ENVIRONMENTAL ESCROW AND SECURITY AGREEMENT
Loan No. 1700020098
Property: Old Orchard Shopping Center
Santa Clarita (Valencia), California
THIS ENVIRONMENTAL ESCROW AND SECURITY AGREEMENT ("Agreement") is made
as of September 23, 1997, by and between CONCORD MILESTONE PLUS, L.P., a
Delaware limited partnership ("Borrower"), and WESTCO REAL ESTATE FINANCE CORP.,
a California corporation ("Lender").
A. Borrower has executed a Note of even date in the principal
amount of $8,445,000 payable to the order of Lender (the "Note"); and
B. The Note is secured by the Loan Documents (as defined in
the Note); and
C. Lender requires, as a condition precedent to Lender's acceptance of
the Note, that Borrower deposit with Lender certain funds, to be held, invested,
released and used as provided in this Agreement to reimburse Borrower for the
cost of providing the Environmental Improvements as hereinafter described.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained in this Agreement and other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
1. The Deposit. Concurrently with its execution of this Agreement,
Borrower has deposited with Lender the cash sum of $45,000 (such funds and all
other funds from time to time deposited with Lender in connection with this
Agreement are hereinafter collectively referred to as the "Funds"). The Funds
shall be held, invested and released by Lender, and used by Borrower, in
accordance with the terms and conditions of this Agreement. Lender (or a
designated representative of Lender) shall have the sole right to make
withdrawal of the Funds.
2. Security Interest; Deposit of Funds. In order to secure Borrower's
repayment of the Note and performance of all other covenants and conditions
required on the part of Borrower to be observed or performed hereunder and under
the Loan Documents, Borrower hereby pledges to and grants to Lender a continuing
security interest in the Funds. Until expended or applied as herein provided,
the Funds shall constitute additional security for the Debt (as defined in the
Note). The Funds shall not constitute a trust fund and may be commingled with
other monies held by Lender. Unless otherwise required by applicable law, no
earnings or interest on the Funds shall be payable to Borrower even if the
Lender or its servicer is paid a fee and/or receives interest or other income in
connection with the deposit or placement of such fund (in which event such
income shall be reported under Lender's or its servicer's tax identification
number, as applicable).
September 23, 1997
LOS01:48425.3
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3. Performance of Improvements.
(a) Borrower shall construct, erect, undertake and complete or
cause to be constructed, erected, undertaken or completed all of the work set
forth on Schedule 1 hereto (the "Environmental Improvements") no later than the
date set forth opposite such Environmental Improvements.
(b) Borrower shall pay for and obtain or cause to be paid for
and obtained all permits, licenses and approvals required by all applicable laws
with regard to the Environmental Improvements, whether necessary for
commencement, completion, use or otherwise.
(c) Borrower shall perform or cause to be performed all work
in connection with the Environmental Improvements in a good and workmanlike
manner, in compliance with all applicable laws (including, without limitation,
any and all environmental laws and laws for the handicapped and/or disabled) and
with the plans and specifications approved (in writing) by Lender covering the
same, which performance by Borrower shall be without regard to the sufficiency
of the Funds.
(d) Borrower covenants and agrees that the Environmental
Improvements shall be constructed, installed or completed, as applicable, free
and clear of any and all liens (including mechanic's, materialman's or other
liens), claims and encumbrances whatsoever subject to Borrower's right to
contest as specified in the Mortgage (as defined in the Note).
Upon the occurrence of an Event of Default or in the event of Borrower's breach
of any provision of this Agreement, Lender may terminate this Agreement and
retain all Funds then being held pursuant to this Agreement and apply such Funds
in such order and in such amounts as Lender shall elect, in its sole and
absolute discretion: (i) to payment of the indebtedness evidenced by the Note
and the Loan Documents, and/or (ii) in order to proceed under existing contracts
or enter into contracts with third parties to make or complete the Environmental
Improvements. Lender shall have the right to enter onto the Mortgaged Property
(as defined in the Mortgage) and perform any and all work and labor necessary to
make or complete the Environmental Improvements and/or employ watchmen to
protect the Mortgaged Property from damage. All sums so expended by Lender shall
be construed to have been paid to Borrower and shall be secured by the Mortgage.
Borrower hereby constitutes and appoints Lender its true and lawful
attorney-in-fact with full power of substitution to complete or undertake the
Environmental Improvements in the name of the Borrower. This power of attorney
shall be construed to be a power coupled with an interest which cannot be
revoked.
September 23, 1997
LOS01:48425.3
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4. Use of Funds. Except as otherwise expressly set forth herein, the
Funds shall be used to reimburse Borrower for the reasonable costs and expenses
incurred by Borrower in completing the Environmental Improvements up to the
amount of the Funds. Borrower shall be responsible for the payment (from sources
other than the Funds) of any and all costs and expenses in completing the
Environmental Improvements in excess of the amount of the Funds. At such time as
Lender determines (in its sole discretion) that the remediation described in
Schedule 1 has been completed and regulatory site closure has been obtained, or
the determination has been made that such remediation is not required, all as
described in Schedule 1, then any remaining Funds shall be released to Borrower.
5. Release of Funds. The following condition shall apply to any release
of funds to Borrower under Section 4 above:
(a) Lender, upon receipt of a draw request specifying the
amount requested and the Environmental Improvements to be paid for with the
requested Funds in the form attached hereto as Exhibit "A" ("Request for
Release") shall, subject to the inspection rights and objection rights contained
herein, release to Borrower the Funds requested in the Request For Release;
(b) Borrower shall provide evidence satisfactory to Lender
(including, without limitation, access to the Mortgaged Property to Lender and
an architect and/or engineer specified by Lender for the purpose of an
inspection of work done, at Borrower's expense, if reasonably requested by
Lender) that the Environmental Improvements for which the Funds are being
requested have been completed in a good and workmanlike manner and in accordance
with this Agreement and with all applicable laws;
(c) Borrower shall submit to Lender copies of paid invoices
for the Funds requested and lien waivers and releases from all parties
furnishing materials and/or services in connection with the Request for Release
and reimbursement of all out-of-pocket inspection fees incurred by Lender;
(d) Borrower shall provide Lender with such additional
documents, certificates and affidavits as Lender may reasonably request; and if
required by Lender, Borrower shall execute and deliver to Lender a certificate
(in form and substance satisfactory to Lender) that the Environmental
Improvements covered by the applicable Request for Release comply with, and
Borrower has fully satisfied, the terms and provisions of Section 3 above;
(e) Except as set forth in Section 4 above, Lender shall not
be obligated to release any Funds (i) for the payment of the cost of an
improvement or other item other than a Environmental Improvement as set forth on
Schedule 1 hereto, or (ii) for costs of Environmental Improvements in excess of
the costs specified therefor on Schedule 1; and
September 23, 1997
LOS01:48425.3
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(f) In addition to the conditions set forth above, Lender
shall not be obligated to honor any Request for Release (i) in the event of
Borrower's breach of any provision of this Agreement or upon the occurrence of
an Event of Default under any of the other Loan Documents, nor (ii) upon the
occurrence of any act, event or condition then existing that, with the giving of
notice or the passage of time, or both, would constitute a breach hereunder or
an Event of Default under any of the Loan Documents.
6. Remedies Cumulative. No right or remedy conferred upon or reserved
to Lender under this Agreement is intended to be exclusive of any other right or
remedy, and each and every such right and remedy shall be cumulative and
concurrent and may be enforced separately, successively or together, and may be
exercised from time to time as often as may be deemed necessary by Lender.
7. Indemnification of Lender and Assignment of Claims. Borrower shall
hold harmless, indemnify and defend Lender from and against any and all
liabilities, obligations, claims, demands, damages, penalties, causes of action,
losses, fines, costs and expenses (including without limitation reasonable
attorneys' fees and expenses) imposed upon or incurred by Lender arising from,
or in connection with, directly or indirectly, this Agreement. This indemnity is
in addition to any other indemnity agreements made by Borrower to Lender in the
Mortgage, the Note or in any of the other Loan Documents. Borrower hereby
assigns to Lender all rights, claims and causes of action Borrower may have
against any person or entities supplying labor or materials in connection with
the Environmental Improvements; provided, however, that Lender may not pursue
any such right, claim or cause of action unless an Event of Default shall have
occurred under the Loan Documents or Borrower shall have otherwise breached any
provision in this Agreement.
8. Miscellaneous.
(a) Any capitalized term utilized herein shall have the
meaning as specified in the Mortgage, unless such term is otherwise specifically
defined herein.
(b) Except as otherwise expressly provided herein, in any
instance where the consent or approval of Lender is required or may be given or
where any determination, judgment or decision is to be rendered by Lender under
this Agreement, such approval and consent shall be given or withheld in Lender's
sole and absolute discretion.
(c) All notices hereunder shall be given in accordance with
the provisions of the Mortgage.
(d) This Agreement shall be binding upon Borrower and its
heirs, devisees, representatives, successors and assigns, including successors
in interest of Borrower in and to all or any part of the Mortgaged Property, and
shall inure to the benefit of and may be enforced by Lender
September 23, 1997
LOS01:48425.3
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and its heirs, successors, legal representatives, substitutes and assigns.
Borrower shall not assign any of its rights or obligations under this Agreement.
(e) This Agreement is intended solely for the benefit of
Borrower and Lender, and no third party shall have any right or interest in this
Agreement, nor any right to enforce this Agreement against any party hereto.
(f) This Agreement may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any act or failure to
act on the part of Borrower and Lender, but only by an agreement in writing
signed by the party against whom the enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is sought.
(g) No provision of this Agreement or action taken by Lender
pursuant hereto shall be construed as acceptance or approval by Lender of any
Environmental Improvement. Each and every provision for the consent, approval,
inspection, review or verification by Lender hereunder is for Lender's own
purpose and benefit only, and no other party may require that the same be given
or be entitled to assume that Lender shall refuse to make or give the same. In
addition, in no event shall any term hereof, or any action taken by Lender
contemplated hereby, be deemed to be or construed as a warranty or
representation by Lender as to the adequacy of any Environmental Improvement,
nor that the same complies with applicable laws (including, without limitation,
any and all environmental laws and laws for the handicapped and/or disabled).
(h) Nothing herein or in the Loan Documents is intended to
create, nor creates, nor shall be deemed to create, a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender, nor to grant Lender any interest in the Mortgaged Property other
than that of creditor or Mortgage.
(i) If any provisions of this Agreement shall conflict with
any provisions of the other Loan Documents regarding the Funds, the provisions
contained in this Agreement shall control.
(j) If any term, covenant or condition of this Agreement is
held to be invalid, illegal or unenforceable in any respect, this Agreement
shall be construed without such provision.
(k) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED
(WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES) AND THE APPLICABLE LAWS OF
THE UNITED STATES OF AMERICA. BORROWER HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION LOCATED IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED IN CONNECTION WITH ANY PROCEEDING OUT OF
OR RELATING TO THIS AGREEMENT.
September 23, 1997
LOS01:48425.3
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Borrower and Lender have executed this Agreement as of the date first
above written.
BORROWER:
CONCORD MILESTONE PLUS, L.P.,
a Delaware limited partnership
By: CM PLUS CORPORATION,
a Delaware corporation,
Its General Partner
By:
Name:
Title:
Borrower's Tax ID Number: 00-0000000
LENDER:
WESTCO REAL ESTATE FINANCE CORP.,
a California corporation
By:
Name:
Title:
September 23, 1997
LOS01:48425.3
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Schedule 1
ENVIRONMENTAL IMPROVEMENTS
Within four months after recordation of the Mortgage (as defined in the
Note), Borrower shall remove and remediate the dry cleaning solvent
contamination on the Mortgaged Property as disclosed by a Report of Subsurface
Environmental Investigation (Palace Cleaners) prepared by Geoscience, Inc. dated
August 8, 1997, and Report of Active Soil Vapor Survey (Palace Cleaners)
prepared by Geoscience, Inc. dated July 28, 1997, and obtain regulatory site
closure therefor in accordance with applicable requirements, or provide to
Lender evidence in form and substance reasonably satisfactory to Lender that
applicable regulatory authorities have determined that remediation of such
contamination is not required under applicable laws and regulations.
September 23, 1997
LOS01:48425.3
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EXHIBIT "A"
REQUEST FOR RELEASE (No. ____)
Loan No. ________
TO: ("Lender")
FROM: ("Borrower")
This Request for Release is submitted by Borrower in accordance with
the Escrow Agreement for Improvements dated ___________, 199__, between Borrower
and Lender (the "Agreement"). Terms used with initial capital letters and not
defined in this Request for Release have the meanings given them in the
Agreement.
1. Borrower hereby requests an Advance for the payment of the
Environmental Improvements in the amounts, to the parties, specified below:
ENVIRONMENTAL
IMPROVEMENTS PAYEE AMOUNT
TOTAL ADVANCE REQUESTED $_________
2. Borrower certifies, represents and warrants to Lender that all
statements, invoices, bills, costs, expenses and any other sums of money owing
with respect to Environmental Improvements incurred or owing on or before this
date, have been paid in full except (a) the amounts requested in Section 1
above, and (b) the amounts, if any, specified in Annex 1 hereto.
3. Borrower certifies, represents and warrants to Lender that (a)
Borrower is entitled to a Release of Funds for the items and amounts requested
in Section 1 above, (b) Borrower's representations and warranties made in the
Loan Documents are true and correct on and as of this date, and (c) no Event of
Default nor any event which with the giving of notice or the lapse of time, or
both, would become an Event of Default, has occurred.
Date: ______________, 199__.
BORROWER:
By:
Title:
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