Exhibit 10.19
PREPARED BY AND UPON
RECORDATION RETURN TO:
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
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MSDWMC Loan No. 01-08446
LABRADOR (AZ) LP, as grantor
(Borrower)
to
_______________________________, as trustee
(Trustee)
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BANK, as beneficiary
(Lender)
-----------------------------------
DEED OF TRUST AND
SECURITY AGREEMENT
-----------------------------------
Dated: November 28, 2001
Location: Phoenix, Arizona
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TABLE OF CONTENTS
Page
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ARTICLE I
GRANTS OF SECURITY
Section 1.1 Property Mortgaged........................................ 1
Section 1.2 Assignment of Leases and Rents............................ 3
Section 1.3 Security Agreement........................................ 3
Section 1.4 Pledge of Monies Held..................................... 4
Section 1.5 Conditions to Grant....................................... 4
ARTICLE II
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt...................................................... 4
Section 2.2 Other Obligations......................................... 5
Section 2.3 Debt and Other Obligations................................ 5
Section 2.4 Payments.................................................. 5
ARTICLE III
BORROWER COVENANTS
Section 3.1 Payment of Debt........................................... 5
Section 3.2 Incorporation by Reference................................ 5
Section 3.3 Insurance................................................. 6
Section 3.4 Payment of Taxes, etc..................................... 8
Section 3.5 Escrow Fund............................................... 9
Section 3.6 Condemnation.............................................. 10
Section 3.7 Restoration After Casualty/Condemnation................... 10
Section 3.8 ▇▇▇▇▇▇ and Rents.......................................... 14
Section 3.9 Maintenance and Use of Property........................... 16
Section 3.10 Waste..................................................... 16
Section 3.11 Compliance With Laws...................................... 17
Section 3.12 Books and Records......................................... 17
Section 3.13 Payment For Labor and Materials........................... 20
Section 3.14 Performance of Other Agreements........................... 20
Section 3.15 Change of Name, Identity or Structure..................... 20
Section 3.16 Existence................................................. 20
Section 3.17 Management................................................ 20
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ARTICLE IV
SPECIAL COVENANTS
Section 4.1 Property Use.............................................. 21
Section 4.2 Single Purpose Entity..................................... 21
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.1 Warranty of Title......................................... 24
Section 5.2 Legal Status and Authority................................ 24
Section 5.3 Validity of Documents..................................... 25
Section 5.4 Litigation................................................ 25
Section 5.5 Status of Property........................................ 25
Section 5.6 No Foreign Person......................................... 27
Section 5.7 Separate Tax Lot.......................................... 27
Section 5.8 Leases.................................................... 27
Section 5.9 Financial Condition....................................... 28
Section 5.10 Business Purposes......................................... 28
Section 5.11 Taxes..................................................... 28
Section 5.12 Mailing Address........................................... 28
Section 5.13 No Change in Facts or Circumstances....................... 28
Section 5.14 Disclosure................................................ 29
Section 5.15 Third Party Representations............................... 29
Section 5.16 Illegal Activity.......................................... 29
Section 5.17 Regulations T, U and X.................................... 29
Section 5.18 Non-Consolidation......................................... 29
ARTICLE VI
OBLIGATIONS AND RELIANCE
Section 6.1 Relationship of Borrower and Lender....................... 29
Section 6.2 No Reliance on Lender..................................... 29
Section 6.3 No Lender Obligations..................................... 30
Section 6.4 Reliance.................................................. 30
ARTICLE VII
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc..................... 30
Section 7.2 Further Acts, etc......................................... 31
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws.... 31
Section 7.4 Estoppel Certificates..................................... 32
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Section 7.5 Flood Insurance........................................... 32
Section 7.6 Replacement Documents..................................... 32
ARTICLE VIII
DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance....................................... 33
Section 8.2 Sale/Encumbrance Defined.................................. 33
Section 8.3 Lender's Rights........................................... 34
Section 8.4 Permitted Transfers....................................... 34
ARTICLE IX
PREPAYMENT
Section 9.1 Prepayment................................................ 37
ARTICLE X
DEFAULT
Section 10.1 Events of Default......................................... 37
ARTICLE XI
RIGHTS AND REMEDIES
Section 11.1 Remedies.................................................. 39
Section 11.2 Application of Proceeds................................... 42
Section 11.3 Right to Cure Defaults.................................... 42
Section 11.4 Actions and Proceedings................................... 42
Section 11.5 Recovery of Sums Required to be Paid...................... 42
Section 11.6 Examination of Books and Records.......................... 43
Section 11.7 Other Rights, etc......................................... 43
Section 11.8 Right to Release Any Portion of the Property.............. 43
Section 11.9 Violation of Laws......................................... 44
Section 11.10 Right of Entry............................................ 44
Section 11.11 Subrogation............................................... 44
ARTICLE XII
ENVIRONMENTAL MATTERS
Section 12.1 Environmental Representations and Warranties.............. 44
Section 12.2 Environmental Covenants................................... 45
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Section 12.3 Lender's Rights........................................... 46
Section 12.4 Operations and Maintenance Programs....................... 46
ARTICLE XIII
INDEMNIFICATIONS
Section 13.1 General Indemnification................................... 46
Section 13.2 Mortgage and/or Intangible Tax............................ 47
Section 13.3 Duty to Defend; Attorneys' Fees and Other Fees and Expenses. 47
Section 13.4 Environmental Indemnity................................... 47
ARTICLE XIV
WAIVERS
Section 14.1 Waiver of Counterclaim.................................... 47
Section 14.2 Marshalling and Other Matters............................. 48
Section 14.3 Waiver of Notice.......................................... 48
Section 14.4 Waiver of Statute of Limitations.......................... 48
Section 14.5 Sole Discretion of Lender................................. 48
Section 14.6 WAIVER OF TRIAL BY JURY................................... 48
ARTICLE XV
EXCULPATION
Section 15.1 Exculpation............................................... 49
ARTICLE XVI
NOTICES
Section 16.1 Notices................................................... 49
ARTICLE XVII
APPLICABLE LAW
Section 17.1 Choice of Law............................................. 49
Section 17.2 Provisions Subject to Applicable Law...................... 51
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ARTICLE XVIII
SECONDARY MARKET
Section 18.1 Transfer of Loan.......................................... 51
Section 18.2 Cooperation............................................... 51
ARTICLE XIX
COSTS
Section 19.1 Performance at Borrower's Expense......................... 52
Section 19.2 Legal Fees for Enforcement................................ 52
ARTICLE XX
DEFINITIONS
Section 20.1 General Definitions....................................... 53
Section 20.2 Headings, etc............................................. 53
ARTICLE XXI
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change............................................ 53
Section 21.2 Liability................................................. 53
Section 21.3 Inapplicable Provisions................................... 53
Section 21.4 Duplicate Originals; Counterparts......................... 53
Section 21.5 Number and Gender......................................... 54
Section 21.6 Cross Default............................................. 54
ARTICLE XXII
SPECIAL [NAME OF STATE] PROVISIONS
Section 22.1 Principles of Construction................................ 54
Section 22.2 [State]................................................... 54
ARTICLE XXIII
DEED OF TRUST PROVISIONS
Section 23.1 Concerning The Trustee.................................... 55
Section 23.2 Trustee's Fees............................................ 55
Section 23.3 Certain Rights............................................ 55
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Section 23.4 Retention of Money........................................ 56
Section 23.5 Perfection of Appointment................................. 56
Section 23.6 Succession Instruments.................................... 56
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THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security Instrument")
is made as of the __ day of November, 2001, by and among LABRADOR (AZ) LP, a
Delaware limited partnership, having a mailing address c/o W.P. ▇▇▇▇▇ & Co. LLC,
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ 10020, as trustor
("Borrower"), _____________________, having a mailing address of
_______________________, as trustee ("Trustee") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ BANK, a Utah
industrial loan company, having a mailing address of ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, as beneficiary ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to Lender
is indebted to Lender in the principal sum of THIRTEEN MILLION TWO HUNDRED FIFTY
THOUSAND AND NO/100 DOLLARS ($13,250,000.00) (the "Loan Amount") in lawful money
of the United States of America (the note together with all extensions,
renewals, modifications, substitutions and amendments thereof shall collectively
be referred to as the "Note"), with interest from the date thereof at the rates
set forth in the Note, principal and interest to be payable in accordance with
the terms and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as defined in
Article 2) and the performance of all of its obligations under the Note and the
Other Obligations (as defined in Article 2).
ARTICLE I
GRANTS OF SECURITY
Section 1.1 Property Mortgaged. ▇▇▇▇▇▇▇▇ does hereby irrevocably
mortgage, grant, bargain, sell, pledge, assign, warrant, transfer and convey to
Trustee, its successors and assigns, for the benefit of ▇▇▇▇▇▇, and grant a
security interest to ▇▇▇▇▇▇ and Trustee in, the following property, rights,
interests and estates now owned, or hereafter acquired by Borrower
(collectively, the "Property"):
(a) Land. The real property described in Exhibit A attached hereto
and made a part hereof (the "Land");
(b) Additional Land. All additional lands, estates and development
rights hereafter acquired by Borrower for use in connection with the Land and
the development of the Land and all additional lands and estates therein which
may, from time to time, by supplemental mortgage or otherwise be expressly made
subject to the lien of this Security Instrument;
(c) Improvements. The buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter erected or located on the Land (the "Improvements");
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(d) Easements. All easements, rights-of-way or use, rights, strips
and gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, and all
estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
now or hereafter belonging, relating or pertaining to the Land and the
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road or avenue, opened or proposed, in
front of or adjoining the Land, to the center line thereof and all the estates,
rights, titles, interests, dower and rights of dower, curtesy and rights of
curtesy, property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Land and the Improvements and every part
and parcel thereof, with the appurtenances thereto;
(e) Fixtures and Personal Property. All machinery, equipment,
fixtures (including, but not limited to, all heating, air conditioning,
plumbing, lighting, communications and elevator fixtures and other property of
every kind and nature whatsoever owned by Borrower, or in which Borrower has or
shall have an interest, now or hereafter located upon the Land and the
Improvements, or appurtenant thereto, and usable in connection with the present
or future operation and occupancy of the Land and the Improvements and all
building equipment, materials and supplies of any nature whatsoever owned by
Borrower, or in which Borrower has or shall have an interest, now or hereafter
located upon the Land and the Improvements, or appurtenant thereto, or usable in
connection with the present or future operation and occupancy of the Land and
the Improvements (collectively, the "Personal Property"), and the right, title
and interest of Borrower in and to any of the Personal Property which may be
subject to any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is located
(the "Uniform Commercial Code"), and all proceeds and products of the above;
(f) Leases and Rents. All leases, subleases and other agreements
affecting the use, enjoyment or occupancy of the Land and/or the Improvements
heretofore or hereafter entered into and all extensions, amendments and
modifications thereto, whether before or after the filing by or against Borrower
of any petition for relief under 11 U.S.C. Section 101 et seq., as the same may
be amended from time to time (the "Bankruptcy Code") (the "Leases") and all
right, title and interest of Borrower, its successors and assigns therein and
thereunder, including, without limitation, any guaranties of the lessees'
obligations thereunder, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues, issues and profits (including all oil and gas or
other mineral royalties and bonuses) from the Land and the Improvements, whether
paid or accruing before or after the filing by or against Borrower of any
petition for relief under the Bankruptcy Code (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;
(g) Insurance Proceeds. All proceeds of and any unearned premiums
on any insurance policies covering the Property, including, without limitation,
the right to receive and apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the Property;
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(h) Condemnation Awards. All awards or payments, including interest
thereon, which may heretofore and hereafter be made with respect to the
Property, whether from the exercise of the right of eminent domain (including
but not limited to any transfer made in lieu of or in anticipation of the
exercise of the right), or for a change of grade, or for any other injury to or
decrease in the value of the Property;
(i) Tax Certiorari. All refunds, rebates or credits in connection
with a reduction in real estate taxes and assessments charged against the
Property as a result of tax certiorari or any applications or proceedings for
reduction;
(j) Conversion. All proceeds of the conversion, voluntary or
involuntary, of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(k) Rights. The right, in the name and on behalf of ▇▇▇▇▇▇▇▇, to
appear in and defend any action or proceeding brought with respect to the
Property and to commence any action or proceeding to protect the interest of
▇▇▇▇▇▇ in the Property;
(l) Agreements. All agreements, contracts, certificates,
instruments, franchises, permits, licenses, plans, specifications and other
documents, now or hereafter entered into, and all rights therein and thereto,
respecting or pertaining to the use, occupation, construction, management or
operation of the Land and any part thereof and any Improvements or respecting
any business or activity conducted on the Land and any part thereof and all
right, title and interest of Borrower therein and thereunder, including, without
limitation, the right, upon the occurrence and during the continuance of an
Event of Default (defined below), to receive and collect any sums payable to
Borrower thereunder;
(m) Intangibles. All trade names, trademarks, servicemarks, logos,
copyrights, goodwill, books and records and all other general intangibles
relating to or used in connection with the operation of the Property; and
(n) Other Rights. Any and all other rights of Borrower in and to
the items set forth in Subsections (a) through (m) above.
Section 1.2 Assignment of Leases and Rents. Borrower hereby absolutely
and unconditionally assigns to Lender and Trustee ▇▇▇▇▇▇▇▇'s right, title and
interest in and to all current and future Leases and Rents; it being intended by
Borrower that this assignment constitutes a present, absolute assignment and not
an assignment for additional security only. Nevertheless, subject to the terms
of this Section 1.2 and Section 3.8, Lender grants to Borrower a revocable
license to collect and receive the Rents. Borrower shall hold a portion of the
Rents sufficient to discharge all current sums due on the Debt for use in the
payment of such sums.
Section 1.3 Security Agreement. This Security Instrument is both a
real property mortgage and a "security agreement" within the meaning of the
Uniform Commercial Code. The Property includes both real and personal property
and all other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. By executing and delivering this Security Instrument,
Borrower hereby grants to Lender and Trustee, as security
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for the Obligations (defined in Section 2.3), a security interest in the
Personal Property to the full extent that the Personal Property may be subject
to the Uniform Commercial Code.
Section 1.4 Pledge of Monies Held. Borrower hereby pledges to Lender
any and all monies now or hereafter held by ▇▇▇▇▇▇, including, without
limitation, any sums deposited in the Escrow Fund (as defined in Section 3.5),
Net Proceeds (as defined in Section 3.7) and condemnation awards or payments
described in Section 3.6, as additional security for the Obligations until
expended or applied as provided in this Security Instrument.
Section 1.5 Conditions to Grant. TO HAVE AND TO HOLD the above granted
and described Property unto and to the use and benefit of Lender and of Trustee,
and for their successors and assigns, forever; IN TRUST, WITH POWER OF SALE, to
secure payment to Lender of the Debt at the time and in the manner provided for
its payment in the Note and in this Security Instrument; PROVIDED, HOWEVER,
these presents are upon the express condition that, if Borrower shall well and
truly pay to Lender the Debt at the time and in the manner provided in the Note
and this Security Instrument, shall well and truly perform the Other Obligations
as set forth in this Security Instrument and shall well and truly abide by and
comply with each and every covenant and condition set forth herein and in the
Note, these presents and the estate hereby granted shall cease, terminate and be
void.
ARTICLE II
DEBT AND OBLIGATIONS SECURED
Section 2.1 Debt. This Security Instrument and the grants, assignments
and transfers made in Article 1 are given for the purpose of securing the
payment of the following, in such order of priority as Lender may determine in
its sole discretion (the "Debt"):
(a) the indebtedness evidenced by the Note in lawful money of the
United States of America;
(b) interest, default interest, late charges and other sums, as
provided in the Note, this Security Instrument or the Other Security Documents
(defined below);
(c) the Default Consideration (as defined in the Note), if any;
(d) all other moneys agreed or provided to be paid by Borrower in
the Note, this Security Instrument or the Other Security Documents;
(e) all sums advanced pursuant to this Security Instrument to
protect and preserve the Property and the lien and the security interest created
hereby; and
(f) all sums advanced and costs and expenses incurred by Lender in
connection with the Debt or any part thereof, any renewal, extension, or change
of or substitution for the Debt or any part thereof, or the acquisition or
perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender.
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Section 2.2 Other Obligations. This Security Instrument and the
grants, assignments and transfers made in Article 1 are also given for the
purpose of securing the performance of the following (the "Other Obligations"):
(a) all other obligations of Borrower contained herein;
(b) each obligation of Borrower contained in the Note and in the
Other Security Documents; and
(c) each obligation of Borrower contained in any renewal,
extension, amendment, modification, consolidation, change of, or substitution or
replacement for, all or any part of the Note, this Security Instrument or the
Other Security Documents.
Section 2.3 Debt and Other Obligations. Borrower's obligations for the
payment of the Debt and the performance of the Other Obligations shall be
referred to collectively below as the "Obligations."
Section 2.4 Payments. Unless payments are made in the required amount
in immediately available funds at the place where the Note is payable,
remittances in payment of all or any part of the Debt shall not, regardless of
any receipt or credit issued therefor, constitute payment until the required
amount is actually received by Lender in funds immediately available at the
place where the Note is payable (or any other place as Lender, in Lender's sole
discretion, may have established by delivery of written notice thereof to
Borrower) and shall be made and accepted subject to the condition that any check
or draft may be handled for collection in accordance with the practice of the
collecting bank or banks. Acceptance by Lender of any payment in an amount less
than the amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an Event
of Default.
ARTICLE III
BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 Payment of Debt. ▇▇▇▇▇▇▇▇ will pay the Debt at the time
and in the manner provided in the Note and in this Security Instrument.
Section 3.2 Incorporation by Reference. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the documents
other than the Note or this Security Instrument now or hereafter executed by
▇▇▇▇▇▇▇▇ and/or others and by or in favor of Lender, which wholly or partially
secure or guaranty payment of the Note (the "Other Security Documents"), are
hereby made a part of this Security Instrument to the same extent and with the
same force as if fully set forth herein.
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Section 3.3 Insurance.
(a) Borrower shall obtain and maintain, or cause to be maintained,
insurance for Borrower and the Property providing at least the following
coverages:
(i) Property Insurance. Insurance with respect to the Improvements
and building equipment insuring against any peril now or hereafter included
within the classification "All Risks of Physical Loss" in amounts at all
times sufficient to prevent Lender from becoming a co-insurer within the
terms of the applicable policies and under applicable law, but in any event
such insurance shall be maintained in an amount which, after application of
deductible, shall be equal to the full insurable value of the Improvements
and building equipment, the term "full insurable value" to mean the actual
replacement cost of the Improvements and building equipment (without taking
into account any depreciation, and exclusive of excavations, footings and
foundations, landscaping and paving) determined annually by an insurer, a
recognized independent insurance broker or an independent appraiser selected
and paid by ▇▇▇▇▇▇▇▇ and in no event less than the coverage required
pursuant to the terms of any Lease;
(ii) Liability Insurance. Comprehensive general liability insurance,
including bodily injury, death and property damage liability, insurance
against any and all claims, including all legal liability to the extent
insurable and imposed upon Lender and all court costs and attorneys' fees
and expenses, arising out of or connected with the possession, use, leasing,
operation, maintenance or condition of the Property in such amounts as are
generally available at commercially reasonable premiums and are generally
required by institutional lenders for properties comparable to the Property
but in any event for a combined single limit of at least $5,000,000;
(iii) Workers' Compensation Insurance. Statutory workers'
compensation insurance with respect to any work on or about the Property;
(iv) Business Interruption Insurance. Business interruption and/or
loss of "rental income" insurance in an amount sufficient to avoid any
co-insurance penalty and to provide proceeds which will cover a period of
not less than twenty-four (24) months, from the date of casualty or loss,
the term "rental income" to mean the sum of (A) the total then ascertainable
Rents payable under the Leases and (B) the total ascertainable amount of all
other amounts to be received by Borrower from third parties which are the
legal obligation of the tenants, reduced to the extent such amounts would
not be received because of operating expenses not incurred during a period
of non-occupancy of that portion of the Property then not being occupied;
(v) Boiler and Machinery Insurance. 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
Property and insurance against loss of occupancy or use arising from any
breakdown in such amounts as are generally required by institutional lenders
for properties comparable to the Property;
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(vi) Flood Insurance. If required by Subsection 5.5(j) hereof, flood
insurance in an amount at least equal to the lesser of (A) the principal
balance of the Note, or (B) the maximum limit of coverage available for the
Property under the National Flood Insurance Act of 1968, The Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform Act of 1994,
as each may be amended;
(vii) Builder's Risk Insurance. At all times during which structural
construction, repairs or alterations are being made with respect to the
Improvements (A) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and (B) the
insurance provided for in Subsection 3.3(a)(i) written in a so-called
builder's risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant to Subsection 3.3(a)(i), (3)
including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions; and
(viii) Other Insurance. Such other insurance with respect to the
Property against loss or damage of the kinds from time to time customarily
insured against and in such amounts as are required by institutional lenders
for properties comparable to the Property.
(b) All insurance provided for in Subsection 3.3(a) hereof shall be
obtained under valid and enforceable policies (the "Policies" or in the
singular, the "Policy"), and shall be issued by one or more domestic primary
insurer(s) having (i) a general policy rating of A or better and a financial
class of VI or better by A.M. Best Company, Inc. (or if a rating of A.M. Best
Company Inc. is no longer available, a similar rating from a similar or
successor service) and (ii) a claims paying ability rating by a credit rating
agency approved by Lender (a "Rating Agency") of not less than AA by Standard &
Poor's Corp. or such comparable rating by such other Rating Agency. All insurers
providing insurance required by this Security Instrument shall be authorized to
issue insurance in the state in which the Property is located. The Policy
referred to in Subsection 3.3(a)(ii) above shall name Lender as an additional
named insured and the Policies referred to in Subsection 3.3(a)(i), (iv), (v),
(vi) and (vii), and as applicable (viii), above shall provide that all proceeds
be payable to Lender as set forth in Section 3.7 hereof. The Policies referred
to in Subsections 3.3(a)(i), (v), (vi) and (vii) shall also contain: (i) a
standard "non-contributory mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by Lender notwithstanding the negligent or willful acts
or omission of Lender; (ii) to the extent available at commercially reasonable
rates, a waiver of subrogation endorsement as to Lender; and (iii) an
endorsement providing for a deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of similar properties in the
general vicinity of the Property, but in no event in excess of $25,000. The
Policy referred to in Subsection 3.3(a)(i) above shall provide coverage for
contingent liability from Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together with an "Ordinance or Law
Coverage" or "Enforcement" endorsement if any of the Improvements or the use of
the Property shall at any time constitute legal non-conforming structures or
uses. All Policies shall contain (i) a provision that such Policies shall not be
cancelled or terminated, nor shall they expire, without at least thirty (30)
days' prior written notice to Lender in each instance; and (ii) include
effective waivers by the insurer of all claims for Insurance Premiums (defined
below) against any loss payees, additional insureds and named
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insureds (other than Borrower). Certificates of insurance with respect to all
renewal and replacement Policies shall be delivered to Lender not less than
twenty (20) days prior to the expiration date of any of the Policies required to
be maintained hereunder, which certificates shall bear notations evidencing
payment of applicable premiums (the "Insurance Premiums"). Originals or
certificates of such replacement Policies shall be delivered to Lender promptly
after ▇▇▇▇▇▇▇▇'s receipt thereof but in any case within thirty (30) days after
the effective date thereof. If Borrower fails to maintain and deliver to Lender
the original Policies or certificates of insurance required by this Security
Instrument, upon ten (10) days' prior notice to Borrower, Lender may procure
such insurance at Borrower's sole cost and expense. Notwithstanding the
foregoing, so long as (i) the lease between Borrower, as landlord, and PetsMART,
Inc., a Delaware corporation ("PetsMART"), as the sole tenant at the Property,
dated November __, 2001, as such may be amended with Lender's consent except as
otherwise specifically permitted pursuant to Section 3.8 hereof, (collectively,
the "PetsMART Lease") or a replacement "triple net" lease for the entire
Property acceptable to Lender in its sole discretion (an "Acceptable Replacement
Lease") with another single-user tenant acceptable to lender in its sole
discretion) an "Acceptable Replacement Tenant") remains in full force and effect
with PetsMART or its assignee as the tenant thereunder, or an Acceptable
Replacement Tenant, (ii) PetsMART or an Acceptable Replacement Tenant is not in
default under the PetsMART Lease or an Acceptable Replacement Lease, as
applicable, beyond any applicable notice and cure periods set forth in the
PetsMART Lease, and (iii) Borrower provides Lender with original Policies or
certificates of insurance evidencing that PetsMART or an Acceptable Replacement
Tenant is carrying all insurance required under the PetsMART Lease, then the
requirements of Section 3.3(a) and (b) shall be deemed satisfied.
(c) Borrower shall comply with all insurance requirements and shall
not bring or keep or permit to be brought or kept any article upon any of the
Property or cause or permit any condition to exist thereon which would be
prohibited by an insurance requirement, or would invalidate the insurance
coverage required hereunder to be maintained by Borrower on or with respect to
any part of the Property pursuant to this Section 3.3.
Section 3.4 Payment of Taxes, etc.
(a) Borrower shall pay or cause to be paid all taxes, assessments,
water rates, sewer rents, governmental impositions, and other charges, including
without limitation vault charges and license fees for the use of vaults, chutes
and similar areas adjoining the Land, now or hereafter levied or assessed or
imposed against the Property or any part thereof (the "Taxes"), all ground
rents, maintenance charges and similar charges, now or hereafter levied or
assessed or imposed against the Property or any part thereof (the "Other
Charges"), and all charges for utility services provided to the Property prior
to the date on which interest or delinquency charges begins to accrue thereon or
any non-payment thereof would result in the application of any penalties,
provided, however, that taxes may be paid in installments to the extent
permitted by the taxing authority. Borrower will deliver to Lender, promptly
upon ▇▇▇▇▇▇'s request, evidence satisfactory to Lender that the Taxes, Other
Charges and utility service charges have been so paid or are not then
delinquent. Borrower shall not suffer and shall promptly cause to be paid and
discharged any lien or charge whatsoever which may be or become a lien or charge
against the Property. Except to the extent sums sufficient to pay all Taxes and
Other Charges have been deposited with Lender in accordance with the terms of
this Security Instrument, Borrower shall
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furnish to Lender paid receipts for the payment of the Taxes and Other Charges
prior to the date the same shall become delinquent.
(b) After prior written notice to Lender, Borrower or, if the
PetsMART Lease or an Acceptable Replacement Lease is in full force and effect,
PetsMART or an Acceptable Replacement Tenant, as applicable, at its own expense,
may contest by appropriate legal proceeding, promptly initiated and conducted in
good faith and with due diligence, the amount or validity or application in
whole or in part of any of the Taxes, provided that (i) no Event of Default has
occurred and is continuing under the Note, this Security Instrument or any of
the Other Security Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt affecting
the Property, (iii) such proceeding shall suspend the collection of the Taxes
from Borrower and from the Property or Borrower shall have paid all of the Taxes
under protest, (iv) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder, (v) neither the Property
nor any part thereof or interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost, and (vi) Borrower shall have deposited
with Lender adequate reserves, a bond, or other reasonable security for the
payment of the Taxes, together with all interest and penalties thereon, unless
Borrower has paid all of the Taxes under protest, or Borrower or PetsMART or an
Acceptable Replacement Tenant shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by ▇▇▇▇▇▇ to
insure the payment of any contested Taxes, together with all interest and
penalties thereon, taking into consideration the amount in the Escrow Fund
available for payment of Taxes.
Section 3.5 Escrow Fund. In addition to the initial deposits with
respect to Taxes and Insurance Premiums made by Borrower to Lender on the date
hereof to be held by Lender in escrow, Borrower shall pay to Lender on the first
day of each calendar month (a) one-twelfth of an amount which would be
sufficient to pay the Taxes payable, or estimated by Lender to be payable,
during the next ensuing twelve (12) months and (b) one-twelfth of an amount
which would be sufficient to pay the Insurance Premiums due for the renewal of
the coverage afforded by the Policies upon the expiration thereof (the amounts
in (a) and (b) above shall be called the "Escrow Fund"). ▇▇▇▇▇▇▇▇ agrees to
notify ▇▇▇▇▇▇ immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it has or
obtains knowledge and authorizes Lender or its agent to obtain the bills for
Taxes directly from the appropriate taxing authority. The Escrow Fund and the
payments of interest or principal or both, payable pursuant to the Note shall be
added together and shall be paid as an aggregate sum by Borrower to Lender.
Provided there are sufficient amounts in the Escrow Fund and no Event of Default
exists, Lender shall be obligated to pay the Taxes and Insurance Premiums as
they become due on their respective due dates on behalf of Borrower by applying
the Escrow Fund to the payments of such Taxes and Insurance Premiums required to
be made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of
the Escrow Fund shall exceed the amounts due for Taxes and Insurance Premiums
pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its discretion, return
any excess to Borrower or credit such excess against future payments to be made
to the Escrow Fund. In allocating such excess, ▇▇▇▇▇▇ may deal with the person
shown on the records of ▇▇▇▇▇▇ to be the owner of the Property. If the Escrow
Fund is not sufficient to pay the items set forth in (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall
reasonably estimate as sufficient to
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make up the deficiency. The Escrow Fund shall not constitute a trust fund and
may be commingled with other monies held by ▇▇▇▇▇▇. Unless otherwise required by
Applicable Laws (defined in Section 3.11), no earnings or interest on the Escrow
Fund shall be payable to Borrower. Notwithstanding the foregoing, so long as (i)
no Event of Default has occurred and is continuing, (ii) PetsMART or an
Acceptable Replacement Tenant, as the sole tenant of the Property, is not in
default under the terms of the PetsMART or an Acceptable Replacement Lease
beyond any applicable notice and cure periods set forth therein, and (iii)
PetsMART or an Acceptable Replacement Tenant is paying the Taxes pursuant to the
terms of Section 3.4 hereof and Insurance Premiums in accordance with the terms
of the last sentence of Section 3.3(b) hereof, directly pursuant to the terms
hereof, and such Taxes are current, then Borrower shall not be required to make
monthly payments into the Escrow Fund.
Section 3.6 Condemnation. Borrower shall promptly give Lender notice
of the actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Notwithstanding any taking by any public or
quasi-public authority through eminent domain or otherwise (including but not
limited to any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Security Instrument and
the Debt shall not be reduced until any award or payment therefor shall have
been actually received and applied by ▇▇▇▇▇▇, after the deduction of expenses of
collection, to the reduction or discharge of the Debt. Borrower shall cause the
award or payment made in any condemnation or eminent domain proceeding, which is
payable to Borrower, to be paid directly to Lender. Lender shall not be limited
to the interest paid on the award by the condemning authority but shall be
entitled to receive out of the award interest at the rate or rates provided
herein or in the Note. Lender may apply any award or payment to the reduction or
discharge of the Debt whether or not then due and payable. If the Property is
sold, through foreclosure or otherwise, prior to the receipt by Lender of the
award or payment, Lender shall have the right, whether or not a deficiency
judgment on the Note (to the extent permitted in the Note or herein) shall have
been sought, recovered or denied, to receive the award or payment, or a portion
thereof sufficient to pay the Debt.
Section 3.7 Restoration After Casualty/Condemnation. In the event of a
casualty or a taking by eminent domain, the following provisions shall apply in
connection with the Restoration (defined below) of the Property:
(a) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, or if the Property or any portion thereof is
taken by the power of eminent domain Borrower shall give prompt notice of such
damage or taking to Lender and, subject to the terms of Paragraph 18 of the
PetsMART Lease, shall promptly commence or cause to be commenced and diligently
prosecute or cause to be prosecuted the completion of the repair and restoration
of the Property as nearly as possible to the condition the Property was in
immediately prior to such fire or other casualty or taking, with such
alterations as may be approved by Lender (the "Restoration"). Use of the Net
Proceeds to pay down the Debt as may be required by Lender herein will not cause
Borrower to incur either a premium or penalty.
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(b) The term "Net Proceeds" for purposes of this Section 3.7 shall
mean: (i) the net amount of all insurance proceeds under the Policies carried
pursuant to Subsections 3.3(a)(i), (iv), (v), (vi), (vii) and (viii) of this
Security Instrument as a result of such damage or destruction, after deduction
of Lender's reasonable costs and expenses (including, but not limited to
reasonable counsel fees), if any, in collecting the same, or (ii) the net amount
of all awards and payments received by Lender with respect to a taking
referenced in Section 3.6 of this Security Instrument, after deduction of
▇▇▇▇▇▇'s reasonable costs and expenses (including, but not limited to reasonable
counsel fees), if any, in collecting the same, whichever the case may be. If (i)
the Net Proceeds do not exceed $250,000 (the "Net Proceeds Availability
Threshold"); (ii) the costs of completing the Restoration as reasonably
estimated by Borrower shall be less than or equal to the Net Proceeds; (iii) no
Event of Default shall have occurred and be continuing under the Note, this
Security Instrument or any of the Other Security Documents; (iv) the Property
and the use thereof after the Restoration will be in compliance with, and
permitted under, all applicable zoning laws, ordinances, rules and regulations
(including, without limitation, all applicable Environmental Laws (defined in
Section 12.1); (v) (A) in the event that the Net Proceeds are insurance
proceeds, less than twenty-five percent (25%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable as a result of
such fire or other casualty; or (B) in the event that the Net Proceeds are
condemnation awards, less than 25% of the Land constituting the Property is
taken, such Land that is taken is located along the perimeter or periphery of
the Property, no portion of the Improvements is located in such Lands, and such
taking does not materially impair access to the Property; and (vi) Lender shall
be satisfied that any operating deficits, including all scheduled payments of
principal and interest under the Note which will be incurred with respect to the
Property as a result of the occurrence of any such fire or other casualty or
taking, whichever the case may be, will be covered out of (1) the Net Proceeds,
or (2) other funds of Borrower, then the Net Proceeds will be disbursed directly
to Borrower. Notwithstanding anything to the contrary contained in this Section
3.7(b), so long as (i) the PetsMART Lease remains in full force and effect and
(ii) PetsMART is not in default under the PetsMART Lease beyond any applicable
notice and cure periods set forth in the PetsMART Lease, then subsections (iv)
and (v) of Section 3.7(b) shall be deemed not applicable.
(c) If the Net Proceeds are greater than the Net Proceeds
Availability Threshold or Borrower is not otherwise entitled to have the Net
Proceeds disbursed directly to Borrower pursuant to Subsection 3.7(b), such Net
Proceeds shall be forthwith paid to Lender to be held by Lender in a segregated
account to be made available to Borrower for the Restoration in accordance with
the provisions of this Subsection 3.7(c).
The Net Proceeds held by Lender pursuant to this Subsection 3.7(c)
shall be made available to Borrower for payment or reimbursement of Borrower's
expenses in connection with the Restoration, subject to the following
conditions:
(i) no Event of Default shall have occurred and be continuing under
the Note, this Security Instrument or any of the Other Security Documents;
(ii) Lender shall, within a reasonable period of time prior to
request for initial disbursement, be furnished with an estimate of the cost
of the Restoration accompanied by an independent architect's certification
as to such costs and appropriate plans and
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specifications for the Restoration, such plans and specifications and cost
estimates to be subject to Lender's approval, not to be unreasonably
withheld or delayed;
(iii) the Net Proceeds, together with any cash or cash equivalent
deposited by Borrower with Lender, are sufficient to cover the cost of the
Restoration as such costs are certified by the independent architect;
(iv) Net Proceeds are less than the then outstanding principal
balance of the Note;
(v) (A) in the event that the Net Proceeds are insurance proceeds,
less than twenty-five percent (25%) of the total floor area of the
Improvements has been damaged or destroyed, or rendered unusable as a result
of such fire or other casualty; or (B) in the event that the Net Proceeds
are condemnation awards, less than 25% of the Land constituting the Property
is taken, such Land that is taken is located along the perimeter or
periphery of the Property, no portion of the Improvements is located in such
Lands and such taking does not materially impair access to the Property,
provided, however, that the terms of this Section 3.7(c)(v) shall not apply
so long as PetsMART is obligated to perform the Restoration pursuant to the
terms of the PetsMART Lease;
(vi) Lender shall be satisfied that any operating deficits,
including all scheduled payments of principal and interest under the Note
which will be incurred with respect to the Property as a result of the
occurrence of any such fire or other casualty or taking, whichever the case
may be, will be covered out of (1) the Net Proceeds, or (2) other funds of
Borrower;
(vii) Lender shall be satisfied that, upon the completion of the
Restoration, the net cash flow of the Property will be restored to a level
sufficient to cover all carrying costs and operating expenses of the
Property, including, without limitation, debt service on the Note and all
required replacement reserves, reserves for tenant improvements and leasing
commissions;
(viii) the Restoration can reasonably be completed on or before the
earliest to occur of (A) six (6) months prior to the Maturity Date (as
defined in the Note), (B) the earliest date required for such completion
under the terms of any Major Leases (defined below) and (C) such time as may
be required under applicable zoning law, ordinance, rule or regulation in
order to repair and restore the Property to as nearly as possible the
condition it was in immediately prior to such fire or other casualty or to
such taking, as applicable;
(ix) the Property and the use thereof after the Restoration will be
in compliance with, and permitted under, all applicable zoning laws,
ordinances, rules and regulations (including, without limitation, all
applicable Environmental Laws (defined in Section 12.1); and
(x) each Major Lease (defined in Section 3.8) in effect as of the
date of the occurrence of such fire or other casualty shall remain in full
force and effect during and
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after the completion of the Restoration without abatement of rent beyond the
time required for Restoration.
(d) The Net Proceeds held by Lender until disbursed in accordance
with the provisions of this Section 3.7 shall constitute additional security for
the Obligations. The Net Proceeds other than the Net Proceeds paid under the
Policy described in Subsection 3.3(a)(iv) shall be disbursed by Lender to, or as
directed by, Borrower, in an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration less customary
retainage from time to time during the course of the Restoration, not more
frequently than once per month, upon receipt of evidence satisfactory to Lender
that (A) all materials installed and work and labor performed (except to the
extent that they are to be paid for out of the requested disbursement) in
connection with the Restoration have been paid for in full, and (B) there exist
no notices of pendency, stop orders, mechanic's or materialman's liens or
notices of intention to file same, or any other liens or encumbrances of any
nature whatsoever on the Property arising out of the Restoration which have not
either been fully bonded and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company insuring the lien of
this Security Instrument. The Net Proceeds paid under the Policy described in
Subsection 3.3(a)(iv) shall be disbursed by Lender to pay for debt service under
the loan evidenced by the Note, to pay other expenses incurred by Borrower in
connection with the ownership and operation of the Property, and the remainder
thereof, to, or as directed by, Borrower to pay for the cost of the Restoration
in accordance with this Section 3.7(d). Final payment shall be made after
submission to Lender of all licenses, permits, certificates of occupancy and
other required approvals of governmental authorization having jurisdiction and
Casualty Consultant's (as defined below) certification that the Restoration has
been fully completed.
(e) Subject to the rights of PetsMART under the PetsMART Lease so
long as the PetsMART Lease remains in full force and effect, Lender shall have
the use of the plans and specifications and all permits, licenses and approvals
required or obtained in connection with the Restoration. The identity of the
contractors, subcontractors and materialmen engaged in the Restoration, as well
as the contracts under which they have been engaged, shall be subject to prior
review and acceptance by ▇▇▇▇▇▇ and an independent consulting engineer selected
by ▇▇▇▇▇▇ (the "Casualty Consultant"), such acceptance not to be unreasonably
withheld or delayed. All costs and expenses incurred by Lender in connection
with making the Net Proceeds available for the Restoration including, without
limitation, reasonable counsel fees and disbursements and the Casualty
Consultant's fees, shall be paid by ▇▇▇▇▇▇▇▇.
(f) If at any time the Net Proceeds or the undisbursed balance
thereof shall not, in the reasonable opinion of ▇▇▇▇▇▇, be sufficient to pay in
full the balance of the costs which are estimated by the Casualty Consultant to
be incurred in connection with the completion of the Restoration, Borrower shall
deposit or cause to be deposited the deficiency (the "Net Proceeds Deficiency")
with Lender before any further disbursement of the Net Proceeds shall be made.
The Net Proceeds Deficiency deposited with Lender shall be held by Lender and
shall be disbursed for costs actually incurred in connection with the
Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 3.7 shall constitute
additional security for the Obligations.
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(g) Except upon the occurrence and continuance of an Event of
Default, Borrower shall settle any insurance claims with respect to the Net
Proceeds which in the aggregate are less than the Net Proceeds Availability
Threshold. Lender shall have the right to participate in and reasonably approve
any settlement for insurance claims with respect to the Net Proceeds which in
the aggregate are greater than the Net Proceeds Availability Threshold. If an
Event of Default shall have occurred and be continuing, Borrower hereby
irrevocably empowers Lender, in the name of Borrower as its true and lawful
attorney-in-fact, to file and prosecute such claim and to collect and to make
receipt for any such payment. If the Net Proceeds are received by Borrower, such
Net Proceeds shall, until the completion of the related work, be held in trust
for Lender and shall be segregated from other funds of Borrower to be used to
pay for the cost of the Restoration in accordance with the terms hereof.
(h) The excess, if any, of the Net Proceeds and the remaining
balance, if any, of the Net Proceeds Deficiency deposited with Lender after (i)
the Casualty Consultant certifies to Lender that the Restoration has been
completed in accordance with the provisions of this Section 3.7, and (ii) the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full and all required permits,
licenses, certificates of occupancy and other required approvals of governmental
authorities having jurisdiction have been issued, shall be remitted by Lender to
Borrower, provided no Event of Default shall have occurred and shall be
continuing under the Note, this Security Instrument or any of the Other Security
Documents.
(i) All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Subsection 3.7(h) shall be retained and applied by Lender toward the payment
of the Debt without penalty or prepayment premium whether or not then due and
payable in such order, priority and proportions as Lender in its discretion
shall deem proper or, at the discretion of Lender, the same shall be paid,
either in whole or in part, to Borrower. If Lender shall receive and retain Net
Proceeds, the lien of this Security Instrument shall be reduced only by the
amount received and retained by ▇▇▇▇▇▇ and actually applied by Lender in
reduction of the Debt.
Section 3.8 Leases and Rents.
(a) Borrower may enter into a proposed Lease (including the renewal
or extension of an existing Lease (a "Renewal Lease")) without the prior written
consent of Lender, provided such proposed Lease or Renewal Lease (i) provides
for rental rates and terms comparable to existing local market rates and terms
(taking into account the type and quality of the tenant) as of the date such
Lease is executed by Borrower (unless, in the case of a Renewal Lease, the rent
payable during such renewal, or a formula or other method to compute such rent,
is provided for in the original Lease), (ii) is an arms-length transaction with
a bona fide, independent third party tenant, (iii) does not have a materially
adverse effect on the value of the Property taken as a whole, (iv) is subject
and subordinate to the Security Instrument and the lessee thereunder agrees to
attorn to Lender, and (v) is written on the standard form of lease approved by
Lender. All proposed Leases which do not satisfy the requirements set forth in
this Subsection 3.8(a) shall be subject to the prior approval of Lender and its
counsel, at Borrower's expense. Borrower shall promptly deliver to Lender copies
of all Leases which are entered into
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pursuant to this Subsection together with Borrower's certification that it has
satisfied all of the conditions of this Subsection.
(b) Borrower (i) shall observe and perform all the obligations
imposed upon the lessor under the Leases and shall not do or permit to be done
anything to impair the value of any of the Leases as security for the Debt; (ii)
upon request, shall promptly send copies to Lender of all notices of default
which Borrower shall send or receive thereunder; (iii) shall enforce all of the
material terms, covenants and conditions contained in the Leases upon the part
of the tenant thereunder to be observed or performed, (iv) shall not collect any
of the Rents more than one (1) month in advance (except security deposits shall
not be deemed Rents collected in advance); (v) shall not execute any other
assignment of the lessor's interest in any of the Leases or the Rents; and (vi)
shall not consent to any assignment of or subletting under any Leases not in
accordance with their terms, without the prior written consent of Lender.
(c) Borrower may, without the consent of Lender, amend, modify or
waive the provisions of any Lease or terminate, reduce rents under, accept a
surrender of space under, or shorten the term of, any Lease (including any
guaranty, letter of credit or other credit support with respect thereto)
provided that such action (taking into account, in the case of a termination,
reduction in rent, surrender of space or shortening of term, the planned
alternative use of the affected space) does not have a materially adverse effect
on the value of the Property taken as a whole, and provided that such Lease, as
amended, modified or waived, is otherwise in compliance with the requirements of
this Security Instrument and any subordinate agreement binding upon Lender with
respect to such Lease. A termination of a Lease with a tenant who is in default
beyond applicable notice and grace periods shall not be considered an action
which has a materially adverse effect on the value of the Property taken as a
whole. Any amendment, modification, waiver, termination, rent reduction, space
surrender or term shortening which does not satisfy the requirements set forth
in this Subsection shall be subject to the prior approval of Lender and its
counsel, which approval shall not be unreasonably withheld or delayed, at
Borrower's expense. Borrower shall promptly deliver to Lender copies of
amendments, modifications and waivers which are entered into pursuant to this
Subsection together with Borrower's certification that it has satisfied all of
the conditions of this Subsection.
(d) Notwithstanding anything contained herein to the contrary,
Borrower shall not, without the prior written consent of ▇▇▇▇▇▇, enter into,
renew, extend, amend, modify, waive any provisions of, terminate, reduce rents
under, accept a surrender of space under, or shorten the term of, any Major
Lease. The term "Major Lease" shall mean any Lease between Borrower as landlord
and a third party as tenant demising in the aggregate more than the lesser of
(i) 15,000 rentable square feet or (ii) fifteen percent (15%) of the total
rentable square feet at the Property.
(e) Provided no Event of Default has occurred and is continuing,
Borrower shall have the right, upon notice to, but without the consent of,
Lender, to accept or reject any offer by PetsMART to terminate the PetsMART
Lease with respect to the Property in connection with a casualty or condemnation
to the Property pursuant to and in accordance with the terms and provisions of
Paragraph 17 of the PetsMART Lease so long as the amount payable by PetsMART to
Borrower pursuant to the PetsMART Lease in connection with such termination
and/or the amount of insurance proceeds or condemnation award, as applicable,
which Borrower is entitled to retain pursuant to the PetsMART Lease in
connection therewith is not less than
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(i) the Allocated Loan Amount (as defined in the Note) for the Property, in the
event Borrower is prepaying a portion of the Debt in connection with such
casualty or condemnation pursuant to Article VI of the Note or (ii) an amount
sufficient to purchase the Partial Defeasance Collateral (as defined in the
Note) for the Property, in the event Borrower is defeasing a portion of the Debt
in connection with such casualty or condemnation pursuant to Article VI of the
Note, and provided, further, that such prepayment or defeasance is made in
accordance with the terms of the Note, this Security Instrument and the Other
Security Documents.
(f) Borrower hereby covenants and agrees that (A) prior to the
Release Date (as defined in the Note) Borrower shall not, without the prior
written consent of Lender, (i) require Tenant to repurchase the Property and pay
to Borrower the Termination Amount (as defined in the PetsMART Lease) pursuant
to Paragraph 36(b) or 36(c) of the PetsMART Lease or (ii) declare the entire
Basic Rent (as defined in the PetsMART Lease) to be immediately due and payable
pursuant to Paragraph 23(b) of the PetsMART Lease and (B) that in the event
Borrower elects to exercise either such right from and after the Release Date,
Borrower shall simultaneously defease the portion of the Loan allocable to the
Premises or the entire Loan, as applicable, pursuant to and in accordance with
the terms and provisions of Article VI of the Note. Any breach by Borrower of
the foregoing covenant and agreement shall constitute an Event of Default.
Section 3.9 Maintenance and Use of Property. Borrower shall cause the
Property to be maintained in a good and safe condition and repair. The
Improvements and the Personal Property shall not be removed, demolished or
materially altered (except for normal replacement of the Personal Property or as
permitted in the PetsMART Lease) without the consent of Lender. Except as
provided in Section 3.8(f) hereof, Borrower shall promptly repair, replace or
rebuild or cause to be repaired, replaced or rebuilt, any part of the Property
which may be destroyed by any casualty, or become damaged, worn or dilapidated
or which may be affected by any proceeding of the character referred to in
Section 3.6 hereof and shall complete and pay for any structure at any time in
the process of construction or repair on the Land. Borrower shall not initiate,
join in, acquiesce in, or consent to any change in any private restrictive
covenant, zoning law or other public or private restriction, limiting or
defining the uses which may be made of the Property or any part thereof,
provided, that Borrower shall be permitted to enter into easement agreements or
grant rights of way so long as such agreements or grants do not reduce the value
of the Property or impair its use, and so long as Borrower has delivered to
Lender a title endorsement satisfactory to Lender with respect to such
agreements and/or rights of way. If under applicable zoning provisions the use
of all or any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued or
the nonconforming Improvement to be abandoned without the express written
consent of Lender.
Section 3.10 Waste. Borrower shall not commit or suffer any waste of
the Property or make any change in the use of the Property which will in any way
materially increase the risk of fire or other hazard arising out of the
operation of the Property, or take any action that might invalidate or give
cause for cancellation of any Policy, or do or permit to be done thereon
anything that may in any way impair the value of the Property or the security of
this Security Instrument. Borrower will not, without the prior written consent
of Lender, permit any drilling or exploration for or extraction, removal, or
production of any minerals from the
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surface or the subsurface of the Land, regardless of the depth thereof or the
method of mining or extraction thereof.
Section 3.11 Compliance With Laws.
(a) Borrower shall promptly comply or cause compliance with all
existing and future federal, state and local laws, orders, ordinances,
governmental rules and regulations or court orders affecting the Property, or
the use thereof ("Applicable Laws").
(b) Borrower shall from time to time, upon ▇▇▇▇▇▇'s request,
provide Lender with evidence reasonably satisfactory to Lender that the Property
complies with all Applicable Laws or is exempt from compliance with Applicable
Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regarding ▇▇▇▇▇▇'s approval of alterations of the Property, but subject
to any rights of PetsMART to perform alterations at the Property pursuant to and
in accordance with the terms and provisions of the PetsMART Lease, Borrower
shall not alter the Property in any manner which would materially increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. ▇▇▇▇▇▇'s approval of the plans,
specifications, or working drawings for alterations of the Property shall create
no responsibility or liability on behalf of Lender for their completeness,
design, sufficiency or their compliance with Applicable Laws. The foregoing
shall apply to tenant improvements constructed by Borrower or by any of its
tenants. Lender may condition any such approval upon receipt of a certificate of
compliance with Applicable Laws from an independent architect, engineer, or
other person acceptable to ▇▇▇▇▇▇.
(d) Borrower shall give prompt notice to Lender of the receipt by
Borrower of any notice related to a violation of any Applicable Laws and of the
commencement of any proceedings or investigations which relate to compliance
with Applicable Laws.
(e) After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the Applicable Laws affecting
the Property, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other Security
Documents; (ii) Borrower is permitted to do so under the provisions of any other
mortgage, deed of trust or deed to secure debt affecting the Property; (iii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower or the Property is subject
and shall not constitute a default thereunder; (iv) neither the Property, any
part thereof or interest therein, any of the tenants or occupants thereof, nor
Borrower shall be affected in any material adverse way as a result of such
proceeding; (v) non-compliance with the Applicable Laws shall not impose civil
or criminal liability on Borrower or Lender; and (vi) Borrower shall have
furnished to Lender all other items reasonably requested by ▇▇▇▇▇▇.
Section 3.12 Books and Records.
(a) Borrower and any Guarantors (defined in Subsection 10.1(e)) and
Indemnitor(s) (defined in Section 13.4), if any, shall keep adequate books and
records of account
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in accordance with generally accepted accounting principles ("GAAP"), or in
accordance with other methods acceptable to Lender in its sole discretion,
consistently applied and furnish to Lender:
(i) monthly, or if the Loan (defined below) has been securitized or
sold as a whole loan by Lender, quarterly and annual certified rent rolls in
the form attached hereto as Exhibit B signed and dated by Borrower,
detailing the names of all tenants of the Improvements, the portion of
Improvements occupied by each tenant, the base rent and any other charges
payable under each Lease and the term of each Lease, including the
expiration date, the extent to which any tenant is in default under any
Lease, and any other information as is reasonably required by ▇▇▇▇▇▇, within
twenty (20) days after the end of each calendar month, thirty (30) days
after the end of each fiscal quarter or sixty (60) days after the close of
each fiscal year of Borrower, as applicable;
(ii) on a monthly basis, operating statements of the Property in the
form attached as Exhibit C for the immediately preceding month (and for
previous periods if required by Lender), or if the Loan has been securitized
or sold as a whole loan by Lender, quarterly and annual operating statements
of the Property in the form attached hereto as Exhibit D and Exhibit E, all
of which shall be prepared and certified by Borrower in the form required by
Lender, detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest) and
major capital improvements completed by Borrower for each month and
containing appropriate year to date information, within twenty (20) days
after the end of each calendar month, thirty (30) days after the end of each
fiscal quarter or sixty (60) days after the close of each fiscal year of
Borrower, as applicable;
(iii) an annual operating statement of the Property in the form
attached hereto as Exhibit E detailing the total revenues received, total
expenses incurred, total cost of all capital improvements, total debt
service and total cash flow, to be prepared and certified by Borrower in the
form required by ▇▇▇▇▇▇, within sixty (60) days after the close of each
fiscal year of Borrower;
(iv) quarterly and annual balance sheet in the form attached hereto
as Exhibit F and profit and loss statements of Borrower, any Guarantors and
any Indemnitor(s) in the form required by Lender, prepared and certified by
the respective Borrower, Guarantors and/or Indemnitor(s), within thirty (30)
days after the end of each fiscal quarter and within sixty (60) days after
the end of each fiscal year, with respect to Borrower, and within sixty (60)
days (or, at any time after the Loan is securitized, ninety (90) days) after
the end of each fiscal quarter with respect to any Guarantors and
Indemnitor(s); and audited financial statements prepared by an independent
certified public accountant acceptable to Lender, within one hundred twenty
(120) days after the close of each fiscal year, with respect to any
Guarantor and Indemnitor; and
(v) an annual operating budget in the form attached hereto as
Exhibit G presented on a monthly basis consistent with the annual operating
statement described above for the Property, including cash flow projections
for the upcoming year, and all
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proposed capital replacements and improvements at least fifteen (15) days
prior to the start of each fiscal year.
(b) Upon request from ▇▇▇▇▇▇, Borrower, any Guarantor and any
Indemnitor shall furnish in a timely manner to Lender:
(i) at any time the PetsMART Lease is no longer in effect or if
PetsMART has otherwise vacated the Property, a property management report
for the Property, showing the number of inquiries made and/or rental
applications received from tenants or prospective tenants and deposits
received from tenants and any other information requested by Lender, in
reasonable detail and certified by Borrower (or an officer, general partner,
member or principal of Borrower if Borrower is not an individual) under
penalty of perjury to be true and complete, but no more frequently than
quarterly; and
(ii) an accounting of all security deposits held in connection with
any Lease of any part of the Property, including the name and identification
number of the accounts in which such security deposits are held, the name
and address of the financial institutions in which such security deposits
are held and the name of the person to contact at such financial
institution, along with any authority or release necessary for Lender to
obtain information regarding such accounts directly from such financial
institutions.
(c) Borrower, any Guarantor and any Indemnitor shall furnish Lender
with such other additional financial or management information (including State
and Federal tax returns, if any) as may, from time to time, be reasonably
required by ▇▇▇▇▇▇ in form and substance satisfactory to Lender.
(d) Borrower acknowledges the importance to Lender of the timely
delivery of each of the items required by this Section 3.12 (each, a "Required
Financial Item" and collectively, the "Required Financial Items"). In the event
Borrower fails to deliver to Lender any of the Required Financial Items within
the time frame specified herein and such failure is not cured within ten (10)
business days after notice from Lender (each such event, a "Reporting Failure"),
without limiting Lender's other rights and remedies with respect to the
occurrence of such an Event of Default, Borrower shall pay to Lender the sum of
$1,000.00 per occurrence for each Reporting Failure. It shall constitute a
further Event of Default hereunder if any such payment is not received by ▇▇▇▇▇▇
within thirty (30) days of the date on which such payment is due, and Lender
shall be entitled to the exercise of all of its rights and remedies provided
hereunder.
(e) In the event that two (2) Reporting Failures occur during any
twelve (12) month period during the term of the Loan, Borrower agrees to
establish a lockbox and lockbox account pursuant to Lender's requirements, each
in the name of Lender, and to execute ▇▇▇▇▇▇'s standard form Cash Management
Agreement, together with any documentation ancillary thereto as required by
Lender, including, without limitation, a lockbox agreement with a bank
acceptable to Lender, signature cards and letters to tenants, credit card
companies and other account receivable counterparties directing them to pay all
rents, receivables and other sums directly to the lockbox account.
-19-
Section 3.13 Payment For Labor and Materials. (a) Borrower will
promptly pay or cause to be paid when due all bills and costs for labor,
materials, and specifically fabricated materials incurred in connection with the
Property and never permit to exist in respect of the Property or any part
thereof any lien or security interest, even though inferior to the liens and the
security interests hereof, and in any event never permit to be created or exist
in respect of the Property or any part thereof any other or additional lien or
security interest other than the liens or security interests hereof, except for
the Permitted Exceptions (defined below).
(b) After prior written notice to Lender, Borrower or, if the
PetsMART Lease or an Acceptable Replacement Lease is in full force and effect,
as applicable, at its own expense, may contest by appropriate legal proceeding,
promptly initiated and conducted in good faith and with due diligence, the
amount or validity or application in whole or in party of any of such lien,
provided that (i) no Event of Default has occurred and is continuing under the
Note, this Security instrument or any of the Other Security Documents, (ii) such
proceeding shall suspend the collection of the such lien from Borrower and from
the Property or Borrower shall have paid such lien under protest, (iii) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, cancelled or lost, and (iv) Borrower shall have
deposited with Lender adequate reserves, a bond, or other reasonable security
for the payment of the lien, together with all interest and penalties thereon,
unless ▇▇▇▇▇▇▇▇ has paid all of the lien under protest, or Borrower or PetsMART
or an Acceptable Replacement Tenant shall have furnished the security as may be
required in the proceeding, or as may be reasonably requested by ▇▇▇▇▇▇ to
insure the payment of any contested lien together with all interest and
penalties thereon.
Section 3.14 Performance of Other Agreements. Borrower shall observe
and perform or cause to be observed and performed each and every term to be
observed or performed by Borrower pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Property, or given by
Borrower to Lender for the purpose of further securing an Obligation secured
hereby and any amendments, modifications or changes thereto.
Section 3.15 Change of Name, Identity or Structure. Except as may be
permitted under Article 8 hereof, Borrower will not change ▇▇▇▇▇▇▇▇'s name,
identity (including its trade name or names) or, if not an individual,
▇▇▇▇▇▇▇▇'s corporate, partnership or other structure without notifying the
Lender of such change in writing at least thirty (30) days prior to the
effective date of such change and, in the case of a change in Borrower's
structure, without first obtaining the prior written consent of the Lender.
Section 3.16 Existence. Borrower will continuously maintain (a) its
existence and shall not dissolve or permit its dissolution, (b) its rights to do
business in the state where the Property is located and (c) its franchises and
trade names, if any.
Section 3.17 Management. The management of the Property shall be by
either: (a) Borrower or an entity affiliated with Borrower approved by Lender
for so long as Borrower or said affiliated entity is managing the Property in a
first class manner; (b) a professional property management company approved by
Lender; or (c) by PetsMART or an Acceptable Replacement Tenant, so long as the
PetsMART Lease or an Acceptable Replacement Lease is in full force and effect
and provided there is no uncured default under the PetsMART Lease or the
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Acceptable Replacement Lease. Such management by an affiliated entity or a
professional property management company shall be pursuant to a written
agreement approved by ▇▇▇▇▇▇. In no event shall any manager be removed or
replaced or the terms of any management agreement modified or amended without
the prior written consent of Lender. In the event of default hereunder or under
any management contract then in effect, which default is not cured within any
applicable grace or cure period, Lender shall have the right to immediately
terminate, or to direct Borrower to immediately terminate, such management
contract and to retain, or to direct Borrower to retain, a new management agent
approved by ▇▇▇▇▇▇. All Rents generated by or derived from the Property shall
first be utilized solely for current expenses directly attributable to the
ownership and operation of the Property, including, without limitation, current
expenses relating to Borrower's liabilities and obligations with respect to the
Note, this Security Instrument and the Other Security Documents, and none of the
Rents generated by or derived from the Property shall be diverted by Borrower
and utilized for any other purpose unless all such current expenses attributable
to the ownership and operation of the Property have been fully paid and
satisfied.
ARTICLE IV
SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 Property Use. The Property shall be used only as a retail
facility and uses ancillary thereto, and, except for any permitted use by
PetsMART or an Acceptable Replacement Tenant as set forth in the PetsMART Lease
or an Acceptable Replacement Lease, for no other use, without the prior written
consent of Lender.
Section 4.2 Single Purpose Entity. It has not and shall not and agrees
that its general partner(s), if ▇▇▇▇▇▇▇▇ is a partnership, or its managing
member(s), if Borrower is a limited liability company (in each case,
"Principal"), has not and shall not:
(a) with respect to any Principal, fail to be organized as a
corporation;
(b) with respect to ▇▇▇▇▇▇▇▇, fail to be organized solely for the
purpose of (i) acquiring, developing, owning, managing or operating the
Property, (ii) entering into this Security Instrument and the documents related
hereto, and (iii) engaging in any activity that is incidental, necessary or
appropriate to accomplish the foregoing and, with respect to a Principal, be
organized for any purpose other than (I) owning at least a 0.5% interest in
Borrower, (II) serving as a manager of Borrower and (III) engaging in any
activity that is incidental, necessary or appropriate to owning an interest in
Borrower and serving as a manager of Borrower;
(c) with respect to ▇▇▇▇▇▇▇▇, engage in any business or activity
other than the ownership, operation and maintenance of the Property, and
activities incidental thereto and with respect to Principal, engage in any
business or activity other than the ownership of its interest in Borrower, and
activities incidental thereto including the management of the Property;
-21-
(d) with respect to Borrower, acquire or own any material assets
other than (i) the Property, and (ii) such incidental Personal Property as may
be necessary for the operation of the Property and with respect to Principal,
acquire or own any material asset other than (i) its interest in Borrower, and
(ii) such incidental Personal Property as may be necessary to effectuate its
purpose;
(e) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal structure;
(f) fail to preserve its existence as an entity duly organized,
validly existing and in good standing (if applicable) under the laws of the
jurisdiction of its organization or formation, and qualification to do business
in the state where the Property is located, if applicable, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's Partnership Agreement, Articles or Certificate of
Incorporation, Articles of Organization, Certificate of Formation, Operating
Agreement or similar organizational documents, as the case may be, or of
Principal's Articles or Certificate of Incorporation or similar organizational
documents, as the case may be;
(g) own, form or acquire any subsidiary or make any investment in,
any person or entity, other than Principal's investment in Borrower;
(h) commingle its assets with the assets of any of its members,
general partners, affiliates, principals or of any other person or entity nor
fail to hold all of its assets in its own name;
(i) with respect to Borrower, incur any debt, secured or unsecured,
direct or contingent (including guaranteeing any obligation), other than the
Debt, except for trade payables in the ordinary course of its business of owning
and operating the Property, provided that such debt is not evidenced by a note
and is paid when due and, with respect to Principal, incur any debt secured or
unsecured, direct or contingent (including guaranteeing any obligations), except
for trade payables in the ordinary course of its business of owning an interest
in ▇▇▇▇▇▇▇▇ and serving as a manager of ▇▇▇▇▇▇▇▇, provided that such debt is not
evidenced by a note and is paid when due;
(j) become insolvent or fail to pay its debts and liabilities from
its assets as the same shall become due;
(k) fail to maintain its records and books of account separate and
apart from those of the members, general partners, principals and affiliates of
Borrower or of Principal, as the case may be, the affiliates of a member,
general partner or principal of Borrower or Principal, as the case may be, and
any other person or entity or fail to maintain such books and records in the
ordinary course of its business;
(l) enter into any contract or agreement with any member, general
partner, principal or affiliate of Borrower or of Principal, as the case may be,
Guarantor or Indemnitor, or any member, general partner, principal or affiliate
thereof, except upon terms and conditions that are intrinsically fair,
commercially reasonable and substantially similar to those that would be
-22-
available on an arms-length basis with third parties other than any member,
general partner, principal or affiliate of Borrower or of Principal, as the case
may be, Guarantor or Indemnitor, or any member, general partner, principal or
affiliate thereof;
(m) seek the dissolution or winding up in whole, or in part, of
Borrower or of Principal, as the case may be;
(n) fail to correct any known misunderstandings regarding the
separate identity of ▇▇▇▇▇▇▇▇, or of Principal, as the case may be, from any
member, general partner, principal or affiliate thereof or any other person;
(o) guaranty or become obligated for the debts of any other person
or entity or hold out its credit as being able to satisfy the debts of another
person or entity, except if a Principal is a general partner of Borrower, such
an entity may be under state law liable for the debts of Borrower in its
capacity as a "general partner";
(p) make any loans or advances to any third party, including any
member, general partner, principal or affiliate of Borrower, or of Principal, as
the case may be, or any member, general partner, principal or affiliate thereof,
nor buy or hold evidence of indebtedness issued by any other person or entity
(other than cash or investment grade securities);
(q) fail to hold itself out to the public as a legal entity
separate and distinct from any other entity or person, fail to conduct its
business solely in its own name, mislead others as to the identity with which
such other party is transacting business, or suggest that Borrower or Principal,
as the case may be, is responsible for the debts of any third party (including
any member, general partner, principal or affiliate of Borrower, or of
Principal, as the case may be, or any member, general partner, principal or
affiliate thereof);
(r) fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;
(s) share any common logo with or hold itself out as or be
considered as a department or division of (i) any general partner, principal,
member or affiliate of Borrower or of Principal, as the case may be, (ii) any
affiliate of a general partner, principal or member of Borrower or of Principal,
as the case may be, or (iii) any other person or entity;
(t) fail to maintain separate financial statements showing its
assets and liabilities separate and apart from those of any other person or
entity, provided that Lender acknowledges that Borrower may file consolidated
tax returns with Corporate Property Associates 14 Incorporated, a Maryland
corporation;
(u) fail to observe all applicable organizational formalities;
(v) pledge its assets for the benefit of any other person or
entity, other than in the case of Borrower, in connection with the loan secured
hereby;
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(w) with respect to Principal, fail at any time to have at least
one independent director (an "Independent Director") who is not at the time of
initial appointment, or at any time while serving as a director of Principal,
and who has not been at any time during the preceding five (5) years: (a) a
stockholder, director (with the exception of serving as the independent director
of Principal), officer, employee, partner, attorney or counsel of Principal,
▇▇▇▇▇▇▇▇ or any affiliate of either of them; (b) a customer, supplier or other
person who derives any of its purchases or revenues from its activities with
Principal, Borrower or any affiliate of either of them; (c) a person or other
entity controlling or under common control with any such stockholder, partner,
customer, supplier or other person; or (d) a member of the immediate family of
any such stockholder, director, officer, employee, partner, customer, supplier
or other person. (As used herein, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of
management, policies or activities of a person or entity, whether through
ownership of voting securities by contract or otherwise);
(x) allow or cause Principal to take any action requiring the
unanimous vote of its Board of Directors unless an Independent Director shall
participate in such vote; or
(y) take for itself or cause any other entity to take any of the
following actions without the unanimous consent of its partners or members, as
applicable, and the unanimous affirmative vote of the Board of Directors of
Principal (including the Independent Director): (i) file or consent to the
filing of any bankruptcy, insolvency or reorganization case or proceeding;
institute any proceedings under any applicable insolvency law or otherwise seek
any relief under any laws relating to the relief from debts or the protection of
debtors generally, (ii) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official
for itself or any other entity, (iii) make an assignment of its assets for the
benefit of its creditors or an assignment of the assets of another entity for
the benefit of such entity's creditors, or (iv) take any action in furtherance
of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 Warranty of Title. ▇▇▇▇▇▇▇▇ has good title to the Property
and has the right to mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey the same and that Borrower possesses an unencumbered fee
simple absolute estate in the Land and the Improvements and that it owns the
Property free and clear of all liens, encumbrances and charges whatsoever except
for those exceptions shown in the title insurance policy insuring the lien of
this Security Instrument (the "Permitted Exceptions"). Borrower shall forever
warrant, defend and preserve the title and the validity and priority of the lien
of this Security Instrument and shall forever warrant and defend the same to
Lender and/or Trustee against the claims of all persons whomsoever.
Section 5.2 Legal Status and Authority. Borrower (a) is duly
organized, validly existing and in good standing under the laws of its state of
organization or incorporation; (b) is duly qualified to transact business and is
in good standing in the state where the Property is
-24-
located; and (c) has all necessary approvals, governmental and otherwise, and
full power and authority to own, operate and lease the Property. ▇▇▇▇▇▇▇▇ (and
the undersigned representative of Borrower, if any) has full power, authority
and legal right to execute this Security Instrument, and to mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer and convey the Property
pursuant to the terms hereof and to keep and observe all of the terms of this
Security Instrument on ▇▇▇▇▇▇▇▇'s part to be performed.
Section 5.3 Validity of Documents. (a) The execution, delivery and
performance of the Note, this Security Instrument and the Other Security
Documents and the borrowing evidenced by the Note (i) are within the power and
authority of Borrower; (ii) have been authorized by all requisite organizational
action; (iii) have received all necessary approvals and consents, corporate,
governmental or otherwise; (iv) will not violate, conflict with, result in a
breach of or constitute (with notice or lapse of time, or both) a material
default under any provision of law, any order or judgment of any court or
governmental authority, the articles of incorporation, by-laws, partnership or
trust agreement, articles of organization, operating agreement, or other
governing instrument of Borrower, or any indenture, agreement or other
instrument to which Borrower is a party or by which it or any of its assets or
the Property is or may be bound or affected; (v) will not result in the creation
or imposition of any lien, charge or encumbrance whatsoever upon any of its
assets, except the lien and security interest created hereby; and (vi) will not
require any authorization or license from, or any filing with, any governmental
or other body (except for the recordation of this Security Instrument in
appropriate land records in the State where the Property is located and except
for Uniform Commercial Code filings relating to the security interest created
hereby); and (b) to the best knowledge of Borrower, the Note, this Security
Instrument and the Other Security Documents constitute the legal, valid and
binding obligations of Borrower.
Section 5.4 Litigation. There is no action, suit or proceeding,
judicial, administrative or otherwise (including any condemnation or similar
proceeding), pending or, to the best of Borrower's knowledge, threatened or
contemplated against Borrower, a Guarantor, if any, an Indemnitor, if any, or
against or affecting the Property that (a) has not been disclosed to Lender by
Borrower in writing, and has a material adverse affect on the Property or
Borrower's, any Guarantor's or any Indemnitor's ability to perform its
obligations under the Note, this Security Instrument or the Other Security
Documents, or (b) is not adequately covered by insurance, each as determined by
▇▇▇▇▇▇ in its sole discretion.
Section 5.5 Status of Property.
(a) Borrower has obtained or caused to be obtained all necessary
certificates, licenses and other approvals, governmental and otherwise,
necessary for the operation of the Property and the conduct of its business and
all required zoning, building code, land use, environmental and other similar
permits or approvals, all of which are in full force and effect as of the date
hereof and not subject to revocation, suspension, forfeiture or modification.
(b) The Property and the present use and occupancy thereof are in
full compliance with all applicable zoning ordinances, building codes, land use
laws, Environmental Laws and other similar laws.
-25-
(c) The Property is served by all utilities required for the
current or contemplated use thereof. All utility service is provided by public
utilities and the Property has accepted or, to the best of Borrower's knowledge,
is equipped to accept such utility service.
(d) All public roads and streets necessary for service of and
access to the Property for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are physically and legally open
for use by the public.
(e) The Property is served by public water and sewer systems.
(f) The Property is free from damage caused by fire or other
casualty.
(g) To the best of ▇▇▇▇▇▇▇▇'s knowledge, all costs and expenses of
any and all labor, materials, supplies and equipment used in the construction of
the Improvements and for which Borrower is or may be responsible or which may
otherwise become a lien upon the Property have been paid in full.
(h) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and all
security interests, liens or encumbrances, except the lien and security interest
created hereby.
(i) To the best of Borrower's knowledge, liquid and solid waste
disposal, septic and sewer systems located on the Property are in a good and
safe condition and repair and in compliance with all Applicable Laws.
(j) No portion of the Improvements is located in an area identified
by the Secretary of Housing and Urban Development or any successor thereto as an
area having special flood hazards pursuant to the Flood Insurance Acts or, if
any portion of the Improvements is located within such area, Borrower has
obtained and will maintain the insurance prescribed in Section 3.3 hereof.
(k) All the Improvements lie within the boundaries of the Land.
(l) As to any declarations of covenants, conditions and
restrictions or similar agreements that run with the Land (the "Declarations")
to which Tenant is a party or by which Tenant or any Property or any portion
thereof may be bound, and which are listed on Exhibit "C" hereto, except as may
be specifically set forth in Exhibit "C":
(i) All of the Declarations are in full force and effect in
accordance with their respective terms, and none of the Declarations has
been modified or amended;
(ii) All work required under the Declarations to be performed by
▇▇▇▇▇▇ as of the closing date and all work required under the Declarations
to be performed by any third party for the benefit of Tenant or any
Property, as of the closing date, has been performed.
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(iii) There are no written or oral promises, agreements,
understandings or commitments between Tenant and any party to any of the
Declarations other than those contained in the Declarations and the other
instruments listed on said Exhibit "C"; and
(iv) There is written claim of default under any of the Declarations
by any party thereto which has not been cured; and to Tenant's knowledge
there exists no event which alone, or with notice or the lapse of time or
both, would constitute a default under any of the Declarations by any party
thereto. Neither Tenant, the current owner of any Property nor any Property
is in default under any of the Declarations or in violation of any provision
of any Declaration. All sums due and payable by Tenant or the current owner
of any Property under the Declarations as of the closing date have been paid
in full prior to the closing date. There are no rights of first refusal or
options to purchase any Property (or any part thereof) contained in the
Declarations or in any other agreement affecting any Property (or any part
thereof).
Section 5.6 No Foreign Person. Borrower is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations.
Section 5.7 Separate Tax Lot. The Property is assessed for real estate
tax purposes as one or more wholly independent tax lot or lots, separate from
any adjoining land or improvements not constituting a part of such lot or lots,
and no other land or improvements is assessed and taxed together with the
Property or any portion thereof.
Section 5.8 Leases. (a) Except as disclosed in the rent roll for the
Property delivered to and approved by ▇▇▇▇▇▇ in writing prior to the date
hereof, (i) Borrower is the sole owner of the entire lessor's interest in the
Leases; (ii) the Leases are valid and enforceable and in full force and effect;
(iii) all of the Leases are arms-length agreements with bona fide, independent
third parties; (iv) no party under any Lease is in default; (v) all Rents due
have been paid in full; (vi) the terms of all alterations, modifications and
amendments to the Leases are reflected in the certified occupancy statement
delivered to and approved by Lender; (vii) none of the Rents reserved in the
Leases have been assigned or otherwise pledged or hypothecated; (viii) none of
the Rents have been collected for more than one (1) month in advance (except a
security deposit shall not be deemed rent collected in advance); (ix) the
premises demised under the Leases have been completed and the tenants under the
Leases have accepted the same and have taken possession of the same on a
rent-paying basis; (x) there exist no offsets or defenses to the payment of any
portion of the Rents and Borrower has no monetary obligation to any tenant under
any Lease; (xi) Borrower has received no notice from any tenant challenging the
validity or enforceability of any Lease; (xii) there are no agreements with the
tenants under the Leases other than expressly set forth in each Lease; (xiii)
the Leases are valid and enforceable against Borrower and the tenants set forth
therein; (xiv) no Lease contains an option to purchase, right of first refusal
to purchase, or any other similar provision; (xv) no person or entity has any
possessory interest in, or right to occupy, the Property except under and
pursuant to a Lease; (xvi) each Lease is subordinate to this Security
Instrument, either pursuant to its terms or a recordable subordination
agreement; (xvii) no Lease has the benefit of a non-disturbance agreement that
would be considered unacceptable to prudent institutional lenders, (xviii) all
security deposits relating to the Leases reflected on the certified rent roll
delivered to Lender
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have been collected by ▇▇▇▇▇▇▇▇; and (xix) no brokerage commissions or finders
fees are due and payable regarding any Lease.
(b) Notwithstanding anything contained herein to the contrary,
Borrower shall not willfully withhold from Lender any information regarding
renewal, extension, amendment, modification, waiver of provisions of,
termination, rental reduction of, surrender of space of, or shortening of the
term of, any Lease during the term of the Loan. Borrower further covenants and
agrees that, to the best of ▇▇▇▇▇▇▇▇'s knowledge, one of the entities comprising
PetsMART, as of the date hereof, is in physical occupancy of each of the
premises demised under the PetsMART Lease and is paying full rent under the
PetsMART Lease.
Section 5.9 Financial Condition. (a) (i) Borrower is solvent, and no
bankruptcy, reorganization, insolvency or similar proceeding under any state or
federal law with respect to Borrower has been initiated, and (ii) Borrower has
received reasonably equivalent value for the granting of this Security
Instrument.
(b) No petition in bankruptcy has ever been filed by or against
Borrower, any Guarantor, any Indemnitor or any related entity, or any principal,
general partner or member thereof, in the last seven (7) years, and neither
Borrower, any Guarantor, any Indemnitor nor any related entity, or any
principal, general partner or member thereof, in the last seven (7) years has
ever made any assignment for the benefit of creditors or taken advantage of any
insolvency act or any act for the benefit of debtors, provided, however, that
this representation specifically excludes any shareholder in Guarantor.
Section 5.10 Business Purposes. The loan evidenced by the Note secured
by the Security Instrument and the Other Security Documents (the "Loan") is
solely for the business purpose of Borrower, and is not for personal, family,
household, or agricultural purposes.
Section 5.11 Taxes. Borrower, any Guarantor and any Indemnitor have
filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Guarantor nor any Indemnitor
knows of any basis for any additional assessment in respect of any such taxes
and related liabilities for prior years. Borrower confirms that its federal tax
identification number is: ▇▇-▇▇▇▇▇▇▇.
Section 5.12 Mailing Address. ▇▇▇▇▇▇▇▇'s mailing address, as set forth
in the opening paragraph hereof or as changed in accordance with the provisions
hereof, is true and correct.
Section 5.13 No Change in Facts or Circumstances. All information in
the application for the Loan submitted to Lender (the "Loan Application") and in
all financing statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application or in satisfaction of the
terms thereof, are accurate, complete and correct in all respects. There has
been no adverse change in any condition, fact, circumstance or event that would
make any such information inaccurate, incomplete or otherwise misleading.
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Section 5.14 Disclosure. Borrower has disclosed to Lender all material
facts and has not failed to disclose any material fact that could cause any
representation or warranty made herein to be materially misleading.
Section 5.15 Third Party Representations. Each of the representations
and the warranties made by each Guarantor and Indemnitor herein or in any Other
Security Document(s) is true and correct in all material respects.
Section 5.16 Illegal Activity. No portion of the Property has been or
will be purchased, improved, equipped or furnished with proceeds of any illegal
activity and to the best of Borrower's knowledge, there are no illegal
activities or activities relating to controlled substance at the Property.
Section 5.17 Regulations T, U and X. Borrower does not own any "margin
stock" as such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 CFR Part 221), as amended. Borrower will not use any
part of the proceeds from the loan to be made under this Security Instrument (a)
directly or indirectly, to purchase or carry any such stock or to reduce or
retire any Obligations originally incurred to purchase any such stock within the
meaning of such Regulation, (b) so as to involve Borrower in a violation of
Regulation T, U or X of such Board (12 CFR Parts 220, 221 and 224), as amended,
or (c) for any other purpose not permitted by Section 7 of the Securities
Exchange Act of 1934, as amended, or any of the rules and regulations respecting
the extension of credit promulgated thereunder.
Section 5.18 Non-Consolidation. All of the assumptions made in that
certain substantive non-consolidation opinion letter of even date herewith
delivered by ▇▇▇▇▇▇▇▇'s counsel in connection herewith and any subsequent
non-consolidation opinion delivered in accordance with the terms and conditions
of this Mortgage and/or the Note, including, but not limited to, any exhibits
attached thereto (the "Non-Consolidation Opinion"), are true and correct in all
respects. ▇▇▇▇▇▇▇▇ has complied and will comply with all of the assumptions made
with respect to it in the Non-Consolidation Opinion. Each entity other than
Borrower with respect to which an assumption is made in the Non-Consolidation
Opinion has complied and will comply with all of the assumptions made with
respect to it in the Non-Consolidation Opinion.
ARTICLE VI
OBLIGATIONS AND RELIANCE
Section 6.1 Relationship of Borrower and Lender. The relationship
between ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ is solely that of debtor and creditor, and ▇▇▇▇▇▇
has no fiduciary or other special relationship with Borrower, and no term or
condition of any of the Note, this Security Instrument and the Other Security
Documents shall be construed so as to deem the relationship between Borrower and
Lender to be other than that of debtor and creditor.
Section 6.2 No Reliance on Lender. The members, general partners,
principals and (if Borrower is a trust) beneficial owners of Borrower are
experienced in the ownership and operation of properties similar to the
Property, and Borrower and Lender are relying solely upon such expertise and
business plan in connection with the ownership and operation of the Property.
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Borrower is not relying on ▇▇▇▇▇▇'s expertise, business acumen or advice in
connection with the Property.
Section 6.3 No Lender Obligations. Notwithstanding the provisions of
Subsections 1.1(f) and (l) or Section 1.2, Lender is not undertaking the
performance of (i) any obligations under the Leases; or (ii) any obligations
with respect to such agreements, contracts, certificates, instruments,
franchises, permits, trademarks, licenses and other documents. By accepting or
approving anything required to be observed, performed or fulfilled or to be
given to Lender pursuant to this Security Instrument, the Note or the Other
Security Documents, including without limitation, any officer's certificate,
balance sheet, statement of profit and loss or other financial statement,
survey, appraisal, or insurance policy, Lender shall not be deemed to have
warranted, consented to, or affirmed the sufficiency, the legality or
effectiveness of same, and such acceptance or approval thereof shall not
constitute any warranty or affirmation with respect thereto by ▇▇▇▇▇▇.
Section 6.4 Reliance. Borrower recognizes and acknowledges that in
accepting the Note, this Security Instrument and the Other Security Documents,
Lender is expressly and primarily relying on the truth and accuracy of the
warranties and representations set forth in Article 5 and Article 12 without any
obligation to investigate the Property and notwithstanding any investigation of
the Property by ▇▇▇▇▇▇; that such reliance existed on the part of Lender prior
to the date hereof; that the warranties and representations are a material
inducement to Lender in accepting the Note, this Security Instrument and the
Other Security Documents; and that ▇▇▇▇▇▇ would not be willing to make the Loan
and accept this Security Instrument in the absence of the warranties and
representations as set forth in Article 5 and Article 12.
ARTICLE VII
FURTHER ASSURANCES
Section 7.1 Recording of Security Instrument, etc. Borrower forthwith
upon the execution and delivery of this Security Instrument and thereafter, from
time to time, will cause this Security Instrument and any of the Other Security
Documents creating a lien or security interest or evidencing the lien hereof
upon the Property and each instrument of further assurance to be filed,
registered or recorded in such manner and in such places as may be required by
any present or future law in order to publish notice of and fully to protect and
perfect the lien or security interest hereof upon, and the interest of Lender
in, the Property. Borrower will pay all taxes, filing, registration or recording
fees, and all expenses incident to the preparation, execution, acknowledgment
and/or recording of the Note, this Security Instrument, the Other Security
Documents, any note or deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property and any instrument of further
assurance, and any modification or amendment of the foregoing documents, and all
federal, state, county and municipal taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution and delivery of this
Security Instrument, any deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property or any instrument of further
assurance, and any modification or amendment of the foregoing documents, except
where prohibited by law so to do.
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Section 7.2 Further Acts, etc. ▇▇▇▇▇▇▇▇ will, at the cost of ▇▇▇▇▇▇▇▇,
and without expense to ▇▇▇▇▇▇, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, deeds of trust, mortgages,
assignments, notices of assignments, transfers and assurances as Lender shall,
from time to time, require, for the better assuring, conveying, assigning,
transferring, and confirming unto Lender and Trustee the Property and rights
hereby deeded, mortgaged, granted, bargained, sold, conveyed, confirmed,
pledged, assigned, warranted and transferred or intended now or hereafter so to
be, or which Borrower may be or may hereafter become bound to convey or assign
to Lender, or for carrying out the intention or facilitating the performance of
the terms of this Security Instrument or for filing, registering or recording
this Security Instrument, or for complying with all Applicable Laws. ▇▇▇▇▇▇▇▇,
on demand, will execute and deliver and hereby authorizes ▇▇▇▇▇▇, following 10
days' notice to Borrower, to execute in the name of Borrower or without the
signature of Borrower to the extent Lender may lawfully do so, (i) one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Lender in the Property and (ii) any
amendments or modifications to the Note, this Security Instrument and/or the
Other Security Documents in order to correct any scrivener's errors contained
herein or therein, including, without limitation, any errors with respect to the
spelling of ▇▇▇▇▇▇▇▇'s name, the address of the Property, the legal description
of the Property and/or the date of execution of the Note, this Security
Instrument and/or the Other Security Documents. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to Lender
pursuant to this Section 7.2.
Section 7.3 Changes in Tax, Debt Credit and Documentary Stamp Laws.
(a) If any law is enacted or adopted or amended after the date of
this Security Instrument which deducts the Debt from the value of the Property
for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or ▇▇▇▇▇▇'s interest in the Property, Borrower will pay
the tax, with interest and penalties thereon, if any. If ▇▇▇▇▇▇ is advised by
counsel chosen by it that the payment of tax by ▇▇▇▇▇▇▇▇ would be unlawful or
taxable to Lender or unenforceable or provide the basis for a defense of usury,
then Lender shall have the option, exercisable by written notice of not less
than one hundred twenty (120) days, to declare the Debt immediately due and
payable.
(b) Borrower will not claim or demand or be entitled to any credit
or credits on account of the Debt for any part of the Taxes or Other Charges
assessed against the Property, or any part thereof, and no deduction shall
otherwise be made or claimed from the assessed value of the Property, or any
part thereof, for real estate tax purposes by reason of this Security Instrument
or the Debt. If such claim, credit or deduction shall be required by law, Lender
shall have the option, exercisable by written notice of not less than one
hundred twenty (120) days, to declare the Debt immediately due and payable.
(c) If at any time the United States of America, any State thereof
or any subdivision of any such State shall require revenue or other stamps to be
affixed to the Note, this Security Instrument, or any of the Other Security
Documents or impose any other tax or charge on the same, Borrower will pay for
the same, with interest and penalties thereon, if any.
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Section 7.4 Estoppel Certificates.
(a) After request by ▇▇▇▇▇▇, Borrower, within fifteen (15) days,
shall furnish Lender or any proposed assignee with a statement, duly
acknowledged and certified, setting forth (i) the original principal amount of
the Note, (ii) the unpaid principal amount of the Note, (iii) the rate of
interest of the Note, (iv) the terms of payment and maturity date of the Note,
(v) the date installments of interest and/or principal were last paid, (vi)
that, except as provided in such statement, there are no defaults or events
which with the passage of time or the giving of notice or both, would constitute
an event of default under the Note or the Security Instrument, (vii) that the
Note and this Security Instrument are valid, legal and binding obligations and
have not been modified or if modified, giving particulars of such modification,
(viii) whether any offsets or defenses exist against the obligations secured
hereby and, if any are alleged to exist, a detailed description thereof, (ix)
that all Leases are in full force and effect and (provided the Property is not a
residential multifamily property) have not been modified (or if modified,
setting forth all modifications), (x) the date to which the Rents thereunder
have been paid pursuant to the Leases, (xi) whether or not, to the best
knowledge of Borrower, any of the lessees under the Leases are in default under
the Leases, and, if any of the lessees are in default, setting forth the
specific nature of all such defaults, (xii) the amount of security deposits held
by Borrower under each Lease and that such amounts are consistent with the
amounts required under each Lease, and (xiii) as to any other matters reasonably
requested by Lender and reasonably related to the Leases, the obligations
secured hereby, the Property or this Security Instrument.
(b) Borrower shall use its best efforts to deliver to Lender,
promptly upon request, duly executed estoppel certificates from any one or more
lessees as required by Lender attesting to such facts regarding the Lease as
Lender reasonably may require, including but not limited to attestations that
each Lease covered thereby is in full force and effect with no defaults
thereunder on the part of any party, that none of the Rents have been paid more
than one month in advance, and that the lessee claims no defense or offset
against the full and timely performance of its obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated by Section
18.1 hereof, at ▇▇▇▇▇▇'s request, Borrower, any Guarantors and any Indemnitor(s)
shall provide an estoppel certificate to the Investor (defined in Section 18.1)
or any prospective Investor in such form, substance and detail as Lender, such
Investor or prospective Investor may require.
(d) After written request by Borrower not more than once annually,
and at Borrower's sole cost and expense, Lender shall furnish to Borrower a
statement setting forth (i) the unpaid principal amount of the Note, and (ii)
the balance of the sums held in escrow pursuant to the Reserve and Security
Agreement.
Section 7.5 Flood Insurance. After ▇▇▇▇▇▇'s request, Borrower shall
deliver evidence satisfactory to Lender that no portion of the Improvements is
situated in a federally designated "special flood hazard area" or if it is, that
Borrower has obtained or caused to be obtained insurance meeting the
requirements of Section 3.3(a)(vi).
Section 7.6 Replacement Documents. Upon receipt of an affidavit of an
officer of Lender as to the loss, theft, destruction or mutilation of the Note
or any Other Security
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Document which is not of public record, and, in the case of any such mutilation,
upon surrender and cancellation of such Note or Other Security Document,
Borrower will issue, in lieu thereof, a replacement Note or Other Security
Document, dated the date of such lost, stolen, destroyed or mutilated Note or
Other Security Document in the same principal amount thereof and otherwise of
like tenor.
ARTICLE VIII
DUE ON SALE/ENCUMBRANCE
Section 8.1 No Sale/Encumbrance. ▇▇▇▇▇▇▇▇ agrees that Borrower shall
not, without the prior written consent of Lender, sell, convey, mortgage, grant,
bargain, encumber, pledge, assign, or otherwise transfer the Property or any
part thereof or any interest therein or any direct or indirect interest in
Borrower or permit the Property or any part thereof or any interest therein or
any direct or indirect interest in Borrower to be sold, conveyed, mortgaged,
granted, bargained, encumbered, pledged, assigned, or otherwise transferred,
other than pursuant to Leases of space in the Improvements to tenants in
accordance with the provisions of Section 3.8.
Section 8.2 Sale/Encumbrance Defined. A sale, conveyance, mortgage,
grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning
of this Article 8 shall be deemed to include, but not be limited to, (a) an
installment sales agreement wherein Borrower agrees to sell the Property or any
part thereof for a price to be paid in installments; (b) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, ▇▇▇▇▇▇▇▇'s right, title and interest
in and to any Leases or any Rents; (c) if Borrower, any Guarantor, any
Indemnitor, or any general or limited partner or member of Borrower, any
Guarantor or any Indemnitor is a corporation, any merger, consolidation or
voluntary or involuntary sale, conveyance, transfer or pledge of such
corporation's stock (or the stock of any corporation directly or indirectly
controlling such corporation by operation of law or otherwise) or the creation
or issuance of new stock 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; (d) if Borrower, any Guarantor or
any Indemnitor or any general or limited partner or member of Borrower, any
Guarantor or any Indemnitor is a limited or general partnership or joint
venture, the change, removal or resignation of a general partner or the transfer
or pledge of the partnership interest of any general partner or any profits or
proceeds relating to such partnership interest or the voluntary or involuntary
sale, conveyance, transfer or pledge of limited partnership interests (or the
limited partnership interests of any limited partnership directly or indirectly
controlling such limited partnership by operation of law or otherwise); and (e)
if Borrower, any Guarantor, any Indemnitor or any general or limited partner or
member of Borrower, any Guarantor or any Indemnitor is a limited liability
company, the change, removal or resignation of a managing member (or if no
managing member, any member or non-member manager) or the transfer of the
membership interest of a managing member (or if no managing member, any member)
or any profits or proceeds relating to such membership interest or the voluntary
or involuntary sale, conveyance, transfer or pledge of membership interests (or
the membership interests of any limited liability company directly or indirectly
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controlling such limited liability company by operation of law or otherwise).
Notwithstanding the foregoing, so long as the Guarantor and/or Indemnitor is
Corporate Property Associates 14 Incorporated or an Affiliate (as defined in
Section 8.4(b) hereof) (the "Guarantor"), the provisions of clauses (c), (d) and
(e) above shall not apply to the Guarantor, any Indemnitor or any interest
holder therein.
Section 8.3 Lender's Rights. Lender reserves the right to condition
the consent required hereunder upon a modification of the terms hereof and on
assumption of the Note, this Security Instrument and the Other Security
Documents as so modified by the proposed transferee, payment of a transfer fee
equal to one percent (1%) of the then outstanding principal balance of the Note,
and all of ▇▇▇▇▇▇'s expenses incurred in connection with such transfer, the
approval by a Rating Agency of the proposed transferee, the proposed
transferee's continued compliance with the covenants set forth in this Security
Instrument, including, without limitation, the covenants in Section 4.2 hereof,
or such other conditions as Lender shall determine in its sole discretion to be
in the interest of Lender. All of ▇▇▇▇▇▇'s expenses incurred shall be payable by
Borrower whether or not Lender consents to the transfer. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of default hereunder in order to declare the Debt immediately due and
payable upon ▇▇▇▇▇▇▇▇'s sale, conveyance, mortgage, grant, bargain, encumbrance,
pledge, assignment, or transfer of the Property without ▇▇▇▇▇▇'s consent. This
provision shall apply to every sale, conveyance, mortgage, grant, bargain,
encumbrance, pledge, assignment, or transfer of the Property regardless of
whether voluntary or not, or whether or not Lender has consented to any previous
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property.
Section 8.4 Permitted Transfers. (a) Notwithstanding the foregoing
provisions of this Section, Lender shall not unreasonably withhold consent to
the simultaneous sale, conveyance or transfer of all of the Individual
Properties (as defined in the Note) in their entirety on a single occasion (a
"Sale") after the first anniversary of the first day of the first calendar month
after the date hereof (or the date hereof if dated the first day of a calendar
month) and with respect to such Sale, Lender shall not require a modification of
the material economic terms hereof (other than a corresponding increase in
Borrower's deposits into the Escrow Fund with respect to Taxes in the event such
Sale results in an increase in the real property tax assessment by the
applicable taxing authority), to any person or entity provided that each of the
following terms and conditions are satisfied:
(i) no default after the expiration of notice or grace periods is
then continuing hereunder, under the Note, or any of the Other Security
Documents;
(ii) Borrower gives Lender written notice of the terms of such
prospective Sale not less than thirty (30) days before the date on which
such Sale is scheduled to close and, concurrently therewith, gives Lender
all such information concerning the proposed transferee of the Property
(hereinafter, "Buyer") as Lender would reasonably require in evaluating an
initial extension of credit to a borrower and pays to Lender a
non-refundable application fee in the amount of $2,500.00. Lender shall have
the right to approve or disapprove the proposed Buyer, such approval not to
be unreasonably withheld or delayed. In determining whether to give or
withhold its approval of the
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proposed Buyer, Lender shall consider the Buyer's experience and track
record in owning and operating facilities similar to the Property, the
Buyer's financial strength, the Buyer's general business standing and the
Buyer's relationships and experience with contractors, vendors, tenants,
lenders and other business entities; provided, however, that,
notwithstanding Lender's agreement to consider the foregoing factors in
determining whether to give or withhold such approval, such approval shall
be given or withheld based on what Lender determines to be commercially
reasonable and, if given, may be given subject to such conditions as Lender
may deem reasonably appropriate;
(iii) Borrower pays Lender, concurrently with the closing of such
Sale, a non-refundable assumption fee in an amount equal to all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by Lender in connection with the Sale plus an
amount equal to one percent (1.0%) of the then outstanding principal balance
of the Note. Borrower also pays, concurrently with the closing of such Sale,
all costs and expenses of all third parties and Rating Agencies in
connection with the Sale;
(iv) Buyer (a) assumes and agrees to pay all indebtedness secured
hereby as and when due subject to the provisions of Article 11 of the Note
and, (b) prior to or concurrently with the closing of such Sale, the Buyer
executes, without any cost or expense to Lender, such documents and
agreements as Lender shall reasonably require to evidence and effectuate
said assumption;
(v) Borrower and the Buyer execute, without any cost or expense to
Lender, new financing statements or financing statement amendments and any
additional documents reasonably requested by ▇▇▇▇▇▇;
(vi) Borrower delivers to Lender, without any cost or expense to
Lender, such endorsements to ▇▇▇▇▇▇'s title insurance policy, hazard
insurance endorsements or certificates and other similar materials as Lender
may deem necessary at the time of the Sale, all in form and substance
satisfactory to Lender, including, without limitation, an endorsement or
endorsements to Lender's title insurance policy insuring the lien of this
Security Instrument insuring that fee simple title to the Property is vested
in the Buyer;
(vii) Buyer shall furnish, if the Buyer is a corporation, partnership
or other entity, all appropriate papers evidencing the Buyer's capacity and
good standing, and the qualification of the signers to execute the
assumption of the indebtedness secured hereby, which papers shall include
certified copies of all documents relating to the organization and formation
of the Buyer and of the entities, if any, which are partners or members of
the Buyer. The Buyer and such constituent partners, members or shareholders
of Buyer (as the case may be), as Lender shall require, shall be single
purpose, "bankruptcy remote" entities which satisfy the requirements of
Article IV hereof and the requirements of the Rating Agencies, and whose
formation documents shall be approved by counsel to Lender. An individual
recommended by the Buyer and approved by Lender shall serve as an
independent director of the Buyer (if the Buyer is a corporation) or the
Buyer's corporate general partner or an independent member or, in ▇▇▇▇▇▇'s
discretion, manager, of Buyer if the Buyer is a limited liability company.
The consent of such independent
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party shall be required for, among other things, any merger, consolidation,
dissolution, bankruptcy or insolvency of such independent party or of the
Buyer;
(viii) Buyer shall assume the obligations of Borrower under any
management agreements pertaining to the Property or assign to Lender as
additional security any new management agreement entered into in connection
with such Sale;
(ix) Buyer shall furnish an opinion of counsel satisfactory to
Lender and its counsel (A) that the Buyer's formation documents provide for
the matters described in subparagraph (vii) above, (B) that the assumption
of the indebtedness evidenced hereby has been duly authorized, executed and
delivered, and that the Note, this Security Instrument, the assumption
agreement and the Other Security Documents are valid, binding and
enforceable against the Buyer in accordance with their terms, (C) that the
Buyer and any entity which is a controlling stockholder, member or general
partner of Buyer, have been duly organized, and are in existence and good
standing, (D) if required by ▇▇▇▇▇▇, that the assets of the Buyer will not
be consolidated with the assets of any other entity having an interest in,
or affiliation with, the Buyer, in the event of bankruptcy or insolvency of
any such entity, and (E) with respect to such other matters as Lender may
reasonably request;
(x) Lender shall have received confirmation in writing from the
Rating Agencies that rate the Securities or Participations (as defined in
Section 18.1) to the effect that the Sale will not result in a
qualification, downgrade or withdrawal of any rating initially assigned or
then currently assigned or to be assigned to the Securities or
Participations, as applicable;
(xi) An affiliate of Buyer with a net worth (as determined by
Lender) of not less than Twenty-Five Million Dollars ($25,000,000) shall
have assumed, from and after the date of such Sale, all of the obligations
of Guarantor under the Environmental Indemnity and the Guaranty of Recourse
Obligations of Borrower of even date herewith (the "Guaranty") pursuant to
such documents and agreements as Lender shall reasonably require to evidence
and effectuate such assumption and thereafter Guarantor shall be released
from all liabilities and obligations under the Environmental Indemnity and
the Guaranty arising from matters first occurring from and after the date of
such Sale; and
(xii) Borrower's obligations under the contract of sale pursuant to
which the Sale is proposed to occur shall expressly be subject to the
satisfaction of the terms and conditions of this Section 8.4;
(b) Notwithstanding the foregoing provision of this Section and
provided Borrower has not exercised its right to sell, convey or transfer all of
the Individual Properties pursuant to Section 8.4(a) above, Borrower shall be
permitted, after the first anniversary of the first day of the first calendar
month after the date hereof (or the date hereof if dated the first day of a
calendar month), to transfer or convey all of its interests in all of the
Individual Properties to any Affiliate (hereinafter defined) whose key
principal's (the "Key Principal") net worth as determined by Lender shall be not
less than Twenty-Five Million Dollars ($25,000,000) without Lender's approval or
consent and without payment of the one percent (1%) transfer fee (but with
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payment of all out-of-pocket expenses, including without limitation, reasonable
attorney's fees, incurred by ▇▇▇▇▇▇ in connection with the transfer and all
costs and expenses of all third parties and Rating Agencies in connection with
the Sale) so long as the terms and conditions set forth in Sections 8.4(a)(i),
(iv), (v), (vi), (vii), (viii), (ix) and (x) are satisfied. Borrower shall, not
less than thirty (30) days before any such transfer, deliver to Lender written
notice of such transfer which notice shall (i) describe the proposed transfer in
reasonable detail, (ii) include evidence reasonably satisfactory to Lender that
the proposed transferee is an Affiliate of Borrower and that such Key Principal
has a net worth of not less than Twenty-Five Million Dollars ($25,000,000), and
(c) include evidence reasonably satisfactory to Lender that the applicable
provisions of Section 8.4 hereof have been satisfied. In connection with any
such transfer to an Affiliate, Key Principal shall assume, from and after the
date of such transfer, all of the obligations of Guarantor under the
Environmental Indemnity and the Guaranty pursuant to such documents and
agreements as Lender shall reasonably require to evidence and effectuate such
assumption and thereafter Guarantor shall be released from all liabilities and
obligations under the Environmental Indemnity and the Guaranty arising from
matters first occurring from and after the date of such transfer. As used
herein, the term "Affiliate" shall mean an entity which controls, is controlled
by or is under common control with Borrower, Corporate Property Associates 10
Incorporated, Corporate Property Associates 14 Incorporated, Corporate Property
Associates 15 Incorporated, ▇▇▇▇▇ Institutional Properties Incorporated or W.P.
▇▇▇▇▇ Co. LLC; and
(c) Notwithstanding the foregoing provision of this Section,
Corporate Property Associates 15 Incorporated shall be permitted to acquire up
to a thirty percent (30%) interest in the Borrower, without ▇▇▇▇▇▇'s approval or
consent and without payment of the one percent (1%) transfer fee provided that
no Event of Default shall have occurred and be continuing, such transfer does
not affect the single purpose bankruptcy remote structure of the Borrower and
Borrower pays all out-of-pocket expenses, if any, including without limitation,
reasonable attorney's fees, incurred by ▇▇▇▇▇▇ in connection with the transfer
and all costs and expenses of all third parties and Rating Agencies in
connection with such transfer).
ARTICLE IX
PREPAYMENT
Section 9.1 Prepayment. The Debt may not be prepaid in whole or in
part except in strict accordance with the express terms and conditions of the
Note.
ARTICLE X
DEFAULT
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the fifth (5th)
day after the same is due or if the entire Debt is not paid on or before the
Maturity Date (as defined in the Note);
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(b) if any of the Taxes or Other Charges is not paid prior to
delinquency, penalty or interest except to the extent sums sufficient to pay
such Taxes and Other Charges have been deposited with Lender in accordance with
the terms of this Security Instrument or such items are being contested in
accordance with the terms of the Security Instrument;
(c) if the Policies are not kept in full force and effect, or if
the Policies are not delivered to Lender upon request;
(d) if Borrower violates or does not comply with any of the
provisions of Section 4.2 or Article 8;
(e) if any representation or warranty of Borrower, any Indemnitor
or any person guaranteeing payment of the Debt or any portion thereof or
performance by Borrower of any of the terms of this Security Instrument (a
"Guarantor"), or any member, general partner, principal or beneficial owner of
any of the foregoing, made herein other than an unintentional representation or
warranty under Section 5.5(a), (b) or (l) or in the Environmental Indemnity
(defined below) or in any guaranty, or in any certificate, report, financial
statement or other instrument or document furnished to Lender shall have been
false or misleading in any material respect when made;
(f) if (i) Borrower or any managing member or general partner of
▇▇▇▇▇▇▇▇, or any Guarantor or Indemnitor shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, conservatorship
or relief of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets, or the
Borrower or any managing member or general partner of Borrower, or any Guarantor
or Indemnitor shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor any case, proceeding
or other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of sixty (60) days;
or (iii) there shall be commenced against the Borrower or any managing member or
general partner of ▇▇▇▇▇▇▇▇, or any Guarantor or Indemnitor any case, proceeding
or other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its assets
which results in the entry of any order for any such relief which shall not have
been vacated, discharged, or stayed or bonded pending appeal within sixty (60)
days from the entry thereof; or (iv) the Borrower or any managing member or
general partner of Borrower, or any Guarantor or Indemnitor shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above;
or (v) the Borrower or any managing member or general partner of Borrower, or
any Guarantor or Indemnitor shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
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(g) if Borrower shall be in default beyond applicable notice and
grace periods under any other mortgage, deed of trust, deed to secure debt or
other security agreement covering any part of the Property whether it be
superior or junior in lien to this Security Instrument;
(h) if the Property becomes subject to any mechanic's,
materialman's or other lien other than a lien for local real estate taxes and
assessments not then due and payable and the lien shall remain undischarged of
record (by payment, bonding or otherwise) for a period of thirty (30) days;
(i) if any federal tax lien is filed against Borrower, any member
or general partner of Borrower, any Guarantor, any Indemnitor or the interest of
Borrower in the Property and same is not discharged of record within thirty (30)
days after same is filed;
(j) if any default occurs under any guaranty or indemnity executed
in connection herewith (including the Environmental Indemnity, defined in
Section 13.4) and such default continues after the expiration of applicable
grace periods, if any;
(k) if Borrower shall fail to deliver to Lender, within fifteen
(15) days after receipt of written request from Lender, the estoppel
certificates required pursuant to Section 7.4(a);
(l) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term, covenant or
condition of the Note, this Security Instrument or the Other Security Documents
in the case of any default which can be cured by the payment of a sum of money
or for thirty (30) days after notice from Lender in the case of any other
default including, without limitation an unintentional under Section 5.5(a), (b)
or (l), provided that if such default cannot reasonably be cured within such
thirty (30) day period and Borrower shall have commenced to cure such default
within such thirty (30) day period and thereafter diligently and expeditiously
proceeds to cure the same, such thirty (30) day period shall be extended for so
long as it shall require Borrower in the exercise of due diligence to cure such
default, it being agreed that no such extension shall be for a period in excess
of ninety (90) days or
(m) if any of the assumptions contained in the Non-Consolidation
Opinion were not true and correct as of the date of such opinion.
ARTICLE XI
RIGHTS AND REMEDIES
Section 11.1 Remedies. Upon the occurrence of any Event of Default,
▇▇▇▇▇▇▇▇ agrees that Lender may or acting by or through Trustee may take such
action, without notice or demand, as it deems advisable to protect and enforce
its rights against Borrower and in and to the Property, including, but not
limited to, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Lender or Trustee may determine, in
their sole discretion, without impairing or otherwise affecting the other rights
and remedies of Lender or Trustee:
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(a) declare the entire unpaid Debt to be immediately due and
payable;
(b) institute proceedings, judicial or otherwise, for the complete
foreclosure of this Security Instrument under any applicable provision of law in
which case the Property or any interest therein may be sold for cash or upon
credit in one or more parcels or in several interests or portions and in any
order or manner;
(c) with or without entry, to the extent permitted and pursuant to
the procedures provided by applicable law, institute proceedings for the partial
foreclosure of this Security Instrument for the portion of the Debt then due and
payable, subject to the continuing lien and security interest of this Security
Instrument for the balance of the Debt not then due, unimpaired and without loss
of priority;
(d) sell for cash or upon credit the Property or any part thereof
and all estate, claim, demand, right, title and interest of Borrower therein and
rights of redemption thereof, pursuant to power of sale or otherwise, at one or
more sales, in one or more parcels, at such time and place, upon such terms and
after such notice thereof as may be required or permitted by law;
(e) subject to the provisions of Article 11 of the Note, institute
an action, suit or proceeding in equity for the specific performance of any
covenant, condition or agreement contained herein, in the Note or in the Other
Security Documents;
(f) subject to the provisions of Article 11 of the Note, recover
judgment on the Note either before, during or after any proceedings for the
enforcement of this Security Instrument or the Other Security Documents;
(g) apply for the appointment of a receiver, trustee, liquidator or
conservator of the Property, without notice and without regard for the adequacy
of the security for the Debt and without regard for the solvency of Borrower,
any Guarantor, Indemnitor or of any person, firm or other entity liable for the
payment of the Debt;
(h) subject to any applicable law, the license granted to Borrower
under Section 1.2 shall automatically be revoked and Lender may enter into or
upon the Property, either personally or by its agents, nominees or attorneys and
dispossess Borrower and its agents and servants therefrom, without liability for
trespass, damages or otherwise and exclude Borrower and its agents or servants
wholly therefrom, and take possession of all books, records and accounts
relating thereto and Borrower agrees to surrender possession of the Property and
of such books, records and accounts to Lender upon demand, and thereupon Lender
may (i) use, operate, manage, control, insure, maintain, repair, restore and
otherwise deal with all and every part of the Property and conduct the business
thereat; (ii) complete any construction on the Property in such manner and form
as Lender deems advisable; (iii) make alterations, additions, renewals,
replacements and improvements to or on the Property; (iv) exercise all rights
and powers of Borrower with respect to the Property, whether in the name of
Borrower or otherwise, including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect
and receive all Rents of the Property and every part thereof; (v) require
Borrower to pay monthly in advance to Lender, or any receiver appointed to
collect the Rents, the fair and reasonable rental value for the use and
occupation of such part of
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the Property as may be occupied by ▇▇▇▇▇▇▇▇; (vi) require Borrower to vacate and
surrender possession of the Property to Lender or to such receiver and, in
default thereof, Borrower may be evicted by summary proceedings or otherwise;
and (vii) apply the receipts from the Property to the payment of the Debt, in
such order, priority and proportions as Lender shall deem appropriate in its
sole discretion after deducting therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and all
amounts necessary to pay the Taxes, Other Charges, insurance and other expenses
in connection with the Property, as well as just and reasonable compensation for
the services of Lender, its counsel, agents and employees;
(i) exercise any and all rights and remedies granted to a secured
party upon default under the Uniform Commercial Code, including, without
limiting the generality of the foregoing: (i) the right to take possession of
the Personal Property or any part thereof, and to take such other measures as
Lender or Trustee may deem necessary for the care, protection and preservation
of the Personal Property, and (ii) request Borrower at its expense to assemble
the Personal Property and make it available to Lender at a convenient place
acceptable to Lender. Any notice of sale, disposition or other intended action
by Lender or Trustee with respect to the Personal Property sent to Borrower in
accordance with the provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any other
sums held in escrow or otherwise by Lender in accordance with the terms of this
Security Instrument or any Other Security Document to the payment of the
following items in any order in its sole discretion: (i) Taxes and Other
Charges; (ii) Insurance Premiums; (iii) interest on the unpaid principal balance
of the Note; (iv) amortization of the unpaid principal balance of the Note; (v)
all other sums payable pursuant to the Note, this Security Instrument and the
Other Security Documents, including without limitation advances made by Lender
pursuant to the terms of this Security Instrument;
(k) surrender the Policies maintained pursuant to Article 3 hereof,
collect the unearned Insurance Premiums and apply such sums as a credit on the
Debt in such priority and proportion as Lender in its discretion shall deem
proper, and in connection therewith, Borrower hereby appoints Lender as agent
and attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such Insurance Premiums;
(l) apply the undisbursed balance of any Net Proceeds Deficiency
deposit, together with interest thereon, to the payment of the Debt in such
order, priority and proportions as Lender shall deem to be appropriate in its
discretion;
(m) proceed under this Security Instrument against all or any part
of the Individual Properties and/or all or any Property covered by this Security
Instrument or the other Security Documents in one or more parcels and in such
manner and order as Lender shall elect. Borrower hereby irrevocably waives and
releases, to the extent permitted by law, and whether or not hereafter enforced,
any right to have all or any part of the Individual Property covered by the
other Security Documents and/or all or any part of the Property covered by this
Security Instrument marshaled upon any foreclosure of this Security Instrument
and/or and one or more of the Other Security Documents or upon any other sale of
all or any part of the Individual Properties and/or the Property covered by this
Security Instrument; or
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(n) pursue such other remedies as Lender may have under applicable law.
In the event of a sale, by foreclosure, power of sale, or otherwise, of less
than all of the Property, this Security Instrument shall continue as a lien and
security interest on the remaining portion of the Property unimpaired and
without loss of priority. Notwithstanding the provisions of this Section 11.1 to
the contrary, if any Event of Default as described in clause (i) or (ii) of
Subsection 10.1(f) shall occur, the entire unpaid Debt shall be automatically
due and payable, without any further notice, demand or other action by ▇▇▇▇▇▇.
Section 11.2 Application of Proceeds. The purchase money, proceeds and
avails of any disposition of the Property, or any part thereof, or any other
sums collected by Lender pursuant to the Note, this Security Instrument or the
Other Security Documents, may be applied by Lender to the payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
Section 11.3 Right to Cure Defaults. Upon the occurrence of any Event
of Default or if Borrower fails to make any payment or to do any act as herein
provided, Lender may, but without any obligation to do so and without notice to
or demand on Borrower and without releasing Borrower from any obligation
hereunder, make or do the same in such manner and to such extent as Lender may
deem necessary to protect the security hereof. Lender or Trustee is authorized
to enter upon the Property for such purposes, or appear in, defend, or bring any
action or proceeding to protect its interest in the Property or to foreclose
this Security Instrument or collect the Debt. The cost and expense of any cure
hereunder (including reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this Section 11.3, shall constitute a portion of
the Debt and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender or Trustee in remedying such Event of Default or
such failed payment or act or in appearing in, defending, or bringing any such
action or proceeding shall bear interest at the Default Rate (as defined in the
Note), for the period after notice from Lender that such cost or expense was
incurred to the date of payment to Lender. All such costs and expenses incurred
by Lender together with interest thereon calculated at the Default Rate shall be
deemed to constitute a portion of the Debt and be secured by this Security
Instrument and the Other Security Documents and shall be immediately due and
payable upon demand by Lender therefor.
Section 11.4 Actions and Proceedings. Lender or Trustee has the right
to appear in and defend any action or proceeding brought with respect to the
Property and, after the occurrence and during the continuance of an Event of
Default, to bring any action or proceeding, in the name and on behalf of
▇▇▇▇▇▇▇▇, which ▇▇▇▇▇▇, in its discretion, decides should be brought to protect
its interest in the Property.
Section 11.5 Recovery of Sums Required to be Paid. Lender shall have
the right from time to time to take action to recover any sum or sums which
constitute a part of the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without prejudice to the right
of Lender or Trustee thereafter to bring an action of foreclosure, or any other
action, for a default or defaults by Borrower existing at the time such earlier
action was commenced.
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Section 11.6 Examination of Books and Records. Lender, its agents,
accountants and attorneys shall have the right, upon prior written notice to
Borrower if no Event of Default exists, to examine and audit, during reasonable
business hours, the records, books, management and other papers of Borrower and
its affiliates or of any Guarantor or Indemnitor which pertain to their
financial condition or the income, expenses and operation of the Property, at
the Property, if Borrower or Guarantor maintain such records at the Property, or
at any office regularly maintained by Borrower, its affiliates or any Guarantor
or Indemnitor where the books and records are located. Lender and its agents
shall have the right to make copies and extracts from the foregoing records and
other papers.
Section 11.7 Other Rights, etc. (a) The failure of Lender or Trustee
to insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Security Instrument. Borrower shall not be relieved
of Borrower's obligations hereunder by reason of (i) the failure of Lender or
Trustee to comply with any request of Borrower, any Guarantor or any Indemnitor
to take any action to foreclose this Security Instrument or otherwise enforce
any of the provisions hereof or of the Note or the Other Security Documents,
(ii) the release, regardless of consideration, of the whole or any part of the
Property, or of any person liable for the Debt or any portion thereof, or (iii)
any agreement or stipulation by Lender extending the time of payment or
otherwise modifying or supplementing the terms of the Note, this Security
Instrument or the Other Security Documents.
(b) It is agreed that the risk of loss or damage to the Property is
on Borrower, and Lender shall have no liability whatsoever for decline in value
of the Property, for failure to maintain the Policies, or for failure to
determine whether insurance in force is adequate as to the amount of risks
insured. Possession by ▇▇▇▇▇▇ shall not be deemed an election of judicial
relief, if any such possession is requested or obtained, with respect to any
Property or collateral not in ▇▇▇▇▇▇'s possession.
(c) Lender may resort for the payment of the Debt to any other
security held by ▇▇▇▇▇▇ in such order and manner as Lender, in its discretion,
may elect. Lender or Trustee may take action to recover the Debt, or any portion
thereof, or to enforce any covenant hereof without prejudice to the right of
Lender or Trustee thereafter to foreclose this Security Instrument. The rights
of Lender or Trustee under this Security Instrument shall be separate, distinct
and cumulative and none shall be given effect to the exclusion of the others. No
act of Lender or Trustee shall be construed as an election to proceed under any
one provision herein to the exclusion of any other provision. Neither Lender nor
Trustee shall be limited exclusively to the rights and remedies herein stated
but shall be entitled to every right and remedy now or hereafter afforded at law
or in equity.
Section 11.8 Right to Release Any Portion of the Property. Lender may
release any portion of the Property for such consideration as Lender may require
without, as to the remainder of the Property, in any way impairing or affecting
the lien or priority of this Security Instrument, or improving the position of
any subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept by
assignment, pledge or otherwise any other property in place thereof as Lender
may require without being
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accountable for so doing to any other lienholder. This Security Instrument shall
continue as a lien and security interest in the remaining portion of the
Property.
Section 11.9 Violation of Laws. If the Property is not in compliance
with Applicable Laws, Lender may impose additional requirements upon Borrower in
connection herewith including, without limitation, monetary reserves or
financial equivalents.
Section 11.10 Right of Entry. Lender and its agents shall have the
right to enter and inspect the Property at all reasonable times.
Section 11.11 Subrogation. If any or all of the proceeds of the Note
have been used to extinguish, extend or renew any indebtedness heretofore
existing against the Property, then, to the extent of the funds so used, Lender
shall be subrogated to all of the rights, claims, liens, titles, and interests
existing against the Property heretofore held by, or in favor of, the holder of
such indebtedness and such former rights, claims, liens, titles, and interests,
if any, are not waived but rather are continued in full force and effect in
favor of Lender and are merged with the lien and security interest created
herein as cumulative security for the repayment of the Debt, the performance and
discharge of Borrower's obligations hereunder, under the Note and the Other
Security Documents and the performance and discharge of the Other Obligations.
ARTICLE XII
ENVIRONMENTAL MATTERS
Section 12.1 Environmental Representations and Warranties. Borrower
represents and warrants, based upon an environmental site assessment of the
Property and information that Borrower knows or should reasonably have known,
that: (a) there are no Hazardous Materials (defined below) or underground
storage tanks in, on, or under the Property, except those that are both (i) in
compliance with Environmental Laws (defined below) and with permits issued
pursuant thereto (if such permits are required), if any, and (ii) either (A) in
amounts not in excess of that necessary to operate the Property or (B) fully
disclosed to and approved by ▇▇▇▇▇▇ in writing pursuant to the written reports
resulting from the environmental site assessments of the Property delivered to
Lender (the "Environmental Report"); (b) there are no past, present or
threatened Releases (defined below) of Hazardous Materials in violation of any
Environmental Law and which would require remediation by a governmental
authority in, on, under or from the Property except as described in the
Environmental Report; (c) there is no threat of any Release of Hazardous
Materials migrating to the Property except as described in the Environmental
Report; (d) there is no past or present non-compliance with Environmental Laws,
or with permits issued pursuant thereto, in connection with the Property except
as described in the Environmental Report; (e) Borrower does not know of, and has
not received, any written or oral notice or other communication from any person
or entity (including but not limited to a governmental entity) relating to
Hazardous Materials in, on, under or from the Property; and (f) Borrower has
truthfully and fully provided to Lender, in writing, any and all information
relating to environmental conditions in, on, under or from the Property known to
Borrower or contained in Borrower's files and records, including but not limited
to any reports relating to Hazardous Materials in, on, under or migrating to or
from the Property and/or to the environmental condition of the Property.
"Environmental Law" means any present and future
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federal, state and local laws, statutes, ordinances, rules, regulations,
standards, policies and other government directives or requirements, as well as
common law, including but not limited to the Comprehensive Environmental
Response, Compensation and Liability Act and the Resource Conservation and
Recovery Act, that apply to Borrower or the Property and relate to Hazardous
Materials. "Hazardous Materials" shall mean petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil; explosives,
flammable materials; radioactive materials; polychlorinated biphenyls ("PCBs")
and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Property is prohibited by
any federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future defined as a
"hazardous substance," "hazardous material," hazardous waste," toxic substance,"
"toxic pollutant," "contaminant," or "pollutant" within the meaning of any
Environmental Law. "Release" of any Hazardous Materials includes but is not
limited to any release, deposit, discharge, emission, leaking, spilling,
seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Materials.
Section 12.2 Environmental Covenants. Borrower covenants and agrees
that so long as Borrower owns, manages, is in possession of, or otherwise
controls the operation of the Property: (a) all uses and operations on or of the
Property, whether by Borrower or any other person or entity, shall be in
compliance with all Environmental Laws and permits issued pursuant thereto; (b)
there shall be no Releases of Hazardous Materials in, on, under or from the
Property, except in compliance with Environmental Laws; (c) there shall be no
Hazardous Materials in, on, or under the Property, except those that are both
(i) in compliance with all Environmental Laws and with permits issued pursuant
thereto, if and to the extent required, and (ii) (A) in amounts not in excess of
that necessary to operate the Property or (B) fully disclosed to and approved by
Lender in writing; (d) Borrower shall keep the Property free and clear of all
liens and other encumbrances imposed pursuant to any Environmental Law, whether
due to any act or omission of Borrower or any other person or entity (the
"Environmental Liens"); (e) Borrower shall, at its sole cost and expense, fully
and expeditiously cooperate in all activities pursuant to Section 12.3 below,
including but not limited to providing all relevant information and making
knowledgeable persons available for interviews; (f) Borrower shall, at its sole
cost and expense, perform any environmental site assessment or other
investigation of environmental conditions in connection with the Property,
pursuant to any reasonable written request of ▇▇▇▇▇▇, upon ▇▇▇▇▇▇'s reasonable
belief that the Property is not in full compliance with all Environmental Laws,
and share with Lender the reports and other results thereof, and Lender and
other Indemnified Parties shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply with
all reasonable written requests of Lender to (i) reasonably effectuate
remediation of any Hazardous Materials in, on, under or from the Property in
violation of Environmental Law; and (ii) comply with any Environmental Law; (h)
Borrower shall not allow any tenant or other user of the Property to violate any
Environmental Law; and (i) Borrower shall immediately notify Lender in writing
after it has become aware of (A) any presence or Release or threatened Releases
of Hazardous Materials in, on, under, from or migrating towards the Property;
(B) any non-compliance with any Environmental Laws related in any way to the
Property; (C) any actual or potential Environmental Lien; (D) any required or
proposed remediation of environmental conditions
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relating to the Property; and (E) any written or oral notice or other
communication of which Borrower becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to
Hazardous Materials. Any failure of Borrower to perform its obligations pursuant
to this Section 12.2 shall constitute bad faith waste with respect to the
Property.
Section 12.3 Lender's Rights. Lender and any other person or entity
designated by Lender, including but not limited to any representative of a
governmental entity, and any environmental consultant, and any receiver
appointed by any court of competent jurisdiction, shall have the right, but not
the obligation, to enter upon the Property at all reasonable times to assess any
and all aspects of the environmental condition of the Property and its use,
including but not limited to conducting any environmental assessment or audit
(the scope of which shall be determined in Lender's sole discretion) and taking
samples of soil, groundwater or other water, air, or building materials, and
conducting other invasive testing. Borrower shall cooperate with and provide
access to Lender and any such person or entity designated by Lender.
Section 12.4 Operations and Maintenance Programs. Where recommended by
the Environmental Report or as a result of any other environmental assessment or
audit of the Property, Borrower shall establish and comply with an operations
and maintenance program with respect to the Property, in form and substance
reasonably acceptable to Lender, prepared by an environmental consultant
reasonably acceptable to Lender, which program shall address any asbestos
containing material or lead based paint that may now or in the future be
detected at or on the Property. Without limiting the generality of the preceding
sentence, Lender may require (a) periodic notices or reports to Lender in form,
substance and at such intervals as Lender may specify, (b) an amendment to such
operations and maintenance program to address changing circumstances, laws or
other matters, (c) at Borrower's sole expense, supplemental examination of the
Property by consultants specified by ▇▇▇▇▇▇, (d) access to the Property by
Lender, its agents or servicer, to review and assess the environmental condition
of the Property and ▇▇▇▇▇▇▇▇'s compliance with any operations and maintenance
program, and (e) variation of the operations and maintenance program in response
to the reports provided by any such consultants.
ARTICLE XIII
INDEMNIFICATIONS
Section 13.1 General Indemnification. Borrower shall, at its sole cost
and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties (defined below) from and against any and all Losses (defined
below) imposed upon or incurred by or asserted against any Indemnified Parties
and directly or indirectly arising out of or in any way relating to any one or
more of the following: (a) any accident, injury to or death of persons or loss
of or damage to property occurring in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (b) any use, nonuse or condition in, on or about
the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent
property or adjacent parking areas, streets or ways; (c) performance of any
labor or services or the furnishing of any materials or other property in
respect of the Property or any part thereof; (d) any failure of the Property to
be in compliance with any Applicable Laws; (e) any and all claims and demands
whatsoever which may be asserted against
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Lender by reason of any alleged obligations or undertakings on its part to
perform or discharge any of the terms, covenants, or agreements contained in any
Lease; or (f) the payment of any commission, charge or brokerage fee to anyone
which may be payable in connection with the funding of the Loan evidenced by the
Note and secured by this Security Instrument, except in each of the above cases,
to the extent arising out of the gross negligence or willful misconduct of the
Indemnified Parties. Any amounts payable to Lender by reason of the application
of this Section 13.1 shall become immediately due and payable and shall bear
interest at the Default Rate from the date loss or damage is sustained by Lender
until paid.
The term "Losses" shall mean any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages, losses, costs, expenses, fines, penalties, charges,
fees, expenses, judgments, awards, amounts paid in settlement of whatever kind
or nature (including but not limited to attorneys' fees and other costs of
defense). The term "Indemnified Parties" shall mean (a) Lender, (b) any prior
owner or holder of the Note, (c) any servicer or prior servicer of the Loan, (d)
the officers, directors, shareholders, partners, members, employees and trustees
of any of the foregoing, and (e) the heirs, legal representatives, successors
and assigns of each of the foregoing.
Section 13.2 Mortgage and/or Intangible Tax. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses imposed upon or incurred
by or asserted against any Indemnified Parties and directly or indirectly
arising out of or in any way relating to any tax on the making and/or recording
of this Security Instrument, the Note or any of the Other Security Documents.
Section 13.3 Duty to Defend; Attorneys' Fees and Other Fees and
Expenses. Upon written request by any Indemnified Party, Borrower shall defend
such Indemnified Party (if requested by any Indemnified Party, in the name of
the Indemnified Party) by attorneys and other professionals approved by the
Indemnified Parties. Notwithstanding the foregoing, any Indemnified Parties may,
in their sole discretion, engage their own attorneys and other professionals to
defend or assist them, and, at the option of Indemnified Parties, their
attorneys shall control the resolution of any claim or proceeding. Upon demand,
▇▇▇▇▇▇▇▇ shall pay or, in the sole discretion of the Indemnified Parties,
reimburse, the Indemnified Parties for the payment of reasonable fees and
disbursements of attorneys, engineers, environmental consultants, laboratories
and other professionals in connection therewith.
Section 13.4 Environmental Indemnity. Simultaneously with this
Security Instrument, Borrower and any other person(s) or entity(ies) identified
therein (collectively, the "Indemnitors") have executed and delivered that
certain environmental indemnity agreement dated the date hereof to Lender (the
"Environmental Indemnity").
ARTICLE XIV
WAIVERS
Section 14.1 Waiver of Counterclaim. Borrower hereby waives the right
to assert a counterclaim, other than a mandatory or compulsory counterclaim, in
any action or
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proceeding brought against it by Lender arising out of or in any way connected
with this Security Instrument, the Note, any of the Other Security Documents, or
the Obligations.
Section 14.2 Marshalling and Other Matters. Borrower hereby waives, to
the extent permitted by law, the benefit of all appraisement, valuation, stay,
extension, reinstatement and redemption laws now or hereafter in force and all
rights of marshalling in the event of any sale hereunder of the Property or any
part thereof or any interest therein. Further, Borrower hereby expressly waives
any and all rights of redemption from sale under any order or decree of
foreclosure of this Security Instrument on behalf of Borrower, and on behalf of
each and every person acquiring any interest in or title to the Property
subsequent to the date of this Security Instrument and on behalf of all persons
to the extent permitted by Applicable Laws.
Section 14.3 Waiver of Notice. Borrower shall not be entitled to any
notices of any nature whatsoever from Lender or Trustee except (a) with respect
to matters for which this Security Instrument specifically and expressly
provides for the giving of notice by Lender or Trustee to Borrower and (b) with
respect to matters for which Lender or Trustee is required by Applicable Laws to
give notice, and Borrower hereby expressly waives the right to receive any
notice from Lender or Trustee with respect to any matter for which this Security
Instrument does not specifically and expressly provide for the giving of notice
by Lender or Trustee to Borrower.
Section 14.4 Waiver of Statute of Limitations. Borrower hereby
expressly waives and releases to the fullest extent permitted by law, the
pleading of any statute of limitations as a defense to payment of the Debt or
performance of its Other Obligations.
Section 14.5 Sole Discretion of Lender. Wherever pursuant to this
Security Instrument (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or (c)
any other decision or determination is to be made by ▇▇▇▇▇▇, the decision of
Lender to approve or disapprove, all decisions that arrangements or terms are
satisfactory or not satisfactory and all other decisions and determinations made
by ▇▇▇▇▇▇, shall be in the sole discretion of Lender, except as may be otherwise
expressly and specifically provided herein.
SECTION 14.6 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE APPLICATION FOR
THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY INSTRUMENT OR THE OTHER
SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES,
DIRECTORS OR AGENTS IN CONNECTION THEREWITH.
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ARTICLE XV
EXCULPATION
Section 15.1 Exculpation. The provisions of Article 11 of the Note are
hereby incorporated by reference to the fullest extent as if the text of such
Article were set forth in its entirety herein.
ARTICLE XVI
NOTICES
Section 16.1 Notices. All notices or other written communications
hereunder shall be deemed to have been properly given (i) upon delivery, if
delivered in person or by facsimile transmission with receipt acknowledged by
the recipient thereof and confirmed by telephone by sender, (ii) one (1)
Business Day (defined below) after having been deposited for overnight delivery
with any reputable overnight courier service, or (iii) three (3) Business Days
after having been deposited in any post office or mail depository regularly
maintained by the U.S. Postal Service and sent by registered or certified mail,
postage prepaid, return receipt requested, addressed to Borrower or Lender, as
the case may be, at the addresses set forth on the first page of this Security
Instrument or addressed as such party may from time to time designate by written
notice to the other parties.
Notices to Borrower shall be addressed to the attention of Director,
Asset Management, with a copy to ▇▇▇▇ ▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Managing
Partner, Real Estate. ▇▇▇▇▇▇▇▇'s telephone number is (▇▇▇) ▇▇▇-▇▇▇▇ and
facsimile number is (▇▇▇) ▇▇▇-▇▇▇▇.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a day on
which commercial banks are not authorized or required by law to close in New
York, New York.
ARTICLE XVII
APPLICABLE LAW
Section 17.1 Choice of Law. (A) THIS SECURITY INSTRUMENT WAS
NEGOTIATED IN THE STATE OF NEW YORK, AND MADE BY ▇▇▇▇▇▇▇▇ AND ACCEPTED BY ▇▇▇▇▇▇
IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE SECURED HEREBY WERE
DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING TRANSACTION
EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS
SECURITY INSTRUMENT AND THE
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OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT LAWS) AND ANY
APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE
PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER SECURITY
DOCUMENTS WITH RESPECT TO THE PROPERTY SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAW OF THE STATE IN WHICH THE PROPERTY IS LOCATED, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE
LAW OF THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS SECURITY INSTRUMENT OR THE OTHER LOAN DOCUMENTS,
AND THIS SECURITY INSTRUMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO
SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR
BORROWER ARISING OUT OF OR RELATING TO THIS SECURITY INSTRUMENT MAY AT LENDER'S
OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR
HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING. ▇▇▇▇▇▇▇▇ DOES
HEREBY DESIGNATE AND APPOINT
GOLDFISH (DE) LP
C/O W.P. ▇▇▇▇▇ & Co. LLC
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WITH A COPY TO:
▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: CHAIRMAN, REAL ESTATE DEPARTMENT
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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SUCH AGENT AT SUCH ADDRESS AND WRITTEN NOTICE OF SUCH SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. ▇▇▇▇▇▇▇▇ (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II)
MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT
WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE
DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
Section 17.2 Provisions Subject to Applicable Law. All rights, powers
and remedies provided in this Security Instrument may be exercised only to the
extent that the exercise thereof does not violate any applicable provisions of
law and are intended to be limited to the extent necessary so that they will not
render this Security Instrument invalid, unenforceable or not entitled to be
recorded, registered or filed under the provisions of any Applicable Laws.
ARTICLE XVIII
SECONDARY MARKET
Section 18.1 Transfer of Loan. Lender may, at any time, sell, transfer
or assign the Note, this Security Instrument and the Other Security Documents,
and any or all servicing rights with respect thereto, or grant participations
therein (the "Participations") or issue mortgage pass- through certificates or
other securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to each
purchaser, transferee, assignee, servicer, participant, or investor in such
Participations or Securities (collectively, the "Investor") or any Rating Agency
rating such Securities, each prospective Investor, and any organization
maintaining databases on the underwriting and performance of commercial mortgage
loans, all documents and information which Lender now has or may hereafter
acquire relating to the Debt and to Borrower, any Guarantor, any Indemnitor(s)
and the Property, whether furnished by ▇▇▇▇▇▇▇▇, any Guarantor, any
Indemnitor(s) or otherwise, as Lender determines necessary or desirable.
Borrower irrevocably waives any and all rights it may have under Applicable Laws
to prohibit such disclosure, including but not limited to any right of privacy.
Section 18.2 Cooperation. Borrower, any Guarantor and any Indemnitor
agree to cooperate with Lender in connection with any transfer made or any
Securities created pursuant to this Article XVIII, including, without
limitation, the taking, or refraining from taking, of such
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action as may be necessary to satisfy all of the conditions of any Investor, the
delivery of an estoppel certificate required in accordance with Subsection
7.4(c) hereof and such other documents as may be reasonably requested by ▇▇▇▇▇▇
and the execution of amendments to the Note, this Security Instrument and Other
Security Documents and ▇▇▇▇▇▇▇▇'s organizational documents as reasonably
requested by ▇▇▇▇▇▇. Borrower shall also furnish and Borrower, any Guarantor and
any Indemnitor consent to Lender furnishing to such Investors or such
prospective Investors or such Rating Agency any and all information concerning
the Property, the Leases, the financial condition of Borrower, any Guarantor and
any Indemnitor as may be requested by Lender, any Investor, any prospective
Investor or any Rating Agency in connection with any sale, transfer or
Participations or Securities.
ARTICLE XIX
COSTS
Section 19.1 Performance at Borrower's Expense. Borrower acknowledges
and confirms that Lender shall impose certain administrative processing and/or
commitment fees in connection with (a) the extension, renewal, modification,
amendment and termination of the Loan, (b) the release or substitution of
collateral therefor, (c) obtaining certain consents, waivers and approvals with
respect to the Property, or (d) the review of any Lease or proposed Lease or the
preparation or review of any subordination, non-disturbance agreement (the
occurrence of any of the above shall be called an "Event"). Borrower further
acknowledges and confirms that it shall be responsible for the payment of all
costs of reappraisal of the Property or any part thereof, whether required by
law, regulation, Lender or any governmental or quasi-governmental authority.
Borrower hereby acknowledges and agrees to pay, immediately, with or without
demand, all such fees (as the same may be increased or decreased from time to
time), and any additional fees of a similar type or nature which may be imposed
by Lender from time to time, upon the occurrence of any Event or otherwise.
Wherever it is provided for herein that Borrower pay any costs and expenses,
such costs and expenses shall include, but not be limited to, all reasonable
legal fees and disbursements of Lender, whether with respect to retained firms,
the reimbursement for the expenses of in-house staff or otherwise.
Section 19.2 Legal Fees for Enforcement. (a) Borrower shall pay all
reasonable legal fees incurred by ▇▇▇▇▇▇ in connection with (i) the preparation
of the Note, this Security Instrument and the Other Security Documents and (ii)
the items set forth in Section 19.1 above, and (b) Borrower shall pay to Lender
on demand any and all expenses, including legal expenses and attorneys' fees,
incurred or paid by Lender in protecting its interest in the Property or in
collecting any amount payable hereunder or in enforcing its rights hereunder
with respect to the Property, whether or not any legal proceeding is commenced
hereunder or thereunder, together with interest thereon at the Default Rate from
the date paid or incurred by ▇▇▇▇▇▇ until such expenses are paid by ▇▇▇▇▇▇▇▇.
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ARTICLE XX
DEFINITIONS
Section 20.1 General Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided herein, words used
in this Security Instrument may be used interchangeably in singular or plural
form and the word "Borrower" shall mean "each Borrower and any subsequent owner
or owners of the Property or any part thereof or any interest therein," the word
"Lender" shall mean "Lender and any subsequent holder of the Note," the word
"Trustee" shall mean "Trustee and any substitute Trustee of the estates,
properties, powers, trusts and rights conferred upon Trustee pursuant to this
Security Instrument," the word "Note" shall mean "the Note and any other
evidence of indebtedness secured by this Security Instrument," the word "person"
shall include an individual, corporation, partnership, limited liability
company, trust, unincorporated association, government, governmental authority,
and any other entity, the word "Property" shall include any portion of the
Property and any interest therein, and the phrases "attorneys' fees" and
"counsel fees" shall include any and all attorneys', paralegal and law clerk
fees and disbursements, including, but not limited to, fees and disbursements at
the pre-trial, trial and appellate levels incurred or paid by ▇▇▇▇▇▇ in
protecting its interest in the Property, the Leases and the Rents and enforcing
its rights hereunder.
Section 20.2 Headings, etc. The headings and captions of various
Articles and Sections of this Security Instrument are for convenience of
reference only and are not to be construed as defining or limiting, in any way,
the scope or intent of the provisions hereof.
ARTICLE XXI
MISCELLANEOUS PROVISIONS
Section 21.1 No Oral Change. This Security Instrument, and any
provisions hereof, may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
Section 21.2 Liability. If Borrower consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. This Security Instrument shall be binding upon and inure to the benefit
of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and their respective successors and assigns forever.
Section 21.3 Inapplicable Provisions. If any term, covenant or
condition of the Note or this Security Instrument is held to be invalid, illegal
or unenforceable in any respect, the Note and this Security Instrument shall be
construed without such provision.
Section 21.4 Duplicate Originals; Counterparts. This Security
Instrument may be executed in any number of duplicate originals and each
duplicate original shall be deemed to be an original. This Security Instrument
may be executed in several counterparts, each of which
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counterparts shall be deemed an original instrument and all of which together
shall constitute a single Security Instrument. The failure of any party hereto
to execute this Security Instrument, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder.
Section 21.5 Number and Gender. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural and vice versa.
Section 21.6 Cross Default. An Event of Default under this Security
Instrument shall constitute an Event of Default under the Note and each of the
Other Security Documents and an Event of Default under the Note and/or any of
the Other Security Documents shall constitute an Event of Default under this
Security Instrument.
ARTICLE XXII
SPECIAL ARIZONA PROVISIONS
Section 22.1 Principles of Construction. In the event of any
inconsistencies between the terms and provisions of this Section 22 and the
terms and provision of the other Sections of this Security Instrument, the terms
and provisions of this Section 22 shall govern and control.
Section 22.2 Recording Tax Indemnity. ▇▇▇▇▇▇▇▇ agrees at its sole cost
and expense to protect, defend, indemnify and hold ▇▇▇▇▇▇, its successors and
assigns, harmless for, from and against, and shall be responsible for, any
liability incurred by reason of the imposition of any tax on the making and
recording of this Security Instrument.
Section 22.3 Fixture Filing Provision. Upon recording this Security
Instrument in the real property records, this Security Instrument shall be
effective as a financing statement filed as a fixture filing. In addition, a
carbon, photographic or other reproduction of this Security Instrument and/or
any financing statement relating thereto shall be sufficient for filing and/or
recording as a financing statement. The filing of any other financing statement
relating to any personal property rights or interests described herein shall not
be construed to diminish any right or priority hereunder.
Section 22.4 Interest Rate. ▇▇▇▇▇▇▇▇ agrees to pay an effective rate
of interest equal to the Applicable Interest Rate (as such terms are defined in
the Loan Agreement), and (ii) the additional rate, if any, resulting from any
charge or fee in the nature of interest paid or to be paid by Borrower in
connection with the Note, this Security Instrument or any Loan Document or other
document executed and delivered by Borrower to Lender in connection with the
indebtedness evidenced by the Note. The total liability of Borrower for the
payment of interest under the Note and this Security Instrument shall not exceed
the applicable limit imposed by the usury laws of the State of Arizona. If
Lender receives interest in an amount which exceeds such limit, such excess
amount shall be applied instead to the reduction of the unpaid principal balance
and not to the payment of principal and lawful interest, the surplus shall be
remitted to Borrower by ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ hereby agrees to accept such
remittance.
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Section 22.5 Additional Remedies. In addition to any other remedies
specified in this Security Instrument, Lender may, itself or through Trustee or
otherwise, recover judgment (deficiency or otherwise) on the Note or under the
covenants of this Security Instrument either before, during or after any
proceedings for the enforcement of this Security Instrument. Lender shall have
all of the remedies provided under Arizona Revised Statutes Section 33-702.
Section 22.6 Notice. ▇▇▇▇▇▇▇▇'s mailing address is c/o W.P. ▇▇▇▇▇ &
Co. LLC, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇'s
mailing address is _______________________________________. ▇▇▇▇▇▇'s mailing
address is ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
ARTICLE XXIII
DEED OF TRUST PROVISIONS
Section 23.1 Concerning The Trustee. Trustee shall be under no duty to
take any action hereunder except as expressly required hereunder or by law, or
to perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby
waives any statutory fee and agrees to accept reasonable compensation, in lieu
thereof, for any services rendered by Trustee in accordance with the terms
hereof. Trustee may resign at any time upon giving thirty (30) days' notice to
▇▇▇▇▇▇▇▇ and to Lender. Lender may remove Trustee at any time or from time to
time and select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole
discretion for any reason whatsoever Lender may, without notice and without
specifying any reason therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded wherever this Security
Instrument is recorded and all powers, rights, duties and authority of Trustee,
as aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by ▇▇▇▇▇▇. The procedure provided
for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.
Section 23.2 Trustee's Fees. Borrower shall pay all reasonable costs,
fees and expenses incurred by Trustee and Trustee's agents and counsel in
connection with the performance by Trustee of Trustee's duties hereunder and all
such costs, fees and expenses shall be secured by this Security Instrument.
Section 23.3 Certain Rights. With the approval of ▇▇▇▇▇▇, Trustee
shall have the right to take any and all of the following actions: (i) to
select, employ, and advise with counsel (who may be, but need not be, counsel
for Lender) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Note, this Security Instrument or the Other
Security Documents, and shall be fully protected in relying as to legal matters
on the advice of counsel, (ii) to execute any of the trusts and powers hereof
and to perform any duty hereunder either directly or through his/her agents or
attorneys, (iii) to select and employ, in and
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about the execution of his/her duties hereunder, suitable accountants, engineers
and other experts, agents and attorneys-in-fact, either corporate or individual,
not regularly in the employ of Trustee, and Trustee shall not be answerable for
any act, default, negligence, or misconduct of any such accountant, engineer or
other expert, agent or attorney-in-fact, if selected with reasonable care, or
for any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce ▇▇▇▇▇▇'s
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
actual expenses incurred by Trustee in the performance of ▇▇▇▇▇▇▇'s duties
hereunder and to reasonable compensation for such of Trustee's services
hereunder as shall be rendered.
Section 23.4 Retention of Money. All moneys received by Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated in any manner from any
other moneys (except to the extent required by applicable law) and Trustee shall
be under no liability for interest on any moneys received by Trustee hereunder.
Section 23.5 Perfection of Appointment. Should any deed, conveyance,
or instrument of any nature be required from Borrower by any Trustee or
substitute trustee to more fully and certainly vest in and confirm to the
Trustee or substitute trustee such estates rights, powers, and duties, then,
upon request by the Trustee or substitute trustee, any and all such deeds,
conveyances and instruments shall be made, executed, acknowledged, and delivered
and shall be caused to be recorded and/or filed by Borrower.
Section 23.6 Succession Instruments. Any substitute trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its or his/her predecessor in the rights hereunder with like
effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, the Trustee ceasing to
act shall execute and deliver any instrument transferring to such substitute
trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such Trustee to the
substitute trustee so appointed in the Trustee's place.
[NO FURTHER TEXT ON THIS PAGE]
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IN WITNESS WHEREOF, ▇▇▇▇▇▇▇▇ has executed this Security Instrument
under seal as of the day and year first above written.
BORROWER:
LABRADOR (AZ) LP,
a Delaware limited partnership
By: TERRIER (AZ) QRS, Inc.
a Delaware corporation,
its general partner
By: ____________________
Name:
Title:
STATE OF ___________ )
)
County of __________ )
The foregoing instrument was acknowledged before me this _________
day of_______________, 2001, by ___________, the _________________ of TERRIER
(AZ) QRS, Inc., a Delaware corporation, the general partner of LABRADOR (AZ)
LP, a Delaware limited partnership, on behalf of the partnership.
___________________________
Notary Public
My commission expires:
__________________________
EXHIBIT A
[Attach Legal Description of Property]
A-1
EXHIBIT B
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[__________]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
RENT ROLL CERTIFICATION
CURRENT
SQUARE LEASE MONTHLY RENT CURRENT CURRENT ANNUAL CURRENT ANNUAL
TENANT FEET EXPIRATION PSF MONTHLY RENT PSF RENT
[PetsMART] $ $ $ $
TOTAL FOR PROPERTY $ $ $ $
B-1
EXHIBIT C
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
MONTHLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
=====
C-1
EXHIBIT D
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. ________
QUARTERLY OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
=====
D-1
EXHIBIT E
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09724
GMAC Loan No. _________
ANNUAL OPERATING STATEMENT CERTIFICATION
INCOME
Current Base Rent for Period $
Reimbursements $
Other $
Total Income
OPERATING EXPENSES
(None-NNN bond-type lease. Tenant is responsible) $
Total Operating Expenses $
Net Operating Income $
=====
E-1
EXHIBIT F
W.P. ▇▇▇▇▇ & Co. LLC
GOLDFISH (DE) LP
[PetsMART]
____________________
____________________
MSMC Loan No. 01-09970
GMAC Loan No. _________
BALANCE SHEET CERTIFICATION
ASSETS
CURRENT ASSETS:
Cash $
Restricted Deposits (TI/LC Reserve Account) $
Tenant Receivables $
Prepaid Expenses $
Other $
Total Current Assets $
FIXED ASSETS:
Building & Improvements (at total acquisition cost) $
Furniture & Equipment $
Other $
Total Fixed Assets $
TOTAL ASSETS $
=====
LIABILITIES
CURRENT LIABILITIES:
Restricted Deposits (TI/LC Reserve Account) $
Other Current Liabilities $
Total Current Liabilities $
LONG-TERM LIABILITIES:
Outstanding Loan Balance $
Other $
TOTAL LONG-TERM LIABILITIES $
=====
NET WORTH $
=====
F-1
EXHIBIT G
(ATTACH FORM OF ANNUAL OPERATING BUDGET)
G-1