MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (Including Fixture Filing) (TENNESSEE – REVISION DATE 03-31-2008)
Prepared
by, and after recording return to:
Xxxxxxx
Xxx Xxxxxxx, Esquire
Xxxxxxxx
Xxxxxxx LLP
P.O. Box
1122
Richmond,
Virginia 23218-1122
MULTIFAMILY DEED OF
TRUST,
ASSIGNMENT OF
RENTS
(Including
Fixture Filing)
(TENNESSEE
– REVISION DATE 03-31-2008)
Maximum
Principal Indebtedness for Tennessee Recording Tax Purposes is
$22,646,919.84
.
FHLMC
Loan No. 534381251
Grove at
Richland
MULTIFAMILY
DEED OF TRUST,
ASSIGNMENT
OF RENTS AND
SECURITY
AGREEMENT
(TENNESSEE
– REVISION DATE 03-31-2008)
THIS
MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Instrument") is made as
of this 16th day
of December, 2009 among NLP
RICHLAND, LLC, a limited liability company organized and existing under
the laws of Delaware, whose address is c/o NTS Development Company, 00000 Xxxx
Xxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, as grantor ("Borrower"), to XXXXXX
X. XXXX, XX., as trustee, whose address is c/o Fidelity National Title
Group, 000 Xxxx
Xxxxxxx Xxxx., Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000 ("Trustee"), for the benefit
of XXXXXXXX XXXXXXXX
XXXXXX, X.X., a limited partnership organized and existing under the laws
of Texas, whose address is 0 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx (Xxxxxx Xxxxxx),
Xxxxx 00000, as beneficiary ("Lender"). Borrower's
organizational identification number, if applicable, is 4739667.
This Instrument
covers property or goods
herein described that are, or are to become so affixed to real property
described
in Exhibit A hereto so as to become fixtures and also constitutes a
fixture filing under §§
47-9-334 and 47-9-502 of Tennessee Code Annotated, and is
to be filed in the real estate records. The names of the debtor (the
“Borrower” herein) and the secured party (the “Lender” herein), the mailing
address of the secured party from which information concerning the security
interest may be obtained, the mailing address of the debtor, and a statement
indicating the types, or describing the items, of collateral are stated herein
in compliance with § 47-9-502 of the
Tennessee Code Annotated, as
amended. The real property is described
in Exhibit A hereto and the record owner of such real property is NLP Richland,
LLC.
NOTICE PURSUANT TO §§ 47-9-334 and 00-00-000 OF
TENNESSEE CODE ANNOTATED. THIS
INSTRUMENT SECURES OBLIGATORY ADVANCES AND IS FOR COMMERCIAL PURPOSES PURSUANT
TO § 00-00-000, ET SEQ, OF THE TENNESSEE CODE ANNOTATED.
Borrower,
in consideration of the Indebtedness and the trust created by this Instrument,
irrevocably grants, conveys, bargains, sells, confirms, assigns and
transfers to Trustee, and any and all
successors of Trustee, in trust, with power of sale, the Mortgaged
Property, including the Land located in Davidson County, State of Tennessee and
described in Exhibit A attached to and
incorporated in this Instrument.
TO SECURE
TO LENDER the repayment of the Indebtedness evidenced by Xxxxxxxx's Multifamily
Note payable to Lender dated as of the date of this Instrument, and maturing on
January 1, 2020 (the "Maturity
Date"), in the principal amount of $27,000,000.00, and all renewals,
extensions and modifications of the Indebtedness, and the performance of the
covenants and agreements of Borrower contained in the Loan
Documents.
TO HAVE
AND TO HOLD the Mortgaged Property to the use and benefit of the Trustee and the
Trustee’s successors, heirs and assigns, forever in FEE SIMPLE in
trust. Borrower represents and warrants that Borrower is
lawfully seized of the Mortgaged Property and has the
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right,
power and authority to grant, convey and assign the Mortgaged Property, and that
the Mortgaged Property is unencumbered except as shown on the schedule of
exceptions to coverage in the title policy issued to and accepted by Xxxxxx
contemporaneously with the execution and recordation of this Instrument and
insuring Xxxxxx's interest in the Mortgaged Property (the "Schedule of Title
Exceptions"). Borrower covenants that Borrower will warrant
and defend generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in the Schedule of
Title Exceptions.
THIS DEED OF TRUST IS GIVEN FOR COMMERCIAL PURPOSES AND
FOR THE PURPOSE OF CREATING A LIEN ON THE MORTGAGED PROPERTY IN ORDER TO SECURE
NOT ONLY ANY EXISTING INDEBTEDNESS OR ADVANCES MADE CONTEMPORANEOUSLY WITH THE
EXECUTION HEREOF, BUT ALSO FUTURE ADVANCES, WHETHER SUCH ADVANCES ARE
OBLIGATORY, OR TO BE MADE AT THE OPTION OF THE BENEFICIARY, OR BOTH, AND WHETHER
MADE BEFORE OR AFTER DEFAULT OR MATURITY OR OTHER SIMILAR EVENTS, TO THE SAME
EXTENT AS IF SUCH FUTURE ADVANCES WERE MADE ON THE DATE OF THE EXECUTION OF THIS
INSTRUMENT, ALTHOUGH THERE MAY BE NO ADVANCE MADE AT THE TIME OF THE EXECUTION
HEREOF AND ALTHOUGH THERE MAY BE NO INDEBTEDNESS OUTSTANDING AT THE TIME ANY
ADVANCE IS MADE AS PROVIDED BY T.C.A. § 00-00-000. THIS NOTICE
REFERENCING OBLIGATORY FUTURE ADVANCES IS FOR PURPOSES OF COMPLYING WITH T.C.A.
§ 47-28-104(B) AND NO OTHER INFERENCE IS TO BE PRESUMED
HEREUNDER. NOTWITHSTANDING THE REDUCTION OF THE AMOUNT(S) SECURED
HEREBY AT ANY TIME TO ZERO, THIS INSTRUMENT SHALL REMAIN IN FULL FORCE AND
EFFECT UNTIL SUCH TIME AS RELEASE OR SATISFACTION THEREOF IS FILED OR RECORDED
BY THE BENEFICIARY.
UNIFORM
COVENANTS-CME
REVISION
DATE 8-14-2009
Covenants. In
consideration of the mutual promises set forth in this Instrument, Xxxxxxxx and
Lender covenant and agree as follows:
1. DEFINITIONS. The
following terms, when used in this Instrument (including when used in the above
recitals), shall have the following meanings:
(a) “Affiliate” of any Person means
(i) any other Person which, directly or indirectly, is in Control of, is
Controlled by or is under common Control with, such Person; (ii) any other
Person who is a director or officer of (A) such Person, (B) any subsidiary of
such Person, or (C) any Person described in clause (i) above; or (iii) any
corporation, limited liability company or partnership which has as a director
any Person described in subsection (ii) above.
(b) “Approved Seller/Servicer” is
defined in Section 43(b).
(c) “Assignment of Management
Agreement” means Assignment of Management Agreement and Subordination of
Management Fee of even date herewith among Borrower, Lender and Property
Manager, including all schedules, riders, allonges and addenda, as such
Assignment of Management Agreement may be amended from time to
time.
(d) “Attorneys’ Fees and Costs”
means (i) fees and out of pocket costs of Xxxxxx’s and Loan Servicer’s
attorneys, as applicable, including costs of Lender’s and Loan Servicer’s
in-house counsel, support staff costs, costs of preparing for litigation,
computerized research,
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telephone
and facsimile transmission expenses, mileage, deposition costs, postage,
duplicating, process service, videotaping and similar costs and expenses; (ii)
costs and fees of expert witnesses, including appraisers; (iii) investigatory
fees; and (iv) the costs for any opinion required by Lender pursuant to the
terms of the Loan Documents.
(e) “Borrower” means all entities
identified as “Borrower” in the first paragraph of this Instrument, together
with their successors and assigns.
(f) “Business Day” means any day
other than a Saturday, a Sunday or any other day on which Lender or the national
banking associations are not open for business.
(g) “Claim” is defined in Section
18(l).
(h) “Collateral Agreement” means
any separate agreement between Borrower and Lender for the purpose of
establishing replacement reserves for the Mortgaged Property, establishing a
fund to assure the completion of repairs or improvements specified in that
agreement, or assuring reduction of the outstanding principal balance of the
Indebtedness if the occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account.
(i)
“Condemnation” is
defined in Section 20(a).
(j)
“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person whether through ownership
of voting securities, beneficial interests, by contract or
otherwise. The definition is to be construed to apply equally to
variations of the word “Control,” including “Controlled,” “Controlling” or
“Controlled by.”
(k) “Controlling Entity” means an
entity which, directly or indirectly through one or more intermediaries, (i)
owns or Controls a general partnership interest or a Controlling Interest of the
limited partnership interests in Borrower (if Borrower is a partnership), (ii)
is a Manager of Borrower or owns a Controlling Interest in a manager of Borrower
or a Controlling Interest of the ownership or membership interests in Borrower
(if Borrower is a limited liability company), or (iii) owns or Controls a
Controlling Interest of any class of voting stock of Borrower (if Borrower is a
corporation). The SPE Equity Owner, if applicable, shall be
considered a Controlling Entity for purposes of this definition.
(l)
“Controlling
Interest” means (i) 50 percent or more of the direct or indirect
ownership interests in an entity, or (ii) a percentage ownership interest in an
entity of less than 50 percent, if the owner(s) of that interest actually
Control(s) the business and affairs of the entity without the requirement of
consent of any other party.
(m) “Cut-off Date” is defined in
the Note.
(n) “Defeasance” is defined in
Section 44.
(o) “Defeasance Closing Date” is
defined in Section 44(b).
(p) “Defeasance Collateral” means
(i) a Freddie Mac Debt Security, (ii) a Xxxxxx Xxx Debt Security, (iii) U.S.
Treasury Obligations, or (iv) FHLB Obligations.
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(q) “Defeasance Date” means the
second (2nd)
anniversary of the “startup date” of the last REMIC within the meaning of
Section 860G(a)(9) of the Tax Code which holds all or any portion of the
Loan.
(r) “Defeasance Fee” is defined in
Section 44(c).
(s) “Defeasance Notice” is defined
in Section 44(b).
(t)
“Defeasance
Period” is defined in the Note.
(u) “Disclosure Document” is
defined in Section 39.
(v) “Eligible Account” means an
identifiable account which is separate from all other funds held by the holding
institution that is either (i) an account or accounts maintained with the
corporate trust department of a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts maintained with the
corporate trust department of a federal or state chartered depository
institution or trust company acting in its fiduciary capacity which, in the case
of a state chartered depository institution or trust company is subject to
regulations substantially similar to 12 C.F.R. §9.10(b), having in either case a
combined capital and surplus of at least $50,000,000 and subject to supervision
or examination by federal and state authority. An Eligible Account
will not be evidenced by a certificate of deposit, passbook or other
instrument.
(w) “Eligible Institution” means a
federal or state chartered depository institution or trust company insured by
the Federal Deposit Insurance Corporation, the short term unsecured debt
obligations or commercial paper of which are rated at least A-1 by Standard
& Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc.,
P-1 by Xxxxx’x Investors Service, Inc. and F-1 by Fitch, Inc. in the case of
accounts in which funds are held for thirty (30) days or less or, in the case of
letters of credit or accounts in which funds are held for more than thirty (30)
days, the long term unsecured debt obligations of which are rated at least “A”
by Fitch, Inc. and Standard & Poor’s Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and “A2” by Xxxxx’x Investors Service,
Inc. If at any time an Eligible Institution does not meet the
required rating, the Loan Servicer must move the Eligible Account within thirty
(30) days of such event to an appropriately rated Eligible
Institution.
(x) “Environmental Inspections” is
defined in Section 18(g).
(y) “Environmental Permit” means
any permit, license, or other authorization issued under any Hazardous Materials
Law with respect to any activities or businesses conducted on or in relation to
the Mortgaged Property.
(z) “ERISA” is defined in Section
48(d).
(aa) “Event of Default” means the
occurrence of any event listed in Section 22.
(bb) “Xxxxxx Xxx Debt Security”
means any non-callable bond, debenture, note, or other similar debt obligation
issued by Federal National Mortgage Association.
(cc) “FHLB Obligations” mean direct,
non-callable and non-redeemable securities issued, or fully insured as to
payment, by any consolidated bank that is a member of the Federal Home Loan
Banks.
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(dd) “First Mortgage” is defined in
Section 43(b).
(ee) “Fixtures” means all property
owned by Borrower which is so attached to the Land or the Improvements as to
constitute a fixture under applicable law, including: machinery, equipment,
engines, boilers, incinerators, installed building materials; systems and
equipment for the purpose of supplying or distributing heating, cooling,
electricity, gas, water, air, or light; antennas, cable, wiring and conduits
used in connection with radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals; telephone systems and
equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
systems and apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers
and other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming
pools; and exercise equipment.
(ff) “Freddie Mac” is defined in
Section 43(a).
(gg) “Freddie Mac Debt Security”
means any non-callable bond, debenture, note, or other similar debt obligation
issued by Freddie Mac.
(hh) “Governmental Authority” means
any board, commission, department or body of any municipal, county, state or
federal governmental unit, or any subdivision of any of them, that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property or over the Borrower.
(ii) “Hazard Insurance” is defined
in Section 19.
(jj) “Hazardous Materials” means
petroleum and petroleum products and compounds containing them, including
gasoline, diesel fuel and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls (“PCBs”) and compounds
containing them; lead and lead-based paint; asbestos or asbestos containing
materials in any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any substance; any
substance the presence of which on the Mortgaged Property is prohibited by any
federal, state or local authority; any substance that requires special handling
and any other material or substance now or in the future that (i) is
defined as a “hazardous substance,” “hazardous material,” “hazardous waste,”
“toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” by or within
the meaning of any Hazardous Materials Law, or (ii) is regulated in any way by
or within the meaning of any Hazardous Materials Law.
(kk) “Hazardous Materials Laws”
means all federal, state, and local laws, ordinances and regulations and
standards, rules, policies and other governmental requirements, administrative
rulings and court judgments and decrees in effect now or in the future and
including all amendments, that relate to Hazardous Materials or the protection
of human health or the environment and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et
seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Section 6901, et seq., the Toxic
Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean
Water Act, 33 U.S.C. Section 1251, et seq., and the
Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their
state analogs.
(ll) “Impositions” and “Imposition Deposits” are
defined in Section 7(a).
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(mm) “Improvements” means the
buildings, structures, improvements, and alterations now constructed or at any
time in the future constructed or placed upon the Land, including any future
replacements and additions.
(nn)
“Indebtedness” means the
principal of, interest at the fixed or variable rate set forth in the Note on,
and all other amounts due at any time under, the Note, this Instrument or any
other Loan Document, including prepayment premiums, late charges, default
interest, and advances as provided in Section 12 to protect the security of this
Instrument.
(oo) “Indemnitees” is defined in
Section 18(j).
(pp) “Initial Owners” means, with
respect to Borrower or any other entity, the Persons that (i) on the date of the
Note, or (ii) on the date of a Transfer to which Xxxxxx has consented, own in
the aggregate 100 percent of the ownership interests in Borrower or that
entity.
(qq) “Intercreditor Agreement” is
defined in Section 43(b).
(rr) “Issuer Group” is defined in
Section 47.
(ss) “Issuer Person” is defined in
Section 47.
(tt) “Junior Lender” is defined in
Section 43(e).
(uu) “Land” means the land described
in Exhibit A.
(vv) “Leases” means all present and
future leases, subleases, licenses, concessions or grants or other possessory
interests now or hereafter in force, whether oral or written, covering or
affecting the Mortgaged Property, or any portion of the Mortgaged Property
(including proprietary leases or occupancy agreements if Borrower is a
cooperative housing corporation), and all modifications, extensions or
renewals.
(ww) “Lender” means the entity
identified as “Lender” in the first paragraph of this Instrument, or any
subsequent holder of the Note.
(xx)
“Lien” is defined in Section
16.
(yy) “Loan” means the loan evidenced
by the Note.
(zz) “Loan Documents” means the
Note, this Instrument, the Assignment of Management Agreement, all guaranties,
all indemnity agreements, all Collateral Agreements, O&M Programs, the MMP
and any other documents now or in the future executed by Borrower, any guarantor
or any other Person in connection with the Loan evidenced by the Note, as such
documents may be amended from time to time.
(aaa) “Loan Servicer” means the
entity that from time to time is designated by Lender or its designee to collect
payments and deposits and receive Notices under the Note, this Instrument and
any other Loan Document, and otherwise to service the Loan evidenced by the Note
for the benefit of Lender. Unless Borrower receives Notice to the
contrary, the Loan Servicer is the entity identified as “Lender” in the first
paragraph of this Instrument.
(bbb) “Lockout Period” is defined in
the Note.
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(ccc) “Manager” or “Managers” means a Person who
is named or designated as a manager or managing member or otherwise acts in the
capacity of a manager or managing member of a limited liability company in a
limited liability company agreement or similar instrument under which the
limited liability company is formed or operated.
(ddd) “Material Adverse Effect” is
defined in Section 48(f).
(eee) “MMP” means a moisture
management plan to control water intrusion and prevent the development of Mold
or moisture at the Mortgaged Property throughout the term of this
Instrument. At a minimum, the MMP must contain a provision for (i)
staff training, (ii) information to be provided to tenants, (iii) documentation
of the plan, (iv) the appropriate protocol for incident response and remediation
and (v) routine, scheduled inspections of common space and unit
interiors.
(fff) “Mold” means mold, fungus,
microbial contamination or pathogenic organisms.
(ggg) “Mortgaged Property” means all
of Borrower’s present and future right, title and interest in and to all of the
following:
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(i)
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the
Land;
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(ii)
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the
Improvements;
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(iii)
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the
Fixtures;
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(iv)
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the
Personalty;
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(v)
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all
current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements, tenements,
rights of way, strips and gores of land, streets, alleys, roads, sewer
rights, waters, watercourses, and appurtenances related to or benefiting
the Land or the Improvements, or both, and all rights-of-way, streets,
alleys and roads which may have been or may in the future be
vacated;
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(vi)
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all
proceeds paid or to be paid by any insurer of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property,
whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;
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(vii)
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all
awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property, including any awards or settlements resulting
from condemnation
proceedings or the total or partial taking of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property
under the power of eminent domain or otherwise and including any
conveyance in lieu thereof;
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(viii)
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all
contracts, options and other agreements for the sale of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future,
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cash
or securities deposited to secure performance by parties of their
obligations;
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(ix)
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all
proceeds from the conversion, voluntary or involuntary, of any of the
above into cash or liquidated claims, and the right to collect such
proceeds;
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(x)
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all
Rents and Leases;
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(xi)
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all
earnings, royalties, accounts receivable, issues and profits from the
Land, the Improvements or any other part of the Mortgaged Property, and
all undisbursed proceeds of the Loan secured by this
Instrument;
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(xii)
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all
Imposition Deposits;
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(xiii)
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all
refunds or rebates of Impositions by any municipal, state or federal
authority or insurance company (other than refunds applicable to periods
before the real property tax year in which this Instrument is
dated);
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(xiv)
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all
tenant security deposits which have not been forfeited by any tenant under
any Lease and any bond or other security in lieu of such deposits;
and
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(xv)
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all
names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill relating
to any of the Mortgaged Property.
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(hhh) “New Commercial Lease” is
defined in Section 4(f).
(iii) “Note” means the Multifamily
Note described on page 1 of this Instrument, including all schedules, riders,
allonges and addenda, as such Multifamily Note may be amended from time to
time.
(jjj) “Notice” is defined in Section
31(a).
(kkk) “O&M Program” is defined in
Section 18(d).
(lll)
“Person” means any natural
person, sole proprietorship, corporation, general partnership, limited
partnership, limited liability company, limited liability limited partnership,
joint venture, association, joint stock company, bank, trust, estate,
unincorporated organization, any federal, state, county or municipal government
(or any agency or political subdivision thereof), endowment fund or any other
form of entity.
(mmm) “Personalty” means
all:
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(i)
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accounts
(including deposit accounts) of Borrower related to the Mortgaged
Property;
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(ii)
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equipment
and inventory owned by Borrower, which are used now or in the future in
connection with the ownership, management or operation of the Land or
Improvements or are located on the Land or Improvements, including
furniture, furnishings, machinery, building materials,
goods,
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supplies,
tools, books, records (whether in written or electronic form), and
computer equipment (hardware and
software);
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(iii)
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other
tangible personal property owned by Borrower which is used now or in the
future in connection with the ownership, management or operation of the
Land or Improvements or is located on the Land or in the Improvements,
including ranges, stoves, microwave ovens, refrigerators, dishwashers,
garbage disposers, washers, dryers and other appliances (other than
Fixtures);
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(iv)
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any
operating agreements relating to the Land or the
Improvements;
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(v)
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any
surveys, plans and specifications and contracts for architectural,
engineering and construction services relating to the Land or the
Improvements;
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(vi)
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all
other intangible property, general intangibles and rights relating to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on the Land
and including subsidy or similar payments received from any sources,
including a governmental authority;
and
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(vii)
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any
rights of Borrower in or under letters of
credit.
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(nnn) “Pledge Agreement” is defined
in Section 44(f).
(ooo) “Preapproved Transfer” is
defined in Section 21(c).
(ppp) “Prior Lien” is defined in
Section 12.
(qqq) “Proceeding” means, whether
voluntary or involuntary, any case, proceeding or other action against Borrower
or any SPE Equity Owner under any existing or future law of any jurisdiction
relating to bankruptcy, insolvency, reorganization or relief of
debtors.
(rrr) “Prohibited Activities or
Conditions” is defined in Section 18(a).
(sss) “Property Jurisdiction” is
defined in Section 30(a).
(ttt) “Property Manager” means NTS
Development Company.
(uuu) “Rating Agencies” means Fitch,
Inc.; Xxxxx’x Investors Service, Inc.; or Standard & Poor’s Ratings
Services, a division of The XxXxxx-Xxxx Companies, Inc., or any successor
entity of the foregoing, or any other nationally recognized statistical rating
organization.
(vvv) “Rating Confirmation” means a
written confirmation from each of the Rating Agencies which has rated the
Securitization which includes the Loan (unless otherwise agreed by Lender) or
any portion thereof or interest therein, that an action shall not result in a
downgrade, withdrawal or qualification of any securities issued in connection
with the Securitization, unless such Rating Agency has elected to waive its
right to issue a Rating Confirmation.
(www)
“Release
Instruments” is defined in Section 44(f).
Page 9
(xxx) “Remedial Work” is defined in
Section 18(h).
(yyy)
“Rent Schedule”
means a written schedule for the Mortgaged Property showing the name of each
tenant, and for each tenant, the space occupied, the lease expiration date, the
rent payable for the current month, the date through which rent has been paid,
and any related information requested by Xxxxxx.
(zzz)
“Rents” means all
rents (whether from residential or non-residential space), revenues and other
income of the Land or the Improvements, parking fees, laundry and vending
machine income and fees and charges for food, health care and other services
provided at the Mortgaged Property, whether now due, past due, or to become due,
and deposits forfeited by tenants, and, if Borrower is a cooperative housing
corporation or association, maintenance fees, charges or assessments payable by
shareholders or residents under proprietary leases or occupancy agreements,
whether now due, past due, or to become due.
(aaaa) “Required DSCR” is defined in
Section 43(b).
(bbbb) “Required LTV” is defined in
Section 43(b).
(cccc) “Restoration” is defined in
Section 19(f).
(dddd) “Scheduled Debt Payments” is
defined in Section 44(g).
(eeee) “Secondary Market Transaction”
means (a) any sale or assignment of this Instrument, the Note and the other
Loan Documents to one or more investors as a whole loan; (b) a
participation of the Loan to one or more investors; (c) any deposit of this
Instrument, the Note and the other Loan Documents with a trust or other entity
which may sell certificates or other instruments to investors evidencing an
ownership interest in the assets of such trust or other entity; or (d) any
other sale, assignment or transfer of the Loan or any interest therein to one or
more investors.
(ffff) “Securities Liabilities” is
defined in Section 47.
(gggg) “Securitization” means when the
Note is assigned to a REMIC trust.
(hhhh) “Servicing Arrangement” is
defined in Section 36(b).
(iiii)
“Single Purpose Entity”
is defined in Section 33(b).
(jjjj) “SPE Equity Owner” is NOT
APPLICABLE-Borrower shall not be required to maintain an SPE Equity Owner in its
organizational structure during the term of the Loan and all references to SPE
Equity Owner in this Instrument and in the Note shall be of no force or
effect.
(kkkk)
“Successor Borrower” is
defined in Section 44(h).
(llll) “Supplemental Mortgage” is
defined in Section 43(b).
(mmmm) “Supplemental Mortgage Product”
is defined in Section 43(a).
(nnnn) “Tax Code” means the Internal
Revenue Code of the United States.
Page 10
(oooo) “Taxes” means all taxes,
assessments, vault rentals and other charges, if any, whether general, special
or otherwise, including all assessments for schools, public betterments and
general or local improvements, which are levied, assessed or imposed by any
public authority or quasi-public authority, and which, if not paid, will become
a lien on the Land or the Improvements.
(pppp)
“Third Party
Information” is defined in Section 47.
(qqqq) “Transfer” is defined in
Section 21.
(rrrr) “Transfer and Assumption
Agreement” is defined in Section 44(f).
(ssss) “UCC Collateral” is defined in
Section 2.
(tttt)
“Underwriter Group” is
defined in Section 47.
(uuuu)
“U.S. Treasury
Obligations” means direct, non-callable and non-redeemable securities
issued, or fully insured as to payment, by the United States of
America.
2. UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.
(a) This
Instrument is also a security agreement under the Uniform Commercial Code for
any of the Mortgaged Property which, under applicable law, may be subjected to a
security interest under the Uniform Commercial Code, whether such Mortgaged
Property is owned now or acquired in the future, and all products and cash and
non-cash proceeds thereof (collectively, “UCC Collateral”), and Borrower
hereby grants to Lender a security interest in the UCC
Collateral. Borrower hereby authorizes Xxxxxx to prepare and file
financing statements, continuation statements and financing statement amendments
in such form as Lender may require to perfect or continue the perfection of this
security interest and Xxxxxxxx agrees, if Xxxxxx so requests, to execute and
deliver to Lender such financing statements, continuation statements and
amendments. Borrower shall pay all filing costs and all costs and
expenses of any record searches for financing statements and/or amendments that
Lender may require. Without the prior written consent of Lender,
Borrower shall not create or permit to exist any other lien or security interest
in any of the UCC Collateral.
(b) Unless
Borrower gives Notice to Lender within 30 days after the occurrence of any of
the following, and executes and delivers to Lender modifications or supplements
of this Instrument (and any financing statement which may be filed in connection
with this Instrument) as Lender may require, Borrower shall not (i) change its
name, identity, structure or jurisdiction of
organization; (ii) change the location of its place of business (or chief
executive office if more than one place of business); or (iii) add to or change
any location at which any of the Mortgaged Property is stored, held or
located.
(c) If
an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition to
all remedies provided by this Instrument or existing under applicable
law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender’s other remedies.
(d) This
Instrument constitutes a financing statement with respect to any part of the
Mortgaged Property that is or may become a Fixture, if permitted by applicable
law.
Page 11
3. ASSIGNMENT
OF RENTS; APPOINTMENT OF RECEIVER; XXXXXX IN POSSESSION.
(a) As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the
intention of Borrower to establish a present, absolute and irrevocable transfer
and assignment to Lender of all Rents and to authorize and empower Lender to
collect and receive all Rents without the necessity of further action on the
part of Borrower. Promptly upon request by Xxxxxx, Xxxxxxxx agrees to
execute and deliver such further assignments as Xxxxxx may from time to time
require. Borrower and Xxxxxx intend this assignment of Rents to be
immediately effective and to constitute an absolute present assignment and not
an assignment for additional security only. For purposes of giving
effect to this absolute assignment of Rents, and for no other purpose, Rents
shall not be deemed to be a part of the Mortgaged Property. However,
if this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then the
Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be effective as of
the date of this Instrument.
(b) After
the occurrence of an Event of Default, Borrower authorizes Xxxxxx to collect,
sue for and compromise Rents and directs each tenant of the Mortgaged Property
to pay all Rents to, or as directed by, Xxxxxx. However, until the
occurrence of an Event of Default, Lender hereby grants to Borrower a revocable
license to collect and receive all Rents, to hold all Rents in trust for the
benefit of Lender and to apply all Rents to pay the installments of interest and
principal then due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition Deposits, and to
pay the current costs and expenses of managing, operating and maintaining the
Mortgaged Property, including utilities, Taxes and insurance premiums (to the
extent not included in Imposition Deposits), tenant improvements and other
capital expenditures. So long as no Event of Default has occurred and
is continuing, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower free and clear of, and released from,
Xxxxxx’s rights with respect to Rents under this Instrument. From and after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly, or
by a receiver, Borrower’s license to collect Rents shall automatically terminate
and Lender shall without Notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid. Borrower shall pay to
Lender upon demand all Rents to which Xxxxxx is entitled. At any time
on or after the date of Xxxxxx’s demand for Rents, (i) Lender may give, and
Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of
the Mortgaged Property instructing them to pay all Rents to Lender, (ii) no
tenant shall be obligated to
inquire further as to the occurrence or continuance of an Event of Default, and
(iii) no tenant shall be obligated to pay to Borrower any amounts which are
actually paid to Lender in response to such a notice. Any such notice
by Xxxxxx shall be delivered to each tenant personally, by mail or by delivering
such demand to each rental unit. Borrower shall not interfere with
and shall cooperate with Xxxxxx’s collection of such Rents.
(c) Borrower
represents and warrants to Lender that Xxxxxxxx has not executed any prior
assignment of Rents (other than an assignment of Rents securing any prior
indebtedness that is being assigned to Lender, or paid off and discharged with
the proceeds of the Loan evidenced by the Note), that Xxxxxxxx has not
performed, and Borrower covenants and agrees that it will not perform, any acts
and has not executed, and shall not execute, any instrument which would prevent
Lender from exercising its rights under this Section 3, and that at the time of
execution of this Instrument there has been no anticipation or prepayment of any
Rents for
Page 12
more than
two months prior to the due dates of such Rents. Borrower shall not
collect or accept payment of any Rents more than two months prior to the due
dates of such Rents.
(d) If
an Event of Default has occurred and is continuing, Lender may, regardless of
the adequacy of Lender’s security or the solvency of Borrower and even in the
absence of waste, enter upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its discretion determines
to be necessary or desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and the
execution or termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property
or the security of this Instrument, or for such other purposes as Lender in its
discretion may deem necessary or desirable. Alternatively, if an
Event of Default has occurred and is continuing, regardless of the adequacy of
Xxxxxx’s security, without regard to Borrower’s solvency and without the
necessity of giving prior notice (oral or written) to Borrower, Lender may apply
to any court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in the preceding
sentence. If Lender elects to seek the appointment of a receiver for
the Mortgaged Property at any time after an Event of Default has occurred and is
continuing, Borrower, by its execution of this Instrument, expressly consents to
the appointment of such receiver, including the appointment of a receiver ex parte if permitted
by applicable law. If Borrower is a housing cooperative corporation
or association, Xxxxxxxx hereby agrees that if a receiver is appointed, the
order appointing the receiver may contain a provision requiring the receiver to
pay the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, it being acknowledged and agreed that the
Indebtedness is an obligation of the Borrower and must be paid out of
maintenance charges payable by the Borrower's tenant shareholders under their
proprietary leases or occupancy agreements. Lender or the receiver,
as the case may be, shall be entitled to receive a reasonable fee for managing
the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender’s entering upon and taking possession and control of
the Mortgaged Property, Xxxxxxxx shall surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the case may be, all documents, records (including
records on electronic or magnetic media), accounts, surveys, plans, and
specifications relating to the Mortgaged Property and all security deposits and
prepaid Rents. In the event Lender takes possession and control of
the Mortgaged Property, Lender may exclude Borrower and its representatives from
the Mortgaged Property. Xxxxxxxx acknowledges and agrees that the
exercise by Xxxxxx of any of the rights conferred under this Section 3 shall not
be construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into actual
possession of the Land and Improvements.
(e) If
Lender enters the Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received. Except to the
extent of Xxxxxx’s gross negligence or willful misconduct, Lender shall not be
liable to Borrower, anyone claiming under or through Borrower or anyone having
an interest in the Mortgaged Property, by reason of any act or omission of
Lender under Section 3(d), and Borrower hereby releases and discharges Lender
from any such liability to the fullest extent permitted by law.
(f) If
the Rents are not sufficient to meet the costs of taking control of and managing
the Mortgaged Property and collecting the Rents, any funds expended by Lender
for such purposes shall become an additional part of the Indebtedness as
provided in Section 12.
Page 13
(g) Any
entering upon and taking of control of the Mortgaged Property by Lender or the
receiver, as the case may be, and any application of Rents as provided in this
Instrument shall not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for in this
Instrument.
4. ASSIGNMENT
OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower’s right, title
and interest in, to and under the Leases, including Xxxxxxxx’s right, power and
authority to modify the terms of any such Lease, or extend or terminate any such
Lease. It is the intention of Xxxxxxxx to establish a present,
absolute and irrevocable transfer and assignment to Lender of all of Xxxxxxxx’s
right, title and interest in, to and under the Leases. Xxxxxxxx and
Xxxxxx intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute
assignment of the Leases, and for no other purpose, the Leases shall not be
deemed to be a part of the Mortgaged Property. However, if this
present, absolute and unconditional assignment of the Leases is not enforceable
by its terms under the laws of the Property Jurisdiction, then the Leases shall
be included as a part of the Mortgaged Property and it is the intention of the
Borrower that in this circumstance this Instrument create and perfect a lien on
the Leases in favor of Lender, which lien shall be effective as of the date of
this Instrument.
(b) Until
Lender gives Notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right, power and authority to
modify the terms of any Lease or extend or terminate any Lease. Upon
the occurrence of an Event of Default, the permission given to Borrower pursuant
to the preceding sentence to exercise all rights, power and authority under
Leases shall automatically terminate. Borrower shall comply with and
observe Borrower’s obligations under all Leases, including Borrower’s
obligations pertaining to the maintenance and disposition of tenant security
deposits.
(c) Xxxxxxxx
acknowledges and agrees that the exercise by Xxxxxx, either directly or by a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession of the Land and the
Improvements. The acceptance by Xxxxxx of the
assignment of the Leases pursuant to Section 4(a) shall not at any time or in
any event obligate Lender to take any action under this Instrument or to expend
any money or to incur any expenses. Except to the extent of Xxxxxx’s
gross negligence or willful misconduct, Lender shall not be liable in any way
for any injury or damage to person or property sustained by any Person or
Persons in or about the Mortgaged Property. Prior to Lender’s actual
entry into and taking possession of the Mortgaged Property, Lender shall not (i)
be obligated to perform any of the terms, covenants and conditions contained in
any Lease (or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the Lease
or the Mortgaged Property; or (iii) be responsible for the operation, control,
care, management or repair of the Mortgaged Property or any portion of the
Mortgaged Property. The execution of this Instrument by Borrower
shall constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall be
that of Borrower, prior to such actual entry and taking of
possession.
Page 14
(d) Upon
delivery of Notice by Xxxxxx to Borrower of Xxxxxx’s exercise of Xxxxxx’s rights
under this Section 4 at any time after the occurrence of an Event of Default,
and without the necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or by any other
manner or proceeding permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted to Borrower
under any Lease, including the right, power and authority to modify the terms of
any such Lease, or extend or terminate any such Lease.
(e) Borrower
shall, promptly upon Xxxxxx’s request, deliver to Lender an executed copy of
each residential Lease then in effect. All Leases for residential
dwelling units shall be on forms approved by Lender, shall be for initial terms
of at least six months and not more than two years, and shall not include
options to purchase.
|
(f)
|
(i)
|
Except
as set forth below, Borrower shall not enter into a Lease for any portion
of the Mortgaged Property for non-residential use without the prior
written consent of Lender.
|
|
(ii)
|
Borrower
shall not modify the terms of, or extend or terminate, any Lease for
non-residential use (including any Lease in existence on the date of this
Instrument) without the prior written consent of Lender; provided,
however, Lender’s consent shall not be required for the modification or
extension of a non-residential Lease if such modification or extension is
on terms at least as favorable to Borrower as those customary at that time
in the applicable market and the income from the extended or modified
Lease will not be less than the income received from the Lease as of the
date of this Instrument.
|
|
(iii)
|
Xxxxxx’s
consent shall not be required for Borrower to enter into a new Lease for
space occupied as of the date of this Instrument for non-residential use
(“New Commercial
Lease”), provided that such New Commercial Lease satisfies the
following requirements:
|
|
(A)
|
the
aggregate of the income derived from the space leased by the New
Commercial Lease accounts for less than five percent (5%) of the gross
income of the Mortgaged Property on the date of this
Instrument;
|
|
(B)
|
the
tenant under the New Commercial Lease is not an Affiliate of the Borrower
or any guarantor;
|
|
(C)
|
terms
of the New Commercial Lease are at least as favorable to Borrower as those
customary on the date of this Instrument in the applicable
market;
|
|
(D)
|
the
rents paid to the Borrower pursuant to the New Commercial Lease are
greater than or equal to the rents paid to Borrower pursuant to the Lease
for that portion of the Mortgaged Property that was in effect prior to the
New Commercial Lease; and
|
|
(E)
|
the
New Commercial Lease must provide that the space may not be used or
operated, in whole or in part, for any of the following: (1)
the operation of a so-called “head shop” or other
business.
|
Page 15
|
|
devoted
to the sale of articles or merchandise normally used or associated with
illegal or unlawful activities such as, but not limited to, the sale of
paraphernalia used in connection with marijuana or controlled drugs or
substances, (2) a gun shop, shooting gallery or firearms range, (3) a
so-called massage parlor or any business which sells, rents or permits the
viewing of so-called “adult” or pornographic materials such as, but not
limited to, adult magazines, books, movies, photographs, sexual aids,
sexual articles and sex paraphernalia, (4) for the sale or distribution of
any flammable liquids, gases or other Hazardous Materials as defined under
this Instrument, (5) an off-track betting parlor or arcade, (6) a liquor
store or other business whose primary business is the sale of alcoholic
beverages for off-site consumption, (7) a burlesque or strip club, or (8)
any other illegal activity.
|
|
(iv)
|
Borrower
shall, without request by Xxxxxx, deliver a fully executed copy of each
non-residential Lease to Lender promptly after such Lease is
signed.
|
|
(v)
|
All
non-residential Leases, regardless of whether Lender’s consent or approval
is required, including renewals or extensions of existing Leases, shall
specifically provide that (A) such Leases are subordinate to the lien of
this Instrument; (B) the tenant shall attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and effective
upon acquisition of title to the Mortgaged Property by any purchaser at a
foreclosure sale or by Lender in any manner; (C) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser at
a foreclosure sale may from time to time request; (D) the Lease shall not
be terminated by foreclosure or any other transfer of the Mortgaged
Property; (E) after a foreclosure sale of the Mortgaged Property, Lender
or any other purchaser at such foreclosure sale may, at Lender’s or such
purchaser’s option, accept or terminate such Lease; and (F) upon receipt
of a written request from Lender following the occurrence of an Event of
Default, pay all Rents payable under the Lease to
Lender.
|
(g)
Borrower
shall not receive or accept Rent under any Lease (whether residential or
non-residential) for more than two months in advance.
(h) If
Borrower is a cooperative housing corporation or association, notwithstanding
anything to the contrary contained in this subsection or in Section 21, so long
as Borrower remains a cooperative housing corporation or association and is not
in breach of any covenant of this Instrument, Lender hereby consents
to:
|
(i)
|
the
execution of leases of apartments for a term in excess of two years from
Borrower to a tenant shareholder of Borrower, so long as such leases,
including proprietary leases, are and will remain subordinate to the lien
of this Instrument; and
|
|
(ii)
|
the
surrender or termination of such leases of apartments where the
surrendered or terminated lease is immediately replaced or where the
Borrower makes its best efforts to secure such immediate replacement by a
newly executed lease of the same apartment to a tenant shareholder
of
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Page 16
|
|
the
Borrower. However, no consent is hereby given by Xxxxxx to any
execution, surrender, termination or assignment of a lease under terms
that would waive or reduce the obligation of the resulting tenant
shareholder under such lease to pay cooperative assessments in full when
due or the obligation of the former tenant shareholder to pay any unpaid
portion of such assessments.
|
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE
UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM. Borrower shall pay
the Indebtedness when due in accordance with the terms of the Note and the other
Loan Documents and shall perform, observe and comply with all other provisions
of the Note and the other Loan Documents. Borrower shall pay a
prepayment premium in connection with certain prepayments of the Indebtedness,
including a payment made after Xxxxxx’s exercise of any right of acceleration of
the Indebtedness, as provided in the Note.
6. EXCULPATION. Xxxxxxxx’s
personal liability for payment of the Indebtedness and for performance of the
other obligations to be performed by it under this Instrument is limited in the
manner, and to the extent, provided in the Note.
7. DEPOSITS
FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Unless
this requirement is waived in writing by Xxxxxx, which waiver may be contained
in this Section 7(a), Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or on
another day designated in writing by Xxxxxx), until the Indebtedness is paid in
full, an additional amount sufficient to accumulate with Lender the entire sum
required to pay, when due, the items marked “Collect” below. Lender
will not require the Borrower to make Imposition Deposits with respect to the
items marked “Deferred” below.
|
[Deferred]
|
Hazard
Insurance premiums or other insurance premiums required by Lender under
Section 19,
|
|
[Collect]
|
Taxes,
|
|
[Deferred]
|
water
and sewer charges (that could become a lien on the Mortgaged
Property),
|
[N/A]
|
ground
rents,
|
|
[Deferred]
|
assessments
or other charges (that could become a lien on the Mortgaged
Property)
|
The
amounts deposited under the preceding sentence are collectively referred to in
this Instrument as the “Imposition
Deposits.” The obligations of Borrower for which the
Imposition Deposits are required are collectively referred to in this Instrument
as “Impositions.” The
amount of the Imposition Deposits shall be sufficient to enable Lender to pay
each Imposition before the last date upon which such payment may be made without
any penalty or interest charge being added. Lender shall maintain
records indicating how much of the monthly Imposition Deposits and how much of
the aggregate Imposition Deposits held by Lender are held for the purpose of
paying Taxes, insurance premiums and each other Imposition.
(b) Imposition
Deposits shall be deposited in an Eligible Account at an Eligible Institution
(which may be Lender, if Lender is such an institution) or invested in
“permitted investments” as then defined and required by the Rating
Agencies. Lender shall not be obligated to open additional accounts
or deposit Imposition Deposits in additional institutions when the amount of the
Imposition Deposits exceeds the maximum amount of the federal
deposit
Page 17
insurance
or guaranty. Lender shall apply the Imposition Deposits to pay
Impositions so long as no Event of Default has occurred and is
continuing. Unless applicable law requires, Lender shall not be
required to pay Borrower any interest, earnings or profits on the Imposition
Deposits. As additional security for all of Borrower’s obligations
under this Instrument and the other Loan Documents, Borrower hereby pledges and
grants to Lender a security interest in the Imposition Deposits and all proceeds
of, and all interest and dividends on, the Imposition Deposits. Any
amounts deposited with Lender under this Section 7 shall not be trust funds, nor
shall they operate to reduce the Indebtedness, unless applied by Lender for that
purpose under Section 7(e).
(c) If
Xxxxxx receives a bill or invoice for an Imposition, Xxxxxx shall pay the
Imposition from the Imposition Deposits held by Xxxxxx. Lender shall
have no obligation to pay any Imposition to the extent it exceeds Imposition
Deposits then held by Xxxxxx. Lender may pay an Imposition according
to any bill, statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.
(d) If
at any time the amount of the Imposition Deposits held by Xxxxxx for payment of
a specific Imposition exceeds the amount reasonably deemed necessary by Xxxxxx,
the excess shall be credited against future installments of Imposition
Deposits. If at any time the amount of the Imposition Deposits held
by Lender for payment of a specific Imposition is less than the amount
reasonably estimated by Lender to be necessary, Borrower shall pay to Lender the
amount of the deficiency within 15 days after Notice from Lender.
(e) If
an Event of Default has occurred and is continuing, Lender may apply any
Imposition Deposits, in any amounts and in any order as Lender determines, in
Xxxxxx’s discretion, to pay any Impositions or as a credit against the
Indebtedness. Upon payment in full of the Indebtedness, Xxxxxx shall refund to
Borrower any Imposition Deposits held by Xxxxxx.
(f) If
Lender does not collect an Imposition Deposit with respect to an Imposition
either marked “Deferred” in Section 7(a) or pursuant to a separate written
waiver by Xxxxxx, then on or before the date each such Imposition is due, or on
the date this Instrument requires each such Imposition to be paid, Borrower must
provide Lender with proof of payment of each such Imposition for which Lender
does not require collection of Imposition Deposits. Lender may
revoke
its deferral or waiver and require Borrower to deposit with Lender any or all of
the Imposition Deposits listed in Section 7(a), regardless of whether any such
item is marked “Deferred” in such section, upon Notice to Borrower, (i) if
Borrower does not timely pay any of the Impositions, (ii) if Borrower fails to
provide timely proof to Lender of such payment, or (iii) at any time during the
existence of an Event of Default.
(g) In
the event of a Transfer prohibited by or requiring Lender’s approval under
Section 21, Xxxxxx’s waiver of the collection of any Imposition Deposit in this
Section 7 may be modified or rendered void by Xxxxxx at Xxxxxx’s option by
Notice to Borrower and the transferee(s) as a condition of Xxxxxx’s approval of
such Transfer.
8. COLLATERAL
AGREEMENTS. Borrower shall deposit with Lender such amounts as
may be required by any Collateral Agreement and shall perform all other
obligations of Borrower under each Collateral Agreement.
9. APPLICATION OF
PAYMENTS. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, then Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Xxxxxx, in Xxxxxx’s discretion. Neither
Page 18
Xxxxxx’s
acceptance of an amount that is less than all amounts then due and payable nor
Lender’s application of such payment in the manner authorized shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction. Notwithstanding the application of any such amount
to the Indebtedness, Xxxxxxxx’s obligations under this Instrument and the Note
shall remain unchanged.
10. COMPLIANCE WITH LAWS AND ORGANIZATIONAL
DOCUMENTS.
(a) Borrower
shall comply with all laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded lawful covenants and agreements relating
to or affecting the Mortgaged Property, including all laws, ordinances,
regulations, requirements and covenants pertaining to health and safety,
construction of improvements on the Mortgaged Property, fair housing, disability
accommodation, zoning and land use, and Leases. Borrower also shall
comply with all applicable laws that pertain to the maintenance and disposition
of tenant security deposits.
(b) Borrower
shall at all times maintain records sufficient to demonstrate compliance with
the provisions of this Section 10.
(c) Borrower
shall take appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property, result in
forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this Instrument or Xxxxxx’s interest in the Mortgaged
Property. Borrower represents and warrants to Lender that no portion
of the Mortgaged Property has been or will be purchased with the proceeds of any
illegal activity.
(d) Borrower
shall at all times comply with all laws, regulations and requirements of any
Governmental Authority relating to Borrower's formation, continued existence and
good standing in the Property Jurisdiction. Borrower shall at all
times comply with its organizational documents, including but not limited to its
partnership agreement (if Borrower is a partnership), its by-laws (if Borrower
is a corporation or housing cooperative corporation or association) or its
operating agreement (if Borrower is an limited liability company or
tenancy-in-common). If Borrower
is a housing cooperative corporation or association, Borrower shall at all times
maintain its status as a "cooperative housing corporation" as such term is
defined in Section 216(b) of the Internal revenue Code of 1986, as amended, or
any successor statute thereto.
(e) Borrower
represents and warrants that Borrower, any commercial tenant of the Mortgaged
Property and/or any operator of the Mortgaged Property were in possession of all
material licenses, permits and authorizations required for use of the Mortgaged
Property which were valid and in full force and effect as of the date of this
Instrument. Borrower warrants that it, any commercial tenant of the
Mortgaged Property and/or any operator of the Mortgaged Property shall remain in
material compliance with all material licenses, permits and other legal
requirements necessary and required to conduct its business.
11. USE OF
PROPERTY. Unless required by applicable law, Borrower shall
not (a) allow changes in the use for which all or any part of the Mortgaged
Property is being used at the time this Instrument was executed, except for any
change in use approved by Lender, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate a change in the zoning
classification of the Mortgaged Property or acquiesce without Notice to and
consent of Lender in a change in the zoning classification of the Mortgaged
Property, (d) establish any condominium or cooperative regime with respect to
the Mortgaged Property, (e) combine all or any part of the Mortgaged Property
with all or any part of a tax parcel which is
Page 19
not part
of the Mortgaged Property, or (f) subdivide or otherwise split any tax parcel
constituting all or any part of the Mortgaged Property without the prior consent
of Lender. The Mortgaged Property (x) permits ingress and egress, (y)
is served by public utilities and services generally available in the
surrounding community or otherwise appropriate for the use in which the
Mortgaged Property is currently being utilized, and (z) constitutes one or more
separate tax parcels or the Lender’s title policy contains one or more
endorsements with respect to the matters described in (x) or
(z). Notwithstanding anything contained in this Section to the
contrary, if Borrower is a housing cooperative corporation or association,
Lender acknowledges and consents to Borrower's use of the Mortgaged Property as
a housing cooperative.
12. PROTECTION
OF XXXXXX’S SECURITY; INSTRUMENT SECURES FUTURE ADVANCES.
(a) If
Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding is commenced which purports
to affect the Mortgaged Property, Lender’s security or Lender’s rights under
this Instrument, including eminent domain, insolvency, code enforcement, civil
or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent
conveyance or reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender’s option may make such appearances, file such documents,
disburse such sums and take such actions as Lender reasonably deems necessary to
perform such obligations of Borrower and to protect Lender’s interest, including
(i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and out-of-pocket
expenses of accountants, inspectors and consultants, (iii) entry upon the
Mortgaged Property to make repairs or secure the Mortgaged Property, (iv)
procurement of the insurance required by Section 19, (v) payment of amounts
which Xxxxxxxx has failed to pay under Sections 15 and 17, and (vi) advances
made by Xxxxxx to pay, satisfy or discharge any obligation of Borrower for the
payment of money that is secured by a pre-existing mortgage, deed of trust or
other lien encumbering the Mortgaged Property (a "Prior Lien").
(b) Any
amounts disbursed by Lender under this Section 12, or under any other provision
of this Instrument that treats such disbursement as being made under this
Section 12, shall be
secured by this Instrument, shall be added to, and become part of, the principal
component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the “Default Rate,” as defined in
the Note.
(c) Nothing
in this Section 12 shall require Lender to incur any expense or take any
action.
13. INSPECTION.
(a) Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of the Mortgaged Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time, upon reasonable notice to Borrower if the inspection is to include
occupied residential units (which notice need not be in
writing). Notice to Borrower shall not be required in the case of an
emergency, as determined in Xxxxxx’s discretion, or when an Event of Default has
occurred and is continuing.
(b) If
Lender determines that Mold has developed as a result of a water intrusion event
or leak, Lender, at Xxxxxx’s discretion, may require that a professional
inspector inspect the Mortgaged Property as frequently as Lender determines is
necessary until any issue with Mold and its cause(s) are resolved to Lender’s
satisfaction. Such inspection shall be limited to a visual and
olfactory inspection of the area that has experienced the Mold, water intrusion
event
Page 20
or
leak. Borrower shall be responsible for the cost of such professional
inspection and any remediation deemed to be necessary as a result of the
professional inspection. After any issue with Mold, water intrusion
or leaks is remedied to Xxxxxx’s satisfaction, Lender shall not require a
professional inspection any more frequently than once every three years unless
Lender is otherwise aware of Mold as a result of a subsequent water intrusion
event or leak.
(c) If
Lender or Loan Servicer determines not to conduct an annual inspection of the
Mortgaged Property, and in lieu thereof Lender requests a certification,
Borrower shall be prepared to provide and must actually provide to Lender a
factually correct certification each year that the annual inspection is waived
to the following effect:
Borrower
has not received any written complaint, notice, letter or other written
communication from tenants, management agent or governmental authorities
regarding mold, fungus, microbial contamination or pathogenic organisms (“Mold”)
or any activity, condition, event or omission that causes or facilitates the
growth of Mold on or in any part of the Mortgaged Property or if Borrower has
received any such written complaint, notice, letter or other written
communication that Borrower has investigated and determined that no Mold
activity, condition or event exists or alternatively has fully and
properly remediated such activity, condition, event or omission in compliance
with the Moisture Management Plan for the Mortgaged Property.
If
Borrower is unwilling or unable to provide such certification, Lender may
require a professional inspection of the Mortgaged Property at Borrower’s
expense.
14. BOOKS
AND RECORDS; FINANCIAL REPORTING.
(a) Borrower
shall keep and maintain at all times at the Mortgaged Property or the management
agent’s office, and upon Xxxxxx’s request shall make available at the Mortgaged
Property (or, at Borrower’s option, at the management agent’s office), complete
and accurate books of account and records (including copies of supporting bills
and invoices) adequate to reflect correctly the operation of the Mortgaged
Property, in accordance with GAAP consistently applied (or such other method
which is reasonably acceptable to Lender), and copies of all written contracts,
Leases, and other instruments which affect the Mortgaged
Property. The books, records, contracts, Leases and other instruments
shall be subject to examination and inspection by Lender at any reasonable
time.
(b) Borrower
shall furnish to Lender each of the following:
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(i)
|
if,
in connection with this Loan, the Borrower purchased the Mortgaged
Property, a statement of income and expenses for Borrower’s operation of
the Mortgaged Property from the origination date to the end of the first
full calendar quarter following such origination date, such statement to
be provided within twenty-five (25) days after the end of such quarter;
or
|
|
(ii)
|
for
all other cases (for example, a refinance of a loan, a purchase of
partnership or other interests, or new debt being placed on the Mortgaged
Property), a statement of income and expenses for Xxxxxxxx’s operation of
the Mortgaged Property for the trailing six (6) months, such statement to
be provided within twenty-five (25) days after the end of such
quarter.
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Page 21
|
(iii)
|
after
Borrower has furnished such statements required by Section 14(b)(i) or
(ii) above, within twenty-five (25) days after the end of each subsequent
calendar quarter of Borrower,
|
|
(A)
|
a
Rent Schedule; and
|
|
(B)
|
a
statement of income and expenses for Xxxxxxxx’s operation of the Mortgaged
Property for that calendar quarter;
|
(c) Within
ninety (90) days after the end of each fiscal year of Borrower, Borrower shall
furnish to Lender each of the following:
|
(i)
|
an
annual statement of income and expenses for Xxxxxxxx’s operation of the
Mortgaged Property for that fiscal
year;
|
|
(ii)
|
a
statement of changes in financial position of Borrower relating to the
Mortgaged Property for that fiscal
year;
|
|
(iii)
|
a
balance sheet showing all assets and liabilities of Borrower relating to
the Mortgaged Property as of the end of that fiscal year and a profit and
loss statement for Borrower; and
|
|
(iv)
|
an
accounting of all security deposits held pursuant to all Leases, including
the name of the institution (if any) and the names and identification
numbers of the accounts (if any) in which such security deposits are held
and the name of the person to contact at such financial institution,
along with any authority or release necessary for Lender to access
information regarding such
accounts.
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(d) Borrower
shall furnish to Lender each of the following:
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(i)
|
prior
to a Securitization, and thereafter upon Xxxxxx’s reasonable request, a
monthly Rent Schedule and a monthly statement of income and expenses for
Borrower’s operation of the Mortgaged
Property;
|
|
(ii)
|
prior
to a Securitization, and thereafter upon Xxxxxx’s reasonable request,
Borrower shall furnish to Lender a statement that identifies all owners of
any interest in Borrower and any Controlling Entity and the interest held
by each (unless Borrower or any Controlling Entity is a publicly-traded
entity in which case such statement of ownership shall not be required),
and if Borrower or a Controlling Entity is a corporation, all officers and
directors of Borrower and the Controlling Entity, and if Borrower or a
Controlling Entity is a limited liability company, all Managers who are
not members;
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|
(iii)
|
copies
of all tax returns filed by Xxxxxxxx, within thirty (30) days after the
date of filing; and
|
|
(iv)
|
such
other financial information or property management information (including,
without limitation, information on tenants under Leases to the extent such
information is available to Borrower, copies of bank account statements
from financial institutions where funds owned or controlled by
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Page 22
|
|
Borrower
are maintained, and an accounting of security deposits) as may be required
by Lender from time to time.
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(e) At
any time upon Xxxxxx’s request, Borrower shall furnish to Lender a monthly
property management report for the Mortgaged Property, showing the number of
inquiries made and rental applications received from tenants or prospective
tenants and deposits received from tenants and any other information requested
by Xxxxxx. However, Lender shall not require the foregoing more
frequently than quarterly except when there has been an Event of Default and
such Event of Default is continuing, in which case Lender may require Borrower
to furnish the foregoing more frequently.
(f) A
natural person having authority to bind Borrower (or the SPE Equity Owner or
guarantor, as applicable) shall certify each of the statements, schedules and
reports required by Sections 14(b) through 14(e) and 14(h) to be complete and
accurate. Each of the statements, schedules and reports required by
Sections 14(b) through 14(e) and 14(h) shall be in such form and contain such
detail as Lender may reasonably require. Lender also may require that
any of the statements, schedules or reports listed in Section 14(b) through
14(c) and Section 14(d)(i) and (iv) be audited at Borrower’s expense by
independent certified public accountants acceptable to Lender, at any time when
an Event of Default has occurred and is continuing or at any time that Lender,
in its reasonable judgment, determines that audited financial statements are
required for an accurate assessment of the financial condition of Borrower or of
the Mortgaged Property.
(g) If
Borrower fails to provide in a timely manner the statements, schedules and
reports required by Sections 14(b) through 14(e) and 14(h), Lender shall give
Borrower Notice specifying the statements, schedules and reports required by
Section 14(b) through 14(e) and 14(h)
that Borrower has failed to provide. If Borrower has not provided the
required statements, schedules and reports within 10 Business Days following
such Notice, then Lender shall have the right to have Borrower’s books and
records audited, at Borrower’s expense, by independent certified public
accountants selected by Xxxxxx in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall become immediately
due and payable and shall become an additional part of the Indebtedness as
provided in Section 12. Notice to Borrower shall not be required in
the case of an emergency, as determined in Xxxxxx’s discretion, or when an Event
of Default has occurred and is continuing.
(h) Borrower
shall cause each guarantor and, at Xxxxxx’s request, any SPE Equity Owner, to
provide to Lender (i) within ninety (90) days after the close of such party’s
fiscal year, such party’s balance sheet and profit and loss statement (or if
such party is a natural person, within ninety (90) days after the close of each
calendar year, such party’s personal financial statements) in form reasonably
satisfactory to Lender and certified by such party to be accurate and complete;
and (ii) such additional financial information (including, without limitation,
copies of state and federal tax returns with respect to any SPE Equity Owner but
Lender shall only require copies of such tax returns with respect to each
guarantor if an Event of Default has occurred and is continuing) as Lender may
reasonably require from time to time and in such detail as reasonably required
by Xxxxxx.
(i) If
an Event of Default has occurred and is continuing, Borrower shall deliver to
Lender upon written demand all books and records relating to the Mortgaged
Property or its operation.
(x) Xxxxxxxx
authorizes Xxxxxx to obtain a credit report on Borrower at any
time.
15. TAXES;
OPERATING EXPENSES.
Page 23
(a) Subject
to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or
cause to be paid, all Taxes when due and before the addition of any interest,
fine, penalty or cost for nonpayment.
(b) Subject
to the provisions of Section 15(c), Borrower shall (i) pay the expenses of
operating, managing, maintaining and repairing the Mortgaged Property (including
utilities, repairs and replacements) before the last date upon which each such
payment may be made without any penalty or interest charge being added, and (ii)
pay insurance premiums at least 30 days prior to the expiration date of each
policy of insurance, unless applicable law specifies some lesser
period.
(c) If
Lender is collecting Imposition Deposits, to the extent that Lender holds
sufficient Imposition Deposits for the purpose of paying a specific Imposition,
then Borrower shall not be obligated to pay such Imposition, so long as no Event
of Default exists and Borrower has timely delivered to Lender any bills or
premium notices that it has received. If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Borrower for failing to
pay any Impositions to the extent that (i) any Event of Default has occurred and
is continuing, (ii) insufficient Imposition Deposits are held by Xxxxxx at the
time an Imposition becomes due and payable or (iii) Borrower has failed to
provide Lender with bills and premium notices as provided above.
(d) Borrower,
at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (i) Borrower notifies Lender of the commencement or
expected commencement of such proceedings, (ii) the Mortgaged Property is not in
danger of being sold or forfeited, (iii) if Borrower has not already paid the
Imposition, Borrower deposits with Lender reserves sufficient to pay the
contested Imposition, if requested by Xxxxxx, and (iv) Borrower furnishes
whatever additional security is required in the proceedings or is reasonably
requested by Xxxxxx.
(e) Borrower
shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall
furnish to Lender, on or before the date this Instrument requires such
Impositions to be paid, receipts evidencing that such payments were
made.
16. LIENS;
ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
“Lien”) on the Mortgaged
Property (other than the lien of this Instrument) or on certain ownership
interests in Borrower, whether voluntary, involuntary or by operation of law,
and whether or not such Lien has priority over the lien of this Instrument, is a
“Transfer” which
constitutes an Event of Default and subjects Borrower to personal liability
under the Note.
17. PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
(a) Borrower
shall not commit waste or permit impairment or deterioration of the Mortgaged
Property.
(b) Borrower
shall not abandon the Mortgaged Property.
Page 24
(c) Borrower
shall restore or repair promptly, in a good and workmanlike manner, any damaged
part of the Mortgaged Property to the equivalent of its original condition, or
such other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair; however, Borrower shall not be obligated to perform such
restoration or repair if (i) no Event of Default has occurred and is continuing,
and (ii) Lender has elected to apply any available insurance proceeds and/or
condemnation awards to the payment of Indebtedness pursuant to Section 19(h)(ii)
through (viii), or pursuant to Section 20(d)(ii) through (viii).
(d) Borrower
shall keep the Mortgaged Property in good repair, including the replacement of
Personalty and Fixtures with items of equal or better function and
quality.
(e) Borrower
shall provide for professional management of the Mortgaged Property by the
Property Manager or by a residential rental property manager satisfactory to
Lender at all times under a property management agreement approved by Xxxxxx in
writing. Borrower shall not surrender, terminate, cancel, modify, renew or
extend its property management agreement, or enter into any other agreement
relating to the management or operation of the Property with Property Manager or
any other Person, or consent to the assignment by the Property Manager of its
interest under such property management agreement, in each case without the
consent of Lender, which consent shall not be unreasonably withheld; provided,
however, with respect to a new property manager such consent may be conditioned
upon Borrower delivering a Rating Confirmation
as to such new property manager and the related property management
agreement. If at any time Xxxxxx consents to the appointment of a new
property manager, such new property manager and Borrower shall, as a condition
of Xxxxxx’s consent, execute an assignment of management agreement in a form
acceptable to Xxxxxx. If any such replacement property manager is an
Affiliate of Borrower, and if a nonconsolidation opinion was delivered at the
origination of the Loan, Borrower shall deliver to Lender an updated
nonconsolidation opinion in form and substance satisfactory to the Rating
Agencies (unless waived by the Rating Agencies) with regard to
nonconsolidation.
(f) Borrower
shall give Notice to Lender of and, unless otherwise directed in writing by
Xxxxxx, shall appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Xxxxxx’s security or Xxxxxx’s rights under this
Instrument. Borrower shall not (and shall not permit any tenant or
other person to) remove, demolish or alter the Mortgaged Property or any part of
the Mortgaged Property, including any removal, demolition or alteration
occurring in connection with a rehabilitation of all or part of the Mortgaged
Property, except (i) in connection with the replacement of tangible Personalty,
(ii) if Borrower is a cooperative housing corporation or association, to the
extent permitted with respect to individual dwelling units under the form of
proprietary lease or occupancy agreement and (iii) repairs and replacements in
connection with making an individual unit ready for a new occupant.
(g) Unless
otherwise waived by Xxxxxx in writing, Borrower must have or must establish and
must adhere to the MMP. If the Borrower is required to have an MMP,
the Borrower must keep all MMP documentation at the Mortgaged Property or at the
management agent’s office and available for the Lender or the Loan Servicer to
review during any annual assessment or other inspection of the Mortgaged
Property that is required by Lender.
(h) If
Borrower is a housing cooperative corporation or association, until the
Indebtedness is paid in full Borrower shall not reduce the maintenance fees,
charges or assessments payable by shareholders or residents under proprietary
leases or occupancy agreements below a level which is sufficient to pay all
expenses of the Borrower, including,
Page 25
without
limitation, all operating and other expenses for the Mortgaged Property and all
payments due pursuant to the terms of the Note and any Loan
Documents.
18. ENVIRONMENTAL
HAZARDS.
(a) Except
for matters described in Section 18(b), Borrower shall not cause or permit any
of the following:
|
(i)
|
the
presence, use, generation, release, treatment, processing, storage
(including storage in above ground and underground storage tanks),
handling, or disposal of any Hazardous Materials on or under the Mortgaged
Property;
|
|
(ii)
|
the
transportation of any Hazardous Materials to, from, or across the
Mortgaged Property;
|
|
(iii)
|
any
occurrence or condition on the Mortgaged Property, which occurrence or
condition is or may be in violation of Hazardous Materials
Laws;
|
|
(iv)
|
any
violation of or noncompliance with the terms of any Environmental Permit
with respect to the Mortgaged Property;
or
|
|
(v)
|
any
violation or noncompliance with the terms of any O&M Program as
defined in subsection (d).
|
The
matters described in clauses (i) through (v) above, except as otherwise provided
in Section 18(b), are referred to collectively in this Section 18 as “Prohibited Activities or
Conditions.”
(b) Prohibited
Activities or Conditions shall not include lawful conditions permitted by an
O&M Program or the safe and lawful use and storage of quantities of (i)
pre-packaged supplies, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable multifamily properties, (ii)
cleaning materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants of residential
dwelling units in the Mortgaged Property; and (iii) petroleum products used in
the operation and maintenance of motor vehicles from time to time located on the
Mortgaged Property’s parking areas, so long as all of the foregoing are used,
stored, handled, transported and disposed of in compliance with Hazardous
Materials Laws.
(c) Borrower
shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this Instrument)
to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or
Conditions. Borrower shall not lease or allow the sublease or use of
all or any portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its business,
would cause or permit any Prohibited Activity or Condition.
(d) As
required by Lender, Borrower shall also have established a written operations
and maintenance program with respect to certain Hazardous
Materials. Each such operations and maintenance program and any
additional or revised operations and maintenance programs established for the
Mortgaged Property pursuant to this Section 18 must be approved by Lender and
shall be referred to herein as an “O&M
Program.” Borrower shall comply in a timely manner with, and
cause all employees, agents, and contractors of Borrower and any
other
Page 26
Persons
present on the Mortgaged Property to comply with each O&M
Program. Borrower shall pay all costs of performance of Xxxxxxxx’s
obligations under any O&M Program, and Xxxxxx’s out of pocket costs incurred
in connection with the monitoring and review of each O&M Program and
Xxxxxxxx’s performance shall be paid by Borrower upon demand by
Xxxxxx. Any such out-of-pocket costs of Lender that Borrower fails to
pay promptly shall become an additional part of the Indebtedness as provided in
Section 12.
(e) Borrower
represents and warrants to Lender that, except as previously disclosed by
Xxxxxxxx to Lender in writing (which written disclosure may be in certain
environmental assessments and other written reports accepted by Xxxxxx in
connection with the funding of the Indebtedness and dated prior to the date of
this Instrument):
|
(i)
|
Borrower
has not at any time engaged in, caused or permitted any Prohibited
Activities or Conditions on the Mortgaged
Property;
|
|
(ii)
|
to
the best of Xxxxxxxx’s knowledge after reasonable and diligent inquiry, no
Prohibited Activities or Conditions exist or have existed on the Mortgaged
Property;
|
|
(iii)
|
the
Mortgaged Property does not now contain any underground storage tanks,
and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground storage
tanks in the past. If there is an underground storage tank
located on the Mortgaged Property that has been previously disclosed by
Borrower to Lender in writing, that tank complies with all requirements of
Hazardous Materials Laws;
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|
(iv)
|
to
the best of Xxxxxxxx’s knowledge after reasonable and diligent inquiry,
Xxxxxxxx has complied with all Hazardous Materials Laws, including all
requirements for notification regarding releases of Hazardous
Materials. Without limiting the generality of the foregoing,
Xxxxxxxx has obtained all Environmental Permits required for the operation
of the Mortgaged Property in accordance with Hazardous Materials Laws now
in effect and all such Environmental Permits are in full force and
effect;
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|
(v)
|
to
the best of Xxxxxxxx’s knowledge after reasonable and diligent inquiry, no
event has occurred with respect to the Mortgaged Property that
constitutes, or with the passing of time or the giving of notice would
constitute, noncompliance with the terms of any Environmental
Permit;
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|
(vi)
|
there
are no actions, suits, claims or proceedings pending or, to the best of
Xxxxxxxx’s knowledge after reasonable and diligent inquiry, threatened
that involve the Mortgaged Property and allege, arise out of, or relate to
any Prohibited Activity or Condition;
and
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|
(vii)
|
Borrower
has not received any written complaint, order, notice of violation or
other communication from any Governmental Authority with regard to air
emissions, water discharges, noise emissions or Hazardous Materials, or
any other environmental, health or safety matters affecting the Mortgaged
Property.
|
Page 27
(f) Borrower
shall promptly notify Lender in writing upon the occurrence of any of the
following events:
|
(i)
|
Borrower’s
discovery of any Prohibited Activity or
Condition;
|
|
(ii)
|
Xxxxxxxx’s
receipt of or knowledge of any written complaint, order, notice of
violation or other communication from any tenant, management agent,
Governmental Authority or other Person with regard to present or future
alleged Prohibited Activities or Conditions, or any other environmental,
health or safety matters affecting the Mortgaged Property;
or
|
|
(iii)
|
Borrower’s
breach of any of its obligations under this Section
18.
|
Any such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the Note, or any other Loan
Document.
(g) Borrower
shall pay promptly the costs of any environmental inspections, tests or audits,
a purpose of which is to identify the extent or cause of or potential for a
Prohibited Activity or Condition (“Environmental Inspections”),
required by Lender in connection with any foreclosure or deed in lieu of
foreclosure, or as a condition of Lender’s consent to any Transfer under Section
21, or required by Lender following a reasonable determination by Lender
that Prohibited Activities or Conditions may exist. Any such costs
incurred by Xxxxxx (including Attorneys’ Fees and Costs and the costs of
technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) that Borrower fails to pay promptly shall
become an additional part of the Indebtedness as provided in Section
12. As long as (i) no Event of Default has occurred and is
continuing, (ii) Borrower has actually paid for or reimbursed Lender for all
costs of any such Environmental Inspections performed or required by Xxxxxx, and
(iii) Lender is not prohibited by law, contract or otherwise from doing so,
Lender shall make available to Borrower, without representation of any kind,
copies of Environmental Inspections prepared by third parties and delivered to
Lender. Lender hereby reserves the right, and Xxxxxxxx hereby
expressly authorizes Xxxxxx, to make available to any party, including any
prospective bidder at a foreclosure sale of the Mortgaged Property, the results
of any Environmental Inspections made by or for Lender with respect to the
Mortgaged Property. Borrower consents to Lender notifying any party
(either as part of a notice of sale or otherwise) of the results of any
Environmental Inspections made by or for Lender. Borrower
acknowledges that Lender cannot control or otherwise assure the truthfulness or
accuracy of the results of any Environmental Inspections and that the release of
such results to prospective bidders at a foreclosure sale of the Mortgaged
Property may have a material and adverse effect upon the amount that a party may
bid at such sale. Xxxxxxxx agrees that Xxxxxx shall have no liability
whatsoever as a result of delivering the results to any third party of any
Environmental Inspections made by or for Lender, and Borrower hereby releases
and forever discharges Lender from any and all claims, damages, or causes of
action, arising out of, connected with or incidental to the results of, the
delivery of any of Environmental Inspections made by or for Lender.
(h) If
any investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial
Work”) is necessary to comply with any Hazardous Materials Law or order
of any Governmental Authority that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property, or is otherwise required by Lender as a consequence of any Prohibited
Activity or Condition or to prevent the occurrence of a Prohibited Activity or
Condition, Borrower shall, by the earlier of (i) the applicable deadline
required by Hazardous Materials Law or (ii) 30 days after Notice
from
Page 28
Lender
demanding such action, begin performing the Remedial Work, and thereafter
diligently prosecute it to completion, and shall in any event complete the work
by the time required by applicable Hazardous Materials Law. If
Borrower fails to begin on a timely basis or diligently prosecute any required
Remedial Work, Lender may, at its option, cause the Remedial Work to be
completed, in which case Xxxxxxxx shall reimburse Lender on demand for the cost
of doing so. Any reimbursement due from Borrower to Lender shall
become part of the Indebtedness as provided in Section 12.
(i) Borrower
shall comply with all Hazardous Materials Laws applicable to the Mortgaged
Property. Without limiting the generality of the previous sentence,
Borrower shall (i) obtain and maintain all Environmental Permits required by
Hazardous Materials Laws and comply with all conditions of such Environmental
Permits; (ii) cooperate with any inquiry by any Governmental Authority; and
(iii) comply with any governmental or judicial order that arises from any
alleged Prohibited Activity or Condition.
(j) Borrower
shall indemnify, hold harmless and defend (i) Xxxxxx, including any custodian,
trustee and any other fiduciaries who hold or have held a full or partial
interest in the Loan for the benefit of third parties, (ii) any prior owner or
holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan Servicer, (v)
the officers, directors, shareholders, partners, employees and trustees of any
of the foregoing, and (vi) the heirs, legal representatives, successors
and assigns of each of the foregoing (collectively, the “Indemnitees”) from and against
all proceedings, claims, damages, penalties and costs (whether initiated or
sought by Governmental Authorities or private parties), including Attorneys’
Fees and Costs and remediation costs, whether incurred in connection with any
judicial or administrative process or otherwise, arising directly or indirectly
from any of the following:
|
(i)
|
any
breach of any representation or warranty of Borrower in this Section
18;
|
|
(ii)
|
any
failure by Borrower to perform any of its obligations under this Section
18;
|
|
(iii)
|
the
existence or alleged existence of any Prohibited Activity or
Condition;
|
|
(iv)
|
the
presence or alleged presence of Hazardous Materials on or under the
Mortgaged Property or in any of the Improvements;
and
|
|
(v)
|
the
actual or alleged violation of any Hazardous Materials
Law.
|
(k) Counsel
selected by Xxxxxxxx to defend Indemnitees shall be subject to the approval of
those Indemnitees. In any circumstances in which the indemnity under
this Section 18 applies, Xxxxxx may employ its own legal counsel and consultants
to prosecute, defend or negotiate any claim or legal or administrative
proceeding and Lender, with the prior written consent of Xxxxxxxx (which shall
not be unreasonably withheld, delayed or conditioned) may settle or compromise
any action or legal or administrative proceeding. However, unless an
Event of Default has occurred and is continuing, or the interests of Borrower
and Lender are in conflict, as determined by Lender in its discretion, Lender
shall permit Borrower to undertake the actions referenced in this Section 18 in
accordance with this Section 18(k) and Section 18(l) so long as Lender approves
such action, which approval shall not be unreasonably withheld or
delayed. Borrower shall reimburse Lender upon demand for all costs
and expenses incurred by Xxxxxx, including all costs of settlements entered into
in good faith, consultants’ fees and Attorneys’ Fees and Costs.
Page 29
(l) Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”), settle or compromise
the Claim if the settlement (i) results in the entry of any judgment that does
not include as an unconditional term the delivery by the claimant or plaintiff
to Lender of a written release of those Indemnitees, satisfactory in form and
substance to Lender; or (ii) may materially and adversely affect Lender, as
determined by Xxxxxx in its discretion.
(m) Xxxxxxxx’s
obligation to indemnify the Indemnitees shall not be limited or impaired by any
of the following, or by any failure of Borrower or any guarantor to receive
notice of or consideration for any of the following:
|
(i)
|
any
amendment or modification of any Loan
Document;
|
|
(ii)
|
any
extensions of time for performance required by any Loan
Document;
|
|
(iii)
|
any
provision in any of the Loan Documents limiting Xxxxxx’s recourse to
property securing the Indebtedness, or limiting the personal liability of
Borrower
or any other party for payment of all or any part of the
Indebtedness;
|
|
(iv)
|
the
accuracy or inaccuracy of any representations and warranties made by
Borrower under this Instrument or any other Loan
Document;
|
|
(v)
|
the
release of Borrower or any other Person, by Xxxxxx or by operation of law,
from performance of any obligation under any Loan
Document;
|
|
(vi)
|
the
release or substitution in whole or in part of any security for the
Indebtedness; and
|
|
(vii)
|
Lender’s
failure to properly perfect any lien or security interest given as
security for the Indebtedness.
|
(n) Borrower
shall, at its own cost and expense, do all of the following:
|
(i)
|
pay
or satisfy any judgment or decree that may be entered against any
Indemnitee or Indemnitees in any legal or administrative proceeding
incident to any matters against which Indemnitees are entitled to be
indemnified under this Section 18;
|
|
(ii)
|
reimburse
Indemnitees for any expenses paid or incurred in connection with any
matters against which Indemnitees are entitled to be indemnified under
this Section 18; and
|
|
(iii)
|
reimburse
Indemnitees for any and all expenses, including Attorneys’ Fees and Costs,
paid or incurred in connection with the enforcement by Indemnitees of
their rights under this Section 18, or in monitoring and participating in
any legal or administrative
proceeding.
|
(o) The
provisions of this Section 18 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or under
other Loan Documents, and each Indemnitee shall be entitled to indemnification
under this Section 18 without regard to whether Lender or that Indemnitee has
exercised any rights against the
Page 30
Mortgaged
Property or any other security, pursued any rights against any guarantor, or
pursued any other rights available under the Loan Documents or applicable law.
If Borrower consists of more than one Person, the obligation of those Persons to
indemnify the Indemnitees under this Section 18 shall be joint and several. The
obligation of Borrower to indemnify the Indemnitees under this Section 18 shall
survive any repayment or discharge of the Indebtedness, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, and any release of record of the lien of this
Instrument. Notwithstanding the foregoing, if Xxxxxx has never been a
mortgagee-in-possession of, or held title to, the Mortgaged Property, Borrower
shall have no obligation to indemnify the Indemnitees under this Section 18
after the date of the release of record of the lien of this Instrument by
payment in full at the Maturity Date or by voluntary prepayment in
full.
19. PROPERTY
AND LIABILITY INSURANCE.
(a) At
all times during the term hereof, Borrower shall maintain, at its sole cost and
expense, for the mutual benefit of Borrower and Lender, the following policies
of insurance:
|
(i)
|
Insurance
against any peril included within the classification “All Risks of
Physical Loss” with extended coverage in amounts at all times sufficient
to prevent Borrower from becoming a co-insurer within the terms of the
applicable policies, but in any event such insurance shall be maintained
in an amount equal to the full insurable value of the Mortgaged
Property. The policy referred to in this Section 19 shall contain a
replacement cost endorsement and a waiver of depreciation. As used
in this Instrument, “full insurable value” means the actual replacement
cost of the Improvements and Personalty (without taking into account any
depreciation), determined annually by an insurer or by Borrower or, at the
request of Lender, by an insurance broker (subject to Xxxxxx’s reasonable
approval). In all cases where any of the Improvements or the use of
the Mortgaged Property shall at any time constitute legal non-conforming
structures or uses under applicable legal requirements of any Governmental
Authority, the policy referred to in this Section 19 must include
“Ordinance and Law Coverage,” with “Time Element,” “Loss to the Undamaged
Portion of the Building,” “Demolition Cost” and “Increased Cost of
Construction” endorsements, in the amount of coverage required by
Lender;
|
|
(ii)
|
Commercial
general liability insurance, including contractual injury, bodily injury,
broad form death and property damage liability against any and all claims,
including all legal liability to the extent insurable imposed upon
Borrower and all Attorneys’ Fees and Costs, arising out of or connected
with the possession, use, leasing, operation, maintenance or condition of
the Mortgaged Property with a combined limit of not less than $2,000,000
in the aggregate and $1,000,000 per occurrence, plus umbrella or excess
liability coverage with minimum limits in the aggregate and per occurrence
of $1,000,000 for Improvements that have 1 to 3 stories and an additional
$2,000,000 in coverage for each additional story with maximum required
coverage of $15,000,000, plus motor vehicle
liability coverage for all owned and non-owned vehicles (including,
without limitation, rented and leased vehicles) containing minimum limits
per occurrence, including umbrella coverage, of
$1,000,000.
|
Page 31
|
(iii)
|
Statutory
workers’ compensation insurance;
|
|
(iv)
|
Business
interruption including loss of rental value insurance for the Mortgaged
Property in an amount equal to not less than twelve (12) months’ estimated
gross Rents attributable to the Mortgaged Property and based on gross
Rents for the immediately preceding year and otherwise sufficient to avoid
any co-insurance penalty with a 90 day extended period of indemnity (but a
minimum of eighteen (18) months’ estimated gross Rents attributable to the
Mortgaged Property and based on gross Rents for the immediately preceding
year and otherwise sufficient to avoid any co-insurance penalty with a 90
day extended period of indemnity when (A) the Improvements have 5 or more
stories or (B) at all times during which the Indebtedness is
equal to or greater than
$50,000,000);
|
|
(v)
|
If
any portion of the Improvements are located within a federally designated
flood hazard zone, flood insurance in an amount equal to the full
insurable value of the portion of such Improvements within such flood
hazard zone. Such coverage may need to be purchased through
excess carriers if the required coverage exceeds the maximum insurance
allowed under the federal flood insurance
program;
|
|
(vi)
|
Insurance
against loss or damage from (A) leakage of sprinkler systems and (B)
explosion of steam boilers, air conditioning equipment, pressure vessels
or similar apparatus now or hereafter installed at the Mortgaged Property,
in such amounts as Lender may from time to time reasonably require and
which are customarily required by institutional lenders with respect to
similar properties similarly
situated;
|
|
(vii)
|
The
insurance required under clauses (i) and (iv) above shall cover perils of
terrorism and acts of terrorism and Borrower shall maintain commercial
property insurance for loss resulting from perils and acts of terrorism on
terms (including amounts) consistent with those required under clauses (i)
and (iv) above at all times during the term of the Loan evidenced by the
Note;
|
|
(viii)
|
During
any period of Restoration, builder’s “all risk” insurance in an amount
equal to not less than the full insurable value of the Property against
such risks (including fire and extended coverage and collapse of the
Improvements to agreed limits) as Lender may request, in form and
substance acceptable to Lender; and
|
|
(ix)
|
Such
other insurance with respect to the Improvements and Personalty located on
the Property against loss or damage as required by Lender (including,
without limitation, liquor/dramshop, Mold, hurricane, windstorm and
earthquake insurance) provided such insurance is of the kind for risks
from time to time customarily insured against and in such minimum coverage
amounts and maximum deductibles as are generally required by institutional
lenders for properties comparable to the Mortgaged Property or which
Lender may deem necessary in its reasonable discretion; provided, however,
if Lender requires earthquake insurance, the amount of coverage must be
equal to 150% of the probable maximum loss for the Mortgaged Property but
Lender shall not require
|
Page 32
|
|
earthquake
insurance if the probable maximum loss for the Mortgaged Property is less
than twenty percent (20%). In the event any updated reports or
other documentation are reasonably required by Lender in order to
determine whether such additional insurance is necessary or prudent,
Borrower shall pay for all such documentation at its sole cost and
expense.
|
All
insurance required pursuant to subsections (i) and subsections (iv) through (ix)
shall be referred to as “Hazard Insurance”.
(b) All
premiums on insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Xxxxxx has designated in writing another
method of payment. All such policies shall also be in a form approved
by Lender. All policies of Hazard Insurance must include a
non-contributing, non-reporting mortgagee clause in favor of, and in a form
approved by, Lender. All policies for general liability insurance
must contain a standard additional insured provision, in favor of, and in a form
approved by Lender. Borrower shall deliver to Lender a legible copy
of each insurance policy (or duplicate original), and Borrower shall promptly
deliver to Lender a copy of all renewal and other notices received by Borrower
with respect to the policies and all receipts for paid premiums. At
least 30 days prior to the expiration date of any insurance policy, Borrower
shall deliver to Lender evidence acceptable to Lender that the policy has been
renewed. If Xxxxxxxx has not delivered a legible copy of each
renewal
policy (or a duplicate original) prior to the expiration date of any insurance
policy, Borrower shall deliver a legible copy of each renewal policy (or a
duplicate original) in a form satisfactory to Lender within 60 days after the
expiration date of the original policy.
(c) Borrower
will maintain the insurance coverage described in this Section 19 with companies
acceptable to Lender and with a claims paying ability of at least (i) “A-” or
its equivalent by Fitch, Inc., (ii) “A-” or its equivalent by Standard &
Poor’s Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., (iii)
“A3” or its equivalent by Xxxxx’x Investors Service, Inc. or (iv) “A VIII” or
its equivalent by A.M. Best Company. All insurers providing insurance
required by this Instrument must be authorized to issue insurance in the
Property Jurisdiction.
(d) All
insurance policies and renewals of insurance policies required by this Section
19 shall be for such periods as Lender may from time to time
require.
(e) Borrower
shall comply with all insurance requirements and shall not permit any condition
to exist on the Mortgaged Property that would invalidate any part of any
insurance coverage that this Instrument requires Borrower to
maintain.
(f) In
the event of loss, Borrower shall give immediate written notice to the insurance
carrier and to Lender. Xxxxxxxx hereby authorizes and appoints Xxxxxx
as attorney in fact for Xxxxxxxx to make proof of loss, to adjust and compromise
any claims under policies of Hazard Insurance, to appear in and prosecute any
action arising from such Hazard Insurance policies, to collect and receive the
proceeds of Hazard Insurance, to hold the proceeds of Hazard Insurance, and to
deduct from such proceeds Lender’s expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and
therefore is irrevocable. However, nothing contained in this Section
19 shall require Lender to incur any expense or take any
action. Lender may, at Lender’s option, (i) require a “repair or
replacement” settlement, in which case the proceeds will be used to reimburse
Borrower for the cost of restoring and repairing the Mortgaged Property to the
equivalent of its original condition or to a condition approved by Lender (the
“Restoration”), or (ii)
require an “actual cash value” settlement in which case the proceeds may be
applied to the payment of the Indebtedness, whether or not then due. To
the
Page 33
extent
Lender determines to require a repair or replacement settlement and apply
insurance proceeds to Restoration, Lender shall apply the proceeds in accordance
with Lender’s then-current policies relating to the restoration of casualty
damage on similar multifamily properties.
(g) Notwithstanding
any provision to the contrary in this Section 19, as long as no Event of
Default, or any event which, with the giving of Notice or the passage of time,
or both, would constitute an Event of Default, has occurred and is
continuing,
|
(i)
|
in
the event of a casualty resulting in damage to the Mortgaged Property
which will cost $25,000 or less to repair, the Borrower shall have the
sole right to make proof of loss, adjust and compromise the claim and
collect and receive any proceeds directly without the approval or prior
consent of the Lender so long as the insurance proceeds are used solely
for the Restoration of the Mortgaged Property;
and
|
|
(ii)
|
in
the event of a casualty resulting in damage to the Mortgaged Property
which will cost more than $25,000 but less than $100,000 to repair, the
Borrower is authorized to make proof of loss and adjust and compromise the
claim without the prior consent of Lender, and Lender shall hold the applicable
insurance proceeds to be used to reimburse Borrower for the cost of
Restoration of the Mortgaged Property and shall not apply such proceeds to
the payment of sums due under this
Instrument.
|
(h) Lender
will have the right to exercise its option to apply insurance proceeds to the
payment of the Indebtedness only if Lender determines that at least one of the
following conditions is met:
|
(i)
|
an
Event of Default (or any event, which, with the giving of Notice or the
passage of time, or both, would constitute an Event of Default) has
occurred and is continuing;
|
|
(ii)
|
Lender
determines, in its discretion, that there will not be sufficient funds
from insurance proceeds, anticipated contributions of Borrower of its own
funds or other sources acceptable to Lender to complete the
Restoration;
|
|
(iii)
|
Lender
determines, in its discretion, that the rental income from the Mortgaged
Property after completion of the Restoration will not be sufficient to
meet all operating costs and other expenses, Imposition Deposits, deposits
to reserves and Loan repayment obligations relating to the Mortgaged
Property;
|
|
(iv)
|
Lender
determines, in its discretion, that the Restoration will not be completed
by the earlier of (A) at least one year before the Maturity Date (or six
months before the Maturity Date if Lender determines in its discretion
that re-leasing of the Mortgaged Property will be completed within such
six-month period) or (B) the expiration of the business interruption
coverage;
|
|
(v)
|
Lender
determines that the Restoration will not be completed within one year
after the date of the loss or
casualty;
|
Page 34
|
(vi)
|
the
casualty involved an actual or constructive loss of more than 30% of the
fair market value of the Mortgaged Property, and rendered untenantable
more than 30% of the aggregate rentable square footage of the Mortgaged
Property;
|
|
(vii)
|
after
Restoration the fair market value of the Mortgaged Property is expected to
be less than the fair market value of the Mortgaged Property immediately
prior to such casualty (assuming the affected portion of the Mortgaged
Property is relet within a reasonable period after the date of such
casualty); or
|
|
(viii)
|
Leases
covering at least 65% of the aggregate rentable square footage of the
Mortgaged Property shall not remain in full force and effect during and
after the completion of
Restoration.
|
(i) If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any insurance policies and unearned insurance premiums and in
and to the proceeds resulting from any damage to the Mortgaged Property prior to
such sale or acquisition.
(j) Unless
Lender otherwise agrees in writing, any application of any insurance proceeds to
the Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments.
(k) Xxxxxxxx
agrees to execute such further evidence of assignment of any insurance proceeds
as Lender may require.
20. CONDEMNATION.
(a) Borrower
shall promptly notify Lender in writing of any action or proceeding or notice
relating to any proposed or actual condemnation or other taking, or conveyance
in lieu thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a “Condemnation”). Borrower
shall appear in and prosecute or defend any action or proceeding relating to any
Condemnation unless otherwise directed by Xxxxxx in writing. Xxxxxxxx
authorizes and appoints Xxxxxx as attorney in fact for Xxxxxxxx to commence,
appear in and prosecute, in Xxxxxx’s or Xxxxxxxx’s name, any action or
proceeding relating to any Condemnation and to settle or compromise any claim in
connection with any Condemnation, after consultation with Xxxxxxxx and
consistent with commercially reasonable standards of a prudent
lender. This power of attorney is coupled with an interest and
therefore is irrevocable. However, nothing contained in this Section
20 shall require Lender to incur any expense or take any
action. Borrower hereby transfers and assigns to Lender all right,
title and interest of Xxxxxxxx in and to any award or payment with respect to
(i) any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any
damage to the Mortgaged Property caused by governmental action that does not
result in a Condemnation.
(b) Lender
may hold such awards or proceeds and apply such awards or proceeds, after the
deduction of Xxxxxx’s expenses incurred in the collection of such amounts
(including Attorneys’ Fees and Costs) at Lender’s option, to the restoration or
repair of the Mortgaged Property or to the payment of the Indebtedness, with the
balance, if any, to Borrower. Unless Lender otherwise agrees in
writing, any application of any awards or proceeds to the Indebtedness shall not
extend or postpone the due date of any monthly installments referred to
in
Page 35
the Note,
Section 7 of this Instrument or any Collateral Agreement, or change the amount
of such installments. Xxxxxxxx agrees to execute such further
evidence of assignment of any awards or proceeds as Lender may
require.
(c) Notwithstanding
any provision to the contrary in this Section 20, in the event of a partial
Condemnation of the Mortgaged Property, as long as no Event of Default, or any
event which, with the giving of Notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing,
|
(i)
|
in
the event of a partial Condemnation resulting in proceeds or awards in the
amount of $25,000 or less, the Borrower shall have the sole right to make
proof of loss, adjust and compromise the claim and collect and receive any
proceeds directly without the approval or prior consent of the Lender so
long as the proceeds or awards are used solely for the Restoration of the
Mortgaged Property; and
|
|
(ii)
|
in
the event of a partial Condemnation resulting in proceeds or awards in the
amount of more than $25,000 but less than $100,000, the Borrower is
authorized to make proof of loss and adjust and compromise the claim without
the prior consent of Lender, and Lender shall hold the applicable proceeds
or awards to be used to reimburse Borrower for the cost of Restoration of
the Mortgaged Property and shall not apply such proceeds and awards to the
payment of sums due under this
Instrument.
|
(d) In
the event of a partial Condemnation of the Mortgaged Property resulting in
proceeds or awards in the amount of $100,000 or more, Lender will have the right
to exercise its option to apply Condemnation proceeds to the payment of the
Indebtedness only if Lender determines that at least one of the following
conditions is met:
|
(i)
|
an
Event of Default (or any event, which, with the giving of Notice or the
passage of time, or both, would constitute an Event of Default) has
occurred and is continuing;
|
|
(ii)
|
Lender
determines, in its discretion, that there will not be sufficient funds
from Condemnation proceeds, anticipated contributions of Borrower of its
own funds or other sources acceptable to Lender to complete the
Restoration;
|
|
(iii)
|
Lender
determines, in its discretion, that the rental income from the Mortgaged
Property after completion of the Restoration will not be sufficient to
meet all operating costs and other expenses, Imposition Deposits, deposits
to reserves and Loan repayment obligations relating to the Mortgaged
Property;
|
|
(iv)
|
Lender
determines, in its discretion, that the Restoration will not be completed
at least one year before the Maturity Date (or six months before the
Maturity Date if Lender determines in its discretion that re-leasing of
the Mortgaged Property will be completed within such six-month
period);
|
|
(v)
|
Lender
determines that the Restoration will not be completed within one year
after the date of the Condemnation;
|
Page 36
|
(vi)
|
the
Condemnation involved an actual or constructive loss of more than 15% of
the fair market value of the Mortgaged Property, and rendered untenantable
more than 25% of the aggregate rentable square footage of the Mortgaged
Property;
|
|
(vii)
|
after
Restoration the fair market value of the Mortgaged Property is expected to
be less than the fair market value of the Mortgaged Property immediately
prior to the Condemnation (assuming the affected portion of the Mortgaged
Property is relet within a reasonable period after the date of the
Condemnation); or
|
|
(viii)
|
Leases
covering at least 65% of the aggregate rentable square footage of the
Mortgaged Property shall not remain in full force and effect during and
after the completion of
Restoration.
|
(e) If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any Condemnation proceeds and awards prior to such sale or
acquisition.
(f) Xxxxxxxx
agrees to execute such further evidence of assignment of any Condemnation
proceeds as Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY
OR INTERESTS IN BORROWER. [RIGHT TO UNLIMITED TRANSFERS -- WITH
LENDER APPROVAL]. Notwithstanding anything to the contrary in
this Section 21, no Transfer will be permitted under this Section 21 unless the
provisions of Section 33 are satisfied.
(a) “Transfer” means
|
(i)
|
a
sale, assignment, transfer or other disposition or divestment of any
interest therein (whether voluntary, involuntary or by operation of
law);
|
|
(ii)
|
the
granting, creating or attachment of a lien, encumbrance or security
interest (whether voluntary, involuntary or by operation of
law);
|
|
(iii)
|
the
issuance or other creation of an ownership interest in a legal entity,
including a partnership interest, interest in a limited liability company
or corporate stock;
|
|
(iv)
|
the
withdrawal, retirement, removal or involuntary resignation of a partner in
a partnership or a member or Manager in a limited liability company;
or
|
|
(v)
|
the
merger, dissolution, liquidation, or consolidation of a legal entity or
the reconstitution of one type of legal entity into another type of legal
entity.
|
For
purposes of defining the term “Transfer,” the term “partnership” shall mean a
general partnership, a limited partnership, and a joint venture, and the term
“partner” shall mean a general partner, a limited partner and a joint
venturer.
(b) “Transfer”
does not include
Page 37
|
(i)
|
a
conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under this
Instrument,
|
|
(ii)
|
the
Mortgaged Property becoming part of a bankruptcy estate by operation of
law under the United States Bankruptcy Code,
or
|
|
(iii)
|
a
lien against the Mortgaged Property for local taxes and/or assessments not
then due and payable.
|
(c) The
occurrence of any of the following Transfers shall not constitute an Event of
Default under this Instrument, notwithstanding any provision of Section 21(e) to
the contrary:
|
(i)
|
a
Transfer to which Xxxxxx has
consented;
|
|
(ii)
|
a
Transfer that occurs in accordance with Section
21(d);
|
|
(iii)
|
the
grant of a leasehold interest in an individual dwelling unit for a term of
two years or less not containing an option to
purchase;
|
|
(iv)
|
a
Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and
quality, which are free of liens, encumbrances and security interests
other than those created by the Loan Documents or consented to by
Lender;
|
|
(v)
|
the
creation of a mechanic’s, materialman’s, or judgment lien against the
Mortgaged Property, which is released of record or otherwise remedied to
Xxxxxx’s satisfaction within 60 days of the date of
creation;
|
|
(vi)
|
if
Borrower is a housing cooperative corporation or association, the Transfer
of more than 49 percent of the shares in the housing cooperative or the
assignment of more than 49 percent of the occupancy agreements or leases
relating thereto by tenant shareholders of the housing cooperative or
association to other tenant
shareholders;
|
|
(vii)
|
any
Transfer of an interest in Borrower or any interest in a Controlling
Entity (which, if such Controlling Entity were Borrower, would result in
an Event of Default) listed in (A) through (F) below (a “Preapproved Transfer”),
under the terms and conditions listed as items (1) through (10)
below:
|
|
(A)
|
a
sale or transfer to one or more of the transferor’s immediate family
members; or
|
|
(B)
|
a
sale or transfer to any trust having as its sole beneficiaries the
transferor and/or one or more of the transferor’s immediate family
members; or
|
|
(C)
|
a
sale or transfer from a trust to any one or more of its beneficiaries who
are immediate family members of the transferor ;
or
|
|
(D)
|
the
substitution or replacement of the trustee of any trust with a trustee who
is an immediate family member of the transferor;
or
|
Page 38
|
(E)
|
a
sale or transfer to an entity owned and Controlled by the transferor or
the transferor’s immediate family members;
or
|
|
(F)
|
a
sale or transfer to a natural person or entity that has an existing
interest in the Borrower or in a Controlling
Entity.
|
|
(1)
|
Borrower
shall provide Lender with prior written Notice of the proposed Preapproved
Transfer, which Notice must be accompanied by a non-refundable review fee
in the amount of $3,000.00.
|
|
(2)
|
For
the purposes of these Preapproved Transfers, a transferor’s immediate
family members will be deemed to include a spouse, parent, child or
grandchild of such transferor.
|
|
(3)
|
Either
directly or indirectly, [See Exhibit B] shall retain at all times a
Controlling Interest in the Borrower and manage the day-to-day operations
of the Borrower.
|
|
(4)
|
At
the time of the proposed Preapproved Transfer, no Event of Default shall
have occurred and be continuing and no event or condition shall have
occurred and be continuing that, with the giving of Notice or the passage
of time, or both, would become an Event of
Default.
|
|
(5)
|
Lender
shall be entitled to collect all costs, including the cost of all title
searches, title insurance and recording costs, and all Attorneys’ Fees and
Costs.
|
|
(6)
|
Lender
shall not be entitled to collect a transfer fee as a result of these
Preapproved Transfers.
|
|
(7)
|
In
the event of a Transfer prohibited by or requiring Lender’s approval under
this Section 21, this Section (c)(vii) may be modified or rendered void by
Lender at Lender’s option by Notice to Borrower and the transferee(s), as
a condition of Xxxxxx’s consent.
|
|
(8)
|
if
any certificates evidencing the Securitization remain outstanding, a
Rating Confirmation.
|
|
(9)
|
If
a nonconsolidation opinion was delivered at origination of the Loan and
if, after giving effect to all Preapproved Transfers and all prior
Transfers, fifty percent (50%) or more in the aggregate of direct or
indirect interests in Borrower are owned by any Person and its Affiliates
that owned less than a fifty percent (50%) direct or indirect interest in
Borrower as of the origination of the Loan, an opinion of counsel for
Borrower, in form and substance satisfactory to Lender and to the Rating
Agencies, with regard to
nonconsolidation.
|
Page 39
|
(10)
|
Confirmation
acceptable to Lender that Section 33 continues to be satisfied;
and
|
|
(viii)
|
a
Supplemental Mortgage that complies with Section 43 or Defeasance that
complies with Section 44.
|
(d) The
occurrence of any of the following Transfers shall not constitute an Event of
Default under this Instrument, provided such Transfer does not constitute an
Event of Default under any other Section of this Instrument:
|
(i)
|
a
Transfer that occurs by devise, descent, or by operation of law upon the
death of a natural person to one or more members of the immediate family
of such natural person or to a trust or family conservatorship established
for
the benefit of such immediate family member or members, provided
that:
|
|
(A)
|
The
Property Manager (or a replacement property manager approved by Xxxxxx),
if applicable, continues to be responsible for the management of the
Mortgaged Property, and such Transfer shall not result in a change in the
day-to-day operations of the Mortgaged
Property;
|
|
(B)
|
those
persons responsible for the management and control of Borrower remain
unchanged as a result of such Transfer, or any replacement management is
approved by Lender;
|
|
(C)
|
Lender
receives confirmation acceptable to Lender that Section 33 continues to be
satisfied;
|
|
(D)
|
each
guarantor executes such documents and agreements as Lender shall
reasonably require to evidence and effectuate the ratification of each
guaranty and indemnity agreement, or in the event of the death of any
guarantor or indemnitor, the Borrower causes one or more natural persons
or entities acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender, without any cost or expense to
Lender;
|
|
(E)
|
Borrower
shall give Lender Notice of such Transfer together with copies of all
documents effecting such Transfer not less than thirty (30) calendar days
after the date of such Transfer, and contemporaneously therewith, shall
(1) reaffirm the warranties and representations under Section 10 and
Section 48 of this Instrument and (2) satisfy Lender, in its discretion,
that such Transferee’s organization, credit and experience in the
management of similar properties are deemed to be appropriate to the
overall structure and documentation of the existing
financing;
|
|
(F)
|
such
legal opinions from Transferee’s counsel as Xxxxxx deems necessary,
including an opinion that the Transferee and any SPE Equity Owner is in
compliance with Section 33 of this Instrument, a nonconsolidation opinion
(if a nonconsolidation opinion was delivered at origination of the Loan
and if required by Xxxxxx), an
|
Page 40
|
|
opinion
that the ratification of the Loan Documents and guaranty, if applicable,
has been duly authorized, executed, and delivered and that the
ratification documents and guaranty, if applicable, are enforceable as the
obligation of the Transferee;
|
|
(G)
|
if
any certificates evidencing the Securitization remain outstanding, a
Rating Confirmation; and
|
|
(H)
|
Borrower
shall pay or reimburse Lender for all costs and expenses incurred by
Xxxxxx in connection with such Transfer (including all Attorneys’ Fees and
Costs); and
|
|
(ii)
|
the
grant of an easement, if before the grant Lender determines that the
easement will not materially affect the operation or value of the
Mortgaged Property or Lender’s interest in the Mortgaged Property, and
Borrower pays to Lender, upon demand, all costs and expenses, including
Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing
Borrower’s request; and, if the Note is held by a REMIC trust and if
required by Lender, an opinion of counsel for Borrower, in form and
substance satisfactory to Lender, to the effect that (A) the grant of such
easement has been effected in accordance with the requirements of Treasury
Regulation Section 1.860G-2(a)(8) (as such regulation may be modified,
amended or replaced from time to time), (B) the qualification and status
of the REMIC trust as a REMIC will not be adversely affected or impaired
as a result of such grant, and (C) the REMIC trust will not incur a tax
under Section 860G(d) of the Tax Code as a result of such
grant.
|
(e) The
occurrence of any of the following Transfers shall constitute an Event of
Default under this Instrument:
|
(i)
|
a
Transfer of all or any part of the Mortgaged Property or any interest in
the Mortgaged Property;
|
|
(ii)
|
if
Borrower is a limited partnership, a Transfer of (A) any general
partnership interest, or (B) limited partnership interests in Borrower
that would cause the Initial Owners of Borrower to own less than 50% of
all limited partnership interests in
Borrower;
|
|
(iii)
|
if
Borrower is a limited liability company, (A) a Transfer of any membership
interest in Borrower which would cause the Initial Owners to own less than
50% of all the membership interests in Borrower or (B) a Transfer that
results in a change of Manager;
|
|
(iv)
|
if
Borrower is a corporation (A) the Transfer of any voting stock in Borrower
which would cause the Initial Owners to own less than 50% of any class of
voting stock in Borrower or (B) if the outstanding voting stock in
Borrower is held by 100 or more shareholders, one or more Transfers by a
single transferor within a 12-month period affecting an aggregate of 5
percent or more of that stock;
|
Page 41
|
(v)
|
a
Transfer of any interest in a Controlling Entity which, if such
Controlling Entity were Borrower, would result in an Event of Default
under any of Sections 21(e)(i) through (iv)
above.
|
Lender
shall not be required to demonstrate any actual impairment of its security or
any increased risk of default in order to exercise any of its remedies with
respect to an Event of Default under this Section 21.
(f) Lender
shall consent, without any adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest or to any other economic terms of the
Indebtedness
set forth in the Note, to a Transfer that would otherwise violate this Section
21 if, prior to the Transfer, Borrower has satisfied each of the following
requirements:
|
(i)
|
the
submission to Lender of all information required by Xxxxxx to make the
determination required by this Section
21(f);
|
|
(ii)
|
the
absence of any Event of Default;
|
|
(iii)
|
the
transferee (the “Transferee”) meets
Xxxxxx’s eligibility, credit, management and other standards satisfactory
to Lender in its sole discretion;
|
|
(iv)
|
the
Transferee’s organization, credit and experience in the management of
similar properties are deemed by the Lender, in its discretion, to be
appropriate to the overall structure and documentation of the existing
financing;
|
|
(v)
|
the
Mortgaged Property will be managed by a property manager meeting the
requirements of Section 17(e);
|
|
(vi)
|
the
Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition, occupancy, net operating income
and the collection of reserves satisfactory to Lender in its sole
discretion;
|
|
(vii)
|
in
the case of a Transfer of all or any part of the Mortgaged Property, (A)
the execution by the Transferee of Lender’s then-standard assumption
agreement that, among other things, requires the Transferee to perform all
obligations of Borrower set forth in the Note, this Instrument and any
other Loan Documents, and may require that the Transferee comply with any
provisions of this Instrument or any other Loan Document which previously
may have been waived or modified by Lender, (B) if Lender requires, the
Transferee causes one or more natural persons or entities acceptable to
Lender to execute and deliver to Lender a guaranty in a form acceptable to
Lender, and (C) the Transferee executes such additional Collateral
Agreements as Lender may require;
|
|
(viii)
|
in
the case of a Transfer of any interest in a Controlling Entity, if a
guaranty has been executed and delivered in connection with the Note, this
Instrument or any of the other Loan Documents, the Borrower causes one or
more natural persons or entities acceptable to Lender to execute and
deliver to Lender a guaranty in a form acceptable to
Lender;
|
Page 42
|
(ix)
|
If
a Supplemental Mortgage is outstanding, the Borrower obtains the consent
of the lender for the Supplemental
Mortgage;
|
|
(x)
|
Xxxxxx’s
receipt of all of the following:
|
|
(A)
|
a
review fee in the amount of
$3,000.00;
|
|
(B)
|
a
transfer fee in an amount equal to one percent of the unpaid principal
balance of the Indebtedness immediately before the applicable Transfer;
and
|
|
(C)
|
the
amount of Xxxxxx’s out of pocket costs (including reasonable Attorneys’
Fees and Costs) incurred in reviewing the Transfer request and any fees
charged by the Rating Agencies; and
|
|
(xi)
|
evidence
satisfactory to Lender that the Transferee and any SPE Equity Owner of
such Transferee meet the requirements of Section
33;
|
|
(xii)
|
such
legal opinions from Transferee’s counsel as Xxxxxx deems necessary,
including an opinion that the Transferee and any SPE Equity Owner is in
compliance with Section 33 of this Instrument, a nonconsolidation opinion
(if a nonconsolidation opinion was delivered at origination of the Loan
and if required by Xxxxxx), an opinion that the assignment and assumption
of the Loan Documents has been duly authorized, executed, and delivered
and that the assignment documents and the Loan Documents are enforceable
as the obligation of the Transferee;
and
|
|
(xiii)
|
if
any certificates evidencing the Securitization remain outstanding, a
Rating Confirmation.
|
22. EVENTS OF
DEFAULT. The occurrence of any one or more of the following
shall constitute an Event of Default under this Instrument:
(a) any
failure by Borrower to pay or deposit when due any amount required by the Note,
this Instrument or any other Loan Document;
(b) any
failure by Borrower to maintain the insurance coverage required by Section
19;
(c) any
failure by Borrower or any SPE Equity Owner to comply with the provisions of
Section 33 or if any of the assumptions contained in any nonconsolidation
opinions delivered to Lender at any time is or shall become untrue in any
material respect;
(d) fraud
or material misrepresentation or material omission by Borrower, any of its
officers, directors, trustees, general partners or managers, any SPE Equity
Owner or any guarantor in connection with (i) the application for or creation of
the Indebtedness, (ii) any financial statement, Rent Schedule, or other report
or information provided to Lender during the term of the Indebtedness, or (iii)
any request for Xxxxxx’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;
(e) any
failure by Borrower to comply with the provisions of Section 20;
Page 43
(f) any
Event of Default under Section 21;
(g) the
commencement of a forfeiture action or proceeding, whether civil or criminal,
which could result in a forfeiture of the Mortgaged Property or otherwise
materially impair the lien created by this Instrument or Lender’s interest in
the Mortgaged Property;
(h) any
failure by Borrower to perform any of its obligations under this Instrument
(other than those specified in Sections 22(a) through (g)), as and when
required, which continues for a period of 30 days after Notice of such failure
by Xxxxxx to Borrower. However, if Xxxxxxxx’s failure to perform its
obligations as described in this Section 22(h) is of the nature that it cannot
be cured within the 30 day grace period but reasonably could be cured within 90
days, then Borrower shall have additional time as determined by Lender in its
discretion, not to exceed an additional 60 days, in which to cure such default,
provided that Borrower has diligently commenced to cure such default during the
30-day grace period and diligently pursues the cure of such
default. However, no such Notice or grace periods shall apply in the
case of any such failure which could, in Xxxxxx’s judgment, absent immediate
exercise by Xxxxxx of a right or remedy under this Instrument, result in harm to
Lender, impairment of the Note or this Instrument or any other security given
under any other Loan Document;
(i) any
failure by Borrower to perform any of its obligations as and when required under
any Loan Document other than this Instrument which continues beyond the
applicable cure period, if any, specified in that Loan Document;
(j) any
exercise by the holder of any other debt instrument secured by a mortgage, deed
of trust or deed to secure debt on the Mortgaged Property of a right to declare
all amounts due under that debt instrument immediately due and
payable;
(k) if
(i) Borrower or any SPE Equity Owner shall commence any case, Proceeding or
other action under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, conservatorship or
relief of debtors (A) seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debt, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other similar
official for it or for all or any substantial part of its assets; or (ii) there
shall be commenced against Borrower or any SPE Equity Owner any case,
Proceeding, or other action of a nature referred to in clause (i) above by any
party other than Lender which (A) results in the entry of an order for relief or
any such adjudication or appointment, or (B) remains undismissed, undischarged
or unbonded for a period of ninety (90) days; or (iii) there shall be commenced
against Borrower or any SPE Equity Owner any case, Proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of any order by a court of competent jurisdiction for any such relief
which shall not have been vacated, discharged, or stayed or bonded pending
appeal within ninety (90) days from the entry thereof; or (iv) Borrower or any
SPE Equity Owner shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts set forth in clause
(i), (ii) or (iii) above; and
(l) any
representations and warranties by Borrower or any SPE Equity Owner in this
Instrument that are false or misleading in any material respect.
23. REMEDIES CUMULATIVE; REMEDIES OF
BORROWER. Each right and remedy provided in this Instrument is
distinct from all other rights or remedies under this
Page 44
Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order. In the event that a claim or adjudication is made that
Xxxxxx has acted unreasonably or unreasonably delayed acting in any case where,
by law or under this Instrument or the other Loan Documents, Lender has an
obligation to act reasonably or promptly, Lender shall not be liable
for any monetary damages, and Xxxxxxxx’s sole remedy shall be limited to
commencing an action seeking injunctive relief or declaratory
judgment. Any action or proceeding to determine whether Xxxxxx has
acted reasonably shall be determined by an action seeking declaratory
judgment.
24. FORBEARANCE.
(a) Lender
may (but shall not be obligated to) agree with Borrower, from time to time, and
without giving notice to, or obtaining the consent of, or having any effect upon
the obligations of, any guarantor or other third party obligor, to take any of
the following actions: extend the time for payment of all or any part
of the Indebtedness; reduce the payments due under this Instrument, the Note, or
any other Loan Document; release anyone liable for the payment of any amounts
under this Instrument, the Note, or any other Loan Document; accept a renewal of
the Note; modify the terms and time of payment of the Indebtedness; join in any
extension or subordination agreement; release any Mortgaged Property; take or
release other or additional security; modify the rate of interest or period of
amortization of the Note or change the amount of the monthly installments
payable under the Note; and otherwise modify this Instrument, the Note, or any
other Loan Document.
(b) Any
forbearance by Xxxxxx in exercising any right or remedy under the Note, this
Instrument, or any other Loan Document or otherwise afforded by applicable law,
shall not be a waiver of or preclude the exercise of any other right or remedy,
or the subsequent exercise of any right or remedy. The acceptance by
Lender of payment of all or any part of the Indebtedness after the due date of
such payment, or in an amount which is less than the required payment, shall not
be a waiver of Lender’s right to require prompt payment when due of all other
payments on account of the Indebtedness or to exercise any remedies for any
failure to make prompt payment. Enforcement by Lender of any security for the
Indebtedness shall not constitute an election by Xxxxxx of remedies so as to
preclude the exercise of any other right available to
Lender. Xxxxxx’s receipt of any awards or proceeds under Sections 19
and 20 shall not operate to cure or waive any Event of Default.
25. LOAN CHARGES. If
any applicable law limiting the amount of interest or other charges permitted to
be collected from Borrower is interpreted so that any charge provided for in any
Loan Document, whether considered separately or together with other charges
levied in connection with any other Loan Document, violates that law, and
Borrower is entitled to the benefit of that law, that charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if
any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the principal of the Indebtedness. For
the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the
Note. Unless otherwise required by applicable law, such allocation
and spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS,
OFFSETS, AND COUNTERCLAIMS. Borrower hereby waives the right
to assert any statute of limitations as a
Page 45
bar to
the enforcement of the lien of this Instrument or to any action brought to
enforce any Loan Document. Borrower hereby waives the right to assert
a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or otherwise to offset any obligations
to make the payments required by the Loan Documents. No failure by
Xxxxxx to perform
any of its obligations hereunder shall be a valid defense to, or result in any
offset against, any payments that Borrower is obligated to make under any of the
Loan Documents.
27. WAIVER OF
MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, any other Loan Document or applicable
law. Lender shall have the right to determine the order in which any
or all portions of the Indebtedness are satisfied from the proceeds realized
upon the exercise of such remedies. Borrower and any party who now or
in the future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Instrument waives any and all right to
require the marshalling of assets or to require that any of the Mortgaged
Property be sold in the inverse order of alienation or that any of the Mortgaged
Property be sold in parcels or as an entirety in connection with the exercise of
any of the remedies permitted by applicable law or provided in this
Instrument.
28. FURTHER ASSURANCES; XXXXXX’S
EXPENSES. Borrower shall execute, acknowledge, and deliver, at
its sole cost and expense, all further acts, deeds, conveyances, assignments,
estoppel certificates, financing statements or amendments, transfers and
assurances as Lender may require from time to time in order to better assure,
grant, and convey to Lender the rights intended to be granted, now or in the
future, to Lender under this Instrument and the Loan
Documents. Borrower acknowledges and agrees that, in connection with
each request by Borrower under this Instrument or any Loan Document, Borrower
shall pay all reasonable Attorneys’ Fees and Costs and expenses incurred by
Xxxxxx, including any fees charged by the Rating Agencies, regardless of whether
the matter is approved, denied or withdrawn. Any amounts payable by Borrower
hereunder shall be deemed a part of the Indebtedness, shall be secured by this
Instrument and shall bear interest at the Default Rate if not fully paid within
ten (10) days of written demand for payment.
29. ESTOPPEL
CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and acknowledged by
Borrower, certifying to Lender or any Person designated by Xxxxxx, as of the
date of such statement, (i) that the Loan Documents are unmodified and in full
force and effect (or, if there have been modifications, that the Loan
Documents are in full force and effect as modified and setting forth such
modifications); (ii) the unpaid principal balance of the Note; (iii) the date to
which interest under the Note has been paid; (iv) that Borrower is not in
default in paying the Indebtedness or in performing or observing any of the
covenants or agreements contained in this Instrument or any of the other Loan
Documents (or, if the Borrower is in default, describing such default in
reasonable detail); (v) whether or not there are then existing any setoffs or
defenses known to Borrower against the enforcement of any right or remedy of
Lender under the Loan Documents; and (vi) any additional facts requested by
Xxxxxx.
30. GOVERNING
LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This
Instrument, and any Loan Document which does not itself expressly identify the
law that is to apply to it, shall be governed by the laws of the jurisdiction in
which the Land is located (the “Property
Jurisdiction”).
Page 46
(b) Xxxxxxxx
agrees that any controversy arising under or in relation to the Note, this
Instrument, or any other Loan Document may be litigated in the Property
Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have jurisdiction
over all controversies that shall arise under or in relation to the Note, any
security for the Indebtedness, or any other Loan Document. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise. However, nothing
in this Section 30 is intended to limit Xxxxxx’s right to bring any suit, action
or proceeding relating to matters under this Instrument in any court of any
other jurisdiction.
31. NOTICE.
(a) All
Notices, demands and other communications (“Notice”) under or concerning
this Instrument shall be in writing. Each Notice shall be addressed
to the intended recipient at its address set forth in this Instrument, and shall
be deemed given on the earliest to occur of (i) the date when the Notice is
received by the addressee; (ii) the first Business Day after the Notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (iii) the third Business
Day after the Notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested.
(b) Any
party to this Instrument may change the address to which Notices intended for it
are to be directed by means of Notice given to the other party in accordance
with this Section 31. Each party agrees that it will not refuse or
reject delivery of any Notice given in accordance with this Section 31, that it
will acknowledge, in writing, the receipt of any Notice upon request by the
other party and that any Notice rejected or refused by it shall be deemed for
purposes of this Section 31 to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records of the
U.S. Postal Service or the courier service.
(c) Any
Notice under the Note and any other Loan Document that does not specify how
Notices are to be given shall be given in accordance with this Section
31.
32. SALE OF NOTE; CHANGE IN SERVICER;
LOAN SERVICING. The Note or a partial interest in the Note
(together with this Instrument and the other Loan Documents) may be sold one or
more times without prior Notice to Borrower. A sale may result in a
change of the Loan Servicer. There also may be one or more changes of
the Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given Notice of the change. All
actions regarding the servicing of the Loan evidenced by the Note, including the
collection of payments, the giving and receipt of Notice, inspections of the
Mortgaged Property, inspections of books and records, and the granting of
consents and approvals, may be taken by the Loan Servicer unless Xxxxxxxx
receives Notice to the contrary. If Xxxxxxxx receives conflicting
Notices regarding the identity of the Loan Servicer or any other subject, any
such Notice from Lender shall govern.
33. SINGLE PURPOSE
ENTITY.
(a) Until
the Indebtedness is paid in full, each Borrower and SPE Equity Owner shall
remain a Single Purpose Entity.
(b) A
“Single Purpose Entity”
means a corporation, limited partnership, or limited liability company which, at
all times since its formation and thereafter:
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|
(i)
|
shall
not engage in any business or activity, other than the ownership,
operation and maintenance of the Mortgaged Property and activities
incidental thereto;
|
|
(ii)
|
shall
not acquire, own, hold, lease, operate, manage, maintain, develop or
improve any assets other than the Mortgaged Property and such Personalty
as may be necessary for the operation of the Mortgaged Property and shall
conduct and operate its business as presently conducted and
operated;
|
|
(iii)
|
shall
preserve its existence as an entity duly organized, validly existing and
in good standing (if applicable) under the laws of the jurisdiction of its
formation or organization and shall do all things necessary to observe
organizational formalities;
|
|
(iv)
|
shall
not merge or consolidate with any other
Person;
|
|
(v)
|
shall
not take any action to dissolve, wind-up, terminate or liquidate in whole
or in part; to sell, transfer or otherwise dispose of all or substantially
all of its assets; to change its legal structure; transfer or permit the
direct or indirect transfer of any partnership, membership or other equity
interests, as applicable, other than Transfers permitted hereunder; issue
additional partnership, membership or other equity interests, as
applicable; or seek to accomplish any of the
foregoing;
|
|
(vi)
|
shall
not, without the prior unanimous written consent of all of the Borrower’s
partners, members, or shareholders, as applicable, and, if applicable, the
prior unanimous written consent of one hundred percent (100%) of the
members of the board of directors or of the board of managers of the
Borrower or the SPE Equity Owner: (A) file any insolvency, or
reorganization case or proceeding, to institute proceedings to have the
Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent, (B)
institute proceedings under any applicable insolvency law, (C) seek any
relief under any law relating to relief from debts or the protection of
debtors, (D) consent to the filing or institution of bankruptcy or
insolvency proceedings against the Borrower or any SPE Equity Owner, (E)
file a petition seeking, or consent to, reorganization or relief with
respect to the Borrower or any SPE Equity Owner under any applicable
federal or state law relating to bankruptcy or insolvency, (F) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian, or any similar official for the Borrower or a
substantial part of its property or for any SPE Equity Owner or a
substantial part of its property, (G) make any assignment for the benefit
of creditors of the Borrower or any SPE Equity Owner, (H) admit in writing
the Borrower’s or any SPE Equity Owner’s inability to pay its debts
generally as they become due, or (I) take action in furtherance of any of
the foregoing;
|
|
(vii)
|
shall
not amend or restate its organizational documents if such change would
modify the requirements set forth in this Section
33;
|
|
(viii)
|
shall
not own any subsidiary or make any investment in, any other
Person;
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|
(ix)
|
shall
not commingle its assets with the assets of any other Person and shall
hold all of its assets in its own
name;
|
|
(x)
|
shall
not incur any debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation), other than, (A) the
Indebtedness (and any further indebtedness as described in Section 43 with
regard to Supplemental Mortgages) and (B) customary unsecured trade
payables incurred in the ordinary course of owning and operating the
Mortgaged Property provided the same are not evidenced by a promissory
note, do not exceed, in the aggregate, at any time a maximum amount of two
percent (2%) of the original principal amount of the Indebtedness and are
paid within sixty (60) days of the date
incurred;
|
|
(xi)
|
shall
maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and
apart from those of any other Person and shall not list its assets as
assets on the financial statement of any other Person; provided, however,
that the Borrower’s assets may be included in a consolidated financial
statement of its Affiliate provided that (A) appropriate notation shall be
made on such consolidated financial statements to indicate the
separateness of the Borrower from such Affiliate and to indicate that the
Borrower’s assets and credit are not available to satisfy the debts and
other obligations of such Affiliate or any other Person and (B) such
assets shall also be listed on the Borrower’s own separate balance
sheet;
|
|
(xii)
|
except
for capital contributions or capital distributions permitted under the
terms and conditions of its organizational documents, shall only enter
into any contract or agreement with any general partner, member,
shareholder, principal or Affiliate of Borrower or any guarantor, or any
general partner, member, principal or Affiliate thereof, upon terms and
conditions that are commercially reasonable and substantially similar to
those that would be available on an arm’s-length basis with third
parties;
|
|
(xiii)
|
shall
not maintain its assets in such a manner that will be costly or difficult
to segregate, ascertain or identify its individual assets from those of
any other Person;
|
|
(xiv)
|
shall
not assume or guaranty (excluding any guaranty that has been executed and
delivered in connection with the Note) the debts or obligations of any
other Person, hold itself out to be responsible for the debts of another
Person, pledge its assets to secure the obligations of any other Person or
otherwise pledge its assets for the benefit of any other Person, or hold
out its credit as being available to satisfy the obligations of any other
Person;
|
|
(xv)
|
shall
not make or permit to remain outstanding any loans or advances to any
other Person except for those investments permitted under the Loan
Documents and shall not buy or hold evidence of indebtedness issued by any
other Person (other than cash or investment-grade
securities);
|
|
(xvi)
|
shall
file its own tax returns separate from those of any other Person, except
to the extent that the Borrower is treated as a “disregarded entity”
|
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|
|
for
tax purposes and is not required to file tax returns under applicable law,
and shall pay any taxes required to be paid under applicable
law;
|
|
(xvii)
|
shall
hold itself out to the public as a legal entity separate and distinct from
any other Person and conduct its business solely in its own name, shall
correct any known misunderstanding regarding its separate identity and
shall not identify itself or any of its Affiliates as a division or
department of any other Person;
|
|
(xviii)
|
shall
maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations and shall pay its debts and liabilities
from its own assets as the same shall become
due;
|
|
(xix)
|
shall
allocate fairly and reasonably shared expenses with Affiliates (including,
without limitation, shared office space) and use separate stationery,
invoices and checks bearing its own
name;
|
|
(xx)
|
shall
pay (or cause the Property Manager to pay on behalf of the Borrower from
the Borrower’s funds) its own liabilities (including, without limitation,
salaries of its own employees) from its own
funds;
|
|
(xxi)
|
shall
not acquire obligations or securities of its partners, members,
shareholders, or Affiliates, as
applicable;
|
|
(xxii)
|
except
as contemplated or permitted by the property management agreement with
respect to the Property Manager, shall not permit any Affiliate or
constituent party independent access to its bank
accounts;
|
|
(xxiii)
|
shall
maintain a sufficient number of employees (if any) in light of its
contemplated business operations and pay the salaries of its own
employees, if any, only from its own
funds;
|
|
(xxiv)
|
if
such entity is a single member limited liability company, such entity
shall (A) be formed and organized under Delaware law, (B) have either (1)
one springing member that is a corporation whose stock is 100% owned by
the sole member of Borrower and that satisfies the requirements for a
corporate springing member set forth below in this subsection or (2) two
springing members who are natural persons and (C) otherwise comply with
all Rating Agencies criteria for single member limited liability companies
(including, without limitation, the delivery of Delaware single member
limited liability company opinions acceptable in all respects to Lender
and to the Rating Agencies). If the springing member is a
corporation, such springing member shall at all times comply, and will
cause Borrower to comply, with each of the representations, warranties and
covenants contained in this Section 33 as if such representation, warranty
or covenant were made directly by such corporation. If there is
more than one springing member, only one springing member shall be the
sole member of Borrower at any one time, and the second springing member
shall become the sole member only upon the first springing member ceasing
to be a member, so that at all times Xxxxxxxx has one and only one
member;
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(xxv)
|
if
such entity is a single member limited liability company that is
board-managed, such entity shall have a board of managers separate from
that of guarantor and any other Person and shall cause its board of
managers to keep minutes of board meetings and actions and observe all
other Delaware limited liability company required formalities;
and
|
|
(xxvi)
|
if
a SPE Equity Owner is required pursuant to Section 1(jjjj) of this
Instrument, if the Borrower is (A) a limited liability company with more
than one member, then the Borrower has and shall have at least one (1)
member that is an SPE Equity Owner that has satisfied and shall satisfy
the requirements of Section 33(c) below and such member is its managing
member, or (B) a limited partnership, then all of its general partners are
SPE Equity Owners that have satisfied and shall satisfy the requirements
of Section 33(c) below.
|
(c) With
respect to each SPE Equity Owner, if applicable, a “Single Purpose Entity” means a
corporation or a Delaware single member limited liability company which, at all
times since its formation and thereafter complies in its own right (subject to
the modifications set forth below), and shall cause Borrower to comply, with
each of the requirements contained in Section 33(b). Upon the
withdrawal or the disassociation of an SPE Equity Owner from Borrower, Borrower
shall immediately appoint a new SPE Equity Owner, whose organizational documents
are substantially similar to those of the withdrawn or disassociated SPE Equity
Owner, and deliver a new nonconsolidation opinion to the Rating Agencies and
Lender in form and substance satisfactory to Lender and to the Rating Agencies
(unless the opinion is waived by the Rating Agencies), with regard to
nonconsolidation by a bankruptcy court of the assets of each of the Borrower and
SPE Equity Owner with those of its Affiliates.
|
(i)
|
With
respect to Sections 33(b)(i) and 33(b)(x) the SPE Equity Owner shall not
engage in any business or activity other than being the sole managing
member or general partner, as the case may be, of the Borrower and owning
at least a 0.5% equity interest in
Borrower;
|
|
(ii)
|
With
respect to Section 33(b)(ii), the SPE Equity Owner has not and shall not
acquire or own any assets other than its equity interest in the Borrower
and personal property related thereto;
and
|
|
(iii)
|
With
respect to Section 33(b)(viii), the SPE Equity Owner shall not own any
subsidiary or make any investment in any other Person, except for
Borrower;
|
|
(iv)
|
With
respect to Section 33(b)(xiv), the SPE Equity Owner shall not assume or
guaranty the debts or obligations of any other Person, hold itself out to
be responsible for the debts of another Person, pledge its assets to
secure the obligations of any other Person or otherwise pledge its assets
for the benefit of any other Person, or hold out its credit as being
available to satisfy the obligations of any other Person, except for in
its capacity as general partner of the Borrower (if
applicable);
|
|
(v)
|
With
respect to Section 33(b)(x), the SPE Equity Owner has not and shall not
incur any debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation), other than (A) customary
unsecured payables incurred in the ordinary course of owning
the
|
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|
|
Borrower
provided the same are not evidenced by a promissory note, do not exceed,
in the aggregate, at any time a maximum amount of $10,000 and are paid
within sixty (60) days of the date incurred and (B) except in its capacity
as general partner of the Borrower (if
applicable).
|
(d) [INTENTIONALLY
DELETED]
(e) Notwithstanding
anything to the contrary in this Instrument, no Transfer will be permitted under
Sections 21(c), (d), (e) or (f) unless the provisions of this Section 33 are
satisfied at all times.
34. SUCCESSORS AND ASSIGNS
BOUND. This Instrument shall bind, and the rights granted by
this Instrument shall inure to, the respective successors and assigns of Xxxxxx
and Xxxxxxxx. However, a Transfer not permitted by Section 21 shall
be an Event of Default.
35. JOINT AND SEVERAL
LIABILITY. If more than one Person signs this Instrument as
Borrower, the obligations of such Persons shall be joint and
several.
36. RELATIONSHIP
OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The
relationship between Xxxxxx and Xxxxxxxx shall be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument shall create any
other relationship between Xxxxxx and Borrower.
(b) No
creditor of any party to this Instrument and no other Person shall be a third
party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence,
(i) any arrangement (a “Servicing Arrangement”)
between the Lender and any Loan Servicer for loss sharing or interim advancement
of funds shall constitute a contractual obligation of such Loan Servicer that is
independent of the obligation of Borrower for the payment of the Indebtedness,
(ii) Borrower shall not be a third party beneficiary of any Servicing
Arrangement, and (iii) no payment by the Loan Servicer under any Servicing
Arrangement will reduce the amount of the Indebtedness.
37. SEVERABILITY;
AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the
parties as to the rights granted and the obligations assumed in this
Instrument. This Instrument may not be amended or modified except by
a writing signed by the party against whom enforcement is sought; provided,
however, that in the event of a Transfer prohibited by or requiring Lender’s
approval under Section 21, any or some or all of the Modifications to Instrument
set forth in Exhibit B (if any) may be modified or rendered void by Xxxxxx at
Lender’s option by Notice to Borrower and the transferee(s).
38. CONSTRUCTION. The
captions and headings of the Sections of this Instrument are for convenience
only and shall be disregarded in construing this Instrument. Any
reference in this Instrument to an “Exhibit” or a “Section” shall, unless
otherwise explicitly provided, be construed as referring, respectively, to an
Exhibit attached to this Instrument or to a Section
of this Instrument. All Exhibits attached to or referred to in this
Instrument are incorporated by reference into this Instrument. Any
reference in this Instrument to a statute or regulation shall be construed as
referring to that statute or regulation as amended from time to
time. Use of the singular in this Agreement includes the plural and
use of the plural includes the singular. As used in this Instrument,
the term “including” means “including, but not limited to.”
Page 52
39. DISSEMINATION OF
INFORMATION. Borrower acknowledges that Lender may provide to
third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, ownership, purchase, participation or
Securitization of the Loan, including, without limitation, any of the Rating
Agencies, any entity maintaining databases on the underwriting and performance
of commercial mortgage loans, as well as governmental regulatory agencies having
regulatory authority over Lender, any and all information which Lender now has
or may hereafter acquire relating to the Loan, the Mortgaged Property, Borrower,
any SPE Equity Owner or any guarantor, as Lender determines necessary or
desirable and that such information may be included in disclosure documents in
connection with a Securitization or syndication of participation
interests, including, without limitation, a prospectus, prospectus supplement,
offering memorandum, private placement memorandum or similar document (each, a
“Disclosure Document”)
and also may be included in any filing with the Securities and Exchange
Commission pursuant to the Securities Act or the Securities Exchange
Act. To the fullest extent permitted under applicable law, Borrower
irrevocably waives all rights, if any, to prohibit such disclosure, including,
without limitation, any right of privacy.
40. NO CHANGE IN FACTS OR
CIRCUMSTANCES. Borrower warrants that (a) all information in
the application for the Loan submitted to Lender (the “Loan Application”) and in all
financial statements, Rent Schedules, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects; and (b) there has been no material adverse change in any
fact or circumstance that would make any such information incomplete or
inaccurate.
41. SUBROGATION. If,
and to the extent that, the proceeds of the Loan evidenced by the Note, or
subsequent advances under Section 12, are used to pay, satisfy or discharge a
Prior Lien, such Loan proceeds or advances shall be deemed to have been advanced
by Xxxxxx at Borrower's request, and Lender shall automatically, and without
further action on its part, be subrogated to the rights, including lien
priority, of the owner or holder of the obligation secured by the Prior Lien,
whether or not the Prior Lien is released.
42. [INTENTIONALLY
DELETED]
43. SUPPLEMENTAL
FINANCING.
(a) This
Section shall apply only if at the time of any application referred to below,
the Federal Home Loan Mortgage Corporation (“Xxxxxxx Xxx”) has in effect a
product described in its Multifamily Seller/Servicer
Guide under which it purchases supplemental mortgages on multifamily
properties that meet specified criteria (a “Supplemental Mortgage
Product”).
(b) After
the first anniversary of the date of this Instrument (the “First Mortgage”), Freddie Mac
will consider an application from an originating lender that is generally
approved by Freddie Mac to sell mortgages to Freddie Mac under the Supplemental
Mortgage Product (an “Approved
Seller/Servicer”) for the purchase by Freddie Mac of a proposed
indebtedness of Borrower
to the Approved Seller/Servicer to be secured by one or more supplemental
mortgages on the Mortgaged Property (such indebtedness and supplemental
mortgages being referred to together as a “Supplemental
Mortgage”). Freddie Mac will purchase each Supplemental
Mortgage secured by the Mortgaged Property if the following conditions are
satisfied:
|
(i)
|
At
the time of the proposed Supplemental Mortgage, no Event of Default shall
have occurred and be continuing and no event or condition shall have
|
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|
|
occurred
and be continuing that, with the giving of Notice or the passage of time,
or both, would become an Event of
Default;
|
|
(ii)
|
Borrower
and the Mortgaged Property must be acceptable to Freddie Mac under its
Supplemental Mortgage Product;
|
|
(iii)
|
New
loan documents must be entered into to reflect each Supplemental Mortgage,
such documents to be acceptable to Freddie Mac in its sole
discretion;
|
|
(iv)
|
Each
Supplemental Mortgage will not cause the combined debt service coverage
ratio of the Mortgaged Property after each Supplemental Mortgage to be
less than 1.25:1, subject to increase in accordance with Freddie Mac’s
then-current policies (“Required DSCR”), as
determined by Freddie Mac. As used in this Section, the term “combined
debt service coverage ratio” means, with respect to the Mortgaged
Property, the ratio of (A) the annual net operating income from the
operations of the Mortgaged Property at the time of the proposed
Supplemental Mortgage to (B) the aggregate of the annual principal and
interest payable on (I) the Indebtedness under this Instrument (using a
30-year amortization schedule), (II) any “Indebtedness” as defined in any
security instruments recorded against the Mortgaged Property (using a
30-year amortization schedule for any Supplemental Mortgages) and (III)
the proposed “Indebtedness” for any Supplemental Mortgage (using a 30-year
amortization schedule). The annual net operating income of the Mortgaged
Property will be as determined by Freddie Mac in its sole discretion
considering factors such as income in place at the time of the proposed
Supplemental Mortgage and income during the preceding twelve (12) months,
and actual, historical and anticipated operating
expenses. Freddie Mac shall determine the combined debt service
coverage ratio of the Mortgaged Property based on its
underwriting. Borrower shall provide Freddie Mac such financial
statements and other information Freddie Mac may require to make these
determinations;
|
|
(v)
|
Each
Supplemental Mortgage will not cause the combined loan to value ratio of
the Mortgaged Property after each Supplemental Mortgage to exceed 72% (“Required LTV”), as
determined by Freddie Mac. As used in this Section, “combined
loan to value ratio” means, with respect to the Mortgaged Property, the
ratio, expressed as a percentage, of (A) the aggregate outstanding
principal balances of (I) the Indebtedness under this Instrument, (II) any
“Indebtedness” as defined in any security instruments recorded against the
Mortgaged Property and (III) the proposed “Indebtedness” for any
Supplemental Mortgage, to (B) the value of the Mortgaged
Property. Freddie Mac shall determine the combined loan to
value ratio of the Mortgaged Property based on its
underwriting. Borrower shall provide Freddie Mac such financial
statements and other information Freddie Mac may require to make these
determinations. In addition, Freddie Mac, at Xxxxxxxx’s
expense, may obtain MAI appraisals of the Mortgaged Property in order to
assist Freddie Mac in making the determinations hereunder. If
Freddie Mac requires an appraisal, then the value of the Mortgaged
Property that will be used to determine whether the Required LTV has been
met shall be the lesser of (A) the
appraised
|
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|
value
set forth in such appraisal or (B) the value of the Mortgaged Property as
determined by Freddie Mac;
|
|
(vi)
|
The
Borrower’s organizational documents are amended to permit the Borrower to
incur additional debt in the form of Supplemental Mortgages (Lender shall
consent to such amendment(s));
|
|
(vii)
|
One
or more natural persons or entities acceptable to Freddie Mac executes and
delivers to the Approved Seller/Servicer a guaranty in a form acceptable
to Freddie Mac with respect to the exceptions to non-recourse liability
described in Freddie Mac’s form promissory note, unless Freddie Mac has
elected to waive its requirement for a
guaranty;
|
|
(viii)
|
The
loan term of each Supplemental Mortgage shall be coterminous with the
First Mortgage or longer than the First Mortgage, including any “Extension
Period” described in the Note secured by the First Mortgage, at Freddie
Mac’s discretion;
|
|
(ix)
|
The
Prepayment Premium Period (as defined in the Note) of each Supplemental
Mortgage shall be coterminous with the Prepayment Premium Period or the
combined Lockout Period and Defeasance Period (all, as defined in the
Note), as applicable, of the First
Mortgage;
|
|
(x)
|
The
interest rate of each Supplemental Mortgage will be determined by Freddie
Mac in its sole and absolute
discretion;
|
|
(xi)
|
The
Lender enters into an intercreditor agreement (“Intercreditor
Agreement”) acceptable to Freddie Mac and to Lender for each
Supplemental Mortgage;
|
|
(xii)
|
Borrower’s
payment of fees and other expenses charged by Xxxxxx, Freddie Mac, the
Approved Seller/Servicer, and the Rating Agencies (including reasonable
Attorneys’ Fees and Costs) in connection with reviewing and originating
each Supplemental Mortgage;
|
|
(xiii)
|
Notwithstanding
anything to the contrary in Section 7 of this Instrument, Borrower shall
make deposits under this First Mortgage for the payment of any
Impositions, so long as a Supplemental Mortgage is outstanding, and such
deposits shall be credited to the payment of such Impositions under any
Supplemental Mortgage;
|
|
(xiv)
|
If
any Supplemental Mortgage is outstanding, the Borrower must obtain the
consent of the lender for each Supplemental Mortgage prior to agreeing to
any modifications or amendments to the Loan
Documents;
|
|
(xv)
|
All
other requirements of the Supplemental Mortgage Product must be met,
unless Freddie Mac has elected to waive one or more of its
requirements.
|
(c) No
later than 5 Business Days after Xxxxxx’s receipt of a written request from
Xxxxxxxx, Lender shall provide the following information to an Approved
Seller/Servicer upon Xxxxxxxx’s written request. Lender shall only be
obligated to provide this information in
Page 55
connection
with Xxxxxxxx’s request for a Supplemental Mortgage from an Approved
Seller/Servicer; provided, however, if Freddie Mac is the owner of the Note,
Lender shall not be obligated to provide such information:
|
(i)
|
the
then-current outstanding principal balance of the First
Mortgage;
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(ii)
|
payment
history of the First Mortgage;
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(iii)
|
whether
taxes, insurance, ground rents, replacement reserves, repair escrows, or
other escrows are being collected on the First Mortgage and the amount of
each such escrow as of the date of the
request;
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(iv)
|
whether
any repairs, capital replacements or improvements or rental achievement or
burn-off guaranty requirements are existing or outstanding under the terms
of the First Mortgage;
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|
(v)
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a
copy of the most recent inspection report for the Mortgaged
Property;
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|
(vi)
|
whether
any modifications or amendments have been made to the Loan Documents for
the First Mortgage since origination of the First Mortgage and, if
applicable, a copy of such modifications and amendments;
and
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|
(vii)
|
whether
to Xxxxxx’s knowledge any Event of Default exists under the First
Mortgage.
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(d) Xxxxxx
shall have no obligation to consent to any mortgage or lien on the Mortgaged
Property that secures any indebtedness other than the Indebtedness, except as
set forth herein.
(e) If
a Supplemental Mortgage is made to Borrower, Xxxxxxxx agrees that the terms of
the Intercreditor Agreement shall govern with respect to any distributions of
excess proceeds by Lender to the Approved Seller/Servicer, Freddie Mac or their
successors and/or assigns (collectively, the “Junior Lender”), and Borrower
agrees that Lender may distribute any excess proceeds received by Lender
pursuant to the Loan Documents to Junior Lender pursuant to the Intercreditor
Agreement.
44. DEFEASANCE (Section Applies if Loan
is Assigned to REMIC Trust Prior to the Cut-off Date). This
Section 44 shall apply in the event the Note is assigned to a REMIC trust prior
to the Cut-off Date, and, subject to Section 44(a) and (c) below, Borrower shall
have the right
to defease the Loan in whole (“Defeasance”) and obtain the
release of the Mortgaged Property from the lien of this Instrument upon the
satisfaction of the following conditions:
(a) Borrower
shall not have the right to obtain Defeasance at any of the following
times:
|
(i)
|
if
the Loan is not assigned to a REMIC
trust;
|
|
(ii)
|
during
the Lockout Period (as defined in the
Note);
|
|
(iii)
|
after
the expiration of the Defeasance Period (as defined in the Note);
or
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|
(iv)
|
after
Xxxxxx has accelerated the maturity of the unpaid principal balance of,
accrued interest on, and other amounts payable under, the Note pursuant to
Section 6 of the Note.
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(b) Borrower
shall give Lender Notice (the “Defeasance Notice”)
specifying a Business Day (the “Defeasance Closing Date”) on
which Borrower desires to close the Defeasance. The Defeasance
Closing Date specified by Borrower may not be more than 60 calendar days, nor
less than 30 calendar days, after the date on which the Defeasance Notice is
received by Lender. Xxxxxx will acknowledge receipt of the Defeasance
Notice and will state in such receipt whether Lender will designate the
Successor Borrower or will permit Borrower to designate the Successor
Borrower.
(c) The
Defeasance Notice must be accompanied by a $10,000 non-refundable fee (the
“Defeasance
Fee”). If Lender does not receive the Defeasance Fee, then
Borrower’s right to obtain Defeasance pursuant to that Defeasance Notice shall
terminate.
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(d)
|
(i)
|
If
Borrower timely pays the Defeasance Fee, but Borrower fails to perform its
other obligations hereunder, Xxxxxx shall have the right to retain the
Defeasance Fee as liquidated damages for Borrower’s default and, except as
provided in Section 44(d)(ii), Borrower shall be released from all further
obligations under this Section 44. Borrower acknowledges that
Xxxxxx will incur financing costs in arranging and preparing for the
release of the Mortgaged Property from the lien of this Instrument in
reliance on the executed Defeasance Notice. Xxxxxxxx agrees
that the Defeasance Fee represents a fair and reasonable estimate, taking
into account all circumstances existing on the date of this Instrument, of
the damages Lender will incur by reason of Xxxxxxxx’s
default.
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|
(ii)
|
In
the event that the Defeasance is not consummated on the Defeasance Closing
Date for any reason, Xxxxxxxx agrees to reimburse Lender for all third
party costs and expenses (other than financing costs covered by Section
44(d)(i) above) incurred by Xxxxxx in reliance on the executed Defeasance
Notice, within 5 Business Days after Xxxxxxxx receives a written demand
for payment, accompanied by a statement, in reasonable detail, of Xxxxxx’s
third party costs and expenses.
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|
(iii)
|
All
payments required to be made by Borrower to Lender pursuant to this
Section 44 shall be made by wire transfer of immediately available
funds to
the account(s) designated by Lender in its acknowledgement of the
Defeasance Notice.
|
(e) No
Event of Default has occurred and is continuing.
(f) The
documents required to be delivered to Lender on or prior to the Defeasance
Closing Date are:
|
(i)
|
an
opinion of counsel for Xxxxxxxx, in form and substance satisfactory to
Lender, to the effect that Lender has a valid and perfected lien and
security interest of first priority in the Defeasance Collateral and the
proceeds thereof;
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Page 57
|
(ii)
|
an
opinion of counsel for Xxxxxxxx, in form and substance satisfactory to
Lender, to the effect that the Pledge Agreement is duly authorized,
executed, delivered and enforceable against Borrower in accordance with
the respective terms;
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|
(iii)
|
unless
waived by Lender or unless Lender designates the Successor Borrower, an
opinion of counsel for Successor Borrower, in form and substance
satisfactory to Lender, to the effect that the Transfer and Assumption
Agreement is duly authorized, executed, delivered and enforceable against
Successor Borrower in accordance with the respective
terms;
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|
(iv)
|
unless
waived by Lender or unless Lender designates the Successor Borrower, an
opinion of counsel for Successor Borrower, in form and substance
satisfactory to Lender, to the effect that the Successor Borrower has been
validly created;
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|
(v)
|
if
Borrower designates the Successor Borrower, an opinion of counsel for
Successor Xxxxxxxx, in form and substance satisfactory to Lender and to
the Rating Agencies, with regard to nonconsolidation of the assets of the
Successor Borrower with those of its Affiliates by a bankruptcy
court;
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|
(vi)
|
unless
waived by Xxxxxx, an opinion of counsel for Xxxxxxxx, in form and
substance satisfactory to Lender, to the effect
that:
|
|
(A)
|
if,
as of the Defeasance Closing Date, the Note is held by a REMIC trust, (1)
the Defeasance has been effected in accordance with the requirements of
Treasury Regulation Section 1.860G-2(a)(8) (as such regulation may be
modified, amended or replaced from time to time), (2) the qualification
and status of the REMIC trust as a REMIC will not be adversely affected or
impaired as a result of the Defeasance, and (3) the REMIC trust will not
incur a tax under Section 860G(d) of the Tax Code as a result of the
Defeasance, and
|
|
(B)
|
the
Defeasance will not result in a “sale or exchange” of the Note within the
meaning of Section 1001(c) of the Tax Code and the temporary and final
regulations promulgated thereunder;
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|
(vii)
|
if
any certificates evidencing the Securitization remain outstanding, a
Rating Confirmation;
|
|
(viii)
|
unless
waived by Xxxxxx, a written certificate from an independent certified
public accounting firm (reasonably acceptable to Lender), confirming that
the Defeasance Collateral will generate cash sufficient to make all
Scheduled Debt Payments as they fall due under the Note, including full
payment due on the Note on the Maturity
Date;
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Page 58
|
(ix)
|
Lender’s
form of a pledge and security agreement (“Pledge Agreement”) and
financing statements which pledge and create a first priority security
interest in the Defeasance Collateral in favor of
Xxxxxx;
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|
(x)
|
Lender’s
form of a transfer and assumption agreement (“Transfer and Assumption
Agreement”), whereupon Borrower and any guarantor (in each case,
subject to satisfaction of all requirements hereunder) shall be
relieved from
liability in connection with the Loan (other than any liability under
Section 18 of this Instrument for events that occur prior to the
Defeasance Closing Date, whether discovered before or after the Defeasance
Closing Date) and Successor Borrower shall assume all remaining
obligations;
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|
(xi)
|
Forms
of all documents necessary to release the Mortgaged Property from the
liens created by this Instrument and related UCC financing statements
(collectively, “Release
Instruments”), each in appropriate form required by the state in
which the Property is located;
and
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|
(xii)
|
such
other opinions, certificates, documents or instruments as Lender may
reasonably request;
|
(g) Borrower
shall deliver to Lender on or prior to the Defeasance Closing Date:
|
(i)
|
The
Defeasance Collateral which meets all requirements of Section 44(g)(ii)
below and is owned by Xxxxxxxx, free and clear of all liens and claims of
third-parties;
|
|
(ii)
|
The
Defeasance Collateral must be in an amount to provide for (A) redemption
payments to occur prior, but as close as possible, to all successive
Installment Due Dates occurring under the Note after the Defeasance
Closing Date and (B) deliver redemption proceeds at least equal to the
amount of principal and interest due on the Note on each Installment Due
Date including full payment due on the Note on the Maturity Date (“Scheduled Debt
Payments”). The Defeasance Collateral shall be arranged
such that redemption payments received from the Defeasance Collateral are
paid directly to Lender to be applied on account of the Scheduled Debt
Payments. Unless otherwise agreed in writing by Xxxxxx,
the pledge of the Defeasance Collateral shall be effectuated through the
book-entry facilities of a qualified securities intermediary designated by
Lender in conformity with all applicable laws;
and
|
|
(iii)
|
All
accrued and unpaid interest and all other sums due under the Note, this
Instrument and under the other Loan Documents, including, without
limitation, all amounts due under Section 44(i) below, up to the
Defeasance Closing Date shall be paid in full on or prior to the
Defeasance Closing Date.
|
(h) If
Lender permits Borrower to designate the Successor Borrower, then Borrower
shall, at Borrower’s expense, designate or establish an accommodation borrower
(“Successor Borrower”)
satisfactory to Lender (or Lender, at its option, may designate the Successor
Borrower) which satisfies Lender’s then current requirements for a “Single
Purpose Entity” to assume at the time of Defeasance ownership of the Defeasance
Collateral and liability for all of
Page 59
Borrower’s
obligations under the Pledge Agreement and the Loan Documents (to the extent
that liability thereunder survives release of this
Instrument). Borrower shall pay to Successor Borrower a fee of
$1,000.00 as consideration of Successor Xxxxxxxx’s assumption of Borrower’s
obligations under the Loan Documents. Notwithstanding any contrary
provision hereunder, no Transfer fee is payable to Lender upon a Transfer of the
Loan in accordance with this Section.
(i) Borrower
shall pay all reasonable costs and expenses incurred by Lender in connection
with the Defeasance in full on or prior to the Defeasance Closing Date, which
payment is required prior to Lender’s issuance of the Release Instruments and
whether or not Defeasance is completed. Such expenses include,
without limitation, all fees, costs and expenses incurred by Lender and its
agents in connection with the Defeasance (including, without limitation,
reasonable Attorneys’ Fees and Costs for the review and preparation of the
Pledge Agreement and of the other materials described herein and any related
documentation, and any servicing fees, Rating Agencies’ fees or other costs
related to the Defeasance); the cost incurred by Lender to obtain a Rating
Confirmation contemplated hereunder; reasonable Attorneys’ Fees and Costs; and a
processing fee to cover Xxxxxx’s administrative costs to process Borrower’s
Defeasance request. Lender reserves the right to require that
Borrower post a deposit to cover costs which Lender reasonably anticipates will
be incurred.
45. INTENTIONALLY
DELETED.
46. XXXXXX’S RIGHTS TO SELL OR
SECURITIZE. Borrower acknowledges that Xxxxxx, and each
successor to Xxxxxx’s interest, may (without prior Notice to Borrower or
Borrower’s prior consent), sell or grant participations in the Loan (or any part
thereof), sell or subcontract the servicing rights related to the Loan,
securitize the Loan or include the Loan as part of a trust. Borrower,
at its expense, agrees to cooperate with all reasonable requests of Lender in
connection with any of the foregoing including, without limitation, executing
any financing statements or other documents deemed necessary by Lender or its
transferee to create, perfect or preserve the rights and interest to be acquired
by such transferee, providing any updated financial information with appropriate
verification through auditors letters, delivering a so called “10b-5” opinion,
revised organizational documents and counsel opinions satisfactory to the Rating
Agencies, executed amendments to the Loan Documents, and review information
contained in a preliminary or final private placement memorandum, prospectus,
prospectus supplements or other Disclosure Document, and providing a mortgagor
estoppel certificate and such other information about Borrower, any SPE Equity
Owner, any guarantor, any Property Manager or the Mortgaged Property as Lender
may require for Lender’s offering materials.
47. SECURITIZATION
INDEMNIFICATION. Borrower and each guarantor agree to provide
in connection with each Disclosure Document, an indemnification certificate: (a)
certifying that all sections of such Disclosure Document relating to Borrower,
any SPE Equity Owner, any guarantors, any Property Manager, their respective
Affiliates, the Loan, the Loan Documents and the Mortgaged Property, and any
risks or special considerations relating thereto, including, without limitation,
the sections entitled “Special Considerations,” and/or “Risk Factors,” and
“Certain Legal Aspects of the Mortgage Loan,” or similar sections, as such
sections relate thereto, have been carefully examined, and that, to the best of
such indemnitor’s knowledge, such sections (and any other sections reasonably
requested) do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading; (b)
indemnifying Lender (and for purposes of this Section 47, Lender shall include
its officers and directors) and any Affiliate of Lender that (i) has filed the
registration statement, if any, relating to the Securitization and/or (ii) which
is acting as issuer, depositor, sponsor and/or in a similar capacity with
respect to the Securitization (any entity described in (i) or (ii), an “Issuer
Page 60
Person”), and each director
and officer of any Issuer Person, and each entity who Controls any Issuer Person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act (collectively, “Issuer Group”), and each
entity which is acting as an underwriter, manager, placement agent, initial
purchaser or in a similar capacity with respect to the Securitization, each of
its directors and officers and each entity who Controls any such entity within
the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act which is acting as an underwriter, manager, placement agent,
initial purchaser or in a similar capacity with respect to the Securitization,
each of its directors and officers and each entity who Controls any such entity
within the meaning of Section 15 of the Securities Act and Section 20 of the
Securities Exchange Act (collectively, “Underwriter Group”) for any
losses to which Lender, the Issuer Group or the Underwriter Group may become
subject insofar as the losses arise out of or are based upon any untrue
statement of any material fact contained in such section or arise out of or are
based upon the omission to state therein a material fact required to be stated
in such sections necessary in order to make the statements in such sections or
in light of the circumstances under which they were made, not misleading
(collectively, “Securities
Liabilities”); and (c) agreeing to reimburse Lender, the Issuer Group and
the Underwriter Group for any legal or other expenses reasonably incurred by
Xxxxxx, the Issuer Group and the Underwriter Group in investigating or defending
the Securities Liabilities; provided, however, that indemnitor will be liable
under clauses (b) or (c) above only to the extent that such Securities
Liabilities arise out of, or are based upon, any such untrue statement or
omission made therein in reliance upon, and in conformity with, information
furnished to Lender or any member of the Issuer Group or Underwriter Group by or
on behalf of Borrower or a guarantor in connection with the preparation of the
Disclosure Documents or in connection with the underwriting of the Loan,
including, without limitation, financial statements of Borrower, any SPE Equity
Owner or any guarantor, and operating statements, rent rolls, environmental site
assessment reports and property condition reports with respect to the Mortgaged
Property (other than any such misstatements contained in (or omissions from)
third party reports prepared by third parties not affiliated directly or
indirectly with Borrower). This indemnity is in addition to any
liability which Borrower may otherwise have and shall be effective whether or
not an indemnification certificate described above is provided and shall be
applicable based on information previously provided by or on behalf of Borrower
or a guarantor if the indemnification certificate is not
provided. Notwithstanding the foregoing, any indemnification
certificate may expressly exclude any information contained in third party
reports prepared by parties that are not Affiliates of Borrower or any guarantor
(“Third Party
Information”), and the
obligations and liability of Borrower and any guarantor pursuant to this Section
shall not extend to the Third Party Information.
48. WARRANTIES OF
BORROWER. Borrower, for itself and its successors and assigns,
does hereby represent, warrant and covenant to and with Lender, its successors
and assigns, that:
(a) The
representations, warranties and covenants contained in this Instrument survive
for as long as any Indebtedness remains outstanding;
(b) None
of the items shown in the Schedule of Title Exceptions will materially or
adversely affect (i) the ability of the Borrower to pay the Loan in full, (ii)
the use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, except as set forth in Section 11 of this
Instrument, (iii) the operation of the Mortgaged Property or (iv) the value of
the Mortgaged Property;
Page 61
(c) Borrower
is not an “investment company”, or a company Controlled by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended;
(d) Xxxxxxxx
is not an “employee benefit plan,” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), which is subject to
Title I of ERISA and the assets of Borrower do not constitute “plan assets” of
one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101;
(e) Borrower
will give prompt written Notice to Lender of any litigation or governmental
proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against Borrower which might have a Material Adverse Effect as defined
below.
(f) There
are no judicial, administrative, mediation or arbitration actions, suits or
proceedings pending or, to the best of Borrower’s knowledge, threatened (in
writing) against or affecting Borrower (and, if Borrower is a limited
partnership, any of its general partners or if Borrower is a limited liability
company, any member of Borrower) or the Mortgaged Property which, if adversely
determined, would have a material adverse effect on (i) the Mortgaged
Property, (ii) the business, prospects, profits, operations or condition
(financial or otherwise) of Borrower, (iii) the enforceability, validity,
perfection or priority of the lien of any Loan Document, or (iv) the
ability of Borrower to perform any obligations under any Loan Document
(collectively, a “Material
Adverse Effect”).
(g) With
regard to ERISA:
|
(i)
|
Borrower
shall not engage in any transaction which would cause an obligation, or
action taken or to be taken, hereunder (or the exercise by Lender of any
of its rights under the Note, this Instrument or any of the other Loan
Documents) to be a non-exempt (under a statutory or administrative class
exemption) prohibited transaction under
ERISA.
|
|
(ii)
|
Borrower
further covenants and agrees to deliver to Lender such certifications or
other evidence from time to time throughout the term of this Instrument,
as requested by Lender in its sole discretion, that (A) Borrower is not an
“employee benefit plan” as defined in Section 3(e) of ERISA,
which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(3) of ERISA; (B) Borrower is not subject to state
statutes regulating investments and fiduciary obligations with respect to
governmental plans; and (C) one or more of the following circumstances is
true:
|
|
(1)
|
Equity
interests in Borrower are publicly offered securities within the meaning
of 29 C.F.R. Section 2510.3-101(b)(2), as amended from time to time or any
successor provision;
|
|
(2)
|
Less
than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the
meaning of 29 C.F.R. 2510.3-101(f)(2), as amended from time to time or any
successor provision; or
|
|
(3)
|
Borrower
qualifies as an “operating company” or a “real estate operating company”
within the meaning of 29 C.F.R. Section 2510.3-101(c), as amended from
time to time or any successor provision, or within the meaning of 29
C.F.R. Section
|
Page 62
|
|
2510.3-101(e)
as an investment company registered under the Investment Company Act of
1940.
|
|
(iii)
|
BORROWER SHALL INDEMNIFY LENDER
AND DEFEND AND HOLD LENDER HARMLESS FROM AND AGAINST ALL CIVIL PENALTIES,
EXCISE TAXES, OR OTHER LOSS, COST, DAMAGE AND EXPENSE (INCLUDING, WITHOUT
LIMITATION, REASONABLE ATTORNEYS’ FEES AND COSTS INCURRED IN THE
INVESTIGATION, DEFENSE AND SETTLEMENT OF CLAIMS AND LOSSES INCURRED IN
CORRECTING ANY PROHIBITED TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN,
AND IN OBTAINING ANY INDIVIDUAL PROHIBITED TRANSACTION EXEMPTION UNDER
ERISA THAT MAY BE REQUIRED, IN XXXXXX’S SOLE DISCRETION) THAT LENDER MAY
INCUR, DIRECTLY OR INDIRECTLY, AS A RESULT OF DEFAULT UNDER THIS SECTION
48. THIS INDEMNITY SHALL SURVIVE ANY TERMINATION, SATISFACTION
OR FORECLOSURE OF THIS
INSTRUMENT.
|
49. COOPERATION WITH RATING AGENCIES AND
INVESTORS. Borrower covenants and agrees that in the event
Xxxxxx decides to include the Loan as an asset of a Secondary Market
Transaction, Borrower shall (a) at Lender’s request, meet with
representatives of the Rating Agencies and/or investors to discuss the business
and operations of the Mortgaged Property, and (b) permit Lender or its
representatives to provide related information to the Rating Agencies and/or
investors, and (c) cooperate with the reasonable requests of the Rating
Agencies and/or investors in connection with all of the foregoing.
50. RESERVED.
51. RESERVED.
52. RESERVED.
53. RESERVED.
54. RESERVED.
55. RESERVED.
56. RESERVED.
57. RESERVED.
58. RESERVED.
59. RESERVED.
Page 63
60. ACCELERATION;
REMEDIES. At any time during the existence of an Event of
Default, Lender, at Xxxxxx's option, may declare the Indebtedness to be
immediately due and payable without further demand and Lender shall have the
STATUTORY POWER OF SALE and any other remedies permitted by applicable law or
provided in this Instrument or in any other Loan Document. Borrower
acknowledges that the power of sale granted in this Instrument may be exercised
by Lender through the Trustee without prior judicial
hearing. Borrower has the right to bring an action to assert the
non-existence of an Event of Default or any other defense of Borrower to
acceleration and sale. Lender shall be entitled to collect all costs
and expenses incurred in pursuing such remedies, including attorneys' fees,
costs of documentary evidence, abstracts and title reports.
If Lender
invokes the power of sale, Trustee shall give notice of sale by public
advertisement for the time and in the manner provided by the laws of Tennessee,
and Lender or Trustee shall mail a copy of the notice of sale to Borrower in the
manner provided in Section 31 of this Instrument,
provided that such notice is in compliance with Tennessee
law. Trustee, without demand on Borrower, shall sell the
Mortgaged Property at the time and under the terms designated in the notice of
sale at public auction to the highest bidder, in one or more parcels and in such
order as Trustee may determine and in bar of the
right of redemption (statutory or otherwise), the right of redemption granted by
§ 66-8-101 of the Tennessee Code, the equity of redemption and the other rights
provided in Section 65 of this Instrument. Trustee may
postpone sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled
sale. Lender or Xxxxxx's designee may purchase the Mortgaged Property
at any sale. The sale or sales by
Trustee of less than the whole of the Mortgaged Property shall not exhaust the
power of sale granted in this Instrument, and the Trustee is specifically
empowered to make successive sale or sales under such power until the
whole of the Mortgaged Property shall be sold; and if the proceeds of such sale
or sales of less than the whole of the Mortgaged Property shall be less than the
aggregate of the Indebtedness and the expenses thereof, this Instrument and the
lien, security interest and assignment hereof shall remain in full force and
effect as to the unsold portion of the Mortgaged Property; provided, however,
that Borrower shall never have any right to require the sale or sales of less
than the whole of the Mortgaged Property, but Lender shall have the right at its
sole election, to request Trustee to sell less than the whole of the Mortgaged
Property.
Trustee
shall deliver to the purchaser at the sale, within a reasonable time after the
sale, a deed conveying the Mortgaged Property so sold without any covenant or
warranty, express or implied. The recitals in Trustee's deed shall be
prima facie evidence of the truth of the statements made
therein. Trustee shall apply the proceeds of the sale in the
following order: (a) to all costs and expenses of the sale, including Trustee's
fees not to exceed 5% of the gross sales price, attorneys' fees and costs of
title evidence; (b) to any advancements made by
the Trustee or the Lender pursuant hereto, with interest thereon; (c) to
the Indebtedness in such order as Lender, in Xxxxxx's sole discretion, directs;
and (d) the excess, if any, to the Borrower, or to such person or persons legally
entitled thereto.
At the request of the Lender the Trustee shall sell the
Personalty concurrently with and in conjunction with a sale of the Mortgaged
Property, in which case the provisions of the preceding Section shall apply to
the Personalty as well as the Mortgaged Property. Borrower stipulates
and agrees that a sale of the Personalty in conjunction with the Mortgaged
Property is a commercially reasonable manner of disposing of the
Personalty. Alternatively, Lender may sell or otherwise dispose of
the Personalty separately and apart from the Mortgaged Property in the time and
manner provided by the Uniform Commercial Code.
Page 64
61. RELEASE. Upon
payment of the Indebtedness, Xxxxxx shall release this
Instrument. Borrower shall pay Xxxxxx's reasonable costs incurred in
releasing this Instrument.
62. SUBSTITUTE
TRUSTEE. Xxxxxx, at Xxxxxx's option, may from time to time
remove Trustee and appoint a successor trustee to any Trustee appointed
hereunder by an instrument recorded in the county in which this Instrument is
recorded. Without conveyance of the Mortgaged Property, the successor
trustee shall succeed to all the title, power and duties conferred upon the
Trustee herein and by applicable law.
63. NO CONSENT TO SENIOR
LIENS. Xxxxxx has not consented and will not consent to any
contract or to any work or to the furnishing of any materials which might be
deemed to create a lien or liens superior to the lien of this Instrument, either
under § 00-00-000 of Tennessee Code Annotated, or otherwise.
64. WAIVER OF TRUSTEE’S
BOND. Xxxxxxxx waives the necessity of the Trustee appointed
hereunder, or any successor in trust, making oath or giving bond.
65. WAIVER OF HOMESTEAD, DOWER, CURTESY
AND REDEMPTION. Borrower waives all right of homestead
exemption in and equitable and statutory redemption of the Mortgaged Property,
and Borrower relinquishes all right of dower and curtesy in the Mortgaged
Property.
66. WAIVER OF TRIAL BY
JURY. XXXXXXXX AND LENDER EACH (A) COVENANTS AND AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS INSTRUMENT
OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT IS TRIABLE
OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.
ATTACHED
EXHIBITS. The following Exhibits are attached to this
Instrument:
|
|X|
|
Exhibit
A
|
Description
of the Land (required).
|
|
|X|
|
Exhibit
B
|
Modifications
to Instrument
|
IN WITNESS WHEREOF, Xxxxxxxx
has signed and delivered this Instrument or has caused this Instrument to be
signed and delivered by its duly authorized representative.
Page 65
|
NLP RICHLAND, LLC, a
Delaware limited
liability
company
|
By: |
NTS
Realty Holdings Limited Partnership, a
Delaware
limited partnership, its sole
member
|
By: |
NTS
Realty Capital, Inc., a Delaware
corporation,
its managing general
partner
|
By: |
/s/
Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: Sr Vice Pres
|
STATE
OF Kentucky ,
Jefferson County, ss:
On
this 7th day
of December ,
2009, before me personally appeared Xxxx X.
Xxxxxxxx , Xx.
Vice Pres of NTS Realty Capital, Inc., a Delaware
corporation, the
managing general partner of NTS Realty Holdings Limited Partnership, a Delaware
limited partnership, the sole member of NLP Richland, LLC, a Delaware limited
liability company, to me known to be the person who executed the foregoing
instrument on behalf of said limited liability company, and acknowledged the
execution of the same to be the free act and deed of said limited liability
company. Witness my hand and official seal.
My
Commission expires: April 27, 2010
/s/ Xxxxx X. Xxxxxx
Notary
Public
Page 66
EXHIBIT
A
Legal
Description
Grove
at Richland Apartments
Being a
parcel of land in Nashville, First Civil District, Twenty-Fifth Councilmanic
District, Davidson
County, Tennessee, being located between Interstate 440 and Elmington Avenue
opposite
Xxxxxxxxx Boulevard, being Lot 2 as shown on the plan of First Revision,
Retained and Proposed
Easements, The Grove at Richland as of record in Book 9700, Page 772, R.O.D.C.,
and being
more particularly described as follows:
BEGINNING
at an iron pin in the northerly right-of-way line of Elmington Avenue, said iron
pin being the
northwest corner of Lot No. 3 shown on the Xxxxxxxxx Subdivision of record in
Book 6900, Page 838, R.O.D.C., said iron pin further described as being
approximately 370 feet southeasterly as measured along said right-of-way from
the centerline extended of Xxxxxxxxx Boulevard;
THENCE,
with said right-of -way line of Elmington Avenue in a northwesterly direction
with a curve to
the left, 388.45 feet to a monument, said curve having a radius of 1,110.00
feet, a central angle of 20° 03' 04", a tangent distance of 196.24 feet, and a
chord of N 58° 30' 06" W, 386.47 feet;
THENCE,
continuing with said right-of-way line N 68° 31' 38" W, 177.89 feet to a
monument;
XXXXXX,
continuing with said right-of-way line in a northwesterly direction with a curve
to the
right,
205.66 feet to a point, said curve having a radius of 680.00 feet, a central
angle of 17° 19' 43" , a tangent distance of 103.62 feet, and a chord of N 59°
51' 47" W, 204.88 feet;
XXXXXX,
leaving said right-of-way with the southerly line of The Grove at Richland of
record
in Plat
Book 9700, page 285, R.O.D.C. the following calls:
N 52° 39' 27" E, 241.71 feet to a point,
S 37° 20' 33" E, 37.71 feet to a point,
S 72° 20' 34" E, 15.00 feet to a point,
N
33° 35' 22" E, 34.90 feet to a point,
N
57° 39' 27" E, 258.37 feet to a point,
N
27° 39' 27" E, 79.50 feet to a point;
S
80° 35' 14" E, 74.70 feet to a point,
N
57° 39' 27" E, 250.00 feet to the southerly right-of-way line of Interstate
440;
THENCE,
with said right-of-way line S 31° 05' 28" E, 125.17 feet to a right-of-way
monument;
THENCE,
continuing with said right-of-way line S 40° 22' 09" E, 211.63 feet to a
right-of-way
monument;
THENCE,
continuing with said right-of-way line S 31° 13' 19" E, 201.77 feet to an iron
pin, being the rear corner between said Lots 2 and 3 as shown on said plan of
Xxxxxxxxx Subdivision.
XXXXXX,
leaving said right-of-way with the common line between said lots, S 46° 34' 04"
W,
582.20
feet to an iron pin in the northerly right-of-way line of Elmington Avenue, the
point of beginning.
Containing
456,127 square feet or 10.47 acres, more or less.
TOGETHER
WITH a non-exclusive and perpetual easement for vehicular and pedestrian access,
ingress and egress as contained in that certain Cross Ingress/Egress Easement
Agreement between HSW Xxxxxxxxx-I, L.P. and HSW Xxxxxxxxx-II, L.P., of record in
Book 10162, page 283, as re-recorded in Book 10171, page 672, said Register's
Office.
PAGE A-1
EXHIBIT
B
MODIFICATIONS
TO INSTRUMENT
The
following modifications are made to the text of the Instrument that precedes
this Exhibit:
I. TRANSACTION
SPECIFIC MODIFICATIONS.
1.
|
The
definition of “Loan Documents” in Section 1 must be modified as
follows:
|
“Loan Documents” means the
Note, this Instrument, the Assignment of Management Agreement, the Master
Cross-Collateralization Agreement, all guaranties, all indemnity
agreements, all Collateral Agreements, O&M Programs, the MMP and any other
documents now or in the future executed by Borrower, any guarantor or any other
Person in connection with the Loan evidenced by the Note, as such documents may
be amended from time to time. As more fully set forth in
Section 69 below, this Instrument secures all of Borrower’s obligations under
the Master Cross-Collateralization Agreement, including Borrower’s obligation to
pay the “Total Indebtedness.” However, the Master Cross-Collateralization
Agreement will not be considered a Loan Document for the purpose of establishing
the Indebtedness as defined in this Instrument and in the Note. The
definition of Total Indebtedness under the Master Cross-Collateralization
Agreement includes the Indebtedness under this Instrument. However,
the definition of Indebtedness under this Instrument does not include that
portion of the Total Indebtedness for which Borrower would not be liable if the
Master Cross-Collateralization Agreement was not in effect.
2.
|
The
following definition must be inserted in Section
1:
|
(vvvv)
|
“Master Cross-Collateralization
Agreement” means the Master Cross-Collateralization Agreement of
even date herewith by and among Borrower, Lender and the other parties
named therein.
|
3
|
The
fourth sentence of Section 7(b) is deleted and replaced with the
following:
|
Lender
shall hold the Imposition Deposits in an interest bearing account. Any
interest earned on such moneys shall be added to the Imposition
Deposits and disbursed in accordance with the terms and provisions of this
Instrument. Lender shall not be responsible for any losses resulting from
investment of the Imposition Deposits or for obtaining any specific level or
percentage of earnings on such Imposition Deposits.
4.
|
The
first paragraph of Section 44 is modified as
follows:
|
This
Section 44 shall apply in the event the Note is assigned to a REMIC trust prior
to the Cut-off Date, and, subject to Section 44(a) and (c) below, Borrower shall
have the right either (x) to defease the Loan in whole and obtain the release of
the Mortgaged Property from the lien of this Instrument, or (y) to defease the
Loan in part as set forth in Section 68 (“Defeasance”), upon the
satisfaction of the following conditions:
5.
|
Section
44(f)(viii) is modified as follows:
|
|
(viii)
|
unless
waived by Xxxxxx, a written certificate from an independent certified
public accounting firm (reasonably acceptable to Xxxxxx), confirming that
the
|
PAGE
B-1
|
Defeasance
Collateral will (A) in the event of a Defeasance of the entire Loan,
generate cash sufficient to make all Scheduled Debt Payments as they fall
due under the Note, including full payment due on the Note on the Maturity
Date, or (B) in the event of a partial Defeasance, generate cash
sufficient to make all Scheduled Debt Payments as they fall due under the
Defeased Note, including full payment on the Defeased Note on the Maturity
Date;
|
6.
|
Section
44(f)(x) is modified as follows:
|
|
(x)
|
Lender’s
form of a transfer and assumption agreement (“Transfer and Assumption
Agreement”), whereupon Borrower and any guarantor (in each case,
subject to satisfaction of all requirements hereunder) shall be relieved
or, in the case of a partial Defeasance, partially relieved from liability
in connection with the Loan (other than, in the event of a Defeasance of
the entire Loan, any liability under Section 18 of this Instrument for
events that occur prior to the Defeasance Closing Date, whether discovered
before or after the Defeasance Closing Date) and Successor Borrower shall
assume all remaining obligations;
|
7.
|
Section
44(f)(xi) is modified as follows:
|
|
(xi)
|
In
the event of a Defeasance of the entire Loan, forms of all documents
necessary to release the Mortgaged Property from the liens created by this
Instrument and related UCC financing statements (collectively, “Release Instruments”),
each in appropriate form required by the state in which the Mortgaged
Property is located; and
|
8.
|
Section
44(g)(ii) is modified as follows:
|
|
(ii)
|
The
Defeasance Collateral must be in an amount to provide for (A) redemption
payments to occur prior, but as close as possible, to all successive
Installment Due Dates occurring under the Note or, in the event of a
partial Defeasance, the Defeased Note, after the Defeasance Closing Date
and (B) deliver redemption proceeds at least equal to (1) in the event of
a Defeassance of the entire Loan, the amount of principal and interest due
on the Note on each Installment Due Date including full payment due on the
Note on the Maturity Date or (2) in the event of a partial Defeasance, the
amount of principal and interest due on the Defeased Note on each
Installment Due Date including full payment due on the Defeased Note on
the Maturity Date (“Scheduled Debt
Payments”). The Defeasance Collateral shall be arranged
such that redemption payments received from the Defeasance Collateral are
paid directly to Lender to be applied on account of the Scheduled Debt
Payments. Unless otherwise agreed in writing by Xxxxxx, the
pledge of the Defeasance Collateral shall be effectuated through the
book-entry facilities of a qualified securities intermediary designated by
Lender in conformity with all applicable laws;
and
|
9.
|
The
following new Section 44(j) must be
inserted:
|
|
(j)
|
With
respect to any partial Defeasance, Xxxxxxxx shall execute and deliver to
Lender all documents necessary to amend and restate the Note with two
substitute notes: one note having a principal balance equal to the
defeased portion of the Loan (the “Defeased Note”) and one
note having a principal balance equal to the undefeased portion of the
Loan (the “Undefeased
Note”). The Undefeased Note may be the subject of
a further Defeasance in accordance with the terms of this Section
44. The term “Note,” as used in this Section 44, refers
to the Undefeased Note that is the subject of further
Defeasance.
|
PAGE
B-2
10.
|
The
following new Section is added at the end of the Instrument after the last
numbered Section, but there are no Sections between the last numbered
Section and Section 68:
|
68. PARTIAL
DEFEASANCE. The Loan is cross-collateralized with certain
other loans, subject to the terms of the Master Cross-Collateralization
Agreement. The Master Cross-Collateralization Agreement provides
that, under certain circumstances, a borrower named therein may obtain the
release of the mortgage securing a particular loan, subject to (i) the
prepayment or defeasance, as applicable, of the amount of the outstanding
indebtedness under such loan, and (ii) on a pro-rata basis, the prepayment or
defeasance, as applicable, of the indebtedness of the other loans remaining
outstanding under the Master Cross-Collateralization Agreement in the total
amount of the “Release Price” or “Defeasance Release Price” defined in the
Master Cross-Collateralization Agreement. During the Defeasance
Period, Borrower will have the right to partially defease the Loan in the amount
of any part of a “Defeasance Release Price” allocated to the Loan subject to the
provisions of Section 44.
11. The
following new Sections are added to the Instrument:
69. CROSS
COLLATERALIZATION. The Indebtedness and all other obligations
of Borrower under the Loan Documents (“Borrower Obligations”) are
also secured pursuant to the terms of that certain Master
Cross-Collateralization Agreement (“Master Cross-Collateralization
Agreement”) dated of even date herewith and executed by Xxxxxx and
Borrower and the other borrowers named therein (“Other
Borrowers”). Borrower hereby irrevocably grants, conveys,
bargains, sells, confirms, transfers and assigns the Mortgaged Property to
Trustee, and any and all successors of Trustee, in trust, with power of sale, to
secure to Lender payment of the Total Indebtedness (as defined in the Master
Cross-Collateralization Agreement) in an aggregate principal amount of
$156,295,000.00 (including the principal amount of the Indebtedness) and the
performance of the covenants and agreements contained in each of the Other
Borrowers’ Loan Documents (as defined in the Master Cross-Collateralization
Agreement), as well as to secure to Lender payment of the Indebtedness and
performance of the covenants and agreements contained in the Loan
Documents.
70. CROSS DEFAULT. Any
Event of Default under this Instrument shall constitute an Event of Default
under the Master Cross-Collateralization Agreement and any Event of Default
under the Master Cross-Collateralization Agreement shall constitute an Event of
Default under this Instrument.
12.
|
Section
33 is deleted in its entirety and replaced with the
following:
|
|
(a)
|
Until
the Indebtedness is paid in full, each Borrower and SPE Equity Owner [Note – all
references to SPE Equity Owner are not applicable] shall remain a
Single Purpose Entity.
|
|
(b)
|
A
“Single Purpose
Entity” means a corporation, limited partnership, or limited
liability company which, at all times since its formation and
thereafter:
|
|
(i)
|
shall
not engage in any business or activity, other than the ownership,
operation and maintenance of the Mortgaged Property and activities
incidental thereto and
those activities permitted under or necessary to comply with the Loan
Documents and the Master Cross-Collateralization
Agreement;
|
|
(ii)
|
shall
not acquire, own, hold, lease, operate, manage, maintain, develop or
improve any assets other than the Mortgaged Property and such Personalty
|
PAGE
B-3
|
|
as
may be necessary for the operation of the Mortgaged Property and shall
conduct and operate its business as presently conducted and
operated;
|
|
(iii)
|
shall
preserve its existence as an entity duly organized, validly existing and
in good standing (if applicable) under the laws of the jurisdiction of its
formation or organization and shall do all things necessary to observe
organizational formalities;
|
|
(iv)
|
shall
not merge or consolidate with any other
Person;
|
|
(v)
|
except as otherwise permitted
in the Loan Documents and to the fullest extent permitted by law,
shall not take any action to dissolve, wind-up, terminate or liquidate in
whole or in part; to sell, transfer or otherwise dispose of all or
substantially all of its assets; to change its legal structure; transfer
or permit the direct or indirect transfer of any partnership, membership
or other equity interests, as applicable, other than Transfers permitted
hereunder; issue additional partnership, membership or other equity
interests, as applicable; or seek to accomplish any of the
foregoing;
|
|
(vi)
|
shall
not, without the prior unanimous written consent of all of the Borrower’s
partners, members, or shareholders, as applicable, and, if applicable, the
prior unanimous written consent of one hundred percent (100%) of the
members of the board of directors or of the board of managers of the
Borrower or the SPE Equity Owner: (A) file any insolvency, or
reorganization case or proceeding, to institute proceedings to have the
Borrower or any SPE Equity Owner be adjudicated bankrupt or insolvent, (B)
institute proceedings under any applicable insolvency law, (C) seek any
relief under any law relating to relief from debts or the protection of
debtors, (D) consent to the filing or institution of bankruptcy or
insolvency proceedings against the Borrower or any SPE Equity Owner, (E)
file a petition seeking, or consent to, reorganization or relief with
respect to the Borrower or any SPE Equity Owner under any applicable
federal or state law relating to bankruptcy or insolvency, (F) seek or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator, custodian, or any similar official for the Borrower or a
substantial part of its property or for any SPE Equity Owner or a
substantial part of its property, (G) make any assignment for the benefit
of creditors of the Borrower or any SPE Equity Owner, (H) admit in writing
the Borrower’s or any SPE Equity Owner’s inability to pay its debts
generally as they become due, or (I) take action in furtherance of any of
the foregoing;
|
|
(vii)
|
shall
not amend or restate its organizational documents if such change would
modify the requirements set forth in this Section
33;
|
|
(viii)
|
shall
not own any subsidiary or make any investment in, any other
Person;
|
|
(ix)
|
except as set forth in the Loan
Documents and the Master Cross-Collateralization Agreement shall
not commingle its assets with the assets of any other Person and shall
hold all of its assets in its own
name;
|
|
(x)
|
shall
not incur any debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation), other than,
|
PAGE
B-4
|
|
(A)
the Indebtedness (and any further indebtedness as described in Section 43
with regard to Supplemental Mortgages) and the Total Indebtedness
under the Master Cross-Collateralization Agreement and (B)
customary unsecured trade payables incurred in the ordinary course of
owning and operating the Mortgaged Property provided the same are not
evidenced by a promissory note, do not exceed, in the aggregate, at any
time a maximum amount of three percent (3%) of
the original principal amount of the Indebtedness and are paid within
sixty (60) days of the date
incurred;
|
|
(xi)
|
except as set forth in the Loan
Documents and the Master Cross-Collateralization Agreement, shall
maintain its records, books of account, bank accounts, financial
statements, accounting records and other entity documents separate and
apart from those of any other Person and shall not list its assets as
assets on the financial statement of any other Person; provided, however,
that the Borrower’s assets may be included in a consolidated financial
statement of its Affiliate provided that (A) appropriate notation shall be
made on such consolidated financial statements to indicate the
separateness of the Borrower from such Affiliate and to indicate that the
Borrower’s assets and credit are not available to satisfy the debts and
other obligations of such Affiliate or any other Person and (B) such
assets shall also be listed on the Borrower’s own separate balance
sheet;
|
|
(xii)
|
except for capital
contributions or capital distributions permitted under the terms and
conditions of its organizational documents, shall only enter into any
contract or agreement with any general partner, member, shareholder,
principal or Affiliate of Borrower or any guarantor, or any general
partner, member, principal or Affiliate thereof, upon terms and conditions
that are commercially reasonable and substantially similar to those that
would be available on an arm’s-length basis with third
parties;
|
|
(xiii)
|
except as set forth in the Loan
Documents and the Master Cross-Collateralization Agreement, shall
not maintain its assets in such a manner that will be costly or difficult
to segregate, ascertain or identify its individual assets from those of
any other Person;
|
|
(xiv)
|
except pursuant to the Master
Cross-Collateralization Agreement, shall not assume or guaranty
(excluding any guaranty that has been executed and delivered in connection
with the Note) the debts or obligations of any other Person, hold itself
out to be responsible for the debts of another Person, pledge its assets
to secure the obligations of any other Person or otherwise pledge its
assets for the benefit of any other Person, or hold out its credit as
being available to satisfy the obligations of any other
Person;
|
|
(xv)
|
shall
not make or permit to remain outstanding any loans or advances to any
other Person except for those investments permitted under the Loan
Documents and shall not buy or hold evidence of indebtedness issued by any
other Person (other than cash or investment-grade
securities);
|
|
(xvi)
|
shall
file its own tax returns separate from those of any other Person, except
to the extent that the Borrower is treated as a “disregarded entity”
for
tax purposes and is not required to file tax returns under applicable law,
and shall pay any taxes required to be paid under applicable
law;
|
PAGE
B-5
|
(xvii)
|
shall
hold itself out to the public as a legal entity separate and distinct from
any other Person and conduct its business solely in its own name, shall
correct any known misunderstanding regarding its separate identity and
shall not identify itself or any of its Affiliates as a division or
department of any other Person; provided that Borrower may
appear on consolidated financial statements with segmented reporting for
NTS Holdings.
|
|
(xviii)
|
shall
maintain adequate capital for the normal obligations reasonably
foreseeable in a business of its size and character and in light of its
contemplated business operations and shall pay its debts and liabilities
from its own assets as the same shall become
due;
|
|
(xix)
|
shall
allocate fairly and reasonably shared expenses with Affiliates (including,
without limitation, shared office
space);
|
|
(xx)
|
except pursuant to the Loan
Documents and Master Cross-Collateralization Agreement shall pay
(or cause the Property Manager to pay on behalf of the Borrower from the
Borrower’s funds) its own liabilities (including, without limitation,
salaries of its own employees) from its own
funds;
|
|
(xxi)
|
shall
not acquire obligations or securities of its partners, members,
shareholders, or Affiliates, as
applicable;
|
|
(xxii)
|
except
as contemplated or permitted by the property management agreement with
respect to the Property Manager, shall not permit any Affiliate or
constituent party independent access to its bank accounts, except pursuant to and in
connection with the Loan Documents and Master Cross-Collateralization
Agreement;
|
|
(xxiii)
|
shall
maintain, or require the
property manager to maintain, a sufficient number of employees (if
any) in light of its contemplated business operations and pay the salaries
of its own employees, if any, only from its own
funds;
|
|
(xxiv)
|
if
such entity is a single member limited liability company, such entity
shall (A) be formed and organized under Delaware law, (B) have either (1)
one springing member that is a corporation whose stock is 100% owned by
the sole member of Borrower and that satisfies the requirements for a
corporate springing member set forth below in this subsection or (2) two
springing members who are natural persons and (C) otherwise comply with
all Rating Agencies criteria for single member limited liability companies
(including, without limitation, the delivery of Delaware single member
limited liability company opinions acceptable in all respects to Lender
and to the Rating Agencies). If the springing member is a
corporation, such springing member shall at all times comply, and will
cause Borrower to comply, with each of the representations, warranties and
covenants contained in this Section 33 as if such representation, warranty
or covenant were made directly by such corporation. If there is
more than one springing member, only one springing member shall be the
sole member of Borrower at any one time, and the second
springing member
shall become the sole member only upon the first springing member ceasing
to be a member, so that at all times Xxxxxxxx has one and only one
member;
|
PAGE
B-6
|
(xxv)
|
if
such entity is a single member limited liability company that is
board-managed, such entity shall have a board of managers separate from
that of guarantor and any other Person and shall cause its board of
managers to keep minutes of board meetings and actions and observe all
other Delaware limited liability company required formalities;
and
|
|
(xxvi)
|
if
a SPE Equity Owner is required pursuant to Section 1(jjjj) of this
Instrument, if the Borrower is (A) a limited liability company with more
than one member, then the Borrower has and shall have at least one (1)
member that is an SPE Equity Owner that has satisfied and shall satisfy
the requirements of Section 33(c) below and such member is its managing
member, or (B) a limited partnership, then all of its general partners are
SPE Equity Owners that have satisfied and shall satisfy the requirements
of Section 33(c) below.
|
|
(c)
|
With
respect to each SPE Equity Owner, if applicable, a “Single Purpose Entity”
means a corporation or a Delaware single member limited liability company
which, at all times since its formation and thereafter complies in its own
right (subject to the modifications set forth below), and shall cause
Borrower to comply, with each of the requirements contained in Section
33(b). Upon the withdrawal or the disassociation of an SPE
Equity Owner from Borrower, Borrower shall immediately appoint a new SPE
Equity Owner, whose organizational documents are substantially similar to
those of the withdrawn or disassociated SPE Equity Owner, and deliver a
new nonconsolidation opinion to the Rating Agencies and Lender in form and
substance satisfactory to Lender and to the Rating Agencies (unless the
opinion is waived by the Rating Agencies), with regard to nonconsolidation
by a bankruptcy court of the assets of each of the Borrower and SPE Equity
Owner with those of its Affiliates.
|
|
(i)
|
With
respect to Sections 33(b)(i) and 33(b)(x) the SPE Equity Owner shall not
engage in any business or activity other than being the sole managing
member or general partner, as the case may be, of the Borrower and owning
at least a 0.5% equity interest in
Borrower;
|
|
(ii)
|
With
respect to Section 33(b)(ii), the SPE Equity Owner has not and shall not
acquire or own any assets other than its equity interest in the Borrower
and personal property related thereto;
and
|
|
(iii)
|
With
respect to Section 33(b)(viii), the SPE Equity Owner shall not own any
subsidiary or make any investment in any other Person, except for
Borrower;
|
|
(iv)
|
With
respect to Section 33(b)(xiv), the SPE Equity Owner shall not assume or
guaranty the debts or obligations of any other Person, hold itself out to
be responsible for the debts of another Person, pledge its assets to
secure the obligations of any other Person or otherwise pledge its assets
for the benefit of any other Person, or hold out its credit as being
available to satisfy the obligations of any other Person, except for in
its capacity as general partner of the Borrower (if
applicable);
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|
(v)
|
With
respect to Section 33(b)(x), the SPE Equity Owner has not and shall not
incur any debt, secured or unsecured, direct or contingent (including,
without limitation, guaranteeing any obligation), other than (A) customary
unsecured payables incurred in the ordinary course of owning the Borrower
provided the same are not evidenced by a promissory note,
do
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PAGE
B-7
|
|
not
exceed, in the aggregate, at any time a maximum amount of $10,000 and are
paid within sixty (60) days of the date incurred and (B) except in its
capacity as general partner of the Borrower (if
applicable).
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|
(d)
|
Notwithstanding
anything to the contrary in this Instrument, no Transfer will be permitted
under Sections 21(c), (d), (e) or (f) unless the provisions of this
Section 33 are satisfied at all times, and any such Transfer shall
be limited by the fact that the Indebtedness may not be assumed by any
third party while the Master Cross-Collateralization Agreement remains in
effect.
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13.
|
Section
11(b) is deleted in its entirety and replaced with the
following:
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|
“(b)
|
convert
any individual units currently used for residential purposes or common
areas to commercial use,”
|
14. Section
14 is modified as follows:
In
Section 14(c), “ninety (90) days” is replaced with “one hundred twenty (120)
days”.
In
Section 14(d), revise subsections (i) and (ii) to read as follows:
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(i)
|
prior
to a Securitization, and thereafter
upon Xxxxxx’s reasonable request, a monthly Rent Schedule and a
monthly statement of income and expenses for Borrower’s operation of the
Mortgaged Property; following a
Securitization, upon Xxxxxx’s reasonable request but not more frequently
than quarterly, a Rent Schedule and a statement of income and expenses for
Xxxxxxxx’s operation of the Mortgaged
Property;
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(ii)
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prior
to a Securitization, and thereafter upon Xxxxxx’s reasonable request (provided that
following a Securitization Lender will not make such a request more
frequently than quarterly}, Borrower shall furnish to Lender a
statement that identifies all owners of any interest in Borrower and any
Controlling Entity and the interest held by each (unless Borrower or any
Controlling Entity is a publicly-traded entity in which case such
statement of ownership shall not be required), and if Borrower or a
Controlling Entity is a corporation, all officers and directors of
Borrower and the Controlling Entity, and if Borrower or a Controlling
Entity is a limited liability company, all Managers who are not
members;
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In
Section 14(g), the second sentence is deleted and replaced with the
following:
If
Borrower has not provided the required statements, schedules and reports within
10 Business Days following such Notice (15 Business Days for any
statements, schedules and reports required pursuant to Sections 14(b)(i), (ii),
or (iii)), then Lender shall have the right to have Borrower’s books and
records audited, at Borrower’s expense, by independent certified public
accountants selected by Lender in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall become immediately
due and payable and shall become an additional part of the Indebtedness as
provided in Section 12.
In
Section 14(h), “ninety (90) days” is replaced each time that it appears, with
“one hundred twenty (120) days”.
15. Section
21(b) is revised to include a new clause (iv) as follows:
PAGE
B-8
|
“(iv)
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a
sale or transfer of limited partnership interests in NTS Realty Holdings
Limited Partnership (“NTS Holdings”), so long as the Controlling Interest
in the managing general partner of NTS Holdings continues to be held by
X.X. Xxxxxxx
and/or Xxxxx X. Xxxxx.”
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16.
|
The
introductory provision of Section 21(c)(vii) is revised to read as
follows:
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“(vii)
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without
limiting the provisions of Section 21(b)(iv), any
Transfer of an interest in Borrower or any
interest in a Controlling Entity (which, if such Controlling Entity
were Borrower, would result in an Event of Default) listed in (A)
through (G) below (a "Preapproved Transfer"),
under the terms and conditions listed as items (1) through (7)
below:”
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17.
|
Section
21(c)(vii)(G) is added as follows:
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|
“(G)
|
a
sale or transfer to employees of NTS Development Company or NTS Realty
Capital, Inc., or to an entity in which NTS Holdings holds the Controlling
Interest owned and controlled by the transferor or the transferor’s
immediate family members; or”
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18.
|
Section
21(c)(vii)(2) is revised to read as
follows:
|
|
“(2)
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For the purposes of
these Preapproved Transfers, a transferor's immediate family members will
be deemed to include a spouse, parent, child (including
by adoption) or grandchild
(including
by adoption) of such
transferor.”
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19.
|
Section
21(c)(vii)(3) is completed as
follows:
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|
“(3)Either
directly or indirectly, X.X. Xxxxxxx and/or Xxxxx X. Xxxxx shall retain at
all times a managing interest in the Borrower.”
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II.
|
EXTRA
LARGE LOAN MODIFICATIONS.
|
1.
|
Section
1 of this Instrument is modified as
follows:
|
The
definition of Collateral Agreement is deleted and replaced with the
following:
“Collateral Agreement” means
any separate agreement between Borrower and Lender for the purpose of
establishing replacement reserves for the Mortgaged Property, establishing a
fund to assure the completion of repairs or improvements specified in that
agreement, or assuring reduction of the outstanding principal balance of the
Indebtedness if the occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account, including, without limitation, the Clearing
Account Agreement and the Cash Management Agreement.
2. The
following definitions shall be added to Section 1 of this
Instrument:
“Cash Management
Agreement” shall mean that certain cash management agreement of even date
herewith among Xxxxxxxx, Xxxxxx and Property Manager.
“Clearing Account
Agreement-CME” shall mean that certain clearing account agreement of even
date herewith among Borrower, Lender and Clearing Bank.
PAGE
B-9
“Clearing Bank” shall be
defined in the Clearing Account Agreement.
3.
|
The
first sentence in Section 19(c) of this Instrument is deleted and replaced
with the following:
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Borrower
will maintain the insurance coverage described in this Section 19 with companies
acceptable to Lender and with a claims paying ability of a minimum of any of the
following (i) “A-” or its equivalent by Fitch, Inc., (ii) “A-” or its equivalent
by Standard & Poor’s Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc. or (iii) “A3” or its equivalent by Xxxxx’x Investors Service,
Inc. All insurers providing insurance required by this Instrument
must be authorized to issue insurance in the Property Jurisdiction.
4. The
following Section 45 is added as follows:
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45.
|
SPLITTING THE
NOTE. Xxxxxx has the right from time to time to sever
the Note into one or more separate promissory notes in such denominations
as Lender determines in its sole discretion, which promissory notes may be
included in separate sales or Securitizations undertaken by
Lender. In conjunction with any such action, Lender may
redefine the interest rate and amortization schedule; provided however:
(a) if Lender redefines the interest rate, the weighted average of the
interest rates contained in the severed promissory notes taken in the
aggregate shall equal the Fixed Interest Rate (as defined in the Note),
and (b) if Lender redefines the amortization schedule, the amortization of
the severed promissory notes taken in the aggregate shall require no more
amortization to be paid under the Loan than as required under this
Instrument and the Note at the time such action was taken by Lender and
such redefined amortization shall not result in a change in the amount of
the monthly payment due under the Note. The Borrower shall only
be required to make one payment under such separate promissory
notes. Subject to the foregoing, each severed promissory note,
and the Loan evidenced thereby, shall be upon all of the terms and
provisions contained in this Instrument and the Loan Documents which
continue in full force and effect, except that Lender may allocate
specific collateral given for the Loan as security for performance of
specific promissory notes, in each case with or without cross default
provisions. Xxxxxxxx, at Xxxxxxxx's expense, agrees to
cooperate with all reasonable requests of Xxxxxx to accomplish the
foregoing, including, without limitation, execution and prompt delivery to
Lender of a severance agreement and such other documents as Lender shall
reasonable require. Borrower hereby appoints Lender its
attorney-in-fact with full power of substitution (and which shall be
deemed to be coupled with an interest and irrevocable until the Loan is
paid and this Instrument is discharged of record, with Borrower hereby
ratifying all that its said attorney shall do by virtue thereof) to make
and execute all documents necessary or desirable to effect the aforesaid
severance; provided however, Lender shall not make or execute any such
documents under such power until ten (10) Business Days after written
Notice has been given to Borrower by Xxxxxx of Xxxxxx's intent to exercise
its rights under such power. Xxxxxxxx's failure to deliver any
of the documents requested by Xxxxxx hereunder for a period of ten (10)
Business Days after such Notice by Xxxxxx shall, at lender's option,
constitute an Event of Default
hereunder.
|
5.
|
Section
49 of this Instrument is deleted and replaced with the
following:
|
|
49.
|
SALE OF NOTE AND
SECURITIZATION. At the request of the Lender and, to the
extent not already required to be provided by Borrower under this
Instrument, Borrower shall use reasonable efforts to satisfy the market
standards
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PAGE
B-10
|
|
to
which the Lender customarily adheres or which may be reasonably required
in the marketplace or by the Rating Agencies in connection with any
Secondary Market Transaction of rated single or multi-class securities
(the “Securities”)
secured by or evidencing ownership interests in the Note and this
Instrument, including, without limitation,
to:
|
|
(a)
|
(i)
provide such financial and other information with respect to the Mortgaged
Property, the Borrower and the Property Manager, (ii) perform or
permit or cause to be performed or permitted such site inspection,
appraisals, market studies, environmental reviews and reports
(Phase I’s and, if appropriate, Phase II’s), engineering reports and
other due diligence investigations of the Mortgaged Property, as may be
reasonably requested by the Lender or the Rating Agencies or as may be
necessary or appropriate in connection with the Secondary Market
Transaction, and (iii) make such representations and warranties as of
the closing date of the Secondary Market Transaction with respect to the
Mortgaged Property, Borrower and the Loan Documents as are customarily
provided in securitization transactions and as may be reasonably requested
by the Lender or by the Rating Agencies and consistent with the facts
covered by such representations and warranties as they exist on the date
thereof, including the representations and warranties made in the Loan
Documents (collectively, the “Provided Information”),
together, if customary, with appropriate verification and/or consents of
the Provided Information through letters of auditors or opinions of
counsel of independent attorneys acceptable to the Lender and to the
Rating Agencies;
|
|
(b)
|
at
Borrower’s expense, cause its counsel to render opinions, which may be
relied upon by the Lender, the Rating Agencies and their respective
counsel, agents and representatives, as to nonconsolidation, fraudulent
conveyance, and true sale or any other opinion customary in securitization
transactions with respect to the Mortgaged Property and Borrower and its
Affiliates, which counsel and opinions shall be reasonably satisfactory to
the Lender and to the Rating
Agencies;
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|
(c)
|
execute
such amendments to the Loan Documents and organizational documents,
establish and fund the Replacement Reserve Fund (as defined in the
Replacement Reserve Agreement), if any, and any Repairs (as defined in the
Repair Agreement), if any, as may be requested by the Lender or by the
Rating Agencies or otherwise to effect the Secondary Market Transaction;
provided, however, that the Borrower shall not be required to modify or
amend any Loan Document if such modification or amendment would
(i) change the interest rate, the stated maturity or the amortization
of principal set forth in the Note, or (ii) modify or amend any other
material economic term of the Loan;
|
|
(d)
|
pay
all reasonable third party costs and expenses incurred by Xxxxxx in
connection with Xxxxxxxx’s complying with requests made under this
Section; and
|
|
(e)
|
in
the event that the provisions of this Instrument or any of the other Loan
Documents require the receipt of a Rating Confirmation with respect to the
ratings on the Securities or if the terms of the transaction documents
relating to a Secondary Market Transaction require a Rating Confirmation
in order for the consent of the Lender to be given, pay all of the costs
and expenses of the Lender, Loan Servicer and each of the Rating Agencies
in
|
PAGE
B-11
|
|
connection
with any required Rating Confirmation and, if applicable, any fees imposed
by any Rating Agencies as a condition to the delivery of the Rating
Confirmation.
|
III. STATE
SPECIFIC MODIFICATIONS.
1.
|
The
following new Section is added to
Instrument:
|
71. RIGHTS
AND RESPONSIBILITIES OF TRUSTEE.
|
(a)
|
Exercise of Remedies
by Trustee. To the extent that this Deed of Trust or any
requirement of law authorizes, empowers, or does not require approval for
Lender (also referred to in this Section 71 as “Beneficiary”) to exercise
any remedies set forth in this Deed of Trust, or perform any acts in
connection therewith, Trustee (but not to the exclusion of Beneficiary
unless so required under the applicable requirements of law) shall have
the power to exercise any or all such remedies, and to perform any acts
provided for in this Deed of Trust in connection therewith, all for the
benefit of Beneficiary and on Beneficiary’s behalf in accordance with the
applicable laws of the State of Tennessee (the “State”). In
connection therewith, Trustee: (a) shall not exercise, or waive the
exercise of, any of Beneficiary’s remedies (other than any rights of
Trustee to any indemnity or reimbursement), except at Beneficiary’s
request, and (b) shall exercise, or waive the exercise of, any or all of
Beneficiary’s remedies at Beneficiary’s request, and in accordance with
Beneficiary’s directions as to the manner of such exercise or waiver.
Trustee may, however, decline to follow Beneficiary’s request or direction
if Trustee shall be advised by counsel that the action or proceeding, or
manner thereof, so directed may not lawfully be taken or
waived.
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|
(b)
|
Rights and Privileges
of Trustee. To the extent that this Deed of Trust or any
of the other Loan Documents requires Xxxxxxxx (also referred to in this
Section 71 as “Grantor”) to indemnify Beneficiary or reimburse Beneficiary
for any expenditures Beneficiary may incur in accordance with this Deed of
Trust, Trustee shall be entitled to the same indemnity and the same rights
to reimbursement of expenses as Beneficiary, subject to such limitations
and conditions as would apply in the case of Beneficiary. To the extent
that this Deed of Trust negates or limits Beneficiary’s liability as to
any matter, Trustee shall be entitled to the same negation or limitation
of liability. To the extent that Grantor, pursuant to this Deed of Trust,
appoints Beneficiary as Xxxxxxx’s attorney-in-fact for any purpose,
Beneficiary or Trustee (when so instructed by Beneficiary) shall be
entitled to act on Grantor’s behalf without joinder or confirmation by the
other.
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|
(c)
|
Resignation or
Replacement of Trustee. Trustee may resign by an
instrument in writing addressed to Beneficiary (with a copy to Grantor),
and Trustee may be removed at any time with or without cause (in
Beneficiary’s sole and absolute discretion) by an instrument in writing
executed by Beneficiary. In case of the death, resignation, removal or
disqualification of Trustee or if for any reason Beneficiary shall deem it
desirable to appoint a substitute, successor or replacement trustee to act
instead of Trustee originally named (or in place of any substitute,
successor or replacement trustee), Beneficiary shall have the right and is
hereby authorized and empowered to appoint a successor, substitute or
replacement trustee, without any formality other than appointment and
designation in writing executed by Beneficiary, which instrument shall be
recorded if required by the applicable law of the State and Beneficiary
shall otherwise provide Grantor with written notice thereof. The laws of
the State shall
|
PAGE
B-12
|
govern
the qualification of any trustee. The authority conferred upon Trustee by
this Deed of Trust shall automatically extend to any and all other
successor, substitute and replacement trustee(s) successively until the
Secured Obligations have been paid in full or the Mortgaged Property has
been sold hereunder or released in accordance with the provisions of the
Loan Documents to which Beneficiary is a party or which grants a security
for the benefit of Beneficiary. Beneficiary’s written appointment and
designation of Trustee shall be full evidence of Beneficiary’s right and
authority to make the same and of all facts therein recited. No
confirmation, authorization, approval or other action by Grantor shall be
required in connection with any resignation or other replacement of
Trustee and Beneficiary and/or Trustee shall provide Grantor with written
notice of any such resignation or
replacement.
|
|
(d)
|
Effect of Appointment
of Successor Trustee. Upon the appointment and
designation of any successor, substitute or replacement trustee, and
subject to compliance with applicable requirements of law, Trustee’s
entire estate, right, title and interest in the Mortgaged Property shall
vest in the designated successor, substitute or replacement trustee. Such
successor, substitute or replacement trustee shall thereupon succeed to
and shall hold, possess and execute all the rights, powers, privileges,
immunities and duties herein conferred upon Trustee. All references herein
to a trustee shall be deemed to refer to Trustee (including any successor
or substitute appointed and designated as herein provided) from time to
time acting hereunder.
|
|
(e)
|
Confirmation of
Transfer and Succession. Upon the written request of
Beneficiary or of any successor, substitute or replacement trustee, any
former trustee ceasing to act shall execute and deliver an instrument
transferring to such successor, substitute or replacement trustee all of
the right, title, estate and interest in the Mortgaged Property of the
trustee so ceasing to act, together with all the rights, powers,
privileges, immunities and duties herein conferred upon Trustee, and shall
duly assign, transfer and deliver all properties and moneys held by said
Trustee hereunder, if any, to said successor, substitute or replacement
trustee.
|
|
(f)
|
Exculpation. Trustee
shall not be liable for any error of judgment or act done by Trustee in
good faith, or otherwise be responsible or accountable under any
circumstances whatsoever, except for Trustee’s gross negligence, willful
misconduct or knowing violation of any requirement of law. Trustee shall
have the right to rely on any instrument, document or signature
authorizing or supporting any action taken or proposed to be taken by it
hereunder, believed by it in good faith to be genuine. All
moneys received by Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received,
but need not be segregated in any manner from any other moneys (except to
the extent required by law). Trustee shall be under no
liability for interest on any moneys received by it
hereunder.
|
|
(g)
|
Endorsement and
Execution of Documents. Upon Beneficiary’s written
request, Trustee shall, without liability or notice to Grantor, execute,
consent to, or join in any instrument or agreement in connection with or
necessary to effectuate the purposes of the Loan Documents to which
Beneficiary is a party or which grants a security interest for the benefit
of Beneficiary. Grantor hereby irrevocably designates Trustee
as its attorney-in-fact to execute, acknowledge and deliver, on Xxxxxxx’s
behalf and in Grantor’s name, all instruments or agreements necessary to
implement any provision(s) of this Deed of Trust or to further perfect the
Lien created by this Deed of Trust on the Mortgaged
Property. This power of attorney
|
PAGE
B-13
|
shall
be deemed to be coupled with an interest and shall survive any disability
of Grantor.
|
|
(h)
|
Multiple
Trustees. If Beneficiary appoints multiple trustees to
serve at the same time, then any trustee, individually, may exercise all
powers granted to Trustee under this instrument, without the need for
action by any other trustee(s), and Beneficiary shall provide Grantor with
notice of any such appointment.
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PAGE B-14