Loan No. 94-0950186
PROMISSORY NOTE
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$11,625,000.00
Arizona
September 18, 2003
FOR VALUE RECEIVED Deer Valley Financial Center, LLC, an
Arizona
limited liability company, Huntington
Company, L.L.C., an Arizona limited
liability company, Geneva Company, L.L.C.,
an Arizona limited liability company,
and Metzger Deer Valley, LLC, a Delaware
limited liability company (collectively
"Borrower"), each having its principal
place of business at Hannay Investment
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Properties, 4651 E. Palomino Road, Phoenix,
Arizona 85018 promises to pay to the
order of PNC Bank, National Association
("Lender"), at the following address:
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10851 Mastin, Suite 300, Overland Park,
Kansas 66210, or such other place as the
holder hereof may from time to time
designate in writing, the principal sum of
Eleven Million Six Hundred Twenty-Five
Thousand and No/100 Dollars
($11,625,000.00) in lawful money of the
United States of America, with interest
thereon to be computed from the date of
disbursement under this Promissory Note
(the "Note") at the Applicable Interest
Rate (hereinafter defined), and to be
paid in installments as follows:
A. A payment, on
the date of disbursement, representing interest
from the
date of disbursement through the last day of the
calendar month in which such disbursement is made;
B. A constant
payment of $71,199.52 (based upon an amortization
schedule assuming a 360 day year consisting of 12 months of 30
days each) on the first day of November, 2003 and on the first
day of each calendar month thereafter up to and including the
first day of September, 2013; and
C. The balance
of said principal sum, all unpaid interest thereon
and all other amounts owed pursuant to this Note, the Security
Instrument (hereinafter defined), the Other Security Documents
(hereinafter defined), or otherwise in connection with the
loan evidenced by this Note shall be due and payable on the
first day of October, 2013 (the "Maturity Date").
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All payments to be made by Borrower to
Lender shall be deemed received by Lender
only upon Lender's actual receipt of
same.
1. Applicable
Interest Rate. Interest accruing on the principal
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sum of this Note shall be calculated based
upon a per annum interest rate
divided by 360 days resulting in a per diem
interest amount that will accrue for
each calendar day in a year of 365 days
(366 days in a leap year). The term
"Applicable Interest Rate" as used in this
Note shall mean, from the date of
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this Note through and including the
Maturity Date, a rate of six and twenty
hundredths percent (6.20%) per annum.
2. Application.
All payments on this Note shall be applied at
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any time and from time to time in the
following order: (i) the payment or
reimbursement of any expenses (including
but not limited to late charges),
costs or obligations (other than the
principal hereof and interest hereon) for
which Borrower shall be obligated or Lender
entitled pursuant to the provisions
hereof or of the Security Instrument or the
Other Security Documents, (ii) the
payment of accrued but unpaid interest
thereon, (iii) the payment of unpaid
escrow amounts required herein, in the
Security Instrument or in the Other
Security Documents, and (iv) the payment of
all or any portion of the principal
balance then outstanding hereunder, in
either the direct or inverse order of
maturity, at Lender's option.
3. Late Charge.
If any part of the Debt (hereinafter defined) is
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not actually received by Lender by close of
business on the fifth (5th) day
after the date on which it was due,
Borrower shall pay to Lender an amount (the
"Late Charge") equal to the lesser of five
percent (5%) of such unpaid portion
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of the missed payment or the maximum amount
permitted by applicable law, to
defray the expenses incurred by Lender in
handling and processing such
delinquent payment and to compensate Lender
for the loss of the use of such
delinquent payment. All such Late Charges
shall be automatically due and payable
without notice or demand and shall be
secured by the Security Instrument and the
Other Security Documents.
4. Security;
Defined Terms; Incorporation by Reference. This Note
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is secured by the Security Instrument and
the Other Security Documents. The term
"Security Instrument" as used in this Note
shall mean either the Mortgage,
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Security Agreement, Assignment of Leases
and Rents and Fixture Filing, or the
Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture
Filing, executed and delivered by Borrower
contemporaneously with this Note and
which secures the Debt. The term "Other
Security Documents" means all documents
------------------------
other than this Note or the Security
Instrument now or hereafter executed and/or
delivered by Borrower and/or others and to
or in favor of Lender, which wholly
or partially secure, evidence or guarantee
payment of the Debt, provide for any
indemnity in favor of or payment to Lender
related to the Debt, this Note or the
Mortgaged Property (as defined in the
Security Instrument), provide for any
escrow/holdback arrangements or for any
actions to be completed by Borrower
subsequent to the date hereof, or are
otherwise related to the loan evidenced by
this Note. All amounts due and payable
under this Note, together with all sums
due under the Security Instrument and the
Other Security Documents, including
any applicable Prepayment Consideration
(hereinafter defined) and all applicable
attorney fees and costs, are collectively
referred to herein as the "Debt."
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Where appropriate, the singular number
shall include the plural, the plural
shall include the singular, and the words
"Lender" and "Borrower" shall include
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their respective successors, assigns,
heirs, personal representatives, executors
and administrators.
5.
Prepayment/Defeasance.
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(a) When Permitted.
Prior to July 1, 2013 (the "Early Payment
--------------
-------------
Date"), Borrower shall not have the right
to prepay all or any portion of the
----
Debt at any time during the term of this
Note (except for any prepayment
permitted under the Security Instrument in
the event of a casualty or
condemnation). No Prepayment Consideration
(hereinafter defined) will be due
from any prepayment of this Note (in whole
but not in part) on or after the
Early Payment Date. In the event of a
prepayment on or after such date, Borrower
shall pay, together with the amount of such
prepayment, an amount equal to
(i) all accrued and unpaid interest, and
(ii) any other sums due under this
Note, the Security Instrument or any Other
Security Document. Additionally, any
such prepayment not actually received by
Lender before 5:00 p.m., central time,
on the 5th day of any calendar month must
also include the interest which would
have accrued on the amount of such
prepayment during the entire calendar month
in which the prepayment is made.
(b) Notice. Borrower
may give written notice to Lender specifying the
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date, which date must be on or after the
Early Payment Date, on which a full
prepayment of the Debt is to be made (the
date of any prepayment hereunder,
whether pursuant to such notice or not, and
whether voluntary or involuntary,
being herein called the "Prepayment Date").
Lender shall receive this notice not
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more than sixty (60) days and not less than
thirty (30) days prior to the
Prepayment Date. If any such notice of
prepayment is given, the entire Debt,
including any applicable Prepayment
Consideration (as defined below), shall be
due and payable on the Prepayment Date.
(c) Prepayment After
Event of Default. If following the occurrence of
---------------------------------
any Event of Default, Borrower shall tender
payment of an amount sufficient to
satisfy the Debt at any time prior to or
after a sale of the Mortgaged Property,
either through foreclosure or the exercise
of the other remedies available to
Lender under the Security Instrument or the
Other Security Documents, such
tender by Borrower shall be deemed to be a
voluntary prepayment under this Note
in the amount tendered and in such case
Borrower shall also pay to Lender, with
respect to the amount tendered, the
applicable Prepayment Consideration set
forth in this Note, which Prepayment
Consideration shall be immediately due and
payable. Lender shall not be obligated to
accept any such prepayment of this
Note unless it is accompanied by an amount
(the "Prepayment Consideration")
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equal to the greater of: (x) one percent
(1%) of the outstanding principal
balance of this Note at the time of
prepayment; or (y) the Yield Maintenance
Amount (hereinafter defined).
Lender shall not be obligated to accept any such tender unless it
is
accompanied by all Prepayment Consideration
due in connection therewith.
Borrower acknowledges that the Prepayment
Consideration is a bargained for
consideration and not a penalty, and
Borrower recognizes that Lender would incur
substantial additional costs and expenses
in the event of a prepayment of the
Debt and that the Prepayment Consideration
compensates Lender for such costs and
expenses (including without limitation, the
loss of Lender's investment
opportunity during the period from the date
such tender is accepted until the
Maturity Date). Borrower agrees that Lender
shall not, as a condition to
receiving the Prepayment Consideration, be
obligated to actually reinvest the
amount prepaid in any treasury obligation
or in any other manner whatsoever.
Except as otherwise set forth in the
Security Instrument, no Prepayment
Consideration will be due for involuntary
prepayments resulting from any
Casualty (as defined in the Security
Instrument) or Condemnation (as defined in
the Security Instrument).
Yield Maintenance Amount. The "Yield Maintenance Amount" shall mean
the
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present value, as of the Prepayment 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 (hereinafter defined), less
the amount of principal being prepaid.
The term "Discount Rate" shall mean the
rate which, when compounded monthly, is
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equivalent to the Treasury Rate
(hereinafter defined) when compounded
semi-annually. The term "Treasury Rate"
shall mean the yield calculated by the
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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 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.
(d) Defeasance. Any
provision hereof to the contrary notwithstanding,
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at any time during the Defeasance Period
(as defined below), Borrower may obtain
a release of the Mortgaged Property from
the lien of the Security Instrument
only upon the satisfaction of the following
conditions:
(i) not less than
thirty (30) days prior written notice shall
be given to Lender specifying a date (the "Defeasance Date") on
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which the Defeasance Collateral (as defined below) is to be
delivered, such date being the first day of the month;
(ii) all accrued and
unpaid interest and all other sums due
under this Note, the Security Instrument and the Other Security
Documents up to the Defeasance Date, including, without limitation,
all
reasonable costs and expenses incurred by Lender or its agents
in
connection with such defeasance, including, without limitation,
any
legal fees and expenses incurred in connection with obtaining
and
reviewing the Defeasance Collateral, the preparation of the
Defeasance
Security
Agreement (as defined below) and related documentation,
accountant fees, and investment advisor fees, all of which shall
be
paid in full on or prior to the Defeasance Date;
(iii) no Event of
Default, and no event or condition that, with
the giving of notice or passage of time or both, would constitute
an
Event of Default, shall exist either at the time Borrower gives
notice
of the Defeasance Date to Lender or on the Defeasance Date;
(iv) Borrower shall
deliver to Lender on or before the
Defeasance Date direct, non-callable obligations of the United
States
of America in such form and amount that provide for the payments
prior,
but as close as possible, to all successive regularly scheduled
monthly
payment dates, including the Maturity Date, with such payments
being
equal to or greater than the amount of the corresponding
monthly
payment required to be paid under this Note (hereafter,
"Scheduled
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Defeasance Payments") for the balance of the term hereof and
the
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amount required to be paid on the Maturity Date (such obligations
are
collectively and singularly referred to herein as "Defeasance
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Collateral") each of
which shall be duly endorsed by the holder
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thereof as directed by Lender or accompanied by a written
instrument of
transfer in form and substance wholly satisfactory to Lender
(including, without limitation, such instrument as may be required
by
the depository
institution holding such securities or the issuer
thereof, as the case may be, to effectuate book-entry transfers
and
pledges through the book-entry facilities of such institution)
in
order to perfect a first priority security interest in such
Defeasance
Collateral in favor of Lender. The Defeasance Collateral may be
purchased by Lender on Borrower's behalf, in which case Borrower
shall
deposit with Lender at least three days before the Defeasance Date
a
sum sufficient, in Lender's sole and absolute discretion, to
purchase
the Defeasance Collateral. Any sums in excess of the amount
necessary
to purchase the Defeasance Collateral shall be remitted to
Borrower
upon release of the Mortgaged Property.
(v) Borrower shall
deliver the following to Lender, at
Borrower's cost, on or prior to the Defeasance Date:
(A) a pledge and
security agreement, in form and substance
satisfactory to Lender in its sole discretion, creating a
first priority security interest in favor of Lender in the
Defeasance Collateral (the "Defeasance Security Agreement");
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(B) a certificate of
Borrower certifying that all of the
requirements hereunder for a defeasance have been satisfied;
(C) an opinion of
counsel in form and substance and
delivered by counsel satisfactory to Lender in its sole
discretion stating, among other things, (x) that Lender has a
perfected first priority security interest in the Defeasance
Collateral, (y) that the Defeasance Security Agreement is
enforceable against Borrower in accordance with its terms and
(z) that the defeasance will not cause the entity which holds
this Note to fail to qualify as a "real estate mortgage
investment conduit" (a "REMIC"), within the meaning of
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Section 860D of the Internal Revenue Code of 1986, as amended
from time to time or any successor statute (the "Code");
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(D) an opinion of an
independent certified public
accountant acceptable to Lender representing and warranting to
Lender that the Defeasance Collateral will generate monthly
amounts equal to or greater than the Scheduled Defeasance
Payments including the amount required to be paid on the
Maturity Date of this Note, and such other approvals required
by Lender;
(E) evidence in
writing from each of the Rating Agencies
to the effect that such release will not result in a qualifi-
cation, downgrade or withdrawal of any rating in effect
immediately prior to the Defeasance Date for any securities or
"Pass-Through Certificates" issued pursuant to the terms of a
trust and servicing agreement in the event that this Note or
any interest therein is included in a REMIC or other
securitization vehicle;
(F) such other
certificates, opinions, documents or
instruments as Lender may reasonably require; and
(G) upon approval by
Lender of the schedule of Defeasance
Collateral to be delivered to Lender, Borrower shall (i) pay
Lender a nonrefundable fee, in an amount reasonably determined
by Lender, as compensation for the review, analysis and
processing of the
defeasance request; and (ii) if required
by Lender, deposit with Lender an amount estimated by
Lender to be sufficient to fund all other fees, costs and
expenses related to the defeasance, including Lender's
reasonable attorneys' fees and expenses and rating agency
fees, if any and expenses together with all expenses and
costs associated with the release of the lien on the Mortgaged
Property. Borrower shall be responsible for all fees, costs
and expenses associated with the defeasance which, if not
covered by the above deposit, shall be paid to Lender no later
than the Defeasance Date.
Upon compliance with the foregoing requirements relating to the
delivery of the Defeasance Collateral, the
Mortgaged Property shall be released
from the lien of the Security Instrument
and the Defeasance Collateral shall
constitute collateral which shall secure
this Note and the Debt.
The "Defeasance Period" shall mean the period of time: (1)
commencing
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on the date which is the later to occur of:
(A) two (2) years after the
"start-up day", within the meaning of
Section 860(G)(a)(9) of the Code, of the
REMIC that holds this Note; and (B) three
(3) years after the date of the first
regularly scheduled monthly payment due
hereunder, and (2) ending on the Early
Payment Date. The "Rating Agencies" shall
mean, collectively, Standard and
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Poor's Ratings Services, Moody's Investors
Service, Inc., and Fitch ICBA, Inc.,
and their respective successors and
assigns, to the extent each of the foregoing
performed credit rating services for the
REMIC or other securitization vehicle
which owns this Note.
(e) Successor
Borrower. In connection with a defeasance under this
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Section, Borrower shall establish or
designate a successor entity (the
"Successor Borrower") which shall be a
single purpose entity approved by Lender
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in its sole discretion. Borrower shall
transfer and assign all obligations,
rights and duties under and to this Note
together with the Defeasance Collateral
to such Successor Borrower. Such Successor
Borrower shall assume the obligations
under this Note and the Security Instrument
and Borrower shall be relieved of
its obligations under such documents except
for any such representations that
specifically survive the defeasance.
Borrower shall pay $1,000 to any such
Successor Borrower as consideration for
assuming the obligations under this Note
and the Security Instrument. Borrower shall
pay all costs and expenses incurred
by Lender, including Lender's attorneys'
fees and expenses, incurred in
connection with establishment of the
Successor Borrower.
(f) Defeasance
Collateral Account. All cash from interest and
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principal payments paid on the Defeasance
Collateral shall be paid over to
Lender for each Scheduled Defeasance
Payment and applied first to accrued and
unpaid interest and then to principal. Any
cash from interest and principal paid
on the Defeasance Collateral not needed to
pay accrued and unpaid interest or
principal shall be retained in a designated
account established by Borrower or
Successor Borrower as the case may be, (the
"Defeasance Collateral Account")
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which shall constitute additional
collateral for the loan evidenced hereby. The
Defeasance Collateral Account shall contain
only cash from interest and
principal paid on the Defeasance
Collateral. Borrower or Successor Borrower, as
applicable, shall be the owner of the
Defeasance Collateral Account and shall
report all income accrued thereon for
federal, state and local income tax
purposes and shall pay all costs and
expenses associated with opening and
maintaining the account and may pay all
costs and expenses associated with
maintaining the Successor Borrower from
such account. Lender shall have no
responsibility to fund any Scheduled
Defeasance Payments and shall not be liable
in any way by reason of any insufficiency
in the Defeasance Collateral Account.
Upon an assumption by Successor Borrower
acceptable to Lender, Borrower shall be
relieved of its obligations under this Note
and the Defeasance Security
Agreement and, to the extent such documents
relate to the Mortgaged Property,
the Other Security Documents.
(g) Release of
Security Instrument Following Defeasance. Upon
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compliance with the requirements hereunder
for a defeasance, the Mortgaged
Property shall be released from the lien of
the Security Instrument and the
Other Security Documents, and the
Defeasance Collateral shall constitute
collateral securing this Note. Lender will,
at Borrower's expense, execute and
deliver any agreements reasonably requested
by Borrower to release the lien of
the Security Instrument from the Mortgaged
Property.
(h) Purchase of
Defeasance Collateral. In the event of purchase by
---------------------------------
Lender of the Defeasance Collateral, such
purchase may, in Lender's sole and
absolute discretion be through an affiliate
of Lender or a third party entity.
Borrower shall be responsible for the
payment of any brokerage or other
transaction fees in connection with such
purchase.
6. Default. An
"Event of Default" shall occur if:
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(a) Borrower fails to
make the full and punctual payment of any amount
payable hereunder or under the Security
Instrument or Other Security Documents,
which failure is not cured on or before the
fifth (5th) day after the date of
written notice from Lender to Borrower of
such failure;
(b) Borrower fails to
pay the entire outstanding principal balance
hereunder, together with all accrued and
unpaid interest, on the date when due,
whether on the Maturity Date, upon
acceleration or prepayment or otherwise;
(c) an Event of
Default (as defined in the Security Instrument or any
of the Other Security Documents) has
occurred under the Security Instrument
and/or Other Security Documents.
7. Acceleration.
The whole of the Debt, including without limitation,
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the principal sum of this Note, all accrued
interest and all other sums due
under this Note, the Security Instrument
and the Other Security Documents,
together with any applicable Prepayment
Consideration, shall become immediately
due and payable at the option of Lender,
without notice, at any time following
the occurrence of an Event of Default.
8. Default
Interest. Upon the occurrence of an Event of Default
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(including without limitation, the failure
of Borrower to pay the Debt in full
on the Maturity Date), Lender shall be
entitled to receive and Borrower shall
pay interest on the entire unpaid principal
balance at the rate (the "Default
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Rate") equal to the greater of: (a) four
percent (4%) above the Applicable
----
Interest Rate; or (b) four percent (4%)
above the Prime Rate (hereinafter
defined) in effect at the time of the
occurrence of the Event of Default;
provided, however, that notwithstanding the
foregoing, in no event shall the
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Default Rate exceed the Maximum Rate
(hereinafter defined). The term "Prime
-----
Rate" shall mean the prime rate reported in
the Money Rates section of The Wall
----
Street Journal for the date (the "Default
Rate Calculation Date") upon which the
-----------------------------
Event of Default occurred, or if no
publication occurs upon such date, then the
date of publication immediately preceding
the date of the Event of Default. In
the event that The Wall Street Journal
should cease or temporarily interrupt
publication, the term "Prime Rate" shall
mean the daily average prime rate
published upon the Default Rate Calculation
Date in another business newspaper,
or business section of a newspaper, of
national standing chosen by Lender. In
the event that a prime rate is no longer
generally published or is limited,
regulated or administered by a governmental
or quasi-governmental body, then
Lender shall select a comparable interest
rate index which is readily available
and verifiable to Borrower but is beyond
Lender's control. The Default Rate
shall be computed from the occurrence of
the Event of Default until the actual
payment in full of the Debt. This charge
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 Maturity Date, nor as a
waiver of any other right or remedy
accruing to Lender by reason of the
occurrence of any Event of Default.
9. Attorney
Fees. In the event that Lender employs attorney(s) to
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collect the Debt, to enforce the provisions
of this Note or to protect or
foreclose the security herefor, Borrower
agrees to pay Lender's attorney fees
and disbursements, whether or not suit be
brought. Such fees shall be
immediately due and payable.
10. Limit of Validity.
All interest and other charges, fees, goods,
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things in action or any other sums, things
of value and reimbursable costs that
Borrower is or may become obligated to pay
or reimburse in connection with the
loan evidenced by this Note, and which may
be deemed to constitute "interest"
within the meaning of Arizona Revised
Statutes Section 44-1201 et. seq. shall be
deemed to constitute items of interest in
addition to the rate(s) of interest
specified above, which Borrower hereby
contracts in writing to pay. This Note is
subject to the express condition that at no
time shall Borrower be obligated or
required to pay interest or other charges
on the Debt at a rate which may
subject Lender to civil or criminal
liability as a result of such rate exceeding
the maximum interest rate which Borrower is
permitted to pay by applicable law
the "Maximum Rate"). If by the terms of
this Note, Borrower is at any
------------
required or obligated to pay interest or
other charges on the Debt at a rate in
excess of the Maximum Rate, the rate of
interest due under this Note shall be
deemed to be immediately reduced to the
Maximum Rate and any 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.
11. No Oral
Amendments. 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.
12. Exculpation.
Subject to the provisions of this Section, Borrower's
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liability under this Note, the Security
Instrument or the Other Security
Documents shall only extend to the
Mortgaged Property and other collateral
given to secure the Debt, and Lender shall
not enforce such liability against
any other asset, property or funds of
Borrower; provided, however, the foregoing
shall not:
(a) impair the right
of Lender to bring suit and obtain personal,
recourse judgments against any person or
entity (including Borrower) relating to
any losses sustained by Lender in
connection with any fraud, intentional
misrepresentation, waste, or
misappropriation of tenant security deposits or
rents collected more than one (1) month in
advance by Borrower;
(b) impair the right
of Lender to name, and obtain a judgment against
any person or entity (including Borrower)
to the extent required by law to
either obtain a judgment of specific
performance with respect to any of the
provisions of this Note, the Security
Instrument or any of the Other Security
Documents, or to foreclose the Security
Instrument and obtain title to the
Mortgaged Property and other collateral
given to secure the Debt;
(c) affect the
validity or enforceability of, or impair the right of
Lender to bring suit and obtain personal,
recourse judgments against any person
or entity (including Borrower) to enforce
any guaranty, indemnity or release of
liability made by such person or entity
(whether made in this Note, the Security
Instrument, any of the Other Security
Documents or in any other separate
agreement);
(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) affect the
validity or enforceability of, or impair the right of
Lender to bring suit and obtain personal,
recourse judgments against any person
or entity (including Borrower) relating to
any losses sustained by Lender in
connection with any of the provisions of
this Note, the Security Instrument or
any of the Other Security Documents
requiring that: (i) any person or entity
maintain any insurance over any of the
Mortgaged Property, or (ii) any insurance
proceeds or condemnation awards be paid to
Lender; or
(g) impair the right
of Lender to bring suit and obtain personal,
recourse judgments against any person or
entity (including Borrower) for the
full amount of the Debt if the Mortgaged
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: (A) which is commenced
by any person or entity controlling,
controlled by or under common control with
Borrower (the "Borrowing Group") or (B) in
which any member of the Borrowing
---------------
Group objects to a motion by Lender for
relief from any stay or injunction from
the foreclosure of the Security Instrument
or any other remedial action
permitted under this Note, the Security
Instrument or any of the Other Security
Documents.
Items (a) through (g) above are
collectively the "Non-Recourse Exceptions". To
-----------------------
the extent Borrower is a general
partnership and Lender is required under
applicable law to pursue its remedies
against the persons or entities
constituting Borrower, each reference to
the phrase "(including Borrower)" in
the Non-Recourse Exceptions shall be deemed
to read "(including Borrower or any
person or entity constituting Borrower)".
Borrower's liability under the
Non-Recourse Exceptions, excepting item
(g), shall be limited to the amount of
any losses or damages sustained by Lender
in connection with such Non-Recourse
Exceptions. 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 the Security Instrument or to
require that all of the Mortgaged
Property and other collateral given to
secure the Debt shall continue to secure
all of the Debt
13. Assignment.
Lender, and its successors, endorsees and assigns, may
----------
freely transfer and assign this Note.
Borrower's right to transfer its rights
and obligations with respect to the Debt,
and to be released from liability
under this Note, shall be governed by the
Security Instrument.
14. Applicable Law;
Jurisdiction. This Note shall be governed and
----------------------------
construed in accordance with the laws of
the state in which the real property
encumbered by the Security Instrument is
located. Borrower hereby submits to
personal jurisdiction in the state courts
located in said state and the federal
courts of the United States of America
located in said state for the enforcement
of Borrower's obligations hereunder and
waives any and all personal rights under
the law of any other state to object to
jurisdiction within such state for the
purposes of any action, suit, proceeding or
litigation to enforce such
obligations of Borrower.
15. Joint and Several
Liability. If Borrower consists of more than one
---------------------------
person or entity, the obligations and
liabilities of each such person or entity
shall be joint and several.
16. Waiver of
Presentment, Etc. 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, notice of
protest, and notice of intent to accelerate
the maturity hereof (and of such
acceleration), except to the extent that
specific notices are required by this
Note, the Security Instrument or the Other
Security Documents.
17. No Waiver. Any
failure by Lender to insist upon strict performance
---------
by Borrower of any of the provisions of
this Note, the Security Instrument or
the Other Security Documents shall not be
deemed to be a waiver of any of the
terms or provisions of this Note, the
Security Instrument or the Other Security
Documents, and Lender shall have the right
thereafter to insist upon strict
performance by Borrower of any and all of
the terms and provisions of this Note,
the Security Instrument or the Other
Security Documents.
18. Notices. Except as
otherwise specified herein, any notice,
-------
consent, request or other communication
required or permitted to be given
hereunder shall be in writing, addressed to
the other party as set forth below
(or to such other address or person as
either party or person entitled to notice
may by notice to the other party specify),
and shall be: (a) personally
delivered; (b) delivered by Federal Express
or other comparable overnight
delivery service; or (c) transmitted by
United States certified mail, return
receipt requested with postage prepaid;
to:
Lender:
PNC Bank, National Association
10851 Mastin, Suite 300
Overland Park, Kansas 66210
Attention: Closing Department
Borrower: Deer
Valley Financial Center, LLC
Huntington Company, L.L.C.
Geneva Company, L.L.C.
Metzger Deer Valley, LLC
c/o Hannay Investment Properties
4651 E.
Palomino Road
Phoenix, Arizona
85018
Attention: R. Craig Hannay
Unless otherwise specified, all notices and
other communications shall be deemed
to have been duly given on the first to
occur of actual receipt of the same or:
(i) the date of delivery if personally
delivered; (ii) one (1) business day
after depositing the same with the delivery
service if by overnight delivery
service; and (iii) three (3) days following
posting if transmitted by mail.
Borrower must prominently display Lender's
Loan Number (as set forth on page 1
of this Note) on all notices or
communications to Lender.
19. Severability. If
any term, covenant or condition of this Note is
------------
held to be invalid, illegal or
unenforceable in any respect, this Note shall be
construed without such provision.
20 . Time of the Essence. Time shall be of the essence in the
-------------------
performance of all obligations of Borrower
hereunder.
BORROWER AND LENDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY
WAIVE ANY RIGHT THEY, OR THEIR RESPECTIVE
SUCCESSORS OR ASSIGNS, MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED ON THE LOAN EVIDENCED BY THIS
NOTE OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS NOTE, THE SECURITY
INSTRUMENT OR ANY OF THE OTHER SECURITY
DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENT (WHETHER
VERBAL OR WRITTEN) OR ACTION OF BORROWER
OR LENDER. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER'S MAKING OF THE
LOAN SECURED BY THE SECURITY INSTRUMENT AND
THE OTHER SECURITY DOCUMENTS.
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note
to
be effective the day and year first above
written.
"Borrower"
DEER VALLEY FINANCIAL CENTER, LLC,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R. Craig Hannay,
President
"Borrower"
HUNTINGTON COMPANY, L.L.C.,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R.
Craig Hannay, President
<PAGE>
"Borrower"
GENEVA COMPANY, L.L.C.,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R. Craig Hannay, President
"Borrower"
METZGER DEER VALLEY, LLC,
a Delaware limited liability company
By:
Metzger Family of Saratoga, LLC,
a New York limited liability company
Its sole Member
By: /s/ Irving L. Metzger
--------------------------------
Irving L. Metzger, Managing Member
<PAGE>
ACKNOWLEDGMENTS
STATE OF ARIZONA
)
) ss.
COUNTY OF MARICOPA
)
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of DEER VALLEY
FINANCIAL CENTER, LLC, an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
STATE OF ARIZONA
)
) ss.
COUNTY OF MARICOPA
)
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of HUNTINGTON
COMPANY, L.L.C., an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand
and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
<PAGE>
STATE OF ARIZONA
)
) ss.
COUNTY OF MARICOPA
)
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of GENEVA
COMPANY, L.L.C., an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
STATE OF ARIZONA
)
) ss.
COUNTY OF MARICOPA
)
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared Irving L. Metzger, who
acknowledged himself to be the Managing Member
of Metzger Family of Saratoga, LLC, a New
York limited liability company the
sole Member of METZGER DEER VALLEY, LLC, a
Delaware limited liability company,
and that he, being authorized so to do,
executed the foregoing instrument for
the purposes therein contained, by signing
the name of the corporations by
himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
<PAGE>
This Endorsement forms a part of that
certain Promissory Note in the stated
principal amount of Eleven Million Six
Hundred Twenty-Five Thousand and No/100
Dollars ($11,625,000.00) dated September
18, 2003, made by Deer Valley Financial
Center, LLC, an Arizona limited liability
company, Huntington Company, L.L.C.,
an Arizona limited liability company,
Geneva Company, L.L.C., an Arizona limited
liability company, and Metzger Deer Valley,
LLC, a Delaware limited liability
company to PNC Bank, National
Association.
Pay to the order of
____________________________________________
_______________________________________________, without
recourse.
PNC Bank, National Association
By:
-----------------------------------
Jeannette Butler, Vice President
<PAGE>
RECORD AND RETURN TO:
PNC BANK, NATIONAL ASSOCIATION
10851 Mastin, Suite 300
Overland Park, Kansas 66210
Attention: Closing Department
DEER VALLEY FINANCIAL CENTER, LLC
HUNTINGTON COMPANY, L.L.C.
GENEVA COMPANY, L.L.C.
METZGER DEER VALLEY, LLC
(collectively Borrower)
to
CHICAGO
TITLE INSURANCE COMPANY
(Trustee)
in favor of
PNC BANK, NATIONAL ASSOCIATION
(Lender)
As used herein, "Borrower" shall mean
"Trustor," and "Lender" shall mean
"Beneficiary," as those terms are used
pursuant to Arizona Revised Statutes
A.R.S. Section 33-801 et. seq.
--------
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS AND FIXTURE FILING
Dated: September 18,
2003
Location: Deer Valley
Financial Center
22601 N. 19th Avenue
Phoenix, Arizona
85027
Loan No.:
94-0950186
<PAGE>
TABLE OF CONTENTS
-----------------
Page
1. Payment of Debt and
Incorporation of Covenants, Conditions
and
Agreements...........................................................3
2. Warranty of
Title........................................................3
3. Insurance
Requirements...................................................4
4. Casualty
Loss............................................................5
5. Payment of Taxes and
Other Charges.......................................7
6. Escrowed
Funds...........................................................7
7.
Condemnation.............................................................8
8. Leases and
Rents.........................................................8
9. Maintenance, Use and
Management of Mortgaged Property....................9
10. Sale of Mortgaged Property
or Change in Borrower.........................9
11. Anti-Terrorism
Laws.....................................................12
12. Estoppel Certificates and No
Default Affidavits.........................13
13. Cooperation; Loan
Servicing.............................................13
14. Books and Records; Reporting
Requirements...............................14
15. Performance of Other
Agreements.........................................15
16. Further Acts,
Etc.......................................................15
17. Recording of Security
Instrument, Etc...................................15
18. Events of
Default.......................................................15
19. Right to Cure
Defaults..................................................16
20. Lender's
Remedies.......................................................17
21. Changes in the Laws
Regarding Taxation..................................19
22. Documentary
Stamps......................................................19
23. Usury
Laws..............................................................19
24. Right of
Entry..........................................................20
25. Reasonable Use and
Occupancy............................................20
26. Security
Agreement......................................................20
27. Actions and
Proceedings.................................................20
28. Waiver of
Counterclaim..................................................21
29. Recovery of Sums Required to
Be Paid....................................21
30. Marshalling and Other
Matters...........................................21
31. Costs and
Expenses......................................................21
32. Access
Laws.............................................................21
33.
Indemnification.........................................................22
34.
Notices.................................................................22
35.
Authority...............................................................22
36. Waiver of
Notice........................................................22
37. Remedies of
Borrower....................................................23
38. Sole Discretion of
Lender...............................................23
39.
Nonwaiver...............................................................23
40. Waiver of Automatic or
Supplemental Stay................................23
41. Bankruptcy
Acknowledgment...............................................23
42. No Oral
Change..........................................................24
43.
Liability...............................................................24
44. Inapplicable
Provisions.................................................24
45. Headings,
Etc...........................................................24
46. Concerning the
Trustee..................................................24
47. Trustee's
Costs.........................................................25
48.
Counterparts............................................................25
49.
Definitions.............................................................25
50.
Homestead...............................................................25
51.
Assignments.............................................................25
52.
Exculpation.............................................................25
53.
Integration.............................................................25
54. Applicable Law;
Jurisdiction............................................26
55. Single Purpose
Entity...................................................26
56. Fixture
Filing..........................................................28
57.
Prepayment..............................................................28
58. Default
Interest........................................................28
59. Additional Terms and
Provisions.........................................28
<PAGE>
THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF LEASES AND
RENTS
AND FIXTURE FILING (the "Security
Instrument") is made as of September 18, 2003,
-------------------
by Deer Valley Financial Center, LLC, an
Arizona limited liability company,
Huntington Company, L.L.C., an Arizona
limited liability company, Geneva
Company, L.L.C., an Arizona limited
liability company, and Metzger Deer Valley,
LLC, a Delaware limited liability company
(collectively "Borrower"), each having
--------
its principal place of business (or
residing) at Hannay Investment Properties,
4651 E. Palomino Road, Phoenix, Arizona
85018 to Chicago Title Insurance
Company, a Missouri corporation
("Trustee"), having an address of 2415 E.
-------
Camelback Road #300, Phoenix, Arizona
85016, for the benefit of PNC Bank,
National Association ("Lender"), having a
mailing address at 10851 Mastin, Suite
------
300, Overland Park, Kansas 66210.
RECITALS:
---------
To secure the payment of an indebtedness in the principal sum of
Eleven
Million Six Hundred Twenty-Five Thousand
and No/100 Dollars ($11,625,000.00),
lawful money of the United States of
America, to be paid with interest according
to a certain contemporaneously executed
Promissory Note made by Borrower to the
order of Lender (said Promissory Note,
together with all extensions, renewals or
modifications thereof, is referred to as
the "Note", and said indebtedness,
----
interest and all other sums due hereunder,
and under the Note and the Other
Security Documents (hereinafter defined),
including applicable attorney fees and
costs, is collectively referred to as the
"Debt"), Borrower hereby irrevocably
----
deeds, mortgages, gives, grants, bargains,
sells, alienates, conveys, confirms,
pledges, assigns, grants a security
interest in, and hypothecates to Trustee,
its successors and assigns, in trust, with
power of sale, and right to entry and
possession, all of its estate, right, title
and interest in, to, and under any
and all of the following described property
(collectively the "Mortgaged
---------
Property"), whether now owned or held or
hereafter acquired:
--------
(a) The real property described in Exhibit
A attached hereto (the "Premises")
--------
and the buildings, structures, additions,
enlargements, extensions,
modifications, repairs, replacements and
improvements now or hereafter located
thereon (the "Improvements");
------------
(b) all easements, rights-of-way, 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, tenements,
hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating
or pertaining to the Premises and the
Improvements and the reversion and
reversions, remainder and remainders, and all
land lying in the bed of any street, road
or avenue, opened or proposed, in
front of or adjoining the Premises, 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 Premises and the Improvements
and every part and parcel thereof, with the
appurtenances thereto;
(c) all other assets of Borrower, of every
kind and nature, now existing and
hereafter acquired and arising and wherever
located, related to the ownership or
operation of the Premises, including
without limitation, accounts, deposit or
reserve accounts, commercial tort claims,
letter of credit rights, chattel paper
(including electronic chattel paper),
documents, instruments, investment
property, general intangibles (including
payment intangibles), software, goods,
inventory, equipment, furniture and
fixtures, all supporting obligations of the
foregoing, and all cash and noncash
proceeds and products (including without
limitation insurance proceeds) of the
foregoing, and all additions and
accessions thereto, substitutions therefor
and replacements thereof, and
including, without limitation, the
following;
(1) all machinery, equipment, fixtures
(including but not limited to all
heating, air conditioning, plumbing,
lighting, communications and elevator
fixtures), building equipment, materials
and supplies, and other property of
every kind and nature, whether tangible or
intangible, owned by Borrower, or in
which Borrower has or shall have an
interest, now or hereafter located upon the
Premises and the Improvements, or
appurtenant thereto, and usable in connection
with the present or future operation and
occupancy of the Premises and the
Improvements (hereinafter collectively
called the "Equipment"), including the
---------
proceeds of any sale or transfer of the
foregoing, and, without limiting the
generality of the foregoing, if any such
Equipment is subject to any prior
security interest or prior security
agreement (as such terms are defined in the
Uniform Commercial Code, as adopted and
enacted in the state or states in which
any of the Mortgaged Property is located),
then the Mortgaged Property shall
include all of the right, title and
interest of Borrower in and to any such
Equipment, together with all deposits and
payments now or hereafter made by
Borrower with respect to such
Equipment;
(2) all awards, payments or compensation,
including interest thereon, heretofore
or hereafter made with respect to the
Mortgaged Property for any injury or
decrease in the value of the Mortgaged
Property related to any exercise of the
right of eminent domain or condemnation
(including without limitation, any
transfer made in lieu of or in anticipation
of the exercise of said rights or
for a change of grade);
(3) all leases, reciprocal easement
agreements, and other agreements and
arrangements affecting the use, enjoyment
or occupancy of, or the conduct of any
activity upon or at the Premises and the
Improvements heretofore or hereafter
entered into (the "Leases"), all income,
rents (including, without limitation,
------
all percentage rents), issues, profits and
revenues (including all oil and gas
or other mineral royalties and bonuses)
from the Mortgaged Property (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;
(4) all proceeds of, and any unearned
premiums on, any insurance policies
covering the Mortgaged 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
Mortgaged Property;
(5) the right, in the name and on behalf of
Borrower, to appear in and defend
any action or proceeding brought with
respect to the Mortgaged Property and to
commence any action or proceeding to
protect the interest of Lender in the
Mortgaged Property; and
(6) all other property or collateral of any
nature whatsoever, now or hereafter
given as additional security for the
payment of the Debt, including without
limitation, property management agreements
now or hereafter entered into with
any person or entity providing management
services to the Mortgaged Property,
service contracts, common area agreements,
licenses, permits, construction
warranties and other contracts, agreements
and instruments relating to the
Mortgaged Property (including, without
limitation, agreements pursuant to which
Borrower acquired any of the Mortgaged
Property, and including any security or
indemnities given in connection therewith),
security deposits, royalties,
refunds, expense reimbursements, reserve or
escrow deposits or accounts related
to the Mortgaged Property or any Lease and
all documents relating to each of the
foregoing.
TO HAVE AND TO HOLD the Mortgaged Property unto and to the use
and
benefit of Trustee, and the successors and
assigns of Trustee, forever; IN
TRUST, WITH POWER OF SALE, to secure the
payment to Lender of the Debt at the
time and in the manner provided for its
payment in the Note, in this Security
Instrument or in the Other Security
Documents;
PROVIDED, HOWEVER, these presents are upon the express condition
that,
if Borrower shall pay to Lender the Debt at
the time and in the manner provided
in the Note, in this Security Instrument or
in the Other Security Documents, and
shall abide by and comply with each and
every covenant and condition set forth
herein and in the Note in a timely manner,
these presents and the estate hereby
granted shall cease, terminate and be void,
and Lender shall execute and deliver
to Borrower a satisfaction or discharge of
this Security Instrument, in
recordable form.
Borrower hereby represents and warrants to and covenants and
agrees
with Lender as follows:
1.
Payment of Debt and Incorporation of Covenants, Conditions and
--------------------------------------------------------------
Agreements. Borrower will pay the Debt at
the time and in the manner provided in
----------
the Note, this Security Instrument and the
Other Security Documents. All the
covenants, conditions and agreements
contained in: (a) the Note; and (b) all and
any documents (other than the Note or this
Security Instrument)(collectively the
"Other Security Documents") now or
hereafter executed by Borrower and/or others
------------------------
in favor of Lender, which wholly or
partially secure or guaranty payment of the
Note, provide for any indemnity in favor of
or payment to Lender related to the
Debt, the Note or the Mortgaged Property,
provide for any escrow/holdback
arrangements or for any actions to be
completed by Borrower subsequent to the
date hereof, or are otherwise related to
the loan secured by this Security
Instrument (the "Loan"), are hereby made a
part of this Security Instrument to
----
the same extent and with the same force as
if fully set forth herein.
Notwithstanding anything herein to the
contrary, neither this Security
Instrument nor any of the Other Security
Documents shall secure the payment
of any Environmental Losses (as defined in
that certain Environmental Indemnity
Agreement executed in favor of Lender
contemporaneously herewith).
2.
Warranty of Title. Borrower warrants that Borrower has good
-----------------
title to the Mortgaged Property and has the
right to deed, mortgage, give, grant
a security interest in, bargain, sell,
alienate, convey, confirm, pledge, assign
and hypothecate the same and that Borrower
possesses an unencumbered fee estate
in the Premises and the Improvements and
that it owns the Mortgaged Property
free and clear of all liens, encumbrances
and charges whatsoever except for
those exceptions shown in the title
insurance policy in favor of Lender
insuring the lien of this Security
Instrument. Borrower shall forever warrant,
defend and preserve such title and the
validity and priority of the lien of this
Security Instrument to Lender against the
claims of all persons whomsoever.
3.
Insurance Requirements.
----------------------
(a) Borrower,
at its sole cost and expense, will keep the
Mortgaged Property insured during the
entire term of this Security Instrument
for the mutual benefit of Borrower and
Lender against loss or damage by fire and
against loss or damage by other risks and
hazards covered by a standard
extended coverage insurance policy
providing "special" form coverage including,
but not limited to, fire, lightning,
explosion, windstorm or hail, smoke,
aircraft or vehicles, riot or civic
commotion, terrorism, vandalism, malicious
mischief, burglary, theft, sprinkler
leakage, sinkhole collapse, volcanic
action, falling objects, weight of snow,
ice or sleet or water damage, and to
the extent required by Lender, earthquake
or any other risks insured against by
persons operating like properties in the
locality of the Mortgaged Property.
Such insurance shall be in an amount not
less than the lesser of (i) the then
full replacement cost of the Mortgaged
Property, without deduction for physical
depreciation, or (ii) the outstanding
principal balance of the Debt; but in any
event an amount sufficient to ensure that
the insurer issuing said policies
would not deem Borrower a co-insurer under
said policies. The policies of
insurance carried in accordance with this
paragraph shall be paid annually in
advance, shall contain the "Replacement
Cost Endorsement" with a waiver of
depreciation, and, if required by Lender,
shall contain "Ordinance and Law"
coverage.
(b) Borrower,
at its sole cost and expense, for the mutual benefit
of Borrower and Lender, shall also obtain
and maintain during the entire term of
this Security Instrument the following
policies of insurance:
(i) Flood insurance (meeting the current requirement of the
Federal Insurance Administration) if any part of the Mortgaged
Property is located in an area identified by the Federal
Emergency
Management Agency as an area having special flood hazards and in
which
flood insurance
has been made available under the Flood Disaster
Protection Act of 1973 (and any successor act thereto) in an amount
at
least equal to the lesser of (A) the outstanding principal balance
of
the Debt; (B) the maximum amount of coverage available to
Borrower
under the National Flood Insurance Program; or (C) the then
full
replacement cost of the Mortgaged Property, without deduction
for
physical depreciation.
(ii) General liability insurance on an "occurrence basis", in
the
amount of at least $1,000,000.00 per occurrence, $2,000,000.00
general
aggregate against claims for bodily injury or property damage
occurring on, in or about the Mortgaged Property.
(iii) Business Income and/or Rental Value insurance in an
amount
equal to the sum of: (A) the total anticipated rental income
(including percentage rents) payable by all tenants under
Leases
(whether or not such Leases are terminable in the event of a fire
or
casualty); (B) the total amount of all Taxes (hereinafter
defined),
Other Charges (hereinafter defined) or similar charges which a
tenant
is obligated to pay on Borrower's behalf; and (C) an amount equal
to
the fair rental value of any portion of the Mortgaged Property
occupied
by Borrower; for a period of at least twelve (12) months after the
date
of the fire or other casualty in question. The amount of such
insurance shall be increased from time to time during the term of
this
Security Instrument as and when Lender requires, to reflect all
rent,
additional rent, increased rent and increased additional rent
payable
by all new or renewal tenants, and all increased profits or
other
income from the Mortgaged Property. No exclusions shall be
allowed
for any risks specifically enumerated in subsection (a) above.
(iv) Boiler and Machinery Insurance if any steam boiler, air
conditioning equipment, high pressure piping, machinery and
equipment
pressure vessels or similar apparatus now exists or is
hereafter
installed in the Improvements (excepting any such apparatus
located
within and serving individual residential units of the
Improvements,
if any).
(v) Such other insurance as may from time to time be required
by Lender in order to protect its interests.
(c) All
policies of insurance (individually, a "Policy", and
------
collectively the "Policies") required
pursuant to this Security Instrument:
--------
(i) shall be issued by an insurer
satisfactory to Lender, in its sole
discretion; (ii) shall contain a mortgagee
non-contribution clause satisfactory
to Lender, in its sole discretion, naming
Lender as the person to which all
payments made by such insurance company
shall be paid; (iii) shall be maintained
throughout the term of this Security
Instrument without cost to Lender;
(iv) shall be assigned and delivered to
Lender; (v) shall contain such
provisions as Lender deems necessary or
desirable to protect its interest
including, without limitation, endorsements
providing that neither Borrower,
Lender nor any other party shall be a
co-insurer under said Policies and that
Lender shall receive at least thirty (30)
days prior written notice of any
modification, termination or cancellation
of the applicable Policy; and (vi)
shall be satisfactory in form and substance
to Lender and shall be approved by
Lender as to amounts, form, risk coverage,
deductibles, loss payees and
insureds. Borrower shall pay the premiums
for such Policies (the "Insurance
---------
Premiums") as the same become due and
payable. Not later than thirty (30) days
--------
prior to the expiration date of each of the
Policies, Borrower will deliver to
Lender satisfactory evidence of the renewal
of each expiring Policy.
(d) If
insurance for earthquake or special hazards is obtained by
Borrower in its sole discretion and without
requirement of Lender, then
Borrower, when obtaining such insurance
coverage, shall meet the insurance
requirements hereof except as to matters
requiring Lender's further approval,
and such insurance coverage: (i) shall be
within the meaning of a "Policy" or
"Policies"; and (ii) shall be for the
benefit of Lender and all proceeds thereof
constitute additional security for the
Debt, and Lender shall have all rights
with respect to and be entitled to receive
all proceeds in the same manner it
would receive any Insurance Proceeds
(hereinafter defined) in the event the
Mortgaged Property is damaged or destroyed
by a Casualty (hereinafter defined)
or by any risk or loss insured against.
(e) Any
failure by Lender to insist on full compliance with all of
the above insurance requirements at closing
does not constitute a waiver of
Lender's right to subsequently require full
compliance with these requirements.
4.
Casualty Loss.
-------------
(a) If the
Mortgaged Property is damaged or destroyed, in whole or
in part, by fire or other casualty (a
"Casualty"), Borrower shall give prompt
--------
notice thereof to Lender. Borrower hereby
authorizes and empowers Lender to
settle, adjust or compromise any claims for
any insurance proceeds arising from
any Casualty (the "Insurance Proceeds"), to
receive such Insurance Proceeds and
------------------
to retain and apply such Insurance Proceeds
as set forth herein. If no Event of
Default (hereinafter defined), or event
which with the giving of notice or
passage of time, or both, would give rise
to an Event of Default, has occurred
as of the date of the Casualty or as of the
date any Insurance Proceeds are to
be paid or disbursed to Borrower, then:
(i) If the aggregate amount of any Insurance Proceeds resulting
from a Casualty is equal to $25,000.00 or less, such Insurance
Proceeds shall be paid directly to Borrower and shall be applied
by
Borrower to the prompt repair and replacement of the Mortgaged
Property;
(ii) If the aggregate amount of any Insurance Proceeds
resulting
from a Casualty (or series of related Casualties) exceeds
$25,000.00
and the value of the Mortgaged Property immediately following
such
Casualty remains greater than fifty percent (50%) of its value
immediately prior to such Casualty, then all Insurance Proceeds
from
such Casualty shall be paid to Lender; provided, however, that so
long
as no Event of Default exists and subject to the requirements set
forth
herein, Lender shall disburse such amounts of the Insurance
Proceeds
(after deduction for Lender's costs and expenses of collection)
as
Lender reasonably deems necessary for the repair or replacement of
the
Mortgaged Property, with any balance remaining after such
disbursement
being applied by Lender to the Debt in such priority and
proportions as
Lender deems
proper;
(iii) If the value of the Mortgaged Property immediately
following
any Casualty (or series of related Casualties) does not exceed
fifty
percent (50%) of its value immediately prior to such Casualties,
then
all Insurance Proceeds from such Casualties shall be paid directly
to
Lender and Lender, at its discretion may declare the entire Debt to
be
immediately due and payable and apply all such Insurance
Proceeds,
after deduction for Lender's costs and expenses of collection, to
the
Debt in such priority and proportions as Lender deems proper. In
the
event Lender does not declare the entire Debt to be immediately
due
and payable, Borrower
shall promptly repair, replace or rebuild any
part of the Mortgaged Property destroyed by such Casualty.
In such
event, subject to the requirements set forth herein, Lender
shall
disburse such amounts of the Insurance Proceeds as Lender
reasonably
deems necessary for the repair or replacement of the Mortgaged
Property, with any balance remaining after such disbursement
being
applied by Lender to the Debt in such priority and proportions
as
Lender deems proper; and
(iv) If no Event of Default (as hereinafter defined) has
occurred,
and no event has occurred that with notice and/or the passage of
time,
or both, would constitute an Event of Default, then no
Prepayment
Consideration (as defined in the Note) will be then due with
respect to
any application of Insurance Proceeds to the Debt pursuant to
subclauses (ii) or (iii) above, or with respect to any required
prepayment of the entire Debt pursuant to Lender's election to
declare
the entire Debt to be immediately due and payable pursuant to
subclause
(iii) above. An Event
of Default which existed but which was
completely cured prior to the date of Casualty shall not in itself
give
rise to any Prepayment Consideration under this subsection.
(b) All
disbursements of any portion of any Insurance Proceeds
held by Lender shall be subject to all
terms and conditions deemed necessary by
Lender, including: (i) Lender's receipt of
satisfactory requests for
disbursements, paid bills and lien waivers,
architect certificates or other
certificates, and certificates or
endorsements from title insurance companies;
(ii) Borrower's deposit with Lender of any
additional funds necessary to
supplement the Insurance Proceeds, so as to
cover, in advance, the entire cost
of the necessary repairs or replacements to
the Mortgaged Property as
established by the certificate of an
architect or engineer (employed by Lender
at Borrower's expense); (iii) such
architect's or engineer's determination that
such repairs or replacements may be
effected within a period of six (6) months
or less; (iv) Borrower's prompt and
diligent completion of such repairs or
replacements in accordance with plans and
specifications submitted to and
approved by Lender; and (v) Lender's
inspection, at Borrower's cost and expense,
of the repairs or replacements to the
Mortgaged Property to verify that such
repairs or replacements have been completed
in a good and workmanlike manner
and are otherwise acceptable to Lender.
Lender, whether in possession of the
Premises or not, shall not have any
obligation to advance or make funds other
than the Insurance Proceeds available for
the repair or replacement of the
Mortgaged Property.
5.
Payment of Taxes and Other Charges.
----------------------------------
(a) Borrower
shall pay or cause to be paid and discharged all
taxes, assessments, water rates and sewer
rents now or hereafter levied or
assessed or imposed against the Mortgaged
Property or any part thereof
(collectively the "Taxes"), and all ground
rents, utility charges, maintenance
-----
charges, other governmental impositions,
and all other liens or charges
whatsoever which may be or become a lien or
charge against the Mortgaged
Property (including without limitation,
mechanics and materialmen's liens,
vault charges and license fees for the use
of vaults, chutes and similar areas
adjoining the Premises), now or hereafter
related to, or levied, assessed or
imposed against, the Mortgaged Property or
any part thereof (collectively the
"Other Charges") as the same become due and
payable. Borrower will deliver to
-------------
Lender, promptly upon Lender's request,
evidence satisfactory to Lender that the
Taxes and Other Charges have been paid
prior to the same becoming 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 or Other Charges, provided
that: (i) no Event of Default has occurred
and shall be continuing; (ii)
Borrower is permitted to do so under the
provisions of any mortgage, deed of
trust, ground lease, or other instrument
which creates a superior or junior
lien to this Security Instrument (it being
understood that no such superior or
junior liens will be permitted unless
specifically allowed, in writing, by
Lender); (iii) 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; (iv) neither the
Mortgaged Property nor any part thereof or
interest therein will be in danger
of being sold, forfeited, terminated,
cancelled or lost; (v) Borrower shall
have set aside adequate reserves (which
Lender may at its option require to be
placed in escrow with Lender) for the
payment of the Taxes or Other Charges,
together with all interest and penalties;
and (vi) Borrower shall have
furnished such security as may be required
in the proceeding, or as may be
requested by Lender to insure the payment
of any such Taxes or Other Charges,
together with all interest and penalties
thereon.
6.
Escrowed Funds. Borrower shall, at the option of Lender or its
--------------
designee, pay to Lender or its designee on
the first day of each calendar month
one-twelfth of an amount which would be
sufficient to pay all Insurance
Premiums, Taxes and Other Charges payable,
or estimated by Lender to be payable,
during the next ensuing twelve (12) months.
(The aggregate of said amounts so
held by Lender is hereinafter called the
"Escrowed Funds"). Borrower hereby
--------------
pledges to Lender any and all Escrowed
Funds now or hereafter held by Lender as
additional security for the payment of the
Debt. Lender will apply the
Escrowed Funds to payments of Taxes, Other
Charges and Insurance Premiums
required to be made by Borrower pursuant
hereto. If the amount of the Escrowed
Funds held by Lender shall exceed the
amounts required for the payment of the
Taxes, Other Charges and Insurance Premiums
described above, Lender shall, in
its discretion, return any excess to
Borrower or credit such excess against
future payments to be made to the Escrowed
Funds. If, at any time, the Escrowed
Funds are not sufficient to pay the Taxes,
Other Charges and Insurance
Premiums described above, Borrower shall
promptly pay to Lender, upon demand,
an amount which Lender shall estimate as
sufficient to make up the deficiency.
Upon the occurrence of an Event of Default,
Lender may apply any Escrowed Funds
held by it to the payment of the following
items in any order in its sole
discretion:
(a) Taxes and
Other Charges;
(b) Insurance
Premiums;
(c) Interest
on the unpaid principal balance of the Note;
(d)
Amortization of the unpaid principal balance of the Note; and
(e) 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 and any applicable Prepayment
Consideration.
Until expended or applied as above
provided, the Escrowed Funds shall constitute
additional security for the Debt. The
Escrowed Funds shall not constitute a
trust fund and may be commingled with other
monies held by Lender. No earnings
or interest on the Escrowed Funds shall be
payable to Borrower.
To the extent Borrower timely deposits all required Escrowed Funds
with
Lender, Borrower shall be relieved of any
further obligation to directly pay, or
to deliver to Lender any evidence of the
payment of (prior to their expiration
or delinquency), any Insurance Premiums,
Taxes or Other Charges.
7.
Condemnation. Borrower shall promptly give Lender written
------------
notice of the actual or threatened
commencement of any exercise of a right of
condemnation or eminent domain affecting
all or any part of the Mortgaged
Property (each such event being hereinafter
referred to as a "Condemnation"),
------------
and shall deliver to Lender copies of any
and all papers served in connection
with any such Condemnation. Notwithstanding
any taking (including but not
limited to any transfer made in lieu of or
in anticipation of the exercise of
such taking) of all or any part of the
Mortgaged Property through a
Condemnation, Borrower shall continue to
pay the Debt at the time and in the
manner provided for its payment in the
Note, this Security Instrument and the
Other Security Documents, and the Debt
shall not be reduced until any award or
payment therefor shall have been actually
received and applied by Lender (after
deducting any expenses of collection,
including reasonable attorney's fees) to
the Debt. Lender shall not be limited to
the rate of interest paid on any such
award or payment from a Condemnation but
shall be entitled to receive out of
such award or payment interest at the rate
then applicable under the Note.
Borrower shall cause any award or payment
payable to Borrower in any
Condemnation to be paid directly to Lender.
Lender shall apply, at Lender's
discretion, any such award or payment
(after deducting any expenses of
collection, including reasonable attorney's
fees) to (a) the reduction or
discharge of the Debt (whether or not then
due and payable) or (b) the
restoration, repair, replacement, or
rebuilding of the portion of the Mortgaged
Property remaining after the Condemnation.
No Prepayment Consideration shall be
payable solely in connection with such
application; provided, however, that
-------- -------
notwithstanding the foregoing, if an Event
of Default is existing as of the date
of the Condemnation, or an event has
occurred as of the date of the Condemnation
that with notice and/or the passage of
time, or both, would constitute an Event
of Default hereunder, then any Condemnation
awards or proceeds applied to the
Debt pursuant to this section shall be
subject to the Prepayment Consideration
computed in accordance with the terms of
the Note. If the Mortgaged Property is
sold, through foreclosure or otherwise,
prior to the receipt by Lender of any
such 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
said award or payment in an amount
sufficient to fully satisfy the Debt.
8.
Leases and Rents. Borrower does hereby absolutely and
----------------
unconditionally assign to Lender 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. The terms and
conditions of this assignment shall be
governed by the Assignment of Leases and
Rents (the "Assignment of Leases") executed
by Borrower in favor of Lender
--------------------
contemporaneously with this Security
Instrument. Except as permitted pursuant
to the Assignment of Leases, Borrower shall
not enter into any future Leases of
all or any part of the Mortgaged
Property.
9.
Maintenance, Use and Management of Mortgaged Property.
-----------------------------------------------------
(a) Borrower
shall maintain the Mortgaged Property in good
condition and repair and in such a manner
as to allow the Mortgaged Property to
remain consistently competitive in its
market. The Improvements and the
Equipment shall not be removed, demolished
or materially altered (except for
normal replacement of the Equipment)
without the consent of Lender, not to be
unreasonably withheld. Borrower shall
promptly repair, replace or rebuild any
part of the Mortgaged Property which may
become damaged, worn or dilapidated,
and shall also complete and pay for any
structure at any time in the process of
construction or repair on the Premises.
Borrower shall promptly comply with all
laws, orders and ordinances affecting the
Mortgaged Property, or the use
thereof, except that Borrower shall be
permitted to contest any change or
proposed change thereto under the same
terms and conditions as permitted in
paragraph 5(b), above.
(b) Without
limiting any rights Lender or its selected
representatives may possess hereunder,
under the Note or under any Other
Security Document to inspect the Mortgaged
Property, Lender shall have the
right to conduct physical inspections of
the Mortgaged Property to ensure
Borrower is appropriately maintaining the
Mortgaged Property. Following any
such inspection, should Lender determine
that the Mortgaged Property has not
been maintained as required herein, Lender
shall have the right to demand that
Borrower complete corrective measures
within a ninety (90) day period of time.
Failure of Borrower to complete such
corrective measures within such period
shall constitute an immediate Event of
Default and shall entitle Lender to
exercise all remedies available to it,
including, without limitation, performing
Borrower's obligations hereunder.
(c) Borrower
shall use and continuously operate and permit the
use and continuous operation of the
Premises and the Improvements as provided
for in Borrower's original loan application
to Lender.
(d) Unless
Lender otherwise consents in writing, Borrower shall
not initiate, join in, acquiesce in or
consent to: (i) the removal or
resignation of the property manager for the
Mortgaged Property; or (ii) if such
property manager is an entity affiliated
with Borrower, the transfer of
ownership, management or control of such
property manager to a person or entity
other than Borrower, its managing member,
general partner or similar controlling
entity in Borrower.
(e) Unless
Lender otherwise consents in writing, Borrower shall
not initiate, join in, acquiesce in or
consent to: (i) any change, modification
or alteration of the existing access to the
Mortgaged Property; (ii) any change
in any private restrictive covenant,
replat, easement, zoning law or other
public or private restriction, limiting or
defining the uses which may be made
of the Mortgaged Property or any part
thereof. If under applicable zoning
provisions the use of all or any portion of
the Mortgaged Property is or shall
become a nonconforming use, Borrower will
not cause or permit such nonconforming
use to be discontinued or abandoned without
the express written consent of
Lender.
10. Sale of
Mortgaged Property or Change in Borrower.
------------------------------------------------
(a) Borrower
acknowledges that Lender has examined and relied on
the creditworthiness and experience of
Borrower in agreeing to make the loan
secured hereby, and that Lender has a valid
interest in maintaining the value
of the Mortgaged Property so as to ensure
that should Borrower default in the
repayment of the Debt, Lender can recover
the Debt by a sale of the Mortgaged
Property.
(b) Borrower
may not Transfer (hereinafter defined) the Mortgaged
Property, nor allow any Change in Ownership
(hereinafter defined), unless all of
the following conditions shall have been
satisfied: (i) Lender has received
Borrower's written request for a Transfer,
or for a Change in Ownership (or any
other request resulting in a new obligor
under the Loan) and Lender shall have
expressly approved, in its sole discretion,
such request in writing, subject to
the satisfaction of all requirements
hereunder; (ii) no Event of Default has
occurred and is continuing; (iii) the
proposed new owner/assignee of the
Mortgaged Property (the "New Borrower")
meets all of Lender's Underwriting
------------
Standards (hereinafter defined); (iv) the
Mortgaged Property meets all of
Lender's Underwriting Standards related to
its financial condition, cash flow,
operating income, physical condition,
management and operation; (v) Borrower
provides Lender such other information and
documentation reasonably required by
Lender, including without limitation,
engineering reports, appraisals,
environmental reports and title
endorsements; (vi) Borrower reimburses Lender
for all underwriting and other costs
("Underwriting Costs") incurred by Lender
------------------
in connection with such Transfer or Change
in Ownership (including
without limitation, engineering and/or
architect's fees, environmental studies,
title searches, credit checks, title
endorsements, appraisal fees, attorney
fees and any costs associated with
obtaining any REMIC Opinion or Rating Agency
No-Downgrade Letter (as such terms are
hereinafter defined) required by Lender);
(vii) Borrower remits to Lender both a
reasonable administrative fee and an
assumption fee in the amount of one percent
(1%) of the outstanding balance of
the Debt as of the date of such Transfer or
Change in Ownership. Borrower shall
reimburse Lender for all Underwriting Costs
incurred by Lender in connection
with any request for Lender's consent to a
Transfer or a Change in Ownership,
whether or not any requested Transfer or
Change in Ownership is approved or
consummated. A failure to comply with any
of the terms of this paragraph 10
shall constitute an Event of Default, and
Lender may then declare the entire
Debt immediately due and payable upon any
such Transfer or Change in Ownership.
Lender shall not be required to demonstrate
any actual impairment of its
security or any increased risk of default
hereunder in order to so declare the
Debt immediately due and payable, or in
denying any request for approval of
a Transfer or Change in Ownership. This
provision shall apply to every
Transfer or Change in Ownership whether or
not Lender has consented to
any previous Transfer or Change in
Ownership.
(c) "Lender's
Underwriting Standards" shall mean the actual
-------------------------------
commercial loan underwriting standards used
by PNC Bank, National Association,
in connection with its making of loans for
the purpose of commercial
securitization, or any successor entity
that is then servicing the Loan, in
effect at the time of the proposed Transfer
or Change in Ownership, or, if no
such standards exist, such standards which
are then customary for a commercial
lender in connection with the origination
of a commercial mortgage loan, for
the purpose of securitization, of the size
and type of Borrower's loan from
Lender secured hereby.
(d) A
"Transfer" is defined as any sale, conveyance, assignment,
--------
alienation, mortgage, hypothecation,
encumbrance, grant of a lien over or a
security interest in, pledge or other
transfer of the Mortgaged Property or any
part thereof or interest therein, whether
voluntary or involuntary. Without
limiting the generality of the foregoing, a
Transfer is deemed to include: (i)
an installment sales agreement wherein
Borrower agrees to sell the Mortgaged
Property or any part thereof for a price to
be paid in installments; (ii) an
agreement by Borrower leasing all or a
substantial part of the Mortgaged
Property for other than actual occupancy by
a space tenant thereunder; or (iii)
a sale, assignment or other transfer of, or
the grant of a security interest in,
Borrower's right, title and interest in and
to any Leases or any Rents.
(e) A "Change
in Ownership" shall occur: (i) when the ownership or
------------------
control of more than forty-nine percent
(49%), in the aggregate, of the
applicable indicia of ownership or actual
ownership interest in Borrower, any
Guarantor (hereinafter defined), or any
Controlling Entity (hereinafter defined)
shall be vested in a party or parties who
were not owners of such indicia of
ownership or actual ownership interest as
of the closing of the Loan (1) by any
one or more voluntary or involuntary sales,
conveyances, transfers, assignments,
mortgages, hypothecations, encumbrances,
grants of liens over or security
interests in, or pledges of such indicia of
ownership or actual ownership
interest or any interest therein, or (2) in
one or a series of transactions
causing the creation or issuance of any
additional indicia of ownership or
actual ownership interest; or (ii) upon the
change, removal or resignation of a
managing member, general partner or similar
controlling person or entity of
Borrower, any Guarantor or any Controlling
Entity. The term "Controlling Entity"
------------------
shall mean any managing member, general
partner or similar controlling entity in
Borrower or any Guarantor. Involuntary
changes in ownership resulting
from a death or physical or mental
disability shall not be considered a
Change in Ownership.
(f) A Change
of Ownership shall not be deemed to have occurred
when a shareholder, member, partner or
other person (for purposes of this
paragraph, each of the foregoing is called
an "Estate Planning Transferor")
--------------------------
possessing an ownership interest in
Borrower makes a one-time transfer (an
"Estate Planning Transfer") during the term
of the Loan, of all or part of such
------------------------
ownership interest for estate planning
purposes to a trust or other entity for
the benefit of any of such person's spouse,
children or grandchildren, or any of
them (each, a "Permitted Transferee");
provided, however, that any such Estate
--------------------
Planning Transfer shall be subject to the
following conditions:
(i) No Event of Default, and no event or condition that, with
the
giving of notice or passage of time or both, would constitute an
Event
of Default, shall exist on the date of the proposed Estate
Planning
Transfer; and
(ii) No such Estate
Planning Transfer shall in any event absolve
any Estate Planning Transferor, in whole or in part, from its
liability, if any, to Lender under the Note, this Security
Instrument
or any Other Security Document; and
(iii) Each applicable Permitted Transferee shall execute and
deliver
to Lender an agreement, in a form acceptable to Lender in its
sole
discretion, whereby such Permitted Transferee, upon the death of
the
applicable Estate Planning Transferor, becomes jointly and
severally
liable for the liability, if any, of such Estate Planning
Transferor to
Lender under the Note, this Security Instrument or any Other
Security
Documents; and
(iv) Lender has been paid a $3,500 administrative fee and all
out-of-pocket costs incurred by Lender (including, without
limitation,
attorney fees) in effecting any Estate Planning Transfer; and
(v) Lender has determined that, from the date of the closing of
the loan to the date of the proposed Estate Planning Transfer,
there
has been no material adverse change in the (a) financial condition
of
the Estate Planning Transferor, and (b) financial or physical
condition
of the Property.
An Estate Planning Transfer shall be
effective only upon the date of
satisfaction of the last of such conditions
to be satisfied. Lender shall have
the absolute and unconditional right to
require reasonable evidence of the
satisfaction of each condition to an Estate
Planning Transfer.
(g) Borrower
shall be released from liability for the Debt only
after: (i) all conditions for a Transfer or
Change in Ownership have been
satisfied; (ii) all security documents
deemed necessary by Lender have been
executed, delivered, recorded and
perfected; (iii) Lender has received a policy
of title insurance (or similar assurance)
reflecting the new ownership and the
priority and perfection of Lender's
security; (iv) the New Borrower has assumed
all required personal liability; and (v)
all other reasonable requirements of
Lender are satisfied.
(h)
Notwithstanding anything herein to the contrary, in connection
with any request for Lender's consent to a
Transfer or Change in Ownership
subsequent to the conveyance of the Note to
a real estate mortgage investment
conduit (a "REMIC"), within the meaning of
Section 860D of the Internal Revenue
-----
Code of 1986, as amended from time to time
or any successor statute (the "Code")
----
or to another entity in connection with a
Secondary Market Transaction
(hereinafter defined), Borrower
acknowledges that Lender may require Borrower to
obtain and deliver to Lender other
documentation evidencing that the proposed
Transfer or Change in Ownership will not
(i) cause the then owner of the Note to
fail to qualify as a REMIC (a "REMIC
Opinion"); and (ii) result in a
-------------
qualification, downgrade or withdrawal of
any credit rating then in effect for
any securities or certificates issued by
the then owner of the Note in
connection with a securitization which
includes the Note (a "Rating Agency
-------------
No-Downgrade Letter").
-------------------
11.
Anti-Terrorism Laws.
-------------------
(a) Neither
Borrower nor any of its affiliates is in violation of
any laws or regulations relating to
terrorism or money laundering
("Anti-Terrorism Laws"), including
Executive Order No. 13224 on Terrorist
-------------------
Financing, effective September 24, 2001
(the "Executive Order") and the Uniting
---------------
and Strengthening America by Providing
Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Public
Law 107-56.
(b) Neither
Borrower, any of its affiliates, or any of its brokers
or other agents acting or benefiting from
the Loan is a Prohibited Person. A
"Prohibited Person" is any of the
following:
-----------------
(i) a person or entity that is listed in the Annex to, or is
otherwise subject to the provisions of, the Executive Order;
(ii) a person or entity owned or controlled by, or acting for or
on
behalf of, any person or entity that is listed in the Annex to, or
is
otherwise subject to the provisions of, the Executive Order;
(iii) a person or entity with whom any Lender is prohibited
from
dealing or otherwise engaging in any transaction by any
Anti-Terrorism
Law;
(iv) a person or entity who commits, threatens or conspires to
commit or supports "terrorism" as defined in the Executive Order;
or
(v) a person or entity that is named as a "specially designated
national and blocked person" on the most current list published by
the
U.S. Treasury Department Office of Foreign Asset Control at its
official website or any replacement website or other
replacement
official publication of such list.
(b) Neither
Borrower, any of its affiliates or any of its brokers
or other agents acting in any capacity in
connection with the Loan (1) conducts
any business or engages in making or
receiving any contribution of funds, goods
or services to or for the benefit of any
Prohibited Person, (2) deals in, or
otherwise engages in any transaction
relating to, any property or interests in
property blocked pursuant to the Executive
Order, or (iii) engages in or
conspires to engage in any transaction that
evades or avoids, or has the purpose
of evading or avoiding, or attempts to
violate, any of the prohibitions set
forth in any Anti-Terrorism Law.
(c) Borrower
shall not (1) conduct any business or engage in
making or receiving any contribution of
funds, goods or services to or for the
benefit of any Prohibited Person, (ii) deal
in, or otherwise engage in any
transaction relating to, any property or
interests in property blocked pursuant
to the Executive Order or any other
Anti-Terrorism Law, or (iii) engage in or
conspire to engage in any transaction that
evades or avoids, or has the purpose
of evading or avoiding, or attempts to
violate, any of the prohibitions set
forth in any Anti-Terrorism Law (and
Borrower shall deliver to Lender any
certification or other evidence requested
from time to time by any Lender in its
reasonable discretion, confirming
Borrower's compliance herewith).
12. Estoppel
Certificates and No Default Affidavits.
-----------------------------------------------
(a) After
request by Lender, Borrower shall within ten (10)
business days furnish Lender with a
statement, duly acknowledged and certified
by Borrower, 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 date
installments of interest and/or principal
were last paid; (v) any offsets or defenses
to the payment of the Debt, if any;
and (vi) that the Note, this Security
Instrument and the Other Security
Documents are valid, legal and binding
obligations and have not been modified,
or if modified, giving particulars of such
modification.
(b) Within ten
(10) business days after request by Lender,
Borrower will furnish Lender with estoppel
certificates, in form and content
satisfactory to Lender, from all tenants
specified by Lender (other than tenants
under Leases for residential purposes,
congregate care services or
mini-warehouse storage rentals where such
storage rental is less than ten
percent (10%) of the rentable square
footage of such storage facility
(collectively "Residential Leases")). If
any tenant fails to provide such
------------------
estoppel certificate, Borrower shall
provide a certificate with respect to the
tenancy of such tenant, in form and
substance satisfactory to Lender.
13.
Cooperation; Loan Servicing. Borrower acknowledges that Lender
---------------------------
and its successors and assigns may: (a)
sell or assign this Security Instrument,
the Note and any of the Other Security
Documents to one or more investors as a
whole loan; (b) sell or assign a
participation interest in the Debt to one or
more investors; (c) deposit this Security
Instrument, the Note and any of the
Other Security Documents with a trust,
which trust may sell certificates to
investors evidencing an ownership interest
in the trust assets; or (d) otherwise
sell or assign the Debt, the Note, this
Security Instrument and any of the
Other Security Documents, or any interest
therein to investors. The transactions
referred to in subparagraphs (a) through
(d) above are hereinafter referred to
as "Secondary Market Transactions".
Borrower shall cooperate in good faith with
-----------------------------
Lender in effecting any such Secondary
Market Transaction and in addressing such
matters as any party involved in a
Secondary Market Transaction may require,
including the provision of such information
and documents relating to Borrower,
any Guarantors, the Mortgaged Property and
any tenants of the Improvements as
Lender may reasonably request in connection
with a Secondary Market Transaction.
Lender shall have the right to provide to
prospective investors any information
in its possession, including, without
limitation, financial statements relating
to Borrower, any Guarantors, the Mortgaged
Property and any tenant of the
Improvements. Borrower acknowledges that
certain information regarding the Loan
and the parties thereto and the Mortgaged
Property may be included in a
private placement memorandum, prospectus or
other disclosure documents.
Prior to or in connection with a Secondary
Market Transaction, Lender may
assign or delegate all or part of the
responsibility for servicing the Loan to
one or more loan servicers. All references
to Lender herein, in the Note or any
other Security Document, shall include all
such loan servicers.
14. Books and
Records; Reporting Requirements.
-----------------------------------------
(a) Borrower
and Guarantor(s), if any, shall keep complete and
accurate books and records of account in
accordance with generally accepted
accounting principles consistently applied.
Borrower shall deliver, or cause to
be delivered, the reports and financial
statements described below, all in form
acceptable to Lender (collectively the
"Reports"), within the time period
-------
required. Any required certification of
such reports and financial statements
must be by the chief financial officer (or
other person acceptable to Lender)
of Borrower or Guarantor, as
applicable.
(i) Within thirty (30) days after the close of each fiscal year
of
Borrower,
Borrower shall deliver, or cause to be delivered to Lender:
(A) a certified current rent roll; (B) a certified annual
operating
statement of the Mortgaged Property; and (C) a certified annual
balance
sheet and profit and loss statement of Borrower. If the
original
principal amount of the Loan was $20,000,000.00 or more, then all
of
the foregoing must be delivered within sixty (60) days after the
close
of each fiscal year of Borrower and must be audited by
independent
certified public accountants acceptable to Lender.
(ii) Within thirty (30) days after the close of the separate
individual fiscal years of any Guarantor, Borrower shall deliver,
or
cause to be delivered to Lender, a certified annual balance sheet
and
profit and loss statement of each Guarantor, if any. If the
original
principal amount of the Loan was $20,000,000.00 or more, then all
of
the foregoing must be delivered within sixty (60) days after the
close
of each fiscal year of Guarantor and must be audited by
independent
certified public accountants acceptable to Lender.
(iii) Within thirty (30) days after the close of each calendar
quarter, Borrower shall deliver, or cause to be delivered to Lender
the
following: (A) a certified current rent roll; (B) a certified
quarterly
operating statement of the Mortgaged Property; (C) a certified
quarterly balance sheet and profit and loss statement of
Borrower.
(iv) Within sixty (60) days after filing, Borrower shall
deliver,
or cause to be delivered to Lender a certified copy of Borrower's
tax
return.
(b)
Within thirty (30)
days after the close of each fiscal year of
Borrower, Borrower shall deliver to Lender,
for Lender's approval in its sole
discretion, a report (the "Leasing Report")
setting forth the minimum economic
--------------
terms which Borrower proposes for use in
connection with the standard lease
form for Leases of portions of the
Mortgaged Property during the twelve month
period beginning upon such anniversary
date. The terms set forth in the Leasing
Report shall reflect the prevailing market
conditions for like properties in the
locality of the Mortgaged Property.
(c) In
addition to the other requirements of this paragraph 14,
until such time as the Note is transferred
to a REMIC or to another entity in
connection with a securitization including
the Note, Borrower shall deliver, or
cause to be delivered to Lender, within ten
(10) days after the close of each
calendar month, a current certified rent
roll and certified monthly (on a
trailing 12 month basis) and annual year to
date income statements of the
Mortgaged Property.
(d) Borrower
shall supplement the required Reports and Leasing
Reports and provide such other financial
information in respect of Borrower, any
Guarantor and the Mortgaged Property as
Lender, from time to time, may request.
Borrower acknowledges that, without timely
delivery of complete and accurate
Reports and Leasing Reports, Lender may not
be able to execute a Secondary
Market Transaction. Borrower agrees that
failure to timely deliver any of the
Reports or the Leasing Reports shall be an
Event of Default hereunder.
15.
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 Mortgaged Property.
16. Further
Acts, Etc. Borrower will, at Borrower's cost, complete
------------------
and deliver any such further acts or
documents required by Lender, from time to
time, to correct errors in the documenting
of the Loan or to better assure,
convey, assign, transfer, perfect or
confirm unto Lender the property and rights
intended to be given it in this Security
Instrument, the Note or any Other
Security Document. Borrower grants to
Lender an irrevocable power of attorney
coupled with an interest for the purpose of
exercising and perfecting any and
all rights and remedies available to Lender
under the Note, this Security
Instrument, the Other Security Documents,
at law or in equity, including without
limitation the rights and remedies
described in this paragraph.
17. Recording
of Security Instrument, Etc. Except where otherwise
--------------------------------------
prohibited by law, Borrower will pay all
filing, registration or recording fees,
and all expenses incident to the
preparation, execution, acknowledgment, and
subsequent release or reconveyance of this
Security Instrument and the Note, any
deed of trust or mortgage supplemental
hereto, any security instrument with
respect to the Mortgaged Property, any
instrument of further assurance and all
federal, state, county and municipal,
taxes, duties, impositions,
assessments and charges arising out of or
in connection with the same.
Borrower shall hold harmless and indemnify
Lender, its successors and assigns,
against any liability incurred by reason of
the imposition of any tax on the
making and recording of this Security
Instrument.
18. Events of
Default. The Debt shall become immediately due and
-----------------
payable at the option of Lender, without
notice or demand, upon the occurrence
of any one or more of the following events
(each an "Event of Default"):
----------------
(a) if
Borrower fails to make the full and punctual payment of any
amount payable pursuant to this Security
Instrument, the Note or any Other
Security Document, which failure is not
cured on or before the fifth (5th) day
after written notice from Lender to
Borrower of such failure;
(b) if
Borrower fails to pay the entire outstanding principal
balance of the Note, together with all
accrued and unpaid interest, on the date
when due, whether on the Maturity Date (as
defined in the Note), or upon
acceleration, or on the Prepayment Date (as
defined in the Note);
(c)
if Borrower
fails to make the full and punctual payment of
Taxes or Other Charges as required
hereby;
(d) if
Borrower fails to keep the Policies of insurance required
hereby in full force and effect, or fails
to promptly deliver copies thereof to
Lender upon request;
(e) if a
Transfer or a Change in Ownership occurs in violation of
the provisions of this Security Instrument,
or if Borrower violates or does
not comply with the provisions of the
Assignment of Leases;
(f) if any
representation or warranty of Borrower or any Guarantor
made herein, in any guaranty or indemnity
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
Borrower shall make an assignment for the benefit of
creditors or if Borrower is not paying
debts as and when the same become due;
(h) if a
receiver, liquidator or trustee of Borrower shall be
appointed or if Borrower is adjudicated
bankrupt or insolvent, or if any
petition for bankruptcy, reorganization or
arrangement pursuant to federal
bankruptcy law, or any similar federal or
state law, shall be filed by or
against, consented to, or acquiesced in by,
Borrower or if any proceeding for
the dissolution or liquidation of Borrower
shall be instituted; however, if such
appointment, adjudication, petition or
proceeding was involuntary and not
consented to by Borrower, then upon the
same not being discharged, stayed or
dismissed within sixty (60) days;
(i) if
Borrower shall be in default under any other deed of trust,
mortgage or security agreement covering any
part of the Mortgaged Property
whether it be superior or junior in
priority to this Security Instrument (it
not being implied by this clause that any
such encumbrance will be permitted);
(j) if the
Mortgaged 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, or
any lien being contested by Borrower
pursuant to its rights hereunder) and such
lien shall remain undischarged of
record (by payment, bonding or otherwise)
for a period of thirty (30) calendar
days;
(k) the
expiration, dismissal or final adjudication of any appeal
rights of Borrower in connection with any
judgment entered against it in excess
of $100,000.00 which is not fully covered
by insurance (other than Borrower's
deductible, if any);
(l) if
Borrower fails to promptly and diligently cure any material
violations of laws or ordinances affecting
the Mortgaged Property; or
(m) if for
more than thirty (30) days after written notice from
Lender, Borrower shall fail to perform any
other term, covenant or condition of
the Note, this Security Instrument or any
of the Other Security Documents;
provided, however, that if such failure to
perform is of a type which cannot be
cured within such thirty (30) day period
and Borrower diligently commences and
prosecutes such cure, Lender shall allow a
reasonable additional time period
(not to exceed sixty (60) additional days)
to complete such cure.
19. 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
required, Lender may do such acts or make
such payments in Borrower's stead, in
such manner and to the extent that Lender
may deem necessary to protect the
security hereof. Any such acts or payments
by Lender shall be at Lender's sole
discretion, may be taken without notice to
or demand on Borrower, and will not
release Borrower from any obligation
hereunder. Lender is authorized to enter
upon the Mortgaged Property for such
purposes, or appear in, defend or bring
any action or proceeding to protect its
interest in the Mortgaged Property, to
cause this Security Instrument to be
foreclosed or to collect the Debt. All
such costs and expenses (including attorney
fees) incurred by Lender in
remedying any such Event of Default, in
acting or making payments in Borrower's
stead, or in appearing in, defending or
bringing any of the foregoing actions or
proceedings, shall bear interest at the
Default Rate from the date incurred by
Lender until the date of payment to Lender.
All such costs and expenses incurred
by Lender together with interest thereon
calculated at the above 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.
20. Lender's
Remedies.
-----------------
(a) Upon the occurrence of
any Event of Default, Lender 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 Mortgaged Property,
including, without limitation, the
following actions:
(i) declare the entire Debt to be immediately due and payable;
(ii) institute proceedings to foreclose this Security
Instrument,
in which case the Mortgaged 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;
(iii) 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 of
this
Security Instrument for the balance of the Debt not then due;
(iv) enforce the power of sale herein granted;
(v) institute an action, suit or proceeding in equity for the
specific performance of any covenant, condition or agreement
contained
herein, in the Note or the Other Security Documents;
(vi) recover judgment on the Note either before, during or
after
any proceedings for the enforcement of this Security
Instrument;
(vii) apply for the appointment of a trustee, receiver,
liquidator
or conservator of the Mortgaged Property, without notice and
without
regard for the adequacy of the security for the Debt or the
solvency of
Borrower, any Guarantor or of any person, firm or other entity
liable
for the
payment of the Debt;
(viii) enforce Lender's interest in the Leases and Rents and
enter
into or upon the Mortgaged Property, either personally or by
its
agents, nominees or attorneys and dispossess Borrower and its
agents
and servants therefrom, and thereupon Lender may: (A) use,
operate,
manage, control, insure, maintain, repair, restore and otherwise
deal
with all and every part of the Mortgaged Property and conduct
the
business thereat; (B) complete any construction on the
Mortgaged
Property in such manner and form as Lender deems advisable; (C)
make
alterations, additions, renewals, replacements and improvements to
or
on the Mortgaged Property; (D) exercise all rights and powers
of
Borrower with respect to the Mortgaged 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 earnings, revenues,
rents,
issues, profits and other income of the Mortgaged Property and
every
part thereof; and (E) apply the receipts from the Mortgaged
Property to
the payment of the Debt, after deducting therefrom all expenses
(including reasonable attorney fees) incurred in connection with
the
aforesaid operations and all amounts necessary to pay the
Taxes,
assessments, Insurance Premiums and Other Charges in connection
with
the Mortgaged Property, as well as just and reasonable compensation
for
the services of Lender, its counsel, agents and employees; or
(ix) pursue such other rights and remedies as may then be
available
at law and in equity. To the extent permitted presently or in
the
future by laws of the state in which the Premises and Improvements
are
located, Lender may institute a proceeding or proceedings,
judicial, or
nonjudicial, by advertisement or otherwise, for the complete or
partial
foreclosure of this Security Instrument or the complete or partial
sale
of the Mortgaged Property under a power of sale which power is
hereby
granted to Trustee.
In the event of a sale, by foreclosure or
otherwise, of less than all of the
Mortgaged Property, this Security
Instrument shall continue as a lien on the
remaining portion of the Mortgaged
Property.
(b) To the
extent permitted by applicable law, Trustee may adjourn
from time to time any sale by it to be made
under or by virtue of this Security
Instrument by announcement at the time and
place appointed for such sale or for
such adjourned sale or sales; and , except
as otherwise provided by law,
Trustee, without further notice or
publication, may make such sale at the time
and place to which the same shall be so
adjourned.
(c) Upon the
completion of any sale or sales made by Trustee under
or by virtue of this Security Instrument,
Trustee, or an officer of any court
empowered to do so shall execute and
deliver to the purchaser or purchasers a
good and sufficient instrument, or good and
sufficient instruments, conveying,
assigning and transferring all estate,
right, title and interest in and to the
property and rights sold. Trustee is hereby
irrevocably appointed the true and
lawful attorney of Borrower, in its name
and stead, to make all necessary
conveyances, assignments, transfers and
deliveries of the Mortgaged Property
and rights so sold, and for that purpose
Trustee may execute all necessary
instruments of conveyance, assignment and
transfer, and may substitute one or
more persons with like power, Borrower
hereby ratifying and confirming all that
Trustee or such substitute or substitutes
shall lawfully do by virtue hereof.
Any such sale or sales made under or by
virtue of this Security Instrument,
whether made under the power of sale herein
or granted or under or by virtue of
judicial proceedings or any judgment or
decree of foreclosure and sale, shall
operate to divest all the estate, right,
title, interest, claim and demand
whatsoever, whether at law or in equity, of
Borrower in and to the properties
and rights so sold, and shall be a
perpetual bar both at law and in equity
against Borrower and against any and all
persons claiming or who may claim the
same, or any part thereof from, through or
under Borrower.
(d) Upon any
sale made under or by virtue of this Security
Instrument, whether made under the power of
sale herein granted or under or by
virtue of judicial proceedings or any
judgment or decree of foreclosure and
sale, Lender may bid for and acquire the
Mortgaged Property or any part thereof
and in lieu of paying cash therefor may
make settlement for the purchase price
by crediting upon the Debt the net sales
price after deducting therefrom, to the
extent allowed by applicable law, the
expenses of the sale and costs of the
action and any other sums which Lender is
authorized to deduct under this
Security Instrument.
(e) No
recovery of any judgment by Lender and no levy of an
execution under any judgment upon the
Mortgaged Property or upon any other
property of Borrower shall affect in any
manner or to any extent the lien of
this Security Instrument upon the Mortgaged
Property or any part thereof, or
any liens, rights, powers or remedies of
Lender hereunder, but such liens,
rights, powers and remedies of Lender shall
continue unimpaired as before.
(f) In any
action by Lender to recover a deficiency judgment
following a foreclosure or trustee's sale,
the successful bid amount at that
sale shall be deemed conclusively to be the
fair market value of the Mortgaged
Property sold at that sale, which value
shall be binding against Borrower in any
proceedings to determine or establish the
fair market value of that portion of
the Mortgaged Property. The successful bid
at any foreclosure or trustee's sale
shall be the preferred alternative means of
determining and establishing the
fair market value of the portion of the
Mortgaged Property sold at the sale.
Borrower hereby waives any right to have
the fair market value of the Mortgaged
Property determined by a judge or jury in
any action seeking a deficiency
judgment, including without limitation, a
hearing to determine fair market
value pursuant to A.R.S. Sections 12-1566,
33-814, 33-725, or 33-727.
(g) Lender
shall have all rights, remedies and recourses granted
in this Security Instrument and the Other
Security Documents or available at law
or equity (including the Uniform Commercial
Code), which rights: (i) shall be
cumulative and concurrent; (ii) may be
pursued separately, successively or
concurrently against Borrower or others
obligated under the Note, this Security
Instrument and the Other Security
Documents, or against the Mortgaged Property,
or against any one or more of them, at the
sole discretion of Lender; (iii) may
be exercised as often as occasion therefore
shall arise and exercise or failure
to exercise any of them shall not be
construed as a waiver or release thereof or
of any other right, remedy or recourse; and
(iv) are intended to be, and shall
be, nonexclusive. No enforcement of any
rights, remedies or recourse under the
Note, this Security Instrument and the
Other Security Documents or otherwise at
law or equity shall be deemed to cure any
Event of Default. The remedies
provided for in this Security Instrument
may be exercised in any order.
21. Changes in
the Laws Regarding Taxation. If any law is enacted
--------------------------------------
or adopted or amended after the date of
this Security Instrument which imposes a
tax, either directly or indirectly, on the
Debt or Lender's interest in the
Mortgaged Property, Borrower will pay such
tax, with interest and penalties
thereon, if any. In the event Lender is
advised by counsel chosen by it that the
payment of such tax or interest and
penalties by Borrower would be unlawful or
taxable to Lender or unenforceable or
provide the basis for a defense of usury,
then in any such event, Lender shall have
the option, by written notice of not
less than ninety (90) days, to declare the
entire Debt immediately due and
payable; provided, however, that no
Prepayment Consideration shall be required
solely as a result of a prepayment required
by any such declaration.
22.
Documentary Stamps. 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 or this Security Instrument,
or impose any other tax or charge on the
same, Borrower will pay for the same,
with interest and penalties thereon, if
any.
23. Usury
Laws. All interest and other charges, fees, goods,
----------
things in action or any other sums, things
of value and reimbursable costs that
Borrower is or may become obligated to pay
or reimburse in connection with the
Loan evidenced by the Note, and which may
be deemed to constitute "interest"
within the meaning of Arizona Revised
Statutes Section 44-1201 et. seq. shall be
deemed to constitute items of interest in
addition to the rate(s) of interest
specified above, which Borrower hereby
contracts in writing to pay. This
Security Instrument, the Other Security
Documents 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 or any other
charges 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 law to contract or
agree to pay. If by the terms of this
Security Instrument, the Other Security
Documents or the Note, Borrower is at any
time required or obligated to pay any
such amounts at a rate in excess of such
maximum rate, the rate of interest
under 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
previous payments in excess of such maximum
rate shall be deemed to have been
payments in reduction of the principal and
not on account of the interest due
hereunder.
24. Right of
Entry. Lender and its agents shall have the right to
--------------
enter and inspect the Mortgaged Property at
all reasonable times.
25. Reasonable
Use and Occupancy. In addition to the rights which
----------------------------
Lender may have herein, upon the occurrence
of any Event of Default, Lender, at
its option, may 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 Mortgaged Property as may be
occupied by Borrower, or may require
Borrower to vacate and surrender possession
of the Mortgaged Property to Lender or to
such receiver and, in default thereof,
Borrower may be evicted by summary
proceedings or otherwise.
26. Security
Agreement. This Security Instrument is both a real
------------------
property deed of trust and a "security
agreement" within the meaning of the
Uniform Commercial Code adopted and enacted
by the state or states where any of
the Mortgaged Property is located (the
"Uniform Commercial Code"), made by and
-----------------------
between Borrower, as debtor, and Lender, as
secured party, and by and between
Borrower, as debtor and Trustee, as secured
party. Borrower hereby grants to
Lender, as security for the Debt, a
security interest in the Mortgaged Property
to the full extent that the Mortgaged
Property may be subject to the Uniform
Commercial Code (said portion of the
Mortgaged Property so subject to the
Uniform Commercial Code being herein
referred to as the "Collateral"). If an
----------
Event of Default shall occur, Lender and
Trustee, in addition to any other
rights and remedies which they may have,
shall have and may exercise immediately
and without demand any and all rights and
remedies granted to a secured party
upon default under the Uniform Commercial
Code, including, without limiting the
generality of the foregoing, the right to
take possession of the Collateral or
any part thereof, and to take such other
measures as Trustee or Lender may deem
necessary for the care, protection and
preservation of the Collateral. Upon
request or demand of Lender or Trustee,
Borrower shall at its expense assemble
the Collateral and make it available to
Lender or Trustee at a convenient place
acceptable to Lender or Trustee. Borrower
shall pay to Lender or Trustee on
demand any and all expenses, including
legal expenses and attorney fees,
incurred or paid by Lender or Trustee in
protecting the interest in the
Collateral and in enforcing the rights
hereunder with respect to the Collateral.
Any notice of sale, disposition or other
intended action by Lender or Trustee
with respect to the Collateral 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.
The Collateral may be sold in such
manner, portions, order or parcels as
Lender may determine, with or without
having first taken possession of same. The
right of sale arising out of any
Event of Default shall not be exhausted by
any one or more sales or attempted
sales, any other action, proceeding, or
other exercise of a remedy, and the
liens granted by this Security Instrument
shall continue unimpaired. The
proceeds of any disposition of the
Collateral, or any part thereof, may be
applied by Lender to the payment of the
Debt in such priority and proportions
as Lender in its discretion shall deem
proper.
27. Actions
and Proceedings. Lender or Trustee has the right to
-----------------------
appear in and defend any action or
proceeding brought with respect to the
Mortgaged 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 Mortgaged
Property. Lender shall, at its option,
be subrogated to the lien of any deed of
trust, mortgage or other security
instrument discharged in whole or in part
by the Debt, and any such subrogation
rights shall constitute additional security
for the payment of the Debt.
28. 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, and, to the extent permitted
by law, waives trial by jury in any action
or proceeding brought by either party
hereto against the other or in any
counterclaim asserted by Lender, or its
successors or assigns, against Borrower, or
in any matters whatsoever arising
out of or in any way connected with this
Security Instrument, the Note, any of
the Other Security Documents or the
Debt.
29. 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.
30.
Marshalling and Other Matters. Borrower hereby waives, to the
-----------------------------
extent permitted by law, the benefit of all
appraisement, valuation, stay,
extension, reinstatement, redemption and
similar laws now or hereafter in force
-------------
and all rights of marshalling in the event
of any sale hereunder of the
Mortgaged 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 Mortgaged Property subsequent
to the date of this Security
Instrument and on behalf of all persons to
the extent permitted by applicable
law.
31. Costs and
Expenses. Without limiting Lender's rights under any
------------------
other provision herein or in the Note or
any Other Security Document, Borrower
agrees that it will reimburse Lender for
any and all costs and expenses incurred
by Lender in connection with any breach or
default of this Security Instrument,
the Note or any Other Security Document, or
in connection with any request that
Lender take, or refrain from taking, any
action with respect to Borrower or the
Mortgaged Property.
32. Access
Laws.
-----------
(a) Borrower
agrees that the Mortgaged Property shall at all times
comply with the requirements of the
Americans with Disabilities Act of 1990, the
Fair Housing Amendments Act of 1988, all
similar state and local laws and
ordinances related to access and all rules,
regulations, and orders issued
pursuant thereto including, without
limitation, the Americans with Disabilities
Act Accessibility Guidelines for Buildings
and Facilities (collectively the
"Access Laws").
-----------
(b)
Notwithstanding any provisions set forth herein or in any
other document regarding Lender's approval
of alterations of the Mortgaged
Property, Borrower shall not alter the
Mortgaged Property in any manner which
would increase Borrower's responsibilities
for compliance with the applicable
Access Laws without the prior written
approval of Lender. 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 an
architect, engineer or other person
acceptable to Lender regarding compliance
with applicable Access Laws.
(c) Borrower
agrees to give prompt notice to Lender of the receipt
by Borrower of any complaints related to
any violations of any Access Laws and
of the commencement of any proceedings or
investigations which relate to
compliance with applicable Access Laws.
33.
Indemnification. Borrower shall protect, defend, indemnify and
---------------
save harmless Lender and Trustee from and
against all liabilities, obligations,
claims, demands, damages, penalties, causes
of action, losses, fines, costs and
expenses (including without limitation
reasonable attorney fees and expenses)
(the "Indemnified Obligations"), imposed
upon, incurred by or asserted against
-----------------------
Lender or Trustee by reason of: (a)
ownership of this Security Instrument, the
Mortgaged Property or any interest therein
or receipt of any Rents; (b) any
accident, injury to or death of persons or
loss of or damage to property
occurring in, on or about the Mortgaged
Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets
or ways; (c) any use, non-use or condition
in, on or about the Mortgaged
Property or any part thereof or on
adjoining sidewalks, curbs, adjacent property
or adjacent parking areas, streets or ways;
(d) performance of any labor or
services or the furnishing of any materials
or other property in respect of the
Mortgaged Property or any part thereof; and
(e) any failure of the Mortgaged
Property to comply with any Access Laws.
Any amounts payable to Lender or
Trustee by reason of the application of
this indemnification shall be secured by
this Security Instrument and the Other
Security Documents, shall become
immediately due and payable and shall bear
interest at the Default Rate from the
date loss or damage is sustained by Lender
or Trustee until paid. The
obligations and liabilities of Borrower
under this paragraph shall survive any
termination, satisfaction or assignment of
this Security Instrument and the
exercise by Lender of any of its rights or
remedies hereunder, including, but
not limited to, the acquisition of the
Mortgaged Property by foreclosure or a
conveyance in lieu of foreclosure. The
foregoing indemnification shall not
relate to Indemnified Obligations arising
from Lender's gross negligence or
willful misconduct.
34. Notices.
Except as otherwise specified herein, any notice,
-------
consent, request or other communication
required or permitted hereunder shall be
in writing and shall be deemed properly
given if delivered in accordance with
the notice requirements contained in the
Note. The notice address for Trustee
is:
Trustee: Chicago Title Insurance Company
2415 E. Camelback Road #300
Phoenix, Arizona 85016
35.
Authority.
---------
(a) Borrower
(and the undersigned representative of Borrower, if
any) has full power, authority and right to
execute, deliver and perform its
obligations pursuant to this Security
Instrument, and to deed, mortgage, give,
grant, bargain, sell, alienate, convey,
confirm, pledge, hypothecate and assign
the Mortgaged 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.
(b) Borrower
represents and warrants that Borrower is not a
"foreign person" within the meaning of
Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended, and the
related Treasury Department
regulations, including temporary
regulations.
36. 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 other
notice.
37. Remedies
of Borrower. In the event that a claim or
--------------------
adjudication is made that Lender has acted
unreasonably or unreasonably delayed
acting in any case where by law or under
the Note, this Security Instrument or
the Other Security Documents, it has an
obligation to act reasonably or
promptly, Lender shall not be liable for
any monetary damages, and Borrower's
remedies shall be limited to injunctive
relief or declaratory judgment.
38. Sole
Discretion of Lender. Wherever pursuant to this Security
-------------------------
Instrument, Lender exercises any right
given to it to approve or disapprove, or
any arrangement or term is to be
satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide that
arrangements or terms are
satisfactory or not satisfactory 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.
39. Nonwaiver.
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: (a) the failure of
Lender or Trustee to comply with any
request of Borrower or any Guarantor to
take any action to foreclose this Security
Instrument or otherwise enforce any
of the provisions hereof, of the Note or
the Other Security Documents; (b) the
release, regardless of consideration, of
the whole or any part of the Mortgaged
Property, or of any person liable for the
Debt or any portion thereof; or
(c) 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.
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 and remedies of Lender or Trustee
under this Security Instrument and the
Other Security Documents shall be
separate, distinct and cumulative and none
shall be given effect to the
exclusion of the others. No act of Lender
or Trustee shall be construed as an
election to proceed under any one provision
herein to the exclusion of any other
provision. Trustee and Lender shall not 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.
40. Waiver of
Automatic or Supplemental Stay. In the event of the
----------------------------------------
filing of any voluntary or involuntary
petition under the Bankruptcy Code by or
against Borrower (other than an involuntary
petition filed by or joined by
Lender), Borrower shall not assert, or
request any other party to assert, that
the automatic stay under ss. 362 of the
Bankruptcy Code shall operate or be
interpreted to stay, interdict, condition,
reduce or inhibit the ability of the
Lender to enforce any rights it has by
virtue of this Security Instrument, or
any other rights that Lender has, whether
now or hereafter acquired, against any
Guarantor. Further, Borrower shall not seek
a supplemental stay or any other
relief, whether injunctive or otherwise,
pursuant to ss.105 of the Bankruptcy
Code or any other provision therein to
stay, interdict, condition, reduce or
inhibit the ability of Lender to enforce
any rights it has by virtue of this
Security Instrument against any Guarantor.
The waivers contained in this
paragraph are a material inducement to
Lender's willingness to make the Loan,
and Borrower acknowledges and agrees that
no grounds exist for equitable relief
which would bar, delay or impede the
exercise by Lender of its rights and
remedies against Borrower or any
Guarantor.
41. Bankruptcy
Acknowledgment. In the event the Mortgaged Property
-------------------------
or any portion thereof or interest therein
becomes property of any bankruptcy
estate or subject to any state or federal
insolvency proceeding, then Lender
shall immediately become entitled, in
addition to all other relief to which
Lender may be entitled under this Security
Instrument, to obtain: (a) an order
from the Bankruptcy Court or other
appropriate court granting immediate relief
from any automatic stay laws (including
ss.362 of the Bankruptcy Code) so to
permit Lender to pursue its rights and
remedies against Borrower as provided
under this Security Instrument and all
other rights and remedies of Lender at
law and in equity under applicable state
law; and (b) an order from the
Bankruptcy Court prohibiting Borrower's use
of all "cash collateral" as defined
under ss.363 of the Bankruptcy Code. In
connection with any such orders,
Borrower shall not contend or allege in any
pleading or petition that Lender
does not have sufficient grounds for relief
from the automatic stay. Any
bankruptcy petition or other action taken
by Borrower to stay, condition, or
inhibit Lender from exercising its remedies
are hereby admitted by Borrower to
be in bad faith and Borrower further admits
that Lender would have just cause
for relief from the automatic stay in order
to take such actions authorized by
state law.
42. 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.
43. 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.
44.
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.
45. Headings,
Etc. The headings and captions of various paragraphs
--------------
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.
46. 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 impose upon
Trustee any expense or liability, or
require the Trustee to institute or defend
any suit in respect hereof, unless
properly indemnified to Trustee's
reasonable satisfaction. Trustee, by
acceptance of this Security Instrument,
covenants to perform and fulfill the
trusts herein created, being liable,
however, only for willful negligence or
misconduct, and hereby waives any statutory
fee and agrees to accept reasonable
compensation in lieu thereof for any
services rendered by Trustee hereunder.
Trustee may resign at any time upon giving
thirty (30) days' notice to Lender.
In the event of the death, removal,
resignation, or refusal or inability to act
of Trustee or any duly appointed successor
Trustee, or in Lender's sole
discretion for any reason whatsoever,
Lender, from time to time without notice
and without specifying any reason therefor
and without applying to any court,
may 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 hereunder shall
thereupon become vested in such successor.
Such successor 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 Security
Instrument for the appointment of a
successor for the Trustee shall be in
addition to and not in exclusion of any
other provisions for such an appointment,
by law or otherwise.
47. Trustee's
Costs. Borrower shall pay all costs, fees and
---------------
expenses incurred by Trustee and Trustee's
agents and counsel in connection with
the Trustee's performance of its duties
hereunder and all such costs, fees and
expenses shall be secured by this Security
Instrument.
48.
Counterparts. This Security Instrument may be executed in any
------------
number of counterparts, each of which shall
be deemed to be an original and all
of which when taken together shall
constitute one and the same Security
Instrument.
49.
Definitions. Unless the context clearly indicates a contrary
-----------
intent or unless otherwise specifically
provided herein, words used in this
Security Instrument (including pronouns)
shall include the corresponding
masculine, feminine or neuter forms, and
the singular form such words shall
include the plural and vice versa. The word
"Borrower" shall mean "each Borrower
--------
and any subsequent owner or owners of the
Mortgaged Property or any part thereof
or any interest therein"; the word "Lender"
shall mean "Lender and any
------
subsequent holder of the Note"; the word
"Trustee" shall mean "Trustee and any
-------
successor trustee under 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 partnership, limited
liability partnership, limited
liability company, trust, unincorporated
association, government, governmental
authority and any other entity; and the
words "Mortgaged Property" shall include
------------------
any portion of the Mortgaged Property and
any interest therein. Additionally,
the word "Guarantor" shall mean any person
or entity guaranteeing or
---------
indemnifying payment of the Debt or any
portion thereof or performance by
Borrower of any of the terms of this
Security Instrument, the Note or the Other
Security Documents, including, without
limitation, any person or entity
executing the Non-Recourse Indemnification
Agreement delivered to Lender in
connection with the Loan.
50. Homestead.
Borrower hereby waives and renounces all homestead
---------
and exemption rights provided by the
constitution and the laws of the United
States and of any state, in and to the
Mortgaged Property as against the
collection of the Debt, or any part
hereof.
51.
Assignments. Lender shall have the right to assign or transfer
-----------
its rights under this Security Instrument
without limitation. Any assignee or
transferee shall be entitled to all the
benefits afforded Lender under this
Security Instrument.
52.
Exculpation. Notwithstanding anything to the contrary
-----------
contained in this Security Instrument, the
liability of Borrower for the payment
of the Debt and for the performance of the
other agreements, covenants and
obligations contained herein, in the Note
or in any of the Other Security
Documents shall be limited as set forth in
Paragraph 12 of the Note.
53.
Integration. This Security Instrument, the Note and the Other
-----------
Security Documents embody the entire
agreement by and between Borrower and
Lender with respect to the Loan, and any
and all prior correspondence,
discussions or negotiations are deemed
merged therein; provided, however, that
-------- -------
except to the extent inconsistent with the
specific terms and provisions of this
Security Instrument, the Note and the Other
Security Documents, all
representations, warranties, statements,
covenants and agreements of Borrower
contained in any loan commitment and/or
loan application executed in connection
with the Loan shall survive the funding of
the Loan, any termination,
satisfaction, or assignment of this
Security Instrument and the exercise by
Lender of any of its rights or remedies
hereunder, including but not limited to,
the acquisition of the Mortgaged Property
by foreclosure or a conveyance in
lieu of foreclosure.
54. Applicable
Law; Jurisdiction. This Security Instrument shall
----------------------------
be governed and construed in accordance
with the laws of the state in which the
Premises and Improvements encumbered by
this Security Instrument are located.
Borrower hereby submits to personal
jurisdiction in the state courts located in
said state and the federal courts of the
United States of America located in
said state for the enforcement of
Borrower's obligations hereunder and waives
any and all personal rights under the law
of any other state to object to
jurisdiction within such state for the
purposes of any action, suit,
proceeding or litigation to enforce such
obligations of Borrower.
55. Single
Purpose Entity.
---------------------
(a) Until the
Debt has been paid in full to Lender, Borrower's
organizational documents will provide that
Borrower's sole business purpose
shall be the acquisition, ownership and
operation of the Mortgaged Property.
Borrower shall at all times during the term
of the Note conduct its business
affairs in compliance with such
organizational documents. In addition, Borrower
represents and warrants to, and covenants
and agrees with Lender that Borrower
has not and shall not: (a) engage in any
business or activity other than the
ownership, operation and maintenance of the
Mortgaged Property, and activities
incidental thereto; (b) acquire or own any
material assets other than (i) the
Mortgaged Property, and (ii) such
incidental personal property as may be
necessary for the operation of the
Mortgaged 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 prior
written 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,
operating agreement, 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 prior
written consent of Lender; (f) commingle
its assets with the assets of any of
its general partners, managing members,
shareholders, affiliates, principals or
any other person or entity; (g) incur any
debt, secured or unsecured, direct or
contingent (including guaranteeing any
obligation), other than the Debt,
excepting trade payables (which must be
paid when due) incurred by Borrower in
the ordinary course of its business of
owning and operating the Mortgaged
Property; (h) fail to maintain its records,
books of account and bank accounts
separate and apart from those of the
general partners, managing members,
shareholders, principals and affiliates of
Borrower, the affiliates of a general
partner or managing member of Borrower, and
any other person or entity; (i)
enter into any contract or agreement with
any general partner, managing member,
shareholder, principal or affiliate of
Borrower, any Guarantor or any
indemnitor, or any general partner,
managing member, shareholder, 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
general partner, managing member,
shareholder, principal or affiliate of
Borrower, any Guarantor or any
indemnitor, or any general partner,
managing member, shareholder, principal or
affiliate thereof; (j) seek the dissolution
or winding up in whole, or in part,
of Borrower; (k) 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 general partner, managing member,
shareholder, principal or affiliate of
Borrower, or any general partner, managing
member, shareholder, principal or
affiliate thereof or any other person; (l)
hold itself out to be responsible for
the debts of another person; (m) make any
loans to any third party; (n) 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 general partner,
managing member, shareholder, principal or
affiliate of Borrower, or any general
partner, managing member, shareholder,
principal or affiliate thereof); (o) 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 (p) 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.
(b)
In
addition to the foregoing, if Borrower or its Controlling
Entity is a single member limited liability
company, it must be organized under
the laws of Delaware, its organizational
documents must also contain
continuation of existence provisions
acceptable to Lender, it must cause an
acceptable Delaware counsel to deliver
acceptable non-consolidation and
non-dissolution opinions to Lender and it
must satisfy any other requirements
imposed by Lender.
(c) If the
original principal amount of the Loan was
$20,000,000.00 or more, then, in addition
to the foregoing:
(i) Borrower's organizational documents shall require unanimous
consent of all shareholders, members, partners or other owners of
an
equity ownership
interest in Borrower prior to the filing of petition
in bankruptcy, or for the dissolution, liquidation,
consolidation,
merger or sale of all or substantially all of Borrower's
assets.
(ii) Borrower must have (A) at least two Independent
Controlling
Persons (hereinafter defined), and (B) organizational documents
requiring the unanimous consent of all directors, members, partners
or
other persons having similar decision-making authority with respect
to
Borrower (each, a "Controlling Person") prior to the filing of
petition
------------------
in bankruptcy, or for the dissolution, liquidation,
consolidation,
merger or sale of all or substantially all of either Borrower's
assets.
The term "Independent Controlling Person" shall mean a
Controlling
------------------------------
Person approved by Lender who shall at no time during the term of
the
Loan be, or have been within the 5 years immediately preceding
becoming
an Independent Controlling Person, (1) an employee, director,
member,
stockholder, partner or employee of Borrower or of any of its
Affiliates (hereinafter defined), (2) a customer of or supplier
to
(including any attorney, accountant, broker or banker) to Borrower
or
any of its Affiliates, or (3) an immediate family member of any
such
employee, director, member, stockholder, partner, customer or
supplier.
The term "Affiliate" shall mean any person or entity (I) which
owns
---------
beneficially, directly or indirectly, ten percent (10%) or more of
the
outstanding ownership interest in Borrower (each, an "Owning
------
Affiliate"), or (II) of which ten percent (10%) or more of its
---------
outstanding ownership interest is owned beneficially, directly
or
indirectly, by any Owning Affiliate, or (III) which is controlled
by
any Owning Affiliate, as the term "control" is defined under
Section
230.405 of the Rules and Regulations of the Securities and Exchange
Commission, 17 C.F.R. Section 230.405, or (IV) any immediate
family
member of the foregoing.
(iii) Borrower agrees that its Controlling Entity shall also be
subject to all of the requirements contained in this section,
except
that its organizational documents shall prohibit it from engaging
in
any business or activity other than the operation and maintenance
of
the Mortgaged Property, and activities incidental thereto, or
acquiring
or owning any material assets other than its interest in
Borrower.
56. Fixture
Filing. This Security Instrument shall be deemed a
--------------
fixture filing within the meaning of any
applicable uniform commercial code,
and for such purpose, the following
information is given:
Name, address and
Deer Valley Financial Center, LLC
tax identification
Tax ID No. 20-0115681
number of Debtor(s):
Huntington Company, L.L.C.
Tax ID No. 86-0723187
Geneva Company, L.L.C.
Tax ID No. 86-0733848
Metzger Deer Valley, LLC
Tax ID No. 77-0608616
c/o Hannay Investment Properties
4651 E. Palomino Road
Phoenix, Arizona
85018
Name and address
PNC Bank, National Association
of Secured Party
10851 Mastin, Suite 300
Overland Park, Kansas 66210
Description of the type
(or items) of property:
See the Recitals herein.
Description of real estate
to which the collateral
is
attached or upon which
it is or will be located:
See Exhibit A hereto.
Some of the above described collateral is or is to become fixtures
upon
the above-described real estate, and this
fixture filing is to be filed for
record in the public real estate
records.
57.
Prepayment. The Debt may only be prepaid in accordance with
----------
the terms of the Note.
58. Default
Interest. Upon the occurrence of any Event of Default
----------------
(including, without limitation, the failure
of Borrower to pay the Debt in full
on the Maturity Date), Borrower shall pay
interest on the unpaid principal
balance of the Note at the Default Rate (as
defined in the Note).
59. Additional
Terms and Provisions. Certain additional and
-------------------------------
supplemental terms and provisions of this
Security Instrument are set forth in
this paragraph. The terms and provisions of
this paragraph control and supersede
any conflicting terms and provisions
contained in this Security Instrument.
(a) Boiler and
Machinery Insurance. Borrower will not be required
------------------------------
to obtain any separate boiler and machinery
insurance with respect to the air
conditioning units located at the Mortgaged
Property as of the closing, or any
replacements therefore that are
substantially similar in size to the existing
units.
(b) Payment of
Taxes and Other Charges. The phrase "as the same
----------------------------------
become due and payable" in Paragraph 5(a)
is amended to be the phrase "prior to
the same becoming delinquent".
(c) Corrective
Maintenance Period. The phrase "should Lender
-----------------------------
determine" in the second sentence of
Paragraph 9(b) is amended to be the phrase
"should Lender reasonably determine".
(d) Transfer.
Any transfer by Huntington Company, L.L.C. or Geneva
--------
Company, L.L.C. of their respective
ownership interest in the Mortgaged Property
to any other entity that was a "Borrower"
as of the date hereof shall not be
deemed a "Transfer" under Paragraph 10.
(e) Financial
Reporting. Each reference to the phrase "thirty (30)
-------------------
days" in Paragraph 14(a)(i), Paragraph
14(a)(ii) or Paragraph 14(b) is amended
to be the phrase "sixty (60) days".
(f) Events of
Default. Paragraph 18(k) is amended to add the
-----------------
phrase "and is not paid within thirty (30)
days following such expiration,
dismissal or final adjudication" at the end
thereof.
(g) Single
Purpose Entity. Paragraph 55(a)(g) is amended to read
---------------------
as follows:
"(g) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than
the Debt, excepting trade payables (which must be paid when
due) incurred by Borrower in the ordinary course of its
business of owning and operating the Mortgaged Property and
further excepting advances made to or on behalf of any
Borrower under the terms of that certain Co-Tenancy Agreement
entered into with respect to the Mortgaged Property by all of
the Borrowers contemporaneously with the closing of the Loan;"
IN WITNESS WHEREOF, Borrower has executed this Deed of Trust,
Security
Agreement, Assignment of Leases and Rents
and Fixture Filing to be effective as
of the day and year first above
written.
"Borrower"
DEER VALLEY FINANCIAL CENTER, LLC,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R. Craig Hannay, President
"Borrower"
HUNTINGTON COMPANY, L.L.C.,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R. Craig Hannay, President
"Borrower"
GENEVA COMPANY, L.L.C.,
an Arizona limited liability company
By:
Hannay Investment Properties, Inc.,
an Arizona corporation
Its Manager
By: /s/ R. Craig Hannay
--------------------------------
R. Craig Hannay, President
"Borrower"
METZGER DEER VALLEY, LLC,
a Delaware limited liability company
By:
Metzger Family of Saratoga, LLC,
a New York limited liability company
Its sole Member
By: /s/ Irving L. Metzger
-------------------------------
Irving L. Metzger, Managing Member
<PAGE>
ACKNOWLEDGMENT(S)
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of DEER VALLEY
FINANCIAL CENTER, LLC, an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ R. A. Sandidge
------------------------------
Notary Public
My Commission Expires:
8-20-07
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of HUNTINGTON
COMPANY, L.L.C., an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
<PAGE>
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared R. Craig Hannay, who acknowledged
himself to be the President of Hannay
Investment Properties, Inc., an Arizona
corporation, the Manager of GENEVA
COMPANY, L.L.C., an Arizona limited
liability company, and that he, being
authorized so to do, executed the foregoing
instrument for the purposes therein
contained, by signing the name of the
corporations by himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand
and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
STATE OF ARIZONA )
) ss.
COUNTY OF MARICOPA )
On this September 18, 2003, before me, the
undersigned Notary Public, personally
appeared Irving L. Metzger, who
acknowledged himself to be the Managing Member
of Metzger Family of Saratoga, LLC, a New
York limited liability company the
sole Member of METZGER DEER VALLEY, LLC, a
Delaware limited liability company,
and that he, being authorized so to do,
executed the foregoing instrument for
the purposes therein contained, by signing
the name of the corporations by
himself in such capacity.
IN WITNESS WHEREOF, I hereunto set my hand
and official seal.
/s/ R. A. Sandidge
--------------------------------
Notary Public
My Commission Expires:
8-20-07
<PAGE>
EXHIBIT A
Legal Description
-----------------
The real property situated in the County of
Maricopa, State of Arizona,
described as follows:
Lot 1, DEER VALLEY FINANCIAL CENTER, a
subdivision recorded in Book 542 of Maps,
page 42, and Certificate of Correction
recorded in Recording No. 2003-0591121,
records of Maricopa County, Arizona
<PAGE>
ASSIGNMENT OF LEASES AND RENTS
DEER VALLEY FINANCIAL CENTER, LLC
HUNTINGTON COMPANY, L.L.C.
GENEVA COMPANY, L.L.C.
METZGER DEER VALLEY, LLC
(collectively Borrower)
to
PNC BANK, NATIONAL ASSOCIATION
(Lender)
Dated: September
18, 2003
Location: Deer
Valley Financial Center
22601 N. 19th Avenue
Phoenix, Arizona
85027
RECORD AND RETURN TO:
PNC BANK, NATIONAL ASSOCIATION
10851
Mastin, Suite 300
Overland Park, Kansas 66210
Attention: Closing
Department
Loan No.:
94-0950186
<PAGE>
THIS ASSIGNMENT OF LEASES AND RENTS ("Assignment") is made as
of
----------
September 18, 2003, by Deer Valley
Financial Center, LLC, an Arizona limited
liability company, Huntington Company,
L.L.C., an Arizona limited liability
company, Geneva Company, L.L.C., an Arizona
limited liability company, and
Metzger Deer Valley, LLC, a Delaware
limited liability company (collectively
"Borrower"), each having its principal
place of business (or residing) at Hannay
--------
Investment Properties, 4651 E. Palomino
Road, Phoenix, Arizona 85108 to PNC
Bank, National Association ("Lender"),
having a mailing address at 10851 Mastin,
------
Suite 300, Overland Park, Kansas 66210.
RECITALS:
---------
THAT Borrower for good and valuable consideration, receipt whereof
is
hereby acknowledged, hereby grants,
transfers and absolutely and unconditionally
assigns to Lender Borrower's entire
interest in and to all current and future
leases, reciprocal easement agreements and
other agreements (together with any
extensions or renewals of the same without
further or supplemental assignment),
now or hereafter made and affecting the
use, enjoyment, or occupancy of all or
any part of that certain real property more
particularly described in Exhibit A
---------
attached 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 (hereinafter
collectively referred to as the "Mortgaged
Property"), all of the same being
------------------
hereinafter collectively referred to as the
"Leases";
------
TOGETHER WITH all rents (including, without limitation,
percentage
rents), income, issues, revenues, proceeds
and profits arising from the Leases
and all rents, income, issues, revenues,
proceeds and profits (including, but
not limited to, all oil and gas or other
mineral royalties and bonuses) from the
use, enjoyment and occupancy of the
Mortgaged Property (hereinafter collectively
referred to as the "Rents").
THIS ASSIGNMENT is made on the following terms, covenants and
conditions:
1.
Indebtedness Secured. This Assignment is made for the purposes
of
--------------------
securing:
(a) The
payment of the Debt (hereinafter defined), including, without
limitation, the principal sum, interest and all other sums
evidenced by
that certain Promissory Note (the "Note") executed by Borrower
contemporaneously with this Assignment and payable to the order
of
Lender.
(b) The
performance and discharge of each and every obligation,
covenant
and agreement of Borrower contained herein, in the Note, in the
Security Instrument (as defined in the Note) and in any of the
Other
Security Documents (as defined in the Note).
2.
Borrower's Warranties. Borrower warrants that: (i) Borrower is the
sole
---------------------
owner of the entire lessor's interest in the Leases; (ii) the
Leases
are in all material respects valid and enforceable and have not
been
altered, modified or amended in any manner since copies of same
were
last delivered to Lender; (iii) none of the Rents reserved in
the
Leases have been
assigned or otherwise pledged or hypothecated; (iv)
none of the Rents have been collected for more than one (1) month
in
advance; (v) Borrower 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 Mortgaged Property; (vi) 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; (vii) to the best of Borrower's knowledge,
there
exist no
offsets or defenses to the payment of any portion of the
Rents; and (viii) other than Leases for all or any part of the
Mortgaged Property for residential purposes, for congregate
care
services or for mini-warehouse storage rentals where such
storage
rental is less than ten percent (10%) or more of the rentable
square
footage of such storage facility (collectively "Residential
Leases"),
------------------
true and correct copies of all Leases in existence as of the date
of
this Assignment were delivered to Lender prior to the execution of
this
Assignment.
3.
Present and Absolute Assignment. Borrower does hereby absolutely
and
-------------------------------
unconditionally assign to Lender all of Borrower's right, title
and
interest in all current and future Leases and Rents, it being
intended
by Borrower that this Assignment constitutes a present, absolute
and
unconditional assignment and not an assignment for additional
security
only. Nothing herein shall be construed to bind Lender to the
performance of any of the covenants, conditions, or provisions
contained in any of the Leases or otherwise to impose any
obligation
upon Lender. Borrower agrees to execute and deliver to Lender
such
additional instruments, in form and substance satisfactory to
Lender,
as Lender may hereinafter require to further evidence and confirm
this
Assignment. Lender is hereby granted the right to enter the
Mortgaged
Property for the purpose of enforcing Lender's interest in the
Leases
and the Rents, this Assignment constituting a present, absolute
and
unconditional assignment of the Leases and Rents. Nevertheless,
subject
to the terms hereof, Lender grants to Borrower a revocable license
to
operate and manage the Mortgaged Property and to collect the
Rents.
Borrower shall hold the Rents for use in the payment of all
current
sums due on the Debt. Upon an Event of Default (as defined in
the
Security Instrument), the license granted to Borrower herein shall
be
automatically
terminated and Lender shall be immediately entitled to
receive and apply all Rents, whether or not Lender enters upon
and
takes possession or control of the Mortgaged Property. Lender is
hereby
granted the right, at its option, upon the termination of the
license
granted Borrower herein to enter upon the Mortgaged Property in
person,
by agent or by court-appointed receiver to collect the Rents. Any
Rents
collected after the termination of the license herein granted may
be
applied toward payment of the Debt in such order and manner as
Lender,
in its sole and absolute discretion, shall deem proper.
4.
Performance of Leases. With respect to all Leases, Borrower shall:
(i)
---------------------
observe and perform all the obligations imposed upon Borrower
as
landlord; (ii) not do or permit to be done anything to impair the
value
of any of the Leases as security for the Debt; (iii) other than
Residential Leases, promptly send to Lender copies of all notices
of
default which Borrower shall send or receive thereunder; (iv)
enforce
all of the material terms, covenants and conditions which are to
be
performed by any tenant, short of termination thereof; (v) not
collect
any of the Rents more than one (1) month in advance; (vi) not
execute
any other assignment of Borrower's interest in any of the Leases or
the
Rents; (vii) execute and deliver at the request of Lender all
such
further assurances, confirmations and assignments in connection
with
the Mortgaged Property as Lender shall from time to time require;
and
(viii) not extend any Lease or enter into any new or renewal
Lease
affecting the Mortgaged Property except as allowed pursuant to
this
Assignment.
5. Acts
Requiring Lender's Approval.
--------------------------------
(a) Without
obtaining Lender's prior written approval (which shall not be
unreasonably withheld), Borrower shall not:
(i) extend any
Lease or enter into any new or renewal Lease affecting the
Mortgaged Property; provided, however, that no such approval is
required if: (A) such Lease is written on a standard form of
lease
approved in writing by Lender (the "Approved Lease Form") with
no
-------------------
material changes to such Approved Lease Form; (B) all of the terms
of
such Lease equal or exceed the requirements set forth in the
then
applicable Leasing Report (as defined in the Security Instrument);
(C) such Lease is an arm's-length transaction with an unrelated
third party tenant; (D) an executed copy of such Lease (other
than
Residential Leases, unless requested by Lender) shall be furnished
to
Lender within ten (10) days after its execution; (E) such Lease
provides that upon Borrower's request the tenant thereunder
shall
subordinate such Lease to the Security Instrument and shall agree
to
attorn to Lender and such subordination and attornment shall be
evidenced by a written agreement executed by such tenant in form
and
substance satisfactory to Lender;
(ii) other than
Residential Leases, consent to any assignment of or
subletting by any tenant under any of the Leases (except in
accordance
with the terms of such tenant's Lease);
(iii) alter, modify, change,
cancel or terminate any guaranty of any of the
Leases;
(iv) other than
Residential Leases, materially alter, modify, change the
terms of, cancel, terminate or accept a surrender of any of the
Leases;
or
(v) transfer
or permit a transfer of the Mortgaged Property or of any
interest therein, even if such a transfer is permitted under
the
Security Instrument, if such transfer would effect a merger of
the
estates and rights of, or a termination or diminution of the
obligations of, tenants under any of the Leases.
(b)
Notwithstanding anything to the contrary above, Borrower agrees
that:
(i) Borrower shall not modify, amend, supplement or replace the
Approved Lease Form without Lender's prior written approval,
which
approval shall not be unreasonably withheld; and (ii) Borrower
shall
not enter into, materially modify, extend, renew or terminate any
Lease
in respect of twenty percent (20%) or more of the rentable space at
the
Mortgaged Property without Lender's prior written approval,
which
approval may be withheld or granted in Lender's sole
discretion.
6.
Remedies of Lender. Upon or at any time after an Event of
Default,
------------------
Lender may, at its option, without waiving such Event of
Default,
without notice and without regard to the adequacy of the security
for
the Debt: (i) in person or by agent, with or without bringing
any
action or proceeding, or by a receiver appointed by a court,
take
possession of the Mortgaged Property and have, hold, manage, lease
and
operate the Mortgaged Property on such terms and for such period
of
time as Lender may deem proper; (ii) with or without taking
possession
of the Mortgaged Property in its own name, demand, sue for or
otherwise
collect and receive all Rents, including those past due and unpaid,
and
(iii) make from time to time all alterations, renovations, repairs
or
replacements to the Mortgaged Property as Lender deems proper.
Lender
may apply any Rents obtained by it to the payment of the following
in
such manner and order as Lender in its sole and absolute discretion
may
determine, any law, custom or use to the contrary notwithstanding:
(a)
all expenses of securing, managing, operating and maintaining
the
Mortgaged Property, including, without limitation, the salaries,
fees
and wages of a managing agent and such other employees or agents
as
Lender may deem necessary or desirable; all taxes, charges,
claims,
assessments, water charges, sewer rents and any other liens;
premiums
for all insurance which Lender may deem necessary or desirable;
the
cost of all alterations, renovations, repairs or replacements; and
all
expenses incident to taking and retaining possession of the
Mortgaged
Property; and (b) the Debt, together with all court costs and
attorney
fees, receiver fees and all other costs and expenses incurred
by
Lender. Upon the occurrence of an Event of Default, Lender, at
its
option, may 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 occupation of such part of
the
Mortgaged Property as may be in possession of Borrower or may
require
Borrower to vacate and surrender possession of the Mortgaged
Property
to Lender or to such receiver and, in default thereof, Borrower may
be
evicted by summary proceedings or otherwise. Borrower grants to
Lender
its irrevocable power of attorney, coupled with an interest, to
take
any and all actions allowed hereunder and any or all other
actions
designated by Lender for the proper management and preservation of
the
Mortgaged Property. The exercise by Lender of any particular remedy
or
right hereunder and the collection of the Rents and the
application
thereof as herein provided shall not be considered a waiver of
any
Event of Default by Borrower.
7. No
Liability of Lender. Lender shall not be liable for any loss
----------------------
sustained by Borrower resulting from Lender's failure to let
the
Mortgaged Property after an Event of Default or from any other act
or
omission of Lender in managing the Mortgaged Property after an
Event of
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 under or
by
reason of this Assignment. Borrower hereby agrees to hold
Lender
harmless from any and all liability, loss or damage (including
attorney
fees and the costs of defense) from any and all claims and
demands
whatsoever asserted against Lender pursuant to the Leases or
this
Assignment, including, without limitation, any claims or
demands
related to any alleged obligations or alleged undertakings on
Lender's
part to perform or discharge any of the terms, covenants or
agreements
contained in the Leases. Borrower shall reimburse Lender
immediately
upon demand for the amount of any such liability, loss or damage,
the
payment of which shall be secured by this Assignment, by the
Security
Instrument and by the Other Security Documents. Upon the failure
of
Borrower to reimburse Lender, Lender may, at its option, declare
the
entire Debt
immediately due and payable. This Assignment shall not
obligate or make Lender liable for (i) the control, care,
management or
repair of the Mortgaged Property, (ii) the carrying out of any of
the
terms and conditions of the Leases, (iii) any waste committed on
the
Mortgaged Property by the tenants or any other parties, any
dangerous
or defective condition of the Mortgaged Property, including
without
limitation the presence of any Hazardous Material (as defined in
the
Environmental Indemnity Agreement executed contemporaneously
herewith
in favor of Lender), or (v) any negligence in the management,
upkeep,
repair or control of the Mortgaged Property resulting in loss or
injury
or death to any tenant, licensee, employee or stranger.
8.
Notice to Tenants. Borrower hereby authorizes and directs all
tenants
-----------------
or occupants now or in the future possessing any rights in the
Mortga
