other
Security Documents and the performance and discharge of the Other Obligations.
Article 23 - SPECIAL ARIZONA PROVISIONS
Section 23.1 INCONSISTENCIES. In the event of any
inconsistencies between this Article 23 and the other Articles contained in this
Security Instrument, the terms and conditions of this Article 23 shall control
and be binding.
Section 23.2 MAILING ADDRESS. The principal place of business
and/or address of Borrower, Trustee and Lender set forth in the first paragraph
of this Deed of Trust shall be deemed to be the mailing address of the
respective party.
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Section 23.3 PROPERTY MORTGAGED. (a) The words "mortgage,
grant, bargain, sell, pledge, assign, warrant, transfer and convey" appearing in
Section 1.1, entitled "Property Mortgaged" are hereby deleted and the words
"grant, transfer, convey and assign" are substituted therefor.
(b) The words "in trust, with power of sale," are hereby
inserted immediately after the words "for the benefit of Lender" and immediately
before the words "and grant a security interest" appearing in Section 1.1,
entitled "Property Mortgaged".
Section 23.4 SECURITY AGREEMENT. The following is hereby added
immediately following the last sentence of Section 1.3, entitled "Security
Agreement":
Upon recording this Security Instrument in the real
property records, this Security Instrument shall be effective
as a financing statement filed as a fixture filing. In
addition, a carbon, photographic or other reproduction of this
Security Instrument and/or any financing statement relating
hereto shall be sufficient for filing and/or recording as a
financing statement. The filing of any other financing
statement relating to any personal property rights or
interests described herein shall not be construed to diminish
any right or priority hereunder.
Section 23.5 REMEDIES. The text of Section 11.1 entitled
"Remedies" is hereby deleted and the following is hereby substituted therefor:
Upon the occurrence of any Event of Default, Borrower
agrees that Lender acting by or through Trustee may, at its
option, and without further notice or demand, declare the Debt
immediately due and payable, and irrespective of whether
Lender acting through Trustee exercises such option, it may,
at its option and in its sole discretion, without any prior
notice or demand to or upon Borrower, do one or more of the
following:
(a) Subject to any applicable law, the
license granted to Borrower under Section 1.2 shall
automatically be revoked and Lender may enter upon,
take possession of, manage and operate the Property
or any part thereof; make repairs and alterations,
and do any acts which Lender deems proper to protect
the security hereof; and either with or without
taking possession, in its own name, sue for or
otherwise collect and receive the Rents, including
those past due and unpaid, and apply the same less
costs and expenses of operation and collection,
including reasonable attorneys' fees, upon the Debt,
and in such order as Lender may determine. Upon
request of Lender, Borrower shall assemble and make
available to Lender at the Property any of the
Property which has been removed therefrom. The
entering upon and taking possession of the Property,
the collection of any Rents and the application
thereof as aforesaid, shall not cure or waive any
default theretofore or thereafter occurring, or
affect any notice of default hereunder or invalidate
any act done pursuant to any such notice.
Notwithstanding Lender's continuance in possession or
receipt and application of Rents, Lender shall be
entitled
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to exercise every right provided for in this Security
Instrument or by law upon or after the occurrence of
an Event of Default, including the right to exercise
the power of sale hereinafter described. Any of the
actions referred to in this Subsection may be taken
by Lender at such time as Lender is so entitled,
without regard to the adequacy of any security for
the Debt;
(b) Lender shall, without limitation on the
rights provided for in A.R.S. ss.33-702(B) and
without regard to the adequacy of any security for
the Debt, be entitled to the appointment of a
receiver by any court having jurisdiction, without
notice, to take possession of and protect the
Property, and operate the same and collect the Rents
therefrom;
(c) Lender may bring an action in any court
of competent jurisdiction to foreclose this Security
Instrument as a mortgage or to enforce any of the
covenants hereof;
(d) Lender may elect to cause the Property
or any part thereof to be sold as follows:
(i) Lender may proceed as if all of
the Property were real property, in
accordance with Subsection (iv) 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 Property without causing structural
damage thereto as if the same were personal
property, and dispose of the same in
accordance with Subsection (iii) below,
separate and apart from the sale of real
property, the remainder of the Property
being treated as real property;
(ii) Lender may cause any such sale
or other disposition to be conducted
immediately upon the expiration of any
notice period required by law, if any, or
Lender may delay any such sale or other
disposition for such period of time as
Lender deems to be in its best interest.
Should Lender desire that more than one such
sale or other disposition be conducted,
Lender may at its option cause the same to
be conducted simultaneously, or successively
on the same day, or at such different days
or times and in such order as Lender may
deem to be in its best interest;
(iii) Should Lender elect to cause
any of the Property to be disposed of as
personal property as permitted by Subsection
(i) above, it may dispose of any part
thereof 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
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may be either public or private as Lender
may so elect, subject to the provisions of
the Uniform Commercial Code;
(iv) Should Lender elect to sell the
Property which is real property or which
Lender has elected to treat as real
property, upon such election Lender or
Trustee shall give such notice of default
and election to sell as may then be required
by law. Thereafter, upon the expiration of
such time and the giving of such notice of
sale as may then be required by law,
Trustee, at the time and place specified by
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 of America, subject, however,
to the provisions of subparagraph (f) of
this Section 23.5. Trustee 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;
(v) 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, 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 or conveyance shall
be conclusive against all persons as to such
facts recited therein; and
(vi) Lender and/or Trustee (with the
prior consent of Lender) shall apply the
proceeds of any sale or disposition
hereunder to payment of the following: (A)
the costs and expenses of exercising the
power of sale and of such sale or
disposition, including trustee's fees and
attorneys' fees, and including, without
limitation, the actual cost of publishing,
recording, mailing and posting notice, the
cost of any search and/or other evidence of
title procured in connection therewith and
revenue stamps on any deed or reconveyance;
(B) to the payment of the Debt; and (C) the
remainder, if any, to the person or persons
legally entitled thereto in the order of
their priority;
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(e) Subject to the provisions of Article 15
and to the extent permitted by law, Borrower shall be
and remain liable for any deficiency remaining after
sale either pursuant to the power of sale or judicial
proceedings. After default or breach, Borrower shall
pay Lender's and Trustee's reasonable attorneys'
fees, Trustee's fees and its costs and expenses
incurred as a result of said default or breach, and
if suit is brought, all costs of suit, all of which
sums shall be secured by this Security Instrument.
Borrower's statutory rights of reinstatement, if any,
are expressly conditioned upon Borrower's payment of
all sums required under the applicable statute and
performance of all required acts;
(f) 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. Also, Lender shall
have the right to foreclose, sell or otherwise
proceed against the Property encumbered by this
Security Instrument and the Property encumbered by
any other Security Instrument securing the bonds, if
any, in such order as Lender shall elect. Any party
that has signed this Instrument as a surety or
accommodation party or that has subjected his or its
property to this Instrument to secure the debt of
another expressly waives the benefit of A.R.S.
ss.ss.12-1641 through and including 12-1644 and
44-142 and Ariz. R. Civ. P. 17 (f) or such similar
provisions as may be enacted or adopted hereafter;
(g) Subject to the provisions of Article 15,
upon any sale of the Property, whether made under a
power of sale herein granted or pursuant to judicial
proceedings, if the holder of the Note is a purchaser
at such sale, it shall be entitled to use and apply
all or any portion of the indebtedness then secured
hereby for or in settlement or payment of all or any
portion of the purchase price of the property
purchased;
(h) Lender may, with or without entry, to
the extent permitted and pursuant to the procedures
provided by applicable law, institute proceedings for
the partial foreclosure of this Security Instrument
for the portion of the Debt then due and payable,
subject to the continuing lien and security interest
of this Security Instrument for the balance of the
Debt not then due, unimpaired and without loss of
priority;
(i) Lender may institute an action, suit or
proceeding in equity for the specific performance of
any covenant, condition or agreement contained
herein, in the Note or in the Other Security
Documents;
(j) Lender may recover judgment on the Note
either before, during or after any proceedings for
the enforcement of this Security Instrument or the
Other Security Documents;
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(k) Lender may 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 Personal Property or
any part thereof, and to take such other measures as
Lender or Trustee may deem necessary for the care,
protection and preservation of the Personal Property,
and (ii) request Borrower at its expense to assemble
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 or Trustee with respect to 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;
(l) Lender may apply any sums then deposited
in the Escrow Fund and any other sums held in escrow
or otherwise by Lender in accordance with the terms
of this Security Instrument or any Other Security
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, this
Security Instrument and the
Other Security Documents,
including without
limitation advances made by
Lender pursuant to the
terms of this Security
Instrument;
(m) Lender may surrender the Policies
maintained pursuant to Article hereof, collect the
unearned Insurance Premiums and apply such sums as a
credit on the Debt in such priority and proportion as
Lender in its discretion shall deem proper, and in
connection therewith, Borrower hereby appoints Lender
as agent and attorney-in-fact (which is coupled with
an interest and is therefore irrevocable) for
Borrower to collect such Insurance Premiums;
(n) Lender may 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; and
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(o) Lender may exercise any and all other
rights and remedies available at law or in equity or
as otherwise provided in this Security Instrument or
the Other Security Documents as may legally be
available to Lender to protect its interest in the
Property and to collect the Debt.
In the event of a sale, by foreclosure, power of sale, or
otherwise, of less than all of the 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. Notwithstanding the provisions
of this Section 23.5 to the contrary, if any Event of Default as described in
clause (i) of Subsection (g) shall occur, the entire unpaid Debt shall be
automatically due and payable, without any further notice, demand or other
action by Lender.
Section 23.6 NOTICES. The first word, "All", of the first
sentence of Section 16.1, entitled "Notices" is hereby deleted and the following
is hereby substituted therefor:
"Except as otherwise provided by applicable law, all"
Section 23.7 USURY. The following sentence is hereby inserted
immediately prior to the first sentence of Section 18.2, entitled "Usury Laws":
Borrower agrees to pay an effective rate of interest
that is equal to the rate provided for in the Note together
with all other payments of, or in the nature of, interest to
be made by Borrower to Lender under the Note and this Security
Instrument. Notwithstanding any provision herein or any
instrument now or hereafter securing the Note, the total
liability of Borrower for the payment of interest under the
Note and the Assignment of Rents and this Security Instrument
shall not exceed the applicable limit imposed by the usury
laws of the State of Arizona. If Lender receives interest in
an amount which exceeds such limit, such excess amount shall
be applied instead to the reduction of the unpaid principal
balance and not to the payment of interest and if a surplus
remains after full payment of principal and lawful interest,
the surplus shall be remitted to Borrower by Lender, and
Borrower hereby agrees to accept such remittance.
Section 23.8 TIME OF ESSENCE. Time is of the essence with
respect to each of Borrower's covenants under this Security Instrument.
Article 24 - DEED OF TRUST PROVISIONS
Section 24.1 CONCERNING THE TRUSTEE. Trustee shall be under no
duty to take any action hereunder except as expressly required hereunder or by
law, or to perform any act which would involve Trustee in any expense or
liability or to institute or defend any suit in respect hereof, unless properly
indemnified to Trustee's reasonable satisfaction. Trustee, by acceptance of this
Security Instrument, covenants to perform and fulfill the trusts herein created,
being liable, however, only for gross negligence or willful misconduct, and
hereby waives any statutory fee and agrees to accept reasonable compensation, in
lieu thereof, for any services rendered by Trustee in accordance with the terms
hereof. Trustee may resign at any time upon giving notice to Borrower and to
Lender. Lender may remove Trustee at any time or from time
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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 24.2 TRUSTEE'S FEES. Borrower shall pay all reasonable
costs, fees and expenses incurred by Trustee and Trustee's agents and counsel in
connection with the performance by Trustee of Trustee's duties hereunder and all
such costs, fees and expenses shall be secured by this Security Instrument.
Section 24.3 CERTAIN RIGHTS. With the approval of Lender,
Trustee shall have the right to take any and all of the following actions: (i)
to select, employ, and advise with counsel (who may be, but need not be, counsel
for Lender) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Note, this Security Instrument or the Other
Security Documents, and shall be fully protected in relying as to legal matters
on the advice of counsel, (ii) to execute any of the trusts and powers hereof
and to perform any duty hereunder either directly or through his/her agents or
attorneys, (iii) to select and employ, in and about the execution of his/her
duties hereunder, suitable accountants, engineers and other experts, agents and
attorneys-in-fact, either corporate or individual, not regularly in the employ
of Trustee, and Trustee shall not be answerable for any act, default,
negligence, or misconduct of any such accountant, engineer or other expert,
agent or attorney-in-fact, if selected with reasonable area, 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 24.4 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 24.5 PERFECTION OF APPOINTMENT. Should any deed,
conveyance, or instrument of any nature be required from Borrower by any Trustee
or substitute trustee to more
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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 24.6 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.
Article 25 - MISCELLANEOUS LEASEHOLD PROVISIONS
Section 25.1 THE GROUND LEASE. Borrower shall (i) pay all
rents, additional rents and other sums required to be paid by Borrower, as
tenant under and pursuant to the provisions of the Ground Lease when such rent
or other charge is due and payable, (ii) diligently perform and observe all of
the terms, covenants and conditions of the Ground Lease on the part of Borrower,
as tenant thereunder, to be performed and observed at least ten (10) days prior
to the expiration of any applicable grace period therein provided, and (iii)
promptly notify Lender of the giving of any notice by the landlord under the
Ground Lease to Borrower of any default by Borrower, as tenant thereunder, to be
performed or observed and deliver to Lender a true copy of each such notice.
Borrower shall not, without the prior consent of Lender, surrender the leasehold
estate created by the Ground Lease or terminate or cancel the Ground Lease or
modify, change, supplement, alter or amend the Ground Lease, in any respect,
either orally or in writing, and Borrower hereby assigns to Lender, as further
security for the payment of the Debt and for the performance and observance of
the terms, covenants and conditions of this Security Instrument, all of the
rights, privileges and prerogatives of Borrower, as tenant under the Ground
Lease, to surrender the leasehold estate created by the Ground Lease or to
terminate, cancel, modify, change, supplement, alter or amend the Ground Lease,
and any such surrender of the leasehold estate created by the Ground Lease or
termination, cancellation, modification, change, supplement, alteration or
amendment of the Ground Lease without the prior consent of Lender shall be void
and of no force and effect. If Borrower shall default in the performance or
observance of any term, covenant or condition of the Ground Lease on the part of
Borrower, as tenant thereunder, to be performed or observed, then, without
limiting the generality of the other provisions of this Security Instrument, and
without waiving or releasing Borrower from any of its obligations hereunder,
Lender shall have the right, but shall be under no obligation, to pay any sums
and to perform any act or take any action as may be appropriate to cause all of
the terms, covenants and conditions of the Ground Lease on the part of Borrower,
as tenant thereunder, to be performed or observed or to be promptly performed or
observed on behalf of Borrower, to the end that the rights of Borrower in, to
and under the Ground Lease shall be kept unimpaired and free from default. If
Lender shall make any payment or perform any act or take action in accordance
with the preceding sentence, Lender will notify Borrower of the making of any
such payment, the performance of any such act, or the taking of any such action.
In any
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such event, subject to the rights of lessees, sublessees and other occupants
under the Leases, Lender and any person designated by Lender shall have, and are
hereby granted, the right to enter upon the Property at any time and from time
to time for the purpose of taking any such action. If the landlord under the
Ground Lease shall deliver to Lender a copy of any notice of default sent by
said landlord to Borrower, as tenant under the Ground Lease, such notice shall
constitute full protection to Lender for any action taken or omitted to be taken
by Lender, in good faith, in reliance thereon. Borrower shall exercise each
individual option, if any, to extend or renew the term of the Ground Lease upon
demand by Lender made at any time within one (1) year of the last day upon which
any such option may be exercised, and Borrower hereby expressly authorizes and
appoints Lender its attorney-in-fact to exercise any such option in the name of
and upon behalf of Borrower, which power of attorney shall be irrevocable and
shall be deemed to be coupled with an interest.
Section 25.2 SUBLEASES. Each Lease hereafter made and each
renewal of any existing Lease shall provide that, (a) in the event of the
termination of the Ground Lease, the lease shall not terminate or be terminable
by the lessee; (b) in the event of any action for the foreclosure of this
Security Instrument, the lease shall not terminate or be terminable by the
subtenant by reason of the termination of the Ground Lease unless the lessee is
specifically named and joined in any such action and unless a judgment is
obtained therein against the lessee; and (c) in the event that the Ground Lease
is terminated as aforesaid, the lessee shall attorn to the lessor under the
Ground Lease or to the purchaser at the sale of the Property on such
foreclosure, as the case may be.
Section 25.3 NO MERGER OF FEE AND LEASEHOLD ESTATES; RELEASES.
So long as any portion of the Debt shall remain unpaid, unless Lender shall
otherwise consent, the fee title to the Land and the leasehold estate therein
created pursuant to the provisions of the Ground Lease shall not merge but shall
always be kept separate and distinct, notwithstanding the union of such estates
in Borrower, Owner, or in any other person by purchase, operation of law or
otherwise. Lender reserves the right, at any time, to release portions of the
Property, including, but not limited to, the leasehold estate created by the
Ground Lease, with or without consideration, at Lender's election, without
waiving or affecting any of its rights hereunder or under the Note or the Other
Security Documents and any such release shall not affect Lender's rights in
connection with the portion of the Property not so released.
Section 25.4 BORROWER'S ACQUISITION OF FEE ESTATE. In the
event that Borrower, so long as any portion of the Debt remains unpaid, shall be
the owner and holder of the fee title to the Land the lien of this Security
Instrument shall be spread to cover Borrower's fee title to the Land and said
fee title shall be deemed to be included in the Property. Borrower agrees, at
its sole cost and expense, including without limitation, Lender's reasonable
attorney's fees, to (i) execute any and all documents or instruments necessary
to subject its fee title to the Land to the lien of this Security Instrument;
and (ii) provide a title insurance policy which shall insure that the lien of
this Security Instrument is a first lien on Borrower's fee title to the Land.
[NO FURTHER TEXT ON THIS PAGE]
- 63 -
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed
by Borrower the day and year first above written.
CAMELBACK PLAZA DEVELOPMENT L.C., an
Arizona limited liability company
By: PERFORMANCE CAMELBACK
DEVELOPMENT CORP., an Arizona
corporation, its managing member
By: __________________________
Name:
Title:
- 64 -
STATE OF______ )
SS.
COUNTY OF_______ )
This instrument was acknowledged before me the undersigned
notary public this _____day of_____________, 1996, by______________________as
President of PERFORMANCE CAMELBACK DEVELOPMENT CORP., an Arizona corporation, as
Managing Member of CAMELBACK PLAZA DEVELOPMENT, L.C., an Arizona limited
liability company with full powers to so do.
-------------
Notary Public
My commission expires:______________________
EXHIBIT A
(Description of Land)
ALL of that certain lot, piece or parcel of land, with the
buildings and improvements thereon, situate, lying and being
TABLE OF CONTENTS
Article 1 - GRANTS OF SECURITY......................................- 1 -
Section 1.1 PROPERTY MORTGAGED.............................................................- 1 -
------------------
Section 1.2 ASSIGNMENT OF RENTS............................................................- 4 -
-------------------
Section 1.3 SECURITY AGREEMENT.............................................................- 4 -
------------------
Section 1.4 PLEDGE OF MONIES HELD..........................................................- 4 -
---------------------
Article 2 - DEBT AND OBLIGATIONS SECURED.................................- 5 -
Section 2.1 DEBT...........................................................................- 5 -
----
Section 2.2 OTHER OBLIGATIONS..............................................................- 5 -
-----------------
Section 2.3 DEBT AND OTHER OBLIGATIONS.....................................................- 6 -
--------------------------
Section 2.4 PAYMENTS.......................................................................- 6 -
--------
Article 3 - BORROWER COVENANTS......................................- 6 -
Section 3.1 PAYMENT OF DEBT................................................................- 6 -
---------------
Section 3.2 INCORPORATION BY REFERENCE.....................................................- 6 -
--------------------------
Section 3.3 INSURANCE......................................................................- 6 -
---------
Section 3.4 PAYMENT OF TAXES, ETC.........................................................- 10 -
---------------------
Section 3.5 ESCROW FUND...................................................................- 11 -
-----------
Section 3.6 CONDEMNATION..................................................................- 12 -
------------
Section 3.7 LEASES AND RENTS..............................................................- 12 -
----------------
Section 3.8 MAINTENANCE OF PROPERTY.......................................................- 14 -
-----------------------
Section 3.9 WASTE.........................................................................- 14 -
-----
Section 3.10 COMPLIANCE WITH LAWS..........................................................- 14 -
--------------------
Section 3.11 BOOKS AND RECORDS.............................................................- 15 -
-----------------
Section 3.12 PAYMENT FOR LABOR AND MATERIALS...............................................- 16 -
-------------------------------
Section 3.13 PERFORMANCE OF OTHER AGREEMENTS...............................................- 16 -
-------------------------------
Article 4 - SPECIAL COVENANTS.....................................- 17 -
Section 4.1 PROPERTY USE..................................................................- 17 -
------------
Section 4.2 ERISA.........................................................................- 17 -
-----
Section 4.3 SINGLE PURPOSE ENTITY.........................................................- 18 -
---------------------
Section 4.4 RESTORATION...................................................................- 20 -
-----------
Article 5 - REPRESENTATIONS AND WARRANTIES...............................- 24 -
Section 5.1 WARRANTY OF TITLE.............................................................- 24 -
-----------------
Section 5.2 AUTHORITY.....................................................................- 24 -
---------
Section 5.3 LEGAL STATUS AND AUTHORITY....................................................- 24 -
--------------------------
Section 5.4 VALIDITY OF DOCUMENTS.........................................................- 24 -
---------------------
Section 5.5 LITIGATION....................................................................- 25 -
----------
Section 5.6 STATUS OF PROPERTY............................................................- 25 -
------------------
Section 5.7 NO FOREIGN PERSON.............................................................- 26 -
-----------------
Section 5.8 SEPARATE TAX LOT..............................................................- 26 -
----------------
Section 5.9 ERISA COMPLIANCE..............................................................- 26 -
----------------
-i-
Section 5.10 LEASES........................................................................- 26 -
------
Section 5.11 FINANCIAL CONDITION...........................................................- 27 -
-------------------
Section 5.12 BUSINESS PURPOSES.............................................................- 27 -
-----------------
Section 5.13 TAXES.........................................................................- 27 -
-----
Section 5.14 MAILING ADDRESS...............................................................- 27 -
---------------
Section 5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES...........................................- 27 -
-----------------------------------
Section 5.16 DISCLOSURE....................................................................- 27 -
----------
Section 5.17 THIRD PARTY REPRESENTATIONS...................................................- 27 -
---------------------------
Article 6 - OBLIGATIONS AND RELIANCES.................................- 27 -
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER...........................................- 27 -
-----------------------------------
Section 6.2 NO RELIANCE ON LENDER.........................................................- 27 -
---------------------
Section 6.3 NO LENDER OBLIGATIONS.........................................................- 28 -
---------------------
Section 6.4 RELIANCE......................................................................- 28 -
--------
Article 7 - FURTHER ASSURANCES.....................................- 28 -
Section 7.1 RECORDING OF SECURITY INSTRUMENT, ETC.........................................- 28 -
-------------------------------------
Section 7.2 FURTHER ACTS, ETC.............................................................- 29 -
-----------------
Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP
-------------------------------------------------
LAWS.......................................................................................- 29 -
----
Section 7.4 ESTOPPEL CERTIFICATES.........................................................- 29 -
---------------------
Section 7.5 FLOOD INSURANCE...............................................................- 30 -
---------------
Section 7.6 SPLITTING OF SECURITY INSTRUMENT..............................................- 30 -
--------------------------------
Section 7.7 REPLACEMENT DOCUMENTS.........................................................- 31 -
---------------------
Article 8 - DUE ON SALE/ENCUMBRANCE..................................- 31 -
Section 8.1 LENDER RELIANCE...............................................................- 31 -
---------------
Section 8.2 NO SALE/ENCUMBRANCE...........................................................- 31 -
-------------------
Section 8.3 SALE/ENCUMBRANCE DEFINED......................................................- 31 -
------------------------
Section 8.4 LENDER'S RIGHTS...............................................................- 32 -
---------------
Article 9 - PREPAYMENT.........................................- 32 -
Section 9.1 PREPAYMENT BEFORE EVENT OF DEFAULT............................................- 32 -
----------------------------------
Section 9.2 PREPAYMENT ON CASUALTY AND CONDEMNATION.......................................- 32 -
---------------------------------------
Section 9.3 PREPAYMENT AFTER EVENT OF DEFAULT.............................................- 32 -
---------------------------------
Article 10 - DEFAULT..........................................- 33 -
Section 10.1 EVENTS OF DEFAULT.............................................................- 33 -
-----------------
Section 10.2 LATE PAYMENT CHARGE...........................................................- 36 -
-------------------
Section 10.3 DEFAULT INTEREST..............................................................- 36 -
----------------
Article 11 - RIGHTS AND REMEDIES....................................- 37 -
Section 11.1 REMEDIES......................................................................- 37 -
--------
Section 11.2 APPLICATION OF PROCEEDS.......................................................- 39 -
-----------------------
Section 11.3 RIGHT TO CURE DEFAULTS........................................................- 39 -
----------------------
Section 11.4 ACTIONS AND PROCEEDINGS.......................................................- 40 -
-----------------------
Section 11.5 RECOVERY OF SUMS REQUIRED TO BE PAID..........................................- 40 -
------------------------------------
-ii-
Section 11.6 EXAMINATION OF BOOKS AND RECORDS..............................................- 40 -
--------------------------------
Section 11.7 OTHER RIGHTS, ETC.............................................................- 40 -
-----------------
Section 11.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY..................................- 41 -
--------------------------------------------
Section 11.9 VIOLATION OF LAWS.............................................................- 41 -
-----------------
Section 11.10 RECOURSE AND CHOICE OF REMEDIES...............................................- 41 -
-------------------------------
Section 11.11 RIGHT OF ENTRY................................................................- 41 -
--------------
Article 12 - ENVIRONMENTAL HAZARDS...................................- 42 -
Section 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES..................................- 42 -
--------------------------------------------
Section 12.2 ENVIRONMENTAL COVENANTS.......................................................- 43 -
-----------------------
Section 12.3 LENDER'S RIGHTS...............................................................- 44 -
---------------
Article 13 - INDEMNIFICATION......................................- 44 -
Section 13.1 GENERAL INDEMNIFICATION.......................................................- 44 -
-----------------------
Section 13.2 MORTGAGE AND/OR INTANGIBLE TAX................................................- 45 -
------------------------------
Section 13.3 ERISA INDEMNIFICATION.........................................................- 45 -
---------------------
Section 13.4 ENVIRONMENTAL INDEMNIFICATION.................................................- 46 -
-----------------------------
Section 13.5 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES AND
--------------------------------------------------
EXPENSES...................................................................................- 47 -
--------
Article 14 - WAIVERS..........................................- 47 -
Section 14.1 WAIVER OF COUNTERCLAIM........................................................- 47 -
----------------------
Section 14.2 MARSHALLING AND OTHER MATTERS.................................................- 47 -
-----------------------------
Section 14.3 WAIVER OF NOTICE..............................................................- 47 -
----------------
Section 14.4 WAIVER OF STATUTE OF LIMITATIONS..............................................- 47 -
--------------------------------
Section 14.5 SOLE DISCRETION OF LENDER.....................................................- 47 -
-------------------------
Section 14.6 SURVIVAL......................................................................- 48 -
--------
SECTION 14.7 WAIVER OF TRIAL BY JURY.......................................................- 48 -
-----------------------
Article 15 - EXCULPATION........................................- 48 -
Section 15.1 EXCULPATION...................................................................- 48 -
-----------
Section 15.2 RESERVATION OF CERTAIN RIGHTS.................................................- 49 -
-----------------------------
Section 15.3 EXCEPTIONS TO EXCULPATION.....................................................- 49 -
-------------------------
Section 15.4 RECOURSE......................................................................- 49 -
--------
Section 15.5 BANKRUPTCY CLAIMS.............................................................- 49 -
-----------------
Article 16 - NOTICES..........................................- 50 -
Section 16.1 NOTICES.......................................................................- 50 -
-------
Article 17 - SERVICE OF PROCESS....................................- 51 -
Section 17.1 CONSENT TO SERVICE............................................................- 51 -
------------------
Section 17.2 SUBMISSION TO JURISDICTION....................................................- 51 -
--------------------------
Section 17.3 JURISDICTION NOT EXCLUSIVE....................................................- 51 -
--------------------------
Article 18 - APPLICABLE LAW......................................- 51 -
Section 18.1 CHOICE OF LAW.................................................................- 51 -
-------------
Section 18.2 USURY LAWS....................................................................- 52 -
----------
-iii-
Section 18.3 PROVISIONS SUBJECT TO APPLICABLE LAW..........................................- 52 -
------------------------------------
Article 19 - SECONDARY MARKET.....................................- 52 -
Section 19.1 TRANSFER OF LOAN..............................................................- 52 -
----------------
Article 20 - COSTS...........................................- 53 -
Section 20.1 PERFORMANCE AT BORROWER'S EXPENSE.............................................- 53 -
---------------------------------
Section 20.2 ATTORNEY'S FEES FOR ENFORCEMENT...............................................- 53 -
-------------------------------
Article 21 - DEFINITIONS........................................- 53 -
Section 21.1 GENERAL DEFINITIONS...........................................................- 53 -
-------------------
Article 22 - MISCELLANEOUS PROVISIONS.................................- 54 -
Section 22.1 NO ORAL CHANGE................................................................- 54 -
--------------
Section 22.2 LIABILITY.....................................................................- 54 -
---------
Section 22.3 INAPPLICABLE PROVISIONS.......................................................- 54 -
-----------------------
Section 22.4 HEADINGS, ETC.................................................................- 54 -
-------------
Section 22.5 DUPLICATE ORIGINALS; COUNTERPARTS.............................................- 54 -
---------------------------------
Section 22.6 NUMBER AND GENDER.............................................................- 54 -
-----------------
Section 22.7 SUBROGATION...................................................................- 54 -
-----------
Article 23 - SPECIAL ARIZONA PROVISIONS................................- 55 -
Section 23.1 INCONSISTENCIES...............................................................- 55 -
---------------
Section 23.2 MAILING ADDRESS...............................................................- 55 -
---------------
Section 23.3 PROPERTY MORTGAGED............................................................- 55 -
------------------
Section 23.4 SECURITY AGREEMENT............................................................- 55 -
------------------
Section 23.5 REMEDIES......................................................................- 55 -
--------
Section 23.6 NOTICES.......................................................................- 60 -
-------
Section 23.7 USURY. ......................................................................- 60 -
-----
Section 23.8 TIME OF ESSENCE. ............................................................- 61 -
---------------
Article 24 - DEED OF TRUST PROVISIONS.................................- 61 -
Section 24.1 CONCERNING THE TRUSTEE........................................................- 61 -
----------------------
Section 24.2 TRUSTEE'S FEES................................................................- 61 -
--------------
Section 24.3 CERTAIN RIGHTS................................................................- 61 -
--------------
Section 24.4 RETENTION OF MONEY............................................................- 62 -
------------------
Section 24.5 PERFECTION OF APPOINTMENT.....................................................- 62 -
-------------------------
Section 24.6 SUCCESSION INSTRUMENTS........................................................- 62 -
----------------------
Article 25 - MISCELLANEOUS LEASEHOLD PROVISIONS............................- 62 -
Section 25.1 THE GROUND LEASE..............................................................- 62 -
----------------
Section 25.2 SUBLEASES.....................................................................- 63 -
---------
Section 25.3 NO MERGER OF FEE AND LEASEHOLD ESTATES; RELEASES..............................- 63 -
------------------------------------------------
Section 25.4 BORROWER'S ACQUISITION OF FEE ESTATE..........................................- 64 -
------------------------------------
DEFINITIONS............................................................................................-v-
-----------
-iv-
DEFINITIONS
-----------
The terms set forth below are defined in the following Sections of this
Security Instrument:
(a) Applicable Laws: Article 3, Subsection 3.10(a);
---------------
(b) Attorneys' Fees/Counsel Fees: Article 21, Section 21.1;
----------------------------
(c) Borrower: Preamble and Article 21, Section 21.1;
--------
(d) Business Day: Article 16, Section 16.1;
------------
(e) Casualty Consultant: Article 4, Subsection 4.4(b)(iii);
-------------------
(f) Casualty Retainage: Article 4, Subsection 4.4(b)(iv);
------------------
(g) Debt: Article 2, Section 2.1;
----
(h) Default Prepayment: Article 9, Section 9.3;
------------------
(i) Default Rate: Article 10, Section 10.3;
------------
(j) Environmental Indemnity: Article 10, Subsection 10.1(q);
-----------------------
(k) Environmental Law: Article 12, Section 12.1;
-----------------
(l) Environmental Liens: Article 12, Subsection 12.2(d);
-------------------
(m) Environmental Report: Article 12, Subsection 12.1(a)
--------------------
(n) ERISA: Article 4, Subsection 4.2(a);
-----
(o) Escrow Fund: Article 3, Section 3.5;
-----------
(p) Event: Article 20, Section 20.1;
-----
(q) Event of Default: Article 10, Section 10.1;
----------------
(r) Full Replacement Cost: Article 3, Subsection 3.3(a)(i)(A);
---------------------
(s) GAAP: Article 3, Subsection 3.11(a);
----
(t) Gains Tax: Article 23, Subsection 23.5(c);
---------
-v-
(u) Guarantor: Article 10, Subsection 10.1(f);
---------
(v) Hazardous Substances: Article 12, Section 12.1;
--------------------
(w) Improvements: Article 1, Subsection 1.1(c);
------------
(x) Indemnified Parties: Article 13, Section 13.1;
-------------------
(y) Indemnitor(s): Article 10, Subsection 10.1(q);
-------------
(z) Insurance Premiums: Article 3, Subsection 3.3(b);
------------------
(aa) Investor: Article 19, Section 19.1;
--------
(bb) Land: Article 1, Subsection 1.1(a);
----
(cc) Lease Guaranty: Article 3, Subsection 3.7(a);
--------------
(dd) Leases: Article 1, Subsection 1.1(f);
------
(ee) Lender: Preamble and Article 21, Section 21.1;
------
(ff) Loan: Article 5, Subsection 5.12;
----
(gg) Loan Application: Article 5, Section 5.15;
----------------
(hh) Losses: Article 13, Section 13.1;
------
(ii) Net Proceeds: Article 4, Subsection 4.4(b);
------------
(jj) Net Proceeds Deficiency: Article 4, Subsection 4.4(b)(vi);
-----------------------
(kk) Note: Recitals and Article 21, Section 21.1;
----
(ll) Obligations: Article 2, Section 2.3;
-----------
(mm) Other Charges: Article 3, Subsection 3.4(a);
-------------
(nn) Other Obligations: Article 2, Section 2.2;
-----------------
(oo) Other Security Documents: Article 3, Section 3.2;
------------------------
(pp) Permitted Exceptions: Article 5, Section 5.1;
--------------------
(qq) Person: Article 21, Section 21.1;
------
(rr) Personal Property: Article 1, Subsection 1.1(e);
-----------------
-vi-
(ss) Policies/Policy: Article 3, Subsection 3.3(b);
---------------
(tt) Property: Article 1, Section 1.1 and Article 21, Section 21.1;
--------
(uu) Qualified Insurer: Article 3, Subsection 3.3(b);
-----------------
(vv) Rating Agency: Article 3, Subsection 3.3(b);
-------------
(ww) Release: Article 12, Section 12.1;
-------
(xx) Remediation: Article 12, Section 12.1;
-----------
(yy) Rents: Article 1, Subsection 1.1(f);
-----
(zz) Restoration: Article 3, Subsection 3.3(h);
-----------
(aaa) Securities: Article 19, Section 19.1;
----------
(bbb) Security Deposits: Article 3, Subsection 3.7(c);
-----------------
(ccc) Security Instrument: Preamble;
-------------------
(ddd) Taxes: Article 3, Subsection 3.4(a);
-----
(eee) Transfer Tax: Article 23, Subsection 23.5(b); and
------------
(fff) Uniform Commercial Code: Article 1, Subsection 1.1(e)
-----------------------
-vii-
================================================================================
CAMELBACK PLAZA DEVELOPMENT L.C., as assignor
(Borrower)
to
BOSTON CAPITAL MORTGAGE COMPANY LIMITED PARTNERSHIP, as assignee
(Lender)
------------------------------
ASSIGNMENT
OF LEASES AND RENTS
------------------------------
Dated: As of November 1, 1996
Location: Camelback Plaza
2621 East Camelback Road
Phoenix, Arizona
County: Maricopa
PREPARED BY AND UPON
RECORDATION RETURN TO:
Messrs. Thacher, Proffitt & Wood
2 World Trade Center
New York, New York 10048
Attention: Donald F. Simone, Esq.
File No.: 18001-00003
Title No.: 601228
================================================================================
THIS ASSIGNMENT OF LEASES AND RENTS ("Assignment") made as of
the first day of November, 1996, by CAMELBACK PLAZA DEVELOPMENT L.C., an Arizona
limited liability company, as assignor, having its principal place of business
c/o Performance Industries, Inc., 2425 Camelback Road, Suite 620, Phoenix,
Arizona 85016 ("Borrower") to BOSTON CAPITAL MORTGAGE COMPANY LIMITED
PARTNERSHIP, a Massachusetts limited partnership, as assignee, having an address
at One Boston Place, Suite 2100, Boston, Massachusetts 02108 ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of SEVEN MILLION TWO HUNDRED
FIFTY THOUSAND AND 00/100 DOLLARS ($7,250,000.00) in lawful money of the United
States of America (together with all extensions, renewals, modifications,
substitutions and amendments thereof, the "Note"), with interest from the date
thereof at the rates set forth in the Note, principal and interest to be payable
in accordance with the terms and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (defined
below) and the performance of all of its obligations under the Note and the
Other Obligations as defined in Article 2 of the Security Instrument (defined
below).
ARTICLE 1-ASSIGNMENT
Section 1.1 PROPERTY ASSIGNED. Borrower hereby absolutely and
unconditionally assigns and grants to Lender the following property, rights,
interests and estates, now owned, or hereafter acquired by Borrower:
(a) Leases. All existing and future leases affecting the use,
enjoyment, or occupancy of all or any part of that certain lot or piece of land,
more particularly described in Exhibit A annexed hereto and made a part hereof,
together with the buildings, structures, fixtures, additions, enlargements,
extensions, modifications, repairs, replacements and improvements now or
hereafter located thereon (collectively, the "Property") and the right, title
and interest of Borrower, its successors and assigns, therein and thereunder.
(b) Other Leases and Agreements. All other leases and other
agreements, whether or not in writing, affecting the use, enjoyment or occupancy
of the Property or any portion thereof now or hereafter made, together with any
extension, renewal or replacement of the same, this Assignment of other present
and future leases and present and future agreements being effective without
further or supplemental assignment. The leases described in Subsection 1.1(a)
and the leases and other agreements described in this Subsection 1.1(b),
together with all other present and future leases and present and future
agreements and any extension or renewal of the same are collectively referred to
as the "Leases".
(c) Rents. All rents, additional rents, revenues, income,
issues and profits arising from the Leases and renewals and replacements thereof
and any cash or security deposited in connection therewith and together with all
rents, revenues, income, issues and
profits (including all oil and gas or other mineral royalties and bonuses) from
the use, enjoyment and occupancy of the Property (collectively, the "Rents").
(d) Bankruptcy Claims. All of Borrower's claims and rights
(the "Bankruptcy Claims") to the payment of damages arising from any rejection
by a lessee of any Lease under the Bankruptcy Code, 11 U.S.C. ss.101 et seq., as
the same may be amended (the "Bankruptcy Code").
(e) Lease Guaranties. All of Borrower's right, title and
interest in and claims under any and all lease guaranties, letters of credit and
any other credit support given by any guarantor in connection with any of the
Leases (individually, a "Lease Guarantor", collectively, the "Lease Guarantors")
to Borrower (individually, a "Lease Guaranty", collectively, the "Lease
Guaranties").
(f) Proceeds. All proceeds from the sale or other disposition
of the Leases, the Rents, the Lease Guaranties and the Bankruptcy Claims.
(g) Other. All rights, powers, privileges, options and other
benefits of Borrower as lessor under the Leases and beneficiary under the Lease
Guaranties, including without limitation the immediate and continuing right to
make claim for, receive, collect and receipt for all Rents payable or receivable
under the Leases and all sums payable under the Lease Guaranties or pursuant
thereto (and to apply the same to the payment of the Debt or the Other
Obligations), and to do all other things which Borrower or any lessor is or may
become entitled to do under the Leases or the Lease Guaranties.
(h) Entry. The right, at Lender's option, upon revocation of
the license granted herein, to enter upon the Property in person, by agent or by
court-appointed receiver, to collect the Rents.
(i) Power of Attorney. Borrower's irrevocable power of
attorney, coupled with an interest, to take any and all of the actions set forth
in Section 3.1 of this Assignment and any or all other actions designated by
Lender for the proper management and preservation of the Property.
(j) Other Rights and Agreements. Any and all other rights of
Borrower in and to the items set forth in subsections (a) through (i) above, and
all amendments, modifications, replacements, renewals and substitutions thereof.
Section 1.2 CONSIDERATION. This Assignment is made in
consideration of that certain loan made by Lender to Borrower evidenced by the
Note and secured by that certain mortgage and security agreement, deed of trust
and security agreement, deed to secure debt and security agreement or similar
real estate security instrument given by Borrower to or for the benefit of
Lender, dated the date hereof, in the principal sum of SEVEN MILLION TWO HUNDRED
FIFTY and 00/100 DOLLARS ($7,250,000.00), covering the Property and intended to
be duly recorded (the "Security Instrument"). The principal sum, interest and
all other sums due and payable under the Note, the Security Instrument, this
Assignment and the Other Security Documents (defined below) are collectively
referred to as the "Debt". The documents other than
- 2 -
this Assignment, the Note or the Security Instrument now or hereafter executed
by Borrower and/or others and by or in favor of Lender which wholly or partially
secure or guarantee payment of the Debt are referred to herein as the "Other
Security Documents".
ARTICLE 2 - TERMS OF ASSIGNMENT
Section 2.1 PRESENT ASSIGNMENT AND LICENSE BACK. It is
intended by Borrower that this Assignment constitute a present, absolute
assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims, and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section , Lender grants to Borrower a revocable license to collect and
receive the Rents and other sums due under the Lease Guaranties. Borrower shall
hold the Rents and all sums received pursuant to any Lease Guaranty, or a
portion thereof sufficient to discharge all current sums due on the Debt, in
trust for the benefit of Lender for use in the payment of such sums.
Section 2.2 NOTICE TO LESSEES. Borrower hereby agrees to
authorize and direct the lessees named in the Leases or any other or future
lessees or occupants of the Property and all Lease Guarantors to pay over to
Lender or to such other party as Lender directs all Rents and all sums due under
any Lease Guaranties upon receipt from Lender of written notice to the effect
that Lender is then the holder of the Security Instrument and that a Default
(defined below) exists, and to continue so to do until otherwise notified by
Lender.
Section 2.3 INCORPORATION BY REFERENCE. All representations,
warranties, covenants, conditions and agreements contained in the Security
Instrument as same may be modified, renewed, substituted or extended are hereby
made a part of this Assignment to the same extent and with the same force as if
fully set forth herein.
ARTICLE 3 - REMEDIES
Section 3.1 REMEDIES OF LENDER. Upon or at any time after the
occurrence of a default under this Assignment or an Event of Default (as defined
in the Security Instrument) (a "Default"), the license granted to Borrower in
Section 2.1 of this Assignment shall automatically be revoked, and Lender shall,
without limitation on its rights under A.R.S. ss. 33- 702(B), immediately be
entitled to possession of all Rents and sums due under any Lease Guaranties,
whether or not Lender enters upon or takes control of the Property. In addition,
Lender may, at its option, without waiving such Default, without notice and
without regard to the adequacy of the security for the Debt, either in person or
by agent, nominee or attorney, with or without bringing any action or
proceeding, or by a receiver appointed by a court, dispossess Borrower and its
agents and servants from the Property, without liability for trespass, damages
or otherwise and exclude Borrower and its agents or servants wholly therefrom,
and take possession of the Property and all books, records and accounts relating
thereto and have, hold, manage, lease and operate the Property on such terms and
for such period of time as Lender may deem proper and either with or without
taking possession of the Property in its own name, demand, sue for or otherwise
collect and receive all Rents and sums due under all Lease Guaranties, including
those past due and unpaid with full power to make from time to time all
alterations, renovations, repairs or replacements thereto or thereof as may seem
proper to Lender and may apply the Rents and sums received pursuant to any Lease
Guaranties to the payment
- 3 -
of the following in such order and proportion as Lender in its sole discretion
may determine, any law, custom or use to the contrary notwithstanding: (a) all
expenses of managing and securing the Property, including, without being limited
thereto, the salaries, fees and wages of a managing agent and such other
employees or agents as Lender may deem necessary or desirable and all expenses
of operating and maintaining the Property, including, without being limited
thereto, all taxes, charges, claims, assessments, water charges, sewer rents and
any other liens, and premiums for all insurance which Lender may deem necessary
or desirable, and the cost of all alterations, renovations, repairs or
replacements, and all expenses incident to taking and retaining possession of
the Property; and (b) the Debt, together with all costs and reasonable
attorneys' fees. In addition, upon the occurrence of a Default, Lender, at its
option, may (1) complete any construction on the Property in such manner and
form as Lender deems advisable, (2) exercise all rights and powers of Borrower,
including, without limitation, the right to negotiate, execute, cancel, enforce
or modify Leases, obtain and evict tenants, and demand, sue for, collect and
receive all Rents from the Property and all sums due under any Lease Guaranties,
(3) either 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 occupancy of such part of the Property as may be in possession of Borrower
or (4) 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.
Section 3.2 OTHER REMEDIES. Nothing contained in this
Assignment and no act done or omitted by Lender pursuant to the power and rights
granted to Lender hereunder shall be deemed to be a waiver by Lender of its
rights and remedies under the Note, the Security Instrument, or the Other
Security Documents and this Assignment is made and accepted without prejudice to
any of the rights and remedies possessed by Lender under the terms thereof. The
right of Lender to collect the Debt and to enforce any other security therefor
held by it may be exercised by Lender either prior to, simultaneously with, or
subsequent to any action taken by it hereunder. Borrower hereby absolutely,
unconditionally and irrevocably waives any and all rights to assert any setoff,
counterclaim or crossclaim of any nature whatsoever with respect to the
obligations of Borrower under this Assignment, the Note, the Security
Instrument, the Other Security Documents or otherwise with respect to the loan
secured hereby in any action or proceeding brought by Lender to collect same, or
any portion thereof, or to enforce and realize upon the lien and security
interest created by this Assignment, the Note, the Security Instrument, or any
of the Other Security Documents (provided, however, that the foregoing shall not
be deemed a waiver of Borrower's right to assert any compulsory counterclaim if
such counterclaim is compelled under local law or rule of procedure, nor shall
the foregoing be deemed a waiver of Borrower's right to assert any claim which
would constitute a defense, setoff, counterclaim or crossclaim of any nature
whatsoever against Lender in any separate action or proceeding). For the purpose
of A.R.S. ss. 33-702 (B), this Assignment shall be deemed to be a "mortgage" or
"trust deed," and Lender's rights shall include, but shall not be limited to,
those rights and methods of enforcement enumerated therein.
Section 3.3 OTHER SECURITY. Lender may take or release other
security for the payment of the Debt, may release any party primarily or
secondarily liable therefor and may apply any other security held by it to the
reduction or satisfaction of the Debt without prejudice to any of its rights
under this Assignment.
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Section 3.4 NON-WAIVER. The exercise by Lender of the option
granted it in Section of this Assignment and the collection of the Rents and
sums due under the Lease Guaranties and the application thereof as herein
provided shall not be considered a waiver of any default by Borrower under the
Note, the Security Instrument, the Leases, this Assignment or the Other Security
Documents. The failure of Lender to insist upon strict performance of any term
hereof shall not be deemed to be a waiver of any term of this Assignment.
Borrower shall not be relieved of Borrower's obligations hereunder by reason of
(a) the failure of Lender to comply with any request of Borrower or any other
party to take any action to enforce any of the provisions hereof or of the
Security Instrument, the Note or the Other Security Documents, (b) the release
regardless of consideration, of the whole or any part of the Property, or (c)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of this Assignment, the Note, the
Security Instrument or the Other Security Documents. Lender may resort for the
payment of the Debt to any other security held by Lender in such order and
manner as Lender, in its discretion, may elect. Lender may take any action to
recover the Debt, or any portion thereof, or to enforce any covenant hereof
without prejudice to the right of Lender thereafter to enforce its rights under
this Assignment. The rights of Lender under this Assignment shall be separate,
distinct and cumulative and none shall be given effect to the exclusion of the
others. No act of Lender shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision.
Section 3.5 BANKRUPTCY. (a) Upon or at any time after the
occurrence of a Default, Lender shall have the right to proceed in its own name
or in the name of Borrower in respect of any claim, suit, action or proceeding
relating to the rejection of any Lease, including, without limitation, the right
to file and prosecute, to the exclusion of Borrower, any proofs of claim,
complaints, motions, applications, notices and other documents, in any case in
respect of the lessee under such Lease under the Bankruptcy Code.
(b) If there shall be filed by or against Borrower a petition
under the Bankruptcy Code, and Borrower, as lessor under any Lease, shall
determine to reject such Lease pursuant to Section 365(a) of the Bankruptcy
Code, then Borrower shall give Lender not less than ten (10) days' prior notice
of the date on which Borrower shall apply to the bankruptcy court for authority
to reject the Lease. Lender shall have the right, but not the obligation, to
serve upon Borrower within such ten-day period a notice stating that (i) Lender
demands that Borrower assume and assign the Lease to Lender pursuant to Section
365 of the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate
assurance of future performance under the Lease. If Lender serves upon Borrower
the notice described in the preceding sentence, Borrower shall not seek to
reject the Lease and shall comply with the demand provided for in clause (i) of
the preceding sentence within thirty (30) days after the notice shall have been
given, subject to the performance by Lender of the covenant provided for in
clause (ii) of the preceding sentence.
ARTICLE 4 - NO LIABILITY, FURTHER ASSURANCES
Section 4.1 NO LIABILITY OF LENDER. This Assignment shall not
be construed to bind Lender to the performance of any of the covenants,
conditions or provisions contained in any Lease or Lease Guaranty or otherwise
impose any obligation upon Lender. Lender shall not be liable for any loss
sustained by Borrower resulting from Lender's failure to let the
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Property after a Default or from any other act or omission of Lender in managing
the Property after a Default unless such loss is caused by the willful
misconduct and bad faith of Lender. Lender shall not be obligated to perform or
discharge any obligation, duty or liability under the Leases or any Lease
Guaranties or under or by reason of this Assignment and Borrower shall, and
hereby agrees, to indemnify Lender for, and to hold Lender harmless from, and to
be responsible for, any and all liability, loss or damage which may or might be
incurred under the Leases, any Lease Guaranties or under or by reason of this
Assignment and from any and all claims and demands whatsoever, including the
defense of any such claims or demands which may be asserted against Lender by
reason of any alleged obligations and undertakings on its part to perform or
discharge any of the terms, covenants or agreements contained in the Leases or
any Lease Guaranties. Should Lender incur any such liability, the amount
thereof, including costs, expenses and reasonable attorneys' fees, shall be
secured by this Assignment and by the Security Instrument and the Other Security
Documents and Borrower shall reimburse Lender therefor immediately upon demand
and upon the failure of Borrower so to do Lender may, at its option, declare all
sums secured by this Assignment and by the Security Instrument and the Other
Security Documents immediately due and payable. This Assignment shall not
operate to place any obligation or liability for the control, care, management
or repair of the Property upon Lender, nor for the carrying out of any of the
terms and conditions of the Leases or any Lease Guaranties; nor shall it operate
to make Lender responsible or liable for any waste committed on the Property by
the tenants or any other parties, or for any dangerous or defective condition of
the Property, including without limitation the presence of any Hazardous
Substances (as defined in the Security Instrument), 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.
Section 4.2 NO MORTGAGEE IN POSSESSION. Nothing herein
contained shall be construed as constituting Lender a "mortgagee in possession"
in the absence of the taking of actual possession of the Property by Lender. In
the exercise of the powers herein granted Lender, no liability shall be asserted
or enforced against Lender, all such liability being expressly waived and
released by Borrower.
Section 4.3 FURTHER ASSURANCES. Borrower will, at the cost of
Borrower, and without expense to Lender, do, execute, acknowledge and deliver
all and every such further acts, conveyances, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require for the better assuring, conveying, assigning, transferring and
confirming unto Lender the property and rights hereby assigned 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 Assignment or for filing, registering or
recording this Assignment and, on demand, will execute and deliver and hereby
authorizes Lender to execute in the name of Borrower to the extent Lender may
lawfully do so, one or more financing statements, chattel mortgages or
comparable security instruments, to evidence more effectively the lien and
security interest hereof in and upon the Leases.
- 6 -
ARTICLE 5 - SECONDARY MARKET
Section 5.1 TRANSFER OF LOAN. Lender may, at any time, sell,
transfer or assign the Note, this Assignment and the Other Security Documents,
and any or all servicing rights with respect thereto, or grant participations
therein or issue mortgage pass-through certificates or other securities
evidencing a beneficial interest in a rated or unrated public offering or
private placement (the "Securities"). Lender may forward to each purchaser,
transferee, assignee, servicer, participant, investor in such Securities or any
credit rating agency rating such Securities (collectively, the "Investor") and
each prospective Investor, all documents and information which Lender now has or
may hereafter acquire relating to the Debt and to Borrower, any guarantor, any
indemnitor, and the Property, whether furnished by Borrower, any guarantor or
otherwise, as Lender determines necessary or desirable. Borrower, any guarantor
and any indemnitor agree to cooperate with Lender in connection with any
transfer made or any Securities created pursuant to this Section, including,
without limitation, the delivery of an estoppel certificate required in
accordance with Subsection 7.4(c) of the Security Instrument and such other
documents as may be reasonably requested by Lender. Borrower shall also furnish
and Borrower, any guarantor and any indemnitor consent to Lender furnishing to
such Investors or such prospective Investors any and all information concerning
the Property, the Leases, the financial condition of Borrower, any guarantor and
any indemnitor as may be requested by Lender, any Investor or any prospective
Investor in connection with any sale, transfer or participation interest.
ARTICLE 6 - MISCELLANEOUS PROVISIONS
Section 6.1 CONFLICT OF TERMS. In case of any conflict between
the terms of this Assignment and the terms of the Security Instrument, the terms
of the Security Instrument shall prevail.
Section 6.2 NO ORAL CHANGE. This Assignment 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 the
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
Section 6.3 CERTAIN DEFINITIONS. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Assignment 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 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
the Security Instrument," the word "person" shall include an individual,
corporation, partnership, limited liability company, trust, unincorporated
association, government, governmental authority, and any other entity, the word
"Property" shall include any portion of the Property and any interest therein,
the phrases "attorneys' 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
- 7 -
rights hereunder, and the word "Debt" shall mean the principal balance of the
Note with interest thereon as provided in the Note and the Security Instrument
and all other sums due pursuant to the Note, the Security Instrument, this
Assignment and the Other Security Documents; 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 6.4 AUTHORITY. Borrower represents and warrants that
it has full power and authority to execute and deliver this Assignment and the
execution and delivery of this Assignment has been duly authorized and does not
conflict with or constitute a default under any law, judicial order or other
agreement affecting Borrower or the Property.
Section 6.5 INAPPLICABLE PROVISIONS. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or unenforceable in
any respect, this Assignment shall be construed without such provision.
Section 6.6 DUPLICATE ORIGINALS; COUNTERPARTS. This Assignment
may be executed in any number of duplicate originals and each such duplicate
original shall be deemed to be an original. This Assignment may be executed in
several counterparts, each of which counterparts shall be deemed an original
instrument and all of which together shall constitute a single Assignment. The
failure of any party hereto to execute this Assignment, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.
SECTION 6.7 CHOICE OF LAW. THIS ASSIGNMENT SHALL BE DEEMED TO
BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND
SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH RESPECT TO
THE CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF THIS
ASSIGNMENT, THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED SHALL APPLY.
Section 6.8 TERMINATION OF ASSIGNMENT. Upon payment in full of
the Debt and the delivery and recording of a satisfaction or discharge of
Security Instrument duly executed by Lender, this Assignment shall become and be
void and of no effect.
Section 6.9 NOTICES. All notices or other written
communications hereunder shall be deemed to have been properly given (i) upon
delivery, if delivered in person or by facsimile transmission with receipt
acknowledged by the recipient thereof and confirmed by telephone by sender, (ii)
one (1) Business Day (hereinafter defined) after having been deposited for
overnight delivery with any reputable overnight courier service, or (iii) three
(3) Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
- 8 -
If to Borrower: Camelback Plaza Development L.C.
2401 West 1st Street
Tempe, Arizona 85281
Attention: James W. Brown
Facsimile No. (602) 912-0480
With a copy to: Ridenour, Swenson, Cleere & Evans, P.C.
302 North First Avenue, Suite 900
Phoenix, Arizona 85003
Attention: Gerard R. Cleere, Esq.
Facsimile No. (602) 254-8670
If to Lender: Boston Capital Mortgage Company Limited Partnership
One Boston Place, Suite 2100
Boston, Massachusetts 02108
Attention: Ms. Kathie Valyeau
Facsimile No. (617) 624-8999
With a copy to: Thacher Proffitt & Wood
2 World Trade Center, 40th Floor
New York, New York 10048
Attention: Donald F. Simone, Esq.
Facsimile No. (212) 912-7751
or addressed as such party may from time to time designate by written notice to
the other parties. For purposes of this Section 6.9, the term "Business Day"
shall mean a day on which commercial banks are not authorized or required by law
to close in New York, New York.
Either party by notice to the other may designate additional
or different addresses for subsequent notices or communications.
SECTION 6.10 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS ASSIGNMENT, THE NOTE, THE
SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
Section 6.11 SUBMISSION TO JURISDICTION. With respect to any
claim or action arising hereunder, Borrower (a) irrevocably submits to the
nonexclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in New York, New York,
and appellate courts from any thereof, and (b) irrevocably waives any objection
which it may have at any time to the laying on venue of any suit, action or
proceeding arising out of or relating to this Assignment brought in any such
court, irrevocably
- 9 -
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
Section 6.12 LIABILITY. If Borrower consists of more than one
person, the obligations and liabilities of each such person hereunder shall be
joint and several. This Assignment shall be binding upon and inure to the
benefit of Borrower and Lender and their respective successors and assigns
forever.
Section 6.13 HEADINGS, ETC. The headings and captions of
various paragraphs of this Assignment 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 6.14 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 6.15 SOLE DISCRETION OF LENDER. Wherever pursuant to
this Assignment (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c)
any other decision or determination is to be made by Lender, the decision of
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations made
by Lender, shall be in the sole and absolute discretion of Lender and shall be
final and conclusive, except as may be otherwise expressly and specifically
provided herein.
Section 6.16 COSTS AND EXPENSES OF BORROWER. Wherever pursuant
to this Assignment it is provided that Borrower pay any costs and expenses, such
costs and expenses shall include, but not be limited to, legal fees and
disbursements of Lender, whether with respect to retained firms, the
reimbursement of the expenses for in-house staff or otherwise.
ARTICLE 7-DEFINITIONS
The terms set forth below are defined in the following Sections of this
Assignment:
(a) Assignment: Preamble;
-----------
(b) Attorneys' Fees: Article 6, Section 6.3;
----------------
(c) Bankruptcy Claims: Article 1, Subsection 1.1(d);
------------------
(d) Bankruptcy Code: Article 1, Subsection 1.1(d);
----------------
(e) Borrower: Preamble and Article 6, Section 6.3;
---------
(f) Business Day: Article 6, Section 6.9;
-------------
(g) Counsel Fees: Article 6, Section 6.3;
-------------
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(h) Debt: Article 6, Section 6.3;
-----
(i) Default: Article 3, Section 3.1;
--------
(j) Investor: Article 5, Section 5.1;
---------
(k) Lease Guaranties: Article 1, Subsection 1.1(e);
-----------------
(l) Lease Guarantor: Article 1, Subsection 1.1(e);
----------------
(m) Lease Guaranty: Article 1, Subsection 1.1(e);
---------------
(n) Leases: Article 1, Subsection 1.1(b);
-------
(o) Lender: Preamble and Article 6, Section 6.3;
-------
(p) Note: Recitals and Article 6, Section 6.3;
-----
(q) Other Security Documents: Article 1, Section 1.2;
-------------------------
(r) Person: Article 6, Section 6.3;
-------
(s) Property: Article 1, Subsection 1.1(a) and Article 6, Section 6.3;
---------
(t) Rents: Article 1, Subsection 1.1(c); and
------
(u) Security Instrument: Article 1, Section 1.2.
--------------------
THIS ASSIGNMENT, together with the covenants and warranties
therein contained, shall inure to the benefit of Lender and any subsequent
holder of the Security Instrument and shall be binding upon Borrower, its heirs,
executors, administrators, successors and assigns and any subsequent owner of
the Property.
- 11 -
IN WITNESS WHEREOF, Borrower has executed this instrument the
day and year first above written.
CAMELBACK PLAZA DEVELOPMENT L.C., an
Arizona limited liability company
By: PERFORMANCE CAMELBACK
DEVELOPMENT CORP., an Arizona
corporation, its managing member
By:
----------------------------
Name:
Title:
- 12 -
ACKNOWLEDGEMENTS
STATE OF_______ )
SS.
COUNTY OF________ )
This instrument was acknowledged before me the undersigned
notary public this ______day of____________, 1996, by________________________as
President of PERFORMANCE CAMELBACK DEVELOPMENT CORP., an Arizona corporation, as
Managing Member of CAMELBACK PLAZA DEVELOPMENT, L.C., an Arizona limited
liability company with full powers to so do.
-------------
Notary Public
My commission expires:___________________
EXHIBIT A
Legal Description of Property
(to be attached)