Exhibit 10.8
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(KANSAS)
TABLE OF CONTENTS
1. DEFINITIONS...............................................................1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT................................6
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION........6
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.............9
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM.......................................................11
6. EXCULPATION..............................................................11
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES..........................11
8. COLLATERAL AGREEMENTS....................................................12
9. APPLICATION OF PAYMENTS..................................................12
10. COMPLIANCE WITH LAWS.....................................................13
11. USE OF PROPERTY..........................................................13
12. PROTECTION OF LENDER'S SECURITY..........................................13
13. INSPECTION...............................................................14
14. BOOKS AND RECORDS; FINANCIAL REPORTING...................................14
15. TAXES; OPERATING EXPENSES................................................16
16. LIENS; ENCUMBRANCES......................................................16
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY...........17
18. ENVIRONMENTAL HAZARDS....................................................17
19. PROPERTY AND LIABILITY INSURANCE.........................................23
20. CONDEMNATION.............................................................24
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21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.............25
22. EVENTS OF DEFAULT........................................................29
23. REMEDIES CUMULATIVE......................................................29
24. FORBEARANCE..............................................................30
25. LOAN CHARGES.............................................................30
26. WAIVER OF STATUTE OF LIMITATIONS.........................................31
27. WAIVER OF MARSHALLING....................................................31
28. FURTHER ASSURANCES.......................................................31
29. ESTOPPEL CERTIFICATE.....................................................31
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.........................32
31. NOTICE...................................................................32
32. SALE OF NOTE; CHANGE IN SERVICER.........................................32
33. SINGLE ASSET BORROWER....................................................33
34. SUCCESSORS AND ASSIGNS BOUND.............................................33
35. JOINT AND SEVERAL LIABILITY..............................................33
36. RELATIONSHIP OF PARTIES; NO TIURD PARTY BENEFICIARY......................33
37. SEVERABILITY; AMENDMENTS.................................................33
38. CONSTRUCTION.............................................................33
39. LOAN SERVICING...........................................................34
40. DISCLOSURE OF INFORMATION................................................34
41. NO CHANGE IN FACTS OR CIRCUMSTANCES......................................34
42. SUBROGATION..............................................................34
43. ACCELERATION; REMEDIES...................................................35
44. RELEASE..................................................................35
45. FINANCING STATEMENT......................................................35
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46. APPOINTMENT OF RECEIVER..................................................35
47. WAIVER OF REDEMPTION.....................................................35
48. WAIVER OF TRIAL BY JURY..................................................35
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MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Instrument") is dated as of the 11day of September, 1998, between Garden Chalet
I L.P., a Delaware limited partnership organized and existing under the laws of
Delaware, whose address is 00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 as mortgagor ("Borrower"), and Xxxxxxx, Xxxxx & Associates, a Michigan
general partnership organized and existing under the laws of Michigan, whose
address is 00 Xxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX. 00000, as
mortgagee ("Lender").
Borrower is indebted to Lender in the principal amount of $4,240,000.00, as
evidenced by Borrower's Multifamily Note payable to Lender, dated as of the date
of this Instrument, and maturing on October 1, 2008.
TO SECURE TO LENDER the repayment of the Indebtedness, and all renewals,
extensions and modifications of the Indebtedness, and the performance of the
covenants and agreements of Borrower contained in the Loan Documents, Borrower
hereby mortgages, warrants, grants, conveys and assigns to Lender the Mortgaged
Property, including the Land located in Shawnee County, State of Kansas and
described in Exhibit A attached to this Instrument.
Borrower represents and warrants that Borrower is lawfully seized of the
Mortgaged Property and has the right, power and authority to mortgage, grant,
convey and assign the Mortgaged Property, and that the Mortgaged Property is
unencumbered. 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 a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously with the execution
and recordation of this Instrument and insuring Lender's interest in the
Mortgaged Property.
Covenants. Borrower 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) "Borrower" means all persons or entities identified as "Borrower" in
the first paragraph of this Instrument, together with their successors and
assigns.
(b) "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 completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the
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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.
(c) "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.
(d) "Event of Default" means the occurrence of any event listed in Section
22.
(e) "Fixtures" means all property 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.
(f) "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.
(g) "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
defined as a "hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(h) "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 and apply to
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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, 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.
(i) "Impositions" and "Imposition Deposits" are defined in Section 7(a).
(j) "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.
(k) "Indebtedness" means the principal of, interest 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.
(l) [Intentionally omitted]
(m) "Key Principal" means the natural person(s) or entity identified as
such at the foot of this Instrument, and any person or entity who becomes a Key
Principal after the date of this Instrument and is identified as such in an
amendment or supplement to this Instrument.
(n) "Land" means the land described in Exhibit A.
(o) "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.
(p) "Lender" means the entity identified as "Lender" in the first paragraph
of this Instrument and its successors and assigns, or any subsequent holder of
the Note.
(q) "Loan Documents" means the Note, this Instrument, all guaranties, all
indemnity agreements, all Collateral Agreements, O&M Programs, and any other
documents now or in the future executed by Borrower, Key Principal, 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.
(r) "Loan Servicer" means the entity that from time to time is designated
by Lender 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.
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(s) "Mortgaged Property" means all of Borrower's present and future right,
title and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) 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 benefitting 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;
(6) 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;
(7) 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;
(8) 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, including cash or securities deposited to
secure performance by parties of their obligations;
(9) 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;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and profits
from the Land, the Improvements or any other part of the
Mortgaged
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Property, and all undisbursed proceeds of the loan secured by
this Instrument and, if Borrower is a cooperative housing
corporation, maintenance charges or assessments payable by
shareholders or residents;
(12) all Imposition Deposits;
(13) 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);
(14) all tenant security deposits which have not been forfeited by
any tenant under any Lease; and
(15) 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.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including the Acknowledgment and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability (if any), and all
schedules, riders, allonges and addenda, as such Multifamily Note may be amended
from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment, machinery,
building materials, appliances, goods, supplies, tools, books, records (whether
in written or electronic form), computer equipment (hardware and software) and
other tangible personal property (other than Fixtures) which are used now or in
the future in connection with the ownership, management or operation of the Land
or the Improvements or are located on the Land or in the Improvements, and any
operating agreements relating to the Land or the Improvements, and any surveys,
plans and specifications and contracts for architectural, engineering and
construction services relating to the Land or the Improvements and all other
intangible property 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.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or non-residential
space), revenues and other income of the Land or the Improvements, including
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.
(y) "Taxes" means all taxes, assessments, vault rentals and other charges,
if any, general, special or otherwise, including all assessments for schools,
public betterments
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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.
(z) "Transfer" means (A) a sale, assignment, transfer or other disposition
(whether voluntary, involuntary or by operation of law); (B) the granting,
creating or attachment of a lien, encumbrance or security interest (whether
voluntary, involuntary or by operation of law); (C) 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; (D) the
withdrawal, retirement, removal or involuntary resignation of a partner in a
partnership or a member or manager in a limited liability company; or (E) the
merger, dissolution, liquidation, or consolidation of a legal entity. "Transfer"
does not include (i) a conveyance of the Mortgaged Property at a judicial or
non-judicial foreclosure sale under this Instrument or (ii) the Mortgaged
Property becoming part of a bankruptcy estate by operation of law under the
United States Bankruptcy Code. For purposes of defining the term "Transfer," the
term "partnership" shall mean a general partnership, a limited partnership, a
joint venture and a limited liability partnership, and the term "partner" shall
mean a general partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.
This Instrument is also a security agreement under the Uniform Commercial
Code for any of the Mortgaged Property which, under applicable law, may be
subject to a security interest under the Uniform Commercial Code, whether
acquired now or 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 shall execute and deliver to
Lender, upon Lender's request, financing statements, continuation statements and
amendments, in such form as Lender may require to perfect or continue the
perfection of this security interest. Borrower shall pay all filing costs and
all costs and expenses of any record searches for financing statements 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. 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. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER 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
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necessity of further action on the part of Borrower. Promptly upon request by
Lender, Borrower agrees to execute and deliver such further assignments as
Lender may from time to time require. Borrower and Lender 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," as that term
is defined in Section 1(s). 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 Lender
to collect, xxx for and compromise Rents and directs each tenant of the
Mortgaged Property to pay all Rents to, or as directed by, Lender. 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, Lender'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 Lender is entitled. At any
time on or after the date of Lender's demand for Rents, 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, no tenant
shall be obligated to inquire further as to the occurrence or continuance of an
Event of Default, and 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 Lender 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 Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the proceeds of
the loan evidenced by the Note), that Borrower 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
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of execution of this Instrument there has been no anticipation or prepayment of
any Rents for 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 Lender'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. 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, Borrower 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. Borrower acknowledges and agrees that the exercise by Lender 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. 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 this Section 3, 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
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Lender for such purposes shall become an additional part of the Indebtedness as
provided in Section 12.
(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 Borrower'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 Borrower to establish a
present, absolute and irrevocable transfer and assignment to Lender of all of
Borrower's right, title and interest in, to and under the Leases. Borrower and
Lender 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," as that term is defined in Section 1(s). 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) Borrower acknowledges and agrees that the exercise by Lender, 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 Lender 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. Lender shall not be liable in any way for any injury or
damage to person or property sustained by any person or persons, firm or
corporation in or about the Mortgaged Property. Prior to Lender's actual entry
into and
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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.
(d) Upon delivery of notice by Lender to Borrower of Lender's exercise of
Lender'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 Lender'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. If customary in the applicable market, residential
Leases with terms of less than six months may be permitted with Lender's prior
written consent.
(f) Borrower shall not lease any portion of the Mortgaged Property for
non-residential use except with the prior written consent of Lender and Lender's
prior written approval of the Lease agreement. 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. Borrower shall, without request by Lender, deliver an
executed copy of each non-residential Lease to Lender promptly after such Lease
is signed. All non-residential Leases, including renewals or extensions of
existing leases, shall specifically provide that (1) such Leases are subordinate
to the lien of this Instrument (unless waived in writing by Lender); (2) 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; (3) 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; (4)
the Lease shall not be terminated by foreclosure or any other transfer of the
Mortgaged Property; (5) 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 (6) the tenant shall,
upon receipt after the occurrence of an Event of Default of a written request
from Lender, pay all Rents payable under the Lease to Lender.
10
(g) Borrower shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.
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 Lender's exercise of any right of
acceleration of the Indebtedness, as provided in the Note.
6. EXCULPATION.
Borrower'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) 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 Lender), until the Indebtedness is paid in full, an
additional amount sufficient to accumulate with Lender the entire sum required
to pay, when due (1) any water and sewer charges which, if not paid, may result
in a lien on all or any part of the Mortgaged Property, (2) the premiums for
fire and other hazard insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4) amounts for other
charges and expenses which Lender at any time reasonably deems necessary to
protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender's interests, all as
reasonably estimated from time to time by Lender. 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 obligation of
Borrower for which Imposition Deposits are required. Any waiver by Lender of the
requirement that Borrower remit Imposition Deposits to Lender may be revoked by
Lender, in Lender's discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are insured
or guaranteed by a federal agency. Lender shall not be obligated to open
additional accounts or deposit
11
Imposition Deposits in additional institutions when the amount of the Imposition
Deposits exceeds the maximum amount of the federal deposit 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. Borrower hereby pledges and grants to Lender
a security interest in the Imposition Deposits as additional security for all of
Borrower's obligations under this Instrument and the other Loan Documents. 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 Lender receives a xxxx or invoice for an Imposition, Lender shall
pay the Imposition from the Imposition Deposits held by Lender. Lender shall
have no obligation to pay any Imposition to the extent it exceeds Imposition
Deposits then held by Lender. Lender may pay an Imposition according to any
xxxx, statement or estimate from the appropriate public office or insurance
company without inquiring into the accuracy of the xxxx, statement or estimate
or into the validity of the Imposition.
(d) If at any time the amount of the Imposition Deposits held by Lender for
payment of a specific Imposition exceeds the amount reasonably deemed necessary
by Lender, 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 Lender's discretion, to pay any Impositions or as a credit against the
Indebtedness. Upon payment in full of the Indebtedness, Lender shall refund to
Borrower any Imposition Deposits held by Lender.
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 Lender, in Lender's discretion.
Neither Lender's acceptance of an amount which 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.
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Notwithstanding the application of any such amount to the Indebtedness,
Borrower's obligations under this Instrument and the Note shall remain
unchanged.
10. COMPLIANCE WITH LAWS.
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,
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. Borrower shall at all times maintain records sufficient to demonstrate
compliance with the provisions of this Section 10. 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 Lender'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.
11. USE OF PROPERTY.
Unless required by applicable law, Borrower shall not (a) except for any
change in use approved by Lender, 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, (b) convert any individual dwelling units or common areas to
commercial use, (c) initiate or acquiesce in a change in the zoning
classification of the Mortgaged Property, or (d) establish any condominium or
cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(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, 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 (1) payment of fees and out-of-pocket expenses of attorneys,
accountants, inspectors and consultants, (2) entry upon the Mortgaged Property
to make repairs or secure the Mortgaged Property, (3) procurement of the
insurance required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.
13
(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 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.
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.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged Property
or the management agent's offices, and upon Lender's request shall make
available at the Mortgaged Property, 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, 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 at any reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of Borrower, a
statement of income and expenses for Borrower's operation of the
Mortgaged Property for that fiscal year, a statement of changes
in financial position of Borrower relating to the Mortgaged
Property for that fiscal year and, when requested by Lender, a
balance sheet showing all assets and liabilities of Borrower
relating to the Mortgaged Property as of the end of that fiscal
year;
(2) within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender's request, a rent 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 Lender;
(3) within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender's request, 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
14
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;
(4) within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender's request, a statement that
identifies all owners of any interest in Borrower and the
interest held by each, if Borrower is a corporation, all
officers and directors of Borrower, and if Borrower is a limited
liability company, all managers who are not members;
(5) upon Lender's request, 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 Lender; and
(6) upon Lender's request, a balance sheet, a statement of income
and expenses for Borrower and a statement of changes in
financial position of Borrower for Borrower's most recent fiscal
year.
(7) if required by Lender, a statement of income and expense for the
Mortgaged Property for the prior month of quarter.
(c) Each of the statements, schedules and reports required by Section 14(b)
shall be certified to be complete and accurate by an individual having authority
to bind Borrower, and shall be in such form and contain such detail as Lender
may reasonably require. Lender also may require that any statements, schedules
or reports be audited at Borrower's expense by independent certified public
accountants acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), 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.
(e) 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.
(f) Borrower authorizes Lender to obtain a credit report on Borrower at any
time.
(g) If an Event of Default has occurred and Lender has not previously
required Borrower to furnish a quarterly statement of income and expense for the
Mortgaged Property, Lender may require Borrower to furnish such a statement
within 45 days after the end of each fiscal quarter of Borrower following such
Event of Xxxxxxx.
00
00. TAXES; OPERATING EXPENSES.
(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 pay the
expenses of operating, managing, maintaining and repairing the Mortgaged
Property (including insurance premiums, utilities, repairs and replacements)
before the last date upon which each such payment may be made without any
penalty or interest charge being added.
(c) As long as no Event of Default exists and Borrower has timely delivered
to Lender any bills or premium notices that it has received, Borrower shall not
be obligated to pay Taxes, insurance premiums or any other individual Imposition
to the extent that sufficient Imposition Deposits are held by Lender for the
purpose of paying that specific Imposition. 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 any Event of Default has occurred and is continuing, insufficient
Imposition Deposits are held by Lender at the time an Imposition becomes due and
payable or 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 (1) Borrower notifies Lender of
the commencement or expected commencement of such proceedings, (2) the Mortgaged
Property is not in danger of being sold or forfeited, (3) Borrower deposits with
Lender reserves sufficient to pay the contested Imposition, if requested by
Lender, and (4) Borrower furnishes whatever additional security is required in
the proceedings or is reasonably requested by Lender, which may include the
delivery to Lender of the reserves established by Borrower to pay the contested
imposition.
(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 promptly furnish to Lender receipts evidencing such payments.
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 Xxxxxxx.
00
00. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
(a) Borrower (1) shall not commit waste or permit impairment or
deterioration of the Mortgaged Property, (2) shall not abandon the Mortgaged
Property, (3) 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 condensation awards are available to cover
any costs of such restoration or repair, (4) shall keep the Mortgaged Property
in good repair, including the replacement of Personalty and Fixtures with items
of equal or better function and quality, (5) shall provide for professional
management of the Mortgaged Property by a residential rental property manager
satisfactory to Lender under a contract approved by Lender in writing, and (6)
shall give notice to Lender of and, unless otherwise directed in writing by
Lender shall appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Lender's security or Lender'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 except in connection with the replacement of tangible
Personalty.
(b) If, in connection with the making of the loan evidenced by the Note or
at any later date, Lender waives in writing the requirement of Section 17 (a)(5)
above that Borrower enter into a written contract for management of the
Mortgaged Property and if, after the date of this Instrument, Borrower intends
to change the management of the Mortgaged Property, Lender shall have the right
to approve such new property manager and the written contract for the management
of the Mortgaged Property and require that Borrower and such new property manger
enter into an Assignment of Management Agreement on a form approved by Lender.
If required by Lender (whether before or after an Event of Default), Borrower
will cause any Affiliate of Borrower to whom fees are payable for the management
of the Mortgaged Property to enter into an agreement with Lender, in a form
approved by Lender, providing for subordination of those fees and such other
provisions as Lender may require. "Affiliate of Borrower" means any corporation,
partnership, joint venture, limited liability company, limited liability
partnership, trust or individual controlled by, under common control with, or
which controls Borrower (the term "control" for these purposes shall mean the
ability, whether by the ownership of shares or other equity interests, by
contract or otherwise, to elect a majority of the directors of a corporation, to
make management decisions on behalf of, or independently to select the managing
partner of, a partnership, or otherwise to have the power independently to
remove and then select a majority of those individuals exercising managerial
authority over an entity, and control shall be conclusively presumed in the case
of the ownership of 50% or more of the equity interests).
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations and
maintenance approved in writing by Lender (an "O&M Program") or matters
described in Section 18(b), Borrower shall not cause or permit any of the
following:
17
(1) 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 or any other property of
Borrower that is adjacent to the Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in
violation of Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or
any property of Borrower that is adjacent to the Mortgaged
Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the safe and
lawful use and storage of quantities of (1) pre-packaged supplies, cleaning
materials and petroleum products customarily used in the operation and
maintenance of comparable multifamily properties, (2) 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 (3) 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) If an O&M Program has been established with respect to Hazardous
Materials, Borrower shall comply in a timely manner with, and cause all
employees, agents, and contractors of Borrower and any other persons present on
the Mortgaged Property to comply with the O&M Program. All costs of performance
of Borrower's obligations under any O&M Program shall be paid by Borrower, and
Lender's out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and Borrower's performance shall be paid by Borrower
upon demand by Lender. Any
18
such out-of-pocket costs of Lender which 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 Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or permitted any
Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist
or have existed;
(3) except to the extent previously disclosed by Borrower to Lender
in writing, 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
Property which has been previously disclosed by Borrower to
Lender in writing, that tank complies with all requirements of
Hazardous Materials Laws;
(4) Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases
of Hazardous Materials. Without limiting the generality of the
foregoing, Borrower 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;
(5) 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;
(6) there are no actions, suits, claims or proceedings pending or,
to the best of Borrower'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
(7) Borrower has not received any 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 or any other
property of Borrower that is adjacent to the Mortgaged Property.
19
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the occurrence of
any of the following events:
(1) Borrower's discovery of any Prohibited Activity or Condition;
(2) Borrower's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any 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 any other property of Borrower that is adjacent to
the Mortgaged Property; and
(3) any representation or warranty in this Section 18 becomes untrue
after the date of this Agreement.
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 ("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 Lender (including the fees and
out-of-pocket costs of attorneys and technical consultants whether incurred in
connection with any judicial or administrative process or otherwise) which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. The results of all Environmental
inspections made by Lender shall at all times remain the property of Lender and
Lender shall have no obligation to disclose or otherwise make available to
Borrower or any other party such results or any other information obtained by
Lender in connection with its Environmental Inspections. Lender hereby reserves
the right, and Borrower hereby expressly authorizes Lender, 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 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 of Lender's Environmental Inspections. Borrower acknowledges that Lender
cannot control or otherwise assure the truthfulness or accuracy of the results
of any of its 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 which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result of
delivering the results of any of its Environmental Inspections to any third
party, and borrower hereby releases and forever discharges Lender from any
20
and all claims, damages, or causes of action, arising out of, connected with or
incidental to the results of, the delivery of any of Lender's Environmental
Inspections.
(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 under any Hazardous Materials Law,
Borrower shall, by the earlier of (1) the applicable deadline required by
Hazardous Materials Law or (2) 30 days after notice from 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 Borrower 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 cooperate with any inquiry by any Governmental Authority
and shall comply with any governmental or judicial order which arises from any
alleged Prohibited Activity or Condition.
(j) Borrower shall indemnify, hold harmless and defend (i) Lender, (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 fees and out-of-pocket expenses of attorneys and expert
witnesses, investigatory fees, and remediation costs, whether incurred in
connection with any judicial or administrative process or otherwise, arising
directly or indirectly from any of the following:
(1) any breach of any representation or warranty of Borrower in this
Section 18;
(2) any failure by Borrower to perform any of its obligations under
this Section 18;
(3) the existence or alleged existence of any Prohibited Activity or
Condition;
(4) the presence or alleged presence of Hazardous Materials on or
under the Mortgaged Property or any property of Borrower that is
adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials Law.
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(k) Counsel selected by Borrower to defend Indemnitees shall be subject to
the approval of those Indemnitees. However, any Indemnitee may elect to defend
any claim or legal or administrative proceeding at the Borrower's expense.
(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 (1)
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 (2) may
materially and adversely affect Lender, as determined by Lender in its
discretion.
(m) Lender agrees that the indemnity under this Section 18 shall be limited
to the assets of Borrower and Lender shall not seek to recover any deficiency
from any natural persons who are general partners of Borrower.
(n) Borrower shall, at its own cost and expense, do all of the following:
(1) 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;
(2) 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
(3) reimburse Indemnitees for any and all expenses, including fees
and out-of-pocket expenses of attorneys and expert witnesses,
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) In any circumstances in which the indemnity under this Section 18
applies, Lender 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 Borrower (which shall not be unreasonably
withheld, delayed or conditioned), may settle or compromise any action or legal
or administrative proceeding. Borrower shall reimburse Lender upon demand for
all costs and expenses incurred by Lender, including all costs of settlements
entered into in good faith, and the fees and out-of-pocket expenses of such
attorneys and consultants.
(p) 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 Mortgaged Property or any other
security, pursued any rights against any guarantor, or pursued any other rights
available under the Loan Documents or applicable
22
law. If Borrower consists of more than one person or entity, the obligation of
those persons or entities 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.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times against such
hazards as Lender may from time to time require, which insurance shall include
but not be limited to coverage against loss by fire and allied perils, general
boiler and machinery coverage, and business income coverage. Lender's insurance
requirements may change from time to time throughout the term of the
Indebtedness. If Lender so requires, such insurance shall also include sinkhole
insurance, mine subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage. If any of the Improvements is located in an
area identified by the Federal Emergency Management Agency (or any successor to
that agency) as an area having special flood hazards, and if flood insurance is
available in that area, Borrower shall insure such Improvements against loss by
flood.
(b) All premiums on insurance policies required under Section 19(a) shall
be paid in the manner provided in Section 7, unless Lender has designated in
writing another method of payment. All such policies shall also be in a form
approved by Lender. All policies of property damage insurance shall include a
non-contributing, non-reporting mortgage clause in favor of, and in a form
approved by, Lender. Lender shall have the right to hold the original policies
or duplicate original policies of all insurance required by Section 19(a).
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 a policy,
Borrower shall deliver to Lender the original (or a duplicate original) of a
renewal policy in form satisfactory to Lender.
(c) Borrower shall maintain at all times commercial general liability
insurance, compensation insurance and such other liability, errors and omissions
and fidelity insurance coverages as Lender may from time to time require.
(d) All insurance policies and renewals of insurance policies required by
this Section 19 shall be in such amounts and for such periods as Lender may from
time to time require, and shall be issued by insurance companies satisfactory to
Lender.
(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. Borrower hereby authorizes and appoints
Lender as
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attorney-in-fact for Borrower to make proof of loss, to adjust and compromise
any claims under policies of property damage insurance, to appear in and
prosecute any action arising from such property damage insurance policies, to
collect and receive the proceeds of property damage 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, (1)
hold the balance of such proceeds to 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
(2) apply the balance of such proceeds to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to apply insurance
proceeds to Restoration, Lender shall do so in accordance with Lender's
then-current policies relating to the restoration of casualty damage on similar
multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds to the
payment of the Indebtedness if all of the following conditions are met: (1) 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; (2) Lender determines, in its discretion, that there will be
sufficient funds to complete the Restoration; (3) Lender determines, in its
discretion, that the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating costs and other
expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; (4) Lender determines, in its
discretion, that the Restoration will be completed before the earlier of (A) one
year before the maturity date of the Note or (B) one year after the date of the
loss or casualty; and (5) upon Lender's request, Borrower provides Lender
evidence of the availability during and after the restoration of the insurance
required to be maintained by Borrower pursuant to this Section 19.
(h) 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.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or proceeding
relating to any 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 Lender in
writing. Borrower authorizes and appoints Lender as attorney-in-fact for
Borrower to commence, appear in and prosecute, in Lender's or Borrower's name,
any action or proceeding relating to any Condemnation and to settle or
compromise any claim in connection with any Condemnation. This power of attorney
is coupled with an interest and therefore is irrevocable. However, nothing
contained in this
24
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
Borrower 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 apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts, 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 the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments. Borrower agrees
to execute such further evidence of assignment of any awards or proceeds as
Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
(a) The occurrence of any of the following events shall constitute an Event
of Default under this Instrument:
(1) a Transfer of all or any part of the Mortgaged Property or any
interest in the Mortgaged Property;
(2) a Transfer of a Controlling Interest in Borrower;
(3) a Transfer of a Controlling Interest in any entity which owns,
directly or indirectly through one or more intermediate
entities, a Controlling Interest in Borrower;
(4) a Transfer of all or any part of Key Principal's ownership
interests (other than limited partnership interests) in
Borrower, or in any other entity which owns, directly or
indirectly through one or more intermediate entities, an
ownership interest in Borrower;
(5) if Key Principal is an entity, (A) a Transfer of a Controlling
Interest in Key Principal, or ( B) a Transfer of a Controlling
Interest in any entity which owns, directly or indirectly
through one or more intermediate entities, a Controlling
Interest in Key Principal;
(6) if Borrower or Key Principal is a trust, the termination or
revocation of such trust; and
(7) a conversion of Borrower from one type of legal entity into
another type of legal entity, whether or not there is a
Transfer.
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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.
(b) The occurrence of any of the following events shall not constitute an
Event of Default under this Instrument, notwithstanding any provision of Section
21 (a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation of
law upon the death of a natural person;
(3) 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;
(4) 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;
(5) 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 incurred by Lender in connection with
reviewing Borrower's request; and
(6) the creation of a tax lien or a mechanic's, materialman's or
judgment lien against the Mortgaged Property which is bonded
off, released of record or otherwise remedied to Lender's
satisfaction within 30 days of the date of creation.
(c) 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, to a Transfer that would otherwise violate this
Section 21 if, prior to the Transfer, Borrower has satisfied each of the
following requirements:
(1) the submission to Lender of all information required by Lender
to make the determination required by this Section 21 (c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit, management
and other standards (including any standards with respect to
previous relationships between Lender and the transferee and the
organization of the transferee) customarily applied by Lender at
26
the time of the proposed Transfer to the approval of borrowers
in connection with the origination or purchase of similar
mortgages, deeds of trust or deeds to secure debt on multifamily
properties;
(4) the Mortgaged Property, at the time of the proposed Transfer,
meets all standards as to its physical condition that are
customarily applied by Lender at the time of the proposed
Transfer to the approval of properties in connection with the
origination or purchase of similar mortgages on multifamily
properties;
(5) in the case of a Transfer of all or any part of the Mortgaged
Property, or direct or indirect ownership interests in Borrower
or key Principal (if an entity), if transferor or any other
person has obligations under any Loan Document, the execution by
the transferee or one or more individuals or entities acceptable
to Lender of an assumption agreement (including, if applicable,
an Acknowledgment and Agreement of Key Principal to Personal
Liability for Exceptions to Non-Recourse Liability) that is
acceptable to Lender and that, among other things, requires the
transferee to perform all obligations of transferor or such
person set forth in such Loan Document, and may require that the
transferee comply with any provisions of this Instrument or any
other Loan Document which previously may have been waived by
Lender;
(6) 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 individuals or entities
acceptable to Lender to execute and deliver to Lender a guaranty
in a form acceptable to Lender; and
(7) Lender's receipt of all of the following:
(A) a non-refundable review fee in the amount of $3,000 and a
transfer fee equal to 1 percent of the outstanding
Indebtedness immediately prior to the Transfer.
(B) In addition, Borrower shall be required to reimburse Lender
for all of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the
Transfer request, to the extent such expenses exceed
$3,000.
(d) For purposes of this Section, the following terms shall have the
meanings set fort below:
(1) "Initial Owners" means, with respect to Borrower or any other
entity, the persons or entities who on the date of the Note own
in
27
the aggregate 100% of the ownership interests in Borrower or
that entity.
(2) A Transfer of a "Controlling Interest" shall mean, with respect
to any entity, the following:
(i) if such entity is a general partnership or a joint venture,
a Transfer of any general partnership interest or joint
venture interest which would cause the Initial Owners to
own less than 51% of all general partnership or joint
venture interests in such entity;
(ii) if such entity is a limited partnership, a Transfer of any
general partnership interest;
(iii)if such entity is a limited liability company or a limited
liability partnership, a Transfer of any membership or
other ownership interest which would cause the Initial
Owners to own less than 51% of all membership or other
ownership interests in such entity;
(iv) if such entity is a corporation (other than a Publicly-Held
Corporation) with only one class of voting stock, a
Transfer of any voting stock which would cause the Initial
Owners to own less than 51% of voting stock in such
corporation;
(v) if such entity is a corporation (other than a Publicly-Held
Corporation) with more than one class of voting stock, a
Transfer of any voting stock which would cause the Initial
Owners to own less than a sufficient number of shares of
voting stock having the power to elect the majority of
directors of such corporation; and
(vi) if such entity is a trust, the removal, appointment or
substitution of a trustee of such trust other than (A) in
the case of a land trust, or (B) if the trustee of such
trust after such removal, appointment or substitution the
trust agreement approved by Lender, is a trustee identified
in the trust agreement approved by Lender.
(3) "Publicly-Held Corporation" shall mean a corporation the
outstanding voting stock of which is registered under Section 12
(b) or 12 (g) of the Securities and Exchange Act of 1934, as
amended.
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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 to comply with the provisions of Section 33;
(d) fraud or material misrepresentation or material omission by Borrower,
or any of its officers, directors, trustees, general partners or managers, Key
Principal, or any guarantor in connection with (A) the application for or
creation of the Indebtedness, (B) any financial statement, rent roll, or other
report or information provided to Lender during the term of the Indebtedness, or
(C) any request for Lender's consent to any proposed action, including a request
for disbursement of funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding, whether civil or
criminal, which, in Lender's reasonable judgment, 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;
(g) any failure by Borrower to perform any of its obligations under this
Instrument (other than those specified in Sections 22(a) through (f)), as and
when required, which continues for a period of 30 days after notice of such
failure by Lender to Borrower, but no such notice or grace period shall apply in
the case of any such failure which could, in Lender's judgment, absent immediate
exercise by Lender 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;
(h) 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; and
(i) 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.
23. REMEDIES CUMULATIVE.
Each night and remedy provided in this Instrument is distinct from all
other rights or remedies under this Instrument or any other Loan Document or
afforded by applicable
29
law, and each shall be cumulative and may be exercised concurrently,
independently, or successively, in any order.
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 Lender 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. 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
Lender of remedies so as to preclude the exercise of any other right available
to Lender. Lender'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.
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26. WAIVER OF STATUTE OF LIMITATIONS.
Borrower hereby waives the right to assert any statute of limitations as a
bar to the enforcement of the lien of this Instrument or to any action brought
to enforce any Loan Document.
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.
Borrower shall execute, acknowledge, and deliver, at its sole cost and
expense, all further acts, deeds, conveyances, assignments, estoppel
certificates, financing statements, 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.
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 Under, 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 Lender.
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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").
(b) Borrower agrees that any controversy arising under or in relation to
the Note, this Instrument, or any other Loan Document shall be litigated
exclusively in the Property Jurisdiction. The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which 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.
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 (1) the date when the notice is
received by the addressee; (2) 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 (3) the third Business Day
after the notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested. As used in this Section 31, the term
"Business Day" means any day other than a Saturday, a Sunday or any other day on
which Lender is not open for business.
(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 which 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.
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.
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33. SINGLE ASSET BORROWER.
Until the Indebtedness is paid in full, Borrower (a) shall not acquire any
real or personal property other than the Mortgaged Property and personal
property related to the operation and maintenance of the Mortgaged Property; (b)
shall not operate any business other than the management and operation of the
Mortgaged Property; and (c) shall not maintain its assets in a way difficult to
segregate and identify.
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 Lender and Borrower. However,
a Transfer not permitted by Section 21 shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY.
If more than one person or entity signs this Instrument as Borrower, the
obligations of such persons and entities shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely that of
creditor and debtor, respectively, and nothing contained in this Instrument
shall create any other relationship between Lender 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, (1) 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, (2) Borrower shall not be a third
party beneficiary of any Servicing Arrangement, and (3) 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.
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
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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."
39. LOAN SERVICING.
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 Property, inspections of books and records, and the granting
of consents and approvals, may be taken by the Loan Servicer unless Borrower
receives notice to the contrary. If Borrower receives conflicting notices
regarding the identity of the Loan Servicer or any other subject, any such
notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION.
Lender may furnish information regarding Borrower or the Mortgaged Property
to third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or securitization of the
Indebtedness, including trustees, master servicers, special servicers, rating
agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans. Borrower irrevocably waives any and
all rights it may have under applicable law to prohibit such disclosure,
including any right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES.
All information in the application for the loan submitted to Lender (the
"Loan Application") and in all financial statements, rent rolls, reports,
certificates and other documents submitted in connection with the Loan
Application are complete and accurate in all material respects. There has been
no material adverse change in any fact or circumstance that would make any such
information incomplete or inaccurate.
42. SUBROGATION.
If, and to the extent that, the proceeds of the loan evidenced by the Note
are used 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"), such loan proceeds shall be
deemed to have been advanced by Lender 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.
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43. ACCELERATION; REMEDIES.
At any time during the existence of an Event of Default, Lender, at
Lender's option, may declare the Indebtedness to be immediately due and payable
without further demand, and may foreclose this Instrument by judicial proceeding
and may invoke any other remedies permitted by applicable law or provided in
this Instrument or in any other Loan Document. Lender shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including
costs of documentary evidence, abstracts, title reports and attorneys' fees and
out of pocket expenses.
44. RELEASE.
Upon payment of the Indebtedness, Lender shall, at its cost, release this
Instrument.
45. FINANCING STATEMENT.
As provided in Section 2, this Instrument constitutes a financing statement
with respect to any part of the Mortgaged Property which is or may become a
Fixture and for the purposes of such financing statement: (a) the Debtor shall
be Borrower and the Secured Party shall be Lender; (b) the addresses of Borrower
as Debtor and of Lender as Secured Party are as specified above in the first
paragraph of this Instrument; (c) the name of the record owner is Borrower; (d)
the types or items of collateral consist of any part of the Mortgaged Property
which is or may become a Fixture; and (e) the social security number or the
federal employer identification number of Borrower as Debtor is 00-0000000
46. APPOINTMENT OF RECEIVER.
Section 3(b) and Section 4(d) are amended by (i) deleting the following
phrase, each time it appears: "Lender entering upon and taking and maintaining
control of the Mortgaged Property," and (ii) inserting the following new phrase
in its place: "Lender entering upon and taking and maintaining control or
possession of the Mortgaged Property or any equivalent action."
47. WAIVER OF REDEMPTION.
Borrower waives all right of redemption of the Mortgaged Property.
48. WAIVER OF TRIAL BY JURY.
BORROWER 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
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JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE
BENEFIT OF COMPETENT LEGAL COUNSEL.
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ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:
|X| Exhibit A Description of the Land (required)
|X| Exhibit B Modifications to Instrument.
|X| Exhibit C Modifications to Instrument
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
GARDEN CHALET IL.P.,
a Delaware limited partnership
By: Garden National Realty, Inc.,
a Nevada corporation General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
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Attachment to Multifamily Instrument
Notary Acknowledgments for Borrower
State of Texas )
)ss:
County of Dallas )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Xxxxxxx X. Xxxxxxx, known to me
to be the Vice President of Garden National Realty, Inc., a Nevada
corporation, the corporation that executed the foregoing instrument, and known
to me to be the person who executed the foregoing instrument on behalf of said
corporation, said corporation being known to be general partner of Garden Chalet
I L.P., a Delaware limited partnership, the limited partnership executed the
same as such general partner and that such limited partnership executed the same
for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 4th day of September, 1998.
/s/ Xxxxxx Xxxx Xxxxxx
[notary seal] Notary Public in and for the State of Texas
My Commission Expires: June 9, 2000
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KEY PRINCIPAL IDENTIFICATION
Key Principal
Name: American Realty Trust, Inc.
Address: 00000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
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EXHIBIT A TO MORTGAGE
DESCRIPTION OF REAL PROPERTY
The land referred to in this Mortgage is situated in the
City of Topeka, County of Shawnee, State of Kansas, and is
described as follows:
Tract I: Lot 1, EXCEPT the South 20 feet thereof, Prospect Place Subdivision in
the City of Topeka, Shawnee County, Kansas, together with vacated Prospect Court
lying East of and adjacent to said Xxx 0.
Xxxxx XX: Xxx 0, Xxxxx X, Xxxxxxxx Xxxxxxx Subdivision in the City of Topeka,
Shawnee County, Kansas together with vacated Prospect Court lying West of and
adjacent to said Xxx 0.
Xxxxx XXX: Xxx 0, Xxxxx X, Xxxxxxxx Xxxxxxx Xx. 0 in the City of Topeka Shawnee
County, Kansas, EXCEPT a part of said Lot 1; thence on Az 268(0)28'09", 190.00
feet coincident with the South line of said Lot 1; thence on Az 359(0)58'36",
152.00 feet coincident with the West line of said Lot 1; thence on Az
88(0)28'09". 190.00 feet coincident with the South line of said Lot 1; thence on
Az 359(0)58'36". 152.00 feet coincident with the West line of said Lot 1; thence
on Az 88(0)28'09". 190.00 feet to the East line of said Lot 1; thence on Az
179(0)58'36". 152.00 feet coincident with the East line of said Lot 1 to the
point of beginning. ALSO EXCEPT a part of said Lot 1 described as follows:
Beginning at the Northwest corner of said Lot 1; thence East on Az 88(0)20'19".
189.93 feet coincident with the North line of said Lot 1; thence on Az
179(0)58'36". 302.40 feet; thence on Az 269(0)28'09". 287.31 feet to the
Westerly line of said Lot 1; thence on Az 28(0)47'25". 246.07 feet coincident
with said Westerly line; thence on Az 359(0)10'40". 89.50 feet coincident with
said Westerly line to the point of beginning.
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EXHIBIT B
MODIFICATIONS TO INSTRUMENT
(Key Principal Transfers)
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
1. Section 21(b) is modified to delete the period at the end of Section
21(b)(6) and substitute "; and" therefor and to add a new Section
21(b)(7):
"(7) a Transfer of ownership interests held by the Key Principal in
Borrower, or in any other entity which owns, directly or
indirectly through one or more intermediate entities, an
ownership interest in Borrower, to (i) other Key Principals;
(ii) non-minor immediate family members; or (iii) trusts
established for the benefit of the transferor and/or immediate
family members; provided, however, that (A) such Transfer of
ownership interests will not cause a change in the management
and control of Borrower (or other intermediate entity), and
after which Transfer, Key Principal shall maintain the same
right and ability to manage and control Borrower (or other
immediate entity) as existed prior to the Transfer and (B)
Lender shall be provided with written notice of all such
Transfers permitted under this Section 21(b)(7) no later than 5
days after the date of the Transfer."
2. All capitalized terms used in this Exhibit not specifically defined
herein shall have the meanings set forth in the text of the Instrument that
precedes this Exhibit.
RP
BORROWER'S INITIALS
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EXHIBIT C
MODIFICATIONS TO INSTRUMENT
(Cross-Default and Cross-Collateralized)
The loan secured by this Multifamily Deed of Trust,
Assignment of Rents and Security Agreement is to be
cross-defaulted and cross-collateralized with Multifamily
Mortgages, Assignments of Rents and Security Agreements
and/or Multifamily Deeds of Trust, Assignments of Rents and
Security Agreements granted by entities related to the
Borrower and Key Principals. Such cross-defaulting and
cross-collateralization are to be the subject of an
amendment to this Multifamily Deed of Trust, Assignment of
Rents and Security Agreement to be executed by Borrower on
or before October 15, 1998. The failure of the Borrower to
timely execute and deliver to Lender the appropriate
amendment to this instrument shall immediately cause the
loan secured hereby to become full recourse as to the
Borrower and the Key Principals without further notice. In
such event, Paragraph 6 of this Instrument shall be deemed
to be deleted.
RP
Initials of Borrower and Key Principal(s)
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