UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-Q
(mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
- ---
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-16757
CONCORD MILESTONE PLUS, L.P.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1494615
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5200 TOWN CENTER CIRCLE
4TH FLOOR
BOCA RATON, FLORIDA 33486
(Address of Principal Executive Offices) (Zip Code)
(561) 394-9260
Registrant's Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing for the
past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
BALANCE SHEETS
SEPTEMBER 30, 1997 (Unaudited) AND DECEMBER 31, 1996
ASSETS
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
<S> <C> <C>
Property, at cost
Building and improvements .............................................. $ 15,450,083 $ 15,359,462
Less: accumulated depreciation ......................................... 5,265,418 4,829,534
------------ ------------
Building and improvements, net ......................................... 10,184,665 10,529,928
Land ................................................................... 10,987,034 10,987,034
------------ ------------
Total property ......................................................... 21,171,699 21,516,962
Cash and cash equivalents ................................................. 94,894 326,120
Accounts receivable ....................................................... 171,524 200,975
Funds held in escrow ...................................................... 401,835 0
Prepaid expenses .......................................................... 35,794 22,864
Other assets, net ......................................................... 62,813 16,957
Debt financing costs ...................................................... 309,676 2,897
------------ ------------
Total assets ........................................................ $ 22,248,235 $ 22,086,775
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage Loans Payable .................................................... $ 16,710,000 $ 0
Bonds payable, net ........................................................ 0 16,473,060
Accrued interest .......................................................... 0 137,100
Accrued expenses and other liabilities .................................... 556,979 255,137
Due to affiliates ......................................................... 80,000 11,985
------------ ------------
Total liabilities ...................................................... 17,346,979 16,877,282
------------ ------------
Commitments and Contingencies
Partners' capital:
General partner ........................................................ (73,552) (70,470)
Limited partners:
Class A Interests, 1,518,800 ........................................... 4,974,808 5,279,963
------------ ------------
Total partners' capital ................................................ 4,901,256 5,209,493
------------ ------------
Total liabilities and partners' capital ................................ $ 22,248,235 $ 22,086,775
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
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<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
<S> <C> <C>
Revenues:
Rent ...................................................................... $ 661,118 $ 638,576
Reimbursed expenses ....................................................... 129,401 108,420
Interest and other income ................................................. 7,835 4,966
--------------- ---------------
Total revenues ......................................................... 798,354 751,962
--------------- ---------------
Expenses:
Interest expense .......................................................... 430,341 390,735
Depreciation and amortization ............................................. 141,063 160,996
Management and property expenses .......................................... 221,148 197,191
Administrative and management fees to related party ....................... 28,195 25,810
Professional fees and other expenses ...................................... 29,035 28,152
--------------- ---------------
Total expenses ......................................................... 849,782 802,884
--------------- ---------------
Net loss .................................................................. $ (51,428) $ (50,922)
=============== ===============
Net loss attributable to:
Limited partners ....................................................... $ (50,914) $ (50,413)
General partner ........................................................ (514) (509)
--------------- ---------------
Net loss .................................................................. $ (51,428) $ (50,922)
=============== ===============
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding ..................................................... $ (3.38) $ (3.35)
=============== ===============
Weighted average number of 100
Class A interests outstanding ............................................. 15,188 15,188
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
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<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF REVENUES AND EXPENSES
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
September 30,1997 September 30, 1996
<S> <C> <C>
Revenues:
Rent ........................................................................... $ 1,930,091 $ 1,958,228
Reimbursed expenses ............................................................ 368,632 303,868
Interest and other income ...................................................... 23,307 13,337
--------------- ---------------
Total revenues .............................................................. 2,322,030 2,275,433
--------------- ---------------
Expenses:
Interest expense ............................................................... 1,252,941 1,172,205
Depreciation and amortization .................................................. 426,113 479,898
Management and property expenses ............................................... 598,139 604,887
Administrative and management fees to related party ............................ 81,697 80,369
Professional fees and other expenses ........................................... 169,637 99,467
--------------- ---------------
Total expenses .............................................................. 2,528,527 2,436,826
--------------- ---------------
Net loss ....................................................................... $ (206,497) $ (161,393)
=============== ===============
Net loss attributable to:
Limited partners ............................................................ $ (204,432) $ (159,779)
General partner ............................................................. (2,065) (1,614)
--------------- ---------------
Net loss ....................................................................... $ (206,497) $ (161,393)
=============== ===============
Loss per weighted average
Limited Partnership 100 Class A
Interests outstanding .......................................................... $ (13.60) $ (10.63)
=============== ===============
Weighted average number of 100
Class A interests outstanding .................................................. 15,188 15,188
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
-4-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
General Class A
Total Partner Interests
<S> <C> <C> <C>
PARTNERS' CAPITAL (DEFICIT)
January 1, 1997 ...... $ 5,209,493 $ (70,470) $ 5,279,963
Distributions ............. (101,740) (1,017) (100,723)
Net Loss .................. (206,497) (2,065) (204,432)
--------------- --------------- ---------------
PARTNERS' CAPITAL (DEFICIT)
September 30, 1997 ... $ 4,901,256 $ (73,552) $ 4,974,808
=============== =============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
-5-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
September 30,1997 September 30, 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ......................................... $ (206,497) $ (161,393)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ................. 426,113 479,898
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable 29,451 (15,395)
Increase in prepaid expenses .............. (12,930) (16,872)
(Increase) decrease in other assets, net .. (55,696) 42,753
(Decrease) increase in accrued interest ... (137,100) 390,735
Increase (decrease) in accrued expenses and
other liabilities .................... 301,842 (17,345)
Increase in due to affiliate .............. 68,015 22,240
--------------- ---------------
Net cash provided by operating activities ........ 413,198 724,621
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITY:
Property improvements ......................... (90,621) (88,353)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption on bonds payable ................... (16,452,000) 0
Funds held in escrow .......................... (401,835) 0
Debt financing costs .......................... (308,228) 2,897
Proceeds from mortgages payable ............... 16,710,000 0
Cash distributions to partners ................ (101,740) (146,328)
--------------- ---------------
Net cash used in financing activities ......... (553,803) (143,431)
--------------- ---------------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS .............................. (231,226) 492,837
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD ........................... 326,120 218,872
--------------- ---------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD ................................. $ 94,894 $ 711,709
=============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for interest ......... $ 1,386,252 $ 781,470
=============== ===============
</TABLE>
See Accompanying Notes to Financial Statements
-6-
<PAGE>
CONCORD MILESTONE PLUS, L.P.
(a Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. The
financial statements as of and for the period ended September 30, 1997 and 1996
are unaudited. The results of operations for the interim periods are not
necessarily indicative of the results of operations for the fiscal year. Certain
information for 1996 has been reclassified to conform to the 1997 presentation.
These financial statements should be read in conjunction with the financial
statements and footnotes included thereto in the Partnership's financial
statements filed on Form 10-K for the year ended December 31, 1996.
1. Refinancing of Bonds Payable
As of September 30, 1997, Concord Milestone Plus, L.P. (the
"Partnership"), with the assistance of Tri-Stone Mortgage Company, an affiliate
of the General Partner, closed three new fixed rate first mortgage loans (the
"Mortgage Loans") from Westco Real Estate Finance Corp. (the "Lender") in the
amounts of $2,865,000, $8,445,000 and $5,400,000, respectively. All three
Mortgage Loans are secured by first mortgages on the Partnership's shopping
centers located in Searcy, Arkansas, Valencia, California and Green Valley,
Arizona (collectively, the "Properties"). Prior to September 30, 1997, the
Properties were encumbered by mortgages granted by the Partnership to United
States Trust Company of New York, as trustee for the benefit of the holders of
the Partnership's Escalating Rate Collateralized Mortgage Bonds due November 30,
1997 (the "Bonds"). The Partnership used the proceeds of the Mortgage Loans and
available cash to redeem all of the outstanding Bonds. An aggregate of
$17,015,650 was paid to the holders of the Bonds in connection with such
redemption, of which $16,452,000 was applied to prepay the principal of the
Bonds and $563,650 was applied to pay interest accrued on the Bonds through the
redemption date.
-7-
<PAGE>
The Mortgage Loan obtained by the Partnership with respect to the Property
located in Searcy, Arkansas (the "Searcy Loan") is in the principal amount of
$2,865,000 and bears interest at a fixed rate of 8.125% per annum. The Searcy
Loan requires monthly payments of principal and interest of $21,640 through and
including September 1, 2007. On October 1, 2007, the balance of principal and
interest (estimated to be $2,505,981) will be due and payable. The Searcy Loan
may not be prepaid in whole or in part prior to November 1, 2003. Subsequent to
October 31, 2003 and prior to May 31, 2007 it may be prepaid in whole but not in
part on any payment date with a prepayment penalty equal to the greater of (i)
1% of the outstanding principal balance at such time, or (ii) the excess, if
any, of the present value of the remaining scheduled principal and interest
payments (including any balloon payment), discounted at the Discount Rate (as
defined below), over the amount of principal being prepaid. The Searcy Loan may
be prepaid without penalty on any payment date after May 31, 2007. The Discount
Rate is a rate determined as of the week ending prior to the prepayment date and
is based on the published rates of U.S. Government securities having maturities
approximating the maturity date of the Searcy Loan. The Searcy Loan is secured
by first mortgages on all three of the Partnership's Properties and a default
under either of the other two Mortgage Loans will constitute a default under the
Searcy Loan. The Mortgage on the Partnership's shopping center located in
Searcy, Arkansas may be released at the Partnership's option after the Searcy
Loan is fully paid provided that no event of default exists under any of the
Mortgage Loans, the mortgagee has not given the Partnership notice of any event
which, with the passage of time, would constitute an event of default, and
certain other conditions are satisfied.
The Mortgage Loan obtained by the Partnership on the Property located in
Valencia, California (the "Valencia Loan") is in the principal amount of
$8,455,000 and bears interest at a fixed rate of 8.125% per annum. The Valencia
Loan requires monthly payments of principal and interest of $65,881 through and
including September 1, 2007. On October 1, 2007, the balance of principal and
interest (estimated to be $7,003,227) will be due and payable. The Valencia Loan
may not be prepaid in whole or in part prior to November 1, 2003. Subsequent to
October 31, 2003 and prior to May 31, 2007 it may be prepaid in whole but not in
part on any payment date with a prepayment penalty equal to the greater of (i)
1% of the outstanding principal balance at such time, or (ii) the excess, if
any, of the present value of the remaining scheduled principal and interest
payments (including any balloon payment), discounted at the Discount Rate (as
defined below), over the amount of principal being prepaid. The Valencia Loan
may be prepaid without penalty on any payment date after May 31, 2007. The
Discount Rate is a rate determined as of the week ending prior to the prepayment
date and is based on the published rates of U.S. Government securities having
maturities approximating the maturity date of the Valencia Loan. The Valencia
Loan is secured by first mortgages on all three of the Partnership's Properties
and a default under either of the other two Mortgage Loans will constitute a
default under the Valencia Loan.
-8-
<PAGE>
The Mortgage on the Partnership's shopping center located in Valencia,
California may be released at the Partnership's option after the Valencia Loan
is fully paid provided that no event of default exists under any of the Mortgage
Loans, the mortgagee has not given the Partnership notice of any event which,
with the passage of time, would constitute an event of default, and certain
other conditions are satisfied. In connection with the Valencia Loan, the
Partnership has deposited $45,000 into an escrow account (the "Valencia Escrow
Account") with Lender. The funds held in the Valencia Escrow Account may be
released upon the satisfactory completion of certain environmental improvements
to the Property located in Valencia, California and the satisfaction of certain
other conditions.
The Mortgage Loan obtained by the Partnership on the Property located in
Green Valley, Arizona (the "Green Valley Loan") is in the principal amount of
$5,400,000 and bears interest at a fixed rate of 8.250% per annum. The Green
Valley Loan requires monthly payments of principal and interest of $41,252
through and including September 1, 2007. On October 1, 2007, the balance of
principal and interest (estimated to be $4,738,096) will be due and payable. The
Green Valley Loan may not be prepaid in whole or in part prior to November 1,
2003. Subsequent to October 31, 2003 and prior to May 31, 2007 it may be prepaid
in whole but not in part on any payment date with a prepayment penalty equal to
the greater of (i) 1% of the outstanding principal balance at such time, or (ii)
the excess, if any, of the present value of the remaining scheduled principal
and interest payments (including any balloon payment), discounted at the
Discount Rate (as defined below), over the amount of principal being prepaid.
The Green Valley Loan may be prepaid without penalty on any payment date after
May 31, 2007. The Discount Rate is a rate determined as of the week ending prior
to the prepayment date and is based on the published rates of U.S. Government
securities having maturities approximating the maturity date of the Green Valley
Loan. The Green Valley Loan is secured by first mortgages on all three of the
Partnership's Properties and a default under either of the other two Mortgage
Loans will constitute a default under the Green Valley Loan. The Mortgage on the
Partnership's shopping center located in Green Valley, Arizona may be released
at the Partnership's option after the Green Valley Loan is fully paid provided
that no event of default exists under any of the Mortgage Loans, the mortgagee
has not given the Partnership notice of any event which, with the passage of
time, would constitute an event of default, and certain other conditions are
satisfied. In connection with the Green Valley Loan, the Partnership has
deposited $150,000 into an escrow account (the "Green Valley Escrow Account")
with Lender. The funds held in the Green Valley Escrow Account may be released
upon the execution of a new lease or renewal lease, with a termination date of
July 31, 2004 or later, by a specified tenant of the Property located in Green
Valley, Arizona and the satisfaction of certain other conditions.
CM Plus Corporation, the general partner of the Partnership, guaranteed
the Partnership's obligations under the Mortgage Loans.
-9-
<PAGE>
As a result of the Mortgage Loans, the Partnership recorded an aggregate
mortgage payable of $16,710,000 at September 30, 1997. In addition, the Lender
required a deposit of $198,000 into an escrow account for payment of real estate
taxes. The Mortgage Loans will require annual scheduled debt service payments
aggregating $1,545,276 through September 1, 2007. On October 1, 2007, all three
Mortgage Loans will become due and will require a payment currently estimated at
$14,247,304.
2. Commitments and Contingencies
The Lender engaged an independent environmental and geotechnical
consulting firm to perform environmental due diligence on the Properties at the
Partnership's expense. After various tests, the consultant identified chemical
contamination in the soil at a site at the Old Orchard Shopping Center in
Valencia, California which it believes is attributable to improper handling of
dry cleaning solvent by a tenant and its predecessors. Based on the results of
soil sampling and testing and the condition of the site, the environmental
consultant has concluded that the contaminated area is an excellent candidate
for receipt of regulatory closure of environmental issues through the use of a
health-risk assessment process which, if accepted by the California
Environmental Protection Agency, would obviate the need for active remediation
by the Partnership. Currently, the consultant has submitted a plan for a
"risk-based closure" for the site which will require a minimum of three to four
months to complete and is estimated to cost between $28,000 and $100,000,
assuming that the Partnership receives regulatory agency acceptance of the plan.
Based on the aforementioned, the Partnership believes it has made adequate
provision in the accompanying financial statements to cover its costs associated
with the environmental condition at the property.
The Partnership currently is pursuing the course of action recommended by
the environmental consultant. There can be no assurance, however, that the
Partnership will be granted a health-risk-based-closure and will not be
responsible for active remediation of the affected site, the cost of which
cannot be estimated at this time, but which could be substantial.
3. Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 128, "Earnings per Share" establishes
standards for computing and presenting earnings per share, and is effective for
financial statements for both interim and annual periods ending after December
15, 1997. Statement No. 129, "Disclosure of Information about Capital Structure"
establishes standards for disclosing information about an entity's capital
structure, and is effective for financial statements for periods ending after
December 15, 1997. Statement No. 130, "Reporting Comprehensive
-10-
<PAGE>
Income" establishes standards for reporting and display of comprehensive income
and its components, and is effective for fiscal years beginning after December
15, 1997. Statement No. 131 "Disclosures about Segments of an Enterprise and
Related Information" establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports issued to partners. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers, and is effective for financial statements
for periods beginning after December 15, 1997.
Management of the Partnership does not believe that these new standards
will have a material effect on the Partnership's reported operating results, per
partnership interest amounts, financial position or cash flows.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions, which will, among other
things, affect demand for retail space or retail goods, availability and
creditworthiness of prospective tenants, lease rents and the terms and
availability of financing; adverse changes in the real estate markets including,
among other things, competition with other companies and technology; risks of
real estate development and acquisition; governmental actions and initiatives
;and environmental/safety requirements.
Organization and Capitalization
Concord Milestone Plus, L.P., a Delaware limited partnership (the
"Partnership"), was formed on December 12, 1986, for the purpose of investing in
existing income-producing commercial and industrial real estate. The Partnership
began operations on August 20, 1987, and currently owns and operates three
shopping centers located in Searcy, Arkansas; Valencia, California; and Green
Valley, Arizona.
-11-
<PAGE>
The Partnership commenced a public offering on April 8, 1987 in order to
fund the Partnership's real property acquisitions. The Partnership terminated
its public offering on April 2, 1988 and was fully subscribed to with a total of
16,452 Bond Units and 15,188 Equity Units issued. Each Bond Unit consisted of
$1,000 principal amount of Bonds and 36 Class B Interests. Each Equity Unit
consists of 100 Class A Interests and 100 Class B Interests. Capital
contributions to the Partnership consisted of $15,187,840 from the sale of the
Equity Units and $592,272 from the sale of the Bond Units.
Results of Operations
Comparison of Quarter Ended September 30, 1997 to Quarter Ended
September 30, 1996
Revenues of the Partnership increased $46,392, or 6.2%, to $798,354 for
the quarter ended September 30, 1997 as compared to $751,962 for the quarter
ended September 30, 1996, primarily due to an increase in reimbursed expenses.
Reimbursed expenses increased due to increased recovery percentages on both
common area expenses and real estate taxes. Additionally, refunds given to
tenants in 1996 due to an incorrect billing in a prior year were charged to
revenue in 1996.
Management and property expenses increased $23,957, or 12.1%, to $221,957
for the quarter ended September 30, 1997 as compared to $197,191 for the quarter
ended September 30, 1996, primarily due to an increase in real estate taxes at
the Green Valley Mall located in Green Valley, Arizona resulting from
county-level increases in both assessed values and tax rates which occurred
during 1997.
Interest expense increased $39,606, or 10.1%, to $430,341 for the quarter
ended September 30, 1997 as compared to $390,735 for the quarter ended September
30, 1996, due to the increase in the interest rate on the Partnership's Bonds
from 9.50% in 1996 to 10.0% in 1997.
Depreciation and amortization expense decreased $19,933, or 12.4%, to
$141,063 for the quarter ended September 30, 1997 as compared to $160,996 for
the quarter ended September 30,1996, due to a decrease in the amortization of
the net bond premium/discount in 1997.
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<PAGE>
Comparison of Nine Months Ended September 30,1997 to Nine Months Ended
September 30, 1996
Revenues of the Partnership increased $46,597, or 2.0%, to $2,322,030 for
the nine months ended September 30, 1997, as compared to $2,275,433 for the nine
months ended September 30, 1996, primarily due to an increase in reimbursed
expenses. Reimbursed expenses increased due to increased recovery percentages on
both common area expenses and real estate taxes. Additionally, refunds given to
tenants in 1996 due to an incorrect billing in a prior year were charged to
revenue in 1996.
Interest expense increased $80,736, or 6.9%, to $1,252,941 for the nine
months ended September 30, 1997, as compared to $1,172,205 for the nine months
ended September 30, 1996 due to the increase in the interest rate on the
Partnership's Bonds from 9.5% in 1996 to 10.0% in 1997.
Depreciation and amortization expense decreased $53,785, or 11.2%, to
$426,113 for the nine months ended September 30, 1997 as compared to $479,898
for the nine months ended September 30, 1996, due to a decrease in the
amortization of the net bond premium/ discount in 1997.
Professional fees and other expenses increased $70,170, or 70.5% to
$169,637 for the nine months ended September 30, 1997 as compared to $99,467 for
the nine months ended September 30, 1996, primarily due to an accrual of
estimated environmental and geotechnical costs for risk-based closure at the Old
Orchard Shopping Center, in Valencia, California.
Liquidity and Capital Resources
The General Partner believes that the Partnership's working capital is
sufficient to meet the Partnership's current operating requirements for the
remainder of the year. Nevertheless, because the cash revenues and expenses of
the Partnership will depend on future facts and circumstances relating to the
Partnership's properties, as well as market and other conditions beyond the
control of the Partnership, a possibility exists that cash flow deficiencies may
occur. Currently, a significant amount of the Partnership's working capital is
in the control of the lender as funds held in escrow pending resolution of
certain circumstances. There are currently no material commitments for capital
expenditures.
-13-
<PAGE>
The Partnership has suspended making distributions due to the cost of
addressing environmental issues identified at the Old Orchard Shopping Center in
Valencia, California and payment of certain expenses relative to the refinancing
which are still outstanding. However, future debt service payments on the
mortgage loans will be approximately $100,000 lower per year than the annualized
1997 scheduled payments on the redeemed Bonds. Also, an additional savings of
approximately $25,000 per year will be realized because the Partnership will no
longer be required to pay trustee fees on the Bonds. Resolution of the
environmental situation affecting the Old Orchard Shopping Center is expected
during the first quarter of 1998. The Partnership will continue to suspend
distributions pending the resolution of the environmental condition.
Management is not aware of any other trends, events, commitments or
uncertainties that will or are likely to materially impact the Partnership's
liquidity.
Cash Flows
Net cash provided by operating activities of $413,198 for the nine months
ended September 30, 1997 included (i) a net loss of $206,497, (ii) non-cash
adjustments of $426,113 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $193,582.
Net cash provided by operating activities of $724,621 for the nine months
ended September 30, 1996 included (i) a net loss of $161,393, (ii) non-cash
adjustments of $479,898 for depreciation and amortization expense and (iii) a
net change in operating assets and liabilities of $406,116.
Net cash used in investing activities of $90,621 and $88,353 for the nine
months ended September 30, 1997 and September 30, 1996, respectively, consisted
of capital expenditures for property improvements.
Net cash used in financing activities of $553,803 for the nine months
ended September 30, 1997 included (i) redemption of Bonds payable of
$16,452,000, (ii) funds held in escrow of $401,835, (iii) debt financing costs
of $308,228, (iv) proceeds from mortgages payable of $16,710,000 and (v) cash
distributions to partners of $101,740.
Net cash used in financing activities of $143,431 for the nine months
ended September 30, 1996 included (i) debt financing costs of $2,897 and (ii)
cash distributions to partners of $146,328.
-14-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Reports on Form 8-K
(a) The following exhibits are included herein:
Number Exhibit
3.1 Amended and Restated Agreement of Limited Partnership of
Concord Milestone Plus, L.P. incorporated herein by
reference to Exhibit A to the Registrant's Prospectus
included as Part I of the Registrant's Post-Effective
Amendment No. 3 to the Registrant's Registration
Statement on Form S-11 which declared effective on April
3, 1987.
3.2 Amendment No. 1 to Amended and Restated Agreement of
Limited Partnership of Concord Milestone Plus, L.P.,
included as Exhibit 3.2 to Registrant's Form 10-K for
the fiscal year ended December 31, 1987 ("1987 Form
10-K"), which is incorporated herein by reference.
3.3 Amendment No. 2 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.3 to
the 1987 Form 10-K, which is incorporated herein by reference. 3.4
Amendment No. 3 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.4 to
the 1987 Form 10-K, which is incorporated herein by reference.
3.5 Amendment No. 4 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.5 to
the 1987 Form 10-K, which is incorporated herein by reference.
3.6 Amendment No. 5 to Amended and Restated Agreement of Limited
Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.6 to
Registrant's Form 10-K for the fiscal year ended December 31, 1988
which is incorporated herein by reference.
10.1 Fixed Rate Note, dated September 23, 1997, executed by
the Partnership in favor of Lender, relating to the
property located in Green Valley, Arizona.
-15-
<PAGE>
Number Exhibit
10.2 Mortgage, Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated September
23, 1997, executed by the Partnership for the benefit of
Lender, relating to the property located in Green
Valley, Arizona.
10.3 Assignment of Leases and Rents, dated September 23,
1997, executed by the Partnership for the benefit of
Lender, relating to the property located in Green
Valley, Arizona.
10.4 Environmental Liabilities Agreement, dated September 23,
1997, executed by the Partnership and CM Plus
Corporation for the benefit of Lender, relating to the
property located in Green Valley, Arizona.
10.5 Tenant Occupancy Escrow and Security Agreement, dated
September 23, 1997, by and between the Partnership and
the Lender, relating to the property located in Green
Valley, Arizona.
10.6 Fixed Rate Note, dated September 23, 1997, executed by
the Partnership in favor of Lender, relating to the
property located in Searcy, Arkansas.
10.7 Mortgage, Deed of Trust and Security Agreement, dated
September 23, 1997, executed by the Partnership for the
benefit of Lender, relating to the property located in
Searcy, Arkansas.
10.8 Assignment of Leases and Rents, dated September 23,
1997, executed by the Partnership for the benefit of
Lender, relating to the property located in Searcy,
Arkansas.
10.9 Environmental Liabilities Agreement, dated September 23,
1997, executed by the Partnership and CM Plus
Corporation for the benefit of Lender, relating to the
property located in Searcy, Arkansas.
10.10 Fixed Rate Note, dated September 23, 1997, executed by
the Partnership in favor of Lender, relating to the
property located in Valencia, California.
10.11 Deed of Trust, Assignment of Leases and Rents, Security
Agreement and Fixture Filing, dated September 23, 1997,
executed by the Partnership for the benefit of Lender,
relating to the property located in Valencia,
California.
-16-
<PAGE>
Number Exhibit
10.12 Assignment of Leases and Rents, dated September 23,
1997, executed by the Partnership for the benefit of
Lender, relating to the property located in Valencia,
California.
10.13 Environmental Liabilities Agreement, dated September 23,
1997, executed by the Partnership and CM Plus
Corporation for the benefit of Lender, relating to the
property located in Valencia, California.
10.14 Environmental Escrow and Security Agreement, dated
September 23, 1997, by and between the Partnership and
the Lender, relating to the property located in
Valencia, California.
27. Financial Data Schedule Article 5 included for
Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) purposes only. This Schedule contains summary
financial information extracted from the balance
sheets and statements of revenues and expenses of the
Partnership as of and for the nine month
period ended September 30, 1997, and is qualified in its
entirety by reference to such financial statements.
(b) No reports on form 8-K were filed during the quarter for which this
report is being filed.
-17-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DATE: November 8, 1996 CONCORD MILESTONE PLUS, L.P.
-------------------------- ----------------------------
(Registrant)
BY: CM PLUS CORPORATION
General Partner
By: /S/ Robert Mandor
Robert Mandor
Director and Vice President
By: /S/ Patrick S Kirse
Patrick S Kirse
Treasurer and Controller
Loan No.: 1700020082
Property: Green Valley Mall
Green Valley, Arizona
FIXED RATE NOTE
$5,400,000 September 23, 1997
FOR VALUE RECEIVED, CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (hereinafter referred to as "Maker"), promises to pay to the order
of WESTCO REAL ESTATE FINANCE CORP., a California corporation, its successors
and assigns (hereinafter referred to as "Payee"), at the office of Payee or its
agent, designee, or assignee at 1 Park Plaza, Suite 430, Irvine, California
92614, or at such place as Payee or its agent, designee, or assignee may from
time to time designate in writing, the principal sum of FIVE MILLION FOUR
HUNDRED THOUSAND AND NO/100 DOLLARS ($5,400,000), in lawful money of the United
States of America, with interest thereon to be computed on the unpaid principal
balance from time to time outstanding at the Applicable Interest Rate
(hereinafter defined) at all times prior to the occurrence of an Event of
Default (as defined in the Mortgage (hereinafter defined)), and to be paid in
installments as follows:
(1) A payment of interest only on the date hereof for the period
from the date of funding through September 30, 1997, both
inclusive;
(2) A constant payment of $41,252.24, on the first day of
November, 1997, and on the first day of each calendar month
thereafter up to and including the first day of September,
2007;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of October, 2007, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Interest on the principal sum of this Note
shall be calculated on a year of three hundred sixty (360) days and a month of
thirty (30) days but charged for the actual number of days elapsed. Payments
under this Note shall be applied first, to the payment of interest and other
costs and charges due in connection with this Note or the Debt (as hereinafter
defined), as Payee may determine in its sole discretion, and the balance shall
be applied toward the reduction of the principal sum. All amounts due under this
Note shall be payable without setoff, counterclaim or any other deduction
whatsoever.
1. Interest Rate. The term "Applicable Interest Rate" means from the date of
this Note through and including the Maturity Date, a rate of Eight and
Twenty-Five One Hundredths
<PAGE>
percent (8.25%) per annum.
Maker agrees to an effective rate of interest that is the rate stated
above plus any additional rate of interest resulting from any other charges in
the nature of interest paid or to be paid by or on behalf of Maker, or any
benefit received or to be received by Payee, in connection with this Note.
2. Security.
(a) This Note is secured by, and Payee is entitled to the
benefits of, the Mortgage, the Assignment of Leases and Rents, the Environmental
Liabilities Agreement, and the other Loan Documents (hereinafter defined). The
term "Mortgage" means the Mortgage, Deed of Trust and Security Agreement dated
the date hereof given by Maker for the use and benefit of Payee covering the
estate of Maker in certain premises as more particularly described therein (the
"Mortgaged Property"). The term "Assignment" means the Assignment of Leases and
Rents of even date herewith executed by Maker in favor of Payee. The term
"Environmental Agreement" means the Environmental Liabilities Agreement of even
date herewith executed by Maker in favor of Payee. The term "Loan Documents"
refers collectively to this Note, the Mortgage, the Assignment, the
Environmental Agreement and any and all other documents executed in connection
with this Note or now or hereafter executed by Maker and/or others and by or in
favor of Payee, which wholly or partially secure or guarantee payment of this
Note or pertains to indebtedness evidenced by this Note.
(b) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $2,865,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Town & Country Shopping Center located in
Searcy, Arkansas, as such property is more particularly described in such Loan
Documents.
(c) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $8,445,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Old Orchard Shopping Center located in
Santa Clarita (Valencia), California, as such property is more particularly
described in such Loan Documents.
3. Grace Period; Late Payments. If any installment payable under this
Note (including the final monthly installment due on the Maturity Date but
excluding the balance of the unpaid principal due thereon) is not received by
Payee within ten (10) days after the date on which it is due (without regard to
any applicable cure and/or notice period), Maker shall pay to Payee upon demand
an amount equal to the lesser of (a) five percent (5%) of such unpaid sum or (b)
the maximum amount permitted by applicable law to defray the expenses incurred
by Payee in handling and processing such delinquent payment and to compensate
Payee for the loss of the
<PAGE>
use of such delinquent payment, and such amount shall be secured by the Loan
Documents. The term "Debt" means, collectively, (i) the unpaid principal balance
of and the accrued but unpaid interest on this Note, (ii) all other sums due,
payable or reimbursable to Payee under the Loan Documents (including, without
limitation, sums due or payable by Maker for deposit into the Tax and Insurance
Escrow Fund [as defined in the Mortgage], the Replacement Escrow Fund [as
defined in the Mortgage], and any other escrows established or required under
the Loan Documents), and (iii) any and all other liabilities and obligations of
Maker under this Note or the other Loan Documents.
4. Remedies Generally. So long as an Event of Default exists, Payee
may, at its option, without notice or demand to Maker except as may be required
under applicable law, declare the Debt immediately due and payable. All remedies
hereunder, under the Loan Documents and at law or in equity shall be cumulative.
In the event that it should become necessary to employ counsel to collect the
Debt or to protect or foreclose the security for the Debt or to defend against
any claims asserted by Maker arising from or related to the Loan Documents,
Maker also agrees to pay to Payee on demand all costs of collection or defense
incurred by Payee, including reasonable attorneys' fees for the services of
counsel whether or not suit be brought.
5. Default Interest. Upon the occurrence of an Event of Default Maker
shall pay interest on the entire unpaid principal sum and any other amounts due
under the Loan Documents until such default is cured at the rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the greater
of (i) three percent (3%) plus the Applicable Interest Rate or (ii) four percent
(4%) plus the Prime Rate (hereinafter defined), in effect at the time of the
occurrence of the Event of Default (the "Default Rate"). The term "Prime Rate"
means the prime rate reported by Citibank, N.A. In the event that Citibank, N.A.
should cease or temporarily interrupt publication, the term "Prime Rate" shall
mean the daily average prime rate published in The Wall Street Journal or
business section of another newspaper of national standing and general
circulation chosen by Payee. 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 Payee shall select a comparable interest rate
index which is readily available and verifiable to Maker but is beyond Payee's
control. The Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of a sum of money determined by
Payee to be sufficient to cure the Event of Default. Amounts of interest accrued
at the Default Rate shall constitute a portion of the Debt, and shall be deemed
secured by the Loan Documents. This clause, however, shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Payee by reason of the
occurrence of any Event of Default.
6. Lock-Out Period; Prepayment Terms. The principal balance of this
Note may not be prepaid in whole or in part (except with respect to the
application of casualty or condemnation proceeds) prior to the first day of the
Sixth Loan Year (as hereinafter defined). During the Sixth Loan Year or at
anytime thereafter, provided no Event of Default exists, the principal balance
of this Note may be prepaid, in whole but not in part (except with respect to
the application of casualty or condemnation proceeds), on any scheduled payment
date under this Note upon not
<PAGE>
less than thirty (30) days' prior written notice to Payee specifying the
scheduled payment date on which prepayment is to be made (the "Prepayment Date")
and upon payment of (a) interest accrued and unpaid on the principal balance of
this Note to and including the Prepayment Date, (b) all other sums then due
under this Note, and the other Loan Documents, and (c) a prepayment
consideration in an amount equal to the greater of (i) one percent (1%) of the
outstanding principal balance of this Note at the time of prepayment, or (ii)
the 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 (as hereinafter defined) less the amount of principal being
prepaid. The term "Discount Rate" means the rate which, when compounded monthly,
is equivalent to the Treasury Rate (as hereinafter defined), when compounded
semi-annually. The term "Treasury Rate" means the yield calculated by the linear
interpolation of the yields, as reported in Federal Reserve Statistical Release
H.15-Selected Interest Rates under the heading "U.S. Government
Securities/Treasury Constant Maturities" for the week ending prior to the
Prepayment Date, of U.S. Treasury constant maturities with maturity dates (one
longer and one shorter) most nearly approximating the Maturity Date. (In the
event Release H.15 is no longer published, Payee shall select a comparable
publication to determine the Treasury Rate.) Payee shall notify Maker of the
amount and the basis of determination of the required prepayment consideration.
Notwithstanding the foregoing, Maker shall have the additional privilege to
prepay the entire principal balance of this Note (together with any other sums
constituting the Debt) on any scheduled payment date during the six (6) months
preceding the Maturity Date without any fee or consideration for such privilege.
If any such notice of prepayment is given, the principal balance of this Note
and the other sums required under this paragraph shall be due and payable on the
Prepayment Date. Payee shall not be obligated to accept any prepayment of the
principal balance of this Note unless it is accompanied by the prepayment
consideration due in connection therewith. The term "Loan Year" for purposes of
this paragraph means each complete 365-day period (366 days in a leap year)
after the first scheduled payment date set forth in section 2 on page 1 of this
Note.
7. Post-Default Payment of Entire Debt: Prepayments Resulting From
Casualty or Condemnation. If following the occurrence of any Event of Default,
Maker shall tender payment of an amount sufficient to satisfy the Debt at any
time prior to a sale of the Mortgaged Property, either through foreclosure or
the exercise of the other remedies available to Payee under the Mortgage, such
tender by Maker shall be deemed to be a voluntary prepayment under this Note in
the amount tendered. If at the time of such tender, prepayment of the principal
balance of this Note is not permitted, Maker shall, in addition to the entire
Debt, also pay to Payee a sum equal to the interest which would have accrued on
the principal balance of this Note at the Applicable Interest Rate in effect on
the date which is five (5) days prior to the date of prepayment, from the date
of such tender to the first day of the period during which prepayment of the
principal balance of this Note would have been permitted, together with a
prepayment consideration equal to the prepayment consideration which would have
been payable as of the first day of the period during which prepayment would
have been permitted. If at the time of such tender, prepayment of the principal
balance of this Note is permitted, Maker shall, in addition to the entire Debt,
also pay to Payee the applicable prepayment consideration specified in this
Note. If the prepayment results from the application to the Debt of the casualty
or condemnation proceeds from the
<PAGE>
Mortgaged Property, no prepayment consideration will be imposed. Partial
prepayments of principal resulting from the application of casualty or insurance
proceeds to the Debt shall not change the amounts of subsequent monthly
installments nor change the dates on which such installments are due, unless
Payee shall otherwise agree in writing.
8. Usury Savings Provisions. It is expressly stipulated and agreed to
be the intent of Maker and Payee at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Payee
to contract for, charge, take, reserve or receive a greater amount of interest
than under state law) and that this section shall control every other covenant
and agreement in this Note and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect to the
indebtedness evidenced by this Note and the other Loan Documents, or if Payee's
exercise of the option to accelerate the maturity of this Note, or if any
prepayment by Maker results in Maker having paid any interest in excess of that
permitted by applicable law, then it is Maker's and Payee's express intent that
all excess amounts theretofore collected by Payee be credited on the principal
balance of this Note (or, if this Note has been or would thereby be paid in
full, refunded to Maker within sixty (60) days after such determination), and
the provisions of this Note and the other Loan Documents immediately be deemed
reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder. All sums paid or agreed to
be paid to Payee for the use, forbearance and detention of the indebtedness
evidenced hereby and by the other Loan Documents shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full so that the rate or amount
of interest on account of such indebtedness does not exceed the maximum rate
permitted under applicable law from time to time in effect and applicable to the
indebtedness evidenced hereby for so long as such indebtedness remains
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Payee to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
9. Waivers. Except as specifically provided in the Loan Documents,
Maker and any endorsers, sureties or guarantors hereof jointly and severally
waive presentment and demand for payment, notice of intent to accelerate
maturity, notice of acceleration of maturity, protest and notice of protest and
non-payment, all applicable exemption rights, valuation and appraisement, notice
of demand, and all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Note and the bringing
of suit and diligence in taking any action to collect any sums owing hereunder
or in proceeding against any of the rights and collateral securing payment
hereof. Maker and any surety, endorser or guarantor hereof agree (i) that the
time for any payments hereunder may be extended from time to time without notice
and consent, (ii) to the acceptance of further collateral, (iii) the release of
any existing collateral for the payment of this Note, (iv) to any and all
renewals, waivers or modifications that may be granted by Payee with respect to
the payment or other provisions of this Note, and/or
<PAGE>
(v) that additional makers, endorsers, guarantors or sureties may become parties
hereto all without notice to them and without in any manner affecting their
liability under or with respect to this Note. No extension of time for the
payment of this Note or any installment hereof shall affect the liability of
Maker under this Note or any endorser or guarantor hereof even though the Maker
or such endorser or guarantor is not a party to such agreement.
10. No Impairment of Remedies. Failure of Payee to exercise any of the
options granted herein to Payee upon the happening of one or more of the events
giving rise to such options shall not constitute a waiver of the right to
exercise the same or any other option at any subsequent time in respect to the
same or any other event. The acceptance by Payee of any payment hereunder that
is less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
options granted herein to Payee at that time or at any subsequent time or
nullify any prior exercise of any such option without the express written
acknowledgment of the Payee.
11. Non-Recourse Provisions; Exceptions to Non-Recourse.
Notwithstanding anything in the Loan Documents to the contrary, but subject to
the qualifications below, Payee and Maker agree that:
(A) Except as hereinafter provided in this Section 11, no
judgment in the nature of a deficiency judgment for the payment of the
indebtedness or interest thereon or the collection of any amount due
under the Loan Documents will be enforced personally against Maker, its
general partner or any of its or their officers, directors, principals
or shareholders except to the full extent (but only to the extent) of
the security therefor, the same being all properties (whether real or
personal), rights, estates and interests now or at any time hereafter
securing the payment of the Debt and/or the other obligations of Maker
under the Loan Documents (collectively with the Mortgaged Property, the
"Security Property"), provided, however, in the event (i) of fraud or
material misrepresentation by Maker or guarantors in connection with
the loan evidenced by this Note, or (ii) the first full monthly payment
on the Note is not paid when due, the limitation on recourse set forth
in this section (A) will be null and void and completely inapplicable,
and this Note shall be with full recourse to Maker and its general
partner;
(B) if a default occurs in the timely and proper payment of
all or any part of the Debt, any judicial proceedings brought by Payee
against Maker and/or its general partner shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the
liens, security titles, estates, assignments, rights and security
interests now or at any time hereafter securing the payment of the Debt
and/or the other obligations of Maker under the Loan Documents, and no
attachment, execution or other writ of process shall be sought, issued
or levied upon any assets, properties or funds of Maker or its general
partner, or its or their officers, directors, principals or
shareholders other than the Security Property, except with respect to
the liability described below in this section; and
(C) in the event of a foreclosure of such liens, security
titles, estates, assignments, rights or security interests securing the
payment of the Debt, no judgment
<PAGE>
for any deficiency upon the Debt shall be sought or obtained by Payee
against Maker or its general partner, or its or their officers,
directors, principals or shareholders except with respect to the
liability described below in this section (C); provided that,
notwithstanding the foregoing provisions of this section, nothing
contained therein shall in any manner or way release, affect or impair
the right of Payee to recover, from Maker and its general partner any
loss, cost, expense, damage, claim or other obligation (including
without limitation reasonable attorneys' fees and court costs) incurred
or suffered by Payee arising out of or in connection with the
following:
(1) any breach of the Environmental Agreement, including the
indemnification provisions contained therein;
(2) Maker's failure to obtain Payee's prior written consent to (a)
any subordinate financing or any other encumbrance on the
Mortgaged Property, or (b) any transfer of the Mortgaged
Property or majority ownership in Maker in violation of the
Mortgage;
(3) any litigation or other legal proceeding related to the Debt
that delays or impairs Payee's ability to preserve, enforce or
foreclose its lien on the Security Property, including, but
not limited to, the filing of a voluntary or involuntary
petition concerning Maker under the U.S. Bankruptcy Code, in
which action a claim, counterclaim, or defense is asserted
against Payee, other than any litigation or other legal
proceeding in which a final, non-appealable judgment for money
damages or injunctive relief is entered against Payee;
(4) Maker's failure to pay required taxes, assessments, and
insurance premiums payable with respect to the Mortgaged
Property or to maintain the required escrows therefor, to the
extent that monies are not paid by Maker in escrow for the
payment of such amounts, except for any amounts applicable to
the period after foreclosure of Payee's lien on the Mortgaged
Property, or the delivery by Maker of a deed to the Mortgaged
Property in lieu of foreclosure (which deed has been accepted
by Payee in writing), or the appointment of a receiver for the
Mortgaged Property;
(5) the gross negligence or willful misconduct of Maker, its
agents, affiliates, officers or employees which causes or
results in a diminution, or loss of value, of the Security
Property that is not reimbursed by insurance or which gross
negligence or willful misconduct exposes Payee to claims,
liability or costs of defense in any litigation or other legal
proceeding;
(6) the seizure or forfeiture of the Security Property, or any
portion thereof, or Payee's interest therein, resulting from
criminal wrongdoing by any person or entity other than Payee
under any federal, state or local law;
(7) (a) any physical waste of the Mortgaged Property caused by
the intentional or
<PAGE>
grossly negligent act(s) or omission(s) of Maker, its agents,
affiliates, officers and employees, (b) the failure by Maker
to maintain, repair or restore any part of the Mortgaged
Property as may be required by the Mortgage or any of the
other Loan Documents to the extent of all gross revenues that
have been generated by the Mortgaged Property following the
date which is eighteen (18) months' prior to notice to Maker
from Payee of such failure to maintain, repair or restore any
part of the Mortgaged Property and that have not been applied
to pay any portion of the Debt, reasonable and customary
operating expenses and capital expenditures for the Mortgaged
Property paid to third parties not affiliated (directly or
indirectly) with Maker, taxes and insurance premiums for the
Mortgaged Property and escrows deposited with Payee, or (c)
the removal or disposal of any portion of the Mortgaged
Property after an Event of Default under the Loan Documents to
the extent such Mortgaged Property is not replaced by Maker
with like property of equivalent value, function and design;
(8) Maker's misapplication or conversion of any insurance proceeds
paid by reason of any loss, damage or destruction to the
Mortgaged Property and any awards or amounts received in
connection with the condemnation of all or a portion of the
Mortgaged Property and not used by Maker for restoration or
repair of the Mortgaged Property;
(9) Maker's failure to pay in accordance with the terms of the
Mortgage any charges for labor or materials or other charges
for work performed or materials furnished prior to foreclosure
that can create liens on any portion of the Mortgaged
Property, to the extent of the amount rightfully claimed by
the lien claimant, or found in any legal proceeding to be owed
to the lien claimant, and not so paid;
(10) Maker's failure to deliver any security deposits collected
with respect to the Mortgaged Property to Payee or any other
party entitled to receive such security deposits under the
Loan Documents, following an Event of Default; and
(11) any rents (including advanced or prepaid rents), issues,
profits, accounts or other amounts generated by or related to
the Mortgaged Property attributable to, or accruing after an
Event of Default, which amounts were collected by Maker or its
property manager and not turned over to the Payee or used to
pay unaffiliated third parties for reasonable and customary
operating expenses and capital expenditures for the Mortgaged
Property, and taxes and insurance premiums with respect to the
Mortgaged Property.
12. References to Loan Documents. References to particular sections of
the Loan Documents shall be deemed references to such sections as affected by
other provisions of the Loan Documents relating thereto. Nothing contained in
this section shall (a) be deemed to be a release or impairment of the Debt or
the lien of the Loan Documents upon the Mortgaged Property, or (b) preclude
Payee from foreclosing under the Loan Documents in case of any default or from
enforcing any of the other rights of Payee, including naming Maker as a party
<PAGE>
defendant in any action or suit for foreclosure and sale under the Mortgage, or
obtaining the appointment of a receiver, except as stated in this section, or
(c) limit or impair in any way whatsoever the Guaranty (the "Guaranty") of even
date executed and delivered in connection with the indebtedness evidenced by
this Note or release, relieve, reduce, waive or impair in any way whatsoever,
any obligation of any party to the Guaranty.
13. No Waiver of Lender's Rights in Bankruptcy. Nothing herein shall be
deemed to be a waiver of any right which Payee 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 Loan Documents or to
require that all collateral shall continue to secure all of the Debt owing to
Payee in accordance with this Note and the other Loan Documents.
14. Maker's Authority; Loan for Business Purposes. Maker (and the
undersigned representative of Maker, if any) represents that Maker has full
power, authority and legal right to execute, deliver and perform its obligations
pursuant to this Note and the other Loan Documents and that this Note and the
other Loan Documents constitute legal, valid and binding obligations of Maker.
Maker further represents that the loan evidenced by the Loan Documents was made
for business or commercial purposes and not for personal, family or household
use.
15. Notices. All notices or other communications required or permitted
to be given pursuant hereto shall be given in the manner and be effective as
specified in the Mortgage, directed to the parties at their respective addresses
as provided therein.
16. Transfer of Loan by Payee. Payee shall have the unrestricted right
at any time or from time to time to sell this Note and the loan evidenced by
this Note and the Loan Documents or participation interests therein. Maker shall
execute, acknowledge and deliver any and all instruments requested by Payee to
satisfy such purchasers or participants that the unpaid indebtedness evidenced
by this Note is outstanding upon the terms and provisions set out in this Note
and the other Loan Documents. To the extent, if any specified in such assignment
or participation, such assignee(s) or participant(s) shall have the rights and
benefits with respect to this Note and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Payee hereunder.
17. Waiver of Trial by Jury. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE
RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN PAYEE AND MAKER;
(B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE
ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF
COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP);
<PAGE>
(D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO, INSTRUMENTALITY, FRAUD, REAL
ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION, UNDUE INFLUENCE, INTERFERENCE
OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS INTERFERENCE WITH PRESENT OR
PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST; OR (F) SLANDER, LIBEL OR
DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY MAKER, PAYEE, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE. PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
18. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY
THE MORTGAGE IS LOCATED (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. MAKER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN
THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY
PROCEEDING OUT OF OR RELATING TO THIS NOTE.
19. No Oral Modification. THE PROVISIONS OF THIS NOTE AND THE LOAN
DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY
THE MAKER AND PAYEE. THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.
20. Due on Sale/Due on Encumbrance. Payment of the indebtedness
evidenced by this Note may be accelerated in the event that Maker transfers or
encumbers the Mortgaged Property in violation of Section 12 of the Deed of
Trust.
(Signature page follows)
<PAGE>
Executed as of the day and year first above written.
MAKER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
LEGAL DESCRIPTION
(For informational purposes only)
PARCEL 1:
All of those portions of Block 4 of TUCSON GREEN VALLEY UNIT NO. 1, Blocks 1
thru 12, according to the plat of record in the office of the County Recorder of
Pima County, Arizona, recorded in Book 16, of Maps, Page 76, more particularly
described as follows:
BEGINNING at the Southwest corner of said Block 4;
THENCE South 08 degrees 09 minutes 55 seconds West on a Southerly extension of
the West line of said Block 4, a distance of 10.0 feet to a point, said point
being the TRUE POINT OF BEGINNING;
THENCE North 08 degrees 09 minutes 55 seconds East, along said previous line and
the West line of Block 4, a distance of 927.81 feet to a point of curvature;
THENCE Northeasterly around said curve to the right whose radius is 25.0 feet, a
distance of 35.71 feet to a point of tangency on the South right of way line of
Esperanza Boulevard, said point also being on the Northerly line of Block 4;
THENCE East, along the North line of said Block 4, a distance of 613.60 feet to
a point;
THENCE South, a distance of 220.0 feet to a point;
THENCE East, a distance of 148.43 feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 45.98 feet to
a point;
THENCE South 81 degrees 50 minutes 05 seconds East, a distance of 152.70 feet to
a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 198.18 feet to
a point on the South right of way line of Esperanza Boulevard.
THENCE East, along the South right of way line of Esperanza Boulevard, a
distance of 40.46 feet to a point;
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 161.57 feet to
a point;
THENCE South, 81 degrees 50 minutes 55 seconds East, a distance of 192.24 feet
to a point on the Westerly right of way line of Tucson-Nogales Highway;
THENCE South 00 degrees 25 minutes 06 seconds East, along said Westerly right of
way line, a distance of 536.0 feet to a point;
<PAGE>
THENCE South 08 degrees 09 minutes 55 seconds West, along said Westerly right of
way line, a distance of 361.36 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 30.0 feet to a
point;
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 40.0 feet to a
point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 1,242.0 feet
to a point, said point being the TRUE POINT OF BEGINNING;
EXCEPT the following described Parcels "A" and "B":
PARCEL "A"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
more particularly described as follows:
BEGINNING at the Southerly point of curvature of Curve No. 2 in said Lot 5;
THENCE South 08 degrees 09 minutes 55 seconds West, along the East right of way
line of La Canada Drive, a distance of 134.92 feet to a point, said point being
the TRUE POINT OF BEGINNING;
THENCE East, a distance of 162.78 feet to a point;
THENCE South, a distance of 105.07 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 176.05 feet to
a point on the East right of way of La Canada Drive;
THENCE North 08 degrees 09 minutes 55 seconds East, along said right of way
line, a distance of 80.89 feet to a point, said point being the TRUE POINT OF
BEGINNING.
PARCEL "B"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
being more particularly described as follows:
BEGINNING at the Southwest corner of said Lot 5;
THENCE North 08 degrees 09 minutes 55 seconds East, along the West line of said
Lot 5, a distance of 40.0 feet to the TRUE POINT OF BEGINNING;
THENCE South 81 degrees 50 minutes 05 seconds East, along a line being 40.0 feet
North of and parallel with the South line of said Lot 5, a distance of 320.0
feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, along a line being 320.0
feet Easterly of and parallel with the said West line of Lot 5, a distance of
600.0 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, along a line being 640.0
feet North of and parallel with said South line of Lot 5, a distance of 320.0
feet to a point in the said West line of Lot 5;
<PAGE>
THENCE south 08 degrees 09 minutes 55 seconds West, along said West line, a
distance of 600.0 feet to the TRUE POINT OF BEGINNING.
Property Address: Green Valley Mall
99-255 Esperanza
101 La Canada Road
Green Valley, Arizona 72143
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier, Esq.
Loan No. 1700020082
Property: Green Valley Mall
Green Valley, Arizona
MORTGAGE, DEED OF TRUST,
ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS MORTGAGE, DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FIXTURE FILING (as the same may from time to time be extended,
renewed or modified, the "Mortgage"), is made as of September 23, 1997, by
CONCORD MILESTONE PLUS, L.P., a Delaware limited partnership, as trustor
("Mortgagor"), having its principal place of business at and whose mailing
address is 5200 Town Center Circle, 4th Floor, Boca Raton, Florida 33486-1012 to
FIRST AMERICAN TITLE INSURANCE COMPANY, as trustee (the "Trustee"), and to and
for the benefit of WESTCO REAL ESTATE FINANCE CORP.,
a California corporation, as beneficiary ("Mortgagee"), having its principal
place of business at and whose mailing address is c/o Imperial Commercial
Capital Corporation, 1 Park Plaza, Suite 430, Irvine, California 92614.
To secure:
A (i) the payment of an indebtedness in the original principal sum of
FIVE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($5,400,000), lawful money
of the United States of America, to be paid with interest according to a certain
note dated the date hereof made by Mortgagor to Mortgagee (the note together
with all extensions, renewals or modifications thereof being hereinafter
collectively called the "Note"), and all other sums, liabilities and obligations
constituting the Debt (as defined in the Note), (ii) the payment of all sums
advanced or incurred by Mortgagee contemplated hereby, and (iii) the performance
of the obligations and covenants herein contained;
B (i) the payment of an indebtedness in the original principal sum of
EIGHT MILLION FOUR HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,445,000),
lawful money of the United States of America, to be paid with interest according
to a certain note
<PAGE>
dated the date hereof made by Mortgagor to Mortgagee (the note together with all
extensions, renewals or modifications thereof being hereinafter collectively
called the "California Note"), and all other sums, liabilities and obligations
constituting the Debt (as defined in the California Note), (ii) the payment of
all sums advanced or incurred by Mortgagee contemplated by the Mortgage (as
defined in the California Note), and (iii) the performance of the obligations
and covenants contained in the Mortgage (as defined in the California Note); and
C (i) the payment of an indebtedness in the original principal sum of
TWO MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND AND NO/100 DOLLARS ($2,865,000),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Arkansas Note"), and all other sums,
liabilities and obligations constituting the Debt (as defined in the Arkansas
Note), (ii) the payment of all sums advanced or incurred by Mortgagee
contemplated by the Mortgage (as defined in the Arkansas Note), and (iii) the
performance of the obligations and covenants contained in the Mortgage (as
defined in the Arkansas Note).
Mortgagor hereby irrevocably grants, transfers and assigns to Trustee, IN TRUST
WITH POWER OF SALE, all of Mortgagor's present and future estate, right, title
and interest in and to the real property described in Exhibit A attached hereto
(the "Premises") and the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
(a) 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 Mortgagor of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(b) all machinery, furnishings, equipment, fixtures (including, but not
limited to, all heating, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other personal property of every kind and nature
(hereinafter collectively called the "Equipment"), whether tangible or
intangible, whatsoever owned by Mortgagor, or in which Mortgagor 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
<PAGE>
Improvements and all building equipment, materials and supplies of any nature
whatsoever owned by Mortgagor, or in which Mortgagor has or shall have an
interest, now or hereafter located upon the Premises and the Improvements, or
appurtenant thereto, or usable in connection with the present or future
operation, enjoyment and occupancy of the Premises and the Improvements,
including the proceeds of any sale or transfer of the foregoing, and the right,
title and interest of Mortgagor in and to any of the Equipment which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the State or States where any of the Mortgaged Property
is located (the "Uniform Commercial Code") superior in lien to the lien of this
Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or other
mineral royalties and bonuses) from the Premises and the Improvements (the
"Rents") and all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;
(e) 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;
(f) the right, in the name and on behalf of Mortgagor, 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 Mortgagee in
the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are defined in
the Uniform Commercial Code, and all contract rights, franchises, books,
records, plans, specifications, permits, licenses (to the extent assignable),
approvals, actions, and causes of action which now or hereafter relate to, are
derived from or are used in connection with the Premises, or the use, operation,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively called the "Intangibles"); and
(h) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Mortgagor's
obligations under the Loan Documents (as defined in the Note), including
(without limitation) the Tax and Insurance Escrow Fund (hereafter defined).
Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
<PAGE>
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. Mortgagor will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole
owner of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor 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
insuring the lien of this Mortgage and that this Mortgage is and will remain a
valid and enforceable first lien on and security interest in the Mortgaged
Property, subject only to said exceptions. Mortgagor shall forever warrant,
defend and preserve such title and the validity and priority of the lien of this
Mortgage and shall forever warrant and defend the same to Mortgagee and/or
Trustee against the claims of all persons whomsoever.
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft on a replacement cost basis
with an Agreed Value Endorsement waiving co-insurance, all in an amount not less
than 100 percent of the then full replacement cost of the Improvements and
Equipment, without deduction for physical depreciation.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
i) Flood insurance if any part of the Mortgaged Property now
(or subsequently determined to be) 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
National Flood Insurance Act of 1968 (and any amendment or successor
act thereto) in an amount at least equal to the lesser of the full
replacement cost of the Improvements and the Equipment, the outstanding
principal amount of the Note or the maximum limit of coverage available
with respect to the Improvements and Equipment under said Act.
Mortgagor hereby agrees to pay Mortgagee such fees as may be permitted
under applicable law for the costs incurred by Mortgagee in
determining, from time to time, whether the Mortgaged Property is then
located within such area.
ii) Comprehensive General Liability insurance, including
broad form property
<PAGE>
damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per
occurrence of $1,000,000 for the Improvements and the Premises with
excess umbrella coverage in an amount of at least $1 million arising
out of any one occurrence with aggregate coverage of $3,000,000, except
that if any buildings contain elevators, the aggregate coverage shall
be a minimum of $4,000,000.
iii) Rental loss insurance in an amount equal to the aggregate
annual amount of all Rents and additional Rents payable by all of the
tenants under the Leases (whether or not such Leases are terminable in
the event of a fire or casualty), and all other Rents, such rental loss
insurance to cover rental losses for a period of at least one year
after the date of the fire or casualty in question. The amount of such
rental loss insurance shall be reviewed annually and shall be increased
from time to time during the term of this Mortgage as and when rent
increases occur under Leases previously in place and as a result of new
Leases, and as renewal Leases are entered into in accordance with the
terms of this Mortgage, to reflect all increased rent and increased
additional rent payable by all of the tenants under all such Leases.
iv) Insurance against loss or damage from (1) leakage of
sprinkler systems, and (2) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in the
Improvements and including broad form boiler and machinery insurance
(without exclusion for explosion) covering all boilers or other
pressure vessels, machinery and equipment located in, on, or about the
Premises and the Improvements. Coverage is required in an amount at
least equal to the full replacement cost of such equipment and the
building or buildings housing same. Coverage must extend to electrical
equipment, sprinkler systems, heating and air conditioning equipment,
refrigeration equipment and piping.
v) If the Mortgaged Property includes commercial property,
worker's compensation insurance with respect to any employees of
Mortgagor, as required by any governmental authority or legal
requirement.
vi) [Intentionally Deleted].
vii) Such other insurance as may from time to time be
reasonably required by Mortgagee in order to protect its interests.
(b) All policies of insurance (the "Policies") required pursuant to
Section 3: (i) shall contain a standard noncontributory mortgagee clause naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days' prior written notice, of any modification, reduction or cancellation,
(v) shall be for a term of not less than one year, (vi) shall be issued by an
insurer licensed in the state in which the
<PAGE>
Mortgaged Property is located, (vii) shall provide that Mortgagee may, but shall
not be obligated to, make premium payments to prevent any cancellation,
endorsement, alteration or reissuance, and such payments shall be accepted by
the insurer to prevent same, (viii) shall be satisfactory in form and substance
to Mortgagee and shall be approved by Mortgagee as to amounts, form, risk
coverage, deductibles, loss payees and insureds, and (ix) shall provide that all
claims shall be allowable on events as they occur. Upon demand therefor,
Mortgagor shall reimburse Mortgagee for all of Mortgagee's (or its servicer's)
reasonable costs and expenses incurred in obtaining any or all of the Policies
or otherwise causing the compliance with the terms and provisions of this
Section 3, including (without limitation) obtaining updated flood hazard
certificates and replacement of any so-called "forced placed" insurance
coverages. All Policies required pursuant to subsections 3(a) and 3(b) shall be
issued by an insurer with a claims paying ability rating of "A-" or better by
Standard & Poor's Corporation or A:VIII or better by A.M. Best as published in
Best's Key Rating Guide. Mortgagor shall pay the premiums for such Policies (the
"Insurance Premiums") as the same become due and payable (unless such Insurance
Premiums have been paid by Mortgagee pursuant to Paragraph 5 hereof). Not later
than thirty (30) days prior to the expiration date of each of the Policies,
Mortgagor will deliver to Mortgagee satisfactory evidence of the renewal of each
Policy. If Mortgagor receives from any insurer any written notification or
threat of any actions or proceedings regarding the non-compliance or
non-conformity of the Mortgaged Property with any insurance requirements,
Mortgagor shall give prompt notice thereof to Mortgagee.
(c) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(d) If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Mortgagor shall give prompt notice
thereof to Mortgagee.
i) In case of loss covered by Policies, Mortgagee may either
(1) settle and adjust any claim in consultation with but without the
consent of Mortgagor, or (2) allow Mortgagor to agree with the
insurance company or companies on the amount to be paid upon the loss;
provided, that Mortgagor may adjust losses aggregating not in excess of
$100,000.00 if such adjustment is carried out in a competent and timely
manner, and provided that in any case Mortgagee shall and is hereby
authorized to collect and receipt for any such insurance proceeds; and
the reasonable expenses incurred by Mortgagee in the adjustment and
collection of insurance proceeds shall become part of the Debt and be
secured hereby and shall be reimbursed by Mortgagor to Mortgagee upon
demand (unless deducted by and reimbursed to Mortgagee from such
proceeds).
ii) In the event of any insured damage to or destruction of
the Mortgaged Property or any part thereof (herein called an "Insured
Casualty"), if (A) the loss is in an aggregate amount less than
twenty-five percent (25%) of the original principal balance of the
Note, and (B), in the reasonable judgment of Mortgagee, the Mortgaged
Property can be
<PAGE>
restored within six (6) months after insurance proceeds are made
available to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, and (C) no Event of Default
(hereinafter defined) shall have occurred and be then continuing, then
the proceeds of insurance shall be applied to reimburse Mortgagor for
the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or part thereof subject to Insured Casualty, as provided for
below; and Mortgagor hereby covenants and agrees forthwith to commence
and diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided, however, in any event Mortgagor shall pay all
costs (and if required by Mortgagee, Mortgagor shall deposit the total
thereof with Mortgagee in advance to be disbursed together with the
insurance proceeds) of such restoring, repairing, replacing or
rebuilding in excess of the net proceeds of insurance made available
pursuant to the terms hereof.
iii) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of Mortgagee
in its sole discretion, be applied to the payment of the Debt (subject
to any restrictions under applicable law) or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding
the Mortgaged Property or part thereof subject to the Insured Casualty,
in the manner set forth below. Any such application to the Debt shall
not be considered a voluntary prepayment requiring payment of the
prepayment consideration provided in the Note, and shall not reduce or
postpone any payments otherwise required pursuant to the Note, other
than the final payment on the Note.
iv) In the event that proceeds of insurance, if any, shall be
made available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal
value and of substantially the same character as prior to such damage
or destruction, all to be effected in accordance with applicable law
and plans and specifications approved in advance by Mortgagee.
v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed
from time to time upon Mortgagee being furnished with (1) evidence
satisfactory to it (which evidence may include inspection[s] of the
work performed) that the restoration, repair, replacement and
rebuilding covered by the disbursement has been completed in accordance
with plans and specifications approved by Mortgagee, (2) evidence
satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (3) funds, or, at
Mortgagee's option, assurances satisfactory to Mortgagee that such
funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and
performance as Mortgagee may reasonably require and approve; and
Mortgagee may, in any event, require that all plans and specifications
for such restoration, repair, replacement and rebuilding be submitted
to and approved by Mortgagee prior to
<PAGE>
commencement of work. With respect to disbursements to be made by
Mortgagee: (A) no payment made prior to the final completion of the
restoration, repair, replacement and rebuilding shall exceed ninety
percent (90%) of the value of the work performed from time to time; (B)
funds other than proceeds of insurance shall be disbursed prior to
disbursement of such proceeds; and (C) at all times, the undisbursed
balance of such proceeds remaining in the hands of Mortgagee, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Mortgagee by or on behalf of Mortgagor for that
purpose, shall be at least sufficient in the reasonable judgment of
Mortgagee to pay for the cost of completion of the restoration, repair,
replacement or rebuilding, free and clear of all liens or claims for
lien and the costs described in subsection 3(d)(vi) below. Any surplus
which may remain out of insurance proceeds held by Mortgagee after
payment of such costs of restoration, repair, replacement or rebuilding
shall be paid to any party entitled thereto. In no event shall
Mortgagee assume any duty or obligation for the adequacy, form or
content of any such plans and specifications, nor for the performance,
quality or workmanship of any restoration, repair, replacement and
rebuilding.
vi) Notwithstanding anything to the contrary contained herein,
the proceeds of insurance reimbursed to Mortgagor in accordance with
the terms and provisions of this Mortgage shall be reduced by the
reasonable costs (if any) incurred by Mortgagee in the adjustment and
collection thereof and in the reasonable costs incurred by Mortgagee of
paying out such proceeds (including, without limitation, reasonable
attorneys' fees and costs paid to third parties for inspecting the
restoration, repair, replacement and rebuilding and reviewing the plans
and specifications therefor).
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Other Charges have been so paid or are not then delinquent no later
than thirty (30) days following the date on which the Other Charges would
otherwise be delinquent if not paid. Mortgagor shall not suffer and shall
promptly cause to be paid and discharged any lien or charge whatsoever which may
be or become a lien or charge against the Mortgaged Property, and shall promptly
pay for all utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. On the Closing Date, Mortgagor shall
make an initial deposit to the Tax and Insurance Escrow Fund, as hereinafter
defined, of an amount which, when added to the monthly amounts to be deposited
as specified below, will be sufficient in the estimation of Mortgagee to satisfy
the next due taxes, assessments, insurance premiums and other similar charges.
Mortgagor shall pay to Mortgagee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay all taxes, assessments
and other similar governmental impositions (the "Taxes") payable or estimated by
Mortgagee to be payable, during the next ensuing twelve (12) months, and (b)
unless otherwise waived by Mortgagee, one-twelfth of an amount which would be
sufficient to pay the Insurance Premiums due for the renewal of the
<PAGE>
coverage afforded by the Policies upon the expiration thereof (said amounts in
[a] and [b] above hereinafter called the "Tax and Insurance Escrow Fund").
Mortgagee may, in its sole discretion, retain a third party tax consultant to
obtain tax certificates or other evidence or estimates of tax due or to become
due or to verify the payment of taxes and Mortgagor will promptly reimburse
Mortgagee for the reasonable cost of retaining any such third parties or
obtaining such certificates. Any unpaid reimbursements for the aforesaid shall
be added to the Debt. The Tax and Insurance Escrow Fund and the payments of
interest or principal or both, payable pursuant to the Note, shall be added
together and shall be paid as an aggregate sum by Mortgagor to Mortgagee.
Mortgagor hereby pledges (and grants a lien and security interest) to Mortgagee
any and all monies now or hereafter deposited in the Tax and Insurance Escrow
Fund as additional security for the payment of the Debt. Mortgagee will apply
the Tax and Insurance Escrow Fund to payments of Taxes and Insurance Premiums
required to be made by Mortgagor pursuant to Sections 3 and 4 hereof. If the
amount of the Tax and Insurance Escrow Fund shall exceed the amounts due for
Taxes and Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee
shall, in its discretion, return any excess to Mortgagor or credit such excess
against future payments to be made to the Tax and Insurance Escrow Fund. In
allocating such excess, Mortgagee may deal with the person shown on the records
of Mortgagee to be the owner of the Mortgaged Property. If the Tax and Insurance
Escrow Fund is not sufficient to pay the items set forth in (a) and (b) above,
Mortgagor shall promptly pay to Mortgagee, upon demand, an amount which
Mortgagee shall estimate as sufficient to make up the deficiency. Upon the
occurrence of an Event of Default, Mortgagee shall be entitled to exercise both
the rights of setoff and banker's lien, if applicable, against the interest of
Mortgagor in the Tax and Insurance Escrow Fund to the full extent of the
outstanding balance of the Debt, application of any such sums to the Debt to be
in any order in its sole discretion. Until expended or applied as above
provided, any amounts in the Tax and Insurance Escrow Fund shall constitute
additional security for the Debt. The Tax and Insurance Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by
Mortgagee. Unless otherwise required by applicable law, no earnings or interest
on the Tax and Insurance Escrow Fund shall be payable to Mortgagor even if the
Mortgagee or its servicer is paid a fee and/or receives interest or other income
in connection with the deposit or placement of such fund (in which event such
income shall be reported under Mortgagee's or its servicer's tax identification
number, as applicable). Upon payment of the Debt and performance by Mortgagor of
all its obligations under this Mortgage and the other Loan Documents, any
amounts remaining in the Tax and Insurance Escrow Fund shall be refunded to
Mortgagor.
6. [Intentionally Omitted].
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. Notwithstanding any
taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Mortgagor shall continue to pay
the Debt
<PAGE>
at the time and in the manner provided for its payment in the Note, in this
Mortgage and the other Loan Documents and the Debt shall not be reduced until
any award or payment therefor shall have been actually received after expenses
of collection and applied by Mortgagee to the discharge of the Debt. Mortgagor
shall cause the award or payment made in any condemnation or eminent domain
proceeding with respect to the Mortgaged Property, which is payable to
Mortgagor, to be paid directly to Mortgagee. Mortgagee may apply any such award
or payment to the reduction or discharge of the Debt whether or not then due and
payable (such application to be free from any prepayment consideration provided
in the Note, except that if an Event of Default, or an event which with notice
and/or the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the full prepayment
consideration computed in accordance with the Note). If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by Mortgagee of
such award or payment, Mortgagee 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, or a portion thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
covenants as follows:
(a) Neither Mortgagor nor any guarantor of the Debt or any part thereof
(a "Guarantor") has any defense to the payment in full of the Debt that arises
from applicable local, state or federal laws, regulations or other requirements.
None of the Loan Documents are subject to any right of rescission, set-off,
abatement, diminution, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of any such Loan Documents, or the
exercise of any right thereunder, render any Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission, set-off, abatement,
diminution, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, abatement, diminution, counterclaim or defense has
been, or will be, asserted with respect thereto.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use and occupancy of the Mortgaged Property, have been obtained and are in
full force and effect. The Mortgaged Property is in good repair, good order and
good condition and free and clear of any damage that would affect materially and
adversely the value of the Mortgaged Property as security for the Debt and the
Mortgaged Property has not been materially damaged by fire, wind or other
casualty or physical condition (including, without limitation, any soil or
geological condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of the
Mortgaged Property.
(c) All of the Improvements which were included in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property, and no easements or
other encumbrances upon the Premises encroach upon any of the Improvements, so
as to affect the value or marketability of the Mortgaged Property except for
immaterial encroachments which do not adversely affect the security intended to
be provided by this Mortgage or the use, enjoyment, value or marketability of
the Mortgaged Property. All of the
<PAGE>
Improvements comply with all material requirements of any applicable zoning and
subdivision laws and ordinances.
(d) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any, described
in the rent roll delivered to Mortgagee in connection with this Mortgage, and
all such leases and agreements are in full force and effect. No person has any
possessory interest in the Mortgaged Property or right to occupy the same except
under and pursuant to the provisions of the leases and any such operating
agreements.
(e) All financial data, including, without limitation, statements of
cash flow and income and operating expenses, delivered to Mortgagee by, or on
behalf of Mortgagor are (i) true and correct in all material respects; (ii)
accurately represent the financial condition of Mortgagor or the Mortgaged
Property as of the date thereof in all material respects; and (iii) to the
extent reviewed by an independent certified public accounting firm, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(f) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated and, to the best of Mortgagor's knowledge, does not fail to
reflect any material matter affecting the Mortgaged Property or the title
thereto.
(g) The loan evidenced by the Loan Documents complies with, or is
exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury and any and all other requirements of any
federal, state or local law.
(h) The Mortgaged Property abuts upon a dedicated, all-weather road, or
is served and benefitted by an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(i) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(j) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(k) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are adequate
in relation to the premises and location on which the Mortgaged Property is
located.
(l) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges adversely
affecting the Mortgaged Property.
(m) The Mortgaged Property is not relied upon by, and does not rely
upon, any building
<PAGE>
or improvement not part of the Mortgaged Property to fulfill any zoning,
building code or other governmental or municipal requirement for structural
support or the furnishing of any essential building systems or utilities, except
to the extent of any valid and existing reciprocal easement agreements shown in
the title insurance policy insuring the lien of this Mortgage.
(n) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and timely
coverage under any insurance policies providing coverage for the Mortgaged
Property.
(o) There are no defaults by Mortgagor beyond any applicable grace
period under any contract or agreement (other than this Mortgage and the other
Loan Documents) that binds Mortgagor and/or the Mortgaged Property, including
any management, service, supply, security, maintenance or similar contracts; and
Mortgagor has no knowledge of any such default for which notice has not yet been
given; and no such agreement is in effect with respect to the Mortgaged Property
that is not capable of being terminated by Mortgagor on less than thirty (30)
days notice except as previously disclosed to Mortgagee by a delivery of a copy
of all such agreements.
(p) The representations and warranties contained in the Closing
Certificate executed by Mortgagor in connection with the Note (which certificate
constitutes one of the Loan Documents) are true and correct and Mortgagor shall
observe the covenants contained therein.
(q) The management agreement with respect to the Mortgaged Property
(the "Management Agreement") between Mortgagor and Concord Assets Management,
Inc., a Delaware corporation ("Manager"), pursuant to which such property
manager operates the Mortgaged Property as an office building, is in full force
and effect and there is no default, breach or violation existing thereunder by
any party thereto and no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a default, breach or violation by any party thereunder.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants
and covenants as follows:
(a) Mortgagor does not own and will not own any asset or property other
than (i) the Mortgaged Property, the Mortgaged Property (as defined in the
Arkansas Note), and the Mortgaged Property (as defined in the California Note)
(collectively, the "Security Property"), and (ii) incidental personal property
necessary for the ownership or operation of the Security Property.
(b) Mortgagor will not engage in any business other than the ownership,
management and operation of the Security Property and Mortgagor will conduct and
operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling, controlled
by or under common control with Mortgagor or Guarantor (an "Affiliate"), except
upon terms and conditions that are intrinsically fair
<PAGE>
and substantially similar to those that would be available on an arms-length
basis with third parties other than any Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, the Debt (as defined in
the Arkansas Note), and the Debt (as defined in the California Note)
(collectively, the "Indebtedness"), and (ii) trade and operational debt incurred
in the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than the
Indebtedness may be secured (subordinate or pari passu) by the Mortgaged
Property.
(e) Mortgagor has not made and will not make any loans or advances to
any third party, nor to Guarantor, any Affiliate or any constituent party of
Mortgagor.
(f) Mortgagor is and will remain solvent and Mortgagor will pay its
debts from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not, nor will Mortgagor
permit Guarantor to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws, trust
or other organizational documents of Mortgagor or Guarantor in a manner which
would adversely affect the Mortgagor's existence as a single-purpose entity.
(h) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party of Mortgagor,
and Mortgagor will file its own tax returns.
(i) Mortgagor will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate, any constituent party of Mortgagor or any Guarantor).
(j) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in which
the Mortgaged Property is located.
(k) Mortgagor will 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.
(l) Neither Mortgagor nor any constituent party of Mortgagor will seek
the dissolution or winding up, in whole or in part, of Mortgagor, nor will
Mortgagor merge with or be consolidated into any other entity.
(m) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any Affiliate, any Guarantor, any constituent party of
Mortgagor or any other person.
(n) Mortgagor has and will maintain its assets in such a manner that it
will not be costly
<PAGE>
or difficult to segregate, ascertain or identify its individual assets from
those of any constituent party of Mortgagor, Affiliate, Guarantor or any other
person.
(o) Mortgagor does not and will not hold itself out to be responsible
for the debts or obligations of any other person (provided, that the foregoing
shall not prevent Mortgagor from being and holding itself responsible for
expenses incurred or obligations undertaken by the property manager of the
Security Property in respect of its duties regarding the Security Property).
(p) Mortgagor shall obtain and maintain in full force and effect, and
abide by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
(q) Since the formation of Mortgagor, Mortgagor has not owned any
asset, conducted any business or operation, or engaged in any business other
than the ownership and operation of the Security Property. The Mortgagor has no
debts or obligations other than normal trade accounts payable in the ordinary
course of business, and the Indebtedness. Any other indebtedness or obligation
of Mortgagor has been paid in full prior to or through application of proceeds
from funding of the Loan.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction. Mortgagor shall not use,
maintain or operate the Mortgaged Property in any manner which constitutes a
public or private nuisance or which makes void, voidable, or cancelable, or
increases the premium of, any insurance then in force with respect thereto. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment) without the consent of
Mortgagee. Mortgagor shall promptly comply with all laws, orders and ordinances
affecting the Mortgaged Property, or the use thereof. Mortgagor shall promptly
repair, replace or rebuild any part of the Mortgaged Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 7 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on the Premises.
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any material change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Mortgaged Property or any part
thereof, nor shall Mortgagor initiate, join in, acquiesce in, or consent to any
zoning change or zoning matter affecting the Mortgaged Property. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof and
shall not take any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management. Mortgagor
will not install or permit to be installed on the Premises any underground
<PAGE>
storage tank or above-ground storage tank without the written consent of
Mortgagee.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Mortgagor shall not, without the prior
written consent of Mortgagee, sell, convey, alienate, mortgage, encumber, pledge
or otherwise transfer the Mortgaged Property or any part thereof, or permit the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred; provided, however,
Mortgagee may, in its sole discretion, give such written consent (but shall have
no obligation to do so) to any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer, and any such consent may be conditioned
upon the satisfaction of such conditions precedent as Mortgagee may require
(including, without limitation, the conditions precedent set forth in subsection
12[c] below). Notwithstanding any other provision of this Section 12, Mortgagee
will consent, subject to the conditions of subsection 12(c) and provided that no
Event of Default under the Loan Documents has occurred and is continuing, to one
sale, conveyance, alienation, mortgage, encumbrance, pledge or other transfer of
the Mortgaged Property by the original Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by persons who are acceptable in all respects to
Mortgagee in its sole and absolute discretion, and (3) no such transfer, death
or other event has any adverse effect either on the bankruptcy-remote status of
Mortgagor under the requirements of any national rating agency for the
Certificates (hereinafter defined) or on the status of Mortgagor as a continuing
legal entity liable for the payment of the Debt and the performance of all other
obligations secured hereby, or (y) transfers otherwise by operation of law in
the event of a bankruptcy, nor shall the meaning include a Lease, but shall be
deemed to include (i) an installment sales agreement wherein Mortgagor agrees to
sell the Mortgaged Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Mortgagor leasing all or a substantial part
of the Mortgaged Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Mortgagor's right, title and interest in and to any Leases
or any Rents; (iii) if Mortgagor, Guarantor, or any general partner of Mortgagor
or Guarantor is a corporation, any merger, consolidation or the voluntary or
involuntary sale, conveyance or transfer of such corporation's stock (or the
stock of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock in one
or a series of
<PAGE>
transactions by which an aggregate of more than 10% of such corporation's stock
shall be vested in a party or parties who are not now stockholders (provided,
however, in no event shall this subpart [iii] apply to any Guarantor whose
stock, shares or partnership interests are traded on a nationally recognized
stock exchange); (iv) if Mortgagor, Guarantor, or any general partner of
Mortgagor or Guarantor is a limited liability company or limited partnership,
the voluntary or involuntary sale, conveyance or transfer by which an aggregate
of more than fifty percent (50%) of the ownership interest in such limited
liability company or more than fifty percent (50%) of the limited partnership
interests in such limited partnership shall be vested in parties not having an
ownership interest as of the date of this Mortgage; and (v) if Mortgagor, any
Guarantor or any general partner of Mortgagor or any Guarantor is a limited or
general partnership or joint venture, the change, removal or resignation of a
general partner, managing partner or joint venturer or the transfer of all or
any portion of the partnership interest of any general partner, managing partner
or joint venturer.
(c) Notwithstanding the provisions of subsections 12(a) and (b) above,
Mortgagee will give its consent to a one time sale or transfer of Mortgaged
Property, provided that no Event of Default under the Loan Documents has
occurred and is continuing and (i) the grantee's or transferee's integrity,
reputation, character and management ability are satisfactory to Mortgagee in
its sole discretion, (ii) the grantee's or transferee's (and its sole general
partner's) single purpose and bankruptcy remote character are satisfactory to
Mortgagee in its sole discretion, (iii) and any conditions relating to the sale
or transfer imposed by any national rating agency for the Certificates (as
defined in Section 20) are satisfied, (iv) Mortgagee has obtained such estoppels
from any guarantors of the Note or replacement guarantors and such other legal
opinions, certificates and similar matters as Mortgagee may require, (v) all of
Mortgagee's costs and expenses associated with the sale or transfer (including
reasonable attorneys fees) are paid by Mortgagor or the grantee or transferee,
(vi) the payment of a transfer fee not to exceed 1% of the outstanding principal
balance of the loan evidenced by the Note and secured hereby (excluding the
California Note and the Arkansas Note) (the "Loan"), (vii) the grantee's
execution of a written assumption agreement and such modification to the Loan
Documents containing such terms as Mortgagee may require and delivery of such
agreement to Mortgagee prior to such sale or transfer (provided that in the
event the Loan is included in a REMIC and is a performing Loan, no modification
to the terms and conditions shall be made or permitted that would cause (A) any
adverse tax consequences to the REMIC or any holders of any Certificates, (B)
the Mortgage to fail to be a Qualifying Mortgage under applicable federal law
relating to REMIC's, or (C) result in a taxation of the income from the Loan to
the REMIC or cause a loss of REMIC status), (viii) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in form and
substance acceptable to Mortgagee in its sole judgment. (ix) the ratio of the
original principal amount of the Note to the greater of (A) the purchase price
paid by the grantee or (B) the then fair market value of the Mortgaged Property
shall not exceed 75 percent as reasonably determined by Mortgagee; and (x) the
debt service coverage ratio under the Note with respect to the Mortgaged
Property as reasonably determined by Mortgagee shall be equal to or greater than
1.30:1.00 at the time of the transfer. Without limiting the foregoing, if
Mortgagee shall consent to any such transfer, the written assumption agreement
described in subsection 12(c)(vii) above shall provide for the release of
Mortgagor of personal liability under the Note and other Loan Documents solely
as to acts or events occurring, or obligations arising, after the closing of
such sale; provided, however, in no event shall such sale operate to: (x)
relieve Mortgagor of any personal
<PAGE>
liability under the Note or any of the other Loan Documents for any acts or
events occurring, or obligations arising, prior to or simultaneously with the
closing of such sale (subject to the applicable recourse limitations provided in
the Note), and Mortgagor shall execute, without any cost or expense to
Mortgagee, such documents and agreements as Mortgagee shall reasonably require
to evidence and effectuate the ratification of such personal liability; or (y)
relieve any current guarantor or indemnitor, including Mortgagor, of its
obligations under any guaranty or indemnity agreement executed in connection
with the loan secured hereby (including, without limitation, the Environmental
Liabilities Agreement of even date herewith [the "Environmental Agreement"]),
and each such current guarantor and indemnitor shall execute, without any cost
or expense to Mortgagee, such documents and agreements as Mortgagee shall
reasonably require to evidence and effectuate the ratification of each such
guaranty and indemnity agreement. Notwithstanding (y) preceding, if the proposed
transferee and a party associated with the proposed transferee (the "Substitute
Guarantor") (1) is approved by Mortgagee in its sole discretion (including a
determination that the proposed transferee and Substitute Guarantor have
adequate financial resources), (2) assumes the obligations of the current
guarantor or indemnitor under its guaranty or indemnity agreement, and (3)
executes, without any cost or expense to Mortgagee, a new guaranty and/or
indemnity agreement, as applicable, in form and substance satisfactory to
Mortgagee, then Mortgagee may release the current guarantor or indemnitor from
all obligations arising under its guaranty or indemnity agreement after the
closing of such sale.
(d) Mortgagee may predicate its decision to grant or withhold consent
to any subsequent sale, conveyance, alienation, mortgage, encumbrance, pledge or
other transfer upon the satisfaction (in the sole determination of Mortgagee)
with such conditions as may be imposed by Mortgagee, which may include, but
shall not be limited to, the following matters: (i) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in a form and
substance acceptable to Mortgagee, in its sole judgment; (ii) the grantee's
integrity, reputation, character, creditworthiness and management ability being
satisfactory to Mortgagee, in its sole judgment; (iii) the grantee's single
purpose and bankruptcy remote character being satisfactory to Mortgagee, in its
sole judgment; (iv) the grantee executing (prior to such sale or transfer) a
written assumption agreement containing such terms as Mortgagee may require; (v)
subject to any restrictions described in Section 12(c) above relating to the
Loan being included in a REMIC, an adjustment to the term of the Note, a
principal paydown on the Note or an increase in the rate of interest payable on
the Note; (vi) payment by Mortgagor of a transfer and assumption fee not to
exceed one percent (1%) of the then unpaid principal balance of the Note
(excluding the California Note and the Arkansas Note); (vii) payment by
Mortgagor of the expenses described in subsection 12(f) below; and (viii) the
satisfaction of any conditions imposed by any national rating agency for
Certificates (hereinafter defined), together with such modification(s) of the
Loan Documents and such legal opinions, certifications and similar matters that
Mortgagee may require. Mortgagee agrees not to unreasonably withhold its consent
to a sale or transfer of the Mortgaged Property upon the satisfaction (in the
sole determination of Mortgagee) of the conditions to its consent as set forth
herein; provided, however, in any event Mortgagee shall be deemed to be
reasonable in withholding its consent if a sale to the proposed transferee
receives unfavorable comment from a national rating agency for Certificates.
Mortgagee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any sale, conveyance, alienation,
<PAGE>
mortgage, encumbrance, pledge or transfer by Mortgagor of the Mortgaged Property
without Mortgagee's consent.
(e) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
Section 12 shall be null and void and of no force and effect.
(f) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on
demand for all reasonable expenses (including, without limitation, all recording
costs, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
(g) In no event shall any of the terms and provisions of this Section
12 amend or modify the terms and provisions contained in Section 9 herein.
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the 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 Mortgage and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor
shall deliver to Mortgagee upon request subject to applicable tenant lease
provisions, tenant estoppel certificates from each commercial tenant at the
Mortgaged Property in form and substance reasonably satisfactory to Mortgagee
provided that Mortgagor shall not be required to deliver such certificates more
frequently than two (2) times in any calendar year.
14. Changes in the Laws Regarding Taxation. If any law is amended,
enacted or adopted after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or
<PAGE>
unenforceable or provide the basis for a defense of usury, then in any such
event, Mortgagee shall have the option, by written notice of not less than
forty-five (45) days, to declare the Debt immediately due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Mortgaged Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Mortgaged Property, or any part thereof, for real estate
tax purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. 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 Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be
the intent of Mortgagor, Trustee and Mortgagee at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Mortgagee to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Mortgagee's exercise of
the option to accelerate the maturity of the Note, or if any prepayment by
Mortgagor results in Mortgagor having paid any interest in excess of that
permitted by applicable law, then it is Mortgagor's, Trustee's and Mortgagee's
express intent that all excess amounts theretofore collected by Mortgagee shall
be credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Mortgagor), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Trustee and/or Mortgagee
to accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.
18. Books and Records. Mortgagor will keep accurate books and records
in accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with
<PAGE>
respect to the Mortgaged Property and the operation thereof, and will permit all
such books and records (including without limitation all contracts, statements,
invoices, bills and claims for labor, materials and services supplied for the
construction, repair or operation of the Improvements) to be inspected or
audited and copies made by Mortgagee and its representatives during normal
business hours and at any other reasonable times. Mortgagor represents that its
chief executive office is as set forth in the introductory paragraph of this
Mortgage and that all books and records pertaining to the Mortgaged Property are
maintained at such location. Mortgagor will furnish, or cause to be furnished,
to Mortgagee on or before forty-five (45) days after March 31, June 30,
September 30 and December 31 of each calendar year the following items, each
certified by Mortgagor as being true and correct, in such format and in such
detail as Mortgagee or its servicer may request: (a) a written statement (rent
roll) dated as of the last day of each such calendar quarter identifying each of
the Leases by the term, space occupied, rental required to be paid, security
deposit paid, any rental concessions, and identifying any defaults or payment
delinquencies thereunder; (b) quarterly and year to date operating statements
prepared for each calendar quarter during each such reporting period; (c) a
property balance sheet for each calendar quarter during each such reporting
period; and (d) a comparison of the budgeted income and expenses and the actual
income and expenses for each calendar quarter during each such reporting period
and year to date. Within ninety (90) days following the end of each calendar
year, Mortgagor shall furnish a statement of the financial affairs and condition
of the Mortgaged Property including a statement of profit and loss for the
Mortgaged Property in such format and in such detail as Mortgagee or its
servicer may request, and setting forth the financial condition and the income
and expenses for the Mortgaged Property for the immediately preceding calendar
year prepared by an independent certified public accountant. Mortgagor shall
deliver to Mortgagee copies of all income tax returns, requests for extension
and other similar items contemporaneously with its delivery of same to the
Internal Revenue Service. On or before November 30 of each calendar year,
Mortgagor shall deliver to Mortgagee an itemized operating budget and capital
expenditure budget of the Mortgaged Property and a management plan for the
Mortgaged Property for the next succeeding calendar year on a quarterly basis,
in such format and in such detail as Mortgagee may request. In the event
Mortgagor fails to deliver such reports within the time frames provided above,
Mortgagor shall pay a late charge equal to two percent (2%) of the monthly
payment amount for each late submission of financial reports to compensate
Mortgagee or its servicer for the additional administrative expense caused by
such failure or delay whether or not Mortgagor is entitled to any notice and
opportunity to cure such failure prior to the exercise of any of the remedies.
Failure to provide quarterly or annual reports shall constitute an Event of
Default under Section 23 and entitle Mortgagee to audit or cause to be audited
Mortgagor's books and records. The late charge and the cost of such audit shall
be immediately payable from Mortgagor upon demand by Mortgagee and, until paid,
shall be added to and constitute a part of the Debt. At any time and from time
to time Mortgagor shall deliver to Mortgagee or its agents such other financial
data as Mortgagor prepares for its own use and which Mortgagee or its agents
shall request with respect to the ownership, maintenance, use and operation of
the Mortgaged Property, including, but not limited to, schedules of gross sales
for percentage rents under Leases. Mortgagor will permit representatives
appointed by Mortgagee, including independent accountants, agents, attorneys,
appraisers and any other persons, to visit and inspect during its normal
business hours and at any other reasonable times any of the Mortgaged Property
and to make photographs thereof, and to write down and record any information
such representatives obtain, and shall permit Mortgagee or its representatives
to investigate and verify the accuracy of the information furnished to Mortgagee
<PAGE>
under or in connection with this Mortgage or any of the other Loan Documents and
to discuss all such matters with its officers, employees and representatives.
Mortgagor will furnish to Mortgagee at Mortgagor's expense all evidence which
Mortgagee may from time to time reasonably request as to the accuracy and
validity of or compliance with all representations and warranties made by
Mortgagor in the Loan Documents and satisfaction of all conditions contained
therein. Any inspection or audit of the Mortgaged Property or the books and
records of Mortgagor, or the procuring of documents and financial and other
information, by or on behalf of Mortgagee, shall be for Mortgagee's protection
only, and shall not constitute any assumption of responsibility or liability by
Mortgagee to Mortgagor or anyone else with regard to the condition,
construction, maintenance or operation of the Mortgaged Property, nor
Mortgagee's approval of any certification given to Mortgagee nor relieve
Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
(a) Mortgagee (and its mortgage servicer and their respective assigns)
shall have the right to disclose in confidence such financial information
regarding Mortgagor, Guarantor or the Mortgaged Property as may be necessary (i)
to complete any sale or attempted sale of the Note or participations in the loan
(or any transfer of the mortgage servicing thereof) evidenced by the Note and
the Loan Documents, (ii) to service the Note or (iii) to furnish information
concerning the payment status of the Note to the holder or beneficial owner
thereof, including, without limitation, all Loan Documents, financial
statements, projections, internal memoranda, audits, reports, payment history,
appraisals and any and all other information and documentation in the
Mortgagee's files (and such servicer's files) relating to the Mortgagor, any
Guarantor and the Mortgaged Property. This authorization shall be irrevocable in
favor of the Mortgagee (and its mortgage servicer and their respective assigns),
and Mortgagor and Guarantor waive any claims that they may have against the
<PAGE>
Mortgagee, its mortgage servicer and their respective assigns or the party
receiving information from the Mortgagee pursuant hereto regarding disclosure of
information in such files and further waive any alleged damages which they may
suffer as a result of such disclosure.
(b) The Mortgagor acknowledges that the Mortgagee intends to sell the
loan evidenced by the Note and the Loan Documents or a participation interest
therein to a party who may pool the loan with a number of other loans and to
have the holder of such loans (most likely a special purpose REMIC) issue one or
more classes of Mortgage Backed Pass-Through Certificates (the "Certificates"),
which may be rated by one or more national rating agencies. Mortgagee (and its
mortgage servicer and their respective assigns) shall be permitted to share any
of the information referred to in subsection (b) above, whether obtained before
or after the date of the Note, with the holders or potential holders of the
Certificates, investment banking firms, rating agencies, accounting firms,
custodians, successor mortgage servicers, law firms and other third-party
advisory firms involved with the loan evidenced by the Note and the Loan
Documents or the Certificates. It is understood that the information provided by
the Mortgagor to the Mortgagee (or its mortgage servicer and their respective
assigns) or otherwise received by Mortgagee (or its mortgage servicer and their
respective assigns) in connection with the loan evidenced by the Loan Documents
may ultimately be incorporated into the offering documents for the Certificates
and thus various prospective investors may also see some or all of the
information. The Mortgagee (and its mortgage servicer and their respective
assigns) and all of the aforesaid third-party advisors and professional firms
shall be entitled to rely on the information supplied by, or on behalf of, the
Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to Mortgagee
of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
<PAGE>
(a) if any portion of the Debt is not paid within ten (10) days from the date
when the same is due;
(b) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(c) if Mortgagor fails to timely provide any quarterly or annual
financial or accounting report;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers,
pledges or otherwise transfers any portion of the Mortgaged Property or permits
the Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, levied, pledged or otherwise transferred without
Mortgagee's prior written consent except as may be permitted in Section 12
above;
(e) if any representation or warranty of Mortgagor, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Mortgagee shall have been false or misleading in any material
respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a 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, Mortgagor or any Guarantor or if Mortgagor or any Guarantor shall admit
in writing its insolvency or bankruptcy or if any proceeding for the dissolution
or liquidation of Mortgagor or of any Guarantor shall be instituted; however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
<PAGE>
(k) damage to the Mortgaged Property in any manner which is not covered
by insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition
of this Mortgage or any of the other Loan Documents other than as specified in
any of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed or (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner or managing partner of the Mortgagor, or (iii) there is any
material change in the property management agreement of the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of
any appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following the
date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms);
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor, its affiliates, or any tenant in the
Mortgaged Property under any federal, state or local law;
(r) an Event of Default occurs under the Arkansas Note or any one of
the other Loan Documents (as defined in the Arkansas Note); and
(s) an Event of Default occurs under the California Note or any one of
the other Loan Documents (as defined in the California Note).
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 23(p) above (a "First Lien Default") and (c) a default
referred to in subsections 23(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of ten (10) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the ten [10] day period referred to in subsection 23[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such
<PAGE>
Nonmonetary Default within twenty (20) days following notice and diligently
prosecute such cure to completion, provided, however, that Mortgagor will
provide Mortgagee with such information as Mortgagee may reasonably request
concerning the status of any attempted cure of any such Nonmonetary Default and
the cure of any such Nonmonetary Default must be completed to the satisfaction
of Mortgagee within sixty (60) days of notice in any case. Notwithstanding the
foregoing, Mortgagee may, but shall not be required, to give notice of a
Monetary Default or a recurrence of the same Nonmonetary Default more frequently
than two times in any calendar year. A Monetary Default and/or First Lien
Default and/or Nonmonetary Default shall nevertheless be an Event of Default for
all purposes under the Loan Documents (including, without limitation,
Mortgagee's right to collect Default Interest and any other administrative
charge set forth in the Note) except that the acceleration of the Debt or other
exercise of remedies shall not be prior to the expiration of the applicable cure
and/or grace periods provided in Section 23 or in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to
any applicable cure period, Mortgagee may, at Mortgagee's option, and by or
through Trustee, by Mortgagee itself or otherwise, do any one or more of the
following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to
keep or perform any covenant whatsoever contained in this Mortgage or the other
Loan Documents, Mortgagee may, but shall not be obligated to any person to do
so, perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid or
expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
(b) Right of Entry. Mortgagee may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged Property,
or any part thereof, and take exclusive possession of the Mortgaged Property and
of all books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting
<PAGE>
from any failure to let the Mortgaged Property, or any part thereof, or from any
other act or omission of the Mortgagee in managing the Mortgaged Property unless
such loss is caused by the willful misconduct of the Mortgagee, nor shall the
Mortgagee be obligated to perform or discharge any obligation, duty, or
liability under any Lease or under or by reason hereof or the exercise of rights
or remedies hereunder. Mortgagor shall and does hereby agree to indemnify the
Mortgagee for, and to hold the Mortgagee harmless from, any and all liability,
loss, or damage, which may or might be incurred by the Mortgagee under any such
Lease or under or by reason hereof or the exercise of rights or remedies
hereunder, and from any and all claims and demands whatsoever which may be
asserted against the Mortgagee by reason of any alleged obligations or
undertakings on its part to perform or discharge any of the terms, covenants, or
agreements contained in any such Lease. Should the Mortgagee incur any such
liability, the amount thereof, including without limitation costs, expenses, and
reasonable attorneys' fees, together with interest thereon from the date of
expenditure until paid at the Default Rate as specified in the Note, shall be
secured hereby, and Mortgagor shall reimburse the Mortgagee therefor immediately
upon demand. Nothing in this subsection shall impose any duty, obligation, or
responsibility upon the Mortgagee for the control, care, management, leasing, or
repair of the Mortgaged Property, nor for the carrying out of any of the terms
and conditions of any such Lease; nor shall it operate to make the Mortgagee
responsible or liable for any waste committed on the Mortgaged Property by the
tenants or by any other parties, or for any hazardous substances or
environmental conditions on or under the Mortgaged Property, or for any
dangerous or defective condition of the Mortgaged Property or for any negligence
in the management, leasing, upkeep, repair, or control of the Mortgaged Property
resulting in loss or injury or death to any tenant, licensee, employee, or
stranger. Mortgagor hereby assents to, ratifies, and confirms any and all
actions of the Mortgagee with respect to the Mortgaged Property taken under this
subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 24 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien and
security interest on the remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of
applicable law and except as otherwise provided herein, the following provisions
shall apply to any sale or sales of all or any
<PAGE>
portion of the Mortgaged Property under or by virtue of subsection (d) above,
whether made under the power of sale herein granted or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale:
i) Trustee or Mortgagee may conduct any number of sales from
time to time. The power of sale set forth above shall not be exhausted
by any one or more such sales as to any part of the Mortgaged Property
which shall not have been sold, nor by any sale which is not completed
or is defective in Mortgagee's opinion, until the Debt shall have been
paid in full.
ii) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice.
iii) After each sale, Mortgagee, Trustee or an officer of any
court empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right, title and
interest of Mortgagor in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as
specified in the Note. Each of Trustee and Mortgagee is hereby
appointed the true and lawful attorney-in-fact of Mortgagor, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Mortgagor's name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the property and
rights so sold, Mortgagor hereby ratifying and confirming all that said
attorney or such substitute or substitutes shall lawfully do by virtue
thereof. Nevertheless, Mortgagor, if requested by Trustee or Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to Trustee, Mortgagee or such purchaser or purchasers all
such instruments as may be advisable, in Trustee's or Mortgagee's
judgment, for the purposes as may be designated in such request.
iv) Any and all statements of fact or other recitals made in
any of the instruments referred to in subparagraph (iii) of this
subsection (e) given by Trustee or Mortgagee shall be taken as
conclusive and binding against all persons as to evidence of the truth
of the facts so stated and recited.
v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Mortgagor in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
Mortgagor and any and all persons claiming or who may claim the same,
or any part thereof or any interest therein, by, through or under
Mortgagor to the fullest extent permitted by applicable law.
vi) Upon any such sale or sales, Mortgagee may bid for and
acquire the Mortgaged Property and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting against the
Debt the amount of the bid made therefor, after deducting therefrom the
expenses of the sale, the cost of any enforcement proceeding
<PAGE>
hereunder, and any other sums which Trustee or Mortgagee is authorized
to deduct under the terms hereof, to the extent necessary to satisfy
such bid.
vii) Upon any such sale, it shall not be necessary for
Trustee, Mortgagee or any public officer acting under execution or
order of court to have present or constructively in its possession any
of the Mortgaged Property.
(f) Mortgagee's Judicial Remedies. Mortgagee, or Trustee upon written
request of Mortgagee, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Mortgage as against all or any part of the Mortgaged Property, and to have
all or any part of the Mortgaged Property sold under the judgment or decree of a
court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to the Mortgagee under this Mortgage or the other
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a
matter of right and (i) without regard to the sufficiency of the security for
repayment of the Debt and without notice to Mortgagor, (ii) without any showing
of insolvency, fraud, or mismanagement on the part of Mortgagor, (iii) without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, and (iv) without regard to the then
value of the Mortgaged Property, shall be entitled to the appointment of a
receiver or receivers for the protection, possession, control, management and
operation of the Mortgaged Property, including (without limitation), the power
to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant to the
provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and any
other funds held by Mortgagee toward payment of the Debt; and (iii) shall have
and may exercise any and all other rights and remedies which Mortgagee may have
at law or in equity, or by virtue of any of the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded
to invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to
<PAGE>
discontinue or abandon same for any reason, Mortgagee shall have the unqualified
right so to do and, in such event, Mortgagor and Mortgagee shall be restored to
their former positions with respect to the Debt, the Loan Documents, the
Mortgaged Property or otherwise, and the rights, remedies, recourses and powers
of Mortgagee shall continue as if same had never been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of
Mortgagee granted in the Note, this Mortgage and the other Loan Documents, any
other pledge of collateral, or otherwise available at law or equity: (i) shall
be cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral taken
by Mortgagee shall in any manner impair or affect the lien or security interests
given pursuant to the Loan Documents, and all collateral shall be taken,
considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives
and releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein or of Trustee's exercise of any right, remedy, or recourse provided for
under the Loan Documents; and (iii) any right to a marshalling of assets, a sale
in inverse order of alienation or any other right to direct in any manner, the
order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of limitations.
Mortgagor hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the
filing of any voluntary or involuntary petition under the U.S. Bankruptcy Code
(the "Bankruptcy Code") by or against
<PAGE>
Mortgagor (other than an involuntary petition filed by or joined in by
Mortgagee), the Mortgagor 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 Mortgagee to enforce any rights it has by virtue of this Mortgage, or
any other rights that Mortgagee has, whether now or hereafter acquired, against
any guarantor of the Debt. Further, Mortgagor 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 Mortgagee to enforce any rights it has by
virtue of this Mortgage against any guarantor of the Debt. The waivers contained
in this paragraph are a material inducement to Mortgagee's willingness to enter
into this Mortgage and Mortgagor acknowledges and agrees that no grounds exist
for equitable relief which would bar, delay or impede the exercise by Mortgagee
of Mortgagee's rights and remedies against Mortgagor or any guarantor of the
Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or
any portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or
other disposition made pursuant to this Mortgage, or the proceeds from the
surrender of any insurance policies pursuant hereto, or any Rents collected by
Mortgagee from the Mortgaged Property, or the Tax and Insurance Escrow Fund or
sums received pursuant to Section 7 hereof, or proceeds from insurance which
Mortgagee elects to apply to the Debt pursuant to Section 3 hereof, shall be
applied by Trustee, or by Mortgagee, as the case may be, to the Debt in the
following order and priority: (1) to the payment of all expenses of advertising,
selling, and conveying the Mortgaged Property or part thereof, and/or
prosecuting or otherwise collecting Rents, proceeds, premiums or other sums
including reasonable attorneys' fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so received;
(2) to that portion, if any, of the Debt with respect to which no person or
entity has personal or entity liability for payment (the "Exculpated Portion"),
and with respect to the Exculpated Portion as follows: first, to accrued but
unpaid interest, second, to matured principal, and third, to unmatured principal
in inverse order of maturity; (3) to the remainder of the Debt as follows:
first, to the remaining accrued but unpaid interest, second, to the matured
portion of principal of the Debt, and third, to prepayment of the unmatured
portion, if any, of principal of the Debt applied to installments of principal
in inverse order of
<PAGE>
maturity; (4) the balance, if any or to the extent applicable, remaining after
the full and final payment of the Debt to the holder or beneficiary of any
inferior liens covering the Mortgaged Property, if any, in order of the priority
of such inferior liens (Trustee and Mortgagee shall hereby be entitled to rely
exclusively on a commitment for title insurance issued to determine such
priority); and (5) the cash balance, if any, to the Mortgagor. The application
of proceeds of sale or other proceeds as otherwise provided herein shall be
deemed to be a payment of the Debt like any other payment. The balance of the
Debt remaining unpaid, if any, shall remain fully due and owing in accordance
with and subject to the terms of the Note and the other Loan Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage
or deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this
Mortgage has granted and hereby grants to Mortgagee, 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 called
in this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
All or part of the Mortgaged Property are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph of this
Mortgage. If an Event of Default shall occur, Mortgagee, 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 Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all expenses,
including legal expenses and attorneys' fees, incurred or paid by Mortgagee 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 Mortgagee with respect to the Collateral sent to Mortgagor in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Mortgagor. The
proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper. In the event of any change in
name, identity or structure of any Mortgagor, such Mortgagor shall notify
Mortgagee thereof and promptly after request shall execute, file and record such
Uniform Commercial Code forms as are necessary to maintain the priority of
Mortgagee's lien upon and security interest in the Collateral, and shall pay
<PAGE>
all expenses and fees in connection with the filing and recording thereof. If
Mortgagee shall require the filing or recording of additional Uniform Commercial
Code forms or continuation statements, Mortgagor shall, promptly after request,
execute, file and record such Uniform Commercial Code forms or continuation
statements as Mortgagee shall deem necessary, and shall pay all expenses and
fees in connection with the filing and recording thereof, it being understood
and agreed, however, that no such additional documents shall increase
Mortgagor's obligations under the Note, this Mortgage and the other Loan
Documents. Mortgagor hereby irrevocably appoints Mortgagee as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by Mortgagee,
as Mortgagor's attorney-in-fact, in connection with the Collateral covered by
this Mortgage. Notwithstanding the foregoing, Mortgagor shall appear and defend
in any action or proceeding which affects or purports to affect the Mortgaged
Property and any interest or right therein, whether such proceeding effects
title or any other rights in the Mortgaged Property (and in conjunction
therewith, Mortgagor shall fully cooperate with Mortgagee in the event Mortgagee
is a party to such action or proceeding).
28. Actions and Proceedings. Mortgagee 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 Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any 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.
29. Waiver of Setoff and Counterclaim. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. To the extent permitted by law,
Mortgagor hereby waives the right to assert a setoff, counterclaim or deduction
in any action or proceeding in which Mortgagee is a participant, or arising out
of or in any way connected with this Mortgage, the Note, any of the other Loan
Documents, or the Debt.
30. Contest of Certain Claims. Notwithstanding the provisions of
Sections 4 and 23(h) hereof, Mortgagor shall not be in default for failure to
pay or discharge Taxes, Other Charges or mechanic's or materialman's lien
asserted against the Mortgaged Property if, and so long as, (a) Mortgagor shall
have notified Mortgagee of same within ten (10) days of obtaining knowledge
thereof; (b) Mortgagor shall diligently and in good faith contest the same by
appropriate legal proceedings which shall operate to prevent the enforcement or
collection of the same and the sale of the Mortgaged Property or any part
thereof, to satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a
cash deposit, or evidence of an indemnity bond satisfactory to Mortgagee and
otherwise in accordance with the laws of the applicable jurisdiction, with a
surety satisfactory to Mortgagee, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor
shall promptly upon final determination thereof pay the amount of any such
Taxes, Other Charges or claim so determined, together with all costs, interest
and penalties which may be payable in connection therewith; (e) the
<PAGE>
failure to pay the Taxes, Other Charges or mechanic's or materialman's lien
claim does not constitute a default under any other deed of trust, mortgage or
security interest covering or affecting any part of the Mortgaged Property; and
(f) notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the reasonable
opinion of Mortgagee, the Mortgaged Property or any part thereof or interest
therein may be in danger of being sold, forfeited, foreclosed, terminated,
canceled or lost. Mortgagee may pay over any such cash deposit or part thereof
to the claimant entitled thereto at any time when, in the reasonable judgment of
Mortgagee, the entitlement of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee 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 Mortgagee thereafter to bring an action of foreclosure, or any other action,
for a default or defaults by Mortgagor existing at the time such earlier action
was commenced.
32. Handicapped Access. Mortgagor agrees that the Mortgaged Property
shall at all times strictly comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped 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 "Access
Laws").
(a) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate from an
architect, engineer, or other person acceptable to Mortgagee of compliance with
Access Laws.
(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt
by Mortgagor of any complaints related to violation of any Access Laws and of
the commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. Indemnification. Subject to the recourse limitations contained in
the Note, in addition to any other indemnifications provided in any of the Loan
Documents, Mortgagor shall protect, defend, indemnify and save harmless
Mortgagee, its subsidiaries, affiliates, persons controlling or under common
control with Mortgagee, their agents, officers, directors, shareholders,
employees, servants, consultants, representatives and their respective
successors and assigns and Trustee (collectively, the "Indemnified Parties"),
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including
without limitation reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against any of the Indemnified Parties by reason of (a)
ownership of this Mortgage, the Mortgaged Property
<PAGE>
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,
nonuse 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) any failure on the part of Mortgagor to perform or comply
with any of the terms of this Mortgage; (e) 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; (f) any failure of the Mortgaged Property to
comply with any Access Laws; (g) any representation or warranty made in the
Note, this Mortgage or the other Loan Documents being false or misleading in any
respect as of the date such representation or warranty was made; (h) any claim
by brokers, finders or similar persons claiming to be entitled to a commission
in connection with any Lease or other transaction involving the Mortgaged
Property or any part thereof under any legal requirement or any liability
asserted against Mortgagee with respect thereto; and (i) the claims of any
lessee to any portion of the Mortgaged Property or any person acting through or
under any lessee or otherwise arising under or as a consequence of any Lease.
Any amounts payable to any of the Indemnified Parties by reason of the
application of this paragraph shall be secured by this Mortgage and shall become
immediately due and payable and shall bear interest at the Default Rate
specified in the Note from the date loss or damage is sustained by any of the
Indemnified Parties until paid. The obligations and liabilities of Mortgagor
under this Section 33 (A) shall survive for a period of one (1) year following
any release of this Mortgage executed by Mortgagee and satisfaction of the loan
evidenced by the Loan Documents, and (B) shall survive the transfer or
assignment of this Mortgage, the entry of a judgment of foreclosure, sale of the
Mortgaged Property by nonjudicial foreclosure sale, or delivery of a deed in
lieu of foreclosure (including, without limitation, any transfer by Mortgagor of
any of its rights, title and interest in and to the Mortgaged Property to any
party, whether or not affiliated with Mortgagor).
34. Trustee. Mortgagee shall have the right from time to time to
substitute the trustee hereunder by an instrument in writing in any manner now
or hereafter provided by law. Such appointment may be executed by any authorized
agent of Mortgagee, and if such Mortgagee be a corporation and such appointment
be executed in its behalf by any officer of such corporation, such appointment
shall be conclusively presumed to be executed with authority and shall be valid
and sufficient without proof of any action by the board of directors or any
superior officer of the corporation. Mortgagor hereby ratifies and confirms any
and all acts which the aforenamed Trustee, or his successor or successors in
this trust, shall do lawfully by virtue hereof. Any substitute Trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its or his predecessor in the rights hereunder with like effect as
if originally named as Trustee herein; but nevertheless, upon the written
request of Mortgagee or of the substitute Trustee, the Trustee ceasing to act
shall execute and deliver any instrument transferring to such substitute
Trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such Trustee to the
substitute Trustee so appointed in the Trustee's place. No fees or expenses
shall be payable to Trustee, except in connection with a foreclosure of the
Mortgaged Property or any part thereof or in connection with the release of the
Mortgaged Property following payment in full of the Debt.
<PAGE>
35. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the first (1st) business
day after such notice is tendered to a nationally-recognized overnight delivery
service or on the third (3rd) day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, in either instance, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address as
Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
36. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor 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.
37. Waiver of Notice. Mortgagor shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
38. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
39. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
40. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
Documents, (b) the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any
<PAGE>
person liable for the Debt or any portion thereof, or (c) any agreement or
stipulation by Mortgagee extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Mortgage, or the other Loan Documents.
Mortgagee may resort for the payment of the Debt to any other security held by
Mortgagee in such order and manner as Mortgagee, in its discretion, may elect.
Mortgagee may take action to recover the Debt, or any portion thereof, or to
enforce any covenant hereof without prejudice to the right of Mortgagee
thereafter to foreclosure this Mortgage. The rights and remedies of Mortgagee
under this Mortgage shall be separate, distinct and cumulative and none shall be
given effect to the exclusion of the others. No act of Mortgagee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Mortgagee 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.
41. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, 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.
42. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
43. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
44. Headings, etc. The headings and captions of various paragraphs of
this Mortgage 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.
45. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
46. Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, 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 and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees
<PAGE>
at the pre-trial, trial and appellate levels incurred or paid by Mortgagee in
protecting its interest in the Mortgaged Property and Collateral and enforcing
its rights hereunder. Whenever the context may require, any pronouns used herein
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural and vice versa.
47. Homestead. Mortgagor 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 Premises as against the collection of the Debt,
or any part hereof.
48. Assignments. Mortgagee shall have the right to assign or transfer
its rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
49. Survival of Obligations; Survival of Warranties and
Representations. Each and all of the covenants and obligations of Mortgagor
(other than warranties and representations contained herein) shall survive the
execution and delivery of the Loan Documents and shall continue in full force
and effect until the Debt shall have been paid in full; provided, however, that
nothing contained in this paragraph shall limit the obligations of Mortgagor
except as otherwise set forth herein. In addition, any and all warranties and
representations of Mortgagor contained herein shall survive the execution and
delivery of the Loan Documents and (i) shall continue for a period of one (1)
year following any release of this Mortgage executed by Mortgagee and
satisfaction of the loan evidenced by the Loan Documents, and (ii) shall survive
the transfer or assignment of this Mortgage, the entry of a judgment of
foreclosure, sale of the Mortgaged Property by non-judicial foreclosure or deed
in lieu of foreclosure (including, without limitation, any transfer of the
Mortgage by Mortgagee of any of its rights, title and interest in and to the
Mortgaged Property to any party, whether or not affiliated with Mortgagee).
50. Covenants Running with the Land. All covenants, conditions,
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor, Mortgagee and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property until
the lien of this Mortgage has been fully released by Mortgagee.
51. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY CONFLICT
OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS MORTGAGE.
52. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
53. No Third Party Beneficiaries. The provisions of this Mortgage and the other
Loan
<PAGE>
Documents are for the benefit of Mortgagor, Mortgagee and Trustee and shall not
inure to the benefit of any third party (other than any successor or assignee of
either Trustee or Mortgagee). This Mortgage and the other Loan Documents shall
not be construed as creating any rights, claims or causes of action against
Mortgagee or any of its officers, directors, agents or employees in favor of any
party other than Mortgagor including but not limited to any claims to any sums
held in the Tax and Insurance Escrow Fund.
54. Relationship of Parties. The relationship of Mortgagee and
Mortgagor is solely that of debtor and creditor, and Mortgagee has no fiduciary
or other special relationship with the Mortgagor, and no term or condition of
any of the Loan Documents shall be construed to be other than that of debtor and
creditor. Mortgagor represents and acknowledges that the Loan Documents do not
provide for any shared appreciation rights or other equity participation
interest.
55. [Intentionally Deleted]
56. Investigations. Any and all representations, warranties, covenants
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.
57. Assignment of Rents and Leases. Mortgagor does hereby irrevocably,
absolutely and unconditionally grant, sell, convey, assign, pledge, transfer,
set over and deliver to Mortgagee:
(a) all of Mortgagor's interest in and to all current and
future leases and other agreements affecting the use, enjoyment, or occupancy of
all or any part of the Mortgaged Property, and all other leases and other
agreements affecting the use, enjoyment or occupancy of any part of the
Mortgaged Property now or hereafter made affecting the Mortgaged Property or any
portion thereof, together with any guaranty, extensions, renewals, replacements
or modifications of the same (all of the leases and other agreements described
above together with all other present and future leases and present and future
agreements and any guaranty, extension, renewal, replacement or modification of
the same are hereinafter collectively referred to as the "Leases"); and
(b) all rents, income, issues, revenues and profits arising
from the Leases and renewals thereof and together with all rents, income, issues
and profits from the use, enjoyment and occupancy of the Mortgaged Property
(including, but not limited to, minimum rents, additional rents, percentage
rents, deficiency rents, security deposits and liquidated damages following
default under any Leases, all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by damage to any
part of the Mortgaged Property, all of Mortgagor's rights to recover monetary
amounts from any Lessee (as hereinafter defined) in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising out of Lease defaults, including rejection of a Lease, together with any
sums of money that may now or at any time hereafter be or become due and payable
to Mortgagor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and all future oil, gas and mining Leases covering the Mortgaged
Property or any part thereof, and all proceeds and other amounts paid or owing
to Mortgagor under or pursuant to any and all contracts and bonds relating to
the construction, erection or renovation of the
<PAGE>
Mortgaged Property) (all of the rights described above hereinafter collectively
referred to as the "Rents").
(c) Present Assignment. Mortgagor does hereby absolutely and
unconditionally assign to Mortgagee Mortgagor's right, title and interest in all
current and future Leases and Rents, it being intended by Mortgagor that this
assignment constitute a present, absolute assignment and not an assignment for
additional security only. Such assignment to Mortgagee shall not be construed to
bind Mortgagee to the performance of any of the covenants, conditions, or
provisions contained in any of the Leases or otherwise to impose any obligation
upon Mortgagee. Mortgagor agrees to execute and deliver to Mortgagee such
additional instruments, in form and substance satisfactory to Mortgagee, as may
hereinafter be requested by Mortgagee to further evidence and confirm said
assignment. Mortgagee is hereby granted and assigned by Mortgagor the right to
enter the Mortgaged Property for the purpose of enforcing its 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 of this paragraph, Mortgagee grants to Mortgagor a revocable license to
operate and manage the Mortgaged Property and to collect the Rents. Prior to
disbursing any amounts to its members, Mortgagor shall hold the Rents, or a
portion thereof sufficient to discharge all current sums due on the Debt for use
in the payment of such sums. Upon an Event of Default, the license granted to
Mortgagor herein shall automatically be revoked and Mortgagee shall immediately
be entitled to receive and apply all Rents, whether or not Mortgagee enters upon
and takes control of the Mortgaged Property. Mortgagor hereby grants and assigns
to Mortgagee the right, at its option, upon the revocation of the license
granted 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
revocation of the license herein granted may be applied toward payment of the
Debt in such priority and proportion as Mortgagee, in its discretion, shall deem
proper.
(d) Remedies of Mortgagee. Upon or at any time after an Event of
Default, Mortgagee may, at its option, without waiving such Event of Default,
without notice and without regard to the adequacy of the security for the Debt,
either 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 Mortgagee may deem proper and either 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 with full power to make from time to time all alterations, renovations,
repairs or replacements thereto or thereof as may seem proper to Mortgagee and
may apply the Rents to the payment of the following in such order and proportion
as Mortgagee in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Mortgaged Property, including, without being limited thereto, the salaries, fees
and wages of a managing agent and such other employees or agents as Mortgagee
may deem necessary or desirable and all expenses of operating and maintaining
the Mortgaged Property, including, without being limited thereto, all taxes,
charges, claims, assessments, water charges, sewer rents and any other liens,
and premiums for all insurance which Mortgagee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the Mortgaged Property;
and (b) the Debt, (including all costs and attorneys' fees). In addition to the
rights which Mortgagee may have herein, upon the
<PAGE>
occurrence of an Event of Default, Mortgagee at its option may require Mortgagor
to vacate and surrender possession of the Mortgaged Property to Mortgagee or to
such receiver and, in default thereof, Mortgagor may be evicted by summary
proceedings or otherwise. Additionally, upon such Event of Default, Mortgagee
shall have the right to establish a lock box for the deposit of all Rents and
other receivables of Mortgagor relating to the Mortgaged Property. Mortgagor
shall pay any and all costs and expenses for such lock box. For purposes of
subsections (a), (b), (c) and (d), Mortgagor grants to Mortgagee its irrevocable
power of attorney, coupled with an interest, to take any and all of the
aforementioned actions and any or all other actions designated by Mortgagee for
the proper management and preservation of the Mortgaged Property. The exercise
by Mortgagee of the option granted it in this paragraph and the collection of
the Rents and the application thereof as herein provided shall not be considered
a waiver of any Event of Default under any of the Loan Documents.
58. Independent Management. In the event Mortgagee determines in its
reasonable and absolute discretion that the quality of management for the
Mortgaged Property has deteriorated, Mortgagor shall engage an independent
management company unaffiliated with Mortgagor which is satisfactory to
Mortgagee within 45 days after Mortgagor's receipt of written notice thereof
pursuant to a management agreement satisfactory to Mortgagee, and cause such
management company to execute and deliver to Mortgagee within such 45-day period
an Acknowledgment of Property Manager substantially in the form executed by
Manager in connection herewith.
59. Mortgagor's Release Option. Notwithstanding that this Mortgage
secures the Note, the Arkansas Note and the California Note, Mortgagee shall
release the Mortgaged Property from the lien of this Mortgage (a "Release") upon
the satisfaction of each and every one of the following conditions precedent at
the time of such Release (singularly and collectively referred to as a "Release
Condition"):
(a) Any and all sums then due and payable to Mortgagee under
the Note and the Loan Documents as defined therein shall be fully paid
(including, without limitation, principal and interest under the Note and all
sums constituting the Tax and Insurance Escrow Fund, and any other escrow
required under the Loan Documents), and no Event of Default shall exist and be
continuing, nor shall Mortgagee have given Mortgagor notice of any event or
condition which, with the passage of time or the giving of notice (or both),
could result in an Event of Default if not cured by Mortgagor.
(b) In no event shall a Release affect any of Mortgagor's
obligations under the Loan Documents (as defined in the Arkansas Note) or the
Loan Documents (as defined in the California Note).
(c) All reasonable costs and expenses incurred by Mortgagee
(and any servicer of the Loan) in connection with the review, approval and
execution of any Release shall be paid by Mortgagor prior to and as a condition
of any Release, including, but not limited to, reasonable attorneys' fees.
60. Mortgagee's Option to Release Cross-Collateralization and
Cross-Default. Mortgagor shall consent to, execute and otherwise cooperate in a
modification of this Mortgage and the other
<PAGE>
Loan Documents providing that this Mortgage shall no longer secure the Arkansas
Note and/or the California Note and that an Event of Default under the Arkansas
Note (and the related Loan Documents, as defined in such Note) and/or the
California Note (and the related Loan Document, as defined in such Note)
(collectively, the "Related Loan Documents") shall no longer constitute an Event
of Default hereunder. Such a modification shall automatically render ineffective
any provisions in the Related Loan Documents providing for
cross-collateralization or cross-defaults under this Mortgage. Such a
modification shall be made at Mortgagee's sole cost and expense, and Mortgagee
shall reimburse Mortgagor for its costs and expenses (including, without
limitation, its reasonable attorneys' fees and costs) related thereto.
61. Special State Provisions.
(a) Community Facilities District. Without obtaining the prior
written consent of Mortgagee, Mortgagor shall not consent to, or vote in favor
of, the inclusion of all or any part of the Mortgaged Property in any Community
Facilities District formed pursuant to the Community Facilities District Act,
A.R.S. Section 48-701, et seq., as amended from time to time. Mortgagor shall
immediately give notice to Mortgagee of any notification or advice that
Mortgagor may receive from any municipality or other third party of any intent
or proposal to include all or any part of the Mortgaged Property in a Community
Facilities District. Mortgagee shall have the right to file a written objection
to the inclusion of all or any part of the Mortgaged Property in a Community
Facilities District, either in its own name or in the name of Mortgagor, and to
appear at, and participate in, any hearing with respect to the formation of any
such district.
(b) Realty Mortgage. If this instrument should be or become
ineffective as a deed of trust, then these presents shall be construed and
enforced as a realty mortgage with the Mortgagor being the mortgagor and
Mortgagee being the mortgagee.
(c) Acceptance of Trust. The acceptance by Trustee of this
trust shall be evidenced when this Mortgage, duly executed and acknowledged, is
made a public record as provided by law. The trust created hereby is irrevocable
by Mortgagor.
(d) Release and Reconveyance. Upon written request of
Mortgagee stating that all of the indebtedness secured hereby has been paid, and
upon surrender of this Mortgage and the Note to Trustee for cancellation and
retention or, if requested, delivery, then Trustee (and Mortgagee if necessary
to clear title), upon payment of Trustee's fees, shall reconvey, without
warranty, the Mortgaged Property. The recitals in such reconveyance of any
matters or facts shall be conclusive as to the accuracy thereof. The grantee in
such reconveyance may be described as "the person or persons legally entitled
thereto."
<PAGE>
Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
Assignment of leases
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT A
(Legal Description)
PARCEL 1:
All of those portions of Block 4 of TUCSON GREEN VALLEY UNIT NO. 1, Blocks 1
thru 12, according to the plat of record in the office of the County Recorder of
Pima County, Arizona, recorded in Book 16, of Maps, Page 76, more particularly
described as follows:
BEGINNING at the Southwest corner of said Block 4;
THENCE South 08 degrees 09 minutes 55 seconds West on a Southerly extension of
the West line of said Block 4, a distance of 10.0 feet to a point, said point
being the TRUE POINT OF BEGINNING;
THENCE North 08 degrees 09 minutes 55 seconds East, along said previous line and
the West line of Block 4, a distance of 927.81 feet to a point of curvature;
THENCE Northeasterly around said curve to the right whose radius is 25.0 feet, a
distance of 35.71 feet to a point of tangency on the South right of way line of
Esperanza Boulevard, said point also being on the Northerly line of Block 4;
THENCE East, along the North line of said Block 4, a distance of 613.60 feet to
a point;
THENCE South, a distance of 220.0 feet to a point;
THENCE East, a distance of 148.43 feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 45.98 feet to
a point;
THENCE South 81 degrees 50 minutes 05 seconds East, a distance of 152.70 feet to
a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 198.18 feet to
a point on the South right of way line of Esperanza Boulevard.
THENCE East, along the South right of way line of Esperanza Boulevard, a
distance of 40.46 feet to a point;
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 161.57 feet to
a point;
THENCE South, 81 degrees 50 minutes 55 seconds East, a distance of 192.24 feet
to a point on the Westerly right of way line of Tucson-Nogales Highway;
THENCE South 00 degrees 25 minutes 06 seconds East, along said Westerly right of
way line, a distance of 536.0 feet to a point;
THENCE South 08 degrees 09 minutes 55 seconds West, along said Westerly right of
way line, a distance of 361.36 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 30.0 feet to a
point;
<PAGE>
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 40.0 feet to a
point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 1,242.0 feet
to a point, said point being the TRUE POINT OF BEGINNING;
EXCEPT the following described Parcels "A" and "B":
PARCEL "A"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
more particularly described as follows:
BEGINNING at the Southerly point of curvature of Curve No. 2 in said Lot 5;
THENCE South 08 degrees 09 minutes 55 seconds West, along the East right of way
line of La Canada Drive, a distance of 134.92 feet to a point, said point being
the TRUE POINT OF BEGINNING;
THENCE East, a distance of 162.78 feet to a point;
THENCE South, a distance of 105.07 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 176.05 feet to
a point on the East right of way of La Canada Drive;
THENCE North 08 degrees 09 minutes 55 seconds East, along said right of way
line, a distance of 80.89 feet to a point, said point being the TRUE POINT OF
BEGINNING.
PARCEL "B"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
being more particularly described as follows:
BEGINNING at the Southwest corner of said Lot 5;
THENCE North 08 degrees 09 minutes 55 seconds East, along the West line of said
Lot 5, a distance of 40.0 feet to the TRUE POINT OF BEGINNING;
THENCE South 81 degrees 50 minutes 05 seconds East, along a line being 40.0 feet
North of and parallel with the South line of said Lot 5, a distance of 320.0
feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, along a line being 320.0
feet Easterly of and parallel with the said West line of Lot 5, a distance of
600.0 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, along a line being 640.0
feet North of and parallel with said South line of Lot 5, a distance of 320.0
feet to a point in the said West line of Lot 5;
THENCE south 08 degrees 09 minutes 55 seconds West, along said West line, a
distance of 600.0 feet to the TRUE POINT OF BEGINNING.
<PAGE>
Property Address: Green Valley Mall
99-255 Esperanza
101 La Canada Road
Green Valley, Arizona 85614
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier
Loan No. 1700020082
Property: Green Valley Mall
Green Valley, Arizona
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS
("Assignment") is made as of September 23, by CONCORD MILESTONE PLUS, L.P., a
Delaware limited partnership ("Assignor"), to WESTCO REAL ESTATE FINANCE CORP.,
a California corporation ("Assignee").
Assignor, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does hereby GRANT,
SELL, CONVEY, ASSIGN, TRANSFER, SET OVER AND DELIVER to Assignee the entire
lessor's interest in and to all current and future leases and other agreements
affecting the use, enjoyment, or occupancy of all or any part of the Mortgaged
Property (as defined in the Mortgage, which is defined below), which Mortgaged
Property includes that certain lot or piece of land, more particularly described
in Exhibit A annexed hereto and made a part hereof.
TOGETHER WITH all other leases and other
agreements affecting the use, enjoyment or occupancy of any part of the
Mortgaged Property now or hereafter made affecting the Mortgaged Property or any
portion thereof, together with any extensions or renewals of the same (all of
the leases and other agreements described above together with all other present
and future leases and present and future agreements and any extension or renewal
of the same are hereinafter collectively referred to as the "Leases");
TOGETHER WITH all rents, income, issues, revenues
and profits arising from the Leases and renewals thereof and together with all
rents, income, issues and profits from the use, enjoyment and occupancy of the
Mortgaged Property (including, but not limited to, minimum rents, additional
rents, percentage rents, deficiency rents, security deposits and liquidated
damages following default under any Leases, all proceeds payable under any
policy of insurance covering loss of rents resulting from untenantability caused
by damage to any part of the
<PAGE>
Mortgaged Property, all of Assignor's rights to recover monetary amounts from
any Lessee (as hereinafter defined) in bankruptcy including, without limitation,
rights of recovery for use and occupancy and damage claims arising out of Lease
defaults, including rejection of a Lease, together with any sums of money that
may now or at any time hereafter be or become due and payable to Assignor by
virtue of any and all royalties, overriding royalties, bonuses, delay rentals
and any other amount of any kind or character arising under any and all present
and all future oil, gas and mining Leases covering the Mortgaged Property or any
part thereof, and all proceeds and other amounts paid or owing to Assignor under
or pursuant to any and all contracts and bonds relating to the construction,
erection or renovation of the Mortgaged Property) (all of the rights described
above hereinafter collectively referred to as the "Rents").
THIS ASSIGNMENT is made to
facilitate:
A. The payment of the Debt as defined in that certain
Note made by Assignor to Assignee, dated the date hereof, in the principal sum
of $5,400,000 (the "Note"), and secured by the Mortgage (as defined in the Note)
covering the Mortgaged Property.
B. The performance and discharge of each and every
obligation, covenant and agreement of Assignor contained herein and in the other
Loan Documents (as defined in the Note).
C. The payment of the Debt as defined in the Arkansas
Note (as defined in the Mortgage).
D. The performance and discharge of each and every
obligation, covenant and agreement of Assignor contained in the Loan Documents
(as defined in the Arkansas Note).
E. The payment of the Debt as defined in the
California Note (as defined in the Mortgage).
F. The performance and discharge of each and every
obligation, covenant and agreement of Assignor contained in the Loan Documents
(as defined in the California Note).
Assignor warrants to Assignee that (a) Assignor is the
sole owner of the entire lessor's interest in the Leases; (b) the Leases are
valid, enforceable and in full force and effect and have not been altered,
modified or amended in any manner whatsoever except as disclosed to Assignee;
(c) neither the Leases nor the Rents reserved in the Leases have been assigned
or otherwise pledged or hypothecated; (d) none of the Rents have been collected
for more than one (1) month in advance; (e) Assignor 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
Assignor or the Mortgaged Property; (f) the premises demised under the Leases
have been completed and Lessees under the Leases have accepted the same and have
taken possession of the
<PAGE>
same on a rent-paying basis except as explicitly identified on the certified
rent roll attached to the Closing Certificate dated concurrently herewith
executed by Assignor in favor of Assignee in connection with the Note; and (g)
there exist no offsets or defenses to the payment of any portion of the Rents.
Assignor covenants with Assignee that Assignor
(a) shall observe and perform all the obligations imposed upon the lessor under
the Leases and shall not do or permit to be done anything to impair the value of
the Leases as security for the Debt; (b) shall promptly send to Assignee copies
of all notices of default which Assignor shall receive under the Leases; (c)
shall not collect any Rents more than one (1) month in advance; (d) shall not
execute any other assignment of lessor's interest in the Leases or the Rents;
(e) shall execute and deliver at the request of Assignee all such further
assurances, confirmations and assignments in connection with the Mortgaged
Property as Assignee shall from time to time require; (f) shall not enter into
any new lease of the Mortgaged Property without the prior written consent of
Assignee (unless such new Lease satisfies the Approval Conditions described
below), and in any event, any new Lease shall be on a form of lease approved by
Assignee; (g) shall deliver to Assignee, upon request, subject to tenant lease
requirements, tenant estoppel certificates from each commercial Lessee at the
Mortgaged Property in form and substance reasonably satisfactory to Assignee
(provided, however, that Assignor shall not be required to deliver such
certificates more frequently than two [2] times in any calendar year); and (h)
shall deliver to Assignee, at Assignee's request, executed copies of all Leases
now existing or hereafter arising.
Assignor further covenants with Assignee that, except
to the extent that Assignor is acting in the ordinary course of business as a
prudent operator of property similar to the Mortgaged Property, Assignor (a)
shall promptly send to Assignee copies of all notices of default which Assignor
shall send to Lessees under the Leases; (b) shall enforce all of the terms,
covenants and conditions contained in the Leases upon the part of the Lessees
thereunder to be observed or performed, short of termination thereof; (c) shall
not alter, modify or change the terms of the Leases without the prior written
consent of Assignee, or cancel or terminate the Leases or accept a surrender
thereof or take any other action which would effect a merger of the estates and
rights of, or a termination or diminution of the obligations of, Lessees
thereunder; provided however, that any Lease may be canceled if at the time of
cancellation thereof a new Lease is entered into on substantially the same terms
or more favorable terms as the canceled Lease; (d) shall not alter, modify or
change the terms of any guaranty of any of the Leases or cancel or terminate any
such guaranty without the prior written consent of Assignee; (e) shall not
consent to any assignment of or subletting under the Leases not in accordance
with their terms, without the prior written consent of Assignee; and (f) shall
not waive, release, reduce, discount or otherwise discharge or compromise the
payment of any of the Rents to accrue under the Leases.
Assignor further covenants with Assignee that (a) all
Leases shall be written on the standard form of lease which has been approved by
Assignee; (b) upon request, Assignor shall furnish Assignee with executed copies
of all Leases; (c) no material changes may be made to the Assignee-approved
standard lease without the prior written consent of Assignee; (d) all renewals
of Leases and all proposed Leases shall provide for rental rates comparable to
existing local market rates and shall be arm's-length transactions; (e) all
Leases shall provide that
<PAGE>
(i) they are subordinate to the Mortgage and any other indebtedness now or
hereafter secured by the Mortgaged Property, (ii) Lessees agree to attorn to
Assignee (such attornment to be effective upon Assignee's acquisition of title
to the Mortgaged Property), (iii) Lessees agree to execute such further
evidences of attornment as Assignee may from time to time request, (iv) the
attornment of Lessees shall not be terminated by foreclosure, (v) Assignee may,
at Assignee's option, accept or reject such attornment, and (vi) Lessees agree
to furnish, two times in any calendar year, as Assignee may request, a
certificate signed by Lessee confirming and containing such factual
certifications and representations deemed reasonably appropriate by Assignee;
and (f) all new Leases shall be subject to the prior approval of Assignee.
Notwithstanding anything to the contrary contained
herein, and provided that no Event of Default (as defined in the Mortgage) shall
exist and be continuing, the following terms and provisions shall apply (the
"Approval Conditions"):
(a) Assignee's consent shall not be required for modifications of
Leases if (i) the Lease to be modified does not involve more than 6,500
rentable square feet of the Mortgaged Property, (ii) such modifications
(together with all prior modifications of such Lease made without
Assignee's consent) do not materially decrease the obligations of Lessee
nor materially increase the obligations of the lessor, (iii) such
modification (together with all prior modifications of Leases made without
Assignee's consent) will not adversely affect the Mortgaged Property,
Assignee, or Assignor's ability to fulfill its obligations under the Loan
Documents (other than to a de minimis extent), and (iv) the Lease as so
modified meets all criteria that would be required with respect to new
Leases as set forth in subpart (c) below.
(b) Assignee's consent shall not be required for termination of a
Lease if (i) Lessee under such Lease is in default beyond all applicable
notice and grace periods, (ii) the Lease to be terminated does not involve
more than 6,500 rentable square feet of the Mortgaged Property, and (iii)
such termination will not adversely affect the Mortgaged Property,
Assignee, or Assignor's ability to fulfill its obligations under the Loan
Documents (other than to a de minimis extent).
(c) Assignee's consent shall not be required for execution of a new
Lease of space at the Mortgaged Property if (i) such Lease does not involve
more than
<PAGE>
6,500 rentable square feet of the Mortgaged Property, (ii) such Lease
will not adversely affect the Mortgaged Property, Assignee, or Assignor's
ability to fulfill its obligations under the Loan Documents, (iii) such
Lease is on the standard form of lease approved by Assignee, (iv) such
Lease is the result of an arms-length transaction and provides for rental
rates comparable to existing market rates, (v) such Lease does not contain
any terms which would materially affect Assignee's rights under this
Assignment or the other Loan Documents, and (vi) the term of such Lease
(including any renewal or extension term) shall be no less than six (6)
months and no more than one (1) year.
THIS ASSIGNMENT is made on the following terms,
covenants and conditions:
1. Present Assignment. Assignor does hereby
absolutely and unconditionally assign to Assignee Assignor's right, title and
interest in all current and future Leases and Rents, it being intended by
Assignor that this assignment constitute a present, absolute assignment and not
an assignment for additional security only. Such assignment to Assignee shall
not be construed to bind Assignee to the performance of any of the covenants,
conditions, or provisions contained in any of the Leases or otherwise to impose
any obligation upon Assignee. Assignor agrees to execute and deliver to Assignee
such additional instruments, in form and substance satisfactory to Assignee, as
may hereinafter be requested by Assignee to further evidence and confirm said
assignment. Assignee is hereby granted and assigned by Assignor the right to
enter the Mortgaged Property for the purpose of enforcing its 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 of this paragraph, Assignee grants to Assignor a revocable license to
operate and manage the Mortgaged Property and to collect the Rents. Assignor
shall hold the Rents, or a portion thereof sufficient to discharge all current
sums due on the Debt for use in the payment of such sums. Upon an Event of
Default, the license granted to Assignor herein shall automatically be revoked
and Assignee shall immediately be entitled to receive and apply all Rents,
whether or not Assignee enters upon and takes control of the Mortgaged Property.
Assignor hereby grants and assigns to Assignee the right, at its option, upon
the revocation of the license granted 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 revocation of the license herein granted
may be applied toward payment of the Debt in such priority and proportion as
Assignee, in its discretion, shall deem proper.
2. Remedies of Assignee. Upon or at any time after
an Event of Default, Assignee may, at its option, without waiving such Event of
Default, without notice and without regard to the adequacy of the security for
the Debt, either in person or by agent,
<PAGE>
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
Assignee may deem proper and either 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 with full power to make
from time to time all alterations, renovations, repairs or replacements thereto
or thereof as may seem proper to Assignee and may apply the Rents to the payment
of the following in such order and proportion as Assignee in its sole discretion
may determine, any law, custom or use to the contrary notwithstanding: (a) all
expenses of managing and securing the Mortgaged Property, including, without
being limited thereto, the salaries, fees and wages of a managing agent and such
other employees or agents as Assignee may deem necessary or desirable and all
expenses of operating and maintaining the Mortgaged Property, including, without
being limited thereto, all taxes, charges, claims, assessments, water charges,
sewer rents and any other liens, and premiums for all insurance which Assignee
may deem necessary or desirable, and the cost of all alterations, renovations,
repairs or replacements, and all expenses incident to taking and retaining
possession of the Mortgaged Property; and (b) the Debt, (including all costs and
attorneys' fees). In addition to the rights which Assignee may have herein, upon
the occurrence of an Event of Default, Assignee, at its option, may require
Assignor to vacate and surrender possession of the Mortgaged Property to
Assignee or to such receiver and, in default thereof, Assignor may be evicted by
summary proceedings or otherwise. Additionally, upon such Event of Default,
Assignee shall have the right to establish a lock box for the deposit of all
Rents and other receivables of Assignor relating to the Mortgaged Property.
Assignor shall pay any and all costs and expenses for such lock box. For
purposes of Paragraphs 1 and 2, Assignor grants to Assignee its irrevocable
power of attorney, coupled with an interest, to take any and all of the
aforementioned actions and any or all other actions designated by Assignee for
the proper management and preservation of the Mortgaged Property. The exercise
by Assignee of the option granted it in this paragraph and the collection of the
Rents and the application thereof as herein provided shall not be considered a
waiver of any Event of Default under any of the Loan Documents.
3. No Liability of Assignee. Assignee shall not be
liable for any loss sustained by Assignor resulting from Assignee's failure to
let the Mortgaged Property after an Event of Default or from any other act or
omission of Assignee in managing the Mortgaged Property after an Event of
Default unless such loss is caused by the willful misconduct and bad faith of
Assignee. Assignee shall not be obligated to perform or discharge any
obligation, duty or liability under the Leases or under or by reason of this
Assignment and Assignor shall, and hereby agrees, to indemnify Assignee for, and
to hold Assignee harmless from, any and all liability, loss or damage which may
or might be incurred under the Leases or under or by reason of this Assignment
and from any and all claims and demands whatsoever, including the defense of any
such claims or demands which may be asserted against Assignee by reason of any
alleged obligations and undertakings on its part to perform or discharge any of
the terms, covenants or agreements contained in the Leases. Should Assignee
incur any such liability, the amount thereof, including costs, expenses and
reasonable attorneys' fees, shall be secured hereby and by the Loan Documents
and Assignor shall reimburse Assignee therefor immediately upon demand and upon
Assignor's failure to do so, Assignee may, at its option, exercise any and all
remedies available to Assignee hereunder and under the other Loan Documents.
This Assignment shall not operate to place any obligation or
<PAGE>
liability for the control, care, management or repair of the Mortgaged Property
upon Assignee, nor for the carrying out of any of the terms and conditions of
the Leases; nor shall it operate to make Assignee responsible or liable for any
waste committed on the Mortgaged Property, including without limitation the
presence of any Hazardous Substances, (as defined in the Environmental
Agreement, which is defined in the Note), or for any negligence in the
management, upkeep, repair or control of the Mortgaged Property resulting in
loss or injury or death to any Lessee, licensee, employee or stranger.
4. Notice to Lessees. Assignor hereby authorizes and
directs Lessees named in the Leases or any other or future Lessees or occupants
of the Mortgaged Property (the "Lessee[s]") upon receipt from Assignee of
written notice to the effect that Assignee is then the holder of the Note and
that an Event of Default exists thereunder or under the other Loan Documents to
pay over to Assignee all Rents and to continue so to do until otherwise notified
by Assignee, without further notice or consent of Assignor and regardless of
whether Assignee has taken possession of the Mortgaged Property, and Lessees may
rely upon any written statement delivered by Assignee to Lessees without any
obligation or right to inquire as to whether such default actually exists and
notwithstanding any notice from or claim of Assignor to the contrary. Assignor
further agrees that it shall have no right to claim against any of Lessees for
any such Rents so paid by Lessees to Assignee and that Assignee shall be
entitled to collect, receive and retain all Rents regardless of when and to whom
such Rents are and have been paid and regardless of the form or location of such
Rents. Any such payment to Assignee shall constitute payment to Assignor under
the Leases, and Assignor appoints Assignee as Assignor's lawful attorney-in-fact
for giving, and Assignee is hereby empowered to give, acquitances to any Lessee
for such payment to Assignee after an Event of Default. Any Rents held or
received by Assignor after a written request from Assignee to Lessees for the
payment of Rents shall be held or received by Assignor as trustee for the
benefit of Assignee only.
5. Rental Offsets. If Assignor becomes aware that any
Lessee proposes to do, or is doing, any act or thing which may give rise to any
right of set-off against Rent, Assignor shall, to the extent Assignee is
permitted to do so under the applicable lease or applicable law, (i) take such
steps as shall be reasonably calculated to prevent the accrual of any right to a
set-off against Rent, (ii) notify Assignee thereof and of the amount of said
set-offs, and (iii) within ten (10) days after such accrual for a valid set-off,
reimburse Lessee who shall have acquired such right to set-off or take such
other steps as shall effectively discharge such set-off and as shall effectively
assure that Rents thereafter due shall continue to be payable without set-off or
deduction.
6. Security Deposits. Following the occurrence and
during the continuance of any Event of Default, Assignor shall, upon Assignee's
request, if permitted by applicable legal requirements, turn over to Assignee
the security deposits (and any interest theretofore earned thereon) with respect
to all or any portion of the Mortgaged Property, to be held by Assignee subject
to the terms of the Leases.
7. Relocations. In no event shall Assignor exercise any right to
relocate any Lessee pursuant to any right set forth in a Lease without the
prior written
<PAGE>
consent of Assignee, except for relocations in connection with the making or
renewal of Leases with respect to which Assignee's consent is not required under
the Approval Conditions above.
8. Other Security. Assignee may take or release other
security for the payment of the Debt, may release any party primarily or
secondarily liable therefor and may apply any other security held by it to the
reduction or satisfaction of the Debt without prejudice to any of its rights
under this Assignment.
9. Other Remedies. Nothing contained in this
Assignment and no act done or omitted by Assignee pursuant to the power and
rights granted to Assignee hereunder shall be deemed to be a waiver by Assignee
of its rights and remedies under the other Loan Documents and this Assignment is
made and accepted without prejudice to any of the rights and remedies possessed
by Assignee under the terms thereof. The right of Assignee to collect the Debt
and to enforce any other security therefor held by it may be exercised by
Assignee either prior to, simultaneously with, or subsequent to any action taken
by it hereunder.
10. No Mortgagee in Possession. Nothing herein
contained shall be construed as constituting Assignee a "mortgagee in
possession" in the absence of the taking of actual possession of the Mortgaged
Property by Assignee. In the exercise of the powers herein granted Assignee, no
liability shall be asserted or enforced against Assignee, all such liability
being expressly waived and released by Assignor.
11. No Oral Change. This Assignment may not be
modified, amended, waived, extended, changed, discharged or terminated orally,
or by any act or failure to act on the part of Assignor or Assignee, but only by
an agreement in writing signed by the party against whom the enforcement of any
modification, amendment, waiver, extension, change, discharge or termination is
sought.
12. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided herein,
words used in this Assignment may be used interchangeable in singular or plural
form and the word "Assignor" shall mean "each Assignor and any subsequent owner
or owners of the Mortgaged Property or any part thereof or any interest
therein," the word "Assignee" shall mean "Assignee and any subsequent holder of
the Note," the word "person" shall include an individual, corporation,
partnership, trust, unincorporated association, government, governmental
authority, and any other entity, the words "Mortgaged Property" shall include
any portion of the Mortgaged Property and any interest therein; whenever the
context may require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural and vice versa.
13. Non-Waiver. The failure of Assignee to insist upon
strict performance of any term hereof shall not be deemed to be a waiver of any
term of this Assignment. Assignor shall not be relieved of Assignor's
obligations hereunder by reason of (a) failure of Assignee to comply with any
request of Assignor or any other party to take any action to enforce any of the
provisions hereof or of the other Loan Documents, (b) the release regardless
<PAGE>
of consideration, of the whole or any part of the Mortgaged Property, or (c) any
agreement or stipulation by Assignee extending the time of payment or otherwise
modifying or supplementing the terms of this Assignment or the other Loan
Documents. Assignee may resort for the payment of the Debt to any other security
held by Assignee in such order and manner as Assignee, in its discretion, may
elect. Assignee may take any action to recover the Debt, or any portion thereof
or to enforce any covenant hereof without prejudice to the right of Assignee
thereafter to enforce its rights under this Assignment. The rights of Assignee
under this Assignment shall be separate, distinct and cumulative and none shall
be given effect to the exclusion of the others. No act of Assignee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
14. Inapplicable Provisions. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or unenforceable in
any respect, this Assignment shall be construed without such provision.
15. Counterparts. This Assignment may be executed
in any number of counterparts each of which shall be deemed to be an original
but all of which when taken together shall constitute one agreement.
16. GOVERNING LAW; JURISDICTION. THIS
ASSIGNMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY THE MORTGAGE IS LOCATED AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. ASSIGNOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN
THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY
PROCEEDING ARISING OUT OF OR RELATING TO THIS ASSIGNMENT.
17. Successors and Assigns. Assignor may not assign
its rights under this Assignment. Assignor hereby acknowledges and agrees that
Assignee may assign this Assignment without Assignor's consent. Subject to the
foregoing, this Assignment shall be binding upon, and shall inure to the benefit
of, Assignor and the Assignee and their respective successors and assigns.
18. Termination of Assignment. Upon payment in full
of the Debt and the delivery and recording of a satisfaction, release or
discharge of Mortgage duly executed by Assignee, this Assignment shall become
and be void and of no effect.
THIS ASSIGNMENT shall inure to the benefit of
Assignee and any subsequent holder of the Note and shall be binding upon
Assignor, and Assignor's heirs, executors, administrators, successors and
assigns and any subsequent owner of the Mortgaged Property.
(Signature page follows)
<PAGE>
Assignor has executed this instrument as of the day and
year first above written.
ASSIGNOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership,
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
ENVIRONMENTAL LIABILITIES AGREEMENT
Loan No. 1700020082
Property: Green Valley Mall
Green Valley, Arizona
THIS ENVIRONMENTAL LIABILITIES
AGREEMENT (this "Agreement") is made as of September 23, 1997, by CONCORD
MILESTONE PLUS, L.P., a Delaware limited partnership (the "Borrower"), and CM
PLUS CORPORATION, a Delaware corporation ("CM Plus") (collectively, the
"Indemnitor"), to and for the benefit of WESTCO REAL ESTATE FINANCE CORP., a
California corporation (the "Lender").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the
following terms shall have the following meanings:
Asbestos: Asbestos or any substance containing
asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision, order,
injunction or decree which pertains to health, safety or the environment
(including but not limited to, ground or air or water or noise pollution or
contamination, and underground or aboveground tanks) and shall include,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation
and Recovery Act of 1976, as amended ("RCRA"), and any state or federal
lien or superlien or environmental clean-up statutes, and regulations,
rules, guidelines, or standards promulgated pursuant thereto all as amended
from time to time.
Hazardous Substance: Any substance, whether solid,
liquid or gaseous: i) which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise classified as
<PAGE>
hazardous or toxic, in or pursuant to any Environmental Law; or ii)
which is or contains Asbestos, radon, any polychlorinated biphenyl, urea
formaldehyde foam insulation, explosive or radioactive material, lead
paint, or motor fuel or other petroleum hydrocarbons; or iii) which causes
or poses a threat to cause a contamination or nuisance on the Mortgaged
Property or any adjacent property or a hazard to the environment or to the
health or safety of persons on or about the Mortgaged Property.
Mortgage: That certain Mortgage, Deed of Trust and Security Agreement,
dated of even date herewith, executed by Borrower for the benefit of
Lender, covering the Mortgaged Property more particularly described
therein, including the real property or interest therein described in
Exhibit A attached hereto and incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment, cleanup,
removal, restoration, or other activities of any kind which are reasonably
necessary or desirable under an applicable Environmental Law.
Storage Tanks: Any underground or aboveground storage tanks, whether
filled, empty, or partially filled with any substance.
Section 1.2 Other Defined Terms. Any capitalized
term utilized herein shall have the meaning as specified in the Mortgage, unless
such term is otherwise specifically defined herein.
ARTICLE II
WARRANTIES AND REPRESENTATIONS
Indemnitor hereby represents and warrants to Lender
that, to the best of Indemnitor's knowledge after due inquiry and investigation
as follows, subject to the information respecting the environmental condition of
the Mortgaged Property contained in a Report of Phase I Environmental Site
Assessment prepared by Geoscience, Inc., dated July 17, 1997:
Section 2.1 Mortgaged Property Compliance. The
Mortgaged Property and the operations conducted thereon do not violate any
applicable law, statute, ordinance, rule, regulation, order, or determination of
any governmental authority or any restrictive
<PAGE>
covenant or deed restriction (recorded or otherwise), including without
limitation all applicable zoning ordinances and building codes, flood disaster
laws and Environmental Laws.
Section 2.2 No Violations. Without limitation to
Section 2.1 above, except as previously disclosed in writing to Lender, the
Mortgaged Property and operations conducted thereon by the current owner or
operator of such Mortgaged Property, are not the subject of any existing,
pending, or threatened action, suit, investigation, inquiry, or proceeding by
any governmental or nongovernmental entity or person or to any Remediation under
any Environmental Law.
Section 2.3 Authorizations. All notices, permits,
licenses, registrations, or similar authorizations, if any, required to be
obtained or filed in connection with the ownership, operation, or use of the
Mortgaged Property, including, without limitation, the existence of any Storage
Tanks at the Mortgaged Property or the past or present generation, treatment,
storage, disposal, or release of a Hazardous Substance into the environment,
have been duly obtained or filed and have been duly renewed or maintained.
Section 2.4 Hazardous Substance. The Mortgaged
Property does not contain any Hazardous Substance in violation of applicable
Environmental Laws. Except as disclosed in writing to Lender the Mortgaged
Property does not contain any Storage Tanks or Asbestos.
Section 2.5 Borrower Investigation. Borrower has
taken all steps necessary to determine, and has determined, that no Hazardous
Substances are or have been generated, treated, stored, used, disposed of or
released on, under, from, or about the Mortgaged Property except in compliance
with applicable Environmental Laws.
Section 2.6 Borrower Compliance. Borrower has
not undertaken, permitted, authorized, or suffered and will not undertake,
permit, authorize, or suffer the presence, use, manufacture, handling,
generation, transportation, storage, treatment, discharge, release, burial, or
disposal on, under, from or about the Mortgaged Property of any Hazardous
Substance or the transportation to or from the Mortgaged Property of any
Hazardous Substance except in compliance with applicable Environmental Laws.
Section 2.7 No Pending Litigation. Except as
otherwise previously disclosed to Lender in writing, there is no pending or
threatened litigation, proceedings, or investigations before or by any
administrative agency in which any person or entity alleges or is investigating
any alleged presence, release, threat of release, placement on, under, from or
about the Mortgaged Property, or the manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, under,
from or about the Mortgaged Property, or the transportation to or from the
Mortgaged Property, of any Hazardous Substance.
Section 2.8 No Notices. Except as otherwise
previously disclosed to Lender in writing, Borrower has not received any notice,
and has no actual or constructive knowledge, that any governmental authority or
any employee or agent thereof has
<PAGE>
determined, or threatens to determine, or is investigating any allegation that
there is a presence, release, threat of release, placement on, under, from or
about the Mortgaged Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, under,
from or about the Mortgaged Property, or the transportation to or from the
Mortgaged Property, of any Hazardous Substance.
Section 2.9 No Communications. Except as
otherwise previously disclosed to Lender in writing, there have been no
communications or agreements with any governmental authority thereof or any
private entity, including, but not limited to, any prior owners or operators of
the Mortgaged Property, relating in any way to the presence, release, threat of
release, placement on, under or about the Mortgaged Property, or the use,
manufacture, handling, generation, transportation, storage, treatment,
discharge, burial, or disposal on, under or about the Mortgaged Property, or the
transportation to or from the Mortgaged Property, of any Hazardous Substance,
except for communications made in the ordinary course of business in connection
with permits, reports, and routine inspections issued, prepared or conducted by
government agencies or authorities having jurisdiction over the Mortgaged
Property.
Section 2.10 Other Properties. Neither Borrower, nor,
to the best knowledge of Borrower, any other person, including, but not limited
to, any predecessor owner, tenant, licensee, occupant, user, or operator of all
or any portion of the Mortgaged Property, has ever caused, permitted, authorized
or suffered, and Borrower will not cause, permit, authorize, or suffer, any
Hazardous Substance to be placed, held, located, or disposed of, on, under or
about any other real property, all or any portion of which is legally or
beneficially owned (or any interest or estate therein which is owned) by
Borrower in any jurisdiction now or hereafter having in effect a so-called
"superlien" law or ordinance or any part thereof, the effect of which law or
ordinance would be to create a lien on the Mortgaged Property to secure any
obligation in connection with the "superlien" law of such other jurisdiction.
Section 2.11 Permits. Borrower has been issued all
required federal, state, and local licenses, certificates, or permits relating
to, and Borrower and the Mortgaged Property are in compliance in all respects
with all applicable Environmental Laws, including but not limited to, federal,
state, and local laws, rules, and regulations relating to, air emissions, water
discharge, noise emissions, solid or liquid waste disposal, hazardous waste or
materials, or other environmental, health, or safety matters.
ARTICLE III
AFFIRMATIVE COVENANTS
Indemnitor hereby unconditionally covenants and
agrees with Lender, until the entire Debt (as defined in the Note) shall have
been paid in full and all of the obligations of Borrower under the Loan
Documents shall have been fully performed and dis charged, as follows:
Section 3.1 Operations. Borrower shall not use,
<PAGE>
generate, manufacture, produce, store, release, discharge, treat, or dispose of
on, under, from or about the Mortgaged Property or transport to or from the
Mortgaged Property any Hazardous Substance or allow any other person or entity
to do so except in compliance with Environmental Laws. Borrower shall not
install or permit to be installed any Asbestos or Storage Tanks at the Mortgaged
Property and shall remedy all violations of Environmental Laws with respect
thereto including, but not limited to, removal of Asbestos and/or Storage Tanks
in the manner and as required by applicable Environmental Laws.
Section 3.2 Compliance. Borrower shall keep and
maintain the Mortgaged Property in compliance with, and shall not cause or
permit the Mortgaged Property to be in violation of, any Environmental Law and
upon discovery of any noncompliance shall promptly take corrective action to
remedy such noncompliance.
Section 3.3 [Intentionally Deleted]
Section 3.4 Notices. Borrower shall give prompt
written notices to Lender of: (i) any proceeding or inquiry by any governmental
or nongovernmental entity or person with respect to the presence of any
Hazardous Substance on, under, from or about the Mortgaged Property, the
migration thereof from or to other property, the disposal, storage, or treatment
of any Hazardous Substance generated or used on, under or about the Mortgaged
Property, (ii) all claims made or threatened by any third party against Borrower
or the Mortgaged Property or any other owner or operator of the Mortgaged
Property relating to any release reportable under any applicable Environmental
Law, loss or injury resulting from any Storage Tank or Hazardous Substance, and
(iii) Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Mortgaged Property that could cause the
Mortgaged Property or any part thereof to be subject to any investigation or
cleanup of the Mortgaged Property pursuant to any Environmental Law or that
could result in Borrower becoming liable for any cost related to any
investigation or cleanup of such Mortgaged Property.
Section 3.5 Legal Proceedings. Borrower shall
permit Lender to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Mortgaged Property in
connection with any Environmental Law, Hazardous Substance or Storage Tank and
Borrower shall pay all attorneys' fees incurred by Lender in connection
therewith.
Section 3.6 Remediation. In the event that the
Mortgaged Property (or any portion thereof) becomes the subject of any
Remediation, Borrower shall commence such Remediation no later than the earlier
of (i) thirty (30) days after written demand by Lender for performance thereof,
or (ii) such shorter period of time as may be required under applicable law, and
thereafter shall diligently prosecute the same to completion in accordance with
applicable law. All Remediation shall be performed by contractors approved in
advance by Lender, and under the supervision of a consulting engineer approved
by Lender. All costs and expenses of such Remediation shall be paid by Borrower
including, without limitation, Lender's reasonable attorneys' fees and costs
incurred in connection with monitoring or review of such Remediation. In the
event Borrower shall fail to timely commence, or cause to be commenced, or
<PAGE>
fail to diligently prosecute to completion, such Remediation, Lender may, but
shall not be required to, cause such Remediation to be performed, and all costs
and expenses thereof, or incurred in connection therewith, shall become part of
the Debt.
ARTICLE IV
INDEMNIFICATION
INDEMNITOR SHALL PROTECT, INDEMNIFY,
AND HOLD HARMLESS LENDER AND TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES,
SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS,
DEMANDS, DAMAGES, PENALTIES, CAUSES OF ACTION, LOSSES, FINES, COSTS AND EXPENSES
(INCLUDING WITHOUT LIMITATION CONSEQUENTIAL DAMAGES AND REASONABLE ATTORNEYS'
FEES AND EXPENSES), DIRECTLY OR INDIRECTLY ARISING FROM OR RELATED TO ANY
RELEASE OF OR EXPOSURE TO ANY HAZARDOUS SUBSTANCE (INCLUDING PERSONAL INJURY OR
DAMAGE TO PROPERTY), NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR
ARISING UNDER ANY ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF
INDEMNITOR HEREUNDER SHALL BE DEEMED TO CONSTITUTE A PART OF THE DEBT SECURED BY
THE MORTGAGE AND THE OTHER LOAN DOCUMENTS.
ARTICLE V
MISCELLANEOUS
Section 5.1 Survival of Obligations. Each and all
of the representations, covenants and agreements and indemnities contained
herein shall survive any termination, satisfaction or assignment of the Loan
Documents or the entry of a judgment of foreclosure, sale of the Mortgaged
Property by nonjudicial foreclosure sale, delivery of a deed in lieu of
foreclosure or the exercise by Lender of any of its other rights and remedies
under the Loan Documents.
Section 5.2 Notices. All notices or other
communications required or permitted to be given hereunder shall be given to the
parties and become effective as provided in the Mortgage.
Section 5.3 Binding Effect. This Agreement shall
be binding on the parties hereto, their successors, assigns, heirs and legal
representatives and all other persons claiming by, through or under them.
Section 5.4 Counterparts. This Agreement may be
executed in any number of counterparts each of which shall be deemed to be an
original but all of
<PAGE>
which when taken together shall constitute one agreement.
Section 5.5 GOVERNING LAW. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA.
Section 5.6 Reliance. Borrower recognizes and
acknowledges that in entering into the loan transaction evidenced by the Loan
Documents and accepting the Mortgage, Lender is expressly and primarily relying
on the truth and accuracy of the warranties and representations set forth in
this Agreement without any obligation to investigate the Mortgaged Property and
notwithstanding any investigation of the Mortgaged Property by Lender; that such
reliance exists on the part of Lender prior hereto; that such warranties and
representations are a material inducement to Lender in making the loan evidenced
by the Loan Documents and accepting the Mortgage; and that Lender would not be
willing to make the loan evidenced by the Loan Documents and accept the Mortgage
in the absence of such warranties and representations.
Section 5.7 Headings. The article, section and
subsection entitlements hereof are inserted for convenience of reference only
and shall in no way alter, modify, or define, or be used in construing the text
of such articles, sections or subsections.
Section 5.8 No Oral Change. This Agreement may
not be waived, extended, changed, discharged or terminated orally, or by any act
or failure to act on the part of Borrower or Lender, but only by an agreement in
writing signed by the party against whom the enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
Section 5.9 Joint and Several Liability. Each party
comprising Indemnitor shall be jointly and severally liable for the obligations
of Indemnitor
hereunder.
Section 5.10 Special State Provisions. CM Plus
waives and agrees not to assert: (i) any benefit of, and any right to
participate in, any security now or hereafter held by Lender; (ii) the benefits
of any statutory or other provision limiting the liability of a surety,
including without limitation, the provisions of A.R.S. ss.ss. 12-1641, et seq.
and Rule 17(f) of the Arizona Rules of Civil Procedure; and (iii) the benefits
of any statutory provision limiting the right of Lender to recover a deficiency
judgment, or to otherwise proceed against any person or entity obligated for
payment of the obligations hereunder, after any foreclosure or trustee's sale of
any security for the obligations hereunder, including without limitation the
benefits to CM Plus of A.R.S. ss. 33-814 and ss. 12-1566. The obligations
hereunder shall be deemed to be paid only to the extent that Lender actually
receives immediately available funds, to the extent of any credit bid by Lender
at any foreclosure or trustee's sale of any security for the obligations
hereunder, or to the extent agreed in writing by Lender.
<PAGE>
(Signature page follows)
<PAGE>
EXECUTED as of the date
first above written.
INDEMNITOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
CM PLUS CORPORATION,
a Delaware corporation,
By:
Name:
Title:
<PAGE>
EXHIBIT A
(Legal Description)
PARCEL 1:
All of those portions of Block 4 of TUCSON GREEN VALLEY UNIT NO. 1, Blocks 1
thru 12, according to the plat of record in the office of the County Recorder of
Pima County, Arizona, recorded in Book 16, of Maps, Page 76, more particularly
described as follows:
BEGINNING at the Southwest corner of said Block 4;
THENCE South 08 degrees 09 minutes 55 seconds West on a Southerly extension of
the West line of said Block 4, a distance of 10.0 feet to a point, said point
being the TRUE POINT OF BEGINNING;
THENCE North 08 degrees 09 minutes 55 seconds East, along said previous line and
the West line of Block 4, a distance of 927.81 feet to a point of curvature;
THENCE Northeasterly around said curve to the right whose radius is 25.0 feet, a
distance of 35.71 feet to a point of tangency on the South right of way line of
Esperanza Boulevard, said point also being on the Northerly line of Block 4;
THENCE East, along the North line of said Block 4, a distance of 613.60 feet to
a point;
THENCE South, a distance of 220.0 feet to a point;
THENCE East, a distance of 148.43 feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 45.98 feet to
a point;
THENCE South 81 degrees 50 minutes 05 seconds East, a distance of 152.70 feet to
a point;
THENCE North 08 degrees 09 minutes 55 seconds East, a distance of 198.18 feet to
a point on the South right of way line of Esperanza Boulevard.
THENCE East, along the South right of way line of Esperanza Boulevard, a
distance of 40.46 feet to a point;
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 161.57 feet to
a point;
THENCE South, 81 degrees 50 minutes 55 seconds East, a distance of 192.24 feet
to a point on the Westerly right of way line of Tucson-Nogales Highway;
THENCE South 00 degrees 25 minutes 06 seconds East, along said Westerly right of
way line, a distance of 536.0 feet to a point;
THENCE South 08 degrees 09 minutes 55 seconds West, along said Westerly right of
way line, a distance of 361.36 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 30.0 feet to a
point;
<PAGE>
THENCE South 08 degrees 09 minutes 55 seconds West, a distance of 40.0 feet to a
point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 1,242.0 feet
to a point, said point being the TRUE POINT OF BEGINNING;
EXCEPT the following described Parcels "A" and "B":
PARCEL "A"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
more particularly described as follows:
BEGINNING at the Southerly point of curvature of Curve No. 2 in said Lot 5;
THENCE South 08 degrees 09 minutes 55 seconds West, along the East right of way
line of La Canada Drive, a distance of 134.92 feet to a point, said point being
the TRUE POINT OF BEGINNING;
THENCE East, a distance of 162.78 feet to a point;
THENCE South, a distance of 105.07 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, a distance of 176.05 feet to
a point on the East right of way of La Canada Drive;
THENCE North 08 degrees 09 minutes 55 seconds East, along said right of way
line, a distance of 80.89 feet to a point, said point being the TRUE POINT OF
BEGINNING.
PARCEL "B"
All of that portion of Lot 5, in Block 4, of TUCSON GREEN VALLEY UNIT NO. 1, a
subdivision of record, according to the plat of record in the office of the
County Recorder of Pima County, Arizona, recorded in Book 16, of Maps, Page 76,
being more particularly described as follows:
BEGINNING at the Southwest corner of said Lot 5;
THENCE North 08 degrees 09 minutes 55 seconds East, along the West line of said
Lot 5, a distance of 40.0 feet to the TRUE POINT OF BEGINNING;
THENCE South 81 degrees 50 minutes 05 seconds East, along a line being 40.0 feet
North of and parallel with the South line of said Lot 5, a distance of 320.0
feet to a point;
THENCE North 08 degrees 09 minutes 55 seconds East, along a line being 320.0
feet Easterly of and parallel with the said West line of Lot 5, a distance of
600.0 feet to a point;
THENCE North 81 degrees 50 minutes 05 seconds West, along a line being 640.0
feet North of and parallel with said South line of Lot 5, a distance of 320.0
feet to a point in the said West line of Lot 5;
THENCE south 08 degrees 09 minutes 55 seconds West, along said West line, a
distance of 600.0 feet to the TRUE POINT OF BEGINNING.
<PAGE>
Property Address: Green Valley Mall
99-255 Esperanza
101 La Canada Road
Green Valley, Arizona 85614
TENANT OCCUPANCY ESCROW AND SECURITY AGREEMENT
Loan No. 1700020082
Property: Green Valley Mall
Green Valley, Arizona
THIS TENANT OCCUPANCY ESCROW AND
SECURITY AGREEMENT (this "Agreement") is made as of September 23, 1997, by and
between CONCORD MILESTONE PLUS, L.P., a Delaware limited partnership
("Borrower"), and WESTCO REAL ESTATE FINANCE CORP., a California corporation
("Lender"), with respect to the following facts:
A. Lender is making a loan to Borrower evidenced by
a promissory note in the principal amount of $5,400,000 payable to the order of
Lender (the "Note").
B. The Note is secured by a Deed of Trust (the
"Mortgage") of even date therewith encumbering property more particularly
described therein (the "Mortgaged Property").
C. Lender requires, as a condition to making the loan
evidenced by the Note, that Borrower deposit funds with Lender until certain
tenant occupancy requirements respecting the Mortgage Property are satisfied.
NOW, THEREFORE, in consideration of the foregoing,
the covenants and conditions contained in this Agreement and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
1. Delivery of Funds. Borrower has deposited with
Lender as of the date hereof the amount of $150,000 (the "Funds"). The Funds
shall be held and released by Lender in accordance with the terms and conditions
of this Agreement. Lender shall have the sole right to make withdrawals of the
Funds. The Funds shall not constitute a trust fund and may be commingled with
other monies held by Lender. The Funds shall be held in an account in Lender's
name (or such other account name style as Lender may elect) at a financial
institution or other depository selected by Lender (or its servicer) in its sole
discretion (the "Depository Institution"). Borrower shall be entitled to, and
shall report under its Federal tax identification number, the amount allocated
to Borrower by Lender, if any, on the Funds. Lender shall allocate to Borrower
an amount on the Funds equal to an amount determined by applying to the average
November 8, 1997
LOS01:48410.2
-73-
<PAGE>
monthly balance of the Funds the quoted interest rate for the Depository
Institution's business money market savings account, as such rate changes from
time to time (such allocated amount being referred to as "Borrower's Interest").
If such Depository Institution quotes more than one interest rate for a business
money market savings account, then the lowest of such rates will be used. If the
Depository Institution does not have an established business money market
savings account (or if an interest rate for such account cannot otherwise be
determined in connection with the deposit of such Funds), a comparable interest
rate as quoted by Bank of America NT & SA shall be used. Borrower's Interest,
less applicable administrative fees (if any), shall be and become part of such
Funds and shall be disbursed as provided in this section. Lender shall not be
responsible for obtaining a specific return or yield on such deposit. Lender
will cause to be furnished to Borrower on an annual basis such income tax
reporting forms as are required by applicable federal law. Lender shall provide
account statements not less frequently than quarterly to Borrower with respect
to the funds, including current balance and accruals of interest thereon.
2. Security Interest. To secure Borrower's repayment
of the Note and performance of all other covenants and conditions required on
the part of Borrower to be observed or performed hereunder and under the Loan
Documents, Borrower hereby pledges to and grants to Lender a continuing security
interest in the Funds.
3. Release of Funds. Lender shall release the Funds
to Borrower upon the satisfaction of the following conditions:
(a) Existing tenant ABCO Realty Corp., an Arizona
corporation ("ABCO"), or a new tenant, shall have entered into a new lease or
lease renewal with Borrower with respect to the premises currently occupied by
ABCO, providing for a lease termination date of July 31, 2004 or later, on
substantially the same or better terms as Borrower's current lease with ABCO
(including, without limitation, at a rental rate equal to or better than is
provided in the existing lease with ABCO), and which shall otherwise be in form
and substance reasonably acceptable to Lender.
(b) No Event of Default (as defined in the
Mortgage) shall then exist, nor shall any condition exist which, with the
passage of time or the giving of notice (or both), would constitute an Event of
Default.
4. Term; Termination. Unless otherwise released in
accordance with the terms of this Agreement, the Funds shall remain on deposit
with Lender for so long as any sums remain due and payable to Lender under the
Loan Documents. Upon the payment in full of all sums payable to Lender under the
Loan Documents, Lender shall deliver the Funds to Borrower. Upon the occurrence
of an Event of Default, Lender may terminate this Agreement and retain all Funds
then being held pursuant to this Agreement and apply such Funds in such order
and in such amounts as Lender shall elect, in its sole and absolute discretion,
to payment of the
November 8, 1997
LOS01:48410.2
-74-
<PAGE>
indebtedness evidenced by the Note and the Loan Documents.
5. Remedies Cumulative. No right or remedy
conferred upon or reserved to Lender under this Agreement is intended to be
exclusive of any other right or remedy, and each and every such right and remedy
shall be cumulative and concurrent and may be enforced separately, successively
or together, and may be exercised from time to time as often as may be deemed
necessary by Lender.
6. Miscellaneous.
(a) Any capitalized term utilized herein shall have
the meaning as specified in the Mortgage, unless such term is otherwise
specifically defined herein.
(b) Except as otherwise expressly provided herein,
in any instance where the consent or approval of Lender is required or may be
given or where any determination, judgment or decision is to be rendered by
Lender under this Agreement, such approval and consent shall be given or
withheld in Lender's sole and absolute discretion.
(c) All notices hereunder shall be given in
accordance with the provisions of the Mortgage.
(d) This Agreement shall be binding upon Borrower
and its heirs, devisees, representatives, successors and assigns, including
successors in interest of Borrower in and to all or any part of the Mortgaged
Property, and shall inure to the benefit of and may be enforced by and binding
upon Lender and its heirs, successors, legal representatives, substitutes and
assigns. Borrower shall not assign any of its rights or obligations under this
Agreement.
(e) This Agreement is intended solely for the
benefit of Lender and Lender, and no third party shall have any right or
interest in this Agreement, nor any right to enforce this Agreement against any
party hereto.
(f) This Agreement 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 and Lender, but only by an agreement in
writing signed by the party against whom the enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
(g) This Agreement contains the complete and
entire understanding of the parties with respect to the subject matter thereof.
If any provisions of this Agreement shall conflict with any provisions of the
other Loan Documents regarding the Funds
November 8, 1997
LOS01:48410.2
-75-
<PAGE>
the provisions contained in this Agreement shall control.
(h) The invalidity, illegality, or unenforceability
of any provision of this Agreement pursuant to judicial decree shall not affect
the validity, legality or enforceability of any other provisions of this
Agreement which can be effected with such invalid, illegal or unenforceable
provision, all of which shall remain in full force and effect.
(i) THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED ACCORDING TO THE LAWS, FROM TIME TO TIME IN EFFECT, OF THE
STATE OF ARIZONA AND THE LAWS OF THE UNITED STATES OF AMERICA.
IN WITNESS WHEREOF, Borrower and Lender have
executed this Agreement as of the date first above written.
BORROWER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
LENDER:
WESTCO REAL ESTATE FINANCE CORP.,
a California corporation
By:
Name:
Title:
-76-
Loan No.: 1700020088
Property: Town & Country Shopping Center
Searcy, Arkansas
FIXED RATE NOTE
$2,865,000 September 23, 1997
FOR VALUE RECEIVED, CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (hereinafter referred to as "Maker"), promises to pay to the order
of WESTCO REAL ESTATE FINANCE CORP., a California corporation, its successors
and assigns (hereinafter referred to as "Payee"), at the office of Payee or its
agent, designee, or assignee at 1 Park Plaza, Suite 430, Irvine, California
92614, or at such place as Payee or its agent, designee, or assignee may from
time to time designate in writing, the principal sum of TWO MILLION EIGHT
HUNDRED SIXTY-FIVE THOUSAND AND NO/100 DOLLARS ($2,865,000), in lawful money of
the United States of America, with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the Applicable Interest Rate
(hereinafter defined) at all times prior to the occurrence of an Event of
Default (as defined in the Mortgage (hereinafter defined)), and to be paid in
installments as follows:
(1) A payment of interest only on the date hereof for the period
from the date of funding through September 30, 1997, both
inclusive;
(2) A constant payment of $21,640.09, on the first day of
November, 1997, and on the first day of each calendar month
thereafter up to and including the first day of September,
2007;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of October, 2007, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Interest on the principal sum of this Note
shall be calculated on a year of three hundred sixty (360) days and a month of
thirty (30) days but charged for the actual number of days elapsed. Payments
under this Note shall be applied first, to the payment of interest and other
costs and charges due in connection with this Note or the Debt (as hereinafter
defined), as Payee may determine in its sole discretion, and the balance shall
be applied toward the reduction of the principal sum. All amounts due under this
Note shall be payable without setoff, counterclaim or any other deduction
whatsoever.
1. Interest Rate. The term "Applicable Interest Rate" means from the date of
this Note through and including the Maturity Date, a rate of Eight and One
Hundred Twenty-Five
<PAGE>
One Thousandths percent (8.125%) per annum.
2. Security.
(a) This Note is secured by, and Payee is entitled to the
benefits of, the Mortgage, the Assignment of Leases and Rents, the Environmental
Liabilities Agreement, and the other Loan Documents (hereinafter defined). The
term "Mortgage" means the Mortgage, Deed of Trust and Security Agreement dated
the date hereof given by Maker for the use and benefit of Payee covering the
estate of Maker in certain premises as more particularly described therein (the
"Mortgaged Property"). The term "Assignment" means the Assignment of Leases and
Rents of even date herewith executed by Maker in favor of Payee. The term
"Environmental Agreement" means the Environmental Liabilities Agreement of even
date herewith executed by Maker in favor of Payee. The term "Loan Documents"
refers collectively to this Note, the Mortgage, the Assignment, the
Environmental Agreement and any and all other documents executed in connection
with this Note or now or hereafter executed by Maker and/or others and by or in
favor of Payee, which wholly or partially secure or guarantee payment of this
Note or pertains to indebtedness evidenced by this Note.
(b) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $5,400,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Green Valley Mall located in Green
Valley, Arizona, as such property is more particularly described in such Loan
Documents.
(c) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $8,445,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Old Orchard Shopping Center located in
Santa Clarita (Valencia), California, as such property is more particularly
described in such Loan Documents.
3. Grace Period; Late Payments. If any installment payable under this
Note (including the final monthly installment due on the Maturity Date but
excluding the balance of the unpaid principal due thereon) is not received by
Payee within ten (10) days after the date on which it is due (without regard to
any applicable cure and/or notice period), Maker shall pay to Payee upon demand
an amount equal to the lesser of (a) five percent (5%) of such unpaid sum or (b)
the maximum amount permitted by applicable law to defray the expenses incurred
by Payee in handling and processing such delinquent payment and to compensate
Payee for the loss of the use of such delinquent payment, and such amount shall
be secured by the Loan Documents. The term "Debt" means, collectively, (i) the
unpaid principal balance of and the accrued but unpaid interest on this Note,
(ii) all other sums due, payable or reimbursable to Payee under the Loan
Documents (including, without limitation, sums due or payable by Maker for
deposit into the Tax and Insurance Escrow Fund [as defined in the Mortgage], the
Replacement Escrow Fund [as defined in the Mortgage], and any other escrows
established or required under the Loan
<PAGE>
Documents), and (iii) any and all other liabilities and obligations of Maker
under this Note or the other Loan Documents.
4. Remedies Generally. So long as an Event of Default exists, Payee
may, at its option, without notice or demand to Maker except as may be required
under applicable law, declare the Debt immediately due and payable. All remedies
hereunder, under the Loan Documents and at law or in equity shall be cumulative.
In the event that it should become necessary to employ counsel to collect the
Debt or to protect or foreclose the security for the Debt or to defend against
any claims asserted by Maker arising from or related to the Loan Documents,
Maker also agrees to pay to Payee on demand all costs of collection or defense
incurred by Payee, including reasonable attorneys' fees for the services of
counsel whether or not suit be brought.
5. Default Interest. Upon the occurrence of an Event of Default Maker
shall pay interest on the entire unpaid principal sum and any other amounts due
under the Loan Documents until such default is cured at the rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the greater
of (i) three percent (3%) plus the Applicable Interest Rate or (ii) four percent
(4%) plus the Prime Rate (hereinafter defined), in effect at the time of the
occurrence of the Event of Default (the "Default Rate"). The term "Prime Rate"
means the prime rate reported by Citibank, N.A. In the event that Citibank, N.A.
should cease or temporarily interrupt publication, the term "Prime Rate" shall
mean the daily average prime rate published in The Wall Street Journal or
business section of another newspaper of national standing and general
circulation chosen by Payee. 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 Payee shall select a comparable interest rate
index which is readily available and verifiable to Maker but is beyond Payee's
control. The Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of a sum of money determined by
Payee to be sufficient to cure the Event of Default. Amounts of interest accrued
at the Default Rate shall constitute a portion of the Debt, and shall be deemed
secured by the Loan Documents. This clause, however, shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Payee by reason of the
occurrence of any Event of Default.
6. Lock-Out Period; Prepayment Terms. The principal balance of this
Note may not be prepaid in whole or in part (except with respect to the
application of casualty or condemnation proceeds) prior to the first day of the
Sixth Loan Year (as hereinafter defined). During the Sixth Loan Year or at
anytime thereafter, provided no Event of Default exists, the principal balance
of this Note may be prepaid, in whole but not in part (except with respect to
the application of casualty or condemnation proceeds), on any scheduled payment
date under this Note upon not less than thirty (30) days' prior written notice
to Payee specifying the scheduled payment date on which prepayment is to be made
(the "Prepayment Date") and upon payment of (a) interest accrued and unpaid on
the principal balance of this Note to and including the Prepayment Date, (b) all
other sums then due under this Note, and the other Loan Documents, and (c) a
prepayment consideration in an amount equal to the greater of (i) one percent
(1%) of the outstanding principal balance of this Note at the time of
prepayment, or (ii) the present value as of the
<PAGE>
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 (as
hereinafter defined) less the amount of principal being prepaid. The term
"Discount Rate" means the rate which, when compounded monthly, is equivalent to
the Treasury Rate (as hereinafter defined), when compounded semi-annually. The
term "Treasury Rate" means the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading "U.S. Government Securities/Treasury Constant
Maturities" for the week ending prior to the Prepayment Date, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Maturity Date. (In the event Release H.15 is no longer
published, Payee shall select a comparable publication to determine the Treasury
Rate.) Payee shall notify Maker of the amount and the basis of determination of
the required prepayment consideration. Notwithstanding the foregoing, Maker
shall have the additional privilege to prepay the entire principal balance of
this Note (together with any other sums constituting the Debt) on any scheduled
payment date during the six (6) months preceding the Maturity Date without any
fee or consideration for such privilege. If any such notice of prepayment is
given, the principal balance of this Note and the other sums required under this
paragraph shall be due and payable on the Prepayment Date. Payee shall not be
obligated to accept any prepayment of the principal balance of this Note unless
it is accompanied by the prepayment consideration due in connection therewith.
The term "Loan Year" for purposes of this paragraph means each complete 365-day
period (366 days in a leap year) after the first scheduled payment date set
forth in section 2 on page 1 of this Note.
7. Post-Default Payment of Entire Debt: Prepayments Resulting From
Casualty or Condemnation. If following the occurrence of any Event of Default,
Maker shall tender payment of an amount sufficient to satisfy the Debt at any
time prior to a sale of the Mortgaged Property, either through foreclosure or
the exercise of the other remedies available to Payee under the Mortgage, such
tender by Maker shall be deemed to be a voluntary prepayment under this Note in
the amount tendered. If at the time of such tender, prepayment of the principal
balance of this Note is not permitted, Maker shall, in addition to the entire
Debt, also pay to Payee a sum equal to the interest which would have accrued on
the principal balance of this Note at the Applicable Interest Rate in effect on
the date which is five (5) days prior to the date of prepayment, from the date
of such tender to the first day of the period during which prepayment of the
principal balance of this Note would have been permitted, together with a
prepayment consideration equal to the prepayment consideration which would have
been payable as of the first day of the period during which prepayment would
have been permitted. If at the time of such tender, prepayment of the principal
balance of this Note is permitted, Maker shall, in addition to the entire Debt,
also pay to Payee the applicable prepayment consideration specified in this
Note. If the prepayment results from the application to the Debt of the casualty
or condemnation proceeds from the Mortgaged Property, no prepayment
consideration will be imposed. Partial prepayments of principal resulting from
the application of casualty or insurance proceeds to the Debt shall not change
the amounts of subsequent monthly installments nor change the dates on which
such installments are due, unless Payee shall otherwise agree in writing.
8. Usury Savings Provisions. It is expressly stipulated and agreed to be the
intent of
<PAGE>
Maker and Payee at all times to comply with applicable state law or applicable
United States federal law (to the extent that it permits Payee to contract for,
charge, take, reserve or receive a greater amount of interest than under state
law) and that this section shall control every other covenant and agreement in
this Note and the other Loan Documents. If the applicable law (state or federal)
is ever judicially interpreted so as to render usurious any amount called for
under this Note or under any of the other Loan Documents, or contracted for,
charged, taken, reserved or received with respect to the indebtedness evidenced
by this Note and the other Loan Documents, or if Payee's exercise of the option
to accelerate the maturity of this Note, or if any prepayment by Maker results
in Maker having paid any interest in excess of that permitted by applicable law,
then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this Note
(or, if this Note has been or would thereby be paid in full, refunded to Maker
within sixty (60) days after such determination), and the provisions of this
Note and the other Loan Documents immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder and thereunder. All sums paid or agreed to be paid to Payee for the
use, forbearance and detention of the indebtedness evidenced hereby and by the
other Loan Documents shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the maximum rate permitted under
applicable law from time to time in effect and applicable to the indebtedness
evidenced hereby for so long as such indebtedness remains outstanding.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Payee to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
9. Waivers. Except as specifically provided in the Loan Documents,
Maker and any endorsers, sureties or guarantors hereof jointly and severally
waive presentment and demand for payment, notice of intent to accelerate
maturity, notice of acceleration of maturity, protest and notice of protest and
non-payment, all applicable exemption rights, valuation and appraisement, notice
of demand, and all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Note and the bringing
of suit and diligence in taking any action to collect any sums owing hereunder
or in proceeding against any of the rights and collateral securing payment
hereof. Maker and any surety, endorser or guarantor hereof agree (i) that the
time for any payments hereunder may be extended from time to time without notice
and consent, (ii) to the acceptance of further collateral, (iii) the release of
any existing collateral for the payment of this Note, (iv) to any and all
renewals, waivers or modifications that may be granted by Payee with respect to
the payment or other provisions of this Note, and/or (v) that additional makers,
endorsers, guarantors or sureties may become parties hereto all without notice
to them and without in any manner affecting their liability under or with
respect to this Note. No extension of time for the payment of this Note or any
installment hereof shall affect the liability of Maker under this Note or any
endorser or guarantor hereof even though the Maker or such endorser or guarantor
is not a party to such agreement.
<PAGE>
10. No Impairment of Remedies. Failure of Payee to exercise any of the
options granted herein to Payee upon the happening of one or more of the events
giving rise to such options shall not constitute a waiver of the right to
exercise the same or any other option at any subsequent time in respect to the
same or any other event. The acceptance by Payee of any payment hereunder that
is less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
options granted herein to Payee at that time or at any subsequent time or
nullify any prior exercise of any such option without the express written
acknowledgment of the Payee.
11. Non-Recourse Provisions; Exceptions to Non-Recourse.
Notwithstanding anything in the Loan Documents to the contrary, but subject to
the qualifications below, Payee and Maker agree that:
(A) Except as hereinafter provided in this Section 11, no
judgment in the nature of a deficiency judgment for the payment of the
indebtedness or interest thereon or the collection of any amount due
under the Loan Documents will be enforced personally against Maker, its
general partner or any of its or their officers, directors, principals
or shareholders except to the full extent (but only to the extent) of
the security therefor, the same being all properties (whether real or
personal), rights, estates and interests now or at any time hereafter
securing the payment of the Debt and/or the other obligations of Maker
under the Loan Documents (collectively with the Mortgaged Property, the
"Security Property"), provided, however, in the event (i) of fraud or
material misrepresentation by Maker or guarantors in connection with
the loan evidenced by this Note, or (ii) the first full monthly payment
on the Note is not paid when due, the limitation on recourse set forth
in this section (A) will be null and void and completely inapplicable,
and this Note shall be with full recourse to Maker and its general
partner;
(B) if a default occurs in the timely and proper payment of
all or any part of the Debt, any judicial proceedings brought by Payee
against Maker and/or its general partner shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the
liens, security titles, estates, assignments, rights and security
interests now or at any time hereafter securing the payment of the Debt
and/or the other obligations of Maker under the Loan Documents, and no
attachment, execution or other writ of process shall be sought, issued
or levied upon any assets, properties or funds of Maker or its general
partner, or its or their officers, directors, principals or
shareholders other than the Security Property, except with respect to
the liability described below in this section; and
(C) in the event of a foreclosure of such liens, security
titles, estates, assignments, rights or security interests securing the
payment of the Debt, no judgment for any deficiency upon the Debt shall
be sought or obtained by Payee against Maker or its general partner, or
its or their officers, directors, principals or shareholders, except
with respect to the liability described below in this section (C);
provided that, notwithstanding the foregoing provisions of this
section, nothing contained therein shall in any manner or way release,
affect or impair the right of Payee to recover, from Maker and its
general partner any loss, cost, expense, damage, claim or other
obligation
<PAGE>
(including without limitation reasonable attorneys' fees and court
costs) incurred or suffered by Payee arising out of or in connection
with the following:
(1) any breach of the Environmental Agreement, including the
indemnification provisions contained therein;
(2) Maker's failure to obtain Payee's prior written consent to (a)
any subordinate financing or any other encumbrance on the
Mortgaged Property, or (b) any transfer of the Mortgaged
Property or majority ownership in Maker in violation of the
Mortgage;
(3) any litigation or other legal proceeding related to the Debt
that delays or impairs Payee's ability to preserve, enforce or
foreclose its lien on the Security Property, including, but
not limited to, the filing of a voluntary or involuntary
petition concerning Maker under the U.S. Bankruptcy Code, in
which action a claim, counterclaim, or defense is asserted
against Payee, other than any litigation or other legal
proceeding in which a final, non-appealable judgment for money
damages or injunctive relief is entered against Payee;
(4) Maker's failure to pay required taxes, assessments, and
insurance premiums payable with respect to the Mortgaged
Property or to maintain the required escrows therefor, to the
extent that monies are not paid by Maker in escrow for the
payment of such amounts, except for any amounts applicable to
the period after foreclosure of Payee's lien on the Mortgaged
Property, or the delivery by Maker of a deed to the Mortgaged
Property in lieu of foreclosure (which deed has been accepted
by Payee in writing), or the appointment of a receiver for the
Mortgaged Property;
(5) the gross negligence or willful misconduct of Maker, its
agents, affiliates, officers or employees which causes or
results in a diminution, or loss of value, of the Security
Property that is not reimbursed by insurance or which gross
negligence or willful misconduct exposes Payee to claims,
liability or costs of defense in any litigation or other legal
proceeding;
(6) the seizure or forfeiture of the Security Property, or any
portion thereof, or Payee's interest therein, resulting from
criminal wrongdoing by any person or entity other than Payee
under any federal, state or local law;
(7) (a) any physical waste of the Mortgaged Property caused by the intentional
or grossly negligent act(s) or omission(s) of Maker, its agents,
affiliates, officers and employees, (b) the failure by Maker to maintain,
repair or restore any part of the Mortgaged Property as may be required by
the Mortgage or any of the other Loan Documents to the extent of all gross
revenues that have been generated by the Mortgaged Property following the
date which is eighteen (18) months' prior to notice to Maker from Payee of
such failure to maintain, repair or restore any part
<PAGE>
of the Mortgaged Property and that have not been applied to
pay any portion of the Debt, reasonable and customary
operating expenses and capital expenditures for the Mortgaged
Property paid to third parties not affiliated (directly or
indirectly) with Maker, taxes and insurance premiums for the
Mortgaged Property and escrows deposited with Payee, or (c)
the removal or disposal of any portion of the Mortgaged
Property after an Event of Default under the Loan Documents to
the extent such Mortgaged Property is not replaced by Maker
with like property of equivalent value, function and design;
(8) Maker's misapplication or conversion of any insurance proceeds
paid by reason of any loss, damage or destruction to the
Mortgaged Property and any awards or amounts received in
connection with the condemnation of all or a portion of the
Mortgaged Property and not used by Maker for restoration or
repair of the Mortgaged Property;
(9) Maker's failure to pay in accordance with the terms of the
Mortgage any charges for labor or materials or other charges
for work performed or materials furnished prior to foreclosure
that can create liens on any portion of the Mortgaged
Property, to the extent of the amount rightfully claimed by
the lien claimant, or found in any legal proceeding to be owed
to the lien claimant, and not so paid;
(10) Maker's failure to deliver any security deposits collected
with respect to the Mortgaged Property to Payee or any other
party entitled to receive such security deposits under the
Loan Documents, following an Event of Default; and
(11) any rents (including advanced or prepaid rents), issues,
profits, accounts or other amounts generated by or related to
the Mortgaged Property attributable to, or accruing after an
Event of Default, which amounts were collected by Maker or its
property manager and not turned over to the Payee or used to
pay unaffiliated third parties for reasonable and customary
operating expenses and capital expenditures for the Mortgaged
Property, and taxes and insurance premiums with respect to the
Mortgaged Property.
12. References to Loan Documents. References to particular sections of
the Loan Documents shall be deemed references to such sections as affected by
other provisions of the Loan Documents relating thereto. Nothing contained in
this section shall (a) be deemed to be a release or impairment of the Debt or
the lien of the Loan Documents upon the Mortgaged Property, or (b) preclude
Payee from foreclosing under the Loan Documents in case of any default or from
enforcing any of the other rights of Payee, including naming Maker as a party
defendant in any action or suit for foreclosure and sale under the Mortgage, or
obtaining the appointment of a receiver, except as stated in this section, or
(c) limit or impair in any way whatsoever the Guaranty (the "Guaranty") of even
date executed and delivered in connection with the indebtedness evidenced by
this Note or release, relieve, reduce, waive or impair in any way whatsoever,
any obligation of any party to the Guaranty.
<PAGE>
13. No Waiver of Lender's Rights in Bankruptcy. Nothing herein shall be
deemed to be a waiver of any right which Payee 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 Loan Documents or to
require that all collateral shall continue to secure all of the Debt owing to
Payee in accordance with this Note and the other Loan Documents.
14. Maker's Authority; Loan for Business Purposes. Maker (and the
undersigned representative of Maker, if any) represents that Maker has full
power, authority and legal right to execute, deliver and perform its obligations
pursuant to this Note and the other Loan Documents and that this Note and the
other Loan Documents constitute legal, valid and binding obligations of Maker.
Maker further represents that the loan evidenced by the Loan Documents was made
for business or commercial purposes and not for personal, family or household
use.
15. Notices. All notices or other communications required or permitted
to be given pursuant hereto shall be given in the manner and be effective as
specified in the Mortgage, directed to the parties at their respective addresses
as provided therein.
16. Transfer of Loan by Payee. Payee shall have the unrestricted right
at any time or from time to time to sell this Note and the loan evidenced by
this Note and the Loan Documents or participation interests therein. Maker shall
execute, acknowledge and deliver any and all instruments requested by Payee to
satisfy such purchasers or participants that the unpaid indebtedness evidenced
by this Note is outstanding upon the terms and provisions set out in this Note
and the other Loan Documents. To the extent, if any specified in such assignment
or participation, such assignee(s) or participant(s) shall have the rights and
benefits with respect to this Note and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Payee hereunder.
17. Waiver of Trial by Jury. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE
RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN PAYEE AND MAKER;
(B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE
ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF
COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN
<PAGE>
KNOWINGLY AND VOLUNTARILY BY MAKER, PAYEE, AND IS INTENDED TO ENCOMPASS
INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY
JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY MAKER.
18. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE EXTENT THAT
THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY
FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.
MAKER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS NOTE, (B)
AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN ORANGE COUNTY, CALIFORNIA,
(C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREES THAT MAKER WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
PAYEE TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). MAKER FURTHER
CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL,
POSTAGE PREPAID, TO MAKER AT THE ADDRESS FOR NOTICES AS PROVIDED IN THE
MORTGAGE, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).
19. No Oral Modification. THE PROVISIONS OF THIS NOTE AND THE LOAN
DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY
THE MAKER AND PAYEE. THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.
<PAGE>
20. Due on Sale/Due on Encumbrance. Payment of the indebtedness
evidenced by this Note may be accelerated in the event that Maker transfers or
encumbers the Mortgaged Property in violation of Section 12 of the Deed of
Trust.
(Signature page follows)
<PAGE>
Executed as of the day and year first above written.
MAKER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
LEGAL DESCRIPTION
(For informational purposes only)
The land situated in the State of Arkansas, County of White and described as
follows:
PARCEL A
Commencing at an iron pipe at the intersection of the Southeast line of Survey
Number 2312 and the South line of Race Avenue; Thence North 89 degrees 54
minutes 23 seconds East 737.11 feet along the South line of Race Avenue to a
found concrete monument; Thence continue along the South line of Race Avenue
North 89 degrees 59 minutes 37 seconds East 306.00 feet to a found iron pin for
the pointy of beginning; Thence continue North 89 degrees 59 minutes 37 seconds
East 60.00 feet along the South line of Race Avenue to a found iron pin; Thence
South 00 degrees 05 minutes 42 seconds East 188.00 feet to a found iron pin;
Thence North 89 degrees 59 minutes 37 seconds East 158.74 feet to a found iron
pin on the Westerly right-of-way of Frontage Road; Thence South 45 degrees 03
minutes 24 seconds East 102.88 feet along said Westerly right-of-way of Frontage
Road to a found iron pin; Thence South 00 degrees 06 minutes 42 seconds East
273.84 feet to a found iron pin; Thence South 32 degrees 05 minutes 06 seconds
East 48.07 feet to a found iron pin; Thence North 89 degrees 54 minutes 54
seconds East 65.00 feet to a found iron pin on the Westerly right-of-way of
Frontage Road; Thence South 06 degrees 34 minutes 32 seconds West 60.41 feet
along said Westerly right-of-way; Thence South 89 degrees 54 minutes 54 seconds
West 115.0 feet; Thence South 18 degrees 04 minutes 12 seconds West 39.26 feet;
Thence South 04 degrees 54 minutes 54 seconds West 112.0 feet; Thence South 14
degrees 35 minutes 06 seconds East 94.0 feet; Thence South 29 degrees 35 minutes
06 seconds East 140.0 feet; Thence South 20 degrees 05 minutes 06 seconds East
48.0 to a found iron pin; Thence South 89 degrees 54 minutes 54 seconds West
307.89 feet to a found railroad spike; Thence North 00 degrees 06 minutes 42
seconds West 126.00 feet to a found railroad spike; Thence South 89 degrees 54
minutes 54 seconds West 345.00 feet to a found iron pin; Thence North 00 degrees
04 minutes 37 seconds West 367.08 feet along the East line of a tract recorded
in Volume 377, Page 359 of the White County Deed Records to a found 2 inch pipe
set in concrete; Thence North 00 degrees 04 minutes 46 seconds West 49.95 feet
along the East line of a street to a found 2 inch pipe set in concrete; Thence
North 00 degrees 05 minutes 42 seconds West 299.93 feet along the East line of a
tract recorded in Volume 360, Page 145 of the White County Deed Records to a
found iron pin; Thence North 89 degrees 59 minutes 37 seconds East 200.00 feet
to a found iron pin; Thence continue North 89 degrees 59 minutes 37 seconds East
106.00 feet to a found iron pin;
<PAGE>
Thence North 00 degrees 05 minutes 42 seconds West 200.00 feet to a found iron
pin which is the point of beginning, containing 10.787 acres more or less,
subject to all easements of record.
PARCEL B
Appurtenant easements for roadways, walkways, ingress and egress, parking, and
loading and unloading of commercial and other vehicles created by that certain
agreement entitled "Easements With Covenants and Restrictions Affecting Land
(ECR)" dated May 16, 1984 by and between Wal-Mart Properties, Inc., and Bramalea
Limited filed for record on July 24, 1984, and recorded in Misc. Book 102 at
Page 419.
Property Address: Town & Country Shopping Center
U.S. Highway 67/167
at East Race Avenue
Searcy, Arkansas 72143
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier, Esq.
Loan No. 1700020088
Property: Town & Country Shopping Center
Searcy, Arkansas
MORTGAGE, DEED OF TRUST AND
SECURITY AGREEMENT
THIS MORTGAGE, DEED OF TRUST AND SECURITY AGREEMENT (as the same may
from time to time be extended, renewed or modified, the "Mortgage"), is made as
of September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership ("Mortgagor"), having its principal place of business at 5200 Town
Center Circle, 4th Floor, Boca Raton, Florida 33486-1012, to FIRST AMERICAN
TITLE INSURANCE COMPANY, as Trustee (the "Trustee"), the trustee hereunder to
the extent that this Mortgage operates as a deed of trust, and to and for the
benefit of WESTCO REAL ESTATE FINANCE CORP., a California corporation
("Mortgagee"), having its principal place of business at c/o Imperial Commercial
Capital Corporation, 1 Park Plaza, Suite 430, Irvine, California 92614, the
mortgagee hereunder to the extent that this Mortgage operates as a mortgage, the
grantee hereunder to the extent that this Mortgage operates as a deed to secure
debt and the beneficiary hereunder to the extent that this Mortgage operates as
a deed of trust.
To secure:
A. (i) the payment of an indebtedness in the original principal sum of
TWO MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND AND NO/100 DOLLARS ($2,865,000),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Note"), and all other sums, liabilities and
obligations constituting the Debt (as defined in the Note), (ii) the payment of
all sums advanced or incurred by Mortgagee contemplated hereby, and (iii) the
performance of the obligations and covenants herein contained:
B. (i) the payment of an indebtedness in the original principal sum of
EIGHT MILLION FOUR HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,445,000),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or
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modifications thereof being hereinafter collectively called the "California
Note"), and all other sums, liabilities and obligations constituting the Debt
(as defined in the California Note), (ii) the payment of all sums advanced or
incurred by Mortgagee contemplated the Mortgage (as defined in the California
Note), and (iii) the performance of the obligations and covenants contained in
the Mortgage (as defined in the California Note);
C. (i) the payment of an indebtedness in the original principal sum of
FIVE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($5,400,000), lawful money
of the United States of America, to be paid with interest according to a certain
note dated the date hereof made by Mortgagor to Mortgagee (the note together
with all extensions, renewals or modifications thereof being hereinafter
collectively called the "Arizona Note"), and all other sums, liabilities and
obligations constituting the Debt (as defined in the Arizona Note), (ii) the
payment of all sums advanced or incurred by Mortgagee contemplated the Mortgage
(as defined in the Arizona Note), and (ii) the performance of the obligations
and covenants therein contained the Mortgage (as defined in the Arizona Note);
Mortgagor has mortgaged, given, granted, bargained, sold, alienated, enfeoffed,
conveyed, confirmed, warranted, pledged, assigned, and hypothecated and by these
presents does hereby mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, warrant, pledge, assign and hypothecate unto Mortgagee and/or
Trustee, IN TRUST WITH POWER OF SALE, the real property described in Exhibit A
attached hereto (the "Premises") and the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
(a) 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 Mortgagor of, in and to the Premises
and the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(b) all machinery, furnishings, equipment, fixtures (including, but not
limited to, all heating, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other personal property of every kind and nature
(hereinafter collectively called the "Equipment"), whether tangible or
intangible, whatsoever owned by Mortgagor, or in which Mortgagor has or shall
have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto,
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and usable in connection with the present or future operation and occupancy of
the Premises and the Improvements and all building equipment, materials and
supplies of any nature whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon the Premises and the
Improvements, or appurtenant thereto, or usable in connection with the present
or future operation, enjoyment and occupancy of the Premises and the
Improvements, including the proceeds of any sale or transfer of the foregoing,
and the right, title and interest of Mortgagor in and to any of the Equipment
which may be subject to any security interests, as defined in the Uniform
Commercial Code, as adopted and enacted by the State or States where any of the
Mortgaged Property is located (the "Uniform Commercial Code") superior in lien
to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or other
mineral royalties and bonuses) from the Premises and the Improvements (the
"Rents") and all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;
(e) 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;
(f) the right, in the name and on behalf of Mortgagor, 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 Mortgagee in
the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are defined in
the Uniform Commercial Code, and all contract rights, franchises, books,
records, plans, specifications, permits, licenses (to the extent assignable),
approvals, actions, and causes of action which now or hereafter relate to, are
derived from or are used in connection with the Premises, or the use, operation,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively called the "Intangibles"); and
(h) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Mortgagor's
obligations under the Loan Documents (as defined in the Note), including
(without limitation) the Tax and Insurance Escrow Fund (hereafter defined).
<PAGE>
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the use and benefit of Mortgagee and/or Trustee, and their
successors and assigns, forever;
PROVIDED, HOWEVER, these presents are upon the express condition that,
if Mortgagor shall well and truly pay to Mortgagee the Debt at the time and in
the manner provided in the Note and this Mortgage and shall well and truly abide
by and comply with each and every covenant and condition set forth herein, in
the Note and in the other Loan Documents in a timely manner, these presents and
the estate hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. Mortgagor will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole
owner of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor 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
insuring the lien of this Mortgage and that this Mortgage is and will remain a
valid and enforceable first lien on and security interest in the Mortgaged
Property, subject only to said exceptions. Mortgagor shall forever warrant,
defend and preserve such title and the validity and priority of the lien of this
Mortgage and shall forever warrant and defend the same to Mortgagee and/or
Trustee against the claims of all persons whomsoever.
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property insured during the entire term of this Mortgage for the
mutual benefit of Mortgagor and Mortgagee against loss or damage by fire and
against loss or damage by other risks and hazards covered by a standard extended
coverage insurance policy and included within the classification "All Risks of
Physical Loss" including, but not limited to, riot and civil commotion,
vandalism, malicious mischief, burglary and theft on a replacement cost basis
with an Agreed Value Endorsement waiving co-insurance, all in an amount not less
than 100 percent of the Improvements and Equipment, without deduction for
physical depreciation.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
<PAGE>
i) Flood insurance if any part of the Mortgaged Property now
(or subsequently determined to be) 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
National Flood Insurance Act of 1968 (and any amendment or successor
act thereto) in an amount at least equal to the lesser of the full
replacement cost of the Improvements and the Equipment, the outstanding
principal amount of the Note or the maximum limit of coverage available
with respect to the Improvements and Equipment under said Act.
Mortgagor hereby agrees to pay Mortgagee such fees as may be permitted
under applicable law for the costs incurred by Mortgagee in
determining, from time to time, whether the Mortgaged Property is then
located within such area.
ii) Comprehensive General Liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing minimum
limits per occurrence of $1,000,000 for the Improvements and the
Premises with excess umbrella coverage in an amount of at least $1
million arising out of any one occurrence with aggregate coverage of
$3,000,000, except that if any buildings contain elevators, the
aggregate coverage shall be a minimum of $4,000,000.
iii) Rental loss insurance in an amount equal to the aggregate
annual amount of all Rents and additional Rents payable by all of the
tenants under the Leases (whether or not such Leases are terminable in
the event of a fire or casualty), and all other Rents, such rental loss
insurance to cover rental losses for a period of at least one year
after the date of the fire or casualty in question. The amount of such
rental loss insurance shall be reviewed annually and shall be increased
from time to time during the term of this Mortgage as and when rent
increases occur under Leases previously in place and as a result of new
Leases, and as renewal Leases are entered into in accordance with the
terms of this Mortgage, to reflect all increased rent and increased
additional rent payable by all of the tenants under all such Leases.
iv) Insurance against loss or damage from (1) leakage of
sprinkler systems, and (2) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in the
Improvements and including broad form boiler and machinery insurance
(without exclusion for explosion) covering all boilers or other
pressure vessels, machinery and equipment located in, on, or about the
Premises and the Improvements. Coverage is required in an amount at
least equal to the full replacement cost of such equipment and the
building or buildings housing same. Coverage must extend to electrical
equipment, sprinkler systems, heating and air conditioning equipment,
refrigeration equipment and piping.
v) If the Mortgaged Property includes commercial property,
worker's compensation insurance with respect to any employees of
Mortgagor, as required by any governmental authority or legal
requirement.
vi) [Intentionally Deleted.]
<PAGE>
vii) Such other insurance as may from time to time be
reasonably required by Mortgagee in order to protect its interests.
(b) All policies of insurance (the "Policies") required pursuant to
Section 3: (i) shall contain a standard noncontributory mortgagee clause naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days' prior written notice, of any modification, reduction or cancellation,
(v) shall be for a term of not less than one year, (vi) shall be issued by an
insurer licensed in the state in which the Mortgaged Property is located, (vii)
shall provide that Mortgagee may, but shall not be obligated to, make premium
payments to prevent any cancellation, endorsement, alteration or reissuance, and
such payments shall be accepted by the insurer to prevent same, (viii) shall be
satisfactory in form and substance to Mortgagee and shall be approved by
Mortgagee as to amounts, form, risk coverage, deductibles, loss payees and
insureds, and (ix) shall provide that all claims shall be allowable on events as
they occur. Upon demand therefor, Mortgagor shall reimburse Mortgagee for all of
Mortgagee's (or its servicer's) reasonable costs and expenses incurred in
obtaining any or all of the Policies or otherwise causing the compliance with
the terms and provisions of this Section 3, including (without limitation)
obtaining updated flood hazard certificates and replacement of any so-called
"forced placed" insurance coverages. All Policies required pursuant to
subsections 3(a) and 3(b) shall be issued by an insurer with a claims paying
ability rating of "A-" or better by Standard & Poor's Corporation or A:VIII or
better by A.M. Best as published in Best's Key Rating Guide. Mortgagor shall pay
the premiums for such Policies (the "Insurance Premiums") as the same become due
and payable (unless such Insurance Premiums have been paid by Mortgagee pursuant
to Paragraph 5 hereof). Not later than thirty (30) days prior to the expiration
date of each of the Policies, Mortgagor will deliver to Mortgagee satisfactory
evidence of the renewal of each Policy. If Mortgagor receives from any insurer
any written notification or threat of any actions or proceedings regarding the
non-compliance or non-conformity of the Mortgaged Property with any insurance
requirements, Mortgagor shall give prompt notice thereof to Mortgagee.
(c) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(d) If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Mortgagor shall give prompt notice
thereof to Mortgagee.
i) In case of loss covered by Policies, Mortgagee may either
(1) settle and adjust any claim in consultation with but without the
consent of Mortgagor, or (2) allow Mortgagor to agree with the
insurance company or companies on the amount to be paid upon the loss;
<PAGE>
provided, that Mortgagor may adjust losses aggregating not in excess of
$100,000.00 if such adjustment is carried out in a competent and timely
manner, and provided that in any case Mortgagee shall and is hereby
authorized to collect and receipt for any such insurance proceeds; and
the reasonable expenses incurred by Mortgagee in the adjustment and
collection of insurance proceeds shall become part of the Debt and be
secured hereby and shall be reimbursed by Mortgagor to Mortgagee upon
demand (unless deducted by and reimbursed to Mortgagee from such
proceeds).
ii) In the event of any insured damage to or destruction of
the Mortgaged Property or any part thereof (herein called an "Insured
Casualty"), if (A) the loss is in an aggregate amount less than
twenty-five percent (25%) of the original principal balance of the
Note, and (B), in the reasonable judgment of Mortgagee, the Mortgaged
Property can be restored within six (6) months after insurance proceeds
are made available to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, and (C) no Event of Default
(hereinafter defined) shall have occurred and be then continuing, then
the proceeds of insurance shall be applied to reimburse Mortgagor for
the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or part thereof subject to Insured Casualty, as provided for
below; and Mortgagor hereby covenants and agrees forthwith to commence
and diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided, however, in any event Mortgagor shall pay all
costs (and if required by Mortgagee, Mortgagor shall deposit the total
thereof with Mortgagee in advance to be disbursed together with the
insurance proceeds) of such restoring, repairing, replacing or
rebuilding in excess of the net proceeds of insurance made available
pursuant to the terms hereof.
iii) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of Mortgagee
in its sole discretion, be applied to the payment of the Debt (subject
to any restrictions under applicable law) or applied to reimburse
Mortgagor for the cost of restoring, repairing, replacing or rebuilding
the Mortgaged Property or part thereof subject to the Insured Casualty,
in the manner set forth below. Any such application to the Debt shall
not be considered a voluntary prepayment requiring payment of the
prepayment consideration provided in the Note, and shall not reduce or
postpone any payments otherwise required pursuant to the Note, other
than the final payment on the Note.
iv) In the event that proceeds of insurance, if any, shall be
made available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal
value and of substantially the same character as prior to such damage
or destruction, all to be effected in accordance with applicable law
and plans and specifications approved in advance by Mortgagee.
v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed
from time to time upon Mortgagee
<PAGE>
being furnished with (1) evidence satisfactory to it (which evidence
may include inspection[s] of the work performed) that the restoration,
repair, replacement and rebuilding covered by the disbursement has been
completed in accordance with plans and specifications approved by
Mortgagee, (2) evidence satisfactory to it of the estimated cost of
completion of the restoration, repair, replacement and rebuilding, (3)
funds, or, at Mortgagee's option, assurances satisfactory to Mortgagee
that such funds are available, sufficient in addition to the proceeds
of insurance to complete the proposed restoration, repair, replacement
and rebuilding, and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and
performance as Mortgagee may reasonably require and approve; and
Mortgagee may, in any event, require that all plans and specifications
for such restoration, repair, replacement and rebuilding be submitted
to and approved by Mortgagee prior to commencement of work. With
respect to disbursements to be made by Mortgagee: (A) no payment made
prior to the final completion of the restoration, repair, replacement
and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; (B) funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds;
and (C) at all times, the undisbursed balance of such proceeds
remaining in the hands of Mortgagee, together with funds deposited for
that purpose or irrevocably committed to the satisfaction of Mortgagee
by or on behalf of Mortgagor for that purpose, shall be at least
sufficient in the reasonable judgment of Mortgagee to pay for the cost
of completion of the restoration, repair, replacement or rebuilding,
free and clear of all liens or claims for lien and the costs described
in subsection 3(d)(vi) below. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any
party entitled thereto. In no event shall Mortgagee assume any duty or
obligation for the adequacy, form or content of any such plans and
specifications, nor for the performance, quality or workmanship of any
restoration, repair, replacement and rebuilding.
vi) Notwithstanding anything to the contrary contained herein,
the proceeds of insurance reimbursed to Mortgagor in accordance with
the terms and provisions of this Mortgage shall be reduced by the
reasonable costs (if any) incurred by Mortgagee in the adjustment and
collection thereof and in the reasonable costs incurred by Mortgagee of
paying out such proceeds (including, without limitation, reasonable
attorneys' fees and costs paid to third parties for inspecting the
restoration, repair, replacement and rebuilding and reviewing the plans
and specifications therefor).
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Other Charges have been so paid or are not then delinquent no later
than thirty (30) days following the date on which the Other Charges would
otherwise be delinquent if not paid. Mortgagor shall not suffer and shall
promptly cause to be paid and discharged any lien or charge whatsoever which may
be or become a lien or
<PAGE>
charge against the Mortgaged Property, and shall promptly pay for all utility
services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. On the Closing Date, Mortgagor shall
make an initial deposit to the Tax and Insurance Escrow Fund, as hereinafter
defined, of an amount which, when added to the monthly amounts to be deposited
as specified below, will be sufficient in the estimation of Mortgagee to satisfy
the next due taxes, assessments, insurance premiums and other similar charges.
Mortgagor shall pay to Mortgagee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay all taxes, assessments
and other similar governmental impositions (the "Taxes") payable or estimated by
Mortgagee to be payable, during the next ensuing twelve (12) months, and (b)
unless otherwise waived by Mortgagee, one-twelfth of an amount which would be
sufficient to pay the Insurance Premiums due for the renewal of the coverage
afforded by the Policies upon the expiration thereof (said amounts in [a] and
[b] above hereinafter called the "Tax and Insurance Escrow Fund"). Mortgagee
may, in its sole discretion, retain a third party tax consultant to obtain tax
certificates or other evidence or estimates of tax due or to become due or to
verify the payment of taxes and Mortgagor will promptly reimburse Mortgagee for
the reasonable cost of retaining any such third parties or obtaining such
certificates. Any unpaid reimbursements for the aforesaid shall be added to the
Debt. The Tax and Insurance Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby
pledges (and grants a lien and security interest) to Mortgagee any and all
monies now or hereafter deposited in the Tax and Insurance Escrow Fund as
additional security for the payment of the Debt. Mortgagee will apply the Tax
and Insurance Escrow Fund to payments of Taxes and Insurance Premiums required
to be made by Mortgagor pursuant to Sections 3 and 4 hereof. If the amount of
the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and
Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee shall, in its
discretion, return any excess to Mortgagor or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. In allocating such
excess, Mortgagee may deal with the person shown on the records of Mortgagee to
be the owner of the Mortgaged Property. If the Tax and Insurance Escrow Fund is
not sufficient to pay the items set forth in (a) and (b) above, Mortgagor shall
promptly pay to Mortgagee, upon demand, an amount which Mortgagee shall estimate
as sufficient to make up the deficiency. Upon the occurrence of an Event of
Default, Mortgagee shall be entitled to exercise both the rights of setoff and
banker's lien, if applicable, against the interest of Mortgagor in the Tax and
Insurance Escrow Fund to the full extent of the outstanding balance of the Debt,
application of any such sums to the Debt to be in any order in its sole
discretion. Until expended or applied as above provided, any amounts in the Tax
and Insurance Escrow Fund shall constitute additional security for the Debt. The
Tax and Insurance Escrow Fund shall not constitute a trust fund and may be
commingled with other monies held by Mortgagee. Unless otherwise required by
applicable law, no earnings or interest on the Tax and Insurance Escrow Fund
shall be payable to Mortgagor even if the Mortgagee or its servicer is paid a
fee and/or receives interest or other income in connection with the deposit or
placement of such fund (in which event such income shall be reported under
Mortgagee's or its servicer's tax identification number, as applicable). Upon
payment of the Debt and performance by Mortgagor of all its obligations under
this Mortgage and the other Loan Documents, any amounts remaining in the Tax and
Insurance Escrow Fund shall be refunded to Mortgagor.
<PAGE>
6. [Intentionally Deleted.]
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. Notwithstanding any
taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Mortgagor shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note, in
this Mortgage and the other Loan Documents and the Debt shall not be reduced
until any award or payment therefor shall have been actually received after
expenses of collection and applied by Mortgagee to the discharge of the Debt.
Mortgagor shall cause the award or payment made in any condemnation or eminent
domain proceeding with respect to the Mortgaged Property, which is payable to
Mortgagor, to be paid directly to Mortgagee. Mortgagee may apply any such award
or payment to the reduction or discharge of the Debt whether or not then due and
payable (such application to be free from any prepayment consideration provided
in the Note, except that if an Event of Default, or an event which with notice
and/or the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the full prepayment
consideration computed in accordance with the Note). If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by Mortgagee of
such award or payment, Mortgagee 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, or a portion thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
covenants as follows:
(a) Neither Mortgagor nor any guarantor of the Debt or any part thereof
(a "Guarantor") has any defense to the payment in full of the Debt that arises
from applicable local, state or federal laws, regulations or other requirements.
None of the Loan Documents are subject to any right of rescission, set-off,
abatement, diminution, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of any such Loan Documents, or the
exercise of any right thereunder, render any Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission, set-off, abatement,
diminution, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, abatement, diminution, counterclaim or defense has
been, or will be, asserted with respect thereto.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use and occupancy of the Mortgaged Property, have been obtained and are in
full force and effect. The Mortgaged Property is in good repair, good order and
good condition and free and clear of any damage that would affect materially and
adversely the value of the Mortgaged Property as security for the Debt and the
Mortgaged Property has not been materially damaged by fire, wind or other
casualty or physical condition
<PAGE>
(including, without limitation, any soil or geological condition), which damage
has not been fully repaired. There are no proceedings pending or threatened for
the partial or total condemnation of the Mortgaged Property.
(c) All of the Improvements which were included in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property, and no easements or
other encumbrances upon the Premises encroach upon any of the Improvements, so
as to affect the value or marketability of the Mortgaged Property except for
immaterial encroachments which do not adversely affect the security intended to
be provided by this Mortgage or the use, enjoyment, value or marketability of
the Mortgaged Property. All of the Improvements comply with all material
requirements of any applicable zoning and subdivision laws and ordinances.
(d) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any, described
in the rent roll delivered to Mortgagee in connection with this Mortgage, and
all such leases and agreements are in full force and effect. No person has any
possessory interest in the Mortgaged Property or right to occupy the same except
under and pursuant to the provisions of the leases and any such operating
agreements.
(e) All financial data, including, without limitation, statements of
cash flow and income and operating expenses, delivered to Mortgagee by, or on
behalf of Mortgagor are (i) true and correct in all material respects; (ii)
accurately represent the financial condition of Mortgagor or the Mortgaged
Property as of the date thereof in all material respects; and (iii) to the
extent reviewed by an independent certified public accounting firm, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(f) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a duly licensed surveyor or
registered professional engineer in the jurisdiction in which the Mortgaged
Property is situated and, to the best of Mortgagor's knowledge, does not fail to
reflect any material matter affecting the Mortgaged Property or the title
thereto.
(g) The loan evidenced by the Loan Documents complies with, or is
exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury and any and all other requirements of any
federal, state or local law.
(h) The Mortgaged Property abuts upon a dedicated, all-weather road, or
is served and benefitted by an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(i) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
<PAGE>
(j) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(k) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are adequate
in relation to the premises and location on which the Mortgaged Property is
located.
(l) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges adversely
affecting the Mortgaged Property.
(m) The Mortgaged Property is not relied upon by, and does not rely
upon, any building or improvement not part of the Mortgaged Property to fulfill
any zoning, building code or other governmental or municipal requirement for
structural support or the furnishing of any essential building systems or
utilities, except to the extent of any valid and existing reciprocal easement
agreements shown in the title insurance policy insuring the lien of this
Mortgage.
(n) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and timely
coverage under any insurance policies providing coverage for the Mortgaged
Property.
(o) There are no defaults by Mortgagor beyond any applicable grace
period under any contract or agreement (other than this Mortgage and the other
Loan Documents) that binds Mortgagor and/or the Mortgaged Property, including
any management, service, supply, security, maintenance or similar contracts; and
Mortgagor has no knowledge of any such default for which notice has not yet been
given; and no such agreement is in effect with respect to the Mortgaged Property
that is not capable of being terminated by Mortgagor on less than thirty (30)
days notice except as previously disclosed to Mortgagee by a delivery of a copy
of all such agreements.
(p) The representations and warranties contained in the Closing
Certificate executed by Mortgagor in connection with the Note (which certificate
constitutes one of the Loan Documents) are true and correct and Mortgagor shall
observe the covenants contained therein.
(q) The management agreement with respect to the Mortgaged Property
(the "Management Agreement") between Mortgagor and Concord Assets Management,
Inc., a Delaware corporation ("Manager") pursuant to which such property manager
operates the Mortgaged Property as an office building, is in full force and
effect and there is no default, breach or violation existing thereunder by any
party thereto and no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a default, breach or violation by any party thereunder.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants
and covenants as follows:
(a) Mortgagor does not own and will not own any asset or property other than
(i) the
<PAGE>
Mortgaged Property, the Mortgaged Property (as defined in the Arizona Note), and
the Mortgaged Property (as defined in the California Note) (collectively, the
"Security Property"), and (ii) incidental personal property necessary for the
ownership or operation of the Security Property.
(b) Mortgagor will not engage in any business other than the ownership,
management and operation of the Security Property and Mortgagor will conduct and
operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling, controlled
by or under common control with Mortgagor or Guarantor (an "Affiliate"), 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 Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, the Debt (as defined in
the Arizona Note), and the Debt (as defined in the California Note)
(collectively the "Indebtedness"), and (ii) trade and operational debt incurred
in the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than the
Indebtedness may be secured (subordinate or pari passu) by the Mortgaged
Property.
(e) Mortgagor has not made and will not make any loans or advances to
any third party, nor to Guarantor, any Affiliate or any constituent party of
Mortgagor.
(f) Mortgagor is and will remain solvent and Mortgagor will pay its
debts from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve its existence, and Mortgagor will not, nor will Mortgagor
permit Guarantor to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws, trust
or other organizational documents of Mortgagor or Guarantor in a manner which
would adversely affect the Mortgagor's existence as a single-purpose entity.
(h) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party of Mortgagor,
and Mortgagor will file its own tax returns.
(i) Mortgagor will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate, any constituent party of Mortgagor or any Guarantor).
(j) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in which
the Mortgaged Property is located.
(k) Mortgagor will maintain adequate capital for the normal obligations
reasonably
<PAGE>
foreseeable in a business of its size and character and in light of its
contemplated business operations.
(l) Neither Mortgagor nor any constituent party of Mortgagor will seek
the dissolution or winding up, in whole or in part, of Mortgagor, nor will
Mortgagor merge with or be consolidated into any other entity.
(m) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any Affiliate, any Guarantor, any constituent party of
Mortgagor or any other person.
(n) Mortgagor has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any constituent party of Mortgagor, Affiliate,
Guarantor or any other person.
(o) Mortgagor does not and will not hold itself out to be responsible
for the debts or obligations of any other person (provided, that the foregoing
shall not prevent Mortgagor from being and holding itself responsible for
expenses incurred or obligations undertaken by the property manager of the
Security Property in respect of its duties regarding the Security Property).
(p) Mortgagor shall obtain and maintain in full force and effect, and
abide by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
(q) Since the formation of Mortgagor, Mortgagor has not owned any
asset, conducted any business or operation, or engaged in any business other
than the ownership and operation of the Security Property. The Mortgagor has no
debts or obligations other than normal trade accounts payable in the ordinary
course of business, and the Indebtedness. Any other indebtedness or obligation
of Mortgagor has been paid in full prior to or through application of proceeds
from funding of the Loan.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction. Mortgagor shall not use,
maintain or operate the Mortgaged Property in any manner which constitutes a
public or private nuisance or which makes void, voidable, or cancelable, or
increases the premium of, any insurance then in force with respect thereto. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment) without the consent of
Mortgagee. Mortgagor shall promptly comply with all laws, orders and ordinances
affecting the Mortgaged Property, or the use thereof. Mortgagor shall promptly
repair, replace or rebuild any part of the Mortgaged Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 7 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on the Premises.
<PAGE>
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any material change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Mortgaged Property or any part
thereof, nor shall Mortgagor initiate, join in, acquiesce in, or consent to any
zoning change or zoning matter affecting the Mortgaged Property. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof and
shall not take any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management. Mortgagor
will not install or permit to be installed on the Premises any underground
storage tank or above-ground storage tank without the written consent of
Mortgagee.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Mortgagor shall not, without the prior
written consent of Mortgagee, sell, convey, alienate, mortgage, encumber, pledge
or otherwise transfer the Mortgaged Property or any part thereof, or permit the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred; provided, however,
Mortgagee may, in its sole discretion, give such written consent (but shall have
no obligation to do so) to any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer, and any such consent may be conditioned
upon the satisfaction of such conditions precedent as Mortgagee may require
(including, without limitation, the conditions precedent set forth in subsection
12[c] below). Notwithstanding any other provision of this Section 12, Mortgagee
will consent, subject to the conditions of subsection 12(c) and provided that no
Event of Default under the Loan Documents has occurred and is continuing, to one
sale, conveyance, alienation, mortgage, encumbrance, pledge or other transfer of
the Mortgaged Property by the original Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by persons who are acceptable in all respects to
Mortgagee in its sole and absolute discretion, and (3) no such transfer, death
or other event has any adverse effect either on the bankruptcy-remote status of
Mortgagor under the requirements of any national rating agency for the
Certificates (hereinafter defined) or on the status of Mortgagor as a continuing
legal entity liable for
<PAGE>
the payment of the Debt and the performance of all other obligations secured
hereby, or (y) transfers otherwise by operation of law in the event of a
bankruptcy, nor shall the meaning include a Lease, but shall be deemed to
include (i) an installment sales agreement wherein Mortgagor agrees to sell the
Mortgaged Property or any part thereof for a price to be paid in installments;
(ii) an agreement by Mortgagor leasing all or a substantial part of the
Mortgaged Property for other than actual occupancy by a space tenant thereunder
or a sale, assignment or other transfer of, or the grant of a security interest
in, Mortgagor's right, title and interest in and to any Leases or any Rents;
(iii) if Mortgagor, Guarantor, or any general partner of Mortgagor or Guarantor
is a corporation, any merger, consolidation or the voluntary or involuntary
sale, conveyance or transfer of such corporation's stock (or the stock of any
corporation directly or indirectly controlling such corporation by operation of
law or otherwise) or the creation or issuance of new stock in one or a series of
transactions by which an aggregate of more than 10% of such corporation's stock
shall be vested in a party or parties who are not now stockholders (provided,
however, in no event shall this subpart [iii] apply to any Guarantor whose
stock, shares or partnership interests are traded on a nationally recognized
stock exchange); (iv) if Mortgagor, Guarantor, or any general partner of
Mortgagor or Guarantor is a limited liability company or limited partnership,
the voluntary or involuntary sale, conveyance or transfer by which an aggregate
of more than fifty percent (50%) of the ownership interest in such limited
liability company or more than fifty percent (50%) of the limited partnership
interests in such limited partnership shall be vested in parties not having an
ownership interest as of the date of this Mortgage; and (v) if Mortgagor, any
Guarantor or any general partner of Mortgagor or any Guarantor is a limited or
general partnership or joint venture, the change, removal or resignation of a
general partner, managing partner or joint venturer or the transfer of all or
any portion of the partnership interest of any general partner, managing partner
or joint venturer.
(c) Notwithstanding the provisions of subsections 12(a) and (b) above,
Mortgagee will give its consent to a one time sale or transfer of Mortgaged
Property, provided that no Event of Default under the Loan Documents has
occurred and is continuing and (i) the grantee's or transferee's integrity,
reputation, character and management ability are satisfactory to Mortgagee in
its sole discretion, (ii) the grantee's or transferee's (and its sole general
partner's) single purpose and bankruptcy remote character are satisfactory to
Mortgagee in its sole discretion, (iii) and any conditions relating to the sale
or transfer imposed by any national rating agency for the Certificates (as
defined in Section 20) are satisfied, (iv) Mortgagee has obtained such estoppels
from any guarantors of the Note or replacement guarantors and such other legal
opinions, certificates and similar matters as Mortgagee may require, (v) all of
Mortgagee's costs and expenses associated with the sale or transfer (including
reasonable attorneys fees) are paid by Mortgagor or the grantee or transferee,
(vi) the payment of a transfer fee not to exceed 1% of the outstanding principal
balance of the loan evidenced by the Note and secured hereby (excluding the
Arizona Note and the California Note) (the "Loan"), (vii) the grantee's
execution of a written assumption agreement and such modification to the Loan
Documents containing such terms as Mortgagee may require and delivery of such
agreement to Mortgagee prior to such sale or transfer (provided that in the
event the Loan is included in a REMIC and is a performing Loan, no modification
to the terms and conditions shall be made or permitted that would cause (A) any
adverse tax consequences to the REMIC or any holders of any Certificates, (B)
the Mortgage to fail to be a Qualifying Mortgage under applicable federal law
relating to REMIC's, or (C) result in a taxation of the income from the Loan to
the REMIC or cause a loss of REMIC status), (viii) the delivery to Mortgagee of
an endorsement (at
<PAGE>
Mortgagor's sole cost and expense) to the mortgagee policy of title insurance
then insuring the lien created by this Mortgage in form and substance acceptable
to Mortgagee in its sole judgment, (ix) the ratio of the original principal
amount of the Note to the greater of (A) the purchase price paid by the grantee
or (B) the then fair market value of the Mortgaged Property, shall not exceed 75
percent as reasonably determined by Mortgagee; and (x) the debt service coverage
ratio under the Note with respect to the Mortgaged Property as reasonably
determined by Mortgagee shall be equal to or greater than 1.25:1.00 at the time
of the transfer. Without limiting the foregoing, if Mortgagee shall consent to
any such transfer, the written assumption agreement described in subsection
12(c)(vii) above shall provide for the release of Mortgagor of personal
liability under the Note and other Loan Documents solely as to acts or events
occurring, or obligations arising, after the closing of such sale; provided,
however, in no event shall such sale operate to: (x) relieve Mortgagor of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring, or obligations arising, prior to or simultaneously
with the closing of such sale (subject to the applicable recourse limitations
provided in the Note), and Mortgagor shall execute, without any cost or expense
to Mortgagee, such documents and agreements as Mortgagee shall reasonably
require to evidence and effectuate the ratification of such personal liability;
or (y) relieve any current guarantor or indemnitor, including Mortgagor, of its
obligations under any guaranty or indemnity agreement executed in connection
with the loan secured hereby (including, without limitation, the Environmental
Liabilities Agreement of even date herewith [the "Environmental Agreement"]),
and each such current guarantor and indemnitor shall execute, without any cost
or expense to Mortgagee, such documents and agreements as Mortgagee shall
reasonably require to evidence and effectuate the ratification of each such
guaranty and indemnity agreement. Notwithstanding (y) preceding, if the proposed
transferee and a party associated with the proposed transferee (the "Substitute
Guarantor") (1) is approved by Mortgagee in its sole discretion (including a
determination that the proposed transferee and Substitute Guarantor have
adequate financial resources), (2) assumes the obligations of the current
guarantor or indemnitor under its guaranty or indemnity agreement, and (3)
executes, without any cost or expense to Mortgagee, a new guaranty and/or
indemnity agreement, as applicable, in form and substance satisfactory to
Mortgagee, then Mortgagee may release the current guarantor or indemnitor from
all obligations arising under its guaranty or indemnity agreement after the
closing of such sale.
(d) Mortgagee may predicate its decision to grant or withhold consent
to any subsequent sale, conveyance, alienation, mortgage, encumbrance, pledge or
other transfer upon the satisfaction (in the sole determination of Mortgagee)
with such conditions as may be imposed by Mortgagee, which may include, but
shall not be limited to, the following matters: (i) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in a form and
substance acceptable to Mortgagee, in its sole judgment; (ii) the grantee's
integrity, reputation, character, creditworthiness and management ability being
satisfactory to Mortgagee, in its sole judgment; (iii) the grantee's single
purpose and bankruptcy remote character being satisfactory to Mortgagee, in its
sole judgment; (iv) the grantee executing (prior to such sale or transfer) a
written assumption agreement containing such terms as Mortgagee may require; (v)
subject to any restrictions described in Section 12(c) above relating to the
Loan being included in a REMIC, an adjustment to the term of the Note, a
principal paydown on the Note or an increase in the rate of interest payable on
the Note; (vi) payment by Mortgagor of a transfer and assumption fee not to
exceed one percent (1%) of the then unpaid principal balance
<PAGE>
of the Note (excluding the Arizona Note and the California Note); (vii) payment
by Mortgagor of the expenses described in subsection 12(f) below; and (viii) the
satisfaction of any conditions imposed by any national rating agency for
Certificates (hereinafter defined), together with such modification(s) of the
Loan Documents and such legal opinions, certifications and similar matters that
Mortgagee may require. Mortgagee agrees not to unreasonably withhold its consent
to a sale or transfer of the Mortgaged Property upon the satisfaction (in the
sole determination of Mortgagee) of the conditions to its consent as set forth
herein; provided, however, in any event Mortgagee shall be deemed to be
reasonable in withholding its consent if a sale to the proposed transferee
receives unfavorable comment from a national rating agency for Certificates.
Mortgagee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer by Mortgagor of the Mortgaged Property without
Mortgagee's consent.
(e) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
Section 12 shall be null and void and of no force and effect.
(f) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on
demand for all reasonable expenses (including, without limitation, all recording
costs, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
(g) In no event shall any of the terms and provisions of this Section
12 amend or modify the terms and provisions contained in Section 9 herein.
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the 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 Mortgage and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor
shall deliver to
<PAGE>
Mortgagee upon request subject to applicable tenant lease provisions, tenant
estoppel certificates from each commercial tenant at the Mortgaged Property in
form and substance reasonably satisfactory to Mortgagee provided that Mortgagor
shall not be required to deliver such certificates more frequently than two (2)
times in any calendar year.
14. Changes in the Laws Regarding Taxation. If any law is amended,
enacted or adopted after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Mortgaged Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Mortgaged Property, or any part thereof, for real estate
tax purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. 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 Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and agreed to be
the intent of Mortgagor, Trustee and Mortgagee at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Mortgagee to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Mortgagee's exercise of
the option to accelerate the maturity of the Note, or if any prepayment by
Mortgagor results in Mortgagor having paid any interest in excess of that
permitted by applicable law, then it is Mortgagor's, Trustee's and Mortgagee's
express intent that all excess amounts theretofore collected by Mortgagee shall
be credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Mortgagor), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to
<PAGE>
Mortgagee for the use, forbearance, or detention of the Debt shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Debt until payment in full so that
the rate or amount of interest on account of the Debt does not exceed the
maximum rate permitted under applicable law from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Trustee and/or Mortgagee to accelerate the maturity
of any interest that has not accrued at the time of such acceleration or to
collect unearned interest at the time of such acceleration.
18. Books and Records. Mortgagor will keep accurate books and records
in accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours and at any other reasonable times.
Mortgagor represents that its chief executive office is as set forth in the
introductory paragraph of this Mortgage and that all books and records
pertaining to the Mortgaged Property are maintained at such location. Mortgagor
will furnish, or cause to be furnished, to Mortgagee on or before forty-five
(45) days after March 31, June 30, September 30 and December 31 of each calendar
year the following items, each certified by Mortgagor as being true and correct,
in such format and in such detail as Mortgagee or its servicer may request: (a)
a written statement (rent roll) dated as of the last day of each such calendar
quarter identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) quarterly and
year to date operating statements prepared for each calendar quarter during each
such reporting period; (c) a property balance sheet for each calendar quarter
during each such reporting period; and (d) a comparison of the budgeted income
and expenses and the actual income and expenses for each calendar quarter during
each such reporting period and year to date. Within ninety (90) days following
the end of each calendar year, Mortgagor shall furnish a statement of the
financial affairs and condition of the Mortgaged Property including a statement
of profit and loss for the Mortgaged Property in such format and in such detail
as Mortgagee or its servicer may request, and setting forth the financial
condition and the income and expenses for the Mortgaged Property for the
immediately preceding calendar year prepared by an independent certified public
accountant. Mortgagor shall deliver to Mortgagee copies of all income tax
returns, requests for extension and other similar items contemporaneously with
its delivery of same to the Internal Revenue Service. On or before November 30
of each calendar year, Mortgagor shall deliver to Mortgagee an itemized
operating budget and capital expenditure budget of the Mortgaged Property and a
management plan for the Mortgaged Property for the next succeeding calendar year
on a quarterly basis, in such format and in such detail as Mortgagee may
request. In the event Mortgagor fails to deliver such reports within the time
frames provided above, Mortgagor shall pay a late charge equal to two percent
(2%) of the monthly payment amount for each late submission of financial reports
to compensate Mortgagee or its servicer for the additional administrative
expense caused by such failure or delay whether or not Mortgagor is entitled to
any notice and opportunity to cure such failure prior to the exercise of any of
the remedies. Failure to provide quarterly or annual reports shall constitute an
Event of Default under Section 23 and entitle Mortgagee to audit or cause to be
audited Mortgagor's books and
<PAGE>
records. The late charge and the cost of such audit shall be immediately payable
from Mortgagor upon demand by Mortgagee and, until paid, shall be added to and
constitute a part of the Debt. At any time and from time to time Mortgagor shall
deliver to Mortgagee or its agents such other financial data as Mortgagor
prepares for its own use and which Mortgagee or its agents shall request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, including, but not limited to, schedules of gross sales for percentage
rents under Leases. Mortgagor will permit representatives appointed by
Mortgagee, including independent accountants, agents, attorneys, appraisers and
any other persons, to visit and inspect during its normal business hours and at
any other reasonable times any of the Mortgaged Property and to make photographs
thereof, and to write down and record any information such representatives
obtain, and shall permit Mortgagee or its representatives to investigate and
verify the accuracy of the information furnished to Mortgagee under or in
connection with this Mortgage or any of the other Loan Documents and to discuss
all such matters with its officers, employees and representatives. Mortgagor
will furnish to Mortgagee at Mortgagor's expense all evidence which Mortgagee
may from time to time reasonably request as to the accuracy and validity of or
compliance with all representations and warranties made by Mortgagor in the Loan
Documents and satisfaction of all conditions contained therein. Any inspection
or audit of the Mortgaged Property or the books and records of Mortgagor, or the
procuring of documents and financial and other information, by or on behalf of
Mortgagee, shall be for Mortgagee's protection only, and shall not constitute
any assumption of responsibility or liability by Mortgagee to Mortgagor or
anyone else with regard to the condition, construction, maintenance or operation
of the Mortgaged Property, nor Mortgagee's approval of any certification given
to Mortgagee nor relieve Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to Mortgagee, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Mortgagee shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed, pledged,
assigned and hypothecated or intended now or hereafter so to be, or which
Mortgagor may be or may hereafter become bound to convey or assign to Mortgagee,
or for carrying out the intention or facilitating the performance of the terms
of this Mortgage or for filing, registering or recording this Mortgage.
Mortgagor, on demand, will execute and deliver and hereby authorizes Mortgagee
to execute in the name of Mortgagor or without the signature of Mortgagor to the
extent Mortgagee may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor grants to Mortgagee
an irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Mortgagee
at law and in equity, including without limitation such rights and remedies
available to Mortgagee pursuant to this paragraph.
<PAGE>
(a) Mortgagee (and its mortgage servicer and their respective assigns)
shall have the right to disclose in confidence such financial information
regarding Mortgagor, Guarantor or the Mortgaged Property as may be necessary (i)
to complete any sale or attempted sale of the Note or participations in the loan
(or any transfer of the mortgage servicing thereof) evidenced by the Note and
the Loan Documents, (ii) to service the Note or (iii) to furnish information
concerning the payment status of the Note to the holder or beneficial owner
thereof, including, without limitation, all Loan Documents, financial
statements, projections, internal memoranda, audits, reports, payment history,
appraisals and any and all other information and documentation in the
Mortgagee's files (and such servicer's files) relating to the Mortgagor, any
Guarantor and the Mortgaged Property. This authorization shall be irrevocable in
favor of the Mortgagee (and its mortgage servicer and their respective assigns),
and Mortgagor and Guarantor waive any claims that they may have against the
Mortgagee, its mortgage servicer and their respective assigns or the party
receiving information from the Mortgagee pursuant hereto regarding disclosure of
information in such files and further waive any alleged damages which they may
suffer as a result of such disclosure.
(b) The Mortgagor acknowledges that the Mortgagee intends to sell the
loan evidenced by the Note and the Loan Documents or a participation interest
therein to a party who may pool the loan with a number of other loans and to
have the holder of such loans (most likely a special purpose REMIC) issue one or
more classes of Mortgage Backed Pass-Through Certificates (the "Certificates"),
which may be rated by one or more national rating agencies. Mortgagee (and its
mortgage servicer and their respective assigns) shall be permitted to share any
of the information referred to in subsection (b) above, whether obtained before
or after the date of the Note, with the holders or potential holders of the
Certificates, investment banking firms, rating agencies, accounting firms,
custodians, successor mortgage servicers, law firms and other third-party
advisory firms involved with the loan evidenced by the Note and the Loan
Documents or the Certificates. It is understood that the information provided by
the Mortgagor to the Mortgagee (or its mortgage servicer and their respective
assigns) or otherwise received by Mortgagee (or its mortgage servicer and their
respective assigns) in connection with the loan evidenced by the Loan Documents
may ultimately be incorporated into the offering documents for the Certificates
and thus various prospective investors may also see some or all of the
information. The Mortgagee (and its mortgage servicer and their respective
assigns) and all of the aforesaid third-party advisors and professional firms
shall be entitled to rely on the information supplied by, or on behalf of, the
Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or
<PAGE>
any instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to Mortgagee
of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt is not paid within ten (10) days from the date
when the same is due;
(b) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(c) if Mortgagor fails to timely provide any quarterly or annual
financial or accounting report;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers,
pledges or otherwise transfers any portion of the Mortgaged Property or permits
the Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, levied, pledged or otherwise transferred without
Mortgagee's prior written consent except as may be permitted in Section 12
above;
(e) if any representation or warranty of Mortgagor, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other instrument or document
furnished to Mortgagee shall have been false or misleading in any material
respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a 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, Mortgagor or any Guarantor or if Mortgagor or any Guarantor shall admit
in writing its insolvency or bankruptcy or if any proceeding for the dissolution
or liquidation of Mortgagor or of any Guarantor shall be instituted; however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
<PAGE>
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered
by insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition
of this Mortgage or any of the other Loan Documents other than as specified in
any of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed or (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner or managing partner of the Mortgagor, or (iii) there is any
material change in the property management agreement of the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
(o) entry of a judgment in excess of $100,000.00 and the expiration of
any appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following the
date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms);
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor, its affiliates, or any tenant in the
Mortgaged Property under any federal, state or local law;
(r) An Event of Default occurs under the Arizona Note or any one of the
other Loan Documents (as defined in the Arizona Note); and
(s) An Event of Default occurs under the California Note or any one of
the other Loan Documents (as defined in the California Note).
<PAGE>
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 23(p) above (a "First Lien Default") and (c) a default
referred to in subsections 23(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of ten (10) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the ten [10] day period referred to in subsection 23[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such Nonmonetary Default within twenty (20)
days following notice and diligently prosecute such cure to completion,
provided, however, that Mortgagor will provide Mortgagee with such information
as Mortgagee may reasonably request concerning the status of any attempted cure
of any such Nonmonetary Default and the cure of any such Nonmonetary Default
must be completed to the satisfaction of Mortgagee within sixty (60) days of
notice in any case. Notwithstanding the foregoing, Mortgagee may, but shall not
be required, to give notice of a Monetary Default or a recurrence of the same
Nonmonetary Default more frequently than two times in any calendar year. A
Monetary Default and/or First Lien Default and/or Nonmonetary Default shall
nevertheless be an Event of Default for all purposes under the Loan Documents
(including, without limitation, Mortgagee's right to collect Default Interest
and any other administrative charge set forth in the Note) except that the
acceleration of the Debt or other exercise of remedies shall not be prior to the
expiration of the applicable cure and/or grace periods provided in Section 23 or
in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to
any applicable cure period, Mortgagee may, at Mortgagee's option, and by or
through Trustee, by Mortgagee itself or otherwise, do any one or more of the
following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to
keep or perform any covenant whatsoever contained in this Mortgage or the other
Loan Documents, Mortgagee may, but shall not be obligated to any person to do
so, perform or attempt to perform said covenant; and any payment made or expense
incurred in the performance or attempted performance of any such covenant,
together with any sum expended by Mortgagee that is chargeable to Mortgagor or
subject to reimbursement by Mortgagor under the Loan Documents, shall be and
become a part of the "Debt," and Mortgagor promises, upon demand, to pay to
Mortgagee, at the place where the Note is payable, all sums so incurred, paid or
expended by Mortgagee, with interest from the date when paid, incurred or
expended by Mortgagee at the Default Rate as specified in the Note.
(b) Right of Entry. Mortgagee may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged Property,
or any part thereof, and take exclusive possession of the Mortgaged Property and
of all books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
<PAGE>
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
the Mortgagee in managing the Mortgaged Property unless such loss is caused by
the willful misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Mortgagor
shall and does hereby agree to indemnify the Mortgagee for, and to hold the
Mortgagee harmless from, any and all liability, loss, or damage, which may or
might be incurred by the Mortgagee under any such Lease or under or by reason
hereof or the exercise of rights or remedies hereunder, and from any and all
claims and demands whatsoever which may be asserted against the Mortgagee by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any such
Lease. Should the Mortgagee incur any such liability, the amount thereof,
including without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid at the
Default Rate as specified in the Note, shall be secured hereby, and Mortgagor
shall reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the Mortgaged
Property, nor for the carrying out of any of the terms and conditions of any
such Lease; nor shall it operate to make the Mortgagee responsible or liable for
any waste committed on the Mortgaged Property by the tenants or by any other
parties, or for any hazardous substances or environmental conditions on or under
the Mortgaged Property, or for any dangerous or defective condition of the
Mortgaged Property or for any negligence in the management, leasing, upkeep,
repair, or control of the Mortgaged Property resulting in loss or injury or
death to any tenant, licensee, employee, or stranger. Mortgagor hereby assents
to, ratifies, and confirms any and all actions of the Mortgagee with respect to
the Mortgaged Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 24 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale
<PAGE>
contained herein or under any applicable provision of law. Mortgagee may sell
the Mortgaged Property, and all estate, right, title, interest, claim and demand
of Mortgagor therein, and all rights of redemption thereof, at one or more
sales, as an entirety or in parcels, with such elements of real and/or personal
property, and at such time and place and upon such terms as it may deem
expedient, or as may be required by applicable law, and in the event of a sale,
by foreclosure or otherwise, of less than all of the Mortgaged Property, this
Mortgage shall continue as a lien and security interest on the remaining portion
of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of
applicable law and except as otherwise provided herein, the following provisions
shall apply to any sale or sales of all or any portion of the Mortgaged Property
under or by virtue of subsection (d) above, whether made under the power of sale
herein granted or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale:
i) Trustee or Mortgagee may conduct any number of sales from
time to time. The power of sale hereunder shall not be exhausted by any
one or more such sales as to any part of the Mortgaged Property which
shall not have been sold, nor by any sale which is not completed or is
defective in Mortgagee's opinion, until the Debt shall have been paid
in full.
ii) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice.
iii) After each sale, Mortgagee, Trustee or an officer of any
court empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right, title and
interest of Mortgagor in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as
specified in the Note. Each of Trustee and Mortgagee is hereby
appointed the true and lawful attorney-in-fact of Mortgagor, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Mortgagor's name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the property and
rights so sold, Mortgagor hereby ratifying and confirming all that said
attorney or such substitute or substitutes shall lawfully do by virtue
thereof. Nevertheless, Mortgagor, if requested by Trustee or Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to Trustee, Mortgagee or such purchaser or purchasers all
such instruments as may be advisable, in Trustee's or Mortgagee's
judgment, for the purposes as may be designated in such request.
iv) Any and all statements of fact or other recitals made in
any of the instruments referred to in subparagraph (iii) of this
subsection (e) given by Trustee or Mortgagee shall be taken as
conclusive and binding against all persons as to evidence of the truth
of the facts so stated and recited.
v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Mortgagor in and to
<PAGE>
the properties and rights so sold, and shall be a perpetual bar both at
law and in equity against Mortgagor and any and all persons claiming or
who may claim the same, or any part thereof or any interest therein,
by, through or under Mortgagor to the fullest extent permitted by
applicable law.
vi) Upon any such sale or sales, Mortgagee may bid for and
acquire the Mortgaged Property and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting against the
Debt the amount of the bid made therefor, after deducting therefrom the
expenses of the sale, the cost of any enforcement proceeding hereunder,
and any other sums which Trustee or Mortgagee is authorized to deduct
under the terms hereof, to the extent necessary to satisfy such bid.
vii) Upon any such sale, it shall not be necessary for
Trustee, Mortgagee or any public officer acting under execution or
order of court to have present or constructively in its possession any
of the Mortgaged Property.
(f) Mortgagee's Judicial Remedies. Mortgagee, or Trustee upon written
request of Mortgagee, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Mortgage as against all or any part of the Mortgaged Property, and to have
all or any part of the Mortgaged Property sold under the judgment or decree of a
court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to the Mortgagee under this Mortgage or the other
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a
matter of right and (i) without regard to the sufficiency of the security for
repayment of the Debt and without notice to Mortgagor, (ii) without any showing
of insolvency, fraud, or mismanagement on the part of Mortgagor, (iii) without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, and (iv) without regard to the then
value of the Mortgaged Property, shall be entitled to the appointment of a
receiver or receivers for the protection, possession, control, management and
operation of the Mortgaged Property, including (without limitation), the power
to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant to the
provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the
<PAGE>
Debt, and, in connection therewith, Mortgagor hereby appoints Mortgagee as agent
and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Mortgagor to collect such premiums; and (ii) may apply the Tax
and Insurance Escrow Fund and any other funds held by Mortgagee toward payment
of the Debt; and (iii) shall have and may exercise any and all other rights and
remedies which Mortgagee may have at law or in equity, or by virtue of any of
the Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded
to invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of
Mortgagee granted in the Note, this Mortgage and the other Loan Documents, any
other pledge of collateral, or otherwise available at law or equity: (i) shall
be cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral taken
by Mortgagee shall in any manner impair or affect the lien or security interests
given pursuant to the Loan Documents, and all collateral shall be taken,
considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives
and releases: (i) dower, curtesy, homestead, sale, all benefits that might
accrue to Mortgagor by virtue of any present or future law exempting the
Mortgaged Property from attachment, levy or sale on execution or providing for
any appraisement, valuation, stay of execution, exemption from civil process,
redemption, or extension of time for payment, including without limitation, as
may be provided under the Act approved May 8, 1899, and Acts amendatory thereof;
(ii) all notices of any Event of Default except as expressly provided herein or
of Trustee's exercise of any right, remedy, or recourse provided for under the
Loan Documents; and (iii) any right to a marshalling of assets, a sale in
<PAGE>
inverse order of alienation or any other right to direct in any manner, the
order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of limitations.
Mortgagor hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the
filing of any voluntary or involuntary petition under the U.S. Bankruptcy Code
(the "Bankruptcy Code") by or against Mortgagor (other than an involuntary
petition filed by or joined in by Mortgagee), the Mortgagor 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 Mortgagee to enforce any rights it has by
virtue of this Mortgage, or any other rights that Mortgagee has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Mortgagor 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
Mortgagee to enforce any rights it has by virtue of this Mortgage against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Mortgagee's willingness to enter into this Mortgage and Mortgagor
acknowledges and agrees that no grounds exist for equitable relief which would
bar, delay or impede the exercise by Mortgagee of Mortgagee's rights and
remedies against Mortgagor or any guarantor of the Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or
any portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or
other disposition made pursuant to this Mortgage, or the proceeds from the
surrender of any insurance policies pursuant hereto, or any Rents collected by
Mortgagee from the Mortgaged Property, or the Tax and Insurance Escrow Fund or
sums received pursuant to Section 7 hereof, or proceeds from insurance which
Mortgagee elects to apply to the Debt pursuant to Section 3 hereof, shall be
applied by
<PAGE>
Trustee, or by Mortgagee, as the case may be, to the Debt in the following order
and priority: (1) to the payment of all expenses of advertising, selling, and
conveying the Mortgaged Property or part thereof, and/or prosecuting or
otherwise collecting Rents, proceeds, premiums or other sums including
reasonable attorneys' fees and a reasonable fee or commission to Trustee, not to
exceed five percent of the proceeds thereof or sums so received; (2) to that
portion, if any, of the Debt with respect to which no person or entity has
personal or entity liability for payment (the "Exculpated Portion"), and with
respect to the Exculpated Portion as follows: first, to accrued but unpaid
interest, second, to matured principal, and third, to unmatured principal in
inverse order of maturity; (3) to the remainder of the Debt as follows: first,
to the remaining accrued but unpaid interest, second, to the matured portion of
principal of the Debt, and third, to prepayment of the unmatured portion, if
any, of principal of the Debt applied to installments of principal in inverse
order of maturity; (4) the balance, if any or to the extent applicable,
remaining after the full and final payment of the Debt to the holder or
beneficiary of any inferior liens covering the Mortgaged Property, if any, in
order of the priority of such inferior liens (Trustee and Mortgagee shall hereby
be entitled to rely exclusively on a commitment for title insurance issued to
determine such priority); and (5) the cash balance, if any, to the Mortgagor.
The application of proceeds of sale or other proceeds as otherwise provided
herein shall be deemed to be a payment of the Debt like any other payment. The
balance of the Debt remaining unpaid, if any, shall remain fully due and owing
in accordance with and subject to the terms of the Note and the other Loan
Documents.
26. Right of Inspection. Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement. This Mortgage is both a real property mortgage
or deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Mortgaged Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this
Mortgage has granted and hereby grants to Mortgagee, 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 called
in this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted. This Mortgage shall also
constitute a "fixture filing" for the purposes of the Uniform Commercial Code.
All or part of the Mortgaged Property are or are to become fixtures. Information
concerning the security interest herein granted may be obtained from the parties
at the addresses of the parties set forth in the first paragraph of this
Mortgage. If an Event of Default shall occur, Mortgagee, 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 Mortgagee may
deem necessary for the care, protection and preservation of the Collateral. Upon
request or demand of Mortgagee, Mortgagor shall at its expense assemble the
Collateral and make it available to Mortgagee at a convenient place acceptable
to Mortgagee.
<PAGE>
Mortgagor shall pay to Mortgagee on demand any and all expenses, including legal
expenses and attorneys' fees, incurred or paid by Mortgagee 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
Mortgagee with respect to the Collateral sent to Mortgagor in accordance with
the provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Mortgagor. The proceeds of any
disposition of the Collateral, or any part thereof, may be applied by Mortgagee
to the payment of the Debt in such priority and proportions as Mortgagee in its
discretion shall deem proper. In the event of any change in name, identity or
structure of any Mortgagor, such Mortgagor shall notify Mortgagee thereof and
promptly after request shall execute, file and record such Uniform Commercial
Code forms as are necessary to maintain the priority of Mortgagee's lien upon
and security interest in the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof. If Mortgagee shall require the
filing or recording of additional Uniform Commercial Code forms or continuation
statements, Mortgagor shall, promptly after request, execute, file and record
such Uniform Commercial Code forms or continuation statements as Mortgagee shall
deem necessary, and shall pay all expenses and fees in connection with the
filing and recording thereof, it being understood and agreed, however, that no
such additional documents shall increase Mortgagor's obligations under the Note,
this Mortgage and the other Loan Documents. Mortgagor hereby irrevocably
appoints Mortgagee as its attorney-in-fact, coupled with an interest, to file
with the appropriate public office on its behalf any financing or other
statements signed only by Mortgagee, as Mortgagor's attorney-in-fact, in
connection with the Collateral covered by this Mortgage. Notwithstanding the
foregoing, Mortgagor shall appear and defend in any action or proceeding which
affects or purports to affect the Mortgaged Property and any interest or right
therein, whether such proceeding effects title or any other rights in the
Mortgaged Property (and in conjunction therewith, Mortgagor shall fully
cooperate with Mortgagee in the event Mortgagee is a party to such action or
proceeding).
28. Actions and Proceedings. Mortgagee 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 Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any 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.
29. Waiver of Setoff and Counterclaim. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. To the extent permitted by law,
Mortgagor hereby waives the right to assert a setoff, counterclaim or deduction
in any action or proceeding in which Mortgagee is a participant, or arising out
of or in any way connected with this Mortgage, the Note, any of the other Loan
Documents, or the Debt.
30. Contest of Certain Claims. Notwithstanding the provisions of
Sections 4 and 23(h) hereof, Mortgagor shall not be in default for failure to
pay or discharge Taxes, Other Charges or mechanic's or materialman's lien
asserted against the Mortgaged Property if, and so long as, (a) Mortgagor shall
have notified Mortgagee of same within ten (10) days of obtaining knowledge
<PAGE>
thereof; (b) Mortgagor shall diligently and in good faith contest the same by
appropriate legal proceedings which shall operate to prevent the enforcement or
collection of the same and the sale of the Mortgaged Property or any part
thereof, to satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a
cash deposit, or evidence of an indemnity bond satisfactory to Mortgagee and
otherwise in accordance with applicable law with a surety satisfactory to
Mortgagee, in the amount of the Taxes, Other Charges or mechanic's or
materialman's lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor shall
promptly upon final determination thereof pay the amount of any such Taxes,
Other Charges or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith; (e) the failure to pay
the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the reasonable
opinion of Mortgagee, the Mortgaged Property or any part thereof or interest
therein may be in danger of being sold, forfeited, foreclosed, terminated,
canceled or lost. Mortgagee may pay over any such cash deposit or part thereof
to the claimant entitled thereto at any time when, in the reasonable judgment of
Mortgagee, the entitlement of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee 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 Mortgagee thereafter to bring an action of foreclosure, or any other action,
for a default or defaults by Mortgagor existing at the time such earlier action
was commenced.
32. Handicapped Access. Mortgagor agrees that the Mortgaged Property
shall at all times strictly comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped 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 "Access
Laws").
(a) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate from an
architect, engineer, or other person acceptable to Mortgagee of compliance with
Access Laws.
(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt
by Mortgagor of any complaints related to violation of any Access Laws and of
the commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
<PAGE>
33. Indemnification. Subject to the recourse limitations contained on
the Note, in addition to any other indemnifications provided in any of the Loan
Documents, Mortgagor shall protect, defend, indemnify and save harmless
Mortgagee, its subsidiaries, affiliates, persons controlling or under common
control with Mortgagee, their agents, officers, directors, shareholders,
employees, servants, consultants, representatives and their respective
successors and assigns and Trustee (collectively, the "Indemnified Parties"),
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including
without limitation reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against any of the Indemnified Parties by reason of (a)
ownership of this Mortgage, 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, nonuse 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) any failure on
the part of Mortgagor to perform or comply with any of the terms of this
Mortgage; (e) 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; (f) any failure of the Mortgaged Property to comply with any Access
Laws; (g) any representation or warranty made in the Note, this Mortgage or the
other Loan Documents being false or misleading in any respect as of the date
such representation or warranty was made; (h) any claim by brokers, finders or
similar persons claiming to be entitled to a commission in connection with any
Lease or other transaction involving the Mortgaged Property or any part thereof
under any legal requirement or any liability asserted against Mortgagee with
respect thereto; and (i) the claims of any lessee to any portion of the
Mortgaged Property or any person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease. Any amounts payable to any of
the Indemnified Parties by reason of the application of this paragraph shall be
secured by this Mortgage and shall become immediately due and payable and shall
bear interest at the Default Rate specified in the Note from the date loss or
damage is sustained by any of the Indemnified Parties until paid. The
obligations and liabilities of Mortgagor under this Section 33 (A) shall survive
for a period of one (1) year following any release of this Mortgage executed by
Mortgagee and satisfaction of the loan evidenced by the Loan Documents, and (B)
shall survive the transfer or assignment of this Mortgage, the entry of a
judgment of foreclosure, sale of the Mortgaged Property by nonjudicial
foreclosure sale, or delivery of a deed in lieu of foreclosure (including,
without limitation, any transfer by Mortgagor of any of its rights, title and
interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagor).
34. Trustee. Trustee may resign by the giving of notice of such
resignation in writing or verbally to Mortgagee. If Trustee shall die, resign,
or become disqualified from acting in the execution of this trust, or if, for
any reason, Mortgagee shall prefer to appoint a substitute trustee or multiple
substitute trustees, or successive substitute trustees or successive multiple
substitute trustees, to act instead of the aforenamed Trustee, Mortgagee shall
have full power to appoint a substitute trustee (or, if preferred, multiple
substitute trustees) in succession who shall succeed (and if multiple substitute
trustees are appointed, each of such multiple substitute trustees shall succeed)
to all the estates, rights, powers, and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent of Mortgagee, and if such
Mortgagee be a corporation and such appointment be executed in its behalf by any
officer of such corporation, such appointment shall be
<PAGE>
conclusively presumed to be executed with authority and shall be valid and
sufficient without proof of any action by the board of directors or any superior
officer of the corporation. Mortgagor hereby ratifies and confirms any and all
acts which the aforenamed Trustee, or his successor or successors in this trust,
shall do lawfully by virtue hereof. If multiple substitute Trustees are
appointed, each of such multiple substitute Trustees shall be empowered and
authorized to act alone without the necessity of the joinder of the other
multiple substitute trustees, whenever any action or undertaking of such
substitute trustees is requested or required under or pursuant to this Mortgage
or applicable law. Any substitute Trustee appointed pursuant to any of the
provisions hereof shall, without any further act, deed, or conveyance, become
vested with all the estates, properties, rights, powers, and trusts of its or
his predecessor in the rights hereunder with like effect as if originally named
as Trustee herein; but nevertheless, upon the written request of Mortgagee or of
the substitute Trustee, the Trustee ceasing to act shall execute and deliver any
instrument transferring to such substitute Trustee, upon the trusts herein
expressed, all the estates, properties, rights, powers, and trusts of the
Trustee so ceasing to act, and shall duly assign, transfer and deliver any of
the property and moneys held by such Trustee to the substitute Trustee so
appointed in the Trustee's place. No fees or expenses shall be payable to
Trustee, except in connection with a foreclosure of the Mortgaged Property or
any part thereof or in connection with the release of the Mortgaged Property
following payment in full of the Debt.
35. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the first (1st) business
day after such notice is tendered to a nationally-recognized overnight delivery
service or on the third (3rd) day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, in either instance, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address as
Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
36. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor 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.
37. Waiver of Notice. Mortgagor shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
<PAGE>
38. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
39. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
40. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
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 Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the payment
of the Debt to any other security held by Mortgagee in such order and manner as
Mortgagee, in its discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Mortgagee thereafter to foreclosure this Mortgage. The
rights and remedies of Mortgagee under this Mortgage shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee 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.
41. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, 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.
42. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
43. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
<PAGE>
44. Headings, etc. The headings and captions of various paragraphs of
this Mortgage 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.
45. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
46. Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, 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 and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
47. Homestead. Mortgagor 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 Premises as against the collection of the Debt,
or any part hereof.
48. Assignments. Mortgagee shall have the right to assign or transfer
its rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
49. Survival of Obligations; Survival of Warranties and
Representations. Each and all of the covenants and obligations of Mortgagor
(other than warranties and representations contained herein) shall survive the
execution and delivery of the Loan Documents and shall continue in full force
and effect until the Debt shall have been paid in full; provided, however, that
nothing contained in this paragraph shall limit the obligations of Mortgagor
except as otherwise set forth herein. In addition, any and all warranties and
representations of Mortgagor contained herein shall survive the execution and
delivery of the Loan Documents and (i) shall continue for a period of one (1)
year following any release of this Mortgage executed by Mortgagee and
satisfaction of the loan evidenced by the Loan Documents, and (ii) shall survive
the transfer or assignment of this Mortgage, the entry of a judgment of
foreclosure, sale of the Mortgaged Property by non-judicial foreclosure or deed
in lieu of foreclosure (including, without limitation, any transfer of the
Mortgage by Mortgagee of any of its rights, title and interest in and to the
Mortgaged Property to any party, whether or not affiliated with Mortgagee).
<PAGE>
50. Covenants Running with the Land. All covenants, conditions,
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor, Mortgagee and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property until
the lien of this Mortgage has been fully released by Mortgagee.
51. Governing Law; Jurisdiction. THIS MORTGAGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, PROVIDED THAT
TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL
LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING; AND
PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND
SECURITY INTERESTS IN PROPERTY LOCATED IN SUCH STATE.
MORTGAGOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY, INTENTIONALLY
AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL, SUBMITS TO
PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT, ACTION OR
PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THE NOTE, THIS MORTGAGE OR
ANY OTHER OF THE LOAN DOCUMENTS, AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING
IN ORANGE COUNTY, CALIFORNIA, SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND TO
THE FULLEST EXTENT PERMITTED BY LAW, AGREES THAT IT WILL NOT BRING ANY ACTION,
SUIT OR PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT
OF MORTGAGEE TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).
MORTGAGOR FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR
CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO MORTGAGOR AT THE ADDRESS FOR NOTICES
SET FORTH ON PAGE 1 HEREOF, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE IN EVERY RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN
SHALL AFFECT THE VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER
PERMITTED BY LAW).
52. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
53. No Third Party Beneficiaries. The provisions of this Mortgage and
the other Loan Documents are for the benefit of Mortgagor, Mortgagee and Trustee
and shall not inure to the benefit of any third party (other than any successor
or assignee of either Trustee or Mortgagee). This Mortgage and the other Loan
Documents shall not be construed as creating any rights, claims or causes of
action against Mortgagee or any of its officers, directors, agents or employees
in favor of any party other than Mortgagor including but not limited to any
claims to any sums held in the Tax
<PAGE>
and Insurance Escrow Fund.
54. Relationship of Parties. The relationship of Mortgagee and
Mortgagor is solely that of debtor and creditor, and Mortgagee has no fiduciary
or other special relationship with the Mortgagor, and no term or condition of
any of the Loan Documents shall be construed to be other than that of debtor and
creditor. Mortgagor represents and acknowledges that the Loan Documents do not
provide for any shared appreciation rights or other equity participation
interest.
55. Trustee Provisions. In the event that this Mortgage operates as a
mortgage, the provisions of this Mortgage which pertain to the Trustee shall be
of no force or effect.
56. Investigations. Any and all representations, warranties, covenants
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.
57. Assignment of Rents and Leases. Mortgagor does hereby irrevocably,
absolutely and unconditionally grant, sell, convey, assign, pledge, transfer,
set over and deliver to Mortgagee:
(a) all of Mortgagor's interest in and to all current and
future leases and other agreements affecting the use, enjoyment, or occupancy of
all or any part of the Mortgaged Property, and all other leases and other
agreements affecting the use, enjoyment or occupancy of any part of the
Mortgaged Property now or hereafter made affecting the Mortgaged Property or any
portion thereof, together with any guaranty, extensions, renewals, replacements
or modifications of the same (all of the leases and other agreements described
above together with all other present and future leases and present and future
agreements and any guaranty, extension, renewal, replacement or modification of
the same are hereinafter collectively referred to as the "Leases"); and
(b) all rents, income, issues, revenues and profits arising
from the Leases and renewals thereof and together with all rents, income, issues
and profits from the use, enjoyment and occupancy of the Mortgaged Property
(including, but not limited to, minimum rents, additional rents, percentage
rents, deficiency rents, security deposits and liquidated damages following
default under any Leases, all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by damage to any
part of the Mortgaged Property, all of Mortgagor's rights to recover monetary
amounts from any Lessee (as hereinafter defined) in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising out of Lease defaults, including rejection of a Lease, together with any
sums of money that may now or at any time hereafter be or become due and payable
to Mortgagor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and all future oil, gas and mining Leases covering the Mortgaged
Property or any part thereof, and all proceeds and other amounts paid or owing
to Mortgagor under or pursuant to any and all contracts and bonds relating to
the construction, erection or renovation of the Mortgaged Property) (all of the
rights described above hereinafter collectively referred to as the "Rents").
(c) Present Assignment. Mortgagor does hereby absolutely and unconditionally
<PAGE>
assign to Mortgagee Mortgagor's right, title and interest in all current and
future Leases and Rents, it being intended by Mortgagor that this assignment
constitute a present, absolute assignment and not an assignment for additional
security only. Such assignment to Mortgagee shall not be construed to bind
Mortgagee to the performance of any of the covenants, conditions, or provisions
contained in any of the Leases or otherwise to impose any obligation upon
Mortgagee. Mortgagor agrees to execute and deliver to Mortgagee such additional
instruments, in form and substance satisfactory to Mortgagee, as may hereinafter
be requested by Mortgagee to further evidence and confirm said assignment.
Mortgagee is hereby granted and assigned by Mortgagor the right to enter the
Mortgaged Property for the purpose of enforcing its 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 of this
paragraph, Mortgagee grants to Mortgagor a revocable license to operate and
manage the Mortgaged Property and to collect the Rents. Prior to disbursing any
amounts to its members, Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt for use in the payment
of such sums. Upon an Event of Default, the license granted to Mortgagor herein
shall automatically be revoked and Mortgagee shall immediately be entitled to
receive and apply all Rents, whether or not Mortgagee enters upon and takes
control of the Mortgaged Property. Mortgagor hereby grants and assigns to
Mortgagee the right, at its option, upon the revocation of the license granted
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
revocation of the license herein granted may be applied toward payment of the
Debt in such priority and proportion as Mortgagee, in its discretion, shall deem
proper.
(d) Remedies of Mortgagee. Upon or at any time after an Event
of Default, Mortgagee may, at its option, without waiving such Event of Default,
without notice and without regard to the adequacy of the security for the Debt,
either 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 Mortgagee may deem proper and either 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 with full power to make from time to time all alterations, renovations,
repairs or replacements thereto or thereof as may seem proper to Mortgagee and
may apply the Rents to the payment of the following in such order and proportion
as Mortgagee in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Mortgaged Property, including, without being limited thereto, the salaries, fees
and wages of a managing agent and such other employees or agents as Mortgagee
may deem necessary or desirable and all expenses of operating and maintaining
the Mortgaged Property, including, without being limited thereto, all taxes,
charges, claims, assessments, water charges, sewer rents and any other liens,
and premiums for all insurance which Mortgagee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the Mortgaged Property;
and (b) the Debt, (including all costs and attorneys' fees). In addition to the
rights which Mortgagee may have herein, upon the occurrence of an Event of
Default, Mortgagee at its option may require Mortgagor to vacate and surrender
possession of the Mortgaged Property to Mortgagee or to such receiver and, in
default thereof, Mortgagor may be evicted by summary proceedings or otherwise.
Additionally, upon such Event of Default, Mortgagee shall have the right to
establish a lock box for the deposit of all Rents
<PAGE>
and other receivables of Mortgagor relating to the Mortgaged Property. Mortgagor
shall pay any and all costs and expenses for such lock box. For purposes of
subsections (a), (b), (c) and (d), Mortgagor grants to Mortgagee its irrevocable
power of attorney, coupled with an interest, to take any and all of the
aforementioned actions and any or all other actions designated by Mortgagee for
the proper management and preservation of the Mortgaged Property. The exercise
by Mortgagee of the option granted it in this paragraph and the collection of
the Rents and the application thereof as herein provided shall not be considered
a waiver of any Event of Default under any of the Loan Documents.
58. Independent Management. In the event Mortgagee determines in its
reasonable and absolute discretion that the quality of management for the
Mortgaged Property has deteriorated, Mortgagor shall engage an independent
management company unaffiliated with Mortgagor which is satisfactory to
Mortgagee within 45 days after Mortgagor's receipt of written notice thereof
pursuant to a management agreement satisfactory to Mortgagee, and cause such
management company to execute and deliver to Mortgagee within such 45-day period
an Acknowledgment of Property Manager substantially in the form executed by
Manager in connection herewith.
59. Mortgagor's Release Option. Notwithstanding that this Mortgage
secures the Note, the Arizona Note and the California Note, Mortgagee shall
release the Mortgaged Property from the lien of this Mortgage (a "Release") upon
the satisfaction of each and every of the following conditions precedent at the
time of such release (singularly and collectively referred to as a "Release
Condition"):
(a) Any and all sums then due and payable to Mortgagee under the Note
and the Loan Documents as defined therein shall be fully paid (including,
without limitation, principal and interest under the Note and all sums
constituting the Tax and Insurance Escrow Fund, and any other escrow required
under the Loan Documents), and no Event of Default shall exist and be
continuing, nor shall Mortgagee have given Mortgagor notice of any event or
condition which, with the passage of time or the giving of notice (or both),
could result in an Event of Default if not cured by Mortgagor.
(b) In no event shall a Release affect any of Mortgagor's obligations
under the Loan Documents (as defined in the Arizona Note) or the Loan Documents
(as defined in the California Note).
(c) All reasonable costs and expenses incurred by Mortgagee (and any
servicer of the Loan) in connection with the review, approval and execution of
any Release shall be paid by Mortgagor prior to and as a condition of any
Release, including but not limited to reasonable attorneys' fees.
60. Mortgagee's Option To Release Cross-Collateralization And
Cross-Default. Mortgagor shall consent to, execute and otherwise cooperate in a
modification of this Mortgage and the other Loan Documents providing that this
Mortgage shall no longer secure the Arizona Note and/or the California Note and
that an Event of Default under the Arizona Note (and the related Loan Documents,
as defined in such Note) and/or the California Note (and the related Loan
Document, as defined in such note) (collectively, the "Related Loan Documents")
shall no longer constitute an Event of Default hereunder. Such a modification
shall automatically render ineffective any
<PAGE>
provisions in the Related Loan Documents providing for cross-collateralization
or cross-defaults under this Mortgage. Such a modification shall be made at
Mortgagee's sole cost and expense, and Mortgagee shall reimburse Mortgagor for
its costs and expenses (including, without limitation, its reasonable attorneys'
fees and costs) related thereto.
Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT A
(Legal Description)
The land situated in the State of Arkansas, County of White and described as
follows:
Commencing at an iron pipe at the intersection of the Southeast line of Survey
Number 2312 and the South line of Race Avenue; Thence North 89 degrees 54
minutes 23 seconds East 737.11 feet along the South line of Race Avenue to a
found concrete monument; Thence continue along the South line of Race Avenue
North 89 degrees 59 minutes 37 seconds East 306.00 feet to a found iron pin for
the pointy of beginning; Thence continue North 89 degrees 59 minutes 37 seconds
East 60.00 feet along the South line of Race Avenue to a found iron pin; Thence
South 00 degrees 05 minutes 42 seconds East 188.00 feet to a found iron pin;
Thence North 89 degrees 59 minutes 37 seconds East 158.74 feet to a found iron
pin on the Westerly right-of-way of Frontage Road; Thence South 45 degrees 03
minutes 24 seconds East 102.88 feet along said Westerly right-of-way of Frontage
Road to a found iron pin; Thence South 00 degrees 06 minutes 42 seconds East
273.84 feet to a found iron pin; Thence South 32 degrees 05 minutes 06 seconds
East 48.07 feet to a found iron pin; Thence North 89 degrees 54 minutes 54
seconds East 65.00 feet to a found iron pin on the Westerly right-of-way of
Frontage Road; Thence South 06 degrees 34 minutes 32 seconds West 60.41 feet
along said Westerly right-of-way; Thence South 89 degrees 54 minutes 54 seconds
West 115.0 feet; Thence South 18 degrees 04 minutes 12 seconds West 39.26 feet;
Thence South 04 degrees 54 minutes 54 seconds West 112.0 feet; Thence South 14
degrees 35 minutes 06 seconds East 94.0 feet; Thence South 29 degrees 35 minutes
06 seconds East 140.0 feet; Thence South 20 degrees 05 minutes 06 seconds East
48.0 to a found iron pin; Thence South 89 degrees 54 minutes 54 seconds West
307.89 feet to a found railroad spike; Thence North 00 degrees 06 minutes 42
seconds West 126.00 feet to a found railroad spike; Thence South 89 degrees 54
minutes 54 seconds West 345.00 feet to a found iron pin; Thence North 00 degrees
04 minutes 37 seconds West 367.08 feet along the East line of a tract recorded
in Volume 377, Page 359 of the White County Deed Records to a found 2 inch pipe
set in concrete; Thence North 00 degrees 04 minutes 46 seconds West 49.95 feet
along the East line of a street to a found 2 inch pipe set in concrete; Thence
North 00 degrees 05 minutes 42 seconds West 299.93 feet along the East line of a
tract recorded in Volume 360, Page 145 of the White County Deed Records to a
found iron pin; Thence North 89 degrees 59 minutes 37 seconds East 200.00 feet
to a found iron pin; Thence continue North 89 degrees 59 minutes 37 seconds East
106.00 feet to a found iron pin; Thence North 00 degrees 05 minutes 42 seconds
West 200.00 feet to a found iron pin which is the point of beginning, containing
10.787 acres more or less, subject to all easements of record. Together with all
right, title and interest of Mortgagor in and to the easements created by that
certain agreement entitled Easements With Covenants and Restrictions Affecting
Land (ECR) dated May 16, 1984 by and between Wal-Mart Properties, Inc. and
Bramalea Limited filed for record on July 24, 1984 and recorded in Misc. Book
102 at Page 419.
Property Address: Town & Country Shopping Center
U.S. Highway 67/167
at East Race Avenue
Searcy, Arkansas 72143
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier
Loan No. 1700020088
Property: Town & Country Shopping Center
Searcy, Arkansas
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS ("Assignment") is made as of
September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership ("Assignor"), to WESTCO REAL ESTATE FINANCE CORP., a California
corporation ("Assignee").
Assignor, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY,
ASSIGN, TRANSFER, SET OVER AND DELIVER to Assignee the entire lessor's interest
in and to all current and future leases and other agreements affecting the use,
enjoyment, or occupancy of all or any part of the Mortgaged Property (as defined
in the Mortgage, which is defined below), which Mortgaged Property includes that
certain lot or piece of land, more particularly described in Exhibit A annexed
hereto and made a part hereof.
TOGETHER WITH all other leases and other agreements affecting the use,
enjoyment or occupancy of any part of the Mortgaged Property now or hereafter
made affecting the Mortgaged Property or any portion thereof, together with any
extensions or renewals of the same (all of the leases and other agreements
described above together with all other present and future leases and present
and future agreements and any extension or renewal of the same are hereinafter
collectively referred to as the "Leases");
TOGETHER WITH all rents, income, issues, revenues and profits arising
from the Leases and renewals thereof and together with all rents, income, issues
and profits from the use, enjoyment and occupancy of the Mortgaged Property
(including, but not limited to, minimum rents, additional rents, percentage
rents, deficiency rents, security deposits and liquidated damages following
default under any Leases, all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by damage to any
part of the Mortgaged Property, all of Assignor's
<PAGE>
rights to recover monetary amounts from any Lessee (as hereinafter defined) in
bankruptcy including, without limitation, rights of recovery for use and
occupancy and damage claims arising out of Lease defaults, including rejection
of a Lease, together with any sums of money that may now or at any time
hereafter be or become due and payable to Assignor by virtue of any and all
royalties, overriding royalties, bonuses, delay rentals and any other amount of
any kind or character arising under any and all present and all future oil, gas
and mining Leases covering the Mortgaged Property or any part thereof, and all
proceeds and other amounts paid or owing to Assignor under or pursuant to any
and all contracts and bonds relating to the construction, erection or renovation
of the Mortgaged Property) (all of the rights described above hereinafter
collectively referred to as the "Rents").
THIS ASSIGNMENT is made for the purposes of securing:
A. The payment of the Debt as defined in that certain Note made by
Assignor to Assignee, dated the date hereof, in the principal sum of $2,865,000
(the "Note"), and secured by the Mortgage (as defined in the Note) covering the
Mortgaged Property.
B. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained herein and in the other Loan Documents (as
defined in the Note).
C. The payment of the Debt as defined in the Arizona Note (as defined
in the Mortgage).
D. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained in the Loan Documents (as defined in the
Arizona Note).
E. The payment of the Debt as defined in the California Note (as
defined in the Mortgage).
F. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained in the Loan Documents (as defined in the
California Note).
Assignor warrants to Assignee that (a) Assignor is the sole owner of
the entire lessor's interest in the Leases; (b) the Leases are valid,
enforceable and in full force and effect and have not been altered, modified or
amended in any manner whatsoever except as disclosed to Assignee; (c) neither
the Leases nor the Rents reserved in the Leases have been assigned or otherwise
pledged or hypothecated; (d) none of the Rents have been collected for more than
one (1) month in advance; (e) Assignor 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 Assignor or the
Mortgaged Property; (f) the premises demised under the Leases have been
completed and Lessees under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis except as explicitly identified on
the certified rent roll attached to the Closing Certificate dated concurrently
herewith executed by Assignor in favor of Assignee in connection with the Note;
and (g) there exist no offsets or defenses to the payment of any portion of the
Rents.
<PAGE>
Assignor covenants with Assignee that Assignor (a) shall observe and
perform all the obligations imposed upon the lessor under the Leases and shall
not do or permit to be done anything to impair the value of the Leases as
security for the Debt; (b) shall promptly send to Assignee copies of all notices
of default which Assignor shall receive under the Leases; (c) shall not collect
any Rents more than one (1) month in advance; (d) shall not execute any other
assignment of lessor's interest in the Leases or the Rents; (e) shall execute
and deliver at the request of Assignee all such further assurances,
confirmations and assignments in connection with the Mortgaged Property as
Assignee shall from time to time require; (f) shall not enter into any new lease
of the Mortgaged Property without the prior written consent of Assignee (unless
such new Lease satisfies the Approval Conditions described below), and in any
event, any new Lease shall be on a form of lease approved by Assignee; (g) shall
deliver to Assignee, upon request, subject to tenant lease requirements, tenant
estoppel certificates from each commercial Lessee at the Mortgaged Property in
form and substance reasonably satisfactory to Assignee (provided, however, that
Assignor shall not be required to deliver such certificates more frequently than
two [2] times in any calendar year); and (h) shall deliver to Assignee, at
Assignee's request, executed copies of all Leases now existing or hereafter
arising.
Assignor further covenants with Assignee that, except to the extent
that Assignor is acting in the ordinary course of business as a prudent operator
of property similar to the Mortgaged Property, Assignor (a) shall promptly send
to Assignee copies of all notices of default which Assignor shall send to
Lessees under the Leases; (b) shall enforce all of the terms, covenants and
conditions contained in the Leases upon the part of the Lessees thereunder to be
observed or performed, short of termination thereof; (c) shall not alter, modify
or change the terms of the Leases without the prior written consent of Assignee,
or cancel or terminate the Leases or accept a surrender thereof or take any
other action which would effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, Lessees thereunder; provided
however, that any Lease may be canceled if at the time of cancellation thereof a
new Lease is entered into on substantially the same terms or more favorable
terms as the canceled Lease; (d) shall not alter, modify or change the terms of
any guaranty of any of the Leases or cancel or terminate any such guaranty
without the prior written consent of Assignee; (e) shall not consent to any
assignment of or subletting under the Leases not in accordance with their terms,
without the prior written consent of Assignee; and (f) shall not waive, release,
reduce, discount or otherwise discharge or compromise the payment of any of the
Rents to accrue under the Leases.
Assignor further covenants with Assignee that (a) all Leases shall be
written on the standard form of lease which has been approved by Assignee; (b)
upon request, Assignor shall furnish Assignee with executed copies of all
Leases; (c) no material changes may be made to the Assignee-approved standard
lease without the prior written consent of Assignee; (d) all renewals of Leases
and all proposed Leases shall provide for rental rates comparable to existing
local market rates and shall be arm's-length transactions; (e) all Leases shall
provide that (i) they are subordinate to the Mortgage and any other indebtedness
now or hereafter secured by the Mortgaged Property, (ii) Lessees agree to attorn
to Assignee (such attornment to be effective upon Assignee's acquisition of
title to the Mortgaged Property), (iii) Lessees agree to execute such further
evidences of attornment as Assignee may from time to time request, (iv) the
attornment of Lessees shall not be terminated by foreclosure, (v) Assignee may,
at Assignee's option, accept or reject such attornment, and (vi) Lessees agree
to furnish, two times in any calendar year, as Assignee may request, a
<PAGE>
certificate signed by Lessee confirming and containing such factual
certifications and representations deemed reasonably appropriate by Assignee;
and (f) all new Leases shall be subject to the prior approval of Assignee.
Notwithstanding anything to the contrary contained herein, and provided
that no Event of Default (as defined in the Mortgage) shall exist and be
continuing, the following terms and provisions shall apply (the "Approval
Conditions"):
(a) Assignee's consent shall not be required for modifications
of Leases if (i) the Lease to be modified does not involve more than
5,000 rentable square feet of the Mortgaged Property, (ii) such
modifications (together with all prior modifications of such Lease made
without Assignee's consent) do not materially decrease the obligations
of Lessee nor materially increase the obligations of the lessor, (iii)
such modification (together with all prior modifications of Leases made
without Assignee's consent) will not adversely affect the Mortgaged
Property, Assignee, or Assignor's ability to fulfill its obligations
under the Loan Documents (other than to a de minimis extent), and (iv)
the Lease as so modified meets all criteria that would be required with
respect to new Leases as set forth in subpart (c) below.
(b) Assignee's consent shall not be required for termination
of a Lease if (i) Lessee under such Lease is in default beyond all
applicable notice and grace periods, (ii) the Lease to be terminated
does not involve more than 5,000 rentable square feet of the Mortgaged
Property, and (iii) such termination will not adversely affect the
Mortgaged Property, Assignee, or Assignor's ability to fulfill its
obligations under the Loan Documents (other than to a de minimis
extent).
(c) Assignee's consent shall not be required for execution of
a new Lease of space at the Mortgaged Property if (i) such Lease does
not involve more than 5,000 rentable square feet of the Mortgaged
Property, (ii) such Lease will not adversely affect the Mortgaged
Property, Assignee, or Assignor's ability to fulfill its obligations
under the Loan Documents, (iii) such Lease is on the standard form of
lease approved by Assignee, (iv) such Lease is the result of an
arms-length transaction and provides for rental rates comparable to
existing market rates, (v) such Lease does not contain any terms which
would materially affect Assignee's rights under this Assignment or the
other Loan Documents, and (vi) the term of such Lease (including any
renewal or extension term) shall be no less than six (6) months and no
more than one (1) year.
THIS ASSIGNMENT is made on the following terms, covenants and
conditions:
1. Present Assignment. Assignor does hereby absolutely and
unconditionally assign to Assignee Assignor's right, title and interest in all
current and future Leases and Rents, it being intended by Assignor that this
assignment constitute a present, absolute assignment and not an assignment for
additional security only. Such assignment to Assignee shall not be construed to
bind Assignee to the performance of any of the covenants, conditions, or
provisions contained in any of the Leases or otherwise to impose any obligation
upon Assignee. Assignor agrees to execute and
<PAGE>
deliver to Assignee such additional instruments, in form and substance
satisfactory to Assignee, as may hereinafter be requested by Assignee to further
evidence and confirm said assignment. Assignee is hereby granted and assigned by
Assignor the right to enter the Mortgaged Property for the purpose of enforcing
its 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 of this paragraph, Assignee grants to
Assignor a revocable license to operate and manage the Mortgaged Property and to
collect the Rents. Assignor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt for use in the payment
of such sums. Upon an Event of Default, the license granted to Assignor herein
shall automatically be revoked and Assignee shall immediately be entitled to
receive and apply all Rents, whether or not Assignee enters upon and takes
control of the Mortgaged Property. Assignor hereby grants and assigns to
Assignee the right, at its option, upon the revocation of the license granted
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
revocation of the license herein granted may be applied toward payment of the
Debt in such priority and proportion as Assignee, in its discretion, shall deem
proper.
2. Remedies of Assignee. Upon or at any time after an Event of Default,
Assignee may, at its option, without waiving such Event of Default, without
notice and without regard to the adequacy of the security for the Debt, either
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 Assignee may deem proper and either 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
with full power to make from time to time all alterations, renovations, repairs
or replacements thereto or thereof as may seem proper to Assignee and may apply
the Rents to the payment of the following in such order and proportion as
Assignee in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Mortgaged Property, including, without being limited thereto, the salaries, fees
and wages of a managing agent and such other employees or agents as Assignee may
deem necessary or desirable and all expenses of operating and maintaining the
Mortgaged Property, including, without being limited thereto, all taxes,
charges, claims, assessments, water charges, sewer rents and any other liens,
and premiums for all insurance which Assignee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the Mortgaged Property;
and (b) the Debt, (including all costs and attorneys' fees). In addition to the
rights which Assignee may have herein, upon the occurrence of an Event of
Default Assignee, at its option, may require Assignor to vacate and surrender
possession of the Mortgaged Property to Assignee or to such receiver and, in
default thereof, Assignor may be evicted by summary proceedings or otherwise.
Additionally, upon such Event of Default, Assignee shall have the right to
establish a lock box for the deposit of all Rents and other receivables of
Assignor relating to the Mortgaged Property. Assignor shall pay any and all
costs and expenses for such lock box. For purposes of Paragraphs 1 and 2,
Assignor grants to Assignee its irrevocable power of attorney, coupled with an
interest, to take any and all of the aforementioned actions and any or all other
actions designated by Assignee for the proper management and preservation of the
Mortgaged Property. The exercise by Assignee of the option granted it in this
paragraph and the collection of the Rents and the application thereof as herein
<PAGE>
provided shall not be considered a waiver of any Event of Default under any of
the Loan Documents.
3. No Liability of Assignee. Assignee shall not be liable for any loss
sustained by Assignor resulting from Assignee's failure to let the Mortgaged
Property after an Event of Default or from any other act or omission of Assignee
in managing the Mortgaged Property after an Event of Default unless such loss is
caused by the willful misconduct and bad faith of Assignee. Assignee shall not
be obligated to perform or discharge any obligation, duty or liability under the
Leases or under or by reason of this Assignment and Assignor shall, and hereby
agrees, to indemnify Assignee for, and to hold Assignee harmless from, any and
all liability, loss or damage which may or might be incurred under the Leases or
under or by reason of this Assignment and from any and all claims and demands
whatsoever, including the defense of any such claims or demands which may be
asserted against Assignee by reason of any alleged obligations and undertakings
on its part to perform or discharge any of the terms, covenants or agreements
contained in the Leases. Should Assignee incur any such liability, the amount
thereof, including costs, expenses and reasonable attorneys' fees, shall be
secured hereby and by the Loan Documents and Assignor shall reimburse Assignee
therefor immediately upon demand and upon Assignor's failure to do so, Assignee
may, at its option, exercise any and all remedies available to Assignee
hereunder and under the other Loan Documents. This Assignment shall not operate
to place any obligation or liability for the control, care, management or repair
of the Mortgaged Property upon Assignee, nor for the carrying out of any of the
terms and conditions of the Leases; nor shall it operate to make Assignee
responsible or liable for any waste committed on the Mortgaged Property,
including without limitation the presence of any Hazardous Substances, (as
defined in the Environmental Agreement, which is defined in the Note), or for
any negligence in the management, upkeep, repair or control of the Mortgaged
Property resulting in loss or injury or death to any Lessee, licensee, employee
or stranger.
4. Notice to Lessees. Assignor hereby authorizes and directs Lessees
named in the Leases or any other or future Lessees or occupants of the Mortgaged
Property (the "Lessee[s]") upon receipt from Assignee of written notice to the
effect that Assignee is then the holder of the Note and that an Event of Default
exists thereunder or under the other Loan Documents to pay over to Assignee all
Rents and to continue so to do until otherwise notified by Assignee, without
further notice or consent of Assignor and regardless of whether Assignee has
taken possession of the Mortgaged Property, and Lessees may rely upon any
written statement delivered by Assignee to Lessees without any obligation or
right to inquire as to whether such default actually exists and notwithstanding
any notice from or claim of Assignor to the contrary. Assignor further agrees
that it shall have no right to claim against any of Lessees for any such Rents
so paid by Lessees to Assignee and that Assignee shall be entitled to collect,
receive and retain all Rents regardless of when and to whom such Rents are and
have been paid and regardless of the form or location of such Rents. Any such
payment to Assignee shall constitute payment to Assignor under the Leases, and
Assignor appoints Assignee as Assignor's lawful attorney-in-fact for giving, and
Assignee is hereby empowered to give, acquitances to any Lessee for such payment
to Assignee after an Event of Default. Any Rents held or received by Assignor
after a written request from Assignee to Lessees for the payment of Rents shall
be held or received by Assignor as trustee for the benefit of Assignee only.
5. Rental Offsets. If Assignor becomes aware that any Lessee proposes to do,
or is
<PAGE>
doing, any act or thing which may give rise to any right of set-off against
Rent, Assignor shall, to the extent Assignee is permitted to do so under the
applicable lease or applicable law, (i) take such steps as shall be reasonably
calculated to prevent the accrual of any right to a set-off against Rent, (ii)
notify Assignee thereof and of the amount of said set-offs, and (iii) within ten
(10) days after such accrual for a valid set-off, reimburse Lessee who shall
have acquired such right to set-off or take such other steps as shall
effectively discharge such set-off and as shall effectively assure that Rents
thereafter due shall continue to be payable without set-off or deduction.
6. Security Deposits. Following the occurrence and during the
continuance of any Event of Default, Assignor shall, upon Assignee's request, if
permitted by applicable legal requirements, turn over to Assignee the security
deposits (and any interest theretofore earned thereon) with respect to all or
any portion of the Mortgaged Property, to be held by Assignee subject to the
terms of the Leases.
7. Relocations. In no event shall Assignor exercise any right to
relocate any Lessee pursuant to any right set forth in a Lease without the prior
written consent of Assignee, except for relocations in connection with the
making or renewal of Leases with respect to which Assignee's consent is not
required under the Approval Conditions above.
8. Other Security. Assignee may take or release other security for the
payment of the Debt, may release any party primarily or secondarily liable
therefor and may apply any other security held by it to the reduction or
satisfaction of the Debt without prejudice to any of its rights under this
Assignment.
9. Other Remedies. Nothing contained in this Assignment and no act done
or omitted by Assignee pursuant to the power and rights granted to Assignee
hereunder shall be deemed to be a waiver by Assignee of its rights and remedies
under the other Loan Documents and this Assignment is made and accepted without
prejudice to any of the rights and remedies possessed by Assignee under the
terms thereof. The right of Assignee to collect the Debt and to enforce any
other security therefor held by it may be exercised by Assignee either prior to,
simultaneously with, or subsequent to any action taken by it hereunder.
10. No Mortgagee in Possession. Nothing herein contained shall be
construed as constituting Assignee a "mortgagee in possession" in the absence of
the taking of actual possession of the Mortgaged Property by Assignee. In the
exercise of the powers herein granted Assignee, no liability shall be asserted
or enforced against Assignee, all such liability being expressly waived and
released by Assignor.
11. No Oral Change. This Assignment may not be modified, amended,
waived, extended, changed, discharged or terminated orally, or by any act or
failure to act on the part of Assignor or Assignee, but only by an agreement in
writing signed by the party against whom the enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
12. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Assignment may be used interchangeable
<PAGE>
in singular or plural form and the word "Assignor" shall mean "each Assignor and
any subsequent owner or owners of the Mortgaged Property or any part thereof or
any interest therein," the word "Assignee" shall mean "Assignee and any
subsequent holder of the Note," the word "person" shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, and any other entity, the words "Mortgaged Property"
shall include any portion of the Mortgaged Property and any interest therein;
whenever the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
13. Non-Waiver. The failure of Assignee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Assignment. Assignor shall not be relieved of Assignor's obligations
hereunder by reason of (a) failure of Assignee to comply with any request of
Assignor or any other party to take any action to enforce any of the provisions
hereof or of the other Loan Documents, (b) the release regardless of
consideration, of the whole or any part of the Mortgaged Property, or (c) any
agreement or stipulation by Assignee extending the time of payment or otherwise
modifying or supplementing the terms of this Assignment or the other Loan
Documents. Assignee may resort for the payment of the Debt to any other security
held by Assignee in such order and manner as Assignee, in its discretion, may
elect. Assignee may take any action to recover the Debt, or any portion thereof
or to enforce any covenant hereof without prejudice to the right of Assignee
thereafter to enforce its rights under this Assignment. The rights of Assignee
under this Assignment shall be separate, distinct and cumulative and none shall
be given effect to the exclusion of the others. No act of Assignee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
14. Inapplicable Provisions. If any term, covenant or condition of this
Assignment is held to be invalid, illegal or unenforceable in any respect, this
Assignment shall be construed without such provision.
15. Counterparts. This Assignment may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
16. GOVERNING LAW; JURISDICTION. THIS MORTGAGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, PROVIDED THAT
TO THE EXTENT THAT ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE PREEMPTED BY FEDERAL
LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE CONTROLLING; AND
PROVIDED FURTHER THAT THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED SHALL GOVERN AS TO THE CREATION, PRIORITY AND ENFORCEMENT OF LIENS AND
SECURITY INTERESTS IN PROPERTY LOCATED IN SUCH STATE.
ASSIGNOR, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY
KNOWINGLY, INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE
<PAGE>
ADVICE OF COMPETENT COUNSEL, SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF
CALIFORNIA OVER ANY SUIT, ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR
RELATING TO THE NOTE, THE MORTGAGE OR ANY OTHER OF THE LOAN DOCUMENTS, AGREES
THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION SITTING IN ORANGE COUNTY, CALIFORNIA, SUBMITS TO
THE JURISDICTION OF SUCH COURTS, AND TO THE FULLEST EXTENT PERMITTED BY LAW,
AGREES THAT IT WILL NOT BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM
(BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF ASSIGNEE TO BRING ANY ACTION, SUIT
OR PROCEEDING IN ANY OTHER FORUM). ASSIGNOR FURTHER CONSENTS AND AGREES TO
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT,
ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID, TO
ASSIGNOR AT THE ADDRESS FOR NOTICES SET FORTH ON PAGE 1 OF THE MORTGAGE, AND
CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID
AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
17. Successors and Assigns. Assignor may not assign its rights under
this Assignment. Assignor hereby acknowledges and agrees that Assignee may
assign this Assignment without Assignor's consent. Subject to the foregoing,
this Assignment shall be binding upon, and shall inure to the benefit of,
Assignor and the Assignee and their respective successors and assigns.
18. Termination of Assignment. Upon payment in full of the Debt and the
delivery and recording of a satisfaction, release or discharge of Mortgage duly
executed by Assignee, this Assignment shall become and be void and of no effect.
THIS ASSIGNMENT shall inure to the benefit of Assignee and any
subsequent holder of the Note and shall be binding upon Assignor, and Assignor's
heirs, executors, administrators, successors and assigns and any subsequent
owner of the Mortgaged Property.
(Signature page follows)
<PAGE>
Assignor has executed this instrument as of the day and year first
above written.
ASSIGNOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
-------------------------------------
Notary Public
(SEAL)
ENVIRONMENTAL LIABILITIES AGREEMENT
Loan No. 1700020088
Property: Town & Country Shopping Center
Searcy, Arkansas
THIS ENVIRONMENTAL LIABILITIES AGREEMENT (this "Agreement") is made as
of September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (the "Borrower"), and CM PLUS CORPORATION, a Delaware corporation
("CM Plus") (collectively, the "Indemnitor"), to and for the benefit of WESTCO
REAL ESTATE FINANCE CORP., a California corporation (the "Lender").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms shall have the
following meanings:
Asbestos: Asbestos or any substance containing asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision,
order, injunction or decree which pertains to health, safety or the
environment (including but not limited to, ground or air or water or
noise pollution or contamination, and underground or aboveground tanks)
and shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and any state or federal lien or superlien or
environmental clean-up statutes, and regulations, rules, guidelines, or
standards promulgated pursuant thereto all as amended from time to
time.
Hazardous Substance: Any substance, whether solid, liquid or
gaseous: i) which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise classified
as hazardous or toxic, in or pursuant to any Environmental Law; or ii)
which is or contains Asbestos, radon, any polychlorinated biphenyl,
urea formaldehyde foam insulation, explosive or radioactive material,
lead paint, or motor fuel or other petroleum hydrocarbons; or iii)
which causes or poses a threat to cause a contamination or nuisance on
the Mortgaged Property or any adjacent property or a hazard to the
environment or to the health or safety of persons on or about the
Mortgaged Property.
Mortgage: That certain Mortgage, Deed of Trust and Security Agreement, dated of
<PAGE>
even date herewith, executed by Borrower for the benefit of Lender,
covering the Mortgaged Property more particularly described therein,
including the real property or interest therein described in Exhibit A
attached hereto and incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other activities of any kind which
are reasonably necessary or desirable under an applicable Environmental
Law.
Storage Tanks: Any underground or aboveground storage tanks, whether filled,
empty, or partially filled with any substance.
Section 1.2 Other Defined Terms. Any capitalized term utilized herein
shall have the meaning as specified in the Mortgage, unless such term is
otherwise specifically defined herein.
ARTICLE II
WARRANTIES AND REPRESENTATIONS
Indemnitor hereby represents and warrants to Lender that, to the best
of Indemnitor's knowledge after due inquiry and investigation as follows,
subject to the information respecting the environmental condition of the
Mortgaged Property contained in a Report of Phase I Environmental Site
Assessment prepared by Geoscience, Inc. dated July 17, 1997:
Section 2.1 Mortgaged Property Compliance. The Mortgaged Property and
the operations conducted thereon do not violate any applicable law, statute,
ordinance, rule, regulation, order, or determination of any governmental
authority or any restrictive covenant or deed restriction (recorded or
otherwise), including without limitation all applicable zoning ordinances and
building codes, flood disaster laws and Environmental Laws.
Section 2.2 No Violations. Without limitation to Section 2.1 above,
except as previously disclosed in writing to Lender, the Mortgaged Property and
operations conducted thereon by the current owner or operator of such Mortgaged
Property, are not the subject of any existing, pending, or threatened action,
suit, investigation, inquiry, or proceeding by any governmental or
nongovernmental entity or person or to any Remediation under any Environmental
Law.
Section 2.3 Authorizations. All notices, permits, licenses,
registrations, or similar authorizations, if any, required to be obtained or
filed in connection with the ownership, operation, or use of the Mortgaged
Property, including, without limitation, the existence of any Storage Tanks at
the Mortgaged Property or the past or present generation, treatment, storage,
disposal, or release of a Hazardous Substance into the environment, have been
duly obtained or filed and have been duly renewed or maintained.
Section 2.4 Hazardous Substance. The Mortgaged Property does not
contain any Hazardous Substance in violation of applicable Environmental Laws.
Except as disclosed in writing to Lender the Mortgaged Property does not contain
any Storage Tanks or Asbestos.
<PAGE>
Section 2.5 Borrower Investigation. Borrower has taken all steps
necessary to determine, and has determined, that no Hazardous Substances are or
have been generated, treated, stored, used, disposed of or released on, under,
from, or about the Mortgaged Property except in compliance with applicable
Environmental Laws.
Section 2.6 Borrower Compliance. Borrower has not undertaken,
permitted, authorized, or suffered and will not undertake, permit, authorize, or
suffer the presence, use, manufacture, handling, generation, transportation,
storage, treatment, discharge, release, burial, or disposal on, under, from or
about the Mortgaged Property of any Hazardous Substance or the transportation to
or from the Mortgaged Property of any Hazardous Substance except in compliance
with applicable Environmental Laws.
Section 2.7 No Pending Litigation. Except as otherwise previously
disclosed to Lender in writing, there is no pending or threatened litigation,
proceedings, or investigations before or by any administrative agency in which
any person or entity alleges or is investigating any alleged presence, release,
threat of release, placement on, under, from or about the Mortgaged Property, or
the manufacture, handling, generation, transportation, storage, treatment,
discharge, burial, or disposal on, under, from or about the Mortgaged Property,
or the transportation to or from the Mortgaged Property, of any Hazardous
Substance.
Section 2.8 No Notices. Except as otherwise previously disclosed to
Lender in writing, Borrower has not received any notice, and has no actual or
constructive knowledge, that any governmental authority or any employee or agent
thereof has determined, or threatens to determine, or is investigating any
allegation that there is a presence, release, threat of release, placement on,
under, from or about the Mortgaged Property, or the use, manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or disposal
on, under, from or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance.
Section 2.9 No Communications. Except as otherwise previously disclosed
to Lender in writing, there have been no communications or agreements with any
governmental authority thereof or any private entity, including, but not limited
to, any prior owners or operators of the Mortgaged Property, relating in any way
to the presence, release, threat of release, placement on, under or about the
Mortgaged Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, under or
about the Mortgaged Property, or the transportation to or from the Mortgaged
Property, of any Hazardous Substance, except for communications made in the
ordinary course of business in connection with permits, reports, and routine
inspections issued, prepared or conducted by government agencies or authorities
having jurisdiction over the Mortgaged Property.
Section 2.10 Other Properties. Neither Borrower, nor, to the best
knowledge of Borrower, any other person, including, but not limited to, any
predecessor owner, tenant, licensee, occupant, user, or operator of all or any
portion of the Mortgaged Property, has ever caused, permitted, authorized or
suffered, and Borrower will not cause, permit, authorize, or suffer, any
Hazardous Substance to be placed, held, located, or disposed of, on, under or
about any other real property, all
<PAGE>
or any portion of which is legally or beneficially owned (or any interest or
estate therein which is owned) by Borrower in any jurisdiction now or hereafter
having in effect a so-called "superlien" law or ordinance or any part thereof,
the effect of which law or ordinance would be to create a lien on the Mortgaged
Property to secure any obligation in connection with the "superlien" law of such
other jurisdiction.
Section 2.11 Permits. Borrower has been issued all required federal,
state, and local licenses, certificates, or permits relating to, and Borrower
and the Mortgaged Property are in compliance in all respects with all applicable
Environmental Laws, including but not limited to, federal, state, and local
laws, rules, and regulations relating to, air emissions, water discharge, noise
emissions, solid or liquid waste disposal, hazardous waste or materials, or
other environmental, health, or safety matters.
ARTICLE III
AFFIRMATIVE COVENANTS
Indemnitor hereby unconditionally covenants and agrees with Lender,
until the entire Debt (as defined in the Note) shall have been paid in full and
all of the obligations of Borrower under the Loan Documents shall have been
fully performed and discharged, as follows:
Section 3.1 Operations. Borrower shall not use, generate, manufacture,
produce, store, release, discharge, treat, or dispose of on, under, from or
about the Mortgaged Property or transport to or from the Mortgaged Property any
Hazardous Substance or allow any other person or entity to do so except in
compliance with Environmental Laws. Borrower shall not install or permit to be
installed any Asbestos or Storage Tanks at the Mortgaged Property and shall
remedy all violations of Environmental Laws with respect thereto including, but
not limited to, removal of Asbestos and/or Storage Tanks in the manner and as
required by applicable Environmental Laws.
Section 3.2 Compliance. Borrower shall keep and maintain the Mortgaged
Property in compliance with, and shall not cause or permit the Mortgaged
Property to be in violation of, any Environmental Law and upon discovery of any
noncompliance shall promptly take corrective action to remedy such
noncompliance.
Section 3.3 [Intentionally Deleted]
Section 3.4 Notices. Borrower shall give prompt written notices to
Lender of: (i) any proceeding or inquiry by any governmental or nongovernmental
entity or person with respect to the presence of any Hazardous Substance on,
under, from or about the Mortgaged Property, the migration thereof from or to
other property, the disposal, storage, or treatment of any Hazardous Substance
generated or used on, under or about the Mortgaged Property, (ii) all claims
made or threatened by any third party against Borrower or the Mortgaged Property
or any other owner or operator of the Mortgaged Property relating to any release
reportable under any applicable Environmental Law, loss or injury resulting from
any Storage Tank or Hazardous Substance, and (iii) Borrower's discovery of any
occurrence or condition on any real property adjoining or in the
<PAGE>
vicinity of the Mortgaged Property that could cause the Mortgaged Property or
any part thereof to be subject to any investigation or cleanup of the Mortgaged
Property pursuant to any Environmental Law or that could result in Borrower
becoming liable for any cost related to any investigation or cleanup of such
Mortgaged Property.
Section 3.5 Legal Proceedings. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal proceedings or actions
initiated with respect to the Mortgaged Property in connection with any
Environmental Law, Hazardous Substance or Storage Tank and Borrower shall pay
all attorneys' fees incurred by Lender in connection therewith.
Section 3.6 Remediation. In the event that the Mortgaged Property (or
any portion thereof) becomes the subject of any Remediation, Borrower shall
commence such Remediation no later than the earlier of (i) thirty (30) days
after written demand by Lender for performance thereof, or (ii) such shorter
period of time as may be required under applicable law, and thereafter shall
diligently prosecute the same to completion in accordance with applicable law.
All Remediation shall be performed by contractors approved in advance by Lender,
and under the supervision of a consulting engineer approved by Lender. All costs
and expenses of such Remediation shall be paid by Borrower including, without
limitation, Lender's reasonable attorneys' fees and costs incurred in connection
with monitoring or review of such Remediation. In the event Borrower shall fail
to timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remediation, Lender may, but shall not be required to, cause
such Remediation to be performed, and all costs and expenses thereof, or
incurred in connection therewith, shall become part of the Debt.
ARTICLE IV
INDEMNIFICATION
INDEMNITOR SHALL PROTECT, INDEMNIFY, AND HOLD HARMLESS LENDER AND
TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND
AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DEMANDS, DAMAGES, PENALTIES,
CAUSES OF ACTION, LOSSES, FINES, COSTS AND EXPENSES (INCLUDING WITHOUT
LIMITATION CONSEQUENTIAL DAMAGES AND REASONABLE ATTORNEYS' FEES AND EXPENSES),
DIRECTLY OR INDIRECTLY ARISING FROM OR RELATED TO ANY RELEASE OF OR EXPOSURE TO
ANY HAZARDOUS SUBSTANCE (INCLUDING PERSONAL INJURY OR DAMAGE TO PROPERTY),
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR ARISING UNDER ANY
ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF INDEMNITOR HEREUNDER SHALL
BE DEEMED TO CONSTITUTE A PART OF THE DEBT SECURED BY THE MORTGAGE AND THE OTHER
LOAN DOCUMENTS.
ARTICLE V
MISCELLANEOUS
<PAGE>
Section 5.1 Survival of Obligations. Each and all of the
representations, covenants and agreements and indemnities contained herein shall
survive any termination, satisfaction or assignment of the Loan Documents or the
entry of a judgment of foreclosure, sale of the Mortgaged Property by
nonjudicial foreclosure sale, delivery of a deed in lieu of foreclosure or the
exercise by Lender of any of its other rights and remedies under the Loan
Documents.
Section 5.2 Notices. All notices or other communications required or
permitted to be given hereunder shall be given to the parties and become
effective as provided in the Mortgage.
Section 5.3 Binding Effect. This Agreement shall be binding on the
parties hereto, their successors, assigns, heirs and legal representatives and
all other persons claiming by, through or under them.
Section 5.4 Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
Section 5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE
EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE
PREEMPTED BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.
BORROWER, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY, WITH AND UPON THE ADVICE OF COMPETENT COUNSEL,
(A) SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF CALIFORNIA OVER ANY SUIT,
ACTION OR PROCEEDING BY ANY PERSON ARISING FROM OR RELATING TO THIS AGREEMENT,
(B) AGREES THAT ANY SUCH ACTION, SUIT OR PROCEEDING MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN ORANGE COUNTY, CALIFORNIA,
(C) SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND (D) TO THE FULLEST EXTENT
PERMITTED BY LAW, AGREES THAT BORROWER WILL NOT BRING ANY ACTION, SUIT OR
PROCEEDING IN ANY OTHER FORUM (BUT NOTHING HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM). BORROWER
FURTHER CONSENTS AND AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL
PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY REGISTERED OR CERTIFIED U.S.
MAIL, POSTAGE PREPAID, TO BORROWER AT THE ADDRESS FOR NOTICES AS PROVIDED IN THE
MORTGAGE, AND CONSENTS AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY
RESPECT VALID AND EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE
VALIDITY OR EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY
LAW).
<PAGE>
Section 5.6 Reliance. Borrower recognizes and acknowledges that in
entering into the loan transaction evidenced by the Loan Documents and accepting
the Mortgage, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in this Agreement
without any obligation to investigate the Mortgaged Property and notwithstanding
any investigation of the Mortgaged Property by Lender; that such reliance exists
on the part of Lender prior hereto; that such warranties and representations are
a material inducement to Lender in making the loan evidenced by the Loan
Documents and accepting the Mortgage; and that Lender would not be willing to
make the loan evidenced by the Loan Documents and accept the Mortgage in the
absence of such warranties and representations.
Section 5.7 Headings. The article, section and subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify, or define, or be used in construing the text of such articles, sections
or subsections.
Section 5.8 No Oral Change. This Agreement may not be waived, extended,
changed, discharged or terminated orally, or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom the enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 5.9 Joint and Several Liability. Each party comprising Indemnitor shall
be jointly and severally liable for the obligations of Indemnitor
hereunder.
Section 5.10 Deferment of Rights of Subrogation, Reimbursement and Contribution.
(a) Notwithstanding any payment or payments made by any
Indemnitor hereunder, CM Plus will assert or exercise any right of Lender or of
CM Plus against Borrower to recover the amount of any payment made by CM Plus to
Lender by way of subrogation, reimbursement, contribution, indemnity, or
otherwise arising by contract or operation of law, and CM Plus shall not have
any right of recourse to or any claim against assets or property of Borrower,
whether or not the obligations of Borrower have been satisfied, all of such
rights being herein expressly waive by CM Plus. CM Plus agrees not to seek
contribution or indemnity or other recourse from any other CM Plus. If any
amount shall nevertheless be paid to CM Plus by Borrower prior to payment in
full of the Obligations (hereinafter defined), such amount shall be held in
trust for the benefit of Lender and shall forthwith be paid to Lender to be
credited and applied to the Obligations, whether matured or unmatured. The
provisions of this paragraph shall survive the termination of this Guaranty, and
any satisfaction and discharge of Borrower by virtue of any payment, court order
or any applicable law.
(b) Notwithstanding the provisions of Section 5.10(a), CM Plus
shall have and be entitled to (1) all rights of subrogation otherwise provided
by applicable law in respect of any payment it may make or be obligated to make
under this Guaranty and (2) all claims it would have against Borrower in the
absence of Section 5.10(a) and to assert and enforce same, in each case on and
after, but at no time prior to, the date (the "Subrogation Trigger Date") which
is 91 days after the date on which all sums owed to Lender under the Loan
Documents (the "Obligations") have been paid in full, if and only if (x) no
Event of Default of the type described in Section 23(e) or 23(f) of
<PAGE>
the Mortgage with respect to Lender has existed at any time on and after the
date of this Guaranty to and including the Subrogation Trigger Date and (y) the
existence of CM Plus' rights under this Section 5.10(b) would not make CM Plus a
creditor (as defined in the Code, as such term is hereinafter defined) of
Borrower in any insolvency, bankruptcy, reorganization or similar proceeding
commenced on or prior to the Subrogation Trigger Date.
(Signature page follows)
<PAGE>
EXECUTED as of the date first above written.
INDEMNITOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
EXHIBIT A
(Legal Description)
The land situated in the State of Arkansas, County of White and described as
follows:
PARCEL A
Commencing at an iron pipe at the intersection of the Southeast line of Survey
Number 2312 and the South line of Race Avenue; Thence North 89 degrees 54
minutes 23 seconds East 737.11 feet along the South line of Race Avenue to a
found concrete monument; Thence continue along the South line of Race Avenue
North 89 degrees 59 minutes 37 seconds East 306.00 feet to a found iron pin for
the pointy of beginning; Thence continue North 89 degrees 59 minutes 37 seconds
East 60.00 feet along the South line of Race Avenue to a found iron pin; Thence
South 00 degrees 05 minutes 42 seconds East 188.00 feet to a found iron pin;
Thence North 89 degrees 59 minutes 37 seconds East 158.74 feet to a found iron
pin on the Westerly right-of-way of Frontage Road; Thence South 45 degrees 03
minutes 24 seconds East 102.88 feet along said Westerly right-of-way of Frontage
Road to a found iron pin; Thence South 00 degrees 06 minutes 42 seconds East
273.84 feet to a found iron pin; Thence South 32 degrees 05 minutes 06 seconds
East 48.07 feet to a found iron pin; Thence North 89 degrees 54 minutes 54
seconds East 65.00 feet to a found iron pin on the Westerly right-of-way of
Frontage Road; Thence South 06 degrees 34 minutes 32 seconds West 60.41 feet
along said Westerly right-of-way; Thence South 89 degrees 54 minutes 54 seconds
West 115.0 feet; Thence South 18 degrees 04 minutes 12 seconds West 39.26 feet;
Thence South 04 degrees 54 minutes 54 seconds West 112.0 feet; Thence South 14
degrees 35 minutes 06 seconds East 94.0 feet; Thence South 29 degrees 35 minutes
06 seconds East 140.0 feet; Thence South 20 degrees 05 minutes 06 seconds East
48.0 to a found iron pin; Thence South 89 degrees 54 minutes 54 seconds West
307.89 feet to a found railroad spike; Thence North 00 degrees 06 minutes 42
seconds West 126.00 feet to a found railroad spike; Thence South 89 degrees 54
minutes 54 seconds West 345.00 feet to a found iron pin; Thence North 00 degrees
04 minutes 37 seconds West 367.08 feet along the East line of a tract recorded
in Volume 377, Page 359 of the White County Deed Records to a found 2 inch pipe
set in concrete; Thence North 00 degrees 04 minutes 46 seconds West 49.95 feet
along the East line of a street to a found 2 inch pipe set in concrete; Thence
North 00 degrees 05 minutes 42 seconds West 299.93 feet along the East line of a
tract recorded in Volume 360, Page 145 of the White County Deed Records to a
found iron pin; Thence North 89 degrees 59 minutes 37 seconds East 200.00 feet
to a found iron pin; Thence continue North 89 degrees 59 minutes 37 seconds East
106.00 feet to a found iron pin;
<PAGE>
Thence North 00 degrees 05 minutes 42 seconds West 200.00 feet to a found iron
pin which is the point of beginning, containing 10.787 acres more or less,
subject to all easements of record.
PARCEL B
Appurtenant easements for roadways, walkways, ingress and egress, parking, and
loading and unloading of commercial and other vehicles created by that certain
agreement entitled "Easements With Covenants and Restrictions Affecting Land
(ECR)" dated May 16, 1984 by and between Wal-Mart Properties, Inc., and Bramalea
Limited filed for record on July 24, 1984, and recorded in Misc.
Book 102 at Page 419.
Property Address: Town & Country Shopping Center
U.S. Highway 67/167
at East Race Avenue
Searcy, Arkansas 72143
Valencia, CA:
Loan No.: 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
FIXED RATE NOTE
$8,445,000 September 23, 1997
FOR VALUE RECEIVED, CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (hereinafter referred to as "Maker"), promises to pay to the order
of WESTCO REAL ESTATE FINANCE CORP., a California corporation, its successors
and assigns (hereinafter referred to as "Payee"), at the office of Payee or its
agent, designee, or assignee at 1 Park Plaza, Suite 430, Irvine, California
92614, or at such place as Payee or its agent, designee, or assignee may from
time to time designate in writing, the principal sum of EIGHT MILLION FOUR
HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,445,000), in lawful money of
the United States of America, with interest thereon to be computed on the unpaid
principal balance from time to time outstanding at the Applicable Interest Rate
(hereinafter defined) at all times prior to the occurrence of an Event of
Default (as defined in the Mortgage (hereinafter defined)), and to be paid in
installments as follows:
(1) A payment of interest only on the date hereof for the period
from the date of funding through September 30, 1997, both
inclusive;
(2) A constant payment of $65,880.72, on the first day of
November, 1997, and on the first day of each calendar month
thereafter up to and including the first day of September,
2007;
and the balance of said principal sum, together with accrued and unpaid interest
and any other amounts due under this Note shall be due and payable on the first
day of October, 2007, or upon earlier maturity hereof whether by acceleration or
otherwise (the "Maturity Date"). Interest on the principal sum of this Note
shall be calculated on a year of three hundred sixty (360) days and a month of
thirty (30) days but charged for the actual number of days elapsed. Payments
under this Note shall be applied first, to the payment of interest and other
costs and charges due in connection with this Note or the Debt (as hereinafter
defined), as Payee may determine in its sole discretion, and the balance shall
be applied toward the reduction of the principal sum. All amounts due under this
Note shall be payable without setoff, counterclaim or any other deduction
whatsoever.
1.Interest Rate. The term "Applicable Interest Rate" means from the date of this
Note through and including the Maturity Date, a rate of Eight and One Hundred
Twenty-Five
<PAGE>
One Thousandths percent (8.125%) per annum.
2. Security.
(a) This Note is secured by, and Payee is entitled to the
benefits of, the Mortgage, the Assignment of Leases and Rents, the Environmental
Liabilities Agreement, and the other Loan Documents (hereinafter defined). The
term "Mortgage" means the Mortgage, Deed of Trust and Security Agreement dated
the date hereof given by Maker for the use and benefit of Payee covering the
estate of Maker in certain premises as more particularly described therein (the
"Mortgaged Property"). The term "Assignment" means the Assignment of Leases and
Rents of even date herewith executed by Maker in favor of Payee. The term
"Environmental Agreement" means the Environmental Liabilities Agreement of even
date herewith executed by Maker in favor of Payee. The term "Loan Documents"
refers collectively to this Note, the Mortgage, the Assignment, the
Environmental Agreement and any and all other documents executed in connection
with this Note or now or hereafter executed by Maker and/or others and by or in
favor of Payee, which wholly or partially secure or guarantee payment of this
Note or pertains to indebtedness evidenced by this Note.
(b) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $2,865,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Town & Country Shopping Center located in
Searcy, Arkansas, as such property is more particularly described in such Loan
Documents.
(c) This Note is also secured by, and Payee is entitled to the
benefits of, the Loan Documents, as such term is defined in a Fixed Rate Note
dated concurrently herewith executed by Maker in favor of Payee in the original
principal amount of $5,400,000 evidencing a loan secured in part by a mortgage
encumbering property commonly known as Green Valley Mall located in Green
Valley, Arizona, as such property is more particularly described in such Loan
Documents.
3. Grace Period; Late Payments. If any installment payable under this
Note (including the final monthly installment due on the Maturity Date but
excluding the balance of the unpaid principal due thereon) is not received by
Payee within ten (10) days after the date on which it is due (without regard to
any applicable cure and/or notice period), Maker shall pay to Payee upon demand
an amount equal to the lesser of (a) five percent (5%) of such unpaid sum or (b)
the maximum amount permitted by applicable law to defray the expenses incurred
by Payee in handling and processing such delinquent payment and to compensate
Payee for the loss of the use of such delinquent payment, and such amount shall
be secured by the Loan Documents. The term "Debt" means, collectively, (i) the
unpaid principal balance of and the accrued but unpaid interest on this Note,
(ii) all other sums due, payable or reimbursable to Payee under the Loan
Documents (including, without limitation, sums due or payable by Maker for
deposit into the Tax and Insurance Escrow Fund [as defined in the Mortgage], the
Replacement Escrow Fund [as defined in the Mortgage], and any other escrows
established or required under the Loan
<PAGE>
Documents), and (iii) any and all other liabilities and obligations of Maker
under this Note or the other Loan Documents.
4. Remedies Generally. So long as an Event of Default exists, Payee
may, at its option, without notice or demand to Maker except as may be required
under applicable law, declare the Debt immediately due and payable. All remedies
hereunder, under the Loan Documents and at law or in equity shall be cumulative.
In the event that it should become necessary to employ counsel to collect the
Debt or to protect or foreclose the security for the Debt or to defend against
any claims asserted by Maker arising from or related to the Loan Documents,
Maker also agrees to pay to Payee on demand all costs of collection or defense
incurred by Payee, including reasonable attorneys' fees for the services of
counsel whether or not suit be brought.
5. Default Interest. Upon the occurrence of an Event of Default Maker
shall pay interest on the entire unpaid principal sum and any other amounts due
under the Loan Documents until such default is cured at the rate equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the greater
of (i) three percent (3%) plus the Applicable Interest Rate or (ii) four percent
(4%) plus the Prime Rate (hereinafter defined), in effect at the time of the
occurrence of the Event of Default (the "Default Rate"). The term "Prime Rate"
means the prime rate reported by Citibank, N.A. In the event that Citibank, N.A.
should cease or temporarily interrupt publication, the term "Prime Rate" shall
mean the daily average prime rate published in The Wall Street Journal or
business section of another newspaper of national standing and general
circulation chosen by Payee. 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 Payee shall select a comparable interest rate
index which is readily available and verifiable to Maker but is beyond Payee's
control. The Default Rate shall be computed from the occurrence of the Event of
Default until the actual receipt and collection of a sum of money determined by
Payee to be sufficient to cure the Event of Default. Amounts of interest accrued
at the Default Rate shall constitute a portion of the Debt, and shall be deemed
secured by the Loan Documents. This clause, however, shall not be construed as
an agreement or privilege to extend the date of the payment of the Debt, nor as
a waiver of any other right or remedy accruing to Payee by reason of the
occurrence of any Event of Default.
6. Lock-Out Period; Prepayment Terms. The principal balance of this
Note may not be prepaid in whole or in part (except with respect to the
application of casualty or condemnation proceeds) prior to the first day of the
Sixth Loan Year (as hereinafter defined). During the Sixth Loan Year or at
anytime thereafter, provided no Event of Default exists, the principal balance
of this Note may be prepaid, in whole but not in part (except with respect to
the application of casualty or condemnation proceeds), on any scheduled payment
date under this Note upon not less than thirty (30) days' prior written notice
to Payee specifying the scheduled payment date on which prepayment is to be made
(the "Prepayment Date") and upon payment of (a) interest accrued and unpaid on
the principal balance of this Note to and including the Prepayment Date, (b) all
other sums then due under this Note, and the other Loan Documents, and (c) a
prepayment consideration in an amount equal to the greater of (i) one percent
(1%) of the outstanding principal balance of this Note at the time of
prepayment, or (ii) the present value as of the
<PAGE>
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 (as
hereinafter defined) less the amount of principal being prepaid. The term
"Discount Rate" means the rate which, when compounded monthly, is equivalent to
the Treasury Rate (as hereinafter defined), when compounded semi-annually. The
term "Treasury Rate" means the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading "U.S. Government Securities/Treasury Constant
Maturities" for the week ending prior to the Prepayment Date, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Maturity Date. (In the event Release H.15 is no longer
published, Payee shall select a comparable publication to determine the Treasury
Rate.) Payee shall notify Maker of the amount and the basis of determination of
the required prepayment consideration. Notwithstanding the foregoing, Maker
shall have the additional privilege to prepay the entire principal balance of
this Note (together with any other sums constituting the Debt) on any scheduled
payment date during the six (6) months preceding the Maturity Date without any
fee or consideration for such privilege. If any such notice of prepayment is
given, the principal balance of this Note and the other sums required under this
paragraph shall be due and payable on the Prepayment Date. Payee shall not be
obligated to accept any prepayment of the principal balance of this Note unless
it is accompanied by the prepayment consideration due in connection therewith.
The term "Loan Year" for purposes of this paragraph means each complete 365-day
period (366 days in a leap year) after the first scheduled payment date set
forth in section 2 on page 1 of this Note.
Maker acknowledges that, in establishing the Applicable Interest Rate,
Payee has assumed and taken into account the fact that the Debt will not be
prepaid (other than at the times, and on the terms, herein provided) and that
there will be no prohibited transfer of all or any part of the Mortgaged
Property or any other event which would cause Payee to accelerate the Maturity
Date. The following provisions relating to Maker's payment of a premium in the
event of an acceleration are intended to compensate Payee in the event that this
assumption proves to be incorrect. If Payee exercises its option to declare the
entire unpaid principal balance due and payable and/or causes to be recorded a
notice of default in accordance with Section 2924 of the California Civil Code
(or any comparable statute or law) after the occurrence of an Event of Default,
there shall be due and payable (in the absence of reinstatement in accordance
with Section 2924c of the California Civil Code or any comparable statute or
law), in addition to the unpaid principal balance and accrued interest and any
other sums due under this Note or any of the other Loan Documents, a prepayment
consideration equal to the prepayment consideration that would have been payable
as of the first day of the period during which prepayment would have been
permitted.
BY INITIALING BELOW, MAKER EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS THAT,
PURSUANT TO THE TERMS OF THIS NOTE, IT HAS AGREED THAT IT HAS NO RIGHT TO PREPAY
THIS NOTE IN WHOLE OR IN PART WITHOUT PENALTY EXCEPT AS OTHERWISE PROVIDED IN
THE NOTE AND THAT IT SHALL BE LIABLE FOR THE PAYMENT OF A PENALTY FOR PREPAYMENT
OF THIS NOTE ON ACCELERATION OF THE NOTE IN ACCORDANCE WITH ITS TERMS.
<PAGE>
FURTHERMORE, BY INITIALING BELOW, MAKER WAIVES ANY RIGHTS IT MAY
HAVE UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY
SUCCESSOR STATUTE, AND EXPRESSLY ACKNOWLEDGES AND UNDERSTANDS
THAT THE HOLDER HAS MADE OR ACQUIRED THE LOAN EVIDENCED HEREBY IN
RELIANCE ON THE AGREEMENTS AND WAIVER OF MAKER AND THAT THE
HOLDER WOULD NOT HAVE MADE OR ACQUIRED THIS LOAN WITHOUT SUCH
AGREEMENTS AND WAIVER OF MAKER.
----------
INITIALS
7. Post-Default Payment of Entire Debt: Prepayments Resulting From
Casualty or Condemnation. If following the occurrence of any Event of Default,
Maker shall tender payment of an amount sufficient to satisfy the Debt at any
time prior to a sale of the Mortgaged Property, either through foreclosure or
the exercise of the other remedies available to Payee under the Mortgage, such
tender by Maker shall be deemed to be a voluntary prepayment under this Note in
the amount tendered. If at the time of such tender, prepayment of the principal
balance of this Note is not permitted, Maker shall, in addition to the entire
Debt, also pay to Payee a sum equal to the interest which would have accrued on
the principal balance of this Note at the Applicable Interest Rate in effect on
the date which is five (5) days prior to the date of prepayment, from the date
of such tender to the first day of the period during which prepayment of the
principal balance of this Note would have been permitted, together with a
prepayment consideration equal to the prepayment consideration which would have
been payable as of the first day of the period during which prepayment would
have been permitted. If at the time of such tender, prepayment of the principal
balance of this Note is permitted, Maker shall, in addition to the entire Debt,
also pay to Payee the applicable prepayment consideration specified in this
Note. If the prepayment results from the application to the Debt of the casualty
or condemnation proceeds from the Mortgaged Property, no prepayment
consideration will be imposed. Partial prepayments of principal resulting from
the application of casualty or insurance proceeds to the Debt shall not change
the amounts of subsequent monthly installments nor change the dates on which
such installments are due, unless Payee shall otherwise agree in writing.
8. Usury Savings Provisions. It is expressly stipulated and agreed to
be the intent of Maker and Payee at all times to comply with applicable state
law or applicable United States federal law (to the extent that it permits Payee
to contract for, charge, take, reserve or receive a greater amount of interest
than under state law) and that this section shall control every other covenant
and agreement in this Note and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under this Note or under any of the other Loan Documents, or
contracted for, charged, taken, reserved or received with respect to the
indebtedness evidenced by this Note and the other Loan Documents, or if Payee's
exercise of the option to accelerate the maturity of this Note, or if any
prepayment by Maker results in Maker having paid any interest in excess of that
permitted by applicable law, then it is Maker's and Payee's express intent that
all excess amounts theretofore collected by Payee be credited on the principal
balance of this Note (or, if this Note has been or would thereby be paid in
full, refunded to Maker within sixty (60) days after such determination), and
the provisions of this Note and the other Loan Documents immediately be deemed
reformed and the
<PAGE>
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder and thereunder. All sums paid or agreed to be paid to Payee
for the use, forbearance and detention of the indebtedness evidenced hereby and
by the other Loan Documents shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the rate or amount of interest on
account of such indebtedness does not exceed the maximum rate permitted under
applicable law from time to time in effect and applicable to the indebtedness
evidenced hereby for so long as such indebtedness remains outstanding.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Payee to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration.
9. Waivers. Except as specifically provided in the Loan Documents,
Maker and any endorsers, sureties or guarantors hereof jointly and severally
waive presentment and demand for payment, notice of intent to accelerate
maturity, notice of acceleration of maturity, protest and notice of protest and
non-payment, all applicable exemption rights, valuation and appraisement, notice
of demand, and all other notices in connection with the delivery, acceptance,
performance, default or enforcement of the payment of this Note and the bringing
of suit and diligence in taking any action to collect any sums owing hereunder
or in proceeding against any of the rights and collateral securing payment
hereof. Maker and any surety, endorser or guarantor hereof agree (i) that the
time for any payments hereunder may be extended from time to time without notice
and consent, (ii) to the acceptance of further collateral, (iii) the release of
any existing collateral for the payment of this Note, (iv) to any and all
renewals, waivers or modifications that may be granted by Payee with respect to
the payment or other provisions of this Note, and/or (v) that additional makers,
endorsers, guarantors or sureties may become parties hereto all without notice
to them and without in any manner affecting their liability under or with
respect to this Note. No extension of time for the payment of this Note or any
installment hereof shall affect the liability of Maker under this Note or any
endorser or guarantor hereof even though the Maker or such endorser or guarantor
is not a party to such agreement.
10. No Impairment of Remedies. Failure of Payee to exercise any of the
options granted herein to Payee upon the happening of one or more of the events
giving rise to such options shall not constitute a waiver of the right to
exercise the same or any other option at any subsequent time in respect to the
same or any other event. The acceptance by Payee of any payment hereunder that
is less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
options granted herein to Payee at that time or at any subsequent time or
nullify any prior exercise of any such option without the express written
acknowledgment of the Payee.
11. Non-Recourse Provisions; Exceptions to Non-Recourse.
Notwithstanding anything in the Loan Documents to the contrary, but subject to
the qualifications below, Payee and Maker agree that:
<PAGE>
(A) Except as hereinafter provided in this Section 11, no
judgment in the nature of a deficiency judgment for the payment of the
indebtedness or interest thereon or the collection of any amount due
under the Loan Documents will be enforced personally against Maker, its
general partner or any of its or their officers, directors, principals
or shareholders except to the full extent (but only to the extent) of
the security therefor, the same being all properties (whether real or
personal), rights, estates and interests now or at any time hereafter
securing the payment of the Debt and/or the other obligations of Maker
under the Loan Documents (collectively with the Mortgaged Property, the
"Security Property"), provided, however, in the event (i) of fraud or
material misrepresentation by Maker or guarantors in connection with
the loan evidenced by this Note, or (ii) the first full monthly payment
on the Note is not paid when due, the limitation on recourse set forth
in this section (A) will be null and void and completely inapplicable,
and this Note shall be with full recourse to Maker and its general
partner;
(B) if a default occurs in the timely and proper payment of
all or any part of the Debt, any judicial proceedings brought by Payee
against Maker and/or its general partner shall be limited to the
preservation, enforcement and foreclosure, or any thereof, of the
liens, security titles, estates, assignments, rights and security
interests now or at any time hereafter securing the payment of the Debt
and/or the other obligations of Maker under the Loan Documents, and no
attachment, execution or other writ of process shall be sought, issued
or levied upon any assets, properties or funds of Maker or its general
partner, or its or their officers, directors, principals or
shareholders other than the Security Property, except with respect to
the liability described below in this section; and
(C) in the event of a foreclosure of such liens, security
titles, estates, assignments, rights or security interests securing the
payment of the Debt, no judgment for any deficiency upon the Debt shall
be sought or obtained by Payee against Maker or its general partner, or
its or their officers, directors, principals or shareholders, except
with respect to the liability described below in this section (C);
provided that, notwithstanding the foregoing provisions of this
section, nothing contained therein shall in any manner or way release,
affect or impair the right of Payee to recover from Maker and its
general partner any loss, cost, expense, damage, claim or other
obligation (including without limitation reasonable attorneys' fees and
court costs) incurred or suffered by Payee arising out of or in
connection with the following:
(1) any breach of the Environmental Agreement, including the
indemnification provisions contained therein;
(2) Maker's failure to obtain Payee's prior written consent to (a)
any subordinate financing or any other encumbrance on the
Mortgaged Property, or (b) any transfer of the Mortgaged
Property or majority ownership in Maker in violation of the
Mortgage;
(3) any litigation or other legal proceeding related to the Debt
that delays or impairs Payee's ability to preserve, enforce or
foreclose its lien on the Security Property,
<PAGE>
including, but not limited to, the filing of a voluntary or
involuntary petition concerning Maker under the U.S.
Bankruptcy Code, in which action a claim, counterclaim, or
defense is asserted against Payee, other than any litigation
or other legal proceeding in which a final, non-appealable
judgment for money damages or injunctive relief is entered
against Payee;
(4) Maker's failure to pay required taxes, assessments, and
insurance premiums payable with respect to the Mortgaged
Property or to maintain the required escrows therefor, to the
extent that monies are not paid by Maker in escrow for the
payment of such amounts, except for any amounts applicable to
the period after foreclosure of Payee's lien on the Mortgaged
Property, or the delivery by Maker of a deed to the Mortgaged
Property in lieu of foreclosure (which deed has been accepted
by Payee in writing), or the appointment of a receiver for the
Mortgaged Property;
(5) the gross negligence or willful misconduct of Maker, its
agents, affiliates, officers or employees which causes or
results in a diminution, or loss of value, of the Security
Property that is not reimbursed by insurance or which gross
negligence or willful misconduct exposes Payee to claims,
liability or costs of defense in any litigation or other legal
proceeding;
(6) the seizure or forfeiture of the Security Property, or any
portion thereof, or Payee's interest therein, resulting from
criminal wrongdoing by any person or entity other than Payee
under any federal, state or local law;
(7) (a) any physical waste of the Mortgaged Property caused by
the intentional or grossly negligent act(s) or omission(s) of Maker,
its agents, affiliates, officers and employees, (b) the failure by
Maker to maintain, repair or restore any part of the Mortgaged
Property as may be required by the Mortgage or any of the other Loan
Documents to the extent of all gross revenues that have been generated
by the Mortgaged Property following the date which is eighteen (18)
months' prior to notice to Maker from Payee of such failure to
maintain, repair or restore any part of the Mortgaged Property and
that have not been applied to pay any portion of the Debt, reasonable
and customary operating expenses and capital expenditures for the
Mortgaged Property paid to third parties not affiliated (directly or
indirectly) with Maker, taxes and insurance premiums for the Mortgaged
Property and escrows deposited with Payee, or (c) the removal or
disposal of any portion of the Mortgaged Property after an Event of
Default under the Loan Documents to the extent such Mortgaged Property
is not replaced by Maker with like property of equivalent value,
function and design;
(8) Maker's misapplication or conversion of any
insurance proceeds paid by reason of any loss, damage or destruction
to the Mortgaged Property and any awards or amounts received in
connection with the condemnation of all or a portion of the Mortgaged
Property and not used by Maker for restoration or repair of the
<PAGE>
Mortgaged Property;
(9) Maker's failure to pay in accordance with the terms of the
Mortgage any charges for labor or materials or other charges
for work performed or materials furnished prior to foreclosure
that can create liens on any portion of the Mortgaged
Property, to the extent of the amount rightfully claimed by
the lien claimant, or found in any legal proceeding to be owed
to the lien claimant, and not so paid;
(10) Maker's failure to deliver any security deposits collected
with respect to the Mortgaged Property to Payee or any other
party entitled to receive such security deposits under the
Loan Documents, following an Event of Default; and
(11) any rents (including advanced or prepaid rents), issues,
profits, accounts or other amounts generated by or related to
the Mortgaged Property attributable to, or accruing after an
Event of Default, which amounts were collected by Maker or its
property manager and not turned over to the Payee or used to
pay unaffiliated third parties for reasonable and customary
operating expenses and capital expenditures for the Mortgaged
Property, and taxes and insurance premiums with respect to the
Mortgaged Property.
12. References to Loan Documents. References to particular
sections of the Loan Documents shall be deemed references to such
sections as affected by other provisions of the Loan Documents
relating thereto. Nothing contained in this section shall (a) be
deemed to be a release or impairment of the Debt or the lien of
the Loan Documents upon the Mortgaged Property, or (b) preclude
Payee from foreclosing under the Loan Documents in case of any
default or from enforcing any of the other rights of Payee,
including naming Maker as a party defendant in any action or suit
for foreclosure and sale under the Mortgage, or obtaining the
appointment of a receiver, except as stated in this section, or
(c) limit or impair in any way whatsoever the Guaranty (the
"Guaranty") of even date executed and delivered in connection
with the indebtedness evidenced by this Note or release, relieve,
reduce, waive or impair in any way whatsoever, any obligation of
any party to the Guaranty.
13. No Waiver of Lender's Rights in Bankruptcy. Nothing herein shall be
deemed to be a waiver of any right which Payee 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 Loan Documents or to
require that all collateral shall continue to secure all of the Debt owing to
Payee in accordance with this Note and the other Loan Documents.
14. Maker's Authority; Loan for Business Purposes. Maker (and the
undersigned representative of Maker, if any) represents that Maker has full
power, authority and legal right to execute, deliver and perform its obligations
pursuant to this Note and the other Loan Documents and that this Note and the
other Loan Documents constitute legal, valid and binding obligations of Maker.
Maker further represents that the loan evidenced by the Loan Documents was made
for business or commercial purposes and not for personal, family or household
use.
<PAGE>
15. Notices. All notices or other communications required or permitted
to be given pursuant hereto shall be given in the manner and be effective as
specified in the Mortgage, directed to the parties at their respective addresses
as provided therein.
16. Transfer of Loan by Payee. Payee shall have the unrestricted right
at any time or from time to time to sell this Note and the loan evidenced by
this Note and the Loan Documents or participation interests therein. Maker shall
execute, acknowledge and deliver any and all instruments requested by Payee to
satisfy such purchasers or participants that the unpaid indebtedness evidenced
by this Note is outstanding upon the terms and provisions set out in this Note
and the other Loan Documents. To the extent, if any specified in such assignment
or participation, such assignee(s) or participant(s) shall have the rights and
benefits with respect to this Note and the other Loan Documents as such
assignee(s) or participant(s) would have if they were the Payee hereunder.
17. Waiver of Trial by Jury. MAKER HEREBY AGREES NOT TO ELECT A TRIAL
BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY
JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH
REGARD TO THIS NOTE OR THE OTHER LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH INCLUDING, BUT NOT LIMITED TO THOSE
RELATING TO (A) ALLEGATIONS THAT A PARTNERSHIP EXISTS BETWEEN PAYEE AND MAKER;
(B) USURY OR PENALTIES OR DAMAGES THEREFOR; (C) ALLEGATIONS OF UNCONSCIONABLE
ACTS, DECEPTIVE TRADE PRACTICE, LACK OF GOOD FAITH OR FAIR DEALING, LACK OF
COMMERCIAL REASONABLENESS, OR SPECIAL RELATIONSHIPS (SUCH AS FIDUCIARY, TRUST OR
CONFIDENTIAL RELATIONSHIP); (D) ALLEGATIONS OF DOMINION, CONTROL, ALTER EGO,
INSTRUMENTALITY, FRAUD, REAL ESTATE FRAUD, MISREPRESENTATION, DURESS, COERCION,
UNDUE INFLUENCE, INTERFERENCE OR NEGLIGENCE; (E) ALLEGATIONS OF TORTIOUS
INTERFERENCE WITH PRESENT OR PROSPECTIVE BUSINESS RELATIONSHIPS OR OF ANTITRUST;
OR (F) SLANDER, LIBEL OR DAMAGE TO REPUTATION. THIS WAIVER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER, PAYEE, AND IS INTENDED TO
ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A
TRIAL BY JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY AUTHORIZED TO FILE A COPY
OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY
MAKER.
18. Governing Law. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE REAL PROPERTY ENCUMBERED BY
THE MORTGAGE IS LOCATED (WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND
THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. MAKER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN
THE STATE IN WHICH THE MORTGAGED
<PAGE>
PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR
RELATING TO THIS NOTE.
19. No Oral Modification. THE PROVISIONS OF THIS NOTE AND THE LOAN
DOCUMENTS MAY BE AMENDED OR REVISED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY
THE MAKER AND PAYEE. THIS NOTE AND ALL THE OTHER LOAN DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT OF MAKER AND PAYEE AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF MAKER AND PAYEE. THERE ARE NO ORAL AGREEMENTS
BETWEEN MAKER AND PAYEE.
20. Due on Sale/Due on Encumbrance. Payment of the indebtedness
evidenced by this Note may be accelerated in the event that Maker transfers or
encumbers the Mortgaged Property in violation of Section 12 of the Deed of
Trust.
(Signature page follows)
<PAGE>
Executed as of the day and year first above written.
MAKER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
LEGAL DESCRIPTION
(For informational purposes only)
THE LAND SITUATED IN LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND DESCRIBED AS
FOLLOWS:
PARCELS 1 TO 6 INCLUSIVE AS SHOWN ON PARCEL MAP 1526, AS PER MAP FILED IN BOOK
24 PAGE 81 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
WHICH SAID PARCEL MAP RECITES "DIVISION OF LAND FOR LEASE PURPOSES ONLY."
EXCEPT THEREFROM ALL RIGHTS TO MINERALS, OIL, GAS, TARS, HYDROCARBONS AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL OR MINE
FOR THE SAME, WITHOUT, HOWEVER, THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE
OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED BY THE NEWHALL
LAND AND FARMING COMPANY, A DELAWARE CORPORATION RECORDED MARCH 24, 1983 AS
INSTRUMENT NO. 83-323387 AND RE-RECORDED FEBRUARY 21, 1985 AS INSTRUMENT NO.
85-196474.
Property Address: Old Orchard Shopping Center
23047-23453 Orchard Village Road
Santa Clarita (Valencia), California 91355
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (as the same may from time to time be extended, renewed or
modified, the "Mortgage"), is made as of September 23, 1997, by CONCORD
MILESTONE PLUS, L.P., a Delaware limited partnership ("Mortgagor"), having its
principal place of business at 5200 Town Center Circle, 4th Floor, Boca Raton,
Florida 33486-1012, to FIRST AMERICAN TITLE INSURANCE COMPANY, as Trustee (the
"Trustee"), for the benefit of WESTCO REAL ESTATE FINANCE CORP., a California
corporation, as beneficiary ("Mortgagee"), having its principal place of
business at c/o Imperial Commercial Capital Corporation, 1 Park Plaza, Suite
430, Irvine, California 92614.
To secure:
A. (i) the payment of an indebtedness in the original principal sum of
EIGHT MILLION FOUR HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($8,445,000),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Note"), and all other sums, liabilities and
obligations constituting the Debt (as defined in the Note), (ii) the payment of
all sums advanced or incurred by Mortgagee contemplated hereby, and (iii) the
performance of the obligations and covenants herein contained or in any other
document or instrument evidencing or securing the Debt, (iv) the payment of any
and all additional advances made by Mortgagee to protect or preserve the
Mortgaged Property or the lien or security interest created hereby on the
Mortgaged Property, or for taxes, assessments or insurance premiums as
hereinafter provided or for performance of any of Mortgagor's obligations
hereunder or under the other Loan Documents (as defined in the Note) or for any
other purpose provided herein or in the other Loan Documents (whether or not the
original Mortgagor remains the owner of the Mortgaged Property at the time of
such advances), together with interest thereon at the Default Rate (as defined
in the Note), and (v) any and all other indebtedness now owing or which may
hereafter be owing by Borrower to Mortgagee, when
<PAGE>
evidenced by a promissory note or notes reciting that they are secured by this
Mortgage, however and whenever incurred or evidenced, whether express or
implied, direct or indirect, absolute or contingent, or due or to become due,
and all renewals, modifications, consolidations, replacements and extensions
thereof;
B. (i) the payment of an indebtedness in the original principal sum of
TWO MILLION EIGHT HUNDRED SIXTY-FIVE THOUSAND AND NO/100 DOLLARS ($2,865,000),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Mortgagor to Mortgagee (the note
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Arkansas Note"), and all other sums,
liabilities and obligations constituting the Debt (as defined in the Arkansas
Note), (ii) the payment of all sums advanced or incurred by Mortgagee
contemplated by the Mortgage (as defined in the Arkansas Note), and (iii) the
performance of the obligations and covenants contained in the Mortgage (as
defined in the Arkansas Note);
C. (i) the payment of an indebtedness in the original principal sum of
FIVE MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS ($5,400,000), lawful money
of the United States of America, to be paid with interest according to a certain
note dated the date hereof made by Mortgagor to Mortgagee (the note together
with all extensions, renewals or modifications thereof being hereinafter
collectively called the "Arizona Note"), and all other sums, liabilities and
obligations constituting the Debt (as defined in the Arizona Note), (ii) the
payment of all sums advanced or incurred by Mortgagee contemplated by the
Mortgage (as defined in the Arizona Note), and (iii) the performance of the
obligations and covenants contained in the Mortgage (as defined in the Arkansas
Note).
Mortgagor hereby irrevocably grants, transfers and assigns to Trustee,
in trust, with power of sale, and right of entry and possession, all of
Mortgagor's present and future estate, right, title and interest in and to the
real property described in Exhibit A attached hereto (the "Premises") and the
buildings, structures, fixtures, additions, enlargements, extensions,
modifications, repairs, replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of Mortgagor now
owned, or hereafter acquired, in and to the following property, rights,
interests and estates (the Premises, the Improvements together with the
following property, rights, interests and estates being hereinafter described
are collectively referred to herein as the "Mortgaged Property"):
(a) 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 Mortgagor of, in and to the Premises
and the Improvements and every part and parcel thereof, with
<PAGE>
the appurtenances thereto;
(b) all machinery, furnishings, equipment, fixtures (including, but not
limited to, all heating, air conditioning, plumbing, lighting, communications
and elevator fixtures) and other personal property of every kind and nature
(hereinafter collectively called the "Equipment"), whether tangible or
intangible, whatsoever owned by Mortgagor, or in which Mortgagor 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 and all
building equipment, materials and supplies of any nature whatsoever owned by
Mortgagor, or in which Mortgagor has or shall have an interest, now or hereafter
located upon the Premises and the Improvements, or appurtenant thereto, or
usable in connection with the present or future operation, enjoyment and
occupancy of the Premises and the Improvements, including the proceeds of any
sale or transfer of the foregoing, and the right, title and interest of
Mortgagor in and to any of the Equipment which may be subject to any security
interests, as defined in the Uniform Commercial Code, as adopted and enacted by
the State or States where any of the Mortgaged Property is located (the "Uniform
Commercial Code") superior in lien to the lien of this Mortgage;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases, subleases and other agreements affecting the use,
enjoyment or occupancy of the Premises and the Improvements heretofore or
hereafter entered into (including, without limitation, any and all security
interests, contractual liens and security deposits) (the "Leases") and all
income, rents, issues, profits and revenues (including all oil and gas or other
mineral royalties and bonuses) from the Premises and the Improvements (the
"Rents") and all proceeds from the sale or other disposition of the Leases and
the right to receive and apply the Rents to the payment of the Debt;
(e) 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;
(f) the right, in the name and on behalf of Mortgagor, 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 Mortgagee in
the Mortgaged Property;
(g) all accounts, escrows, documents, instruments, chattel paper,
claims, deposits and general intangibles, as the foregoing terms are defined in
the Uniform Commercial Code, and all contract rights, franchises, books,
records, plans, specifications, permits, licenses (to the extent assignable),
approvals, actions, and causes of action which now or hereafter relate to, are
derived from or are used in connection with the Premises, or the use, operation,
maintenance, occupancy or enjoyment thereof or the conduct of any business or
activities thereon (hereinafter collectively called
<PAGE>
the "Intangibles"); and
(h) any and all proceeds and products of any of the foregoing and any
and all other security and collateral of any nature whatsoever, now or hereafter
given for the repayment of the Debt and the performance of Mortgagor's
obligations under the Loan Documents (as defined in the Note), including
(without limitation) the Tax and Insurance Escrow Fund (hereafter defined).
TO HAVE AND TO HOLD the above granted and described Mortgaged Property
unto and to the use and benefit of Trustee, and its successors and assigns;
PROVIDED, HOWEVER, if Borrower shall pay to Mortgagee the Debt at the
time and in the manner provided in the Note and this Mortgage and shall abide by
and comply with each and every covenant and condition set forth herein, in the
Note and in the other Loan Documents in a timely manner, then, upon written
request of Mortgagee stating that all indebtedness secured hereby has been paid,
and upon surrender of this Mortgage and the Note to Trustee for cancellation and
retention and upon payment by Borrower of Trustee's fees, Trustee shall reconvey
to Mortgagor, or the person or persons legally entitled thereto, without
warranty, any portion of the Mortgaged Property then held hereunder (the
recitals in such reconveyance of any matters or facts shall be conclusive proof
of the truthfulness thereof and the grantee in any reconveyance may be described
as "the person or persons legally entitled thereto").
AND Mortgagor represents and warrants to and covenants and agrees with
Mortgagee as follows:
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. Mortgagor will pay the Debt at the time and in the manner provided
in the Note and in this Mortgage. Mortgagor will duly and punctually perform all
of the covenants, conditions and agreements contained in the Note, this Mortgage
and the other Loan Documents all of which covenants, conditions and agreements
are hereby made a part of this Mortgage to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that Mortgagor is the sole
owner of and has good, legal, marketable and insurable fee simple title to the
Mortgaged Property and has the full power, authority and right to execute,
deliver and perform its obligations under this Mortgage and to encumber,
mortgage, give, grant, bargain, sell, alienate, enfeoff, convey, confirm,
pledge, assign and hypothecate the same and that Mortgagor 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
insuring the lien of this Mortgage and that this Mortgage is and will remain a
valid and enforceable first lien on and security interest in the Mortgaged
Property, subject only to said exceptions. Mortgagor shall forever warrant,
defend and preserve such title and the validity and priority of the lien of this
Mortgage and shall forever warrant and defend the same to Mortgagee and/or
Trustee against the claims of all persons whomsoever.
3. Insurance. Mortgagor, at its sole cost and expense, will keep the
Mortgaged Property
<PAGE>
insured during the entire term of this Mortgage for the mutual benefit of
Mortgagor and Mortgagee against loss or damage by fire and against loss or
damage by other risks and hazards covered by a standard extended coverage
insurance policy and included within the classification "All Risks of Physical
Loss" including, but not limited to, riot and civil commotion, vandalism,
malicious mischief, burglary and theft on a replacement cost basis with an
Agreed Value Endorsement waiving co-insurance, all in an amount not less than
100 percent of the then full replacement cost of the Improvements and Equipment,
without deduction for physical depreciation.
(a) Mortgagor, at its sole cost and expense, for the mutual benefit of
Mortgagor and Mortgagee, shall also obtain and maintain during the entire term
of this Mortgage the following policies of insurance:
i) Flood insurance if any part of the Mortgaged Property now
(or subsequently determined to be) 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
National Flood Insurance Act of 1968 (and any amendment or successor
act thereto) in an amount at least equal to the lesser of the full
replacement cost of the Improvements and the Equipment, the outstanding
principal amount of the Note or the maximum limit of coverage available
with respect to the Improvements and Equipment under said Act.
Mortgagor hereby agrees to pay Mortgagee such fees as may be permitted
under applicable law for the costs incurred by Mortgagee in
determining, from time to time, whether the Mortgaged Property is then
located within such area.
ii) Comprehensive General Liability insurance, including broad
form property damage, blanket contractual and personal injuries
(including death resulting therefrom) coverages and containing minimum
limits per occurrence of $1,000,000 for the Improvements and the
Premises with excess umbrella coverage in an amount of at least $1
million arising out of any one occurrence with aggregate coverage of
$3,000,000, except that if any buildings contain elevators, the
aggregate coverage shall be a minimum of $4,000,000.
iii) Rental loss insurance in an amount equal to the aggregate
annual amount of all Rents and additional Rents payable by all of the
tenants under the Leases (whether or not such Leases are terminable in
the event of a fire or casualty), and all other Rents, such rental loss
insurance to cover rental losses for a period of at least one year
after the date of the fire or casualty in question. The amount of such
rental loss insurance shall be reviewed annually and shall be increased
from time to time during the term of this Mortgage as and when rent
increases occur under Leases previously in place and as a result of new
Leases, and as renewal Leases are entered into in accordance with the
terms of this Mortgage, to reflect all increased rent and increased
additional rent payable by all of the tenants under all such Leases.
iv) Insurance against loss or damage from (1) leakage of
sprinkler systems, and (2) explosion of steam boilers, air conditioning
equipment, high pressure piping, machinery and equipment, pressure
vessels or similar apparatus now or hereafter installed in the
Improvements and including broad form boiler and machinery insurance
(without exclusion
<PAGE>
for explosion) covering all boilers or other pressure vessels,
machinery and equipment located in, on, or about the Premises and the
Improvements. Coverage is required in an amount at least equal to the
full replacement cost of such equipment and the building or buildings
housing same. Coverage must extend to electrical equipment, sprinkler
systems, heating and air conditioning equipment, refrigeration
equipment and piping.
v) If the Mortgaged Property includes commercial property,
worker's compensation insurance with respect to any employees of
Mortgagor, as required by any governmental authority or legal
requirement.
vi) [If required by Mortgagee, Earthquake or sinkhole
insurance if available in the area where the Mortgaged Property is
located in an amount at least equal to the outstanding principal amount
of the Note or the maximum limit of coverage available, whichever is
less.]
vii) Such other insurance as may from time to time be
reasonably required by Mortgagee in order to protect its interests.
(b) All policies of insurance (the "Policies") required pursuant to
Section 3: (i) shall contain a standard noncontributory mortgagee clause naming
Mortgagee as the person to which all payments made by such insurance company
shall be paid, (ii) shall be maintained throughout the term of this Mortgage
without cost to Mortgagee, (iii) shall be assigned and delivered to Mortgagee,
(iv) shall contain such provisions as Mortgagee deems reasonably necessary or
desirable to protect its interest including, without limitation, endorsements
providing that neither Mortgagor, Mortgagee nor any other party shall be a
co-insurer under said Policies and that Mortgagee shall receive at least thirty
(30) days' prior written notice, of any modification, reduction or cancellation,
(v) shall be for a term of not less than one year, (vi) shall be issued by an
insurer licensed in the state in which the Mortgaged Property is located, (vii)
shall provide that Mortgagee may, but shall not be obligated to, make premium
payments to prevent any cancellation, endorsement, alteration or reissuance, and
such payments shall be accepted by the insurer to prevent same, (viii) shall be
satisfactory in form and substance to Mortgagee and shall be approved by
Mortgagee as to amounts, form, risk coverage, deductibles, loss payees and
insureds, and (ix) shall provide that all claims shall be allowable on events as
they occur. Upon demand therefor, Mortgagor shall reimburse Mortgagee for all of
Mortgagee's (or its servicer's) reasonable costs and expenses incurred in
obtaining any or all of the Policies or otherwise causing the compliance with
the terms and provisions of this Section 3, including (without limitation)
obtaining updated flood hazard certificates and replacement of any so-called
"forced placed" insurance coverages. All Policies required pursuant to
subsections 3(a) and 3(b) shall be issued by an insurer with a claims paying
ability rating of "A-" or better by Standard & Poor's Corporation or A:VIII or
better by A.M. Best as published in Best's Key Rating Guide. Mortgagor shall pay
the premiums for such Policies (the "Insurance Premiums") as the same become due
and payable (unless such Insurance Premiums have been paid by Mortgagee pursuant
to Paragraph 5 hereof). Not later than thirty (30) days prior to the expiration
date of each of the Policies, Mortgagor will deliver to Mortgagee satisfactory
evidence of the renewal of each Policy. If Mortgagor receives from any insurer
any written notification or threat of any actions or proceedings regarding the
non-compliance or non-conformity of the Mortgaged Property with any
<PAGE>
insurance requirements, Mortgagor shall give prompt notice thereof to Mortgagee.
(c) In the event of the entry of a judgment of foreclosure, sale of the
Mortgaged Property by non-judicial foreclosure sale, or delivery of a deed in
lieu of foreclosure, Mortgagee hereby is authorized (without the consent of
Mortgagor) to assign any and all Policies to the purchaser or transferee
thereunder, or to take such other steps as Mortgagee may deem advisable to cause
the interest of such transferee or purchaser to be protected by any of the
Policies without credit or allowance to Mortgagor for prepaid premiums thereon.
(d) If the Mortgaged Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Mortgagor shall give prompt notice
thereof to Mortgagee.
i) In case of loss covered by Policies, Mortgagee may either
(1) settle and adjust any claim in consultation with but without the
consent of Mortgagor, or (2) allow Mortgagor to agree with the
insurance company or companies on the amount to be paid upon the loss;
provided, that Mortgagor may adjust losses aggregating not in excess of
$100,000.00 if such adjustment is carried out in a competent and timely
manner, and provided that in any case Mortgagee shall and is hereby
authorized to collect and receipt for any such insurance proceeds; and
the reasonable expenses incurred by Mortgagee in the adjustment and
collection of insurance proceeds shall become part of the Debt and be
secured hereby and shall be reimbursed by Mortgagor to Mortgagee upon
demand (unless deducted by and reimbursed to Mortgagee from such
proceeds).
ii) In the event of any insured damage to or destruction of
the Mortgaged Property or any part thereof (herein called an "Insured
Casualty"), if (A) the loss is in an aggregate amount less than
twenty-five percent (25%) of the original principal balance of the
Note, and (B), in the reasonable judgment of Mortgagee, the Mortgaged
Property can be restored within six (6) months after insurance proceeds
are made available to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Insured Casualty) and not less useful than the same was prior to the
Insured Casualty, and after such restoration will adequately secure the
outstanding balance of the Debt, and (C) no Event of Default
(hereinafter defined) shall have occurred and be then continuing, then
the proceeds of insurance shall be applied to reimburse Mortgagor for
the cost of restoring, repairing, replacing or rebuilding the Mortgaged
Property or part thereof subject to Insured Casualty, as provided for
below; and Mortgagor hereby covenants and agrees forthwith to commence
and diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided, however, in any event Mortgagor shall pay all
costs (and if required by Mortgagee, Mortgagor shall deposit the total
thereof with Mortgagee in advance to be disbursed together with the
insurance proceeds) of such restoring, repairing, replacing or
rebuilding in excess of the net proceeds of insurance made available
pursuant to the terms hereof.
iii) Except as provided above, the proceeds of insurance
collected upon any Insured Casualty shall, at the option of Mortgagee
in its sole discretion, be applied to the payment of the Debt (subject
to any restrictions under applicable law) or applied to reimburse
<PAGE>
Mortgagor for the cost of restoring, repairing, replacing or rebuilding
the Mortgaged Property or part thereof subject to the Insured Casualty,
in the manner set forth below. Any such application to the Debt shall
not be considered a voluntary prepayment requiring payment of the
prepayment consideration provided in the Note, and shall not reduce or
postpone any payments otherwise required pursuant to the Note, other
than the final payment on the Note.
iv) In the event that proceeds of insurance, if any, shall be
made available to Mortgagor for the restoring, repairing, replacing or
rebuilding of the Mortgaged Property, Mortgagor hereby covenants to
restore, repair, replace or rebuild the same to be of at least equal
value and of substantially the same character as prior to such damage
or destruction, all to be effected in accordance with applicable law
and plans and specifications approved in advance by Mortgagee.
v) In the event Mortgagor is entitled to reimbursement out of
insurance proceeds held by Mortgagee, such proceeds shall be disbursed
from time to time upon Mortgagee being furnished with (1) evidence
satisfactory to it (which evidence may include inspection[s] of the
work performed) that the restoration, repair, replacement and
rebuilding covered by the disbursement has been completed in accordance
with plans and specifications approved by Mortgagee, (2) evidence
satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (3) funds, or, at
Mortgagee's option, assurances satisfactory to Mortgagee that such
funds are available, sufficient in addition to the proceeds of
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (4) such architect's certificates, waivers of lien,
contractor's sworn statements, title insurance endorsements, bonds,
plats of survey and such other evidences of cost, payment and
performance as Mortgagee may reasonably require and approve; and
Mortgagee may, in any event, require that all plans and specifications
for such restoration, repair, replacement and rebuilding be submitted
to and approved by Mortgagee prior to commencement of work. With
respect to disbursements to be made by Mortgagee: (A) no payment made
prior to the final completion of the restoration, repair, replacement
and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; (B) funds other than proceeds of
insurance shall be disbursed prior to disbursement of such proceeds;
and (C) at all times, the undisbursed balance of such proceeds
remaining in the hands of Mortgagee, together with funds deposited for
that purpose or irrevocably committed to the satisfaction of Mortgagee
by or on behalf of Mortgagor for that purpose, shall be at least
sufficient in the reasonable judgment of Mortgagee to pay for the cost
of completion of the restoration, repair, replacement or rebuilding,
free and clear of all liens or claims for lien and the costs described
in subsection 3(d)(vi) below. Any surplus which may remain out of
insurance proceeds held by Mortgagee after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any
party entitled thereto. In no event shall Mortgagee assume any duty or
obligation for the adequacy, form or content of any such plans and
specifications, nor for the performance, quality or workmanship of any
restoration, repair, replacement and rebuilding.
vi) Notwithstanding anything to the contrary contained herein,
the proceeds of insurance reimbursed to Mortgagor in accordance with
the terms and provisions of this
<PAGE>
Mortgage shall be reduced by the reasonable costs (if any) incurred by
Mortgagee in the adjustment and collection thereof and in the
reasonable costs incurred by Mortgagee of paying out such proceeds
(including, without limitation, reasonable attorneys' fees and costs
paid to third parties for inspecting the restoration, repair,
replacement and rebuilding and reviewing the plans and specifications
therefor).
4. Payment of Other Charges. Mortgagor shall pay all assessments, water
rates and sewer rents, ground rents, maintenance charges, other governmental
impositions, and other charges, including without limitation vault charges and
license fees for the use of vaults, chutes and similar areas adjoining the
Premises, now or hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Other Charges") as the same become due and
payable. Mortgagor will deliver to Mortgagee evidence satisfactory to Mortgagee
that the Other Charges have been so paid or are not then delinquent no later
than thirty (30) days following the date on which the Other Charges would
otherwise be delinquent if not paid. Mortgagor shall not suffer and shall
promptly cause to be paid and discharged any lien or charge whatsoever which may
be or become a lien or charge against the Mortgaged Property, and shall promptly
pay for all utility services provided to the Mortgaged Property.
5. Tax and Insurance Escrow Fund. On the Closing Date, Mortgagor shall
make an initial deposit to the Tax and Insurance Escrow Fund, as hereinafter
defined, of an amount which, when added to the monthly amounts to be deposited
as specified below, will be sufficient in the estimation of Mortgagee to satisfy
the next due taxes, assessments, insurance premiums and other similar charges.
Mortgagor shall pay to Mortgagee on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay all taxes, assessments
and other similar governmental impositions (the "Taxes") payable or estimated by
Mortgagee to be payable, during the next ensuing twelve (12) months, and (b)
unless otherwise waived by Mortgagee, one-twelfth of an amount which would be
sufficient to pay the Insurance Premiums due for the renewal of the coverage
afforded by the Policies upon the expiration thereof (said amounts in [a] and
[b] above hereinafter called the "Tax and Insurance Escrow Fund"). Mortgagee
may, in its sole discretion, retain a third party tax consultant to obtain tax
certificates or other evidence or estimates of tax due or to become due or to
verify the payment of taxes and Mortgagor will promptly reimburse Mortgagee for
the reasonable cost of retaining any such third parties or obtaining such
certificates. Any unpaid reimbursements for the aforesaid shall be added to the
Debt. The Tax and Insurance Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note, shall be added together and
shall be paid as an aggregate sum by Mortgagor to Mortgagee. Mortgagor hereby
pledges (and grants a lien and security interest) to Mortgagee any and all
monies now or hereafter deposited in the Tax and Insurance Escrow Fund as
additional security for the payment of the Debt. Mortgagee will apply the Tax
and Insurance Escrow Fund to payments of Taxes and Insurance Premiums required
to be made by Mortgagor pursuant to Sections 3 and 4 hereof. If the amount of
the Tax and Insurance Escrow Fund shall exceed the amounts due for Taxes and
Insurance Premiums pursuant to Sections 3 and 4 hereof, Mortgagee shall, in its
discretion, return any excess to Mortgagor or credit such excess against future
payments to be made to the Tax and Insurance Escrow Fund. In allocating such
excess, Mortgagee may deal with the person shown on the records of Mortgagee to
be the owner of the Mortgaged Property. If the Tax and Insurance Escrow Fund is
not sufficient to pay the items set forth in (a) and (b) above, Mortgagor shall
promptly pay to
<PAGE>
Mortgagee, upon demand, an amount which Mortgagee shall estimate as sufficient
to make up the deficiency. Upon the occurrence of an Event of Default, Mortgagee
shall be entitled to exercise both the rights of setoff and banker's lien, if
applicable, against the interest of Mortgagor in the Tax and Insurance Escrow
Fund to the full extent of the outstanding balance of the Debt, application of
any such sums to the Debt to be in any order in its sole discretion. Until
expended or applied as above provided, any amounts in the Tax and Insurance
Escrow Fund shall constitute additional security for the Debt. The Tax and
Insurance Escrow Fund shall not constitute a trust fund and may be commingled
with other monies held by Mortgagee. Unless otherwise required by applicable
law, no earnings or interest on the Tax and Insurance Escrow Fund shall be
payable to Mortgagor even if the Mortgagee or its servicer is paid a fee and/or
receives interest or other income in connection with the deposit or placement of
such fund (in which event such income shall be reported under Mortgagee's or its
servicer's tax identification number, as applicable). Upon payment of the Debt
and performance by Mortgagor of all its obligations under this Mortgage and the
other Loan Documents, any amounts remaining in the Tax and Insurance Escrow Fund
shall be refunded to Mortgagor.
6. [Intentionally Deleted]
7. Condemnation. Mortgagor shall promptly give Mortgagee written notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Mortgagee copies of any and all papers served in
connection with such proceedings. Mortgagee is hereby irrevocably appointed as
Mortgagor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment for said condemnation or
eminent domain and to make any compromise or settlement in connection with such
proceeding, subject to the provisions of this Mortgage. Notwithstanding any
taking by any public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in lieu of or in
anticipation of the exercise of such taking), Mortgagor shall continue to pay
the Debt at the time and in the manner provided for its payment in the Note, in
this Mortgage and the other Loan Documents and the Debt shall not be reduced
until any award or payment therefor shall have been actually received after
expenses of collection and applied by Mortgagee to the discharge of the Debt.
Mortgagor shall cause the award or payment made in any condemnation or eminent
domain proceeding with respect to the Mortgaged Property, which is payable to
Mortgagor, to be paid directly to Mortgagee. Mortgagee may apply any such award
or payment to the reduction or discharge of the Debt whether or not then due and
payable (such application to be free from any prepayment consideration provided
in the Note, except that if an Event of Default, or an event which with notice
and/or the passage of time, or both, would constitute an Event of Default, has
occurred, then such application shall be subject to the full prepayment
consideration computed in accordance with the Note). If the Mortgaged Property
is sold, through foreclosure or otherwise, prior to the receipt by Mortgagee of
such award or payment, Mortgagee 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, or a portion thereof sufficient to pay the Debt.
8. Representations Concerning Loan. Mortgagor represents, warrants and
covenants as follows:
<PAGE>
(a) Neither Mortgagor nor any guarantor of the Debt or any part thereof
(a "Guarantor") has any defense to the payment in full of the Debt that arises
from applicable local, state or federal laws, regulations or other requirements.
None of the Loan Documents are subject to any right of rescission, set-off,
abatement, diminution, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of any such Loan Documents, or the
exercise of any right thereunder, render any Loan Documents unenforceable, in
whole or in part, or subject to any right of rescission, set-off, abatement,
diminution, counterclaim or defense, including the defense of usury, and no such
right of rescission, set-off, abatement, diminution, counterclaim or defense has
been, or will be, asserted with respect thereto.
(b) All certifications, permits and approvals, including, without
limitation, certificates of completion and occupancy permits required for the
legal use and occupancy of the Mortgaged Property, have been obtained and are in
full force and effect. The Mortgaged Property is in good repair, good order and
good condition and free and clear of any damage that would affect materially and
adversely the value of the Mortgaged Property as security for the Debt and the
Mortgaged Property has not been materially damaged by fire, wind or other
casualty or physical condition (including, without limitation, any soil or
geological condition), which damage has not been fully repaired. There are no
proceedings pending or threatened for the partial or total condemnation of the
Mortgaged Property.
(c) All of the Improvements which were included in determining the
appraised value of the Mortgaged Property lie wholly within the boundaries and
building restriction lines of the Mortgaged Property, and no improvements on
adjoining properties encroach upon the Mortgaged Property, and no easements or
other encumbrances upon the Premises encroach upon any of the Improvements, so
as to affect the value or marketability of the Mortgaged Property except for
immaterial encroachments which do not adversely affect the security intended to
be provided by this Mortgage or the use, enjoyment, value or marketability of
the Mortgaged Property. All of the Improvements comply with all material
requirements of any applicable zoning and subdivision laws and ordinances.
(d) The Mortgaged Property is not subject to any leases or operating
agreements other than the leases and the operating agreements, if any, described
in the rent roll delivered to Mortgagee in connection with this Mortgage, and
all such leases and agreements are in full force and effect. No person has any
possessory interest in the Mortgaged Property or right to occupy the same except
under and pursuant to the provisions of the leases and any such operating
agreements.
(e) All financial data, including, without limitation, statements of
cash flow and income and operating expenses, delivered to Mortgagee by, or on
behalf of Mortgagor are (i) true and correct in all material respects; (ii)
accurately represent the financial condition of Mortgagor or the Mortgaged
Property as of the date thereof in all material respects; and (iii) to the
extent reviewed by an independent certified public accounting firm, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered.
(f) The survey of the Mortgaged Property delivered to Mortgagee in
connection with this Mortgage, has been performed by a duly licensed surveyor or
registered professional engineer in the
<PAGE>
jurisdiction in which the Mortgaged Property is situated and, to the best of
Mortgagor's knowledge, does not fail to reflect any material matter affecting
the Mortgaged Property or the title thereto.
(g) The loan evidenced by the Loan Documents complies with, or is
exempt from, applicable state or federal laws, regulations and other
requirements pertaining to usury and any and all other requirements of any
federal, state or local law.
(h) The Mortgaged Property abuts upon a dedicated, all-weather road, or
is served and benefitted by an irrevocable easement permitting ingress and
egress which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(i) The Mortgaged Property is served by public utilities and services
in the surrounding community, including police and fire protection, public
transportation, refuse removal, public education, and enforcement of safety
codes which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(j) The Mortgaged Property is serviced by public water and sewer
systems which are adequate in relation to the premises and location on which the
Mortgaged Property is located.
(k) The Mortgaged Property has parking and other amenities necessary
for the operation of the business currently conducted thereon which are adequate
in relation to the premises and location on which the Mortgaged Property is
located.
(l) The Mortgaged Property is a contiguous parcel and a separate tax
parcel, and there are no delinquent Taxes or other outstanding charges adversely
affecting the Mortgaged Property.
(m) The Mortgaged Property is not relied upon by, and does not rely
upon, any building or improvement not part of the Mortgaged Property to fulfill
any zoning, building code or other governmental or municipal requirement for
structural support or the furnishing of any essential building systems or
utilities, except to the extent of any valid and existing reciprocal easement
agreements shown in the title insurance policy insuring the lien of this
Mortgage.
(n) No action, omission, misrepresentation, negligence, fraud or
similar occurrence has taken place on the part of any person that would
reasonably be expected to result in the failure or impairment of full and timely
coverage under any insurance policies providing coverage for the Mortgaged
Property.
(o) There are no defaults by Mortgagor beyond any applicable grace
period under any contract or agreement (other than this Mortgage and the other
Loan Documents) that binds Mortgagor and/or the Mortgaged Property, including
any management, service, supply, security, maintenance or similar contracts; and
Mortgagor has no knowledge of any such default for which notice has not yet been
given; and no such agreement is in effect with respect to the Mortgaged Property
that is not capable of being terminated by Mortgagor on less than thirty (30)
days notice except as previously disclosed to Mortgagee by a delivery of a copy
of all such agreements.
<PAGE>
(p) The representations and warranties contained in the Closing
Certificate executed by Mortgagor in connection with the Note (which certificate
constitutes one of the Loan Documents) are true and correct and Mortgagor shall
observe the covenants contained therein.
(q) The management agreement with respect to the Mortgaged Property
(the "Management Agreement") between Mortgagor and Concord Assets Management,
Inc., a Delaware corporation ("Manager"), pursuant to which such property
manager operates the Mortgaged Property as an office building, is in full force
and effect and there is no default, breach or violation existing thereunder by
any party thereto and no event has occurred (other than payments due but not yet
delinquent) that, with the passage of time or the giving of notice, or both,
would constitute a default, breach or violation by any party thereunder.
9. Single Purpose Entity/Separateness. Mortgagor represents, warrants
and covenants as follows:
(a) Mortgagor does not own and will not own any asset or property other
than (i) the Mortgaged Property, the Mortgaged Property (as defined in the
Arkansas Note), and the Mortgaged Property (as defined in the Arizona Note)
(collectively, the "Security Property"), and (ii) incidental personal property
necessary for the ownership or operation of the Security Property.
(b) Mortgagor will not engage in any business other than the ownership,
management and operation of the Security Property and Mortgagor will conduct and
operate its business as presently conducted and operated.
(c) Mortgagor will not enter into any contract or agreement with any
Guarantor or any party which is directly or indirectly controlling, controlled
by or under common control with Mortgagor or Guarantor (an "Affiliate"), 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 Guarantor or Affiliate.
(d) Mortgagor has not incurred and will not incur any indebtedness,
secured or unsecured, direct or indirect, absolute or contingent (including
guaranteeing any obligation), other than (i) the Debt, the Debt (as defined in
the Arkansas Note), and the Debt (as defined in the California Note
(collectively, the "Indebtedness"),and (ii) trade and operational debt incurred
in the ordinary course of business with trade creditors and in amounts as are
normal and reasonable under the circumstances. No indebtedness other than the
Indebtedness may be secured (subordinate or pari passu) by the Mortgaged
Property.
(e) Mortgagor has not made and will not make any loans or advances to
any third party, nor to Guarantor, any Affiliate or any constituent party of
Mortgagor.
(f) Mortgagor is and will remain solvent and Mortgagor will pay its
debts from its assets as the same shall become due.
(g) Mortgagor has done or caused to be done and will do all things
necessary, to preserve
<PAGE>
its existence, and Mortgagor will not, nor will Mortgagor permit Guarantor to
amend, modify or otherwise change the partnership certificate, partnership
agreement, articles of incorporation and bylaws, trust or other organizational
documents of Mortgagor or Guarantor in a manner which would adversely affect the
Mortgagor's existence as a single-purpose entity.
(h) Mortgagor will maintain books and records and bank accounts
separate from those of its Affiliates and any constituent party of Mortgagor,
and Mortgagor will file its own tax returns.
(i) Mortgagor will be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate, any constituent party of Mortgagor or any Guarantor).
(j) Mortgagor will preserve and keep in full force and effect its
existence, good standing and qualification to do business in the state in which
the Mortgaged Property is located.
(k) Mortgagor will 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.
(l) Neither Mortgagor nor any constituent party of Mortgagor will seek
the dissolution or winding up, in whole or in part, of Mortgagor, nor will
Mortgagor merge with or be consolidated into any other entity.
(m) Mortgagor will not commingle the funds and other assets of
Mortgagor with those of any Affiliate, any Guarantor, any constituent party of
Mortgagor or any other person.
(n) Mortgagor has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any constituent party of Mortgagor, Affiliate,
Guarantor or any other person.
(o) Mortgagor does not and will not hold itself out to be responsible
for the debts or obligations of any other person (provided, that the foregoing
shall not prevent Mortgagor from being and holding itself responsible for
expenses incurred or obligations undertaken by the property manager of the
Security Property in respect of its duties regarding the Security Property).
(p) Mortgagor shall obtain and maintain in full force and effect, and
abide by and satisfy the material terms and conditions of, all material permits,
licenses, registrations and other authorizations with or granted by any
governmental authorities that may be required from time to time with respect to
the performance of its obligations under this Mortgage.
(q) Since the formation of Mortgagor, Mortgagor has not owned any
asset, conducted any business or operation, or engaged in any business other
than the ownership and operation of the Security Property. The Mortgagor has no
debts or obligations other than normal trade accounts payable in the ordinary
course of business, and the Indebtedness. Any other indebtedness or obligation
of Mortgagor has been paid in full prior to or through application of proceeds
from
<PAGE>
funding of the Loan.
10. Maintenance of Mortgaged Property. Mortgagor shall cause the
Mortgaged Property to be operated and maintained in a good and safe condition
and repair and in keeping with the condition and repair of properties of a
similar use, value, age, nature and construction. Mortgagor shall not use,
maintain or operate the Mortgaged Property in any manner which constitutes a
public or private nuisance or which makes void, voidable, or cancelable, or
increases the premium of, any insurance then in force with respect thereto. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment) without the consent of
Mortgagee. Mortgagor shall promptly comply with all laws, orders and ordinances
affecting the Mortgaged Property, or the use thereof. Mortgagor shall promptly
repair, replace or rebuild any part of the Mortgaged Property which may be
destroyed by any casualty, or become damaged, worn or dilapidated or which may
be affected by any proceeding of the character referred to in Section 7 hereof
and shall complete and pay for any structure at any time in the process of
construction or repair on the Premises.
11. Use of Mortgaged Property. Mortgagor shall not initiate, join in,
acquiesce in, or consent to any material change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Mortgaged Property or any part
thereof, nor shall Mortgagor initiate, join in, acquiesce in, or consent to any
zoning change or zoning matter affecting the Mortgaged Property. If under
applicable zoning provisions the use of all or any portion of the Mortgaged
Property is or shall become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned without the
express written consent of Mortgagee. Mortgagor shall not permit or suffer to
occur any waste on or to the Mortgaged Property or to any portion thereof and
shall not take any steps whatsoever to convert the Mortgaged Property, or any
portion thereof, to a condominium or cooperative form of management. Mortgagor
will not install or permit to be installed on the Premises any underground
storage tank or above-ground storage tank without the written consent of
Mortgagee.
12. Transfer or Encumbrance of the Mortgaged Property. (a) Mortgagor
acknowledges that Mortgagee has examined and relied on the creditworthiness and
experience of Mortgagor in owning and operating properties such as the Mortgaged
Property in agreeing to make the loan secured hereby, and that Mortgagee will
continue to rely on Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as security for repayment of
the Debt. Mortgagor acknowledges that Mortgagee has a valid interest in
maintaining the value of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can recover the Debt
by a sale of the Mortgaged Property. Mortgagor shall not, without the prior
written consent of Mortgagee, sell, convey, alienate, mortgage, encumber, pledge
or otherwise transfer the Mortgaged Property or any part thereof, or permit the
Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, pledged or otherwise transferred; provided, however,
Mortgagee may, in its sole discretion, give such written consent (but shall have
no obligation to do so) to any such sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer, and any such consent may be conditioned
upon the satisfaction of such conditions precedent as Mortgagee may require
(including, without limitation, the conditions precedent set forth in subsection
12[c] below). Notwithstanding any other provision of this
<PAGE>
Section 12, Mortgagee will consent, subject to the conditions of subsection
12(c) and provided that no Event of Default under the Loan Documents has
occurred and is continuing, to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or other transfer of the Mortgaged Property by the original
Mortgagor as set forth in this Mortgage.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this Section 12 shall not include (x) transfers
made by devise or descent or by operation of law upon the death of a joint
tenant, partner or shareholder, subject, however, to all the following
requirements: (1) written notice of any transfer under this subsection 12(b)(x),
whether by will, trust or other written instrument, operation of law or
otherwise, is provided to Mortgagee or its servicer, together with copies of
such documents relating to the transfer as Mortgagee or its servicer may
reasonably request, (2) control over the management and operation of the
Mortgaged Property is retained by persons who are acceptable in all respects to
Mortgagee in its sole and absolute discretion, and (3) no such transfer, death
or other event has any adverse effect either on the bankruptcy-remote status of
Mortgagor under the requirements of any national rating agency for the
Certificates (hereinafter defined) or on the status of Mortgagor as a continuing
legal entity liable for the payment of the Debt and the performance of all other
obligations secured hereby, or (y) transfers otherwise by operation of law in
the event of a bankruptcy, nor shall the meaning include a Lease, but shall be
deemed to include (i) an installment sales agreement wherein Mortgagor agrees to
sell the Mortgaged Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Mortgagor leasing all or a substantial part
of the Mortgaged Property for other than actual occupancy by a space tenant
thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Mortgagor's right, title and interest in and to any Leases
or any Rents; (iii) if Mortgagor, Guarantor, or any general partner of Mortgagor
or Guarantor is a corporation, any merger, consolidation or the voluntary or
involuntary sale, conveyance or transfer of such corporation's stock (or the
stock of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock in one
or a series of transactions by which an aggregate of more than 10% of such
corporation's stock shall be vested in a party or parties who are not now
stockholders (provided, however, in no event shall this subpart [iii] apply to
any Guarantor whose stock, shares or partnership interests are traded on a
nationally recognized stock exchange); (iv) if Mortgagor, Guarantor, or any
general partner of Mortgagor or Guarantor is a limited liability company or
limited partnership, the voluntary or involuntary sale, conveyance or transfer
by which an aggregate of more than fifty percent (50%) of the ownership interest
in such limited liability company or more than fifty percent (50%) of the
limited partnership interests in such limited partnership shall be vested in
parties not having an ownership interest as of the date of this Mortgage; and
(v) if Mortgagor, any Guarantor or any general partner of Mortgagor or any
Guarantor is a limited or general partnership or joint venture, the change,
removal or resignation of a general partner, managing partner or joint venturer
or the transfer of all or any portion of the partnership interest of any general
partner, managing partner or joint venturer.
(c) Notwithstanding the provisions of subsections 12(a) and (b) above,
Mortgagee will give its consent to a one time sale or transfer of Mortgaged
Property, provided that no Event of Default under the Loan Documents has
occurred and is continuing and (i) the grantee's or transferee's integrity,
reputation, character and management ability are satisfactory to Mortgagee in
its sole discretion, (ii) the grantee's or transferee's (and its sole general
partner's) single purpose and
<PAGE>
bankruptcy remote character are satisfactory to Mortgagee in its sole
discretion, (iii) and any conditions relating to the sale or transfer imposed by
any national rating agency for the Certificates (as defined in Section 20) are
satisfied, (iv) Mortgagee has obtained such estoppels from any guarantors of the
Note or replacement guarantors and such other legal opinions, certificates and
similar matters as Mortgagee may require, (v) all of Mortgagee's costs and
expenses associated with the sale or transfer (including reasonable attorneys
fees) are paid by Mortgagor or the grantee or transferee, (vi) the payment of a
transfer fee not to exceed 1% of the outstanding principal balance of the loan
evidenced by the Note and secured hereby (excluding the Arkansas Note and the
Arizona Note) (the "Loan"), (vii) the grantee's execution of a written
assumption agreement and such modification to the Loan Documents containing such
terms as Mortgagee may require and delivery of such agreement to Mortgagee prior
to such sale or transfer (provided that in the event the Loan is included in a
REMIC and is a performing Loan, no modification to the terms and conditions
shall be made or permitted that would cause (A) any adverse tax consequences to
the REMIC or any holders of any Certificates, (B) the Mortgage to fail to be a
Qualifying Mortgage under applicable federal law relating to REMIC's, or (C)
result in a taxation of the income from the Loan to the REMIC or cause a loss of
REMIC status), (viii) the delivery to Mortgagee of an endorsement (at
Mortgagor's sole cost and expense) to the mortgagee policy of title insurance
then insuring the lien created by this Mortgage in form and substance acceptable
to Mortgagee in its sole judgment, (ix) the ratio of the original principal
amount of the Note to the greater of (A) the purchase price paid by the grantee
or (B) the then fair market value of the Mortgaged Property, shall not exceed 75
percent as reasonably determined by Mortgagee; and (x) the debt service coverage
ratio under the Note with respect to the Mortgaged Property as reasonably
determined by Mortgagee shall be equal to or greater than 1.25:1:00 at the time
of the transfer. Without limiting the foregoing, if Mortgagee shall consent to
any such transfer, the written assumption agreement described in subsection
12(c)(vii) above shall provide for the release of Mortgagor of personal
liability under the Note and other Loan Documents solely as to acts or events
occurring, or obligations arising, after the closing of such sale; provided,
however, in no event shall such sale operate to: (x) relieve Mortgagor of any
personal liability under the Note or any of the other Loan Documents for any
acts or events occurring, or obligations arising, prior to or simultaneously
with the closing of such sale (subject to the applicable recourse limitations
provided in the Note), and Mortgagor shall execute, without any cost or expense
to Mortgagee, such documents and agreements as Mortgagee shall reasonably
require to evidence and effectuate the ratification of such personal liability;
or (y) relieve any current guarantor or indemnitor, including Mortgagor, of its
obligations under any guaranty or indemnity agreement executed in connection
with the loan secured hereby (including, without limitation, the Environmental
Liabilities Agreement of even date herewith [the "Environmental Agreement"]),
and each such current guarantor and indemnitor shall execute, without any cost
or expense to Mortgagee, such documents and agreements as Mortgagee shall
reasonably require to evidence and effectuate the ratification of each such
guaranty and indemnity agreement. Notwithstanding (y) preceding, if the proposed
transferee and a party associated with the proposed transferee (the "Substitute
Guarantor") (1) is approved by Mortgagee in its sole discretion (including a
determination that the proposed transferee and Substitute Guarantor have
adequate financial resources), (2) assumes the obligations of the current
guarantor or indemnitor under its guaranty or indemnity agreement, and (3)
executes, without any cost or expense to Mortgagee, a new guaranty and/or
indemnity agreement, as applicable, in form and substance satisfactory to
Mortgagee, then Mortgagee may release the current guarantor or indemnitor from
all obligations arising under its guaranty or indemnity
<PAGE>
agreement after the closing of such sale.
(d) Mortgagee may predicate its decision to grant or withhold consent
to any subsequent sale, conveyance, alienation, mortgage, encumbrance, pledge or
other transfer upon the satisfaction (in the sole determination of Mortgagee)
with such conditions as may be imposed by Mortgagee, which may include, but
shall not be limited to, the following matters: (i) the delivery to Mortgagee of
an endorsement (at Mortgagor's sole cost and expense) to the mortgagee policy of
title insurance then insuring the lien created by this Mortgage in a form and
substance acceptable to Mortgagee, in its sole judgment; (ii) the grantee's
integrity, reputation, character, creditworthiness and management ability being
satisfactory to Mortgagee, in its sole judgment; (iii) the grantee's single
purpose and bankruptcy remote character being satisfactory to Mortgagee, in its
sole judgment; (iv) the grantee executing (prior to such sale or transfer) a
written assumption agreement containing such terms as Mortgagee may require; (v)
subject to any restrictions described in Section 12(c) above relating to the
Loan being included in a REMIC, an adjustment to the term of the Note, a
principal paydown on the Note or an increase in the rate of interest payable on
the Note; (vi) payment by Mortgagor of a transfer and assumption fee not to
exceed one percent (1%) of the then unpaid principal balance of the Note
(excluding the Arizona Note and the Arkansas Note); (vii) payment by Mortgagor
of the expenses described in subsection 12(f) below; and (viii) the satisfaction
of any conditions imposed by any national rating agency for Certificates
(hereinafter defined), together with such modification(s) of the Loan Documents
and such legal opinions, certifications and similar matters that Mortgagee may
require. Mortgagee agrees not to unreasonably withhold its consent to a sale or
transfer of the Mortgaged Property upon the satisfaction (in the sole
determination of Mortgagee) of the conditions to its consent as set forth
herein; provided, however, in any event Mortgagee shall be deemed to be
reasonable in withholding its consent if a sale to the proposed transferee
receives unfavorable comment from a national rating agency for Certificates.
Mortgagee shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon any sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer by Mortgagor of the Mortgaged Property without
Mortgagee's consent.
(e) Mortgagee's consent to one sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer of the Mortgaged Property shall not be deemed to
be a waiver of Mortgagee's right to require such consent to any future
occurrence of same. Any sale, conveyance, alienation, mortgage, encumbrance,
pledge or transfer of the Mortgaged Property made in contravention of this
Section 12 shall be null and void and of no force and effect.
(f) Mortgagor agrees to bear and shall pay or reimburse Mortgagee on
demand for all reasonable expenses (including, without limitation, all recording
costs, reasonable attorney's fees and disbursements and title search costs)
incurred by Mortgagee in connection with the review, approval and documentation
of any such sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer.
(g) In no event shall any of the terms and provisions of this Section
12 amend or modify the terms and provisions contained in Section 9 herein.
<PAGE>
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a statement, duly acknowledged and certified, setting
forth (i) the amount of the original principal amount of the Note, (ii) the
unpaid principal amount of the Note, (iii) the rate of interest of the Note,
(iv) the 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 Mortgage and the other Loan Documents are valid, legal and binding
obligations and have not been modified or if modified, giving particulars of
such modification.
(b) After request by Mortgagee, Mortgagor shall within ten (10) days
furnish Mortgagee with a certificate reaffirming all representations and
warranties of Mortgagor set forth herein and in the other Loan Documents as of
the date requested by Mortgagee or, to the extent of any changes to any such
representations and warranties, so stating such changes.
(c) If the Mortgaged Property includes commercial property, Mortgagor
shall deliver to Mortgagee upon request subject to the applicable tenant lease
provisions, tenant estoppel certificates from each commercial tenant at the
Mortgaged Property in form and substance reasonably satisfactory to Mortgagee
provided that Mortgagor shall not be required to deliver such certificates more
frequently than two (2) times in any calendar year.
14. Changes in the Laws Regarding Taxation. If any law is amended,
enacted or adopted after the date of this Mortgage which deducts the Debt from
the value of the Mortgaged Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or Mortgagee's interest in the
Mortgaged Property, Mortgagor will pay such tax, with interest and penalties
thereon, if any. In the event Mortgagee is advised by counsel chosen by it that
the payment of such tax or interest and penalties by Mortgagor would be unlawful
or taxable to Mortgagee or unenforceable or provide the basis for a defense of
usury, then in any such event, Mortgagee shall have the option, by written
notice of not less than forty-five (45) days, to declare the Debt immediately
due and payable.
15. No Credits on Account of the Debt. Mortgagor will not claim or
demand or be entitled to any credit or credits on account of the Debt for any
part of the Taxes or Other Charges assessed against the Mortgaged Property, or
any part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Mortgaged Property, or any part thereof, for real estate
tax purposes by reason of this Mortgage or the Debt. In the event such claim,
credit or deduction shall be required by law, Mortgagee shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. 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 Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with interest and
penalties thereon, if any.
<PAGE>
17. Usury Savings Clause. It is expressly stipulated and agreed to be
the intent of Mortgagor, Trustee and Mortgagee at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Mortgagee to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this section shall
control every other covenant and agreement in this Mortgage and the other Loan
Documents. If the applicable law (state or federal) is ever judicially
interpreted so as to render usurious any amount called for under the Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved, or received with respect to the Debt, or if Mortgagee's exercise of
the option to accelerate the maturity of the Note, or if any prepayment by
Mortgagor results in Mortgagor having paid any interest in excess of that
permitted by applicable law, then it is Mortgagor's, Trustee's and Mortgagee's
express intent that all excess amounts theretofore collected by Mortgagee shall
be credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Mortgagor), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Mortgagee for the use, forbearance, or
detention of the Debt shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full stated term of
the Debt until payment in full so that the rate or amount of interest on account
of the Debt does not exceed the maximum rate permitted under applicable law from
time to time in effect and applicable to the Debt for so long as the Debt is
outstanding. Notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents, it is not the intention of Trustee and/or Mortgagee
to accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.
18. Books and Records. Mortgagor will keep accurate books and records
in accordance with sound accounting principles in which full, true and correct
entries shall be promptly made with respect to the Mortgaged Property and the
operation thereof, and will permit all such books and records (including without
limitation all contracts, statements, invoices, bills and claims for labor,
materials and services supplied for the construction, repair or operation of the
Improvements) to be inspected or audited and copies made by Mortgagee and its
representatives during normal business hours and at any other reasonable times.
Mortgagor represents that its chief executive office is as set forth in the
introductory paragraph of this Mortgage and that all books and records
pertaining to the Mortgaged Property are maintained at such location. Mortgagor
will furnish, or cause to be furnished, to Mortgagee on or before forty-five
(45) days after March 31, June 30, September 30 and December 31 of each calendar
year the following items, each certified by Mortgagor as being true and correct,
in such format and in such detail as Mortgagee or its servicer may request: (a)
a written statement (rent roll) dated as of the last day of each such calendar
quarter identifying each of the Leases by the term, space occupied, rental
required to be paid, security deposit paid, any rental concessions, and
identifying any defaults or payment delinquencies thereunder; (b) quarterly and
year to date operating statements prepared for each calendar quarter during each
such reporting period; (c) a property balance sheet for each calendar quarter
during each such reporting period; and (d) a comparison of the budgeted income
and expenses and the actual income and expenses for each calendar quarter during
each such reporting period and year to date. Within ninety (90) days
<PAGE>
following the end of each calendar year, Mortgagor shall furnish a statement of
the financial affairs and condition of the Mortgaged Property including a
statement of profit and loss for the Mortgaged Property in such format and in
such detail as Mortgagee or its servicer may request, and setting forth the
financial condition and the income and expenses for the Mortgaged Property for
the immediately preceding calendar year prepared by an independent certified
public accountant. Mortgagor shall deliver to Mortgagee copies of all income tax
returns, requests for extension and other similar items contemporaneously with
its delivery of same to the Internal Revenue Service. On or before November 30
of each calendar year, Mortgagor shall deliver to Mortgagee an itemized
operating budget and capital expenditure budget of the Mortgaged Property and a
management plan for the Mortgaged Property for the next succeeding calendar year
on a quarterly basis, in such format and in such detail as Mortgagee may
request. In the event Mortgagor fails to deliver such reports within the time
frames provided above, Mortgagor shall pay a late charge equal to two percent
(2%) of the monthly payment amount for each late submission of financial reports
to compensate Mortgagee or its servicer for the additional administrative
expense caused by such failure or delay whether or not Mortgagor is entitled to
any notice and opportunity to cure such failure prior to the exercise of any of
the remedies. Failure to provide quarterly or annual reports shall constitute an
Event of Default under Section 23 and entitle Mortgagee to audit or cause to be
audited Mortgagor's books and records. The late charge and the cost of such
audit shall be immediately payable from Mortgagor upon demand by Mortgagee and,
until paid, shall be added to and constitute a part of the Debt. At any time and
from time to time Mortgagor shall deliver to Mortgagee or its agents such other
financial data as Mortgagor prepares for its own use and which Mortgagee or its
agents shall request with respect to the ownership, maintenance, use and
operation of the Mortgaged Property, including, but not limited to, schedules of
gross sales for percentage rents under Leases. Mortgagor will permit
representatives appointed by Mortgagee, including independent accountants,
agents, attorneys, appraisers and any other persons, to visit and inspect during
its normal business hours and at any other reasonable times any of the Mortgaged
Property and to make photographs thereof, and to write down and record any
information such representatives obtain, and shall permit Mortgagee or its
representatives to investigate and verify the accuracy of the information
furnished to Mortgagee under or in connection with this Mortgage or any of the
other Loan Documents and to discuss all such matters with its officers,
employees and representatives. Mortgagor will furnish to Mortgagee at
Mortgagor's expense all evidence which Mortgagee may from time to time
reasonably request as to the accuracy and validity of or compliance with all
representations and warranties made by Mortgagor in the Loan Documents and
satisfaction of all conditions contained therein. Any inspection or audit of the
Mortgaged Property or the books and records of Mortgagor, or the procuring of
documents and financial and other information, by or on behalf of Mortgagee,
shall be for Mortgagee's protection only, and shall not constitute any
assumption of responsibility or liability by Mortgagee to Mortgagor or anyone
else with regard to the condition, construction, maintenance or operation of the
Mortgaged Property, nor Mortgagee's approval of any certification given to
Mortgagee nor relieve Mortgagor of any of Mortgagor's obligations.
19. Performance of Other Agreements. Mortgagor shall observe and
perform each and every term to be observed or performed by Mortgagor pursuant to
the terms of any agreement or recorded instrument affecting or pertaining to the
Mortgaged Property.
20. Further Acts, etc. Mortgagor will, at the cost of Mortgagor, and
without expense to
<PAGE>
Mortgagee, do, execute, acknowledge and deliver all and every such further acts,
deeds, conveyances, mortgages, assignments, notices of assignment, Uniform
Commercial Code financing statements or continuation statements, transfers and
assurances as Mortgagee shall, from time to time, require, for the better
assuring, conveying, assigning, transferring, and confirming unto Mortgagee the
property and rights hereby mortgaged, given, granted, bargained, sold,
alienated, enfeoffed, conveyed, confirmed, pledged, assigned and hypothecated or
intended now or hereafter so to be, or which Mortgagor may be or may hereafter
become bound to convey or assign to Mortgagee, or for carrying out the intention
or facilitating the performance of the terms of this Mortgage or for filing,
registering or recording this Mortgage. Mortgagor, on demand, will execute and
deliver and hereby authorizes Mortgagee to execute in the name of Mortgagor or
without the signature of Mortgagor to the extent Mortgagee may lawfully do so,
one or more financing statements, chattel mortgages or other instruments, to
evidence more effectively the security interest of Mortgagee in the Mortgaged
Property. Mortgagor grants to Mortgagee an irrevocable power of attorney coupled
with an interest for the purpose of exercising and perfecting any and all rights
and remedies available to Mortgagee at law and in equity, including without
limitation such rights and remedies available to Mortgagee pursuant to this
paragraph.
(a) Mortgagee (and its mortgage servicer and their respective assigns)
shall have the right to disclose in confidence such financial information
regarding Mortgagor, Guarantor or the Mortgaged Property as may be necessary (i)
to complete any sale or attempted sale of the Note or participations in the loan
(or any transfer of the mortgage servicing thereof) evidenced by the Note and
the Loan Documents, (ii) to service the Note or (iii) to furnish information
concerning the payment status of the Note to the holder or beneficial owner
thereof, including, without limitation, all Loan Documents, financial
statements, projections, internal memoranda, audits, reports, payment history,
appraisals and any and all other information and documentation in the
Mortgagee's files (and such servicer's files) relating to the Mortgagor, any
Guarantor and the Mortgaged Property. This authorization shall be irrevocable in
favor of the Mortgagee (and its mortgage servicer and their respective assigns),
and Mortgagor and Guarantor waive any claims that they may have against the
Mortgagee, its mortgage servicer and their respective assigns or the party
receiving information from the Mortgagee pursuant hereto regarding disclosure of
information in such files and further waive any alleged damages which they may
suffer as a result of such disclosure.
(b) The Mortgagor acknowledges that the Mortgagee intends to sell the
loan evidenced by the Note and the Loan Documents or a participation interest
therein to a party who may pool the loan with a number of other loans and to
have the holder of such loans (most likely a special purpose REMIC) issue one or
more classes of Mortgage Backed Pass-Through Certificates (the "Certificates"),
which may be rated by one or more national rating agencies. Mortgagee (and its
mortgage servicer and their respective assigns) shall be permitted to share any
of the information referred to in subsection (b) above, whether obtained before
or after the date of the Note, with the holders or potential holders of the
Certificates, investment banking firms, rating agencies, accounting firms,
custodians, successor mortgage servicers, law firms and other third-party
advisory firms involved with the loan evidenced by the Note and the Loan
Documents or the Certificates. It is understood that the information provided by
the Mortgagor to the Mortgagee (or its mortgage servicer and their respective
assigns) or otherwise received by Mortgagee (or its mortgage servicer and their
respective assigns) in connection with the loan evidenced by the Loan Documents
may
<PAGE>
ultimately be incorporated into the offering documents for the Certificates and
thus various prospective investors may also see some or all of the information.
The Mortgagee (and its mortgage servicer and their respective assigns) and all
of the aforesaid third-party advisors and professional firms shall be entitled
to rely on the information supplied by, or on behalf of, the Mortgagor.
21. Recording of Mortgage, etc. Upon the execution and delivery of this
Mortgage and thereafter, from time to time, Mortgagor will cause this Mortgage,
and any security instrument creating a lien or security interest or evidencing
the lien hereof upon the Mortgaged Property and each instrument of further
assurance to be filed, registered or recorded in such manner and in such places
as may be required by any present or future law in order to publish notice of
and fully to protect the lien or security interest hereof upon, and the interest
of Mortgagee in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to the preparation,
execution and acknowledgment of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state, county and municipal,
taxes, duties, imposts, assessments and charges arising out of or in connection
with the execution and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged Property or any
instrument of further assurance, except where prohibited by law so to do.
Mortgagor shall hold harmless and indemnify Mortgagee, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
22. Reporting Requirements. Mortgagor agrees to give prompt notice to
Mortgagee of the insolvency or bankruptcy filing of Mortgagor or the death,
insolvency or bankruptcy filing of any Guarantor.
23. Events of Default. The term "Event of Default" as used herein shall
mean the occurrence or happening, at any time and from time to time, of any one
or more of the following:
(a) if any portion of the Debt is not paid within ten (10) days from the
date when the same is due;
(b) if the Policies are not kept in full force and effect, or if the
Policies are not delivered to Mortgagee upon request;
(c) if Mortgagor fails to timely provide any quarterly or annual
financial or accounting report;
(d) if Mortgagor sells, conveys, alienates, mortgages, encumbers,
pledges or otherwise transfers any portion of the Mortgaged Property or permits
the Mortgaged Property or any part thereof to be sold, conveyed, alienated,
mortgaged, encumbered, levied, pledged or otherwise transferred without
Mortgagee's prior written consent except as may be permitted in Section 12
above;
(e) if any representation or warranty of Mortgagor, or of any
Guarantor, made herein, in any Loan Document, any guaranty, or in any
certificate, report, financial statement or other
<PAGE>
instrument or document furnished to Mortgagee shall have been false or
misleading in any material respect when made;
(f) if Mortgagor or any Guarantor shall make an assignment for the
benefit of creditors or if Mortgagor or any Guarantor shall admit in writing its
inability to pay, or Mortgagor's or any Guarantor's failure to pay, debts
generally as the debts become due;
(g) if a receiver, liquidator or trustee of Mortgagor or of any
Guarantor shall be appointed or if Mortgagor or any Guarantor shall be
adjudicated a 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, Mortgagor or any Guarantor or if Mortgagor or any Guarantor shall admit
in writing its insolvency or bankruptcy or if any proceeding for the dissolution
or liquidation of Mortgagor or of any Guarantor shall be instituted; however, if
such appointment, adjudication, petition or proceeding was involuntary and not
consented to by Mortgagor or such Guarantor, upon the same not being discharged,
stayed or dismissed within sixty (60) days;
(h) subject to Mortgagor's right to contest as provided herein, if the
Mortgaged Property becomes subject to any mechanic's, materialman's, mortgage or
other lien except a lien for local real estate taxes and assessments not then
due and payable;
(i) if Mortgagor fails to cure properly any violations of laws or
ordinances affecting or which may be interpreted to affect the Mortgaged
Property;
(j) except as permitted in this Mortgage, the actual or threatened
alteration, improvement, demolition or removal of any of the Improvements
without the prior consent of Mortgagee;
(k) damage to the Mortgaged Property in any manner which is not covered
by insurance solely as a result of Mortgagor's failure to maintain insurance
required in accordance with this Mortgage;
(l) if Mortgagor shall default under any term, covenant, or condition
of this Mortgage or any of the other Loan Documents other than as specified in
any of the above subparagraphs;
(m) if without Mortgagee's prior consent (i) the managing agent for the
Mortgaged Property resigns or is removed or (ii) the ownership, management or
control of such managing agent is transferred to a person or entity other than
the general partner or managing partner of the Mortgagor, or (iii) there is any
material change in the property management agreement of the Mortgaged Property;
(n) if all or a substantial part of Mortgagor's assets (other than the
Mortgaged Property) are attached, seized, subjected to a writ or distress
warrant or are levied upon (unless such attachment, seizure, writ, distress
warrant or levy is vacated within sixty [60] days following the date of the
same);
<PAGE>
(o) entry of a judgment in excess of $100,000.00 and the expiration of
any appeal rights or the dismissal or final adjudication of appeals against
Mortgagor (unless such judgment is vacated within sixty [60] days following the
date of the same);
(p) the Mortgage shall cease to constitute a first-priority lien on the
Mortgaged Property (other than in accordance with its terms);
(q) seizure or forfeiture of the Mortgaged Property, or any portion
thereof, or Mortgagor's interest therein, resulting from criminal wrongdoing or
other unlawful action of Mortgagor, its affiliates, or any tenant in the
Mortgaged Property under any federal, state or local law;
(r) an Event of Default occurs under the Arizona Note or any one of the
other Loan Documents (as defined in the Arizona Note); and
(s) an Event of Default occurs under the Arkansas Note or any one of
the other Loan Documents (as defined in the Arkansas Note).
24. Notice and Cure. Notwithstanding the foregoing, Mortgagee agrees to
give to Mortgagor written notice as described below of (a) Mortgagor's failure
to pay any part of the Debt when due (a "Monetary Default"), (b) a default
referred to in subsection 23(p) above (a "First Lien Default") and (c) a default
referred to in subsections 23(c),(i) or (1) above (a "Nonmonetary Default").
Mortgagor shall have a period of ten (10) days from its receipt of notice in
which to cure a Monetary Default (which written notice period may run
concurrently with the ten [10] day period referred to in subsection 23[a]),
shall have a period of twenty (20) days from its receipt of notice to cure a
First Lien Default and shall have a period of twenty (20) days from its receipt
of notice in which to cure a Nonmonetary Default unless such Nonmonetary Default
is not susceptible to cure within such twenty (20) day period, in which case
Mortgagor shall commence to cure such Nonmonetary Default within twenty (20)
days following notice and diligently prosecute such cure to completion,
provided, however, that Mortgagor will provide Mortgagee with such information
as Mortgagee may reasonably request concerning the status of any attempted cure
of any such Nonmonetary Default and the cure of any such Nonmonetary Default
must be completed to the satisfaction of Mortgagee within sixty (60) days of
notice in any case. Notwithstanding the foregoing, Mortgagee may, but shall not
be required, to give notice of a Monetary Default or a recurrence of the same
Nonmonetary Default more frequently than two times in any calendar year. A
Monetary Default and/or First Lien Default and/or Nonmonetary Default shall
nevertheless be an Event of Default for all purposes under the Loan Documents
(including, without limitation, Mortgagee's right to collect Default Interest
and any other administrative charge set forth in the Note) except that the
acceleration of the Debt or other exercise of remedies shall not be prior to the
expiration of the applicable cure and/or grace periods provided in Section 23 or
in this section.
25. Remedies. Upon the occurrence of an Event of Default and subject to
any applicable cure period, Mortgagee may, at Mortgagee's option, and by or
through Trustee, by Mortgagee itself or otherwise, do any one or more of the
following:
(a) Right to Perform Mortgagor's Covenants. If Mortgagor has failed to keep
or perform
<PAGE>
any covenant whatsoever contained in this Mortgage or the other Loan Documents,
Mortgagee may, but shall not be obligated to any person to do so, perform or
attempt to perform said covenant; and any payment made or expense incurred in
the performance or attempted performance of any such covenant, together with any
sum expended by Mortgagee that is chargeable to Mortgagor or subject to
reimbursement by Mortgagor under the Loan Documents, shall be and become a part
of the "Debt," and Mortgagor promises, upon demand, to pay to Mortgagee, at the
place where the Note is payable, all sums so incurred, paid or expended by
Mortgagee, with interest from the date when paid, incurred or expended by
Mortgagee at the Default Rate as specified in the Note.
(b) Right of Entry. Mortgagee may, prior or subsequent to the
institution of any foreclosure proceedings, enter upon the Mortgaged Property,
or any part thereof, and take exclusive possession of the Mortgaged Property and
of all books, records, and accounts relating thereto and to exercise without
interference from Mortgagor any and all rights which Mortgagor has with respect
to the management, possession, operation, protection, or preservation of the
Mortgaged Property, including without limitation the right to rent the same for
the account of Mortgagor and to deduct from such Rents all costs, expenses, and
liabilities of every character incurred by the Mortgagee in collecting such
Rents and in managing, operating, maintaining, protecting, or preserving the
Mortgaged Property and to apply the remainder of such Rents on the Debt in such
manner as Mortgagee may elect. All such costs, expenses, and liabilities
incurred by the Mortgagee in collecting such Rents and in managing, operating,
maintaining, protecting, or preserving the Mortgaged Property, if not paid out
of Rents as hereinabove provided, shall constitute a demand obligation owing by
Mortgagor and shall bear interest from the date of expenditure until paid at the
Default Rate as specified in the Note, all of which shall constitute a portion
of the Debt. If necessary to obtain the possession provided for above, the
Mortgagee may invoke any and all legal remedies to dispossess Mortgagor,
including specifically one or more actions for forcible entry and detainer,
trespass to try title, and restitution. In connection with any action taken by
the Mortgagee pursuant to this subparagraph, the Mortgagee shall not be liable
for any loss sustained by Mortgagor resulting from any failure to let the
Mortgaged Property, or any part thereof, or from any other act or omission of
the Mortgagee in managing the Mortgaged Property unless such loss is caused by
the willful misconduct of the Mortgagee, nor shall the Mortgagee be obligated to
perform or discharge any obligation, duty, or liability under any Lease or under
or by reason hereof or the exercise of rights or remedies hereunder. Mortgagor
shall and does hereby agree to indemnify the Mortgagee for, and to hold the
Mortgagee harmless from, any and all liability, loss, or damage, which may or
might be incurred by the Mortgagee under any such Lease or under or by reason
hereof or the exercise of rights or remedies hereunder, and from any and all
claims and demands whatsoever which may be asserted against the Mortgagee by
reason of any alleged obligations or undertakings on its part to perform or
discharge any of the terms, covenants, or agreements contained in any such
Lease. Should the Mortgagee incur any such liability, the amount thereof,
including without limitation costs, expenses, and reasonable attorneys' fees,
together with interest thereon from the date of expenditure until paid at the
Default Rate as specified in the Note, shall be secured hereby, and Mortgagor
shall reimburse the Mortgagee therefor immediately upon demand. Nothing in this
subsection shall impose any duty, obligation, or responsibility upon the
Mortgagee for the control, care, management, leasing, or repair of the Mortgaged
Property, nor for the carrying out of any of the terms and conditions of any
such Lease; nor shall it operate to make the Mortgagee responsible or liable for
any waste committed on the Mortgaged Property by the tenants or by any other
parties, or for any
<PAGE>
hazardous substances or environmental conditions on or under the Mortgaged
Property, or for any dangerous or defective condition of the Mortgaged Property
or for any negligence in the management, leasing, upkeep, repair, or control of
the Mortgaged Property resulting in loss or injury or death to any tenant,
licensee, employee, or stranger. Mortgagor hereby assents to, ratifies, and
confirms any and all actions of the Mortgagee with respect to the Mortgaged
Property taken under this subparagraph.
(c) Right to Accelerate. Mortgagee may, without notice except as
provided in Section 24 above, demand, presentment, notice of nonpayment or
nonperformance, protest, notice of protest, notice of intent to accelerate,
notice of acceleration, or any other notice or any other action, all of which
are hereby waived by Mortgagor and all other parties obligated in any manner
whatsoever on the Debt, declare the entire unpaid balance of the Debt
immediately due and payable, and upon such declaration, the entire unpaid
balance of the Debt shall be immediately due and payable.
(d) Foreclosure-Power of Sale. Mortgagee may institute a proceeding or
proceedings, judicial, or nonjudicial, by advertisement or otherwise, for the
complete or partial foreclosure of this Mortgage or the complete or partial sale
of the Mortgaged Property under the power of sale contained herein or under any
applicable provision of law. Mortgagee may sell the Mortgaged Property, and all
estate, right, title, interest, claim and demand of Mortgagor therein, and all
rights of redemption thereof, at one or more sales, as an entirety or in
parcels, with such elements of real and/or personal property, and at such time
and place and upon such terms as it may deem expedient, or as may be required by
applicable law, and in the event of a sale, by foreclosure or otherwise, of less
than all of the Mortgaged Property, this Mortgage shall continue as a lien and
security interest on the remaining portion of the Mortgaged Property.
(e) Rights Pertaining to Sales. Subject to the requirements of
applicable law and except as otherwise provided herein, the following provisions
shall apply to any sale or sales of all or any portion of the Mortgaged Property
under or by virtue of subsection (d) above, whether made under the power of sale
herein granted or by virtue of judicial proceedings or of a judgment or decree
of foreclosure and sale:
i) Should Mortgagee elect to foreclose by exercise of the
power of sale herein contained, Mortgagee shall notify Trustee and
shall deposit with Trustee this Deed of Trust and the Note and such
receipts and evidence of expenditures made and secured hereby as
Trustee may require. Upon receipt of such notice from Mortgagee,
Trustee shall cause to be recorded, published and delivered to
Mortgagor such Notice of Default (herein so called) and Election to
Sell (herein so called) as then required by law and by this Deed of
Trust. Trustee shall, without demand on Mortgagor, after lapse of such
time as may then be required by law and after recordation of such
Notice of Default and after Notice of Sale having been given as
required by law, sell the Mortgaged Property at the time and place of
sale fixed by it in said Notice of Sale, either as a whole, or in
separate lots or parcels or items as Trustee shall deem expedient, and
in such order as it may determine, at public auction to the highest
bidder for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to such purchaser or purchasers
thereof its good and sufficient deed or deeds conveying the property so
sold, but without any covenant or warranty, express or implied.
<PAGE>
The recitals in such deed of any matters or facts shall be conclusive
proof of the truthfulness thereof. Any person, including, without
limitation, Mortgagor, Trustee or Mortgagee, may purchase at such sale
and Mortgagor hereby covenants to warrant and defend the title of such
purchaser or purchasers. After deducting all costs, fees and expenses
of Trustee and of this Trust, including costs of evidence of title in
connection with sale, Trustee shall apply the proceeds of sale in the
following priority, to payment of: (A) first, all sums expended under
the terms hereof, not then repaid, with accrued interest at the Default
Rate; (B) second, all other sums then secured hereby; and (C) the
remainder, if any, to the person or persons legally entitled thereto.
Trustee or Mortgagee may conduct any number of sales from time to time.
The power of sale set forth above shall not be exhausted by any one or
more such sales as to any part of the Mortgaged Property which shall
not have been sold, nor by any sale which is not completed or is
defective in Mortgagee's opinion, until the Debt shall have been paid
in full.
ii) Any sale may be postponed or adjourned by public
announcement at the time and place appointed for such sale or for such
postponed or adjourned sale without further notice.
iii) After each sale, Mortgagee, Trustee or an officer of any
court empowered to do so shall execute and deliver to the purchaser or
purchasers at such sale a good and sufficient instrument or instruments
granting, conveying, assigning and transferring all right, title and
interest of Mortgagor in and to the property and rights sold and shall
receive the proceeds of said sale or sales and apply the same as
specified in the Note. Each of Trustee and Mortgagee is hereby
appointed the true and lawful attorney-in-fact of Mortgagor, which
appointment is irrevocable and shall be deemed to be coupled with an
interest, in Mortgagor's name and stead, to make all necessary
conveyances, assignments, transfers and deliveries of the property and
rights so sold, Mortgagor hereby ratifying and confirming all that said
attorney or such substitute or substitutes shall lawfully do by virtue
thereof. Nevertheless, Mortgagor, if requested by Trustee or Mortgagee,
shall ratify and confirm any such sale or sales by executing and
delivering to Trustee, Mortgagee or such purchaser or purchasers all
such instruments as may be advisable, in Trustee's or Mortgagee's
judgment, for the purposes as may be designated in such request.
iv) Any and all statements of fact or other recitals made in
any of the instruments referred to in subparagraph (iii) of this
subsection (e) given by Trustee or Mortgagee shall be taken as
conclusive and binding against all persons as to evidence of the truth
of the facts so stated and recited.
v) Any such sale or sales shall operate to divest all of the
estate, right, title, interest, claim and demand whatsoever, whether at
law or in equity, of Mortgagor in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against
Mortgagor and any and all persons claiming or who may claim the same,
or any part thereof or any interest therein, by, through or under
Mortgagor to the fullest extent permitted by applicable law.
<PAGE>
vi) Upon any such sale or sales, Mortgagee may bid for and
acquire the Mortgaged Property and, in lieu of paying cash therefor,
may make settlement for the purchase price by crediting against the
Debt the amount of the bid made therefor, after deducting therefrom the
expenses of the sale, the cost of any enforcement proceeding hereunder,
and any other sums which Trustee or Mortgagee is authorized to deduct
under the terms hereof, to the extent necessary to satisfy such bid.
vii) Upon any such sale, it shall not be necessary for
Trustee, Mortgagee or any public officer acting under execution or
order of court to have present or constructively in its possession any
of the Mortgaged Property.
(f) Mortgagee's Judicial Remedies. Mortgagee, or Trustee upon written
request of Mortgagee, may proceed by suit or suits, at law or in equity, to
enforce the payment of the Debt to foreclose the liens and security interests of
this Mortgage as against all or any part of the Mortgaged Property, and to have
all or any part of the Mortgaged Property sold under the judgment or decree of a
court of competent jurisdiction. This remedy shall be cumulative of any other
nonjudicial remedies available to the Mortgagee under this Mortgage or the other
Loan Documents. Proceeding with a request or receiving a judgment for legal
relief shall not be or be deemed to be an election of remedies or bar any
available nonjudicial remedy of the Mortgagee.
(g) Mortgagee's Right to Appointment of Receiver . Mortgagee, as a
matter of right and (i) without regard to the sufficiency of the security for
repayment of the Debt and without notice to Mortgagor, (ii) without any showing
of insolvency, fraud, or mismanagement on the part of Mortgagor, (iii) without
the necessity of filing any judicial or other proceeding other than the
proceeding for appointment of a receiver, and (iv) without regard to the then
value of the Mortgaged Property, shall be entitled to the appointment of a
receiver or receivers for the protection, possession, control, management and
operation of the Mortgaged Property, including (without limitation), the power
to collect the Rents, enforce this Mortgage and, in case of a sale and
deficiency, during the full statutory period of redemption (if any), whether
there be a redemption or not, as well as during any further times when
Mortgagor, except for the intervention of such receiver, would be entitled to
collection of such Rents. Mortgagor hereby irrevocably consents to the
appointment of a receiver or receivers. Any receiver appointed pursuant to the
provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(h) Mortgagee's Uniform Commercial Code Remedies. The Mortgagee may
exercise its rights of enforcement under the Uniform Commercial Code in effect
in the state in which the Mortgaged Property is located.
(i) Other Rights. Mortgagee (i) may surrender the Policies maintained
pursuant to this Mortgage or any part thereof, and upon receipt shall apply the
unearned premiums as a credit on the Debt, and, in connection therewith,
Mortgagor hereby appoints Mortgagee as agent and attorney-in-fact (which is
coupled with an interest and is therefore irrevocable) for Mortgagor to collect
such premiums; and (ii) may apply the Tax and Insurance Escrow Fund and any
other funds held by Mortgagee toward payment of the Debt; and (iii) shall have
and may exercise any and all other rights and remedies which Mortgagee may have
at law or in equity, or by virtue of any of the
<PAGE>
Loan Documents, or otherwise.
(j) Discontinuance of Remedies. In case Mortgagee shall have proceeded
to invoke any right, remedy, or recourse permitted under the Loan Documents and
shall thereafter elect to discontinue or abandon same for any reason, Mortgagee
shall have the unqualified right so to do and, in such event, Mortgagor and
Mortgagee shall be restored to their former positions with respect to the Debt,
the Loan Documents, the Mortgaged Property or otherwise, and the rights,
remedies, recourses and powers of Mortgagee shall continue as if same had never
been invoked.
(k) Remedies Cumulative. All rights, remedies, and recourses of
Mortgagee granted in the Note, this Mortgage and the other Loan Documents, any
other pledge of collateral, or otherwise available at law or equity: (i) shall
be cumulative and concurrent; (ii) may be pursued separately, successively, or
concurrently against Mortgagor, the Mortgaged Property, or any one or more of
them, at the sole discretion of Mortgagee; (iii) may be exercised as often as
occasion therefor shall arise, it being agreed by Mortgagor that the exercise or
failure to exercise any of same shall in no event be construed as a waiver or
release thereof or of any other right, remedy, or recourse; (iv) shall be
nonexclusive; (v) shall not be conditioned upon Mortgagee exercising or pursuing
any remedy in relation to the Mortgaged Property prior to Mortgagee bringing
suit to recover the Debt; and (vi) in the event Mortgagee elects to bring suit
on the Debt and obtains a judgment against Mortgagor prior to exercising any
remedies in relation to the Mortgaged Property, all liens and security
interests, including the lien of this Mortgage, shall remain in full force and
effect and may be exercised thereafter at Mortgagee's option.
(l) Election of Remedies. Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder,
in any way impairing, affecting, subordinating, or releasing the lien or
security interests evidenced by this Mortgage or the other Loan Documents or
affecting the obligations of Mortgagor or any other party to pay the Debt. For
payment of the Debt, Mortgagee may resort to any collateral securing the payment
of the Debt in such order and manner as Mortgagee may elect. No collateral taken
by Mortgagee shall in any manner impair or affect the lien or security interests
given pursuant to the Loan Documents, and all collateral shall be taken,
considered, and held as cumulative.
(m) Waivers. Mortgagor hereby irrevocably and unconditionally waives
and releases: (i) all benefits that might accrue to Mortgagor by virtue of any
present or future law exempting the Mortgaged Property from attachment, levy or
sale on execution or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption, or extension of time for
payment; (ii) all notices of any Event of Default except as expressly provided
herein or of Trustee's exercise of any right, remedy, or recourse provided for
under the Loan Documents; and (iii) any right to a marshalling of assets, a sale
in inverse order of alienation or any other right to direct in any manner, the
order of sale of any of the Mortgaged Property.
(n) Statute of Limitations. To the extent permitted by applicable law,
Mortgagee's rights hereunder shall continue even to the extent that a suit for
collection of the Debt, or part thereof, is barred by a statute of limitations.
Mortgagor hereby expressly waives and releases to the fullest extent permitted
by law, the pleading of any statute of limitations as a defense to payment of
the
<PAGE>
Debt.
(o) Waiver of Automatic or Supplemental Stay. In the event of the
filing of any voluntary or involuntary petition under the U.S. Bankruptcy Code
(the "Bankruptcy Code") by or against Mortgagor (other than an involuntary
petition filed by or joined in by Mortgagee), the Mortgagor 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 Mortgagee to enforce any rights it has by
virtue of this Mortgage, or any other rights that Mortgagee has, whether now or
hereafter acquired, against any guarantor of the Debt. Further, Mortgagor 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
Mortgagee to enforce any rights it has by virtue of this Mortgage against any
guarantor of the Debt. The waivers contained in this paragraph are a material
inducement to Mortgagee's willingness to enter into this Mortgage and Mortgagor
acknowledges and agrees that no grounds exist for equitable relief which would
bar, delay or impede the exercise by Mortgagee of Mortgagee's rights and
remedies against Mortgagor or any guarantor of the Debt.
(p) Bankruptcy Acknowledgment. In the event the Mortgaged Property or
any portion thereof or any interest therein becomes property of any bankruptcy
estate or subject to any state or federal insolvency proceeding, then Mortgagee
shall immediately become entitled, in addition to all other relief to which
Mortgagee may be entitled under this Mortgage, to obtain (i) an order from the
Bankruptcy Court or other appropriate court granting immediate relief from the
automatic stay pursuant to ss. 362 of the Bankruptcy Code so to permit Mortgagee
to pursue its rights and remedies against Mortgagor as provided under this
Mortgage and all other rights and remedies of Mortgagee at law and in equity
under applicable state law, and (ii) an order from the Bankruptcy Court
prohibiting Mortgagor's use of all "cash collateral" as defined under ss. 363 of
the Bankruptcy Code. In connection with such Bankruptcy Court orders, Mortgagor
shall not contend or allege in any pleading or petition filed in any court
proceeding that Mortgagee does not have sufficient grounds for relief from the
automatic stay. Any bankruptcy petition or other action taken by the Mortgagor
to stay, condition, or inhibit Mortgagee from exercising its remedies are hereby
admitted by Mortgagor to be in bad faith and Mortgagor further admits that
Mortgagee would have just cause for relief from the automatic stay in order to
take such actions authorized under state law.
(q) Application of Proceeds. The proceeds from any sale, lease, or
other disposition made pursuant to this Mortgage, or the proceeds from the
surrender of any insurance policies pursuant hereto, or any Rents collected by
Mortgagee from the Mortgaged Property, or the Tax and Insurance Escrow Fund or
sums received pursuant to Section 7 hereof, or proceeds from insurance which
Mortgagee elects to apply to the Debt pursuant to Section 3 hereof, shall be
applied by Trustee, or by Mortgagee, as the case may be, to the Debt in the
following order and priority: (1) to the payment of all expenses of advertising,
selling, and conveying the Mortgaged Property or part thereof, and/or
prosecuting or otherwise collecting Rents, proceeds, premiums or other sums
including reasonable attorneys' fees and a reasonable fee or commission to
Trustee, not to exceed five percent of the proceeds thereof or sums so received;
(2) to that portion, if any, of the Debt with respect to which no person or
entity has personal or entity liability for payment (the "Exculpated Portion"),
and with respect to the Exculpated Portion as follows: first, to accrued but
unpaid
<PAGE>
interest, second, to matured principal, and third, to unmatured principal in
inverse order of maturity; (3) to the remainder of the Debt as follows: first,
to the remaining accrued but unpaid interest, second, to the matured portion of
principal of the Debt, and third, to prepayment of the unmatured portion, if
any, of principal of the Debt applied to installments of principal in inverse
order of maturity; (4) the balance, if any or to the extent applicable,
remaining after the full and final payment of the Debt to the holder or
beneficiary of any inferior liens covering the Mortgaged Property, if any, in
order of the priority of such inferior liens (Trustee and Mortgagee shall hereby
be entitled to rely exclusively on a commitment for title insurance issued to
determine such priority); and (5) the cash balance, if any, to the Mortgagor.
The application of proceeds of sale or other proceeds as otherwise provided
herein shall be deemed to be a payment of the Debt like any other payment. The
balance of the Debt remaining unpaid, if any, shall remain fully due and owing
in accordance with and subject to the terms of the Note and the other Loan
Documents.
(r) Occupancy After Foreclosure. In the event there is a
foreclosure sale hereunder and at the time of such sale, Mortgagor or
Mortgagor's representatives, successors or assigns, or any other persons
claiming any interest in the Mortgaged Property by, through or under Mortgagor
(except tenants of space in the Improvements subject to leases entered into
prior to the date hereof), are occupying or using the Mortgaged Property, or any
part thereof, then, to the extent not prohibited by applicable law, each and all
shall, at the option of Mortgagee or the purchaser at such sale, as the case may
be, immediately become the tenant of the purchaser at such sale, which tenancy
shall be a tenancy from day-to-day, terminable at the will of either Landlord or
tenant, at a reasonable rental per day based upon the value of the Mortgaged
Property occupied or used, such rental to be due daily to the purchaser.
Further, to the extent permitted by applicable law, in the event the tenant
fails to surrender possession of the Mortgaged Property upon the termination of
such tenancy, the purchaser shall be entitled to institute and maintain an
action for unlawful detainer of the Mortgaged Property in the appropriate court
of the county in which the Premises is located.
(s) Notice to Account Debtors. Mortgagee may, at any time
after a default hereunder, which default is not cured within any applicable
grace or cure period, notify the account debtors and obligors of any accounts,
chattel paper, negotiable instruments or other evidences of indebtedness to
Mortgagor included in the Mortgaged Property to pay Mortgagee directly.
Mortgagor shall at any time or from time to time upon the request of Mortgagee
provide to Mortgagee a current list of all such account debtors and obligors and
their addresses.
(t) Payment of Expenses. Mortgagor shall pay on demand all of
Mortgagee's expenses incurred in any efforts to enforce any terms of this Deed
of Trust, whether or not any lawsuit is filed and whether or not foreclosure is
commenced but not completed, including, but not limited to, legal fees and
disbursements, foreclosure costs and title charges, together with interest
thereon from and after the date incurred by Mortgagee until actually paid by
Mortgagor at the Default Rate, and the same shall be secured by this Deed of
Trust and by all of the other Loan Documents securing all or any part of the
indebtedness evidenced by the Note.
(u) Action for Breach of Contract. In accordance with
California Code of Civil Procedure Section 736, as such Section may be amended
from time to time, Mortgagee may bring an action for breach of contract against
Mortgagor for breach of any "environmental provision" (as
<PAGE>
such term is defined in such Section) made by Mortgagor herein or in any other
Loan Document for the recovery of damages and/or for the enforcement of the
environmental provision.
(v) Waiver of Security. In accordance with California Code of
Civil Procedure Section 726.5, as such Section may be amended from time to time,
Mortgagee may waive the security of this Mortgage as to any parcel of the
Premises that is "environmentally impaired" or is an "affected parcel" (as such
terms are defined in such Section), and as to any personal property which is
Mortgaged Property attached to such parcel, and thereafter exercise against
Mortgagor, to the extent permitted by such Section 726.5, the rights and
remedies of an unsecured creditor, including reduction of Mortgagee's claim
against Mortgagor to judgment, and any other rights and remedies permitted by
law. In the event Mortgagee elects, in accordance with California Code of Civil
Procedure Section 726.5, to waive all or part of the security of this Mortgage
and proceed against Mortgagor on an unsecured basis, the valuation of the real
property, the determination of the environmentally impaired status of such
security and any cause of action for a money judgment, shall, at the request of
Mortgagee, be referred to a referee in accordance with California Code of Civil
Procedure Section 638 et seq. Such referee shall be an M.A.I. appraiser selected
by Mortgagee and approved by Mortgagor, which approval shall not be unreasonably
withheld or delayed. The decision of such referee shall be binding upon both
Mortgagor and Mortgagee, and judgment upon the award rendered by such referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and 645.
Mortgagor shall pay all reasonable costs and expenses incurred by Mortgagee in
connection with any proceeding under California Code of Civil Procedure Section
726.5, as such Section may be amended from time to time.
26. Right of Inspection. Mortgagee and its agents shall have the right
to enter and inspect the Mortgaged Property during normal business hours upon
reasonable notice.
27. Security Agreement.
(a) This Mortgage is both a real property mortgage or deed of
trust and a "security agreement" within the meaning of the Uniform Commercial
Code. The Mortgaged Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Mortgagor in the Mortgaged Property. Mortgagor by executing and delivering this
Mortgage has granted and hereby grants to Mortgagee, 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 called
in this paragraph the "Collateral"). Mortgagor hereby agrees with Mortgagee to
execute and deliver to Mortgagee, in form and substance satisfactory to
Mortgagee, such financing statements and such further assurances as Mortgagee
may from time to time, reasonably consider necessary to create, perfect, and
preserve Mortgagee's security interest herein granted.
(b) The grant of a security interest to Mortgagee in the
granting clause of this Mortgage shall not be construed to derogate from or
impair the lien or provisions of or the rights of
<PAGE>
Mortgagee under this Mortgage with respect to any property described therein
which is real property or which the parties have agreed to treat as real
property. The hereby stated intention of Mortgagor and Mortgagee is that
everything used in connection with the production of income from such real
property or adapted for use thereon is, and at all times and for all purposes
and in all proceedings, both legal and equitable, shall be regarded as real
property, irrespective of whether or not the same is physically attached to the
Premises and/or Improvements.
(c) This Mortgage shall also constitute a "fixture filing" for
the purposes of the Uniform Commercial Code. All or part of the Mortgaged
Property are or are to become fixtures. Information concerning the security
interest herein granted may be obtained from the parties at the addresses of the
parties set forth in the first paragraph of this Mortgage.
(d) If an Event of Default shall occur, Mortgagee, 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
Mortgagee may deem necessary for the care, protection and preservation of the
Collateral. Upon request or demand of Mortgagee, Mortgagor shall at its expense
assemble the Collateral and make it available to Mortgagee at a convenient place
acceptable to Mortgagee. Mortgagor shall pay to Mortgagee on demand any and all
expenses, including legal expenses and attorneys' fees, incurred or paid by
Mortgagee 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 Mortgagee with respect to the Collateral sent to
Mortgagor in accordance with the provisions hereof at least five (5) days prior
to such action, shall constitute commercially reasonable notice to Mortgagor.
The proceeds of any disposition of the Collateral, or any part thereof, may be
applied by Mortgagee to the payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper.
(e) In the event of any change in name, identity or structure
of any Mortgagor, such Mortgagor shall notify Mortgagee thereof and promptly
after request shall execute, file and record such Uniform Commercial Code forms
as are necessary to maintain the priority of Mortgagee's lien upon and security
interest in the Collateral, and shall pay all expenses and fees in connection
with the filing and recording thereof. If Mortgagee shall require the filing or
recording of additional Uniform Commercial Code forms or continuation
statements, Mortgagor shall, promptly after request, execute, file and record
such Uniform Commercial Code forms or continuation statements as Mortgagee shall
deem necessary, and shall pay all expenses and fees in connection with the
filing and recording thereof, it being understood and agreed, however, that no
such additional documents shall increase Mortgagor's obligations under the Note,
this Mortgage and the other Loan Documents. Mortgagor hereby irrevocably
appoints Mortgagee as its attorney-in-fact, coupled with an interest, to file
with the appropriate public office on its behalf any financing or other
statements signed only by Mortgagee, as Mortgagor's attorney-in-fact, in
connection with the Collateral covered by this Mortgage. Notwithstanding the
foregoing, Mortgagor shall appear and defend in any action or proceeding which
affects or purports to affect the Mortgaged Property and any interest or right
therein, whether such proceeding effects title or any other rights in the
<PAGE>
Mortgaged Property (and in conjunction therewith, Mortgagor shall fully
cooperate with Mortgagee in the event Mortgagee is a party to such action or
proceeding).
28. Actions and Proceedings. Mortgagee 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 Mortgagor,
which Mortgagee, in its discretion, decides should be brought to protect their
interest in the Mortgaged Property. Mortgagee shall, at its option, be
subrogated to the lien of any 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.
29. Waiver of Setoff and Counterclaim. All amounts due under this
Mortgage, the Note and the other Loan Documents shall be payable without setoff,
counterclaim or any deduction whatsoever. To the extent permitted by law,
Mortgagor hereby waives the right to assert a setoff, counterclaim or deduction
in any action or proceeding in which Mortgagee is a participant, or arising out
of or in any way connected with this Mortgage, the Note, any of the other Loan
Documents, or the Debt.
30. Contest of Certain Claims. Notwithstanding the provisions of
Sections 4 and 23(h) hereof, Mortgagor shall not be in default for failure to
pay or discharge Taxes, Other Charges or mechanic's or materialman's lien
asserted against the Mortgaged Property if, and so long as, (a) Mortgagor shall
have notified Mortgagee of same within ten (10) days of obtaining knowledge
thereof; (b) Mortgagor shall diligently and in good faith contest the same by
appropriate legal proceedings which shall operate to prevent the enforcement or
collection of the same and the sale of the Mortgaged Property or any part
thereof, to satisfy the same; (c) Mortgagor shall have furnished to Mortgagee a
cash deposit, or evidence of an indemnity bond satisfactory to Mortgagee and
otherwise in accordance with applicable law with a surety satisfactory to
Mortgagee, in the amount of the Taxes, Other Charges or mechanic's or
materialman's lien claim, plus a reasonable additional sum to pay all costs,
interest and penalties that may be imposed or incurred in connection therewith,
to assure payment of the matters under contest and to prevent any sale or
forfeiture of the Mortgaged Property or any part thereof; (d) Mortgagor shall
promptly upon final determination thereof pay the amount of any such Taxes,
Other Charges or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith; (e) the failure to pay
the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Mortgaged Property; and (f)
notwithstanding the foregoing, Mortgagor shall immediately upon request of
Mortgagee pay (and if Mortgagor shall fail so to do, Mortgagee may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the reasonable
opinion of Mortgagee, the Mortgaged Property or any part thereof or interest
therein may be in danger of being sold, forfeited, foreclosed, terminated,
canceled or lost. Mortgagee may pay over any such cash deposit or part thereof
to the claimant entitled thereto at any time when, in the reasonable judgment of
Mortgagee, the entitlement of such claimant is established.
31. Recovery of Sums Required to Be Paid. Mortgagee 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
<PAGE>
become due, without regard to whether or not the balance of the Debt shall be
due, and without prejudice to the right of Mortgagee thereafter to bring an
action of foreclosure, or any other action, for a default or defaults by
Mortgagor existing at the time such earlier action was commenced.
32. Handicapped Access. Mortgagor agrees that the Mortgaged Property
shall at all times strictly comply to the extent applicable with the
requirements of the Americans with Disabilities Act of 1990, the Fair Housing
Amendments Act of 1988, all state and local laws and ordinances related to
handicapped 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 "Access
Laws").
(a) Notwithstanding any provisions set forth herein or in any other
document regarding Mortgagee's approval of alterations of the Mortgaged
Property, Mortgagor shall not alter the Mortgaged Property in any manner which
would increase Mortgagor's responsibilities for compliance with the applicable
Access Laws without the prior written approval of Mortgagee. The foregoing shall
apply to tenant improvements constructed by Mortgagor or by any of its tenants.
Mortgagee may condition any such approval upon receipt of a certificate from an
architect, engineer, or other person acceptable to Mortgagee of compliance with
Access Laws.
(b) Mortgagor agrees to give prompt notice to Mortgagee of the receipt
by Mortgagor of any complaints related to violation of any Access Laws and of
the commencement of any proceedings or investigations which relate to compliance
with applicable Access Laws.
33. Indemnification. Subject to the recourse limitations contained in
the Note, in addition to any other indemnifications provided in any of the Loan
Documents, Mortgagor shall protect, defend, indemnify and save harmless
Mortgagee, its subsidiaries, affiliates, persons controlling or under common
control with Mortgagee, their agents, officers, directors, shareholders,
employees, servants, consultants, representatives and their respective
successors and assigns and Trustee (collectively, the "Indemnified Parties"),
from and against all liabilities, obligations, claims, demands, damages,
penalties, causes of action, losses, fines, costs and expenses (including
without limitation reasonable attorneys' fees and expenses), imposed upon or
incurred by or asserted against any of the Indemnified Parties by reason of (a)
ownership of this Mortgage, 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, nonuse 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) any failure on
the part of Mortgagor to perform or comply with any of the terms of this
Mortgage; (e) 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; (f) any failure of the Mortgaged Property to comply with any Access
Laws; (g) any representation or warranty made in the Note, this Mortgage or the
other Loan Documents being false or misleading in any respect as of the date
such representation or warranty was made; (h) any claim by brokers, finders or
similar persons claiming to be entitled to a commission in connection with any
Lease or other transaction involving the Mortgaged Property or any part thereof
under any legal requirement or any liability asserted against Mortgagee with
respect
<PAGE>
thereto; and (i) the claims of any lessee to any portion of the Mortgaged
Property or any person acting through or under any lessee or otherwise arising
under or as a consequence of any Lease. Any amounts payable to any of the
Indemnified Parties by reason of the application of this paragraph shall be
secured by this Mortgage and shall become immediately due and payable and shall
bear interest at the Default Rate specified in the Note from the date loss or
damage is sustained by any of the Indemnified Parties until paid. The
obligations and liabilities of Mortgagor under this Section 33 (A) shall survive
for a period of one (1) year following any release of this Mortgage executed by
Mortgagee and satisfaction of the loan evidenced by the Loan Documents, and (B)
shall survive the transfer or assignment of this Mortgage, the entry of a
judgment of foreclosure, sale of the Mortgaged Property by nonjudicial
foreclosure sale, or delivery of a deed in lieu of foreclosure (including,
without limitation, any transfer by Mortgagor of any of its rights, title and
interest in and to the Mortgaged Property to any party, whether or not
affiliated with Mortgagor).
34. Trustee. Trustee may resign by the giving of notice of such
resignation in writing or verbally to Mortgagee. If Trustee shall die, resign,
or become disqualified from acting in the execution of this trust, or if, for
any reason, Mortgagee shall prefer to appoint a substitute trustee or multiple
substitute trustees, or successive substitute trustees or successive multiple
substitute trustees, to act instead of the aforenamed Trustee, Mortgagee shall
have full power to appoint a substitute trustee (or, if preferred, multiple
substitute trustees) in succession who shall succeed (and if multiple substitute
trustees are appointed, each of such multiple substitute trustees shall succeed)
to all the estates, rights, powers, and duties of the aforenamed Trustee. Such
appointment may be executed by any authorized agent of Mortgagee, and if such
Mortgagee be a corporation and such appointment be executed in its behalf by any
officer of such corporation, such appointment shall be conclusively presumed to
be executed with authority and shall be valid and sufficient without proof of
any action by the board of directors or any superior officer of the corporation.
Mortgagor hereby ratifies and confirms any and all acts which the aforenamed
Trustee, or his successor or successors in this trust, shall do lawfully by
virtue hereof. If multiple substitute Trustees are appointed, each of such
multiple substitute Trustees shall be empowered and authorized to act alone
without the necessity of the joinder of the other multiple substitute trustees,
whenever any action or undertaking of such substitute trustees is requested or
required under or pursuant to this Mortgage or applicable law. Any substitute
Trustee appointed pursuant to any of the provisions hereof shall, without any
further act, deed, or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its or his predecessor in the rights
hereunder with like effect as if originally named as Trustee herein; but
nevertheless, upon the written request of Mortgagee or of the substitute
Trustee, the Trustee ceasing to act shall execute and deliver any instrument
transferring to such substitute Trustee, upon the trusts herein expressed, all
the estates, properties, rights, powers, and trusts of the Trustee so ceasing to
act, and shall duly assign, transfer and deliver any of the property and moneys
held by such Trustee to the substitute Trustee so appointed in the Trustee's
place. No fees or expenses shall be payable to Trustee, except in connection
with a foreclosure of the Mortgaged Property or any part thereof or in
connection with the release of the Mortgaged Property following payment in full
of the Debt.
35. Notices. Unless oral notice is expressly permitted hereunder any
notice, demand, statement, request or consent made hereunder shall be in writing
and shall be deemed to be received by the addressee on the first (1st) business
day after such notice is tendered to a nationally-recognized overnight delivery
service or on the third (3rd) day following the day such notice is deposited
with the United States postal service first class certified mail, return receipt
requested, in either instance, addressed to the address, as set forth above, of
the party to whom such notice is to be given, or to such other address as
Mortgagor or Mortgagee, as the case may be, shall in like manner designate in
writing.
36. Authority. (a) Mortgagor (and the undersigned representative of
Mortgagor, if any) has full power, authority and right to execute, deliver and
perform its obligations pursuant to this Mortgage, and to mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Mortgaged Property pursuant to the terms hereof and to keep and
observe all of the terms of this Mortgage on Mortgagor's part to be performed;
and (b) Mortgagor represents and warrants that Mortgagor 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.
37. Waiver of Notice. Mortgagor shall not be entitled to any notices of
any nature whatsoever from Mortgagee except with respect to matters for which
this Mortgage specifically and expressly provides for the giving of notice by
Mortgagee to Mortgagor and except with respect to matters for which Mortgagee is
required by applicable law to give notice, and Mortgagor hereby expressly waives
the right to receive any notice from Mortgagee with respect to any matter for
which this Mortgage does not specifically and expressly provide for the giving
of notice by Mortgagee to Mortgagor.
38. Remedies of Mortgagor. In the event that a claim or adjudication is
made that Mortgagee has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Mortgage or the other Loan Documents,
it has an obligation to act reasonably or promptly, Mortgagee shall not be
liable for any monetary damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
39. Sole Discretion of Mortgagee. Wherever pursuant to this Mortgage,
Mortgagee exercises any right given to it to approve or disapprove, or any
arrangement or term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Mortgagee
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
40. Non-Waiver. The failure of Mortgagee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Mortgage. Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply with any request
of Mortgagor or Guarantor to take any action to foreclose this Mortgage or
otherwise enforce any of the provisions hereof or of the Note or other Loan
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 Mortgagee extending the
time of payment or otherwise modifying or supplementing the terms of the Note,
this Mortgage, or the other Loan Documents. Mortgagee may resort for the payment
of the Debt to any
<PAGE>
other security held by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Mortgagee thereafter to foreclosure this Mortgage. The rights and
remedies of Mortgagee under this Mortgage shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others. No act
of Mortgagee shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision. Mortgagee 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.
41. No Oral Change. This Mortgage may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Mortgagor or Mortgagee, 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.
42. Liability. If Mortgagor consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Mortgagee's consent to any
transfer of the Mortgaged Property, this Mortgage shall be binding upon and
inure to the benefit of Mortgagor and Mortgagee and their respective successors
and assigns forever.
43. Inapplicable Provisions. If any term, covenant or condition of this
Mortgage is held to be invalid, illegal or unenforceable in any respect, this
Mortgage shall be construed without such provision.
44. Headings, etc. The headings and captions of various paragraphs of
this Mortgage 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.
45. Counterparts. This Mortgage may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
46. Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Mortgage
may be used interchangeably in singular or plural form and the word "Mortgagor"
shall mean "each Mortgagor and any subsequent owner or owners of the Mortgaged
Property or any part thereof or any interest therein," the word "Mortgagee"
shall mean "Mortgagee and any subsequent holder of the Note," the word "Debt"
shall mean "the Note and any other evidence of indebtedness secured by this
Mortgage," the word "person" shall include an individual, corporation,
partnership, 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 and the
words "attorneys' fees" shall include any and all attorneys' fees, paralegal and
law clerk fees, including, but not limited to, fees at the pre-trial, trial and
appellate levels incurred or paid by Mortgagee in protecting its interest in the
Mortgaged Property and Collateral and enforcing its rights hereunder. Whenever
the context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter
<PAGE>
forms, and the singular form of nouns and pronouns shall include the plural and
vice versa.
47. Homestead. Mortgagor 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 Premises as against the collection of the Debt,
or any part hereof.
48. Assignments. Mortgagee shall have the right to assign or transfer
its rights under this Mortgage and the other Loan Documents without limitation,
including, without limitation, the right to assign or transfer its rights to a
servicing agent. Any assignee or transferee shall be entitled to all the
benefits afforded Mortgagee under this Mortgage and the other Loan Documents.
49. Survival of Obligations; Survival of Warranties and
Representations. Each and all of the covenants and obligations of Mortgagor
(other than warranties and representations contained herein) shall survive the
execution and delivery of the Loan Documents and shall continue in full force
and effect until the Debt shall have been paid in full; provided, however, that
nothing contained in this paragraph shall limit the obligations of Mortgagor
except as otherwise set forth herein. In addition, any and all warranties and
representations of Mortgagor contained herein shall survive the execution and
delivery of the Loan Documents and (i) shall continue for a period of one (1)
year following any release of this Mortgage executed by Mortgagee and
satisfaction of the loan evidenced by the Loan Documents, and (ii) shall survive
the transfer or assignment of this Mortgage, the entry of a judgment of
foreclosure, sale of the Mortgaged Property by non-judicial foreclosure or deed
in lieu of foreclosure (including, without limitation, any transfer of the
Mortgage by Mortgagee of any of its rights, title and interest in and to the
Mortgaged Property to any party, whether or not affiliated with Mortgagee).
50. Covenants Running with the Land. All covenants, conditions,
warranties, representations and other obligations contained in this Mortgage and
the other Loan Documents are intended by Mortgagor, Mortgagee and Trustee to be,
and shall be construed as, covenants running with the Mortgaged Property until
the lien of this Mortgage has been fully released by Mortgagee.
51. Governing Law; Jurisdiction. THIS MORTGAGE AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED (WITHOUT REGARD TO ANY CONFLICT
OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
MORTGAGOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY COURT OF
COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF OR RELATING TO THIS MORTGAGE.
52. Time. Time is of the essence in this Mortgage and the other Loan
Documents.
53. No Third Party Beneficiaries. The provisions of this Mortgage and
the other Loan Documents are for the benefit of Mortgagor, Mortgagee and Trustee
and shall not inure to the benefit of any third party (other than any successor
or assignee of either Trustee or Mortgagee). This Mortgage and the other Loan
Documents shall not be construed as creating any rights, claims or
<PAGE>
causes of action against Mortgagee or any of its officers, directors, agents or
employees in favor of any party other than Mortgagor including but not limited
to any claims to any sums held in the Tax and Insurance Escrow Fund.
54. Relationship of Parties. The relationship of Mortgagee and
Mortgagor is solely that of debtor and creditor, and Mortgagee has no fiduciary
or other special relationship with the Mortgagor, and no term or condition of
any of the Loan Documents shall be construed to be other than that of debtor and
creditor. Mortgagor represents and acknowledges that the Loan Documents do not
provide for any shared appreciation rights or other equity participation
interest.
55. Trustee Provisions. In the event that this Mortgage operates as a
mortgage, the provisions of this Mortgage which pertain to the Trustee shall be
of no force or effect.
56. Investigations. Any and all representations, warranties, covenants
and agreements made in this Mortgage (and/or in other Loan Documents) shall
survive any investigation or inspection made by or on behalf of Mortgagee.
57. Assignment of Rents and Leases. Mortgagor does hereby irrevocably,
absolutely and unconditionally grant, sell, convey, assign, pledge, transfer,
set over and deliver to Mortgagee:
(a) all of Mortgagor's interest in and to all current and
future leases and other agreements affecting the use, enjoyment, or occupancy of
all or any part of the Mortgaged Property, and all other leases and other
agreements affecting the use, enjoyment or occupancy of any part of the
Mortgaged Property now or hereafter made affecting the Mortgaged Property or any
portion thereof, together with any guaranty, extensions, renewals, replacements
or modifications of the same (all of the leases and other agreements described
above together with all other present and future leases and present and future
agreements and any guaranty, extension, renewal, replacement or modification of
the same are hereinafter collectively referred to as the "Leases"); and
(b) all rents, income, issues, revenues and profits arising
from the Leases and renewals thereof and together with all rents, income, issues
and profits from the use, enjoyment and occupancy of the Mortgaged Property
(including, but not limited to, minimum rents, additional rents, percentage
rents, deficiency rents, security deposits and liquidated damages following
default under any Leases, all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by damage to any
part of the Mortgaged Property, all of Mortgagor's rights to recover monetary
amounts from any Lessee (as hereinafter defined) in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising out of Lease defaults, including rejection of a Lease, together with any
sums of money that may now or at any time hereafter be or become due and payable
to Mortgagor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and all future oil, gas and mining Leases covering the Mortgaged
Property or any part thereof, and all proceeds and other amounts paid or owing
to Mortgagor under or pursuant to any and all contracts and bonds relating to
the construction, erection or renovation of the Mortgaged Property) (all of the
rights described above hereinafter collectively referred to as the "Rents").
<PAGE>
(c) Mortgagor does hereby irrevocably, absolutely and
unconditionally assign to Mortgagee all of Mortgagor's right, title and interest
in all current and future Leases and Rents, it being intended by Mortgagor that
this assignment shall constitute a present, absolute assignment and not an
assignment for additional security only. Such assignment to Mortgagee shall not
be construed to bind Mortgagee to the performance of any of the covenants,
conditions, or provisions contained in any of the Leases or otherwise to impose
any obligation upon Mortgagee. Mortgagor agrees to execute and deliver to
Mortgagee such additional instruments, in form and substance satisfactory to
Mortgagee, as may hereinafter be requested by Mortgagee to further evidence and
confirm said assignment. Mortgagee is hereby granted and assigned by Mortgagor
the right to enter the Mortgaged Property for the purpose of enforcing its
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 of this paragraph, Mortgagee grants to Mortgagor a
revocable license to operate and manage the Mortgaged Property and to collect
and to hold the Rents, or a portion thereof sufficient to discharge all current
sums due on the Debt for use in the payment of such sums. Upon an Event of
Default, the license granted to Mortgagor herein shall automatically terminate
without notice to Mortgagor and Mortgagee shall immediately be entitled to
receive and apply all Rents, whether or not Mortgagee enters upon and takes
control of the Mortgaged Property. Any Rents collected by Mortgagor after the
termination of the license granted to Mortgagor hereunder shall be held in trust
for Mortgagee and shall be paid to Mortgagee within one day after receipt by
Mortgagor. Mortgagor hereby grants and assigns to Mortgagee the right, at its
option, upon the revocation of the license granted 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 revocation of the license herein
granted may be applied toward the expenses of holding, operating, managing or
repairing the Mortgaged Property, or toward payment of the Debt, in such
priority and proportion as Mortgagee, in its discretion, shall deem proper.
(d) Upon or at any time after an Event of Default, Mortgagee
may, at its option, without waiving such Event of Default, without notice and
without regard to the adequacy of the security for the Debt, either 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 Mortgagee may deem proper and either 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
with full power to make from time to time all alterations, renovations, repairs
or replacements thereto or thereof as may seem proper to Mortgagee and may apply
the Rents to the payment of the following in such order and proportion as
Mortgagee in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Mortgaged Property, including, without being limited thereto, the salaries, fees
and wages of a managing agent and such other employees or agents as Mortgagee
may deem necessary or desirable and all expenses of operating and maintaining
the Mortgaged Property, including, without being limited thereto, all taxes,
charges, claims, assessments, water charges, sewer rents and any other liens,
and premiums for all insurance which Mortgagee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the Mortgaged Property;
and (b) the Debt, (including all costs and attorneys' fees). In addition to the
rights which Mortgagee may have herein, upon the occurrence of
<PAGE>
an Event of Default, Mortgagee at its option may require Mortgagor to vacate and
surrender possession of the Mortgaged Property to Mortgagee or to such receiver
and, in default thereof, Mortgagor may be evicted by summary proceedings or
otherwise. Additionally, upon such Event of Default, Mortgagee shall have the
right to establish a lock box for the deposit of all Rents and other receivables
of Mortgagor relating to the Mortgaged Property. Mortgagor shall pay any and all
costs and expenses for such lock box. For purposes of subsections (a), (b), (c)
and (d), Mortgagor grants to Mortgagee its irrevocable power of attorney,
coupled with an interest, to take any and all of the aforementioned actions and
any or all other actions designated by Mortgagee for the proper management and
preservation of the Mortgaged Property. The exercise by Mortgagee of the option
granted it in this paragraph and the collection of the Rents and the application
thereof as herein provided shall not be considered a waiver of any Event of
Default under any of the Loan Documents.
58. Independent Management. In the event Mortgagee determines in its
reasonable and absolute discretion that the quality of management for the
Mortgaged Property has deteriorated, Mortgagor shall engage an independent
management company unaffiliated with Mortgagor which is satisfactory to
Mortgagee within 45 days after Mortgagor's receipt of written notice thereof,
pursuant to a management agreement satisfactory to Mortgagee, and cause such
management company to execute and deliver to Mortgagee within such 45-day period
an Acknowledgment of Property Manager substantially in the form executed by
Manager in connection herewith.
59. Mortgagor's Release Option. Notwithstanding that this Mortgage
secures the Note, the Arkansas Note and the Arizona Note, Mortgagee shall
release the Mortgaged Property from the lien of this Mortgage (a "Release") upon
the satisfaction of each and every one of the following conditions precedent at
the time of such Release (singularly and collectively referred to as a "Release
Condition"):
(a) Any and all sums then due and payable to Mortgagee under
the Note and the Loan Documents as defined therein shall be fully paid
(including, without limitation, principal and interest under the Note and all
sums constituting the Tax and Insurance Escrow Fund, and any other escrow
required under the Loan Documents), and no Event of Default shall exist and be
continuing, nor shall Mortgagee have given Mortgagor notice of any event or
condition which, with the passage of time or the giving of notice or both, could
result in an Event of Default if not cured by Mortgagor.
(b) In no event shall a Release affect any of Mortgagor's
obligations under the Loan Documents (as defined in the Arkansas Note) or the
Loan Documents (as defined in the Arizona Note).
(c) All reasonable costs and expenses incurred by Mortgagee
(and any servicer of the Loan) in connection with the review, approval and
execution of any Release shall be paid by Mortgagor prior to and as a condition
of any Release, including, but not limited to, reasonable attorneys' fees.
60. Mortgagee's Option to Release Cross-Collateralization and
Cross-Default. Mortgagor shall consent to, execute and otherwise cooperate in a
modification of this Mortgage and the other Loan Documents providing that this
Mortgage shall no longer secure the Arkansas Note and/or the
<PAGE>
Arizona Note and that an Event of Default under the Arkansas Note (and the
related Loan Documents, as defined in such Note) and/or the Arizona Note (and
the related Loan Document, as defined in such Note) (collectively, the "Related
Documents") shall no longer constitute an Event of Default hereunder. Such a
modification shall automatically render ineffective any provisions in the
Related Loan Documents providing for cross-collateralization or cross-default
with this Mortgage. Such a modification shall be made at Mortgagee's sole cost
and expense, and Mortgagee shall reimburse Mortgagor for its costs and expenses
(including, without limitation, its reasonable attorneys' fees and costs)
related thereto.
Mortgagor has executed this instrument the day and year first above
written.
MORTGAGOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT A
(Legal Description)
THE LAND SITUATED IN LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND DESCRIBED AS
FOLLOWS:
PARCELS 1 TO 6 INCLUSIVE AS SHOWN ON PARCEL MAP 1526, AS PER MAP FILED IN BOOK
24 PAGE 81 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
WHICH SAID PARCEL MAP RECITES "DIVISION OF LAND FOR LEASE PURPOSES ONLY."
EXCEPT THEREFROM ALL RIGHTS TO MINERALS, OIL, GAS, TARS, HYDROCARBONS AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL OR MINE
FOR THE SAME, WITHOUT, HOWEVER, THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE
OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED BY THE NEWHALL
LAND AND FARMING COMPANY, A DELAWARE CORPORATION RECORDED MARCH 24, 1983 AS
INSTRUMENT NO. 83- 323387 AND RE-RECORDED FEBRUARY 21, 1985 AS INSTRUMENT NO.
85-196474.
Property Address: Old Orchard Shopping Center
23047-23453 Orchard Village Road
Santa Clarita (Valencia), California 91355
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
Andrews & Kurth L.L.P.
601 S. Figueroa Street,
Suite 4200
Los Angeles, California 90017
Attention: Gregg J. Loubier
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
ASSIGNMENT OF LEASES AND RENTS
THIS ASSIGNMENT OF LEASES AND RENTS ("Assignment") is made as of
September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership ("Assignor"), to WESTCO REAL ESTATE FINANCE CORP., a California
corporation ("Assignee").
Assignor, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, does hereby GRANT, SELL, CONVEY,
ASSIGN, TRANSFER, SET OVER AND DELIVER to Assignee the entire lessor's interest
in and to all current and future leases and other agreements affecting the use,
enjoyment, or occupancy of all or any part of the Mortgaged Property (as defined
in the Mortgage, which is defined below), which Mortgaged Property includes that
certain lot or piece of land, more particularly described in Exhibit A annexed
hereto and made a part hereof.
TOGETHER WITH all other leases and other agreements affecting the use,
enjoyment or occupancy of any part of the Mortgaged Property now or hereafter
made affecting the Mortgaged Property or any portion thereof, together with any
extensions or renewals of the same (all of the leases and other agreements
described above together with all other present and future leases and present
and future agreements and any extension or renewal of the same are hereinafter
collectively referred to as the "Leases");
TOGETHER WITH all rents, income, issues, revenues and profits arising
from the Leases and renewals thereof and together with all rents, income, issues
and profits from the use, enjoyment and occupancy of the Mortgaged Property
(including, but not limited to, minimum rents, additional rents, percentage
rents, deficiency rents, security deposits and liquidated damages following
default under any Leases, all proceeds payable under any policy of insurance
covering loss of rents resulting from untenantability caused by damage to any
part of the Mortgaged Property, all of Assignor's rights to recover monetary
amounts from any Lessee (as hereinafter defined) in bankruptcy including,
without limitation, rights of recovery for use and occupancy and damage claims
arising
<PAGE>
out of Lease defaults, including rejection of a Lease, together with any sums of
money that may now or at any time hereafter be or become due and payable to
Assignor by virtue of any and all royalties, overriding royalties, bonuses,
delay rentals and any other amount of any kind or character arising under any
and all present and all future oil, gas and mining Leases covering the Mortgaged
Property or any part thereof, and all proceeds and other amounts paid or owing
to Assignor under or pursuant to any and all contracts and bonds relating to the
construction, erection or renovation of the Mortgaged Property) (all of the
rights described above hereinafter collectively referred to as the "Rents").
THIS ASSIGNMENT is made for the purposes of securing:
A. The payment of the Debt as defined in that certain Note made by
Assignor to Assignee, dated the date hereof, in the principal sum of $8,445,000
(the "Note"), and secured by the Mortgage (as defined in the Note) covering the
Mortgaged Property.
B. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained herein and in the other Loan Documents (as
defined in the Note).
C. The payment of the Debt as defined in the Arizona Note (as defined
in the Mortgage).
D. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained in the Loan Documents (as defined in the
Arizona Note).
E. The payment of the Debt as defined in the Arkansas Note (as defined
in the Mortgage).
F. The performance and discharge of each and every obligation, covenant
and agreement of Assignor contained in the Loan Documents (as defined in the
Arkansas Note).
Assignor warrants to Assignee that (a) Assignor is the sole owner of
the entire lessor's interest in the Leases; (b) the Leases are valid,
enforceable and in full force and effect and have not been altered, modified or
amended in any manner whatsoever except as disclosed to Assignee; (c) neither
the Leases nor the Rents reserved in the Leases have been assigned or otherwise
pledged or hypothecated; (d) none of the Rents have been collected for more than
one (1) month in advance; (e) Assignor 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 Assignor or the
Mortgaged Property; (f) the premises demised under the Leases have been
completed and Lessees under the Leases have accepted the same and have taken
possession of the same on a rent-paying basis except as explicitly identified on
the certified rent roll attached to the Closing Certificate dated concurrently
herewith executed by Assignor in favor of Assignee in connection with the Note;
and (g) there exist no offsets or defenses to the payment of any portion of the
Rents.
Assignor covenants with Assignee that Assignor (a) shall observe and
perform all the obligations imposed upon the lessor under the Leases and shall
not do or permit to be done anything
<PAGE>
to impair the value of the Leases as security for the Debt; (b) shall promptly
send to Assignee copies of all notices of default which Assignor shall receive
under the Leases; (c) shall not collect any Rents more than one (1) month in
advance; (d) shall not execute any other assignment of lessor's interest in the
Leases or the Rents; (e) shall execute and deliver at the request of Assignee
all such further assurances, confirmations and assignments in connection with
the Mortgaged Property as Assignee shall from time to time require; (f) shall
not enter into any new lease of the Mortgaged Property without the prior written
consent of Assignee (unless such new Lease satisfies the Approval Conditions
described below), and in any event, any new Lease shall be on a form of lease
approved by Assignee; (g) shall deliver to Assignee, upon request, subject to
tenant lease requirements, tenant estoppel certificates from each commercial
Lessee at the Mortgaged Property in form and substance reasonably satisfactory
to Assignee (provided, however, that Assignor shall not be required to deliver
such certificates more frequently than two [2] times in any calendar year); and
(h) shall deliver to Assignee, at Assignee's request, executed copies of all
Leases now existing or hereafter arising.
Assignor further covenants with Assignee that, except to the extent
that Assignor is acting in the ordinary course of business as a prudent operator
of property similar to the Mortgaged Property, Assignor (a) shall promptly send
to Assignee copies of all notices of default which Assignor shall send to
Lessees under the Leases; (b) shall enforce all of the terms, covenants and
conditions contained in the Leases upon the part of the Lessees thereunder to be
observed or performed, short of termination thereof; (c) shall not alter, modify
or change the terms of the Leases without the prior written consent of Assignee,
or cancel or terminate the Leases or accept a surrender thereof or take any
other action which would effect a merger of the estates and rights of, or a
termination or diminution of the obligations of, Lessees thereunder; provided
however, that any Lease may be canceled if at the time of cancellation thereof a
new Lease is entered into on substantially the same terms or more favorable
terms as the canceled Lease; (d) shall not alter, modify or change the terms of
any guaranty of any of the Leases or cancel or terminate any such guaranty
without the prior written consent of Assignee; (e) shall not consent to any
assignment of or subletting under the Leases not in accordance with their terms,
without the prior written consent of Assignee; and (f) shall not waive, release,
reduce, discount or otherwise discharge or compromise the payment of any of the
Rents to accrue under the Leases.
Assignor further covenants with Assignee that (a) all Leases shall be
written on the standard form of lease which has been approved by Assignee; (b)
upon request, Assignor shall furnish Assignee with executed copies of all
Leases; (c) no material changes may be made to the Assignee-approved standard
lease without the prior written consent of Assignee; (d) all renewals of Leases
and all proposed Leases shall provide for rental rates comparable to existing
local market rates and shall be arm's-length transactions; (e) all Leases shall
provide that (i) they are subordinate to the Mortgage and any other indebtedness
now or hereafter secured by the Mortgaged Property, (ii) Lessees agree to attorn
to Assignee (such attornment to be effective upon Assignee's acquisition of
title to the Mortgaged Property), (iii) Lessees agree to execute such further
evidences of attornment as Assignee may from time to time request, (iv) the
attornment of Lessees shall not be terminated by foreclosure, (v) Assignee may,
at Assignee's option, accept or reject such attornment, and (vi) Lessees agree
to furnish, two times in any calendar year, as Assignee may request, a
certificate signed by Lessee confirming and containing such factual
certifications and representations deemed reasonably appropriate by Assignee;
and (f) all new Leases shall be subject to the prior
<PAGE>
approval of Assignee.
Notwithstanding anything to the contrary contained herein, and provided
that no Event of Default (as defined in the Mortgage) shall exist and be
continuing, the following terms and provisions shall apply (the "Approval
Conditions"):
(a) Assignee's consent shall not be required for modifications
of Leases if (i) the Lease to be modified does not involve more than
6,000 rentable square feet of the Mortgaged Property, (ii) such
modifications (together with all prior modifications of such Lease made
without Assignee's consent) do not materially decrease the obligations
of Lessee nor materially increase the obligations of the lessor, (iii)
such modification (together with all prior modifications of Leases made
without Assignee's consent) will not adversely affect the Mortgaged
Property, Assignee, or Assignor's ability to fulfill its obligations
under the Loan Documents (other than to a de minimis extent), and (iv)
the Lease as so modified meets all criteria that would be required with
respect to new Leases as set forth in subpart (c) below.
(b) Assignee's consent shall not be required for termination
of a Lease if (i) Lessee under such Lease is in default beyond all
applicable notice and grace periods, (ii) the Lease to be terminated
does not involve more than 6,000 rentable square feet of the Mortgaged
Property, and (iii) such termination will not adversely affect the
Mortgaged Property, Assignee, or Assignor's ability to fulfill its
obligations under the Loan Documents (other than to a de minimis
extent).
(c) Assignee's consent shall not be required for execution of
a new Lease of space at the Mortgaged Property if (i) such Lease does
not involve more than 6,000 rentable square feet of the Mortgaged
Property, (ii) such Lease will not adversely affect the Mortgaged
Property, Assignee, or Assignor's ability to fulfill its obligations
under the Loan Documents, (iii) such Lease is on the standard form of
lease approved by Assignee, (iv) such Lease is the result of an
arms-length transaction and provides for rental rates comparable to
existing market rates, (v) such Lease does not contain any terms which
would materially affect Assignee's rights under this Assignment or the
other Loan Documents, and (vi) the term of such Lease (including any
renewal or extension term) shall be no less than six (6) months and no
more than one (1) year.
THIS ASSIGNMENT is made on the following terms, covenants and
conditions:
1. Present Assignment. Assignor does hereby absolutely and
unconditionally assign to Assignee Assignor's right, title and interest in all
current and future Leases and Rents, it being intended by Assignor that this
assignment constitute a present, absolute assignment and not an assignment for
additional security only. Such assignment to Assignee shall not be construed to
bind Assignee to the performance of any of the covenants, conditions, or
provisions contained in any of the Leases or otherwise to impose any obligation
upon Assignee. Assignor agrees to execute and deliver to Assignee such
additional instruments, in form and substance satisfactory to Assignee, as may
hereinafter be requested by Assignee to further evidence and confirm said
assignment.
<PAGE>
Assignee is hereby granted and assigned by Assignor the right to enter the
Mortgaged Property for the purpose of enforcing its 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 of this
paragraph, Assignee grants to Assignor a revocable license to operate and manage
the Mortgaged Property and to collect the Rents. Assignor shall hold the Rents,
or a portion thereof sufficient to discharge all current sums due on the Debt
for use in the payment of such sums. Upon an Event of Default, the license
granted to Assignor herein shall automatically be revoked and Assignee shall
immediately be entitled to receive and apply all Rents, whether or not Assignee
enters upon and takes control of the Mortgaged Property. Assignor hereby grants
and assigns to Assignee the right, at its option, upon the revocation of the
license granted 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 revocation of the license herein granted may be applied toward payment of
the Debt in such priority and proportion as Assignee, in its discretion, shall
deem proper.
2. Remedies of Assignee. Upon or at any time after an Event of Default,
Assignee may, at its option, without waiving such Event of Default, without
notice and without regard to the adequacy of the security for the Debt, either
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 Assignee may deem proper and either 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
with full power to make from time to time all alterations, renovations, repairs
or replacements thereto or thereof as may seem proper to Assignee and may apply
the Rents to the payment of the following in such order and proportion as
Assignee in its sole discretion may determine, any law, custom or use to the
contrary notwithstanding: (a) all expenses of managing and securing the
Mortgaged Property, including, without being limited thereto, the salaries, fees
and wages of a managing agent and such other employees or agents as Assignee may
deem necessary or desirable and all expenses of operating and maintaining the
Mortgaged Property, including, without being limited thereto, all taxes,
charges, claims, assessments, water charges, sewer rents and any other liens,
and premiums for all insurance which Assignee may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and all
expenses incident to taking and retaining possession of the Mortgaged Property;
and (b) the Debt, (including all costs and attorneys' fees). In addition to the
rights which Assignee may have herein, upon the occurrence of an Event of
Default Assignee, at its option, may require Assignor to vacate and surrender
possession of the Mortgaged Property to Assignee or to such receiver and, in
default thereof, Assignor may be evicted by summary proceedings or otherwise.
Additionally, upon such Event of Default, Assignee shall have the right to
establish a lock box for the deposit of all Rents and other receivables of
Assignor relating to the Mortgaged Property. Assignor shall pay any and all
costs and expenses for such lock box. For purposes of Paragraphs 1 and 2,
Assignor grants to Assignee its irrevocable power of attorney, coupled with an
interest, to take any and all of the aforementioned actions and any or all other
actions designated by Assignee for the proper management and preservation of the
Mortgaged Property. The exercise by Assignee of the option granted it in this
paragraph and the collection of the Rents and the application thereof as herein
provided shall not be considered a waiver of any Event of Default under any of
the Loan Documents.
<PAGE>
3. No Liability of Assignee. Assignee shall not be liable for any loss
sustained by Assignor resulting from Assignee's failure to let the Mortgaged
Property after an Event of Default or from any other act or omission of Assignee
in managing the Mortgaged Property after an Event of Default unless such loss is
caused by the willful misconduct and bad faith of Assignee. Assignee shall not
be obligated to perform or discharge any obligation, duty or liability under the
Leases or under or by reason of this Assignment and Assignor shall, and hereby
agrees, to indemnify Assignee for, and to hold Assignee harmless from, any and
all liability, loss or damage which may or might be incurred under the Leases or
under or by reason of this Assignment and from any and all claims and demands
whatsoever, including the defense of any such claims or demands which may be
asserted against Assignee by reason of any alleged obligations and undertakings
on its part to perform or discharge any of the terms, covenants or agreements
contained in the Leases. Should Assignee incur any such liability, the amount
thereof, including costs, expenses and reasonable attorneys' fees, shall be
secured hereby and by the Loan Documents and Assignor shall reimburse Assignee
therefor immediately upon demand and upon Assignor's failure to do so, Assignee
may, at its option, exercise any and all remedies available to Assignee
hereunder and under the other Loan Documents. This Assignment shall not operate
to place any obligation or liability for the control, care, management or repair
of the Mortgaged Property upon Assignee, nor for the carrying out of any of the
terms and conditions of the Leases; nor shall it operate to make Assignee
responsible or liable for any waste committed on the Mortgaged Property,
including without limitation the presence of any Hazardous Substances, (as
defined in the Environmental Agreement, which is defined in the Note), or for
any negligence in the management, upkeep, repair or control of the Mortgaged
Property resulting in loss or injury or death to any Lessee, licensee, employee
or stranger.
4. Notice to Lessees. Assignor hereby authorizes and directs Lessees
named in the Leases or any other or future Lessees or occupants of the Mortgaged
Property (the "Lessee[s]") upon receipt from Assignee of written notice to the
effect that Assignee is then the holder of the Note and that an Event of Default
exists thereunder or under the other Loan Documents to pay over to Assignee all
Rents and to continue so to do until otherwise notified by Assignee, without
further notice or consent of Assignor and regardless of whether Assignee has
taken possession of the Mortgaged Property, and Lessees may rely upon any
written statement delivered by Assignee to Lessees without any obligation or
right to inquire as to whether such default actually exists and notwithstanding
any notice from or claim of Assignor to the contrary. Assignor further agrees
that it shall have no right to claim against any of Lessees for any such Rents
so paid by Lessees to Assignee and that Assignee shall be entitled to collect,
receive and retain all Rents regardless of when and to whom such Rents are and
have been paid and regardless of the form or location of such Rents. Any such
payment to Assignee shall constitute payment to Assignor under the Leases, and
Assignor appoints Assignee as Assignor's lawful attorney-in-fact for giving, and
Assignee is hereby empowered to give, acquitances to any Lessee for such payment
to Assignee after an Event of Default. Any Rents held or received by Assignor
after a written request from Assignee to Lessees for the payment of Rents shall
be held or received by Assignor as trustee for the benefit of Assignee only.
5. Rental Offsets. If Assignor becomes aware that any Lessee proposes
to do, or is doing, any act or thing which may give rise to any right of set-off
against Rent, Assignor shall, to the extent Assignee is permitted to do so under
the applicable lease or applicable law, (i) take such
<PAGE>
steps as shall be reasonably calculated to prevent the accrual of any right to a
set-off against Rent, (ii) notify Assignee thereof and of the amount of said
set-offs, and (iii) within ten (10) days after such accrual for a valid set-off,
reimburse Lessee who shall have acquired such right to set-off or take such
other steps as shall effectively discharge such set-off and as shall effectively
assure that Rents thereafter due shall continue to be payable without set-off or
deduction.
6. Security Deposits. Following the occurrence and during the
continuance of any Event of Default, Assignor shall, upon Assignee's request, if
permitted by applicable legal requirements, turn over to Assignee the security
deposits (and any interest theretofore earned thereon) with respect to all or
any portion of the Mortgaged Property, to be held by Assignee subject to the
terms of the Leases.
7. Relocations. In no event shall Assignor exercise any right to
relocate any Lessee pursuant to any right set forth in a Lease without the prior
written consent of Assignee, except for relocations in connection with the
making or renewal of Leases with respect to which Assignee's consent is not
required under the Approval Conditions above.
8. Other Security. Assignee may take or release other security for the
payment of the Debt, may release any party primarily or secondarily liable
therefor and may apply any other security held by it to the reduction or
satisfaction of the Debt without prejudice to any of its rights under this
Assignment.
9. Other Remedies. Nothing contained in this Assignment and no act done
or omitted by Assignee pursuant to the power and rights granted to Assignee
hereunder shall be deemed to be a waiver by Assignee of its rights and remedies
under the other Loan Documents and this Assignment is made and accepted without
prejudice to any of the rights and remedies possessed by Assignee under the
terms thereof. The right of Assignee to collect the Debt and to enforce any
other security therefor held by it may be exercised by Assignee either prior to,
simultaneously with, or subsequent to any action taken by it hereunder.
10. No Mortgagee in Possession. Nothing herein contained shall be
construed as constituting Assignee a "mortgagee in possession" in the absence of
the taking of actual possession of the Mortgaged Property by Assignee. In the
exercise of the powers herein granted Assignee, no liability shall be asserted
or enforced against Assignee, all such liability being expressly waived and
released by Assignor.
11. No Oral Change. This Assignment may not be modified, amended,
waived, extended, changed, discharged or terminated orally, or by any act or
failure to act on the part of Assignor or Assignee, but only by an agreement in
writing signed by the party against whom the enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
12. Certain Definitions. Unless the context clearly indicates a
contrary intent or unless otherwise specifically provided herein, words used in
this Assignment may be used interchangeable in singular or plural form and the
word "Assignor" shall mean "each Assignor and any subsequent owner or owners of
the Mortgaged Property or any part thereof or any interest therein," the word
<PAGE>
"Assignee" shall mean "Assignee and any subsequent holder of the Note," the word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, and any other
entity, the words "Mortgaged Property" shall include any portion of the
Mortgaged Property and any interest therein; whenever the context may require,
any pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
13. Non-Waiver. The failure of Assignee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Assignment. Assignor shall not be relieved of Assignor's obligations
hereunder by reason of (a) failure of Assignee to comply with any request of
Assignor or any other party to take any action to enforce any of the provisions
hereof or of the other Loan Documents, (b) the release regardless of
consideration, of the whole or any part of the Mortgaged Property, or (c) any
agreement or stipulation by Assignee extending the time of payment or otherwise
modifying or supplementing the terms of this Assignment or the other Loan
Documents. Assignee may resort for the payment of the Debt to any other security
held by Assignee in such order and manner as Assignee, in its discretion, may
elect. Assignee may take any action to recover the Debt, or any portion thereof
or to enforce any covenant hereof without prejudice to the right of Assignee
thereafter to enforce its rights under this Assignment. The rights of Assignee
under this Assignment shall be separate, distinct and cumulative and none shall
be given effect to the exclusion of the others. No act of Assignee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision.
14. Inapplicable Provisions. If any term, covenant or condition of this
Assignment is held to be invalid, illegal or unenforceable in any respect, this
Assignment shall be construed without such provision.
15. Counterparts. This Assignment may be executed in any number of
counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
16. GOVERNING LAW; JURISDICTION. THIS ASSIGNMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE REAL PROPERTY
ENCUMBERED BY THE MORTGAGE IS LOCATED AND THE APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA. ASSIGNOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN WHICH THE MORTGAGED
PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING ARISING OUT OF OR RELATING
TO THIS ASSIGNMENT.
17. Successors and Assigns. Assignor may not assign its rights under
this Assignment. Assignor hereby acknowledges and agrees that Assignee may
assign this Assignment without Assignor's consent. Subject to the foregoing,
this Assignment shall be binding upon, and shall inure to the benefit of,
Assignor and the Assignee and their respective successors and assigns.
18. Termination of Assignment. Upon payment in full of the Debt and the
delivery and
<PAGE>
recording of a satisfaction, release or discharge of Mortgage duly executed by
Assignee, this Assignment shall become and be void and of no effect.
THIS ASSIGNMENT shall inure to the benefit of Assignee and any
subsequent holder of the Note and shall be binding upon Assignor, and Assignor's
heirs, executors, administrators, successors and assigns and any subsequent
owner of the Mortgaged Property.
(Signature page follows)
Assignor has executed this instrument as of the day and year first
above written.
ASSIGNOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
<PAGE>
STATE OF ________________ ss.
ss. ss.
COUNTY OF ______________ ss.
On ___________________, before me, _____________________________, a
Notary Public for said state, personally appeared
________________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to the
within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity, and that by his/her signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
---------------------------------------
Notary Public
(SEAL)
<PAGE>
EXHIBIT A
(Legal Description)
THE LAND SITUATED IN LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND DESCRIBED AS
FOLLOWS:
PARCELS 1 TO 6 INCLUSIVE AS SHOWN ON PARCEL MAP 1526, AS PER MAP FILED IN BOOK
24 PAGE 81 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
WHICH SAID PARCEL MAP RECITES "DIVISION OF LAND FOR LEASE PURPOSES ONLY."
EXCEPT THEREFROM ALL RIGHTS TO MINERALS, OIL, GAS, TARS, HYDROCARBONS AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL OR MINE
FOR THE SAME, WITHOUT, HOWEVER, THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE
OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED BY THE NEWHALL
LAND AND FARMING COMPANY, A DELAWARE CORPORATION RECORDED MARCH 24, 1983 AS
INSTRUMENT NO. 83- 323387 AND RE-RECORDED FEBRUARY 21, 1985 AS INSTRUMENT NO.
85-196474.
Property Address: Old Orchard Shopping Center
23047-23453 Orchard Village Road
Santa Clarita (Valencia), California 91355
ENVIRONMENTAL LIABILITIES AGREEMENT
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
THIS ENVIRONMENTAL LIABILITIES AGREEMENT (this "Agreement") is made as
of September 23, 1997, by CONCORD MILESTONE PLUS, L.P., a Delaware limited
partnership (the "Borrower"), and CM PLUS CORPORATION, a Delaware corporation
("CM Plus") (collectively, the "Indemnitor"), to and for the benefit of WESTCO
REAL ESTATE FINANCE CORP., a California corporation (the "Lender").
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms shall have the
following meanings:
Asbestos: Asbestos or any substance containing asbestos.
Environmental Law: Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, authorization, decision,
order, injunction or decree which pertains to health, safety or the
environment (including but not limited to, ground or air or water or
noise pollution or contamination, and underground or aboveground tanks)
and shall include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Resource Conservation and Recovery Act of 1976, as
amended ("RCRA"), and any state or federal lien or superlien or
environmental clean-up statutes, and regulations, rules, guidelines, or
standards promulgated pursuant thereto all as amended from time to
time.
Hazardous Substance: Any substance, whether solid, liquid or
gaseous: i) which is listed, defined or regulated as a "hazardous
substance," "hazardous waste" or "solid waste," or otherwise classified
as hazardous or toxic, in or pursuant to any Environmental Law; or ii)
which is or contains Asbestos, radon, any polychlorinated biphenyl,
urea formaldehyde foam insulation, explosive or radioactive material,
lead paint, or motor fuel or other petroleum hydrocarbons; or iii)
which causes or poses a threat to cause a contamination or nuisance on
the Mortgaged Property or any adjacent property or a hazard to the
environment or to the health or safety of persons on or about the
Mortgaged Property.
Mortgage: That certain Mortgage, Deed of Trust and Security
Agreement, dated of even date herewith, executed by Borrower for the
benefit of Lender, covering the Mortgaged
<PAGE>
Property more particularly described therein, including the real
property or interest therein described in Exhibit A attached hereto and
incorporated herein by this reference.
Remediation: Any investigation, site monitoring, containment,
cleanup, removal, restoration, or other activities of any kind which
are reasonably necessary or desirable under an applicable Environmental
Law.
Storage Tanks: Any underground or aboveground storage tanks,
whether filled, empty, or partially filled with any substance.
Section 1.2 Other Defined Terms. Any capitalized term utilized herein
shall have the meaning as specified in the Mortgage, unless such term is
otherwise specifically defined herein.
ARTICLE II
WARRANTIES AND REPRESENTATIONS
Indemnitor hereby represents and warrants to Lender that, to the best
of Indemnitor's knowledge after due inquiry and investigation as follows,
subject to the information respecting the environmental condition of the
Mortgaged Property contained in Report of Phase I Environmental Site Assessment
prepared by Geoscience, Inc. dated July 18, 1997, and a Report of Subsurface
Environmental Investigation (Palace Cleaners) prepared by Geoscience, Inc. dated
August 8, 1997, and Report of Active Soil Vapor Survey (Palace Cleaners)
prepared by Geoscience, Inc. dated July 28, 1997:
Section 2.1 Mortgaged Property Compliance. The Mortgaged Property and
the operations conducted thereon do not violate any applicable law, statute,
ordinance, rule, regulation, order, or determination of any governmental
authority or any restrictive covenant or deed restriction (recorded or
otherwise), including without limitation all applicable zoning ordinances and
building codes, flood disaster laws and Environmental Laws.
Section 2.2 No Violations. Without limitation to Section 2.1 above,
except as previously disclosed in writing to Lender, the Mortgaged Property and
operations conducted thereon by the current owner or operator of such Mortgaged
Property, are not the subject of any existing, pending, or threatened action,
suit, investigation, inquiry, or proceeding by any governmental or
nongovernmental entity or person or to any Remediation under any Environmental
Law.
Section 2.3 Authorizations. All notices, permits, licenses,
registrations, or similar authorizations, if any, required to be obtained or
filed in connection with the ownership, operation, or use of the Mortgaged
Property, including, without limitation, the existence of any Storage Tanks at
the Mortgaged Property or the past or present generation, treatment, storage,
disposal, or release of a Hazardous Substance into the environment, have been
duly obtained or filed and have been duly renewed or maintained.
Section 2.4 Hazardous Substance. The Mortgaged Property does not
contain any
<PAGE>
Hazardous Substance in violation of applicable Environmental Laws. Except as
disclosed in writing to Lender the Mortgaged Property does not contain any
Storage Tanks or Asbestos.
Section 2.5 Borrower Investigation. Borrower has taken all steps
necessary to determine, and has determined, that no Hazardous Substances are or
have been generated, treated, stored, used, disposed of or released on, under,
from, or about the Mortgaged Property except in compliance with applicable
Environmental Laws.
Section 2.6 Borrower Compliance. Borrower has not undertaken,
permitted, authorized, or suffered and will not undertake, permit, authorize, or
suffer the presence, use, manufacture, handling, generation, transportation,
storage, treatment, discharge, release, burial, or disposal on, under, from or
about the Mortgaged Property of any Hazardous Substance or the transportation to
or from the Mortgaged Property of any Hazardous Substance except in compliance
with applicable Environmental Laws.
Section 2.7 No Pending Litigation. Except as otherwise previously
disclosed to Lender in writing, there is no pending or threatened litigation,
proceedings, or investigations before or by any administrative agency in which
any person or entity alleges or is investigating any alleged presence, release,
threat of release, placement on, under, from or about the Mortgaged Property, or
the manufacture, handling, generation, transportation, storage, treatment,
discharge, burial, or disposal on, under, from or about the Mortgaged Property,
or the transportation to or from the Mortgaged Property, of any Hazardous
Substance.
Section 2.8 No Notices. Except as otherwise previously disclosed to
Lender in writing, Borrower has not received any notice, and has no actual or
constructive knowledge, that any governmental authority or any employee or agent
thereof has determined, or threatens to determine, or is investigating any
allegation that there is a presence, release, threat of release, placement on,
under, from or about the Mortgaged Property, or the use, manufacture, handling,
generation, transportation, storage, treatment, discharge, burial, or disposal
on, under, from or about the Mortgaged Property, or the transportation to or
from the Mortgaged Property, of any Hazardous Substance.
Section 2.9 No Communications. Except as otherwise previously disclosed
to Lender in writing, there have been no communications or agreements with any
governmental authority thereof or any private entity, including, but not limited
to, any prior owners or operators of the Mortgaged Property, relating in any way
to the presence, release, threat of release, placement on, under or about the
Mortgaged Property, or the use, manufacture, handling, generation,
transportation, storage, treatment, discharge, burial, or disposal on, under or
about the Mortgaged Property, or the transportation to or from the Mortgaged
Property, of any Hazardous Substance, except for communications made in the
ordinary course of business in connection with permits, reports, and routine
inspections issued, prepared or conducted by government agencies or authorities
having jurisdiction over the Mortgaged Property.
Section 2.10 Other Properties. Neither Borrower, nor, to the best
knowledge of Borrower, any other person, including, but not limited
to, any predecessor owner, tenant, licensee, occupant,
<PAGE>
user, or operator of all or any portion of the Mortgaged Property, has ever
caused, permitted, authorized or suffered, and Borrower will not cause, permit,
authorize, or suffer, any Hazardous Substance to be placed, held, located, or
disposed of, on, under or about any other real property, all or any portion of
which is legally or beneficially owned (or any interest or estate therein which
is owned) by Borrower in any jurisdiction now or hereafter having in effect a
so-called "superlien" law or ordinance or any part thereof, the effect of which
law or ordinance would be to create a lien on the Mortgaged Property to secure
any obligation in connection with the "superlien" law of such other
jurisdiction.
Section 2.11 Permits. Borrower has been issued all required federal,
state, and local licenses, certificates, or permits relating to, and Borrower
and the Mortgaged Property are in compliance in all respects with all applicable
Environmental Laws, including but not limited to, federal, state, and local
laws, rules, and regulations relating to, air emissions, water discharge, noise
emissions, solid or liquid waste disposal, hazardous waste or materials, or
other environmental, health, or safety matters.
ARTICLE III
AFFIRMATIVE COVENANTS
Indemnitor hereby unconditionally covenants and agrees with Lender,
until the entire Debt (as defined in the Note) shall have been paid in full and
all of the obligations of Borrower under the Loan Documents shall have been
fully performed and discharged, as follows:
Section 3.1 Operations. Borrower shall not use, generate, manufacture,
produce, store, release, discharge, treat, or dispose of on, under, from or
about the Mortgaged Property or transport to or from the Mortgaged Property any
Hazardous Substance or allow any other person or entity to do so except in
compliance with Environmental Laws. Borrower shall not install or permit to be
installed any Asbestos or Storage Tanks at the Mortgaged Property and shall
remedy all violations of Environmental Laws with respect thereto including, but
not limited to, removal of Asbestos and/or Storage Tanks in the manner and as
required by applicable Environmental Laws.
Section 3.2 Compliance. Borrower shall keep and maintain the Mortgaged
Property in compliance with, and shall not cause or permit the Mortgaged
Property to be in violation of, any Environmental Law and upon discovery of any
noncompliance shall promptly take corrective action to remedy such
noncompliance.
Section 3.3 Monitoring. Borrower shall establish and maintain, at
Borrower's sole expense, a system to assure and monitor the remediation in
compliance with Environmental Laws of the dry cleaning solvent contamination at
the Mortgaged Property, including a detailed review ("Environmental Remediation
Report") of the status of such remediation by such environmental consultant.
Borrower shall furnish each Environmental Remediation Report to the Lender
within sixty (60) days after Lender so requests, together with such additional
information as Lender may reasonably request. If Borrower fails to contract for
such an Environmental Remediation Report after ten (10) days' notice, or fails
to provide either such report within sixty (60) days, Lender may
<PAGE>
order same, and Borrower grants to Lender and its employees, agents, contractors
and consultants access to the Mortgaged Property and a license (which is coupled
with an interest and irrevocable while the Mortgage is in effect) to perform
inspections and tests, including (but not limited to) the taking of soil borings
and air and groundwater samples. All costs of such reports, inspections and
tests shall be an obligation of Borrower which Borrower promises to pay to
Lender pursuant to this Agreement. All such costs shall constitute a portion of
the Debt, secured by the Mortgage and the other Loan Documents. Borrower's
obligations under this Section 3.3 to implement such a monitoring system and
provide such reports shall terminate upon Borrower's full performance of its
obligations as set forth in Schedule 1 to the Environmental Escrow and Security
Agreement between Lender and Borrower dated concurrently herewith.
Section 3.4 Notices. Borrower shall give prompt written notices to
Lender of: (i) any proceeding or inquiry by any governmental or nongovernmental
entity or person with respect to the presence of any Hazardous Substance on,
under, from or about the Mortgaged Property, the migration thereof from or to
other property, the disposal, storage, or treatment of any Hazardous Substance
generated or used on, under or about the Mortgaged Property, (ii) all claims
made or threatened by any third party against Borrower or the Mortgaged Property
or any other owner or operator of the Mortgaged Property relating to any release
reportable under any applicable Environmental Law, loss or injury resulting from
any Storage Tank or Hazardous Substance, and (iii) Borrower's discovery of any
occurrence or condition on any real property adjoining or in the vicinity of the
Mortgaged Property that could cause the Mortgaged Property or any part thereof
to be subject to any investigation or cleanup of the Mortgaged Property pursuant
to any Environmental Law or that could result in Borrower becoming liable for
any cost related to any investigation or cleanup of such Mortgaged Property.
Section 3.5 Legal Proceedings. Borrower shall permit Lender to join and
participate in, as a party if it so elects, any legal proceedings or actions
initiated with respect to the Mortgaged Property in connection with any
Environmental Law, Hazardous Substance or Storage Tank and Borrower shall pay
all attorneys' fees incurred by Lender in connection therewith.
Section 3.6 Remediation. In the event that the Mortgaged Property (or
any portion thereof) becomes the subject of any Remediation, Borrower shall
commence such Remediation no later than the earlier of (i) thirty (30) days
after written demand by Lender for performance thereof, or (ii) such shorter
period of time as may be required under applicable law, and thereafter shall
diligently prosecute the same to completion in accordance with applicable law.
All Remediation shall be performed by contractors approved in advance by Lender,
and under the supervision of a consulting engineer approved by Lender. All costs
and expenses of such Remediation shall be paid by Borrower including, without
limitation, Lender's reasonable attorneys' fees and costs incurred in connection
with monitoring or review of such Remediation. In the event Borrower shall fail
to timely commence, or cause to be commenced, or fail to diligently prosecute to
completion, such Remediation, Lender may, but shall not be required to, cause
such Remediation to be performed, and all costs and expenses thereof, or
incurred in connection therewith, shall become part of the Debt.
<PAGE>
ARTICLE IV
INDEMNIFICATION
INDEMNITOR SHALL PROTECT, INDEMNIFY, AND HOLD HARMLESS LENDER AND
TRUSTEE, THEIR PARENTS, SUBSIDIARIES, TRUSTEES, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND
AGAINST ALL LIABILITIES, OBLIGATIONS, CLAIMS, DEMANDS, DAMAGES, PENALTIES,
CAUSES OF ACTION, LOSSES, FINES, COSTS AND EXPENSES (INCLUDING WITHOUT
LIMITATION CONSEQUENTIAL DAMAGES AND REASONABLE ATTORNEYS' FEES AND EXPENSES),
DIRECTLY OR INDIRECTLY ARISING FROM OR RELATED TO ANY RELEASE OF OR EXPOSURE TO
ANY HAZARDOUS SUBSTANCE (INCLUDING PERSONAL INJURY OR DAMAGE TO PROPERTY),
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LAW, REMEDIATION, OR ARISING UNDER ANY
ENVIRONMENTAL LAW. THE INDEMNIFICATION OBLIGATIONS OF INDEMNITOR HEREUNDER SHALL
BE DEEMED TO CONSTITUTE A PART OF THE DEBT SECURED BY THE MORTGAGE AND THE OTHER
LOAN DOCUMENTS.
ARTICLE V
MISCELLANEOUS
Section 5.1 Survival of Obligations. Each and all of the
representations, covenants and agreements and indemnities contained herein shall
survive any termination, satisfaction or assignment of the Loan Documents or the
entry of a judgment of foreclosure, sale of the Mortgaged Property by
nonjudicial foreclosure sale, delivery of a deed in lieu of foreclosure or the
exercise by Lender of any of its other rights and remedies under the Loan
Documents.
Section 5.2 Notices. All notices or other communications required or
permitted to be given hereunder shall be given to the parties and become
effective as provided in the Mortgage.
Section 5.3 Binding Effect. This Agreement shall be binding on the
parties hereto, their successors, assigns, heirs and legal representatives and
all other persons claiming by, through or under them.
Section 5.4 Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed to be an original but all of which
when taken together shall constitute one agreement.
Section 5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED AND THE APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA.
<PAGE>
Section 5.6 Reliance. Borrower recognizes and acknowledges that in
entering into the loan transaction evidenced by the Loan Documents and accepting
the Mortgage, Lender is expressly and primarily relying on the truth and
accuracy of the warranties and representations set forth in this Agreement
without any obligation to investigate the Mortgaged Property and notwithstanding
any investigation of the Mortgaged Property by Lender; that such reliance exists
on the part of Lender prior hereto; that such warranties and representations are
a material inducement to Lender in making the loan evidenced by the Loan
Documents and accepting the Mortgage; and that Lender would not be willing to
make the loan evidenced by the Loan Documents and accept the Mortgage in the
absence of such warranties and representations.
Section 5.7 Headings. The article, section and subsection entitlements
hereof are inserted for convenience of reference only and shall in no way alter,
modify, or define, or be used in construing the text of such articles, sections
or subsections.
Section 5.8 No Oral Change. This Agreement may not be waived, extended,
changed, discharged or terminated orally, or by any act or failure to act on the
part of Borrower or Lender, but only by an agreement in writing signed by the
party against whom the enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 5.9 Joint and Several Liability. Each party comprising
Indemnitor shall be jointly and severally liable for the obligations
of Indemnitor hereunder.
Section 5.10 Waiver of Subrogation, Reimbursement and Contribution.
(a) Notwithstanding anything to the contrary contained in this
Agreement, CM Plus hereby unconditionally and irrevocably waives, releases and
abrogates any and all rights it may now or hereafter have under any agreement,
at law or in equity (including, without limitation, any law subrogating CM Plus
to the rights of Lender) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from Borrower or any other
party liable for payment of any or all of the obligations hereunder for any
payment made by CM Plus under or in connection with this Agreement or otherwise.
CM Plus hereby waives all rights and defenses arising out of an election of
remedies by Lender even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for the loan secured by the Mortgage, has
destroyed CM Plus's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise. Specifically, and without in any way limiting the
foregoing, CM Plus hereby waives any rights of subrogation, indemnification,
contribution or reimbursement arising under Sections 2846, 2847, 2848 and 2849
of the California Civil Code or any right of recourse to or with respect to
Borrower or the assets or property of Borrower or to any collateral for the
Loan. In connection with the foregoing, CM Plus expressly waives any and all
rights of subrogation to Lender against Borrower, and CM Plus hereby waives any
rights to enforce any remedy which Lender may have against Borrower and any
right to participate in any collateral for the Loan. The parties included in CM
Plus recognize that, pursuant to Section 580d of the California Code of Civil
Procedure, Lender's realization through non-judicial foreclosure upon any real
property constituting security for Borrower's obligations under the Loan
Documents could terminate any right of Lender to recover a deficiency judgment
against Borrower, thereby
<PAGE>
terminating subrogation rights which such parties otherwise might have against
Borrower. In the absence of an adequate waiver, such a termination of
subrogation rights could create a defense to enforcement of this Agreement
against such parties. The parties included in CM Plus hereby unconditionally and
irrevocably waive any such defense. In addition to and without in any way
limiting the foregoing, CM Plus hereby subordinates any and all indebtedness of
Borrower now or hereafter owed to CM Plus to all indebtedness of Borrower to
Lender, and agrees with Lender that CM Plus shall not demand or accept any
payment of principal or interest from Borrower, shall not claim any offset or
other reduction of CM Plus's obligations hereunder because of any such
indebtedness and shall not take any action to obtain any of the collateral for
the Loan. Further, CM Plus shall not have any right of recourse against Lender
by reason of any action Lender may take or omit to take under the provisions of
this Agreement or under the provisions of any of the Loan Documents. If any
amount shall nevertheless be paid to CM Plus by Borrower or another CM Plus
prior to payment in full of the Obligations (hereinafter defined), such amount
shall be held in trust for the benefit of Lender and shall forthwith be paid to
Lender to be credited and applied to the Obligations, whether matured or
unmatured. The provisions of this paragraph shall survive the termination of
this Agreement, and any satisfaction and discharge of Borrower by virtue of any
payment, court order or any applicable law.
(b) Notwithstanding the provisions of Section 5.10(a), each CM
Plus shall have and be entitled to (1) all rights of subrogation otherwise
provided by applicable law in respect of any payment it may make or be obligated
to make under this Agreement and (2) all claims it would have against Borrower
in the absence of Section 5.10(a) and to assert and enforce same, in each case
on and after, but at no time prior to, the date (the "Subrogation Trigger Date")
which is 91 days after the date on which all sums owed to Lender under the Loan
Documents (the "Obligations") have been paid in full, if and only if (x) no
Event of Default of the type described in Section 23(e), (f) or (g) of the
Mortgage with respect to Lender has existed at any time on and after the date of
this Agreement to and including the Subrogation Trigger Date and (y) the
existence of CM Plus's rights under this Section 5.10(b) would not make CM Plus
a creditor (as defined in the Code, as such term is hereinafter defined) of
Borrower in any insolvency, bankruptcy, reorganization or similar proceeding
commenced on or prior to the Subrogation Trigger Date.
(c) Without limiting the foregoing:
(1) CM Plus waives CM Plus's rights of subrogation,
reimbursement, indemnification, and contribution and any other rights
and defenses that are or may become available to CM Plus by reason of
California Civil Code Sections 2787 to 2855, inclusive.
(2) CM Plus waives any rights or defenses CM Plus may have in
respect of its obligations as a CM Plus by reason of any election of
remedies by the Lender.
(3) CM Plus waives all rights and defenses that CM Plus may have
because the Borrower's debt is secured by real property. This means,
among other things:
(i) Lender may collect from CM Plus without first foreclosing on any
real or personal property collateral pledged by Borrower; and
<PAGE>
(ii) If Lender forecloses on any real property collateral pledged by
Borrower:
(A) The amount of the debt may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price;
(B) Lender may collect from CM Plus even if Lender, by
foreclosing on the real property collateral, has destroyed any right
CM Plus may have to collect from Borrower.
This is an unconditional and irrevocable waiver of any rights and defenses CM
Plus may have because the Borrower's debt evidenced by the Note is secured by
real property. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure.
(Signature page follows)
<PAGE>
EXECUTED as of the date first above written.
INDEMNITOR:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
CM PLUS CORPORATION,
a Delaware corporation
By:
Name:
Title:
<PAGE>
EXHIBIT A
(Legal Description)
LEGAL DESCRIPTION
THE LAND SITUATED IN LOS ANGELES COUNTY, STATE OF CALIFORNIA, AND DESCRIBED AS
FOLLOWS:
PARCELS 1 TO 6 INCLUSIVE AS SHOWN ON PARCEL MAP 1526, AS PER MAP FILED IN BOOK
24 PAGE 81 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY,
WHICH SAID PARCEL MAP RECITES "DIVISION OF LAND FOR LEASE PURPOSES ONLY."
EXCEPT THEREFROM ALL RIGHTS TO MINERALS, OIL, GAS, TARS, HYDROCARBONS AND
METALLIFEROUS SUBSTANCES OF EVERY KIND, TOGETHER WITH THE RIGHT TO DRILL OR MINE
FOR THE SAME, WITHOUT, HOWEVER, THE RIGHT TO DRILL OR MINE THROUGH THE SURFACE
OR THE UPPER 500 FEET OF THE SUBSURFACE OF SAID LAND, AS RESERVED BY THE NEWHALL
LAND AND FARMING COMPANY, A DELAWARE CORPORATION RECORDED MARCH 24, 1983 AS
INSTRUMENT NO. 83- 323387 AND RE-RECORDED FEBRUARY 21, 1985 AS INSTRUMENT NO.
85-196474.
Property Address: Old Orchard Shopping Center
23047-23453 Orchard Village Road
Santa Clarita (Valencia), California 91355
ENVIRONMENTAL ESCROW AND SECURITY AGREEMENT
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
THIS ENVIRONMENTAL ESCROW AND SECURITY AGREEMENT ("Agreement") is made
as of September 23, 1997, by and between CONCORD MILESTONE PLUS, L.P., a
Delaware limited partnership ("Borrower"), and WESTCO REAL ESTATE FINANCE CORP.,
a California corporation ("Lender").
A. Borrower has executed a Note of even date in the principal
amount of $8,445,000 payable to the order of Lender (the "Note"); and
B. The Note is secured by the Loan Documents (as defined in
the Note); and
C. Lender requires, as a condition precedent to Lender's acceptance of
the Note, that Borrower deposit with Lender certain funds, to be held, invested,
released and used as provided in this Agreement to reimburse Borrower for the
cost of providing the Environmental Improvements as hereinafter described.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
1. The Deposit. Concurrently with its execution of this Agreement,
Borrower has deposited with Lender the cash sum of $45,000 (such funds and all
other funds from time to time deposited with Lender in connection with this
Agreement are hereinafter collectively referred to as the "Funds"). The Funds
shall be held, invested and released by Lender, and used by Borrower, in
accordance with the terms and conditions of this Agreement. Lender (or a
designated representative of Lender) shall have the sole right to make
withdrawal of the Funds.
2. Security Interest; Deposit of Funds. In order to secure Borrower's
repayment of the Note and performance of all other covenants and conditions
required on the part of Borrower to be observed or performed hereunder and under
the Loan Documents, Borrower hereby pledges to and grants to Lender a continuing
security interest in the Funds. Until expended or applied as herein provided,
the Funds shall constitute additional security for the Debt (as defined in the
Note). The Funds shall not constitute a trust fund and may be commingled with
other monies held by Lender. Unless otherwise required by applicable law, no
earnings or interest on the Funds shall be payable to Borrower even if the
Lender or its servicer is paid a fee and/or receives interest or other income in
connection with the deposit or placement of such fund (in which event such
income shall be reported under Lender's or its servicer's tax identification
number, as applicable).
September 23, 1997
LOS01:48425.3
1
<PAGE>
3. Performance of Improvements.
(a) Borrower shall construct, erect, undertake and complete or
cause to be constructed, erected, undertaken or completed all of the work set
forth on Schedule 1 hereto (the "Environmental Improvements") no later than the
date set forth opposite such Environmental Improvements.
(b) Borrower shall pay for and obtain or cause to be paid for
and obtained all permits, licenses and approvals required by all applicable laws
with regard to the Environmental Improvements, whether necessary for
commencement, completion, use or otherwise.
(c) Borrower shall perform or cause to be performed all work
in connection with the Environmental Improvements in a good and workmanlike
manner, in compliance with all applicable laws (including, without limitation,
any and all environmental laws and laws for the handicapped and/or disabled) and
with the plans and specifications approved (in writing) by Lender covering the
same, which performance by Borrower shall be without regard to the sufficiency
of the Funds.
(d) Borrower covenants and agrees that the Environmental
Improvements shall be constructed, installed or completed, as applicable, free
and clear of any and all liens (including mechanic's, materialman's or other
liens), claims and encumbrances whatsoever subject to Borrower's right to
contest as specified in the Mortgage (as defined in the Note).
Upon the occurrence of an Event of Default or in the event of Borrower's breach
of any provision of this Agreement, Lender may terminate this Agreement and
retain all Funds then being held pursuant to this Agreement and apply such Funds
in such order and in such amounts as Lender shall elect, in its sole and
absolute discretion: (i) to payment of the indebtedness evidenced by the Note
and the Loan Documents, and/or (ii) in order to proceed under existing contracts
or enter into contracts with third parties to make or complete the Environmental
Improvements. Lender shall have the right to enter onto the Mortgaged Property
(as defined in the Mortgage) and perform any and all work and labor necessary to
make or complete the Environmental Improvements and/or employ watchmen to
protect the Mortgaged Property from damage. All sums so expended by Lender shall
be construed to have been paid to Borrower and shall be secured by the Mortgage.
Borrower hereby constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Environmental Improvements in the name of the Borrower. This power of attorney
shall be construed to be a power coupled with an interest which cannot be
revoked.
September 23, 1997
LOS01:48425.3
2
<PAGE>
4. Use of Funds. Except as otherwise expressly set forth herein, the
Funds shall be used to reimburse Borrower for the reasonable costs and expenses
incurred by Borrower in completing the Environmental Improvements up to the
amount of the Funds. Borrower shall be responsible for the payment (from sources
other than the Funds) of any and all costs and expenses in completing the
Environmental Improvements in excess of the amount of the Funds. At such time as
Lender determines (in its sole discretion) that the remediation described in
Schedule 1 has been completed and regulatory site closure has been obtained, or
the determination has been made that such remediation is not required, all as
described in Schedule 1, then any remaining Funds shall be released to Borrower.
5. Release of Funds. The following condition shall apply to any release
of funds to Borrower under Section 4 above:
(a) Lender, upon receipt of a draw request specifying the
amount requested and the Environmental Improvements to be paid for with the
requested Funds in the form attached hereto as Exhibit "A" ("Request for
Release") shall, subject to the inspection rights and objection rights contained
herein, release to Borrower the Funds requested in the Request For Release;
(b) Borrower shall provide evidence satisfactory to Lender
(including, without limitation, access to the Mortgaged Property to Lender and
an architect and/or engineer specified by Lender for the purpose of an
inspection of work done, at Borrower's expense, if reasonably requested by
Lender) that the Environmental Improvements for which the Funds are being
requested have been completed in a good and workmanlike manner and in accordance
with this Agreement and with all applicable laws;
(c) Borrower shall submit to Lender copies of paid invoices
for the Funds requested and lien waivers and releases from all parties
furnishing materials and/or services in connection with the Request for Release
and reimbursement of all out-of-pocket inspection fees incurred by Lender;
(d) Borrower shall provide Lender with such additional
documents, certificates and affidavits as Lender may reasonably request; and if
required by Lender, Borrower shall execute and deliver to Lender a certificate
(in form and substance satisfactory to Lender) that the Environmental
Improvements covered by the applicable Request for Release comply with, and
Borrower has fully satisfied, the terms and provisions of Section 3 above;
(e) Except as set forth in Section 4 above, Lender shall not
be obligated to release any Funds (i) for the payment of the cost of an
improvement or other item other than a Environmental Improvement as set forth on
Schedule 1 hereto, or (ii) for costs of Environmental Improvements in excess of
the costs specified therefor on Schedule 1; and
September 23, 1997
LOS01:48425.3
3
<PAGE>
(f) In addition to the conditions set forth above, Lender
shall not be obligated to honor any Request for Release (i) in the event of
Borrower's breach of any provision of this Agreement or upon the occurrence of
an Event of Default under any of the other Loan Documents, nor (ii) upon the
occurrence of any act, event or condition then existing that, with the giving of
notice or the passage of time, or both, would constitute a breach hereunder or
an Event of Default under any of the Loan Documents.
6. Remedies Cumulative. No right or remedy conferred upon or reserved
to Lender under this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right and remedy shall be cumulative and
concurrent and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary by Lender.
7. Indemnification of Lender and Assignment of Claims. Borrower shall
hold harmless, indemnify and defend Lender from and against any and all
liabilities, obligations, claims, demands, damages, penalties, causes of action,
losses, fines, costs and expenses (including without limitation reasonable
attorneys' fees and expenses) imposed upon or incurred by Lender arising from,
or in connection with, directly or indirectly, this Agreement. This indemnity is
in addition to any other indemnity agreements made by Borrower to Lender in the
Mortgage, the Note or in any of the other Loan Documents. Borrower hereby
assigns to Lender all rights, claims and causes of action Borrower may have
against any person or entities supplying labor or materials in connection with
the Environmental Improvements; provided, however, that Lender may not pursue
any such right, claim or cause of action unless an Event of Default shall have
occurred under the Loan Documents or Borrower shall have otherwise breached any
provision in this Agreement.
8. Miscellaneous.
(a) Any capitalized term utilized herein shall have the
meaning as specified in the Mortgage, unless such term is otherwise specifically
defined herein.
(b) Except as otherwise expressly provided herein, in any
instance where the consent or approval of Lender is required or may be given or
where any determination, judgment or decision is to be rendered by Lender under
this Agreement, such approval and consent shall be given or withheld in Lender's
sole and absolute discretion.
(c) All notices hereunder shall be given in accordance with
the provisions of the Mortgage.
(d) This Agreement shall be binding upon Borrower and its
heirs, devisees, representatives, successors and assigns, including successors
in interest of Borrower in and to all or any part of the Mortgaged Property, and
shall inure to the benefit of and may be enforced by Lender
September 23, 1997
LOS01:48425.3
4
<PAGE>
and its heirs, successors, legal representatives, substitutes and assigns.
Borrower shall not assign any of its rights or obligations under this Agreement.
(e) This Agreement is intended solely for the benefit of
Borrower and Lender, and no third party shall have any right or interest in this
Agreement, nor any right to enforce this Agreement against any party hereto.
(f) This Agreement 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 and Lender, but only by an agreement in writing
signed by the party against whom the enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
(g) No provision of this Agreement or action taken by Lender
pursuant hereto shall be construed as acceptance or approval by Lender of any
Environmental Improvement. Each and every provision for the consent, approval,
inspection, review or verification by Lender hereunder is for Lender's own
purpose and benefit only, and no other party may require that the same be given
or be entitled to assume that Lender shall refuse to make or give the same. In
addition, in no event shall any term hereof, or any action taken by Lender
contemplated hereby, be deemed to be or construed as a warranty or
representation by Lender as to the adequacy of any Environmental Improvement,
nor that the same complies with applicable laws (including, without limitation,
any and all environmental laws and laws for the handicapped and/or disabled).
(h) Nothing herein or in the Loan Documents is intended to
create, nor creates, nor shall be deemed to create, a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender, nor to grant Lender any interest in the Mortgaged Property other
than that of creditor or Mortgage.
(i) If any provisions of this Agreement shall conflict with
any provisions of the other Loan Documents regarding the Funds, the provisions
contained in this Agreement shall control.
(j) If any term, covenant or condition of this Agreement is
held to be invalid, illegal or unenforceable in any respect, this Agreement
shall be construed without such provision.
(k) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF
OR RELATING TO THIS AGREEMENT.
September 23, 1997
LOS01:48425.3
5
<PAGE>
Borrower and Lender have executed this Agreement as of the date first
above written.
BORROWER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
Borrower's Tax ID Number: 52-1494615
LENDER:
WESTCO REAL ESTATE FINANCE CORP.,
a California corporation
By:
Name:
Title:
September 23, 1997
LOS01:48425.3
6
<PAGE>
Schedule 1
ENVIRONMENTAL IMPROVEMENTS
Within four months after recordation of the Mortgage (as defined in the
Note), Borrower shall remove and remediate the dry cleaning solvent
contamination on the Mortgaged Property as disclosed by a Report of Subsurface
Environmental Investigation (Palace Cleaners) prepared by Geoscience, Inc. dated
August 8, 1997, and Report of Active Soil Vapor Survey (Palace Cleaners)
prepared by Geoscience, Inc. dated July 28, 1997, and obtain regulatory site
closure therefor in accordance with applicable requirements, or provide to
Lender evidence in form and substance reasonably satisfactory to Lender that
applicable regulatory authorities have determined that remediation of such
contamination is not required under applicable laws and regulations.
September 23, 1997
LOS01:48425.3
7
<PAGE>
EXHIBIT "A"
REQUEST FOR RELEASE (No. ____)
Loan No. ________
TO: ("Lender")
FROM: ("Borrower")
This Request for Release is submitted by Borrower in accordance with
the Escrow Agreement for Improvements dated ___________, 199__, between Borrower
and Lender (the "Agreement"). Terms used with initial capital letters and not
defined in this Request for Release have the meanings given them in the
Agreement.
1. Borrower hereby requests an Advance for the payment of the
Environmental Improvements in the amounts, to the parties, specified below:
ENVIRONMENTAL
IMPROVEMENTS PAYEE AMOUNT
TOTAL ADVANCE REQUESTED $_________
2. Borrower certifies, represents and warrants to Lender that all
statements, invoices, bills, costs, expenses and any other sums of money owing
with respect to Environmental Improvements incurred or owing on or before this
date, have been paid in full except (a) the amounts requested in Section 1
above, and (b) the amounts, if any, specified in Annex 1 hereto.
3. Borrower certifies, represents and warrants to Lender that (a)
Borrower is entitled to a Release of Funds for the items and amounts requested
in Section 1 above, (b) Borrower's representations and warranties made in the
Loan Documents are true and correct on and as of this date, and (c) no Event of
Default nor any event which with the giving of notice or the lapse of time, or
both, would become an Event of Default, has occurred.
Date: ______________, 199__.
BORROWER:
By:
Title:
8
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