HomeMy WebLinkAboutRES 18-20RESOLUTION NO. 18-20
A RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY
OF APACHE JUNCTION,PINAL COUNTY,ARIZONA,AUTHORIZING
THE CITY MANAGER TO EXECUTE A LOAN AGREEMENT WITH APACHE
JUNCTION VILLAS,LLC,REGARDING THE DEVELOPMENT O F
APACHE JUNCTION TOWNHOMES GENERALLY LOCATED AT THE
SOUTHEAST CORNER OF SAN MARCOS DRIVE AND TEPEE STREET.
WHEREAS, on January 9, 2017, the Apache Junction city council
at a regularly scheduled council meeting indicated its support and
participation in a project utilizing a variety of public and
private funding sources to develop property located at the
southeast corner of San Marcos Drive and Tepee Street; and
WHEREAS,the land is currently an undeveloped parcel and is
anticipated to be developed by Apache Junction Villas,LLC
("Developer") with 52 low to moderate income rental housing units
(the "Project"); and
WHEREAS, in order to incentivize housing projects to be built
within the city, it is beneficial for developers to receive federal
funding passed through the Arizona Department of Housing ("ADOH");
and
WHEREAS, typically in such funding assistance efforts,ADOH
desires evidence of the local governing entity's commitment and
enthusiasm to the project in the form 'of some monetary
contribution; and
WHEREAS, the City of Apache Junction commits to loan $34,000
to Developer in order to secure ADOH funding for the project; and
WHEREAS,the term of the loan is 20 years and is secured by
a letter of credit with a local bank.
NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COUNCIL
OF THE CITY OF APACHE JUNCTION, ARIZONA, AS FOLLOWS:
SECTION I That the Apache Junction city council hereby
approves a loan agreement with Apache Junction Villas, LLC,
presented for council review this date.
SECTION 2 That the City Manager,Bryant Powell,or his
designated representative,is authorized and directed to
RESOLUTION NO. 18-20
PAGE 1 OF 2
execute all documents necessary to carry out the intent of
this resolution and the loan agreement.
APPROVED AND ADOPTED BY THE MAYOR p..[;1_p CITY COUNCIL OF THE CITY OF
APACHE JUNCTION, ARIZONA, THIS k 5 1 "7DAY OF m y ,2018.
SIGNED AND ATTESTED TO THIS /3r6Y DAY OF Mey , 2018.
Mayor
ATTEST:
KATHLEEN CONNELLY
City Clerk
APPROVED AS TO FORM:
5 -9:18
RICHARD J: STERN
City Attorney
RESOLUTION NO. 18-20
PAGE 2 OF 2
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement")is made as of , 2018,
by the following (the "Parties"or a "Party"):CITY OF APACHE JUNCTION,an Arizona
municipal corporation ("Lender");and APACHE JUNCTION VILLAS,LLC,an Arizona
limited liability company ("Borrower").
I.Definitions and Recitals
1.1 Assignment of Leases and Rents.The Absolute Blanket Assignment of
Leases and Rents, of even date herewith prepared by Lender and executed and acknowledged by
Borrower, in substance identical to Exhibit "C."
1.2 Business Day.Each day,other than any Friday,Saturday,or Sunday,
during which Lender's principal office in Apache Junction, Arizona,is generally open to the
public.
1.3 CERCLA.The Comprehensive Environmental Response, Compensation,
and Liability Act.
1.4 Closing Date.The Business Day, if any, on which the Title Company
unconditionally commits to record the Deed of Trust in accordance with the Closing Letter.
1.5 Closing Letter.A closing instruction letter from Lender to the Title
Company in substantially the form attached as Exhibit "D".
1.6 Completion Date.The date of completion of the construction of the
Project, which date shall be no later than May 1, 2019.
1.7 Construction Lender.U.S. Bank.
1.8 Construction Loan.The loan in the original principal amount of
, made by U.S. Bank, to Borrower.
1.9 Construction Loan Documents.All documents or instruments
evidencing or securing repayment of the Construction Loan to Construction Lender.
1.10 Promissory Note.The Promissory Note representing the Lender's
commitment to loan the maximum principal amount of $34,000, executed by Borrower in the
form attached hereto as Exhibit "A."
1.11 Deed of Trust.The Deed of Trust, Assignment of Rents, and Security
Agreement of even date herewith prepared by Lender and executed and acknowledged by
Borrower, in substance identical to Exhibit "B."
1.12 Default Interest Rate.Ten percent (10%) per annum.
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1.13 Deposit Account Control Agreement.The Deposit Account Control
Agreement, of even date herewith, executed by Lender, Borrower, and Deposit Bank (as defined
in the Deposit Account Control Agreement).
1.14 Environmental Certification.The Environmental Certification and
Agreement of even date herewith, prepared by Lender and executed by Borrower in substance
identical to Exhibit "E."
1.15 Environmental Laws.United States, State of Arizona, Pinal County and
City of Apache Junction laws,ordinances and regulations treating with or bearing on the
physical environmental condition of real property and its appurtenances,including,without
limitation, CERCLA, RCRA, the Clean Water Act and similar regulatory schemes to control and
address through remediation environmental issues.
1.16 Escrow.The escrow established by Title Company for purpose of
Borrower's acquisition of the Property and the funding of the Loan.
1.17 Event of Default.See Section 8.1 for this definition.
1.18 Fixed Interest Rate.Zero percent (0%) per annum, prior to any Event of
Default.
1.19 Government Authority.The United States of America,the State of
Arizona, Pinal County, Lender, and any political subdivision, agency, department, commission,
district, board, bureau or instrumentality of any of the foregoing, which now or hereafter has
jurisdiction over Borrower or any of the Property,including the construction or use of any
Improvements.
1.20 Hazardous Substances.Those substances governed by Environmental
Laws as to their quantity,concentration,storage and use on the Property whether they are
incorporated in construction materials,in the work of construction or otherwise following
construction activities."Permitted Substances"are substances that,while inherently deemed
hazardous or toxic above thresholds regulated by Government Authority, in the circumstances
are allowed since they do not exceed those regulatory thresholds in view of their use or storage.
1.21 Improvements.All buildings, structures and other improvements that
are now or hereafter located,placed or erected on any portion of the Property, whether
real, personal or mixed.
1.22 Investor Member.Wincopin Circle LLLP, its successors and assigns.
1.23 Loan.The loan by Lender to Borrower of the original principal sum of
Thirty -Four Thousand Dollars ($34,000) as described in this Agreement.
1.24 Loan Documents.This Agreement, the Environmental Certification, the
Note, and the Security Documents, all as may hereafter be modified.
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1.25 Maturity Date.The date that is twenty (20) years from the date first set
forth above in which the Loan and all interest and fees accrued thereon shall be due and payable
in full by Borrower to Lender.
1.26 Note.The Promissory Note,and any extensions,modifications or
renewals thereof, executed by Borrower from time to time.
1.27 Obligations.The indebtedness and any other obligations of Borrower
arising pursuant to the Loan Documents.
1.28 Permanent Lender.Rocky Mountain Community Reinvestment
Corporation, a Utah nonprofit corporation.
1.29 Permanent Loan.The loan in the original principal amount of One
Million Eight Hundred Thirty -Five Thousand Four Hundred Ninety -Six Dollars ($1,835,496)
from the Permanent Lender to the Borrower.
1.30 Permanent Loan Documents.All documents or instruments evidencing
or securing repayment of the Permanent Loan.
1.31 Pledge and Security Agreement.The Pledge and Security Agreement,
of even date herewith, executed by Borrower.
1.32 Project.The acquisition, construction and operation of an 52- unit low
income housing project,on the Property,including buildings,related on -site and off -site
improvements for housing to older persons and families with incomes at or below 60% of the
area median income for the Phoenix metropolitan area.
1.33 RCRA.The Resource Conservation and Recovery Act.
1.34 Property.That certain real property in Pinal County, Arizona commonly
located at 235 West Tepee Street, Apache Junction, Arizona, 85120, and legally described on
Exhibit "F"attached hereto.
1.35 Security Documents.Deed of Trust, Assignment of Rents and Leases,
Pledge and Security Agreement, Deposit Account Control Agreement, and UCC-ls, as any of
same may be modified or continued.
1.36 Term.The Loan term commencing from the date hereof and continuing
until the Maturity Date.
1.37 Title Company.Lawyers Title Insurance Agency,Phoenix,Arizona.
Title Company will also be providing escrow services for the Project Closing and all references
to "Title Company" shall be deemed to refer to Title Company whether in its title or escrow
capacity.
1.38 UCC.The Uniform Commercial Code.
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Basic Terms
2.1 Agreement.Lender agrees to make the Loan for the benefit of Borrower
and for the purpose of supplementing the acquisition and/or construction costs of the Project, and
Borrower agrees to borrow the Loan proceeds for use in the acquisition and/or construction of
the Project, in the manner and on the terms and conditions set forth in this Agreement and the
Loan Documents.
2.2 Advance.The proceeds of the Loan in the amount of $34,000 will be
advanced to Borrower in a single lump sum payment on the Closing Date to the Title Company
by the wire transfer described in and as provided by the Closing Letter.
2.3 Payment.The Loan will be evidenced by the Note and this Agreement,
secured by the Security Documents,and paid as follows:On or before the Maturity Date,
Borrower shall pay in full all principal under the Loan.In the event of an Event of Default,
interest on all sums advanced shall bear interest at the Default Interest Rate until the Loan and
said interest is paid in full.
III.Collateral
3.1 Security Documents.To secure the payment and performance of the
Obligations,Borrower will execute and acknowledge,or cause to be executed and
acknowledged, the Security Documents and deliver all of them to Title Company for forwarding
to Lender.This Agreement is expressly conditioned upon Borrower executing and delivering to
Lender the Pledge and Security Agreement and the Deposit Account Control Agreement.
3.2 Title Insurance.Borrower will provide Lender with:(a) a preliminary
title commitment for the Property (the "Title Commitment")prepared by the Title Company
insuring that Borrower has title to the Property;and (b) an American Land Title Association
("ALTA")extended coverage mortgagee's title insurance policy insuring the Lender's lien on
the Property in the amount of the proceeds of the Loan,subject only to those exceptions
approved by the Lender in writing, and such endorsements thereto as requested by Lender (the
"Lender Title Policy"),which Lender Title Policy shall be given to Lender at the Closing.
3.3 Legal Description.Borrower and Lender acknowledge and agree that a
recorded plat for the Property has been prepared (the "Plat")which amends the Property's
current metes and bounds legal description but which will not be recorded until after the Closing.
Borrower agrees to provide Lender with a California Land Title Association ("CLTA")Form
116.3 (Legal Description — New Subdivision) Endorsement to its Policy after the Plat has been
recorded, which will insure Lender, under its Lender's Title Policy, against the failure of the
Property described in Schedule A to the Policy to constitute the Property as described in Lot 1 of
the Plat.
3.4 Other Documents.Borrower shall obtain and execute and deliver to
Lender (or, where appropriate, cause to be executed and delivered to Lender and/or to be filed,
recorded and/or accepted by third parties) such additional amendments or modifications to the
Security Documents or continuation statements required to be filed pursuant to the UCC —
Secured Transactions article then in effect under the Arizona Revised Statutes, as amended from
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time to time, as Lender may in good faith detennine from time to time are reasonably required to
modify or extend the Loan Documents or the liens on the Property and fixtures thereat. The
Borrower will provide Lender with such other items and documents relevant to the Loan as the
Lender may require.
3.5 Release.As long as no uncured Event of Default exists,Lender will
provide a full release and reconveyance of the Security Documents (on Title Company's
standard form of same), upon full payment and satisfaction of the Obligations of Borrower under
the Loan Documents.
3.6 Lien Priority.The Lender's Security Documents shall be subject and
subordinate to (i) the Construction Loan Documents, and, after that construction loan has been
repaid in full,(ii)the Permanent Loan Documents.Lender shall execute such reasonable
documents as may be necessary to effectuate subordination to the Construction and Permanent
Loan Documents.
IV.Closing
The obligation of Lender to advance the proceeds of the Loan is subject to the following
conditions precedent:
(a)Lender shall have received evidence of all insurance required by Section
7.10 hereof.
(b)A copy of the Closing Instruction Letter duly accepted by an authorized
representative of Title Company.
(c)All representations and warranties by Borrower in Part VI hereof shall
remain true and correct.
(d)The Borrower has delivered to the Lender fully executed originals of all
non -recordable Loan Documents and fully executed and acknowledged originals of all
recordable Security Documents to the Title Company with electronic copies of the same to
Lender.
(e)Lender has reviewed and approved the Title Commitment.
(f)Lender shall have received copies of the Pledge and Security Agreement
and the Deposit Account Control Agreement, fully executed by Borrower, Lender, and Deposit
Bank (as defined in the Deposit Account Control Agreement), as applicable.
V.General Procedures
Borrower shall use the proceeds of the Loan solely for the permitted purposes described
in this Agreement. All proceeds pursuant to this Agreement and all indebtedness of Borrower to
Lender,whether arising from the proceeds of the Loan pursuant to this Agreement,costs
incurred by Lender for purposes of preserving or protecting any portion of the Property pursuant
to any Security Documents, costs incurred by Lender in collecting any of the Obligations or in
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enforcing any of its rights under any Loan Documents or any other amounts Borrower is
obligated to pay to Lender pursuant to the Loan Documents, shall be added to the outstanding
balance of the Loan secured by the Security Documents.
VI.Representations and Warranties
Borrower represents and warrants to Lender as follows:
6.1 Status.Borrower is a limited liability company,duly organized and
validly existing under the laws of the State of Arizona.
6.2 Authority.Borrower has full power and authority to own, operate and
encumber the Property.Borrower is fully authorized to enter into the Loan Documents,to
borrow on the terms set forth in this Agreement and to perform the terms of the Loan
Documents, none of which require the consent or approval of any third person or will conflict
with or violate any legal requirement (to the best knowledge of Borrower) or any of Borrower's
organizational documents. The Loan Documents constitute valid and binding legal obligations of
Borrower,enforceable in accordance with their respective terms.The execution, delivery and
performance of the Loan Documents will not result in any breach of,or constitute a default
under, any agreement or instrument to which Borrower is a party.
6.3 Actions.No action, suit or legal or administrative proceeding is pending
before any court, arbitrator or Government Authority, or is threatened to Borrower's knowledge,
nor, to the best knowledge of Borrower, does any basis exist therefore, against Borrower that
might adversely affect the repayment of the Loan,Borrower's performance under the Loan
Documents,Borrower's financial condition,or the value of any Property.Borrower is not in
default under or violation of any order, writ, injunction, decree, judgment, award, direction or
demand of any court, arbitrator or Government Authority.
6.4 Financial Condition.All financial and other statements and reports
previously or hereafter given to Lender by or on behalf of Borrower are and will be accurate and
complete in all material respects,and fairly present the financial condition and results of
operations of Borrower, as of the dates thereof No material adverse change has occurred in the
financial condition of Borrower since the date of the latest financial statements given to Lender.
6.5 Taxes.If not exempt, Borrower has filed and will file all required federal,
state and local tax returns and has paid or will pay all of its taxes, assessments and all other
obligations under federal, state or local law before they became delinquent.
6.6 Licenses;Utilities.Borrower has obtained and maintained in effect all
licenses, permits, consents and authorizations necessary or appropriate for the operation, leasing
and use of the Property. All water, sewer, electricity, gas, refuse collection and telephone service,
and fire protection, necessary for the use and operation of the Property are available.
6.7 Purpose.The proceeds of the Loan will be used solely for the
development of a 52 -unit apartment project for low income families.
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6.8 Other Agreements.No agreement exists between Borrower and any
third person relating to the management of the Property, other than any agreement previously
provided to Lender.
6.9 Environmental Condition of the Property.The Borrower (at its sole
cost and expense) will provide the Lender with a satisfactory Phase I Environmental Assessment
and other United States Department of Housing and Urban Development ("HUD")required
environmental reviews (collectively,the "Environmental Assessment")prepared by a firm
acceptable to Lender. If the Environmental Assessment reflects the existence of environmental
hazards at the Property, Borrower will provide Lender with a plan for removing any hazards
prior to the completion of the Project.Any such plan will be approved by the Lender in its
reasonable discretion prior to execution of the plan. Except as disclosed in the Environmental
Assessment, (a) no portion of the Property is now or has ever been the site of the any Hazardous
Substances,except Permitted Substances;and (b)there are no above -ground or underground
storage tanks on or at the Property.During the period of time that Borrower's has owned the
Property,to the best of Borrower's knowledge,there has been no release of Hazardous
Substances at, on, under, or from the Property. To the best of Borrower's knowledge, there is no
basis for the imposition of any lien against the Property based on any action of a Government
Authority under any Environmental Laws, and no such lien has been imposed. Neither Borrower
nor, to the best of its knowledge and based on the Environmental Assessment, any other Person
is or has been involved in activities or operations on or in connection with the Property that
could:(i)cause the Property to be subject to any restrictions on the ownership,occupancy,
transferability or use of the Property under applicable Environmental Laws;(ii)lead to the
imposition of liability under Environmental Laws against Borrower, Lender, or any other present
or former occupant, operator or owner of the Property; or (iii) result in the creation of a lien
under Environmental Laws against the Property.
6.10 Survival.All representations and warranties herein will survive until the
Obligations have been satisfied in full.
VII.Covenants
Until the Obligations have been satisfied in full,and with respect to the covenants in
Section 7.4 below, which shall survive payment in full of the Note and release of the Deed of
Trust:
7.1 Information.Borrower shall:(a)furnish to Lender,with reasonable
promptness,such data and information,financial or otherwise,concerning Borrower and the
Property, as Lender may from time to time reasonably request; (b) promptly notify Lender of any
condition or event that constitutes an Event of Default, and of any material adverse change in the
financial condition of Borrower; (c) permit any authorized representative of Lender to inspect
and copy the books of account of Borrower or any other person or entity with knowledge of
Borrower's affairs, finances and accounts; (d) promptly notify Lender of any litigation or claims
that could materially and adversely affect the repayment of the Loan,the performance by
Borrower under any Loan Documents, the financial condition or operations of Borrower or the
value of the Property; and (e) promptly notify Lender of any complaint or charge filed by or with
any Government Authority or any other person (i) that could materially and adversely affect any
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of the Property or performance under any Loan Documents, or (ii)exercising supervision or
control of Borrower,or its business or assets,that could impair the security of Lender or
adversely affect any of Lender's rights under the Loan Documents.
7.2 Financial Information.Borrower shall keep and maintain full and
accurate accounts and records of its operations and business affairs, in accordance with generally
accepted accounting principles and similar to those maintained by other businesses of the type in
which Borrower is engaged,and permit Lender by its duly authorized agents to inspect such
accounts and records in Mesa, Arizona at any reasonable time. Borrower shall prepare or cause
to be prepared and furnish or cause to be furnished to Lender,in form and with detail
satisfactory to Lender:
(a)Within 90 calendar days after the end of each Fiscal Year,separate
financial statements reflecting Borrower's financial condition at the end of such Fiscal Year and
the results of its operations for such Fiscal Year ending at the end thereof and including a
certified rent roll;
(b)Within 30 calendar days after the filing thereof, copies of all federal and
state income tax returns, including all related schedules, and all requests for extensions of filing
dates, filed by or for Borrower; and
(c)Such other information regarding the financial condition and operations of
Borrower and/or the Property, as Lender may request from time to time.
7.3 Project Reports.Following completion, Borrower shall submit a written
report within 60 calendar days of the closing of each fiscal year of Borrower until the terms of
this Agreement are satisfied.This report shall include,but not be limited to,the financial
statement for the Project and a certified rent roll showing household size, ethnicity and race, and
the dates of execution of occupants' leases and the rents reserved for all leases.
7.4 Indemnification.Borrower shall indemnify, defend, and hold Lender and
its past and current elected officials,appointees,employees and agents,and their respective
successors and assigns (collectively,"Indemnitees"),harmless for, from, and against any and all
claims asserted against any Indemnitee by any person arising out of or in connection with the
construction, development, marketing, sale, ownership, management, rental, financing or use of
the Property, including, but not limited to, claims asserted by reason of or in connection with: (i)
any activity by Borrower, its agents, contractors or subcontractors, or any other person or entity
carried on or undertaken on or off the Property in connection with the handling,treatment,
removal, storage, decontamination, cleanup, transport or disposal of any Hazardous Substances
located or present on or under the Site; or (ii) the failure of Borrower or its agents, contractors
or subcontractors to comply with any Environmental Laws relating to the handling, treatment,
presence, removal, storage, decontamination, cleanup, transportation or disposal of Hazardous
Substances into, on, under or from the Property.If, in the good faith judgment of Lender,
Borrower is incapable of or unwilling to defend the relevant Indemnitee(s) against such claims
or fails to defend the relevant Indemnitee(s) against such claims in a manner Lender in good faith
deems appropriate, Lender may hire its own counsel and appear in any action or proceeding to
defend the relevant Indemnitee(s) against such claims, and Borrower shall reimburse Lender for
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all costs incurred by Lender in connection therewith. The relevant Indemnitee(s), at its (their)
sole option, shall be entitled to settle or compromise, in good faith and with ten (10) Business
Days'prior notice to Borrower,any claim asserted against those Indemnitee(s),and such
settlement shall be binding on Borrower for purposes of the foregoing indemnification; provided
that Borrower may first settle or compromise any such claim,or decide not to settle or
compromise any such claim,as long as all Indemnitees are fully released from all liability
thereon. Payment by Lender pursuant to such settlement or compromise, or payment by Lender
of any judgment or claim successfully asserted against an Indemnitee or the Property, shall be
added to the outstanding balance of the Obligation and bear interest at the Default Interest Rate
until paid. The agreements in this Section 7.4 will survive repayment of the Obligation. This
release, indemnity, and duty to defend shall not apply to grossly negligent acts or failures to act
by,or the intentional conduct of,Lender,or its elected officials,appointees,employees and
agents.
7.5 Costs.Borrower shall pay the title insurance premium for the Lender's
Title Policy referenced in Section 3.2 above.
7.6 Management.The Project shall be managed by Adams Construction &
Management Company,Inc.,and Lender shall have the right to approve any changes to the
property manager in its sole discretion.
7.7 Transfers.Without the prior consent of Lender, and except as permitted
in the Deed of Trust, Borrower shall not: (a) assign, transfer or convey any of its right, title or
interest in any of the Property; or (b) create or suffer to be created any mortgage, pledge, security
interest, encumbrance or other lien on any of the Property beyond the Security Documents and
any prior liens approved by Lender.
7.8 LReserved by the Parties'
7.9 Organization.
(a)Lender will have no duty to inquire into the powers of Borrower or its
representatives when acting or purporting to act on Borrower's behalf and or to determine or be
concerned with any fiduciary or other duty of Borrower or any member thereof to any other
person. Nothing in this Section 7.9(a)will affect any rights and obligations between Borrower
and any person other than Lender.
(b)If, after the Closing Date, Borrower amends its organizational documents,
Borrower shall provide copies of any such amendment(s) to Lender and thereafter Lender may
impose such documentary,title insurance,opinion of counsel and/or recording and filing
requirements as Lender may determine on a conservative basis are required or prudent to assure
that Lender's rights will not be adversely affected.
7.10 Insurance.Borrower shall cause the Property to be insured at all times
during the term of the Loan as follows:
(a)With comprehensive general liability insurance,including automobile
insurance,with liability limits in amounts not less than $1,000,000 per occurrence and
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$3,000,000 aggregate limit of liability for bodily injury, including death, and property damage in
any one occurrence.Said policies of insurance must include coverage for all operations
performed on or about the Project, including coverage for collapse, explosion and underground
liability coverage, coverage for the use of all owned, non -owned, hired automobiles, vehicles and
other equipment both on and off the Project site and contractual liability coverage which shall
specifically insure the indemnification provisions of this Agreement.The above requirement
shall include, but shall not be limited to, protection against damage or destruction of public and
private property, including telephone conduit, telegraph conduit, power conduit, telephone signal
cables, fiber optics cables, television cables, computer cables,fire alarm circuits, gas mains,
water service connections, sanitary sewer, sewer, house or building connections, water mains,
water service connections, steam lines, petroleum products pipelines, storm drains, storm inlet
lines including all appurtenances thereto while located below the surface of the ground including
injury or death to person or persons. All such insurance shall indicate that Lender, its elected
officials, appointees, employees and agents, are additional insured parties.
(b)During any period of construction, Builder's Risk Insurance for the full
replacement value of the Improvements.
(c)With property and casualty insurance in an amount that is the greater of:
(i) the amounts specified from time to time by the senior lender having a lien with priority over
the Deed of Trust; and (ii) the full replacement cost of the Improvements (with the exception of
the foundations and footings),as determined by periodic appraisals of the Property and
Improvements; and all such insurance shall indicate that Lender is an additional insured and a
loss payee subject to the rights of any senior lender. Such insurance shall include coverage for
loss of business income and personal property loss coverage for furnishings,fixtures and
equipment within the common areas of the Property.
(d)If Owner fails to maintain the full insurance coverage required by this
Agreement, Lender may, but shall be under no obligation to, take out the required policies of
insurance and pay the premiums on the same or make the required repairs,renewals and
replacements. All amounts so advanced by the Lender shall become an additional obligation of
Borrower under the Loan, which amounts, together with interest thereon at the Default Rate of
interest described in the Note.Borrower agrees to pay the amount of any such advance by
Lender promptly upon demand. Any such premium amounts advanced by the Lender shall be
secured by the Deed of Trust.
7.11 Payment, Fees and Other Amounts Payable.Borrower shall promptly
pay or cause to be paid,as the same become due,all governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with respect to the
Project or any interest therein which, if not paid, will become a lien on the Property prior to or on
a parity with the Lender Security Documents, including all utility and other charges incurred in
the operation, maintenance, use, occupancy and upkeep of the Project. Provided, however, with
respect to governmental charges that may lawfully be paid in installments over a period of years,
Borrower shall be obligated to pay only such installments as are required to be paid during the
term of this Agreement when due. Borrower may, in good faith, contest any such charges and in
the event of any such contest may permit the charges so contested to remain unpaid during the
period of such a contest and any appeal therefrom, so long as during such period, enforcement of
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any such contested item shall be effectively stayed.If Borrower shall fail to pay any of the
foregoing items required herein to be paid by Borrower, Lender may (without obligation to) pay
the same and any amounts so advanced therefor by Lender shall become an additional obligation
of Borrower under the Loan and such amounts,together with interest thereon at Arizona's
statutory judgment interest rate from the date thereof, Owner agrees to pay on demand. Any such
amounts so advanced by the Lender shall be secured by the Deed of Trust.
7.12 Payments Required.The obligations of Borrower to make the payments
required in Section 7.11 and to perform and observe the other agreements on its part contained
herein shall be absolute and unconditional without offset or counterclaim for claims against
Lender or any other party.
7.13 Maintenance of Project.Borrower agrees that, during the term of this
Agreement, it shall, at its own expense, keep the Project in as reasonably safe condition as its
operations shall permit and keep the buildings and all other improvements forming a part of the
Project in good repair and in good operating condition making, from time to time, all necessary
repairs thereto and renewals and replacements thereof.Any tangible property purchased or
installed with proceeds from the Loan or received in exchange for tangible property purchased or
installed with proceeds from the Loan shall become a part of the Project.Borrower shall not
permit any mechanic's lien, security interest, or other encumbrance to be established or to remain
against the Project for labor or materials furnished in connection with the construction or
installation of the Project or any additions, modifications,improvements, repairs, renewals or
replacements;provided,however,if Borrower shall notify Lender of its intention to do so,
Borrower may, in good faith, contest any mechanic's or other liens filed or established against
the Project and in such event may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom unless Borrower
determines,or Lender notifies Borrower that,in Lender's opinion,non-payment of any such
items jeopardizes the Loan's priority or that the Project or any part thereof shall be subject to
loss or forfeiture. In the event of such Lender notice, Borrower shall promptly pay and cause to
be satisfied and discharged all such unpaid items.
VIII.Default and Remedies
8.1 Events of Default.Occurrence of one or more of the following will
constitute an "Event of Default" by Borrower:
(a)Any failure by Borrower to pay to Lender any amount due under any Loan
Document as and when the same becomes due and payable.
(b)Any failure by Borrower, after the expiration of any applicable notice and
cure period, to perform or observe in any material way any of the terms, provisions, conditions
or covenants of any Loan Document, other than any failure described in Section 8.1(a).
(c)If any warranty, representation, financial or other statement or certificate
by Borrower in or provided pursuant to any Loan Document, or made or furnished to Lender by
or on behalf of Borrower, shall be or have been false, inaccurate or misleading and that has a
11
1450147.5
material adverse effect on the payment and performance of the Borrower under the Loan
Documents.
(d)If Borrower: (i) is dissolved, liquidated or terminated or otherwise ceases
to exist; or (ii) has a receiver, trustee, custodian or conservator appointed with respect to any of
its property.
(e)If a petition for relief under any chapter of the Bankruptcy Code, or any
similar debtor relief law, is filed by or against Borrower and, if an involuntary petition, is not
dismissed within 90 calendar days.
(f)If any mechanics'or materialmen's lien,stop notice,attachment,
garnishment, replevin, execution or other statutory or judicial lien is filed, levied or claimed
against all or any portion of or interest in the Property or the Loan or any proceeds thereof, and
such claim or lien is not discharged, satisfied or bonded over to Lender's good faith satisfaction
within ten (10) Business Days, and in any event not later than the fifth (5th) Business Day prior
to any sale or seizure of any property within the Property.
8.2 Cure Period.If an Event of Default occurs under the Loan Documents,
other than failure of payment of the Loan on the Maturity Date, upon written notice from Lender
to Borrower and its Investor Member, reasonably specifying the Event of Default, Borrower
shall have ten (10) Business Days in which to cure the Event of Default. The ten (10) Business
Day period described in the foregoing sentence shall be extended for an additional ten (10)
Business Days for a total of twenty (20) Business Days if: (i) the Event of Default is reasonably
capable of being cured, but not within ten (10) Business Days and not by the payment of money;
and (ii) Borrower promptly commences, expeditiously takes and diligently pursues all reasonable
steps to cure such Event of Default. Notwithstanding the foregoing, if, in Lender's good faith
judgment, the delay resulting from any cure period could result in the imposition of any lien,
claim or encumbrance on any part of the Property that would have priority over any Security
Document,or would otherwise impair the priority,diminish the value or cause the loss or
impairment of any of Lender's security, then Lender may immediately make protective advances
and enforce any remedies described in the Loan Documents,excluding commencement of
foreclosure as to portions of the Property, with or without notice or awaiting the expiration of
any cure period. The giving of any such notice will not preclude Lender from other or additional
notices of any other Event of Default, whether or not any such other Event of Default is or was in
existence at the time of such notice. The filing of a voluntary petition for relief under the
Bankruptcy Code by Borrower will constitute an Event of Default not capable of cure unless
discharged within 60 calendar days thereof. Notwithstanding any provision of any Document to
the contrary,no notice or cure period need be given of any Event of Default which exists by
reason of the failure to pay the Loan on the Maturity Date.All cure periods in the Loan
Documents will run concurrently with all applicable statutory cure periods.Any member of
Borrower shall have the same right but not the obligation to cure defaults hereunder on the same
terms as Borrower.
8.3 Remedies.
1450147.5
12
(a)If an Event of Default occurs and is not cured as provided in Section 8.2,
Lender will have the right, at its sole option, to declare the whole Obligation then outstanding
immediately due and payable, including all accrued and unpaid interest, and costs, charges and
expenses described in the Loan Documents, and the total sum shall thereafter bear interest at the
Default Interest Rate until paid. The same shall be collectible by one or more suits at law and/or
trustee's sale proceedings under, or judicial foreclosure of, the Deed of Trust in the same manner
as if the entire Obligation then owing had been made payable at the time of Lender's election to
declare the Obligation then due and payable, and with all of the rights and remedies provided by
the Loan Documents, and with any other relief to which Lender may be legally or equitably
entitled under applicable law. Any sums advanced or costs or expenses incurred by Lender under
the Loan Documents will be immediately payable by Borrower on Lender's demand,bear
interest at the Default Interest Rate and be secured by the Security Documents. The foregoing
sentence shall be equally applicable to costs and expenses incurred by Lender in any proceeding
under the Bankruptcy Code.
(b)If any Event of Default or event which, with the giving of notice or the
passage of time or both, would constitute an Event of Default exists which has not been cured,
Lender may, at its option, take any action which Lender determines in good faith is necessary to
preserve and protect the Property. If an involuntary petition is filed against Borrower under the
Bankruptcy Code, Lender may at its option withhold any advances under this Agreement until
such petition is dismissed or the court enters an order confirming that Lender's liens on any then-
owned or after -acquired property will remain in full force and effect with respect to any
indebtedness then or thereafter evidenced or secured by any Loan Document.
(c)If any Event of Default occurs and is either not cured as provided in
Section 8.2 or is not reasonably capable of cure,Lender may,at its sole option,enter into
possession of the Property and perform any work necessary to safeguard any portion thereof, and
employ watchmen to protect the Property from damage. All sums so expended by Lender shall
constitute advances for the account of Borrower and be added to the Loan secured by the
Security Documents, and interest shall accrue thereon at the Default Interest Rate until paid.
(d)Borrower irrevocably authorizes Lender, in the name of Borrower, upon
the occurrence of an Event of Default and the failure to cure: (i) to use any funds of Borrower in
the possession of Lender for the purpose of doing any of the acts in (c) above; (ii) to employ
such contractors, subcontractors, agents, architects,engineers and inspectors as shall be required
for such purposes; (iii) to pay, settle, or compromise existing bills and claims which may be or
become liens against any of the Property, or as may be necessary or desirable for the completion
of the work or for the clearance of title; (iv) to execute all applications and certificates in the
name of Borrower that may reasonably be required to accomplish the foregoing;and (v) to
perform every related act that Borrower might perform on Borrower's own behalf. The foregoing
authorization is coupled with an interest and given as security to prosecute and defend all actions
or proceedings in connection with any part of the Property.Lender shall not be obligated to
perform any obligation, duty or liability of Borrower under any other agreement affecting the
Property.
13
1450147.5
(e)If Lender so requires, Borrower shall deposit in an escrow account with
Lender all security deposits received by or on behalf of Borrower or any property manager from
any Property tenants.
8.4 Borrower's Exculpation.
(a)Subject to the provisions of this Section 8.4 and notwithstanding any other
provision in the Loan Documents, the personal liability of the Borrower and of any members or
officers of the Borrower to pay the principal of and interest on the debt evidenced by the Note
and any other agreement evidencing the Borrower's obligations under the Note or the other Loan
Documents shall be limited to: (i) the real and personal property of the Project and the Security
Documents described in this Agreement; and (ii) the rents, profits, issues, products and income
of the Project as they become due and payable,including any received or collected by or on
behalf of the Borrower after an Event of Default (as defined in Section 8.1 hereof)and not
applied to the payment of principal and interest due under the Note or payment of utilities, taxes
and assessments,insurance premiums and ground rents,if any,on the Project and other
reasonable and customary operating expenses of the Project (but not including any fees or other
payments of any kind or nature made to the Borrower or any affiliate or related entity of the
Borrower), except not including any amounts to the extent that Borrower did not have the legal
right,because of a bankruptcy,receivership or similar judicial proceeding,to direct the
disbursement of such sums.
(b)Except as provided in this Section 8.4,Lender shall not seek:(i)any
judgment for a deficiency against the Borrower, any member, or any officer of the Borrower, or
the heirs,legal representatives,successors or assigns,of any of the foregoing,or any other
person or entity, in any action to enforce any right or remedy under the Loan Documents; or (ii)
any judgment on the Note, except as may be necessary in any action brought under the Loan
Documents to enforce the lien against the Project, Project revenues or other collateral.
(c)The Borrower (except as provided in the immediately succeeding
sentence), shall be personally liable in the amount of any loss, damage or cost to the Lender
resulting from:(i)fraud or intentional misrepresentation by the Borrower in connection with
obtaining the Loan evidenced by the Note;(ii)insurance proceeds,condemnation awards,or
other sums or payments attributable to the Project not applied in accordance with the provisions
of the Loan Documents, except to the extent that the Borrower did not have the legal right,
because of a bankruptcy, receivership or similar judicial proceeding, to direct disbursement of
such sums or payments; (iii) all rents, profits, issues, products and income of the Project received
or collected by or on behalf of the Borrower, as they become due or payable, or following any
Event of Default under the Loan Documents and not applied to payment of principal and interest
due under the Note and payments of utilities, taxes and assessments, insurance, and ground rents,
if any, on the Project, and other reasonable and customary operating expenses of the Project (but
not including any fees or other payments of any kind or nature made to the Borrower or any
affiliate or related entity of the Borrower other than a member of the Borrower), except not
including amounts to the extent that the Borrower did not have the legal right, because of a
bankruptcy, receivership or similar judicial proceeding, to direct the disbursement of such sums;
(iv) a breach of any environmental representation, obligation or warranty made or undertaken by
the Borrower in the Loan Documents or any other document executed by the Borrower in
14
1450147.5
connection with the Loan evidenced by the Note; (v) amounts necessary to repair or replace any
damage caused by the willful or wanton act or omission of the Borrower; (vi) the Borrower's
failure to pay transfer fees and charges due Lender under the Note or the Loan Documents in
connection with any transfer of all or any part of the Project, or any interest therein, from the
Borrower to the Borrower's transferee, or transfer of beneficial interest in the Borrower (if the
Borrower is not a natural person or persons but is a corporation, partnership, trust of other legal
entity); or (vii) security deposits paid by tenants improperly retained by the Borrower.
(d)No provision of this Section 8.4 shall: (i) affect any guaranty or similar
agreement executed in connection with debt evidenced by the Note; (ii) release or reduce the
debt evidenced by the Note; or (iii) impair the lien of the Deed of Trust or the Lender's lien on
any security interest in the Security Document.
IX.General and Miscellaneous
9.1 Right to Assign.Borrower may not assign, sell or otherwise transfer any
of its rights under this Agreement, and any such purported assignment, sale or transfer shall be
void and constitute an Event of Default incapable of cure.
9.2 Integration.The Loan Documents constitute a complete integration of
the agreement of the Parties with respect to the Loan, and may be modified in the future only by
written amendment. All prior oral and/or written commitments from Lender to Borrower, or any
principals or agents thereof, with respect to the Loan have been merged in the Loan Documents
and shall, except as expressly provided in the Loan Documents, be of no further force or effect.
No representations,promises,warranties,understandings or agreements,express or implied,
verbal or written, exist with respect to the Loan except those expressly set forth in the Loan
Documents. Borrower acknowledges that its execution and delivery of the Loan Documents has
not been induced by any representation, promise, warranty, understanding or agreement made by
Lender or its agents, officers, employees or representatives that are not set forth in the Loan
Documents.
9.3 Cumulative Rights.The rights and remedies provided to Lender by the
Loan Documents are for Lender's sole and exclusive benefit, shall be cumulative and shall not
preclude the exercise of rights and remedies that may otherwise be available.Lender may
exercise any such right, power or remedy, at its option and in its sole and absolute discretion,
without any obligation to do so. If Lender is given two or more alternative courses of action,
Lender may elect any alternative or combination of alternatives, at its option and in its sole and
absolute discretion. No single or partial exercise of any right, power or remedy shall preclude
any other or further exercise thereof or of any other right, power or remedy.
9.4 Law and Venue.The terms and conditions of this Agreement shall be
governed by and interpreted in accordance with the laws of the State of Arizona.Any action at
law or in equity brought by either Party for the purpose of enforcing a right or rights provided for
in this Agreement, shall be tried in a court of competent jurisdiction in Pinal County, State of
Arizona.The parties hereby waive all provisions of law providing for a change of venue in such
proceeding to any other county.In the event either Party shall bring suit to enforce any term of
this Agreement or to recover any damages for and on account of the breach of any term or
15
1450147.5
condition in this Agreement, it is mutually agreed that the prevailing Party in such action shall
recover all costs including:all litigation and appeal expenses, collection expenses, reasonable
attorney fees, necessary witness fees and court costs to be determined by the court in such action.
9.5 Waivers by Borrower.Borrower waives, to the extent allowed by law,
presentment, demand, protest and notices of protest, nonpayment, partial payment, acceleration
and all other notices and formalities except as expressly required by this Agreement. Borrower
further consents to and waives notice of (a) the granting of indulgences or extensions of time of
payment; exercise of lender's security interests.
9.6 Waivers by Lender.No delay or omission by Lender in exercising any
right, power or remedy hereunder, and no indulgence given to Borrower with respect to any
condition set forth herein or Event of Default, shall: (a) impair any right, power or remedy of
Lender under any Loan Document; or (b) be construed as Lender's waiver of, or acquiescence in,
such condition or any Event of Default. No waiver by Lender of any Event of Default shall
constitute a waiver of any other prior or subsequent Event of Default.Lender shall not be
estopped from taking any action with respect to any Event of Default because of any delay by
Lender in giving notice of such Event of Default or exercising any remedy based thereon. No
waiver of any Event of Default shall be effective unless it is written and signed by an authorized
officer of Lender.
9.7 Successors and Assigns.Except as is expressly provided herein,this
Agreement shall be binding on and inure to the benefit of the successors and assigns of the
Parties. This Agreement shall not confer any rights on any person other than the Parties and their
respective successors and assigns. None of the proceeds of the Loan shall constitute a fund for
the benefit of any contractor or labor or material supplier.
9.8 Construction.The headings or captions of Parts and Sections in the Loan
Documents are for convenience only, and do not define, limit or describe the scope or intent of
such Parts or Sections. The Loan Documents shall be construed as a whole, in accordance with
the fair meaning of their language, and, as each Party has been represented by legal counsel of its
choice in the negotiation of the Loan Documents, they shall not be construed for or against any
Party by reason of the identity of the Party drafting them. As used in the Loan Documents, the
term(s): (a) "include" or "including" shall mean without limitation by reason of enumeration;
(b) "herein," "hereunder," "hereof," "hereinafter" or similar terms refer to this Agreement as a
whole rather than to any particular Part or Section; (c) "person" includes a corporation, trust,
partnership, association, limited liability company, Government Authority or other entity, as well
as a natural person; (d) "month" means a calendar month; and (e) "day" means a calendar day
unless otherwise provided. Unless otherwise expressly provided in a Document, this Agreement
shall prevail if an irreconcilable conflict exists between this Agreement and any other Document.
Technical words and phrases and those that have acquired particular meanings in the banking,
real estate and construction industries shall be construed according to those particular meanings
when the context in which they are used in this Agreement reasonably indicates that the technical
meaning is intended.
9.9 Severability.Lender and Borrower each believe that the execution,
delivery and performance of this Agreement are in compliance with all applicable
16
1450147.5
laws.However, in the unlikely event that any provision of this Agreement is declared void or
unenforceable (or is construed as requiring Lender to do any act in violation of any applicable
laws, including any constitutional provision, law, regulation, or City of Apache Junction Code),
such provision shall be deemed severed from this Agreement and this Agreement shall otherwise
remain in full force and effect;provided that this Agreement shall retroactively be deemed
reformed to the extent reasonably possible in such a manner so that the reformed agreement (and
any related agreements effective as of the same date) provide essentially the same rights and
benefits (economic and otherwise) to the Parties as if such severance and reformation were not
required.Unless prohibited by applicable laws, the Parties further shall perform all acts and
execute,acknowledge and/or deliver all amendments,instruments and consents necessary to
accomplish and to give effect to the purposes of this Agreement, as reformed.
9.10 Time.Time is of the essence of all Loan Documents. Time periods will
be determined by excluding the day of the event when the period commences or from which it
runs and will expire at 5:00 p.m. Apache Junction, Arizona time on the last day included in such
period unless it is not a Business Day, in which case it will expire at 5:00 p.m. on the next
Business Day.
9.11 Miscellaneous.The only relationship created by this Agreement is that of
Borrower and Lender, and Borrower is not and shall not be the agent of Lender for any purpose
whatsoever. Each Party warrants and represents to the other that it has dealt with no mortgage
broker or finder with respect to the Loan.
9.12 Prohibition to Contract with Consultants Who Engage in Boycott of
the State of Israel.The parties acknowledge A.R.S. §§ 35-393 through 35-393.03, as amended,
which forbids public entities from contracting with consultants who engage in boycotts of the
State of Israel.Should Borrower under this Agreement engage in any such boycott against the
State of Israel,this Agreement is automatically terminated.Any such boycott is a material
breach of contract and will subject Borrower to monetary damages, including but not limited to,
consequential and liquidated damages.
9.13 Conflicts of Interest.This Agreement is subject to,and may be
terminated by Lender in accordance with, the provisions of A.R.S. § 38-511.
9.14 Force Majeure.Neither Lender nor Borrower, as the case may be, shall
be considered not to have performed its obligations under this Agreement in the event of
enforced delay (an "Enforced Delay")due to causes beyond its control and without its fault or
negligence or failure to comply with applicable laws, including, but not restricted to, acts of God,
fires,floods,epidemics,pandemics,quarantine,restrictions,embargoes,labor disputes,and
unusually severe weather or the delays of subcontractors or materialmen due to such causes, acts
of a public enemy, war, terrorism or act of terror (including but not limited to bio-terrorism or
eco-terrorism),nuclear radiation,blockade,insurrection,riot,labor strike or interruption,
extortion, sabotage, or similar occurrence or any exercise of the power of eminent domain of any
governmental body on behalf of any public entity, or a declaration of moratorium or similar
hiatus (whether permanent or temporary) by any public entity directly affecting the obligations
under this Agreement.In no event will Enforced Delay include any delay resulting from
unavailability for any reason of labor shortages, or the unavailability for any reason of particular
17
1450147.5
consultants, subcontractors, vendors or investors desired by Borrower in connection with the
obligations under this Agreement.Borrower agrees that Borrower alone will bear all risks of
delay which are not an Enforced Delay.In the event of the occurrence of any such Enforced
Delay, the time or times for performance of the obligations of the Party claiming delay shall be
extended for a period of the Enforced Delay;provided, however,that the Party seeking the
benefit of the provisions of this Section shall, within thirty (30) calendar days after such Party
knows or should know of any such Enforced Delay, first notify the other Party of the specific
delay in writing and claim the right to an extension for the period of the Enforced Delay; and
provided further that in no event shall a period of Enforced Delay exceed ninety (90) calendar
days.
9.15 Compliance with Federal and State Laws.Borrower understands and
acknowledges the applicability of the American with Disabilities Act, the Immigration Reform
and Control Act of 1986 and the Drug Free Workplace Act of 1989 to the services performed
under this Agreement.
As required by A.R.S.§ 41-4401,Borrower hereby warrants its compliance with all
federal immigration laws and regulations that relate to its employees and A.R.S.§23-
214(A).Borrower further warrants that after hiring an employee,Borrower will verify the
employment eligibility of the employee through the E -Verify program.If Borrower uses any
subcontractors in performance of services, subcontractors shall warrant their compliance with all
federal immigration laws and regulations that relate to its employees and A.R.S. § 23-214(A),
and subcontractors shall further warrant that after hiring an employee,such subcontractor
verifies the employment eligibility of the employee through the E -Verify program.A breach of
this warranty shall be deemed a material breach of the Agreement that is subject to penalties up
to and including termination of this Agreement.Borrower is subject to a penalty of $100 per day
for the first violation, $500 per day for the second violation, and $1,000 per day for the third
violation.Lender at its option may terminate this Agreement after the third violation.Borrower
shall not be deemed in material breach of this Agreement if Borrower and/or subcontractors
establish compliance with the employment verification provisions of Sections 274A and 274B of
the federal Immigration and Nationality Act and the E -Verify requirements contained in A.R.S. §
23-214(A).Lender retains the legal right to inspect the papers of any Borrower or subcontractor
employee who works under this Agreement to ensure that the Borrower or subcontractor is
complying with the warranty.Any inspection will be conducted after reasonable notice and at
reasonable times.If state law is amended, the parties may modify this paragraph consistent with
state law.
9.16 Counterparts.This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter shall be deemed
an original, and all of which shall be taken to be one and the same instrument, for the same effect
as if all parties hereto had signed the same signature page. Any signature page of this Agreement
may be detached from any counterpart of this Agreement without impairing the legal effect of
any signatures thereon and may be attached to another counterpart of this Agreement identical in
form hereto but having attached to it one or more additional signature pages.
18
1450147.5
X.Notices
10.1 Notices.All notices, requests, demands, approvals, consents, waivers and
other communications required or permitted by any Document must be in writing and:
(a) personally delivered, which will be effective on delivery; (b) sent by certified United States
mail, return receipt requested, postage prepaid, which communication will be effective two (2)
Business Days after deposit or any earlier date shown on the receipt;(c)sent by telecopier
transmission,which will be effective on acknowledgment of receipt during regular business
hours or, if after regular business hours or not on a Business Day, on the next Business Day; or
(d) sent by a reputable national overnight commercial courier service such as Federal Express but
not United States Postal Service Express Mail, which will be effective on the first Business Day
after deposit. The addresses and numbers of the Parties for notice are:
If to Borrower:
Apache Junction Villas, LLC
c/o Adams Construction
1611 E. 2450 S., STE IA
St. George, Utah 84790
Attention: Gregory Wagner
Phone:(435) 652-0144
Fax:(435) 652-0145
Email:gwagner@acmc-utah.com
With copies to:
Borrower's Investor Member:
Wincopin Circle LLLP, its successors and
assigns
do Enterprise Community Asset
Management, Inc.
11000 Broken Land Parkway, Suite 700
Columbia, MD 21044
Attn: General Counsel
Construction Lender:
U.S. Bank
If to Lender:
City of Apache Junction
300 E. Superstition Boulevard
Apache Junction, AZ 85119
Attention:City Manager
Phone:(480) 474-5066
Fax:(480) 474-5110
Email:bpowell@ajcity.net
Borrower's Permanent Lender:
RCMCRC
475 East 200 South, Suite 210
Salt Lake City, UT 84111
1450147.5
19
Any Party may change its address or number with five (5) Business Days' notice to the other
Parties.Lender's notice to Borrower under the Loan Documents will not be required if such
notice is prohibited by 11 U.S.C. § 362.
[Signature Page Follows]
20
1450147.5
DATED as of the day first above written.
APACHE JUNCTION VILLAS, LLC,an CITY OF APACHE JUNCTION,an
Arizona limited liability company Arizona municipal corporation
By:AJ VILLAS MANAGEMENT, LLC, an By:
Arizona limited liability company,Name: Bryant Powell
Its:Managing Member Its: City Manager
By:Adams Construction and Management
Co., Inc., an Arizona corporation
Its:Sole Member
By:
Gregory A. Wagner President
Approved as to form:
Joel Stern, City Attorney
Exhibits List:
Exhibit "A":Promissory Note
Exhibit "B":Deed of Trust
Exhibit "C":Absolute Blanket Assignment of Leases and Rents
Exhibit "D":Closing Letter
Exhibit "E":Environmental Certification
Exhibit "F":Legal Description
21
1450147.5
Exhibit "A"
PROMISSORY NOTE
$34,000.00 Apache Junction, Arizona
, 2018
FOR VALUE RECEIVED, the undersigned Maker promises to pay to the City of Apache
Junction, a municipal corporation of the State of Arizona ("Holder"),the principal sum of Thirty
Four Thousand Dollars ($34,000.00) without interest on the outstanding principal balance, unless
there is an Event of Default (as defined below). The entire principal sum then outstanding, if any,
shall be due and payable on the twentieth (20th) anniversary of the date first set forth above (the
"Maturity Date").
There shall be no prepayment premium or penalty. Principal shall be payable in the form
of immediately available funds in lawful money of the United States.
A default hereunder shall occur if the undersigned shall: (a) fail to pay principal upon the
Maturity Date; (b) fail to comply with the terms of the Deed of Trust, Assignment of Rents and
Security Agreement of even date herewith (other than regarding payment on the Maturity Date)
securing this Note (the "Deed of Trust")within thirty (30)calendar days following written
notice from holder of such failure; or (c) default under the Construction Deed of Trust in favor of
U.S. Bank, to be recorded in the Official Records of Pinal County, Arizona, or the Promissory
Note secured thereby.
Should Maker default in the timely performance of any of the foregoing obligations and
any applicable cure period lapse,this shall constitute an Event of Default,and the entire
outstanding principal balance immediately shall become due and payable without further demand
or notice to Maker.Should an Event of Default occur, the outstanding principal balance shall
bear default interest at the rate of ten percent (10%) per annum ("Default Rate"),which default
interest shall be calculated from the date of the Event of Default until all sums are fully paid;
provided, however, any interest in excess of the highest legal rate permitted under applicable law
shall be waived or refunded to the undersigned Maker or its assigns or successors.
Failure to exercise any option herein given holder shall not constitute a waiver of the
right of holder to exercise such option subsequently. Time is of the essence of each and every
provision hereof.
In the event this Note or any interest now or hereafter securing it is referred to an attorney
for collection or enforcement by trustee's sale or otherwise, then the undersigned agrees to pay
all costs and expenses incurred by the owner or holder hereof including reasonable attorney fees.
Court costs and reasonable attorney fees in the event of suit or any appeal are to be awarded to
the prevailing party, in the option of the court, as part of any judgment rendered therein and the
attorney fees are to be determined by a judge of the court. If collection is undertaken without
suit,all reasonable attorney fees actually incurred hereunder shall be paid as a condition to
Maker's curing all defaults hereunder.
A-1
1450147.5
This Note shall be construed and enforced in accordance with the laws of the State of
Arizona; and venue for its enforcement shall be appropriate in Pinal County, Arizona. This Note
is secured by the Deed of Trust referenced above and additional security documents.
Section 8.4 of the Loan Agreement of even date herewith executed by and between
Maker as "Borrower" and Holder as "Lender" is incorporated herein.
MAKER:
APACHE JUNCTION VILLAS, LLC, an Arizona
limited liability company
By:AJ VILLAS MANAGEMENT,LLC,an
Arizona limited liability company
Its: Managing Member
By: Adams Construction & Management Co., Inc.
an Arizona Corporation
Its: Sole Member
By:
Gregory A. Wagner, President
1450147.5
V
A-2
Exhibit "B"
When Recorded, Mail to:
Bruce Babcock
Jones Waldo
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
DEED OF TRUST, ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (this "Deed of Trust"),dated as of , 2018, is made by and
among APACHE JUNCTION VILLAS, LLC, an Arizona limited liability company, as Trustor,
whose mailing address is 235 West Tepee Street,Apache Junction,Arizona,85120;
Commonwealth Land Title Insurance Company, as Trustee,whose mailing address is 2390 E.
Camelback Road, Suite 230, Phoenix, AZ 85016; and the CITY OF APACHE JUNCTION, an
Arizona municipal corporation, whose mailing address is 300 E. Superstition Boulevard, Apache
Junction, Arizona 85119, Attn: Bryant Powell as Beneficiary.
TRUSTOR CONVEYS, TRANSFERS, AND ASSIGNS to Trustee in Trust, with Power
of Sale, the real property in Pinal County, Arizona legally described on Exhibit A attached hereto
and commonly located at 235 West Tepee Street, Apache Junction, Arizona.
TOGETHER WITH the rents,issues,profits,and income thereof and all personal
property and fixtures located thereat from time to time, except fuel and other petroleum products
and the residue thereof (collectively, the "Property"),SUBJECT, HOWEVER, to the right,
power, and authority hereinafter given to and conferred upon Trustor to collect and apply income
of the Property.
This Deed of Trust is given for the purpose of securing:(A)performance of each
agreement of Trustor herein contained; (B) payment of the indebtedness in the principal amount
of Thirty Four Thousand Dollars ($34,000)evidenced by a Promissory Note dated
,2018, and any extension or renewal thereof, executed by Trustor (the "Note");
and (C) performance of the obligations of Trustor as "Borrower" to Beneficiary as "Lender"
under that certain Loan Agreement of even date herewith (the "Loan Agreement"). The Trustor's
various obligations under the Note, the Loan Agreement and this Deed of Trust are referred to
collectively herein from time to time as the "Obligations."
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To protect the security of this Deed of Trust, it is agreed that:
(1)Trustor shall keep the Property in good condition and repair, shall not remove or
demolish any building or other improvement thereon, shall complete or restore promptly and in
good and workmanlike manner any building which may be constructed, damaged or destroyed
thereon, and shall pay when due all claims for labor performed and materials furnished therefor,
shall comply with all laws (including without limitation environmental laws)affecting the
Property or requiring any alterations or improvements to be made thereon, shall not commit or
permit waste thereof, shall not commit, suffer, or permit any act upon the Property in violation of
law,and shall do all other acts which from the character or use of the Property may be
reasonably necessary, the specific enumerations herein not excluding the general.
(2)(A)At Trustor's sole expense Trustor shall keep all improvements now or
hereafter erected on the Property continuously insured during the term hereof against loss by fire
or other hazards in an amount not less than the per -occurrence coverage required by U.S. Bank
("Construction Lender") encumbering the Property during the period of initial construction, and
each such policy shall provide for a minimum thirty (30)calendar days written notice of
cancellation to Beneficiary.All policies shall name the Beneficiary,its elected officials,
appointees, employees and agents, as additional insured parties and shall be underwritten by such
companies as Beneficiary may first approve and,following the release of the Construction
Lender's security instruments,shall have the loss payable first to Beneficiary and Rocky
Mountain Community Reinvestment Corporation ("Permanent Lender") (rather than jointly to
Trustor and Beneficiary), and then to Trustor.The amount collected under any insurance policy
may be applied upon any Obligations hereby secured as the Beneficiary may determine subject
only to subparagraph (B) below and the rights of prior lenders. Trustor further shall provide or to
cause to be provided comprehensive personal liability and property damage insurance coverage in a
combined single limit amount of not less than the amount specified in Section 7.10 of the Loan
Agreement;and as to all such coverage Trustor shall cause Beneficiary to be named as an
additional insured.
(B)In the event of any loss or claim,Trustor will give immediate written
notice thereof to Beneficiary, and Beneficiary may make proof of loss if not made promptly by
Trustor. Subject to the rights of senior lienholders, each insurance company is hereby authorized
and directed to make payment for such loss directly to Beneficiary instead of to Trustor or to
Trustor and Beneficiary jointly.Insurance proceeds or any part thereof may be applied by
Beneficiary, at its option, either to the reduction or payment of the Obligations or to the repair,
rebuilding and restoration of the Property lost, damaged or destroyed. Unless the Trustor is in
default under the terms of this Deed Of Trust, the Note,the insurance proceeds or any part
thereof may be turned over to Trustor by Beneficiary, to the repair, rebuilding and restoration of
the Property,but Beneficiary shall not be obligated to ensure the proper application of any
amount paid over to Trustor. Notwithstanding the foregoing sentence, if proceeds are used for
the repair, rebuilding and restoration of the Property, Beneficiary may require that the insurance
proceeds be placed in a segregated account with Beneficiary and used for the repair, rebuilding
and restoration of the insured loss, through such commercially reasonable advance procedures as
shall be agreed to by Trustor and Beneficiary and with such other safeguards and procedures for
release of such proceeds and payment of construction and related expenses as Beneficiary
customarily imposes for advances of construction loan funds, which shall include requirements
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that: (i) Trustor first expend or deposit into the escrow account any difference between the total
cost of repair, rebuilding and restoration and the amount of such proceeds; (ii) Trustor, at its
expense, promptly prepare and submit to Beneficiary all plans and specifications necessary for
the restoration and repair of the damaged Property,together with evidence acceptable to
Beneficiary setting forth the total expenditure needed for the restoration and repair based upon a
fixed price contract with a reputable builder;(iii) the plans and specifications and all other
aspects of the proposed restoration and repair be subject to Beneficiary's approval in the exercise
of its reasonable discretion;(iv)Trustor commence restoration and repair of the damaged
Property only after Beneficiary shall have notified Trustor in writing that the use of proceeds for
restoration and repair is allowable under this Paragraph (2)(B)that the required safeguards,
procedures and assignments described in this Paragraph (2)(B) are in place and that the plans and
specifications and all other aspects of the proposed restoration have been approved by
Beneficiary, and Trustor shall thereafter proceed diligently with the restoration and repair until
completed; (v) disbursements be made from the escrow account for the restoration and repair in
accordance with a disbursement schedule;and (vi)all funds held in the escrow account be
assigned to Beneficiary as further security for the Obligations and any balance remaining shall be
released to Trustor upon completion of such repair, rebuilding or restoration. The Property as
rebuilt or restored shall be of at least equal value and substantially identical character as prior to
the damage or destruction.
(C)Application of insurance proceeds by Beneficiary shall not cure or waive
any Event of Default hereunder or invalidate any act done hereunder because of such default. In
the event proceedings have been commenced for sale of the Property by Trustee or for
foreclosure of this Deed of Trust under the laws relating to deeds of trust and mortgages, or in
the event Beneficiary shall take possession of the Property, all right, title and interest of Trustor
in and to any insurance policies then in force, including any right to unearned premiums, shall
inure to the benefit of and pass to Beneficiary, if in possession, the receiver, or the purchaser of
the Property upon sale,as the case may be,or at Beneficiary's election,evidence of such
insurance satisfactory to it shall be delivered to it in lieu of such policy or policies.
(3 )Trustor shall appear in and defend any action or proceeding purporting to affect
the security hereof or the rights or powers of the Beneficiary or Trustee; and shall pay all costs
and expenses, including cost of evidence of title and attorney fees in a reasonable sum in such
action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by
Beneficiary to foreclose this Deed of Trust.
(4)Trustor shall pay, before delinquency,all taxes and assessments affecting the
Property (including without limitation real and personal property taxes);all encumbrances,
charges, and liens, with interest, on the Property or any part thereof which appear to be prior or
superior hereto; all costs, fees, and expenses of this Trust, including without limitation the fees of
Trustee for issuance of any deed of release and reconveyance and all lawful charges, costs, and
expenses in the event of reinstatement of,following default in,this Deed of Trust or the
Obligations. Trustor shall provide to Beneficiary written proof of payment of real property taxes
within ten (10) calendar days of each semiannual payment thereof. Trustor shall further pay
timely all permit and license fees necessary for operation of the Property.
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(5 )Should Trustor fail to make any payment or to do any act as provided in this Deed
of Trust, then Beneficiary may, but without obligation to do so, and without notice to or demand
upon Trustor and without releasing Trustor from any obligation hereof: Make or do the same in
such manner and to such extent as either may deem necessary to protect the security hereof,
Beneficiary or Trustee being authorized to enter upon the Property for such purposes;pay,
purchase, contest, or compromise any encumbrance, charge, or lien which in the judgment of
either appears to be prior or superior hereto; and, in exercising any such powers, pay necessary
expenses, employ professionals, and pay reasonable attorney fees. Trustor shall pay immediately
and without demand all sums so expended by Beneficiary or Trustee, with interest from date of
expenditure at the default interest rate provided for in the Note until fully paid.
(6)Subject to the rights of senior lienholders, any award of damages in connection
with any condemnation of the Property or any part thereof is hereby assigned to and shall be paid
to Beneficiary, who may apply such moneys received in the same manner and with the same
effect as provided in Paragraph 2(B) for disposition of proceeds of fire or other insurance.
(7)By accepting payment of any sum secured hereby after its due date, Beneficiary
does not waive the right either to require prompt payment when due of all other sums so secured
or to declare default for failure to so pay.
(8)At any time or from time to time, without liability therefor and without notice,
upon written request of Beneficiary and presentation of this Deed of Trust for endorsement, and
without affecting the personal liability of any person for payment of the Obligations, and upon
payment of its fees, Trustee may: Consent to the making of any map or plat thereof; join in
granting any easement thereon;or join in any extension agreement or any agreement
subordinating the lien or charge hereof.
(9 )Upon written request of Beneficiary stating that all sums secured hereby have
been paid and upon surrender of this Deed of Trust to Trustee for cancellation and retention and
upon payment of its fees, Trustee shall by deed of release and full reconveyance release and
reconvey, without covenant or warranty, express or implied, the Property then held thereunder.
The recitals in such deed of release and full reconveyance of any matters shall be conclusive
proof of the truthfulness thereof. The grantee in such deed of release and full reconveyance may
be described as "The Person or Persons Legally Entitled Thereto."
(10)As additional security, Trustor hereby gives to and confers upon Beneficiary the
absolute right, power, and authority during the continuance of this Trust to collect and have the
rents and other income of the Property, reserving unto Trustor only a revocable license, prior to
any Event of Default, to collect and retain such rents and other income as it becomes due and
payable. Upon such Event of Default, Beneficiary may, at any time, without notice, either in
person or by agent,or by a receiver to be appointed by a court (and Trustor does hereby
irrevocably consent to such appointment), and without regard to the adequacy of any security for
the Obligations or the solvency of the Trustor: Enter upon and take possession of the Property or
any part thereof, in Beneficiary's own name sue for or otherwise collect income of the Property,
including that past due and unpaid, and apply the same, less costs and expenses of operation and
collection,including reasonable attorney fees,upon any Obligations and in such order as
Beneficiary may determine.The entering upon and taking possession of the Property,the
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collection of such income of the Property and the application thereof as aforesaid shall not cure
or waive any Event of Default or notice of default hereunder or invalidate any act done pursuant
to such notice. Beneficiary shall not be deemed by virtue of this assignment to have assumed any
of the lessor's obligations, duties or liabilities under or in connection with the leases. Trustor
hereby authorizes all lessees and guarantors under the leases upon receipt of written notice from
the Beneficiary that an Event of Default has occurred hereunder, to pay over all rent or other
sums at any time owed under the leases to the Beneficiary.
(1 1 )Trustor shall not sell or encumber the Property with monetary liens (except non-
delinquent taxes) other than a construction deed of trust ("Construction Deed of Trust") in favor
of Construction Lender, a deed of trust in favor of Permanent Lender (including any refinancing
of the Permanent Loan) ("Permanent Deed of Trust") (following the discharge of the liens of the
Construction Lender) which shall be senior to this Deed of Trust without Beneficiary's prior
written authorization, which may be withheld in Beneficiary's sole direction; provided, however,
Trustor's managing member may be removed for cause under Trustor's operating agreement
without Beneficiary's approval,so long as Beneficiary is promptly notified of the identity of
Trustor's new managing member and its address for notices, and Trustor's Investor Member (as
defined in the Loan Agreement)may transfer its interest in Trustor without Beneficiary's
approval.Such replacement of the managing member shall not trigger any due on transfer
provision hereof.
(12)Trustor shall not generate at or dispose of upon or permit the generation or
disposal of upon the Property any toxic waste or hazardous substance as defined in any federal,
state or local ordinance,statute, or regulation now or in the future (collectively,"Hazardous
Substances")other than in de minimus amounts commonplace in construction, nor permit any
lien under any environmental laws to attach to the Property, but instead maintain and use the
Property and/or cause the Property to be maintained and used in accordance with applicable land
use statutes, ordinances, by-laws, codes, rules and regulations of all federal, state and municipal
authorities insofar as applicable,and Trustor shall provide Beneficiary with prompt written
notice: (i) Upon Trustor's becoming aware of any release or threat of release of any Hazardous
Substances upon, in, under, about or from the Property (whether or not caused by Trustor); (ii)
upon Trustor's receipt of any notice, including without limitation, any notice of violation, from
any federal, state municipal or other governmental agency or authority pursuant to the provision
of any of the environmental laws and (iii) upon Trustor's obtaining knowledge of any occurrence
of any expense by any governmental authority in connection with the assessment, containment or
removal of any Hazardous Substances (a) located in, upon, under or about the Property, (b)
emanating from the Property or (c) improperly stored, transported, disposed of or released by
Trustor (whether or not on, from, about or emanating from the Property).Trustor shall and
hereby agrees to indemnify, exonerate, defend (with counsel acceptable to Beneficiary) and hold
Beneficiary and Trustee harmless for, from and against any claim, liability, loss, cost, damage or
expense,including,without limitations,reasonable costs of environmental consultants,
Beneficiary's fees and expenses and reasonable attorney fees and expenses, arising out of any
breach of any of the representations, warranties,conditions and covenants of this Paragraph 12
(whether before or after foreclosure proceedings are commenced or entry for the purpose of
which foreclosure is made)and in connection with the enforcement of the aforesaid
indemnification agreement. Notwithstanding the foregoing, Beneficiary shall have the option of
conducting its defense with counsel of Beneficiary's choice (in the event that Trustor shall fail to
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take action to defend Beneficiary within a reasonable time after the assertion of any such claim),
but at the expense of Trustor as aforesaid. The indemnity provisions of this Paragraph 12 shall
survive the payment and performance of the Obligations and release of this Deed of Trust.
(13)(A)Upon default by Trustor (i) in payment of any of the Obligations when due or
(ii) in performance of any other (i.e., non-payment) agreement hereunder, and upon delivery by
Beneficiary to Trustee of demand for cure and the lapse of the applicable cure period described
in the Loan Agreement, from and after the Completion Date, each of which shall be deemed an
"Event of Default"hereunder: (a) All sums secured hereby shall become immediately due and
payable on delivery to Trustee of Beneficiary's written declaration that such sums are
immediately due and payable, and (b) Trustee at its election may proceed to sell at public auction
the Property secured hereby under (x)the Power of Sale contained herein on delivery by
Beneficiary to Trustee of written notice of election to have the Property sold (as to the realty and
fixtures) and (y) the provisions of Arizona's Uniform Commercial Code (the "AUCC")as to the
personalty constituting the Property, in each instance after the giving of notice of sale in the
manner provided by law.
(B)In addition,a default under the Construction Deed of Trust or the
Permanent Deed of Trust or the promissory notes secured thereby (the "Senior Notes")shall be
deemed an Event of Default hereunder and under the Note. In addition to Beneficiary's remedies
for a default hereunder or under the Note,Beneficiary shall have the right,in the event of
Trustor's default under the Construction Deed of Trust, the Permanent Deed of Trust or the
Senior Notes, to cure any such default, and any sum paid to the holder of the Senior Notes in so
curing shall be added to the principal balance due under the Note and become part of the
Obligations.
(C)Beneficiary shall deposit with Trustee this Deed of Trust, the Note, and all
other documents evidencing the Obligations. At a sale of the Property under the Power of Sale
contained herein any person, including Trustor, Trustee, or Beneficiary, may purchase at such
sale.Trustee shall deliver to the purchaser a Trustee's Deed, without covenant or warranty,
express or implied, to the Property so sold. After deducting costs and expenses of exercising the
Power of Sale, and of the sale, including, but not limited to, costs of evidence of title, Trustee's
fees, and Trustee's attorney fees, if any, Trustee shall apply the proceeds of the Trustee's Sale in
the manner provided by law. The purchaser at the Trustee's Sale shall be entitled to immediate
possession of the Property as against Trustor and shall have a right to the summary proceedings
to obtain possession provided in Title 12, Chapter 8, Article 4 of the Arizona Revised Statutes,
together with costs and reasonable attorney fees.
(D)In the event this instrument is construed not to be a Deed of Trust for any
reason,Beneficiary may nonetheless foreclose this instrument in the manner provided under
Arizona law for the foreclosure of a mortgage. To the extent lawful, Trustor hereby expressly
waives any right pertaining to the marshaling of assets,the administration of estates of
decedents, or other matter to defeat, reduce or affect the right of Beneficiary to sell the Property
for the collection of the Obligations (without any prior or different resort for collection), or the
right of Beneficiary to receive the proceeds of sale of the Property in preference to every other
person and claimant.
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(E)Beneficiary may sell the personal property items of the Property at public
or private sale either with or without having such collateral at the place of sale. The proceeds of
such sale, after deducting therefrom all expenses of Beneficiary in taking, storing, repairing and
selling such collateral (including reasonable attorney fees) shall be applied to the payment of the
Obligations and any surplus thereafter remaining shall be paid to the Trustor. At any such public
or private sale of the personal property or any part thereof, Beneficiary may purchase all or a
portion of such collateral offered at such sale. Trustor agrees that as to the personalty notice and
demand shall be conclusively deemed effective and reasonable if such notice is sent by certified
mail, postage prepaid to Trustor at its address set forth above (or at such other address as Trustor
may designate hereafter by written notice to Beneficiary) at least five (5) Business Days prior to
such sale or other disposition. Beneficiary shall have all rights and remedies afforded a secured
party under the AUCC or other laws of the United States and the State of Arizona applying to the
personal property collateral.
(F)Any member in Trustor may cure any Event of Default hereunder with the
same effect as if Trustor had cured the Event of Default.
(14)Trustee may resign by mailing or delivering notice thereof to Beneficiary and to
Trustor. Upon such resignation, Beneficiary may appoint a successor trustee, which appointment
shall constitute a substitution of trustee upon the mailing and recording of written notice thereof
by Beneficiary in the manner prescribed by Arizona law.
(15)This Deed of Trust applies to, inures to the benefit of, and binds all parties hereto
and their successors, and assigns. The term "Beneficiary"shall mean the owner and holder,
including a pledgee, of the Note, whether or not named as Beneficiary herein. In this Deed of
Trust,whenever the context so requires,the masculine gender includes the feminine and/or
neuter, and the singular number includes the plural.
(16)Trustee accepts this trust when this Deed of Trust,duly executed and
acknowledged, is made public record as provided by law. Trustee is not obligated to notify any
party hereto of pending sale under any other Deed of Trust or of any action or proceeding in
which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
(17)Time is of the essence of this Deed of Trust and each and every provision hereof,
and shall be governed in its interpretation and enforcement by Arizona law. This Deed of Trust
shall not be modified or amended in any manner except in a writing signed by each of Trustor
and Beneficiary.
(18)Trustor and Beneficiary agree that the trust relationship between them created by
this instrument is strictly limited to the creation and enforcement of a security interest in real and
personal property. Thus, all Trustee's duties, fiduciary or otherwise, are strictly limited to those
imposed by this document, A.R.S. § 33-801 et seq.,and Arizona reported court decisions, and no
additional duties, burdens, or responsibilities shall be placed on Trustee. In addition, Beneficiary
shall have the right to subordinate this Deed of Trust and its rights hereunder to any lease, except
that Beneficiary expressly excludes from such subordination Beneficiary's rights to insurance
proceeds and condemnation awards as set forth herein. Neither anything contained herein, or in
the Note nor the acts of the parties hereto shall be construed to create a partnership or joint
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venture between Beneficiary and Trustor.Trustor is not the agent or representative of
Beneficiary.
(19)Trustor requests that a copy of any Notice of Trustee's Sale hereunder be mailed
to Trustor at the address set forth above.All notices required hereby shall be sent to the
addresses indicated above unless such party shall have recorded a Request for Notice pursuant to
A.R.S. § 33-809(A) indicating a different address.
(20)This Deed of Trust may be executed in counterparts and when a counterpart has
been executed by each party those counterparts,taken together,shall constitute a single
document. This instrument further shall serve as a security agreement encumbering all personal
property and trade fixtures items constituting the Property consistent with the AUCC,and
Trustor hereby grants and assigns to Beneficiary a second position security interest in all of
Trustor's furniture, fixtures and equipment, inventory and all other goods at the Property and all
of Trustor's contracts, contract rights, rentals, documents and instruments with respect to the
Property and all proceeds from,increases or additions to,or substitutions for any of the
foregoing presently owned by Trustor or at any time hereafter acquired wherever located. Trustor
shall not grant any assignment for the benefit of Trustor's creditors.
(21)Trustor does not now appear,and shall not in the future appear,on any
"Government Lists,"where that term includes (i)the Specially Designated Nationals and
Blocked Persons List maintained by OFAC, (ii) any other list of terrorists, terrorist organizations
or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC as to
which Beneficiary notifies Trustor in writing is later included in "Governmental Lists", or (iii)
any similar list maintained by the United States Department of State,the United States
Department of Commerce or any other governmental authority or pursuant to any Executive
Order of the President of the United States of America as to which Beneficiary notifies Trustor in
writing is later included in "Governmental Lists." If Trustor cannot certify from time to time
upon request of Beneficiary that it does not appear in Government Lists, Trustor's failure to so
certify shall be an Event of Default without any further action by either of the parties.
(22)All notices, certificates or other communications hereunder shall be sufficiently
given and shall be deemed given when mailed by certified mail, return receipt requested, postage
prepaid, or by hand -delivery by a courier service, addressed as follows:
If to Beneficiary:
City Manager's Office
City of Apache Junction
300 E. Superstition Blvd.
Apache Junction, AZ 85119
If to Trustor:
Adams Construction and Management Co., Inc.
Attn: Gregory A. Wagner
1611 E. 2450 S., Suite lA
St. George, Utah 84790
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With copies to:
Bruce Babcock
Jones Waldo
170 S. Main St., Ste. 1500
SLC, Utah 84101-1644
Borrower's Investor Member:
Wincopin Circle LLLP, its successors and assigns
do Enterprise Community Asset Management, Inc.
11000 Broken Land Parkway, Suite 700
Columbia, MD 21044
Attn: General Counsel
Trustor's Construction Lender:
U.S. Bank
Loan No.:
Attention: Loan Administrator
Trustor's Permanent Lender:
Rocky Mountain Community Reinvestment Corporation
475 East 200 South, Suite 210
Salt Lake City, Utah 84111
The Beneficiary and other Parties listed above may, by notice given hereunder, designate
any further or different addresses to which subsequent notices,certificate or other
communication shall be sent.
(23)Trustor has informed Beneficiary that Trustor intends that the Property qualify for
an allocation of low-income housing tax credits ("Tax Credits")under Section 42 of the Internal
Revenue Code of 1986,as amended (the "Code").In order to receive an allocation of Tax
Credits, Trustor will be required to record in the real property records of Pinal County, Arizona,
an "extended low-income housing commitment" (as defined in Code Section 42(h)(6)(B)) (the
"Extended Use Agreement").The Arizona Department of Housing or applicable federal law
requires for the granting of tax credits that the lien of this Deed of Trust be subordinate to the
Extended Use Agreement, and Beneficiary shall execute a subordination agreement (the "Tax
Credit Subordination Agreement")wherein the lien of this Deed of Trust will be subordinated
to the Extended Use Agreement.The Tax Credit Subordination Agreement will: (a) provide that
if Beneficiary or its successors or assigns (collectively,the "REO Owner")acquires the
Property by foreclosure (or instrument in lieu of foreclosure, then the "extended use period" (as
defined in Code Section 42(h)(6)(D)) shall terminate, except for the obligation of the REO
Owner to comply with the limitations on evictions, termination of tenancy and increase in rents
for the three year period following the REO Owner's acquisition of the Property, as set forth in
Code Section 42(h)(6)(E)(ii);and (b)otherwise be in a form reasonably acceptable to
Beneficiary.
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(24)Section 8.4 of the loan agreement of even date herewith executed by and between
Maker as "Borrower" and Holder as "Lender" is incorporated herein, anything to the contrary
herein notwithstanding.
(25)Trustor believes that the execution,delivery and performance of this Deed of
Trust are in compliance with all applicable laws.However,in the unlikely event that any
provision of this Deed of Trust is declared void or unenforceable (or is construed as requiring
Trustee or Beneficiary to do any act in violation of any applicable laws,including any
constitutional provision, law, regulation, or city code), such provision shall be deemed severed
from this Deed of Trust and this Deed of Trust shall otherwise remain in full force and effect;
provided that this Deed of Trust shall retroactively be deemed reformed to the extent reasonably
possible in such a manner so that the refonned agreement (and any related agreements effective
as of the same date) provide essentially the same rights and benefits (economic and otherwise) to
the parties as if such severance and reformation were not required.Unless prohibited by
applicable laws,the parties further shall perform all acts and execute,acknowledge and/or
deliver all amendments, instruments and consents necessary to accomplish and to give effect to
the purposes of this Deed of Trust, as reformed.
(26)Neither Beneficiary, Trustee, nor Trustor, as the case may be, shall be considered
not to have performed its obligations under this Deed of Trust in the event of enforced delay (an
"Enforced Delay")due to causes beyond its control and without its fault or negligence or
failure to comply with applicable laws, including, but not restricted to, acts of God, fires, floods,
epidemics, pandemics, quarantine, restrictions, embargoes, labor disputes, and unusually severe
weather or the delays of subcontractors or materialmen due to such causes,acts of a public
enemy,war,terrorism or act of terror (including but not limited to bio-terrorism or eco-
terrorism), nuclear radiation, blockade, insurrection, riot, labor strike or interruption, extortion,
sabotage,or similar occurrence or any exercise of the power of eminent domain of any
governmental body on behalf of any public entity,or a declaration of moratorium or similar
hiatus (whether permanent or temporary) by any public entity directly affecting the obligations
under this Deed of Trust.In no event will Enforced Delay include any delay resulting from
unavailability for any reason of labor shortages, or the unavailability for any reason of particular
consultants,subcontractors,vendors or investors desired by Trustor in connection with the
obligations under this Deed of Trust.Trustor agrees that Trustor alone will bear all risks of delay
which are not Enforced Delay.In the event of the occurrence of any such Enforced Delay, the
time or times for performance of the obligations of the party claiming delay shall be extended for
a period of the Enforced Delay; provided, however, that the party seeking the benefit of the
provisions of this Section shall, within thirty (30) calendar days after such party knows or should
know of any such Enforced Delay, first notify the other party of the specific delay in writing and
claim the right to an extension for the period of the Enforced Delay; and provided further that in
no event shall a period of Enforced Delay exceed ninety (90) calendar days.
(27)Trustor understands and acknowledges the applicability of the American with
Disabilities Act, the Immigration Reform and Control Act of 1986 and the Drug Free Workplace
Act of 1989 to the services performed under this Deed of Trust.As required by A.R.S. § 41-
4401, Trustor hereby warrants its compliance with all federal immigration laws and regulations
that relate to its employees and A.R.S. § 23-214(A).Consultant further warrants that after hiring
an employee,Trustor will verify the employment eligibility of the employee through the E-
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Verify program.If Trustor uses any subcontractors in performance of services, subcontractors
shall warrant their compliance with all federal immigration laws and regulations that relate to its
employees and A.R.S. § 23-214(A), and subcontractors shall further warrant that after hiring an
employee, such subcontractor verifies the employment eligibility of the employee through the E-
Verify program.A breach of this warranty shall be deemed a material breach of this Deed of
Trust that is subject to penalties up to and including termination of this Deed of Trust.Trustor is
subject to a penalty of $100 per day for the first violation, $500 per day for the second violation,
and $1,000 per day for the third violation.Beneficiary at its option may terminate this Deed of
Trust after the third violation.Trustor shall not be deemed in material breach of this Deed of
Trust if Trustor and/or subcontractors establish compliance with the employment verification
provisions of Sections 274A and 274B of the federal Immigration and Nationality Act and the E-
Verify requirements contained in A.R.S.§23-214(A).Beneficiary retains the legal right to
inspect the papers of any consultant or subcontractor employee who works under this Deed of
Trust to ensure that the consultant or subcontractor is complying with the warranty.Any
inspection will be conducted after reasonable notice and at reasonable times.If state law is
amended, the parties may modify this paragraph consistent with state law.
(28)This Deed of Trust is subject to,and may be terminated by Beneficiary in
accordance with, the provisions of A.R.S. § 38-511.
(29)The parties acknowledge A.R.S.§§35-393 through 35-393.03,as amended,
which forbids public entities from contracting with consultants who engage in boycotts of the
State of Israel.Should Trustor under this Deed of Trust engage in any such boycott against the
State of Israel, this Deed of Trust is automatically terminated.Any such boycott is a material
breach of contract and will subject Trustor to monetary damages, including but not limited to,
consequential and liquidated damages.
(30)The terms and conditions of this Deed of Trust shall be governed by and
interpreted in accordance with the laws of the State of Arizona.Any action at law or in equity
brought by either party for the purpose of enforcing a right or rights provided for in this Deed of
Trust, shall be tried in a court of competent jurisdiction in Pinal County, State of Arizona.The
parties hereby waive all provisions of law providing for a change of venue in such proceeding to
any other county.In the event either party shall bring suit to enforce any term of this Deed of
Trust or to recover any damages for and on account of the breach of any term or condition in this
Deed of Trust, it is mutually agreed that the prevailing party in such action shall recover all costs
including:all litigation and appeal expenses,collection expenses, reasonable attorney fees,
necessary witness fees and court costs to be determined by the court in such action.
[SIGNATURE OF TRUSTOR APPEARS ON THE NEXT PAGE, NO FURTHER TEXT
APPEARS ON THIS PAGE]
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1450147.5
TRUSTOR:
APACHE JUNCTION VILLAS, LLC, an
Arizona limited liability company
By: AJ VILLAS MANAGEMENT, LLC, an
Arizona limited liability company
Its: Managing Member
By: Adams Construction and Management Co.,
INC., an Arizona corporation
Its: Sole Member
By:
Gregory A. Wagner /President
STATE OF ARIZONA )
) ss.
County of )
This instrument was acknowledged before me for the purposes therein contained this
day of , 2018, by , the of Adams Construction
and Management Co.,INC.,an Arizona corporation and the Sole Member of AJ VILLAS
MANAGEMENT,LLC,an Arizona limited liability company,the Managing Member of
APACHE JUNCTION VILLAS, LLC, an Arizona limited liability company.
Notary Public
My Commission Expires:
B-12
1450147.5
EXHIBIT A
Lots 1 through 47, inclusive, and Tracts A and B, of IDAHO CREEKVILLAS —PHASE
3, according to the plat of record in the office of the County Recorder of Pinal County, Arizona
recorded in Cabinet G, Slide 59.
EXCEPT all coal,oil,gas and other mineral deposits,as reserved in patent from the
United States of America.
B-13
1450147.5
Exhibit "C"
When Recorded, Mail to: Bruce Babcock
Jones Waldo
170 S. Main Street, Suite 1500
Salt Lake City, Utah 84101
ABSOLUTE BLANKET Assignment of Rents and Leases
THIS ABSOLUTE BLANKET ASSIGNMENT OF RENTS AND LEASES (this
"Assignment")dated as of ,2018,is made by APACHE JUNCTION
VILLAS, LLC, an Arizona limited liability company, whose mailing address is 235 West Tepee
Street,Apache Junction,Arizona 85120 (the "Assignor"),in favor of CITY OF APACHE
JUNCTION, an Arizona municipal corporation, whose mailing address is 300 E.Superstition
Boulevard,Apache Junction,Arizona 85119 (together with any successors and assigns,
"Lender").All capitalized terms not defined herein shall have the meanings ascribed to them in
the Loan Agreement of even date herewith executed by Lender and Assignor as "Borrower" (the
"Loan Agreement").
WITNESSETH:
WHEREAS,Lender has agreed to make a loan to Assignor (also referred to as the
"Borrower"),in the maximum principal amount of THIRTY FOUR THOUSAND DOLLARS
($34,000.00) (the "Loan"),which Loan is evidenced by a Loan Agreement and a Promissory
Note of even date herewith (as amended, substituted, restated or modified from time to time, the
"Note")and which Loan is secured by, among other things, the Deed of Trust, Assignment of
Rents and Security Agreement (as amended, substituted, restated or modified from time to time,
collectively, the "Deed of Trust")made by Assignor in favor of Lender, encumbering, among
other things, certain real property commonly located at 235 West Tepee Street, Apache Junction,
Arizona, as more fully described on Exhibit A attached hereto and incorporated by reference
herein,together with the improvements,fixtures and equipment thereon (collectively,the
"Property"),together with other documents and instruments; and
WHEREAS,as a condition precedent to the Lender extending any financial
accommodation to Borrower pursuant to the Note or otherwise,Lender has requested that
Assignor execute and deliver this Assignment to Lender, and that any loan or other financial
accommodation made by Lender to Borrower, as the case may be, under the Loan Agreement or
otherwise shall be in reliance upon this Assignment.
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1450147.5
GRANTING CLAUSE
For full and fair consideration,the receipt and sufficiency whereof are hereby
acknowledged,Assignor does hereby grant,assign,and transfer to Lender all right, title and
interest of the Assignor in, under or pursuant to any and all present or future leases or subleases,
whether written or oral,or any lettings of possession of,or any agreements for the use or
occupancy of, the whole or any part of the real estate and Property hereinafter described which
the Assignor may have heretofore made or agreed to or may hereafter make or agree to, or which
may be made or agreed to by the Lender under the powers hereinafter granted, including all
amendments and supplements to and renewals thereof at any time made (collectively,the
"Leases" and each is individually a "Lease"), relating to the Property including, without limiting
the generality of the foregoing,all right,title and interest of Assignor in and to all the rents
(whether fixed or contingent),earnings,renewal rents and all other sums due or which may
hereafter become due under or by virtue of the Leases and all rights under or against guarantors
of the obligations of lessees and obligors under the Leases.
THIS ASSIGNMENT OF LEASES AND RENTS IS GIVEN TO SECURE:
(i)The payment and performance in full of the Obligations,Loan Agreement)(ii)the
performance of all obligations, covenants, promises and agreements of the Assignor contained in
the Loan Agreement, or any agreements setting forth terms and conditions applicable to the Loan
or providing collateral security therefor, (iii) the payment of all expenses and charges, legal or
otherwise, paid or incurred by Lender in realizing upon or protecting the indebtedness referred to
in the foregoing clauses (i), (ii) and (iii) or any security therefor, including this Assignment (the
Deed of Trust, the other Loan Documents and the other indebtedness, obligations and liabilities
referred to in clauses (i),(ii)and (iii)above being hereinafter collectively referred to as the
"indebtedness hereby secured").
ASSIGNOR HEREBY COVENANTS,AGREES,REPRESENTS AND WARRANTS
AS FOLLOWS:
I.Upon the occurrence of any Event of Default as defined in the Loan Agreement,
and subject to the rights of superior lienholders, the Assignor does hereby irrevocably constitute
and appoint Lender the true and lawful attorney of the Assignor with full power of substitution
for Assignor and in Assignor's name, place and stead to ask, demand, collect,receive, receipt
for, sue for, compound and give aquittances for any and all sums due or to become due under any
Lease, with full power to settle, adjust or compromise any claim thereunder as fully as the
Assignor could do, and to endorse the name of the Assignor on all commercial paper given in
payment or in part payment thereof, and in Lender's discretion to file any claim or take any other
action or proceeding, either in Lender's name or in the name of the Assignor or otherwise, which
Lender may deem necessary or appropriate to protect and preserve the right, title and interest of
Lender in and to such sums and the security intended to be afforded hereby.
2.The Assignor warrants to Lender that the Assignor has good right to make this
Assignment and that the rights, rents and other sums due or which may hereafter become due and
which are intended to be assigned hereunder are not presently alienated, assigned, or pledged to
any other person or entity except as disclosed in the Loan Agreement.
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1450147.5
3.This Assignment includes and establishes a present, absolute and primary transfer
and assignment of all rents, earnings, income, issues and profits from the Leases, but so long as
no Event of Default has occurred under the terms as set forth in the Note, the Deed of Trust, or
any other Loan Documents, the Assignor shall have the right and license to collect, use and enjoy
all rents and other sums due or to become due by virtue of any Lease as they respectively
become due, but not more than thirty (30) calendar days in advance.
4.The Assignor hereby irrevocably consents to and authorizes and directs that the
tenant or other obligor under any Lease upon demand and notice from Lender of Lender's right
to receive rents and other sums hereunder, shall pay such rents and other sums to Lender after an
Event of Default without any obligation on the part of such tenant or other obligor to determine
the actual existence of any default or event claimed by Lender as the basis for Lender's right to
receive such rents or other sums and notwithstanding any notice from or claim of the Assignor to
the contrary. The Assignor hereby waives any right or claim against any tenant or other obligor
for any such rents and other sums paid by tenant or other obligor to Lender.
5.Without limiting any legal rights of Lender as the absolute assignee of the rents,
issues and profits of the Leases and in furtherance thereof, Assignor agrees that after an Event of
Default, whether before or after the Loan is declared due in accordance with its terms, the Lender
may, at its option, (i) take actual possession of the Property hereinabove described, or of any part
thereof, personally or by agent or attorney, as for condition broken, and without force and with
process of law,enter upon, take and maintain possession of all or any part of said Property,
together with all documents, books, records, papers and accounts relating thereto, and exclude
the Assignor,its agents or servants,therefrom and hold,operate,manage and control the
Property, and at the expense of the Assignor, from time to time, cause to be made all necessary
or proper repairs,renewals,replacements,useful alterations,additions,betterments and
improvements to the Property as may seem judicious, and pay taxes, assessments and prior or
proper charges on the Property, or any part thereof, and insure and reinsure the same, and lease
the Property in such parcels and for such times and on such terms as Lender may deem fit and
subject to the terms of the Declaration of Affirmative Land Use and Restrictive Covenants
recorded against the Property,including leases for terms expiring beyond the maturity of the
indebtedness evidenced by the Note, and cancel any lease or sublease for any cause or on any
ground which would entitle the Assignor to cancel the same and in every such case have the right
to manage and operate the said Property and to carry on the business thereof as Lender shall
deem proper or (ii) with or without taking possession of the Property, Lender may proceed to
enforce the Leases and collect all sums due or to become due thereunder and by so doing, Lender
shall not be deemed a mortgagee in possession nor to have assumed or become responsible or
liable for any obligations of Assignor arising thereunder or in respect thereof.
6.Any sums received by Lender under or by virtue of this Assignment shall be
applied to the payment of or on account of the following in such order and manner as Lender
may elect:
(a)to the payment of all proper charges and expenses, including the just and
reasonable compensation for the services of Lender, its attorneys, agents, clerks, servants
and others employed in connection with the operation, management and control of the
Property and the conduct of the business thereof;
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1450147.5
(b)to the payment of any sum secured by a lien or encumbrance upon the
Property;
(c)to the cost of completing any improvements being constructed on or about
the Property at the time of taking over the Leases; and
(d)to the reduction of the indebtedness hereby secured, whether or not the
same may then be due or be otherwise adequately secured.
The manner of application of such sums and the items which shall be credited or paid out of
same shall be within the sole discretion of Lender and nothing contained herein shall obligate
Lender to use any such sums for a purpose other than reducing the indebtedness hereby secured
unless it shall elect to do so. Lender shall be subrogated to any lien discharged out of the rents,
income and profits of the Property.
7.Assignor hereby further covenants that the Assignor will, upon request of Lender,
execute and deliver such further instruments and do and perform such other acts and things as
Lender may reasonably deem necessary or appropriate to more effectively vest in and secure to
Lender the rights and rents which are intended to be assigned to Lender hereunder.Assignor
irrevocably waives any right it now or hereafter may have to offset any claim or liability owing
from it to any obligor on a Lease against sums due or to become due from such obligor under a
Lease.
8.Assignor covenants and agrees to observe and perform all of the obligations
imposed on it under the Leases and not to do or permit to be done anything to impair the security
thereof, not to further assign or encumber its rights under the Leases or its rights to the rents or
other sums due or to become due thereunder and not suffer or permit any of the Leases to be
subordinated to any other liens or encumbrances whatsoever except as disclosed in the Loan
Agreement, any such subordination to be null and void unless done with the written consent of
Lender. Assignor further covenants and agrees that it will, at the request of Lender, submit the
executed originals of all Leases or true and correct copies thereof and of amendments thereto to
Lender.
9.The acceptance by Lender of this Assignment,with all of the rights,powers,
privileges and authority so created, shall not, prior to entry upon and taking of actual physical
possession of the Property by Lender, be deemed or construed to constitute Lender a mortgagee
in possession nor impose any obligation whatsoever upon Lender, it being understood and agreed
that Lender does not hereby undertake to perform or discharge any obligation or liability of the
landlord under any Leases or under or by reason of this Assignment.Lender shall have no
liability to Assignor or anyone for any action taken or omitted to be taken by it hereunder, except
for its willful misconduct. Subject to the limitation imposed by the preceding sentence, should
Lender incur any liability, loss or damage under or by reason of this Assignment or for any
action taken by Lender hereunder, or in defense against any claim or demand whatsoever which
may be asserted against Lender arising out of any Lease, the amount thereof, including costs,
expenses and reasonable attorney fees, together with interest thereon at the rate applicable to the
Loan at the time of incurrence (or if the Loan has been paid in full at the time of incurrence, then
at the rate applicable to the Loan at the time of such payment in full), shall be secured by this
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1450147.5
Assignment and by the Deed of Trust, and the Assignor shall reimburse the Assignee therefore
immediately upon demand.Assignor's obligation to so pay shall survive payment of the
indebtedness hereby secured and the release of this Assignment.
10.The rights and remedies of Lender hereunder are cumulative and are not
secondary to or in lieu of, but are in addition to any rights or remedies which Lender shall have
under the Deed of Trust or any other instrument or document or under applicable law and the
exercise by Lender of any rights and remedies herein contained shall not be deemed a waiver of
any other rights or remedies of Lender, whether arising under the Deed of Trust or otherwise,
each and all of which may be exercised whenever Lender deems it in its interest to do so. The
rights and remedies of Lender may be exercised from time to time and as often as such exercise
is deemed expedient and the failure of Lender to enforce any of the terms,provisions and
conditions of this Assignment for any period of time, at any time or times, shall not be construed
or deemed to be a waiver of any rights under the terms hereof.
1 1 .The right of Lender to collect and receive the rents assigned hereunder or to
exercise any of the rights or powers herein granted to Lender shall, to the extent not prohibited
by law, extend also to the period from and after the filing of any suit to foreclose the lien of the
Deed of Trust, including any period allowed by law for the redemption of the Property after any
exercise by Lender of its power of sale.
12.This Assignment shall be assignable by Lender and all of the terms and provisions
hereof shall be binding upon and inure to the benefit of the respective legal representatives,
successors and assigns of each of the parties hereto. All provisions hereof are severable and if
any provisions hereof shall be invalid or unenforceable, the validity and enforceability of the
remaining provisions hereof shall in no way be affected thereby
1 3 .There shall be no merger of interest or estate created by this Assignment with any
other interest or estate in the Property at any time held by or for the benefit of Lender in any
capacity, without the written consent of Lender.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE; NO FURTHER TEXT
APPEARS ON THIS PAGE]
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1450147.5
LENDER:
CITY OF APACHE JUNCTION, an Arizona
municipal corporation
By:
Name: Bryant Powell
Its:City Manager
ASSIGNOR:
APACHE JUNCTION VILLAS, LLC, an Arizona
limited liability company
By: AJ VILLAS MANAGEMENT, LLC, an
Arizona limited liability company
Its: Managing Member
By: Adams Construction and Management Co.,
INC., an Arizona corporation
Its: Sole Member
By:
Gregory A. Wagner
President
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1450147.5
STATE OF ARIZONA
County of
)
) ss.
)
This instrument was acknowledged before me for the purposes therein contained this
day of , 2018, by Gregory A. Wagner, the President of Adams Construction and
Management Co.,INC.,an Arizona corporation and the Sole Member of AJ VILLAS
MANAGEMENT,LLC,an Arizona limited liability company,the Managing Member of
APACHE JUNCTION VILLAS, LLC. an Arizona limited liability company.
My Commission Expires:
STATE OF ARIZONA
County of Pinal
)
) ss.
)
Notary Public
This instrument was acknowledged before me for the purposes therein contained this
day of ,2018,by Bryant Powell,the City Manager of CITY OF APACHE
JUNCTION, an Arizona municipal corporation.
Notary Public
My Commission Expires:
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1450147.5
EXHIBIT A
LEGAL DESCRIPTION OF APACHE JUNCTION VILLAS
Lots 1 through 47, inclusive, and Tracts A and B, of IDAHO CREEKVILLAS —PHASE
3, according to the plat of record in the office of the County Recorder of Final County, Arizona
recorded in Cabinet G, Slide 59.
EXCEPT all coal,oil,gas and other mineral deposits,as reserved in patent from the
United States of America.
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Exhibit "D"
Closing Letter
(to Come)
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1450147.5
Exhibit "E"
ENVIRONMENTAL CERTIFICATION AND AGREEMENT
THIS CERTIFICATION AND AGREEMENT REGARDING HAZARDOUS SUBSTANCES
(this "Agreement")is made as of the day of ,2018, by and between APACHE
JUNCTION VILLAS, LLC, an Arizona limited liability company ("Borrower")and CITY OF
APACHE JUNCTION, an Arizona municipal corporation ("Lender").
I.RECITALS
1.1 Borrower desires to obtain a loan from Lender in the amount of Thirty Four
Thousand and No/100 Dollars ($34,000.00),(the "Loan")to be secured by a Deed of Trust
encumbering certain real property located in Final County, Arizona which is more specifically
described in the Loan Documents (the "Property").
1.2 Lender is willing to make the Loan to Borrower,under certain terms and
conditions, which include the execution and delivery of this Agreement and the Loan Documents
(as defined below).
II.DEFINITIONS
As used herein, the following terms shall have the meanings specified below:
2.1 "Environmental Law or Laws"shall mean any federal,state or local statute,
common law duty, ordinance or regulation, (including any amendments thereto), pertaining to
health, industrial hygiene or the environment, including, without limitation, the Comprehensive
Environmental Response,Compensation and Liability Act,42 U.S.C.Section 9601,et seq.
("CERCLA"); the Resource Conservation and Recovery Act, 42 U.S.C.Section 6901,et seq.
("RCRA"); the Superfimd Amendments and Reauthorization Act of 1986 (Pub.L. No. 99-499,
100 Stat.1613 (1986)) and the Arizona Environmental Quality Act, Title 49, Arizona Revised
Statutes,and all rules and regulations adopted and guidelines promulgated pursuant to the
foregoing.
2.2 "Hazardous Substances"shall include:
(a)Those substances included within the definitions of "hazardous
substances," "pollutants or contaminants," "hazardous materials," "toxic
substances,"or "solid waste"in CERCLA,RCRA,and the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., and in the
lists and regulations promulgated pursuant thereto;
(b)Those substances defined as "hazardous substances" in A.R.S. Section 49-
201 and in rules adopted or guidelines promulgated pursuant thereto; and
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1450147.5
(c)All other substances,materials and waste that are,or that become,
regulated under,or that are classified as hazardous or toxic under,any
Environmental Law.
(d)For purposes of the Leases,Permitted Substances are not Hazardous
Substances.
2.3 "Release"shall mean any releasing, spilling, leaking, pumping, pouring, emitting,
emptying,discharging,injecting,escaping,leaching,dumping,or disposing (including the
abandonment or discarding of barrels,containers and other closed receptacles containing any
Hazardous Substance).
2.4 "Loan"shall mean the extension of credit, of even date herewith, in the amount
of Thirty Four Thousand and No/100 Dollars ($34,000.00), between Borrower and Lender.
2.5 "Loan Documents"shall include any documents executed in connection with the
Loan, including but not limited to the Note and the Deed of Trust, Assignment of Rents and
Security Agreement between Borrower and Lender, all of even date herewith.
2.6 "Termination"shall mean the date on which the loan is satisfied or if the Loan is
not satisfied, the date on which Borrower is divested of title through foreclosure or delivery of a
deed in lieu thereof.
2.7 "Environmental Reports"means all Phase I,a lead -based paint and asbestos
survey and United States Department of Housing and Urban Development ("HUD")
Environmental Review Reports prepared in connection with or as a condition of the Loan
Documents.
2.8 "Permitted Substances"are substances that, while inherently deemed hazardous
or toxic above thresholds regulated by Government Authority and in the circumstances are
allowed since they do not exceed those regulatory thresholds in view of their use or storage.
III.BORROWER'S REPRESENTATIONS AND WARRANTIES
Borrower certifies, represents and warrants to the best of its knowledge and except as
previously disclosed in the Environmental Reports that:
3.1.Neither the Property nor any improvements, fixtures or equipment, if any, thereon
is in violation of any Environmental Law.
3.2.Borrower is not in violation of any Environmental Law with respect to the
Property or otherwise.
3.3.Neither Borrower nor the Property is subject to any threatened or existing
investigation by any federal,state or local governmental authority with regard to any
Environmental Law.
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1450147.5
3.4.Neither the Property nor Borrower is subject to any threatened or existing lawsuit
by any federal, state, or local governmental authority or by any private party with regard to any
Environmental Law.
3.5.Neither Borrower nor the Property is subject to any removal or remedial
obligation, or any lien under or in connection with any Environmental Law.
3.6.Borrower is not required by any Environmental Law to obtain any permit or
license to construct or use any existing or contemplated improvements,fixtures or equipment
related to the Property or any business conducted or intended to be conducted on the Property.
3.7.Borrower has not caused or permitted the Release of,and Borrower has no
knowledge of the Release or presence of, any Hazardous Substance on the Property in excess of
the reportable quantities prescribed by CERCLA or the Arizona Environmental Quality Act, or
the migration of any Hazardous Substance from or to any other property adjacent to or in the
vicinity of the Property. Borrower's intended use of the Property will not result in the Release of
any Hazardous Substance on the Property.
IV.RIGHTS AND OBLIGATIONS
4.1.Borrower shall not violate any Environmental Law in connection with its
possession or use of the Property prior to Termination.
4.2.Borrower shall promptly notify Lender in writing if Hazardous Substances are to
be stored,generated,treated or transported on the Property for any period of time prior to
Termination. Such notice shall include a detailed description of the business, which requires the
storage or use of Hazardous Substances, the specific Hazardous Substances involved, and any
licenses or permits under any Environmental Law which have been obtained in connection with
the operations.
4.3.Borrower states that the Property is or is intended for use as a site for apartment
buildings ("Project"), and shall notify Lender in writing of any material change in the nature of
the contemplated or actual use of the Project prior to Termination.
4.4.Borrower shall not permit the Release of any Hazardous Substance on the
Property prior to Termination.
4.5.Borrower shall provide Lender with copies of any license or permit obtained by
Borrower pursuant to any Environmental Law with respect to the Property prior to Termination.
4.6.Borrower will require any parties taking possession of portions of the Project
prior to Termination (collectively "Lessees") to agree in writing to at least the following terms
and conditions prior to Termination:
(a)Lessees will not violate any Environmental Law with respect to the
Property in connection with its possession or use of the Property; and
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1450147.5
(b)Lessees will not permit the Release of any Hazardous Substance on the
Property (except for Pen-nitted Substances).
4.7.Borrower shall not permit any environmental liens to be placed on any portion of
the Property prior to Termination.
4.8.Borrower shall not permit any third party to use, generate, manufacture, produce,
store or release,any Hazardous Substance on, under or about the Property, or transport such
Hazardous Substances to or from the Property prior to Termination, except in compliance with
all applicable Environmental Laws.
4.9.
following:
Prior to Termination, Borrower shall give prompt written notice to Lender of the
(a)Any threatened or pending proceeding, lawsuit, investigation or settlement
by or with any private party or federal, state or local governmental authority with respect
to the presence of any Hazardous Substance on the Property or the migration thereof to or
from any other property in the vicinity of the Property;
(b)All claims made or threatened by any third party against Borrower or the
Property relating to any loss or injury resulting from any Hazardous Substance;
(c)Borrower's discovery of any occurrence or condition on the Property or
any property adjoining or in the vicinity of the Property which could cause the Property
or any part thereof to be subject to any restrictions on its ownership,occupancy,
transferability or use under any Environmental Law or which, due to any environmental
condition could result in any liability, cost, expense or loss to any owner, occupant or
operator of the Property, or in loss or diminution in the value to the Property; and
(d)Borrower's discovery of a violation of Environmental Law that Borrower
is legally required to report to any federal, state or local governmental authority or the
discovery of a Release of a Hazardous Substance in sufficient quantities to be reportable
under CERCLA or the Arizona Environmental Quality Act to any federal, state or local
governmental authority.
4.10.Borrower shall conduct and complete any and all investigations,studies,
sampling, testing and all remedial, removal, and other actions necessary to clean up and remove
all Hazardous Substances in, on, from or affecting the Property, whether currently existing or
occurring prior to Termination:
(a)In accordance with applicable Environmental Laws;
(b)To the reasonable satisfaction of Lender and only as provided in the Loan
Documents; and
(c)In accordance with the orders and directives of all governmental
authorities.
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1450147.5
4.11.In the event Lender obtains information regarding an environmental problem on
the Property, Lender shall give written notice and demand on Borrower for immediate action. If
Borrower fails to take action within 30 calendar days from the date of the written notification,
Lender shall have the authority to take any of the following actions:
(a)to enter onto the Property at any time and from time to time for the
purpose of assessing whether environmental conditions exist which could result in any
liability, cost, expense or loss to any owner, occupant or operator of the Property, or in
loss or diminution in the value of the security to Lender. Lender agents or independent
contractors may so enter onto the Property at any time, upon reasonable notice, and under
reasonable conditions established by Borrower which do not impede the ability of
Lender's agents or independent contractors to perform such assessment(s) as they deem
necessary; provided, however, that in the event of a default by Borrower hereunder or
under the Loan Documents, the failure or refusal of Borrower to cooperate in Lender's
assessment of the Property shall not prevent Lender's agents or independent contractors
from having reasonable access to the Property for the purpose of making such an
assessment.
(b)through its agents or independent contractors,to conduct such tests for
environmental damage and/or the presence of Hazardous Substances on the Property as
Lender's agents or independent contractors reasonably deem necessary,including,
without limitation,soil drilling and sampling of air, soil, water, groundwater, building
materials, or other materials located on or near the Property. Borrower agrees to assist
Lender's agents or independent contractors in assessing the Property by providing
historical and operational information regarding the Property as requested, and by making
personnel with knowledge of such matters available for meetings with Lender's agents or
independent contractors.Any reasonable cost incurred by Lender in causing any
assessment to be performed shall be secured by the Loan Documents and be payable by
Borrower on demand.Lender shall make the results of any assessment available to
Borrower.Borrower acknowledges that the right of Lender to assess environmental
conditions given under this paragraph 4.11 is granted solely to protect Lender's interest,
and does not create any obligation of Lender to protect Borrower from liability under any
Environmental Law.
4.12.Lender shall have the right, but not the obligation, prior to Termination, without
in any way limiting Lender's other rights and remedies under the Loan Documents, to enter onto
the Property or to take such other actions as it deems necessary to clean up, remove, resolve, or
minimize the impact of, or otherwise deal with (provided Borrower has failed to take such
actions within a reasonable time after written notice from Lender) any Hazardous Substances on
or affecting the Property following a receipt of any notice from any person or entity asserting the
existence of any Hazardous Substances pertaining to the Property or any part thereof that, if true,
could result in an order, notice, suit, imposition of a lien on the Property, or other action that in
Lender's sole opinion,could jeopardize Lender's security under the Loan Documents.All
reasonable costs and expenses paid or incurred by Lender, including but not limited to, attorney
fees and expenses, in the exercise of any such rights shall be secured by the Loan Documents and
shall be payable by Borrower upon demand.
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4.13.Lender shall have the right at any time to appear in and to participate in, as a party
if it so elects,and be represented by counsel of its own choice in,any action or proceeding
initiated in connection with any Environmental Law that affects the Property.
4.14.Borrower agrees to indemnify and hold harmless Lender,any successor to
Lender's interest in the Property, any purchaser of the Property upon foreclosure by Lender of its
interest in the Property (or upon any action in lieu of foreclosure), and all directors, officers,
employees and agents of all of the foregoing,from and against all claims,costs,expenses,
actions,suits, proceedings,losses,damages and liabilities of any kind whatsoever,except as
resulting from any negligence of Lender or any purchaser of the Property,including but not
limited to attorney fees and expenses, directly or indirectly arising out of or attributable to any
activity involving Hazardous Substances into,on,under or from the property,which activity
commenced from and after the date of Borrower's ownership of the property and continuing until
Borrower sells the Property to an unrelated third party purchaser, or any breach of any Borrower
warranties, representations and covenants contained herein.
V.SURVIVAL OF INDEMNIFICATION
The covenants, warranties, representations and indemnity contained herein shall continue
in full force and effect and shall survive: (a) the payment and performance of the Loan, (b) the
release of any lien or encumbrance on the Property securing the Loan,(c)any foreclosure
whether judicial or non -judicial, (or action in lieu of foreclosure) of any lien or encumbrance on
the Property securing the Loan, (d) any delivery of a deed in lieu of foreclosure to Lender or any
successor of Lender,as holder of a security interest in the Property or indebtedness secured
thereby, or as an owner of the Property following foreclosure or the delivery of a deed in lieu of
foreclosure, (e) the exercise by Lender of any other remedy under any document securing the
Loan, and (0 any suit, proceeding or judgment against Borrower by Lender hereon.
VI.GENERAL PROVISIONS
6.1 The indemnity contained in this Agreement shall not be subject to any
nonrecourse or other limitation of liability provision contained in any document or instrument
executed and delivered in connection with the Loan and the liability of Borrower hereunder shall
not be limited by any such nonrecourse or similar limitation of liability provision.
6.2 If any material warranty, representation or statement contained herein shall be or
shall prove to have been false when made or if Borrower shall fail or neglect to perform or
observe any of the terms, provisions or covenants contained herein, the same shall constitute an
Event of Default under the Loan and Loan Documents that shall entitle Lender to pursue any and
all remedies provided for such default.
6.3.Lender shall not be deemed to have waived any delay or omission on the part of
Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver
by any party of a provision of this Agreement shall not constitute a waiver of or prejudice the
party's right otherwise to demand strict compliance with that provision or any other provision.
No prior waiver by Lender,nor any course of dealing between Lender and Borrower,shall
constitute a waiver of any of Lender's rights or any of Borrower's obligations as to any future
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transactions. Whenever consent by Lender is required in this Agreement, the granting of such
consent by Lender in any instance shall not constitute continuing consent to subsequent instances
where such consent is required. Borrower hereby waives notice of acceptance of this Agreement
by Lender.
6.4 Except as otherwise provided in Paragraphs 4.14 and V of this Agreement, the
warranties, representations and rights provided for in this Certification and Agreement are for the
benefit of Lender and Borrower only. There are no third party beneficiaries to this Agreement.
6.5 This Certification and Agreement shall be binding upon Borrower and its
successors and assigns and shall inure to the benefit of Lender and its successors and assigns.
6.6 No promise, representation, warranty or agreement made subsequent to the date
hereof by any party hereto, and no revocation or waiver, partial or otherwise, or amendment or
modification of, this Agreement shall be effective unless the same shall be in writing and signed
by the party to be charged therewith.
6.7 Any notice required or permitted in connection herewith shall be given in the
manner provided for in the Loan Documents executed and delivered in connection with the
Loan.
6.8 The terms and conditions of this Agreement shall be governed by and interpreted
in accordance with the laws of the State of Arizona.Any action at law or in equity brought by
either party for the purpose of enforcing a right or rights provided for in this Agreement, shall be
tried in a court of competent jurisdiction in Pinal County, State of Arizona.The parties hereby
waive all provisions of law providing for a change of venue in such proceeding- to any other
county.In the event either party shall bring suit to enforce any term of this Agreement or to
recover any damages for and on account of the breach of any term or condition in this
Agreement, it is mutually agreed that the prevailing party in such action shall recover all costs
including:all litigation and appeal expenses,collection expenses,reasonable attorney fees,
necessary witness fees and court costs to be determined by the court in such action.
6.9 In this Agreement,whenever the context so requires,the masculine gender
includes the feminine and/or neuter and the singular number includes the plural.If Borrower
consists of more than one person or entity, the obligation of each person or entity hereunder shall
be joint and several.
[SIGNATURE OF BORROWER IS ON THE NEXT PAGE; NO FURTHER TEXT
APPEARS ON THIS PAGE]
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1450147.5
IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date
first hereinabove written.
STATE OF ARIZONA
County of
)
) ss.
)
BORROWER:
APACHE JUNCTION VILLAS, LLC, an Arizona
limited liability company
By: AJ VILLAS MANAGEMENT, LLC, an
Arizona limited liability company
Its: Managing Member
By: Adams Construction and Management Co.,
INC., an Arizona corporation
Its: Sole Member
By:
Gregory A. Wagner
President
This instrument was acknowledged before me for the purposes therein contained this
day of , 2018, by Gregory A. Wagner, the President of Adams Construction and
Management Co.,INC.,an Arizona corporation and the Sole Member of AJ VILLAS
MANAGEMENT,LLC,an Arizona limited liability company,the Managing Member of
APACHE JUNCTION VILLAS, LLC, an Arizona limited liability company.
Notary Public
My Commission Expires:
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1450147.5
LENDER:
CITY OF APACHE JUNCTION
a municipal corporation
By:
Name: Bryant Powell
Its: City Manager
STATE OF ARIZONA )
) ss.
County of Pinal )
This instrument was acknowledged before me for the purposes therein contained this
day of , 2018, by Bryant Powell, the City Manager of the CITY OF APACHE
JUNCTION, an Arizona municipal corporation.
Notary Public
My Commission Expires:
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1450147.5
Exhibit "F"
LEGAL DESCRIPTION
Lots 1 through 47, inclusive, and Tracts A and B, of IDAHO CREEK VILLAS —PHASE
3, according to the plat of record in the office of the County Recorder of Pinal County, Arizona
recorded in Cabinet G, Slide 59.
EXCEPT all coal,oil,gas and other mineral deposits,as reserved in patent from the
United States of America.
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1450147.5