EXHIBIT 99-b20
Prepared by, and after recording return to:
ARCS Commercial Mortgage Co., L.P.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx Xxxxx, XX 00000
Attn.: Closing Dept.
ARCS # 226637
FNMA # 989116
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING
(TEXAS)
TABLE OF CONTENTS
PAGE
1. DEFINITIONS..............................................................................................1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT...............................................................6
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER;
LENDER IN POSSESSION.....................................................................................7
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....................................................................................12
11. USE OF PROPERTY.........................................................................................13
12. PROTECTION OF LENDER'S SECURITY.........................................................................13
13. INSPECTION..............................................................................................13
14. BOOKS AND RECORDS; FINANCIAL REPORTING..................................................................13
15. TAXES; OPERATING EXPENSES...............................................................................15
16. LIENS; ENCUMBRANCES.....................................................................................16
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF
MORTGAGED PROPERTY......................................................................................16
18. ENVIRONMENTAL HAZARDS...................................................................................17
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19. PROPERTY AND LIABILITY INSURANCE........................................................................22
20. CONDEMNATION............................................................................................24
21. TRANSFERS OF THE MORTGAGED PROPERTY OR
INTERESTS IN BORROWER...................................................................................24
22. EVENTS OF DEFAULT.......................................................................................28
23. REMEDIES CUMULATIVE.....................................................................................29
24. FORBEARANCE.............................................................................................29
25. INTENTIONALLY DELETED...................................................................................30
26. WAIVER OF STATUTE OF LIMITATIONS........................................................................30
27. WAIVER OF MARSHALLING...................................................................................30
28. FURTHER ASSURANCES......................................................................................30
29. ESTOPPEL CERTIFICATE....................................................................................30
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE........................................................31
31. NOTICE..................................................................................................31
32. SALE OF NOTE; CHANGE IN SERVICER........................................................................31
33. SINGLE ASSET BORROWER...................................................................................31
34. SUCCESSORS AND ASSIGNS BOUND............................................................................32
35. JOINT AND SEVERAL LIABILITY.............................................................................32
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.....................................................32
37. SEVERABILITY; AMENDMENTS................................................................................32
38. CONSTRUCTION............................................................................................32
39. LOAN SERVICING..........................................................................................33
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40. DISCLOSURE OF INFORMATION...............................................................................33
41. NO CHANGE IN FACTS OR CIRCUMSTANCES.....................................................................33
42. SUBROGATION.............................................................................................33
43. ACCELERATION; REMEDIES..................................................................................33
44. RELEASE.................................................................................................37
45. TRUSTEE.................................................................................................37
46. VENDOR'S LIEN; RENEWAL AND EXTENSION....................................................................37
47. NO FIDUCIARY DUTY.......................................................................................37
48. FIXTURE FILING..........................................................................................38
49. ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS.....................................................38
50. LOAN CHARGES............................................................................................38
51. PROPERTY AND LIABILITY INSURANCE DELIVERY OF
POLICY TO LENDER........................................................................................39
52. ENTIRE AGREEMENT........................................................................................39
53. WAIVER OF TRIAL BY JURY.................................................................................39
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MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
SECURITY AGREEMENT AND FIXTURE FILING
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (the INSTRUMENT) is dated as of the 4th day of April, 2001,
by CAC III Limited Partnership, a Virginia limited partnership organized and
existing under the laws of Virginia, whose address is 000 Xxxx Xxxx Xxxxxx,
Xxxxxxxx, XX 00000, as trustor (BORROWER), to Lawyers Title Insurance
Corporation, as trustee (TRUSTEE), for the benefit of ARCS Commercial Mortgage
Co., L.P., a limited partnership organized and existing under the laws of
California, whose address is 00000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx Xxxxx, XX
00000, as beneficiary (LENDER).
Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the Land located in
Tarrant County, State of Texas and described in Exhibit A attached to this
Instrument. To have and to hold the Mortgaged Property unto Trustee, Trustees
successor in trust and Trustees assigns forever.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrowers Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on May 1, 2011, in the principal amount of
$15,680,000.00, and all renewals, extensions and modifications of the
Indebtedness, and the performance of the covenants and agreements of Borrower
contained in the Loan Documents.
Borrower warrants and represents that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to 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,
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establishing a fund to assure completion of repairs or improvements specified in
that agreement, or assuring reduction of the outstanding principal balance of
the Indebtedness if the occupancy of or income from the Mortgaged Property does
not increase to a level specified in that agreement, or any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account.
(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
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amendments, that relate to Hazardous Materials and apply to Borrower or to the
Mortgaged Property. Hazardous Materials Laws include, but are not limited to,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act, 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 the Note 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.
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Unless Borrower receives notice to the contrary, the Loan Servicer is the entity
identified as "Lender" in the first paragraph of this Instrument.
(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;
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(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 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
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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 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.
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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 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 after the occurrence of an Event of Default, 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; provided,
however, that the giving of any such notice by Lender shall not affect, in any
way, Lender's entitlement to the Rents as of the date on which the Event of
Default occurs. 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.
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(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 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
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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 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 the occurrence of an Event of Default, 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
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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 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) 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, 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.
(g) Borrower shall not receive or accept Rent under any Lease (whether
residential or
10
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 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
11
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. 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
12
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.
(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.
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(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 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
14
(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; and
(7) if required by Lender, a statement of income and
expense for the Mortgaged Property for the prior
month or 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 Default.
15. 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,
15
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 Default.
17. 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 condemnation 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.
16
(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
manager 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:
(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.
17
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 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
18
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.
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
19
(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 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.
20
(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.
(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:
21
(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 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
22
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, workers' 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 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
23
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 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.
24
(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.
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;
25
(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 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
26
entities acceptable to Lender of an assumption
agreement (including, if applicable, an
Acknowledgement 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 forth 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 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
27
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 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.
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,
28
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 right 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 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
29
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. [INTENTIONALLY DELETED]. See Section 50.
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 Lender, 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.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
30
(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.
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
31
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 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
32
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.
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 invoke the power of
sale and any other remedies permitted by Texas law or provided in this
Instrument or in any other Loan Document. Borrower acknowledges that the power
of sale granted in this Instrument may be exercised by Lender without prior
judicial hearing. Lender shall be entitled to collect all costs and expenses
incurred in pursuing such remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title reports.
If Lender invokes the power of sale, Lender may, by and through the
Trustee, or otherwise, sell or offer for sale the Mortgaged Property in such
portions, order and parcels as Lender may determine, with or without having
first taken possession of the Mortgaged Property, to the highest bidder for cash
at public auction. Such sale shall be made at the courthouse door of the county
in which all or any part of the Land to be sold is situated (whether the parts
or parcel, if any, situated in different counties are contiguous or not, and
without the necessity of having any Personalty present at such sale) on the
first Tuesday of any month between the hours of 10:00 a.m. and 4:00
33
p.m., after advertising the time, place and terms of sale and that portion of
the Mortgaged Property to be sold by posting or causing to be posted written or
printed notice of sale at least twenty-one (21) days before the date of the sale
at the courthouse door of the county in which the sale is to be made and at the
courthouse door of any other county in which a portion of the Land may be
situated, and by filing such notice with the County Clerk(s) of the county(s) in
which all or a portion of the Land may be situated, which notice may be posted
and filed by the Trustee acting, or by any person acting for the Trustee, and
Lender has, at least twenty-one (21) days before the date of the sale, served
written or printed notice of the proposed sale by certified mail on each debtor
obligated to pay the Indebtedness according to Lender's records by the deposit
of such notice, enclosed in a postpaid wrapper, properly addressed to such
debtor at debtor's most recent address as shown by Lender's records, in a post
office or official depository under the care and custody of the United States
Postal Service. The affidavit of any person having knowledge of the facts to the
effect that such service was completed shall be prima facie evidence of the fact
of service.
Trustee shall deliver to the purchaser at the sale, within a reasonable
time after the sale, a deed conveying the Mortgaged Property so sold in fee
simple with covenants of general warranty. Borrower covenants and agrees to
defend generally the purchaser's title to the Mortgaged Property against all
claims and demands. The recitals in Trustee's deed shall be prima facie evidence
of the truth of the statements contained in those recitals. Trustee shall apply
the proceeds of the sale in the following order: (a) to all reasonable costs and
expenses of the sale, including reasonable Trustee's fees and attorneys' fees
and costs of title evidence; (b) to the Indebtedness in such order as Lender, in
Lender's discretion, directs; and (c) the excess, if any, to the person or
persons legally entitled to the excess.
If all or any part of the Mortgaged Property is sold pursuant to this
Section 43, Borrower will be divested of any and all interest and claim to the
Mortgaged Property, including any interest or claim to all insurance policies,
utility deposits, bonds, loan commitments and other intangible property included
as a part of the Mortgaged Property. Additionally, after a sale of all or any
part of the Land, Improvements, Fixtures and Personalty, Borrower will be
considered a tenant at sufferance of the purchaser of the same, and the
purchaser shall be entitled to immediate possession of such property. If
Borrower shall fail to vacate the Mortgaged Property immediately, the purchaser
may and shall have the right, without further notice to Borrower, to go into any
justice court in any precinct or county in which the Mortgaged Property is
located and file an action in forcible entry and detainer, which action shall
lie against Borrower or its assigns or legal representatives, as a tenant at
sufferance. This remedy is cumulative of any and all remedies the purchaser may
have under this Instrument or otherwise.
In any action for a deficiency after a foreclosure under this
Instrument, if any person against whom recovery is sought requests the court in
which the action is pending to determine the fair market value of the Mortgaged
Property, as of the date of the foreclosure sale, the following shall be the
basis of the court's determination of fair market value:
(a) the Mortgaged Property shall be valued as is and in its
condition as of the date of foreclosure, and no assumption of
increased value because of post-foreclosure
34
repairs, refurbishment, restorations or improvements shall be
made;
(b) any adverse effect on the marketability of title because of
the foreclosure or because of any other title condition not
existing as of the date of this Instrument shall be
considered;
(c) the valuation of the Mortgaged Property shall be based upon an
assumption that the foreclosure purchaser desires a prompt
resale of the Mortgaged Property for cash within a six
month-period after foreclosure;
(d) although the Mortgaged Property may be disposed of more
quickly by the foreclosure purchaser, the gross valuation of
the Mortgaged Property as of the date of foreclosure shall be
discounted for a hypothetical reasonable holding period (not
to exceed 6 months) at a monthly rate equal to the average
monthly interest rate on the Note for the twelve months before
the date of foreclosure;
(e) the gross valuation of the Mortgaged Property as of the date
of foreclosure shall be further discounted and reduced by
reasonable estimated costs of disposition, including brokerage
commissions, title policy premiums, environmental assessment
and clean-up costs, tax and assessment, prorations, costs to
comply with legal requirements and attorneys' fees;
(f) expert opinion testimony shall be considered only from a
licensed appraiser certified by the State of Texas and, to the
extent permitted under Texas law, a member of the Appraisal
Institute, having at least five years experience in appraising
property similar to the Mortgaged Property in the county where
the Mortgaged Property is located, and who has conducted and
prepared a complete written appraisal of the Mortgaged
Property taking into considerations the factors set forth in
this Instrument; no expert opinion testimony shall be
considered without such written appraisal;
(g) evidence of comparable sales shall be considered only if also
included in the expert opinion testimony and written appraisal
referred to in the preceding paragraph; and
(h) an affidavit executed by Lender to the effect that the
foreclosure bid accepted by Trustee was equal to or greater
than the value of the Mortgaged Property determined by Lender
based upon the factors and methods set forth in subparagraphs
(a) through (g) above before the foreclosure shall constitute
prima facie evidence that the foreclosure bid was equal to or
greater than the fair market value of the Mortgaged Property
on the foreclosure date.
Lender may, at Lender's option, comply with these provisions in the
manner permitted or required by Title 5, Section 51.002 of the Texas Property
Code (relating to the sale of real estate) or by Chapter 9 of the Texas Business
and Commerce Code (relating to the sale of collateral after
35
default by a debtor), as those titles and chapters now exist or may be amended
or succeeded in the future, or by any other present or future articles or
enactments relating to same subject. Unless expressly excluded, the Mortgaged
Property shall include Rents collected before a foreclosure sale, but
attributable to the period following the foreclosure sale, and Borrower shall
pay such Rents to the purchaser at such sale. At any such sale:
(a) whether made under the power contained in this Instrument,
Section 51.002, the Texas Business and Commerce Code, any
other legal requirement or by virtue of any judicial
proceedings or any other legal right, remedy or recourse, it
shall not be necessary for Trustee to have physically present,
or to have constructive possession of, the Mortgaged Property
(Borrower shall deliver to Trustee any portion of the
Mortgaged Property not actually or constructively possessed by
Trustee immediately upon demand by Trustee) and the title to
and right of possession of any such property shall pass to the
purchaser as completely as if the property had been actually
present and delivered to the purchaser at the sale;
(b) each instrument of conveyance executed by Trustee shall
contain a general warranty of title, binding upon Borrower;
(c) the recitals contained in any instrument of conveyance made by
Trustee shall conclusively establish the truth and accuracy of
the matters recited in the Instrument, including nonpayment of
the Indebtedness and the advertisement and conduct of the sale
in the manner provided in this Instrument and otherwise by law
and the appointment of any successor Trustee;
(d) all prerequisites to the validity of the sale shall be
conclusively presumed to have been satisfied;
(e) the receipt of Trustee or of such other party or officer
making the sale shall be sufficient to discharge to the
purchaser or purchasers for such purchaser(s)"purchase money,
and no such purchaser or purchasers, or such purchaser(s)
assigns or personal representatives, shall thereafter be
obligated to see to the application of such purchase money or
be in any way answerable for any loss, misapplication or
nonapplication of such purchase money;
(f) to the fullest extent permitted by law, Borrower shall be
completely and irrevocably divested of all of Borrower's
right, title, interest, claim and demand whatsoever, either at
law or in equity, in and to the property sold, and such sale
shall be a perpetual bar to any claim to all or any part of
the property sold, both at law and in equity, against Borrower
and against any person claiming by, through or under Borrower;
and
(g) to the extent and under such circumstances as are permitted by
law, Lender may be a purchaser at any such sale.
36
44. RELEASE. Upon payment of the Indebtedness, Lender shall
release this Instrument. Borrower shall pay Lender's reasonable costs incurred
in releasing this Instrument.
45. TRUSTEE.
(a) Trustee may resign by giving of notice of such resignation in
writing to Lender. If Trustee shall die, resign or become
disqualified from acting under this Instrument or shall fail
or refuse to act in accordance with this Instrument when
requested by Lender or if for any reason and without cause
Lender shall prefer to appoint a substitute trustee to act
instead of the original Trustee named in this Instrument or
any prior successor or substitute trustee, Lender shall have
full power to appoint a substitute trustee and, if preferred,
several substitute trustees in succession who shall succeed to
all the estate, rights, powers and duties of the original
Trustee named in this Instrument. Such appointment may be
executed by an authorized officer, agent or attorney-in-fact
of Lender (whether acting pursuant to a power of attorney or
otherwise), and such appointment shall be conclusively
presumed to be executed with authority and shall be valid and
sufficient without proof of any action by Lender.
(b) Any successor Trustee appointed pursuant to this Section
shall, without any further act, deed or conveyance, become
vested with all the estates, properties, rights, powers and
trusts of the predecessor Trustee with like effect as if
originally named as Trustee in this Instrument; but,
nevertheless, upon the written request of Lender or such
successor Trustee, the Trustee ceasing to act shall execute
and deliver an instrument transferring to such successor
Trustee, all the estates, properties, rights, powers and
trusts of the Trustee so ceasing to act, and shall duly
assign, transfer and deliver any of the property and monies
held by the Trustee ceasing to act to the successor Trustee.
(c) Trustee may authorize one or more parties to act on Trustee's
behalf to perform the ministerial functions required of
Trustee under this Instrument, including the transmittal and
posting of any notices.
46. VENDOR'S LIEN; RENEWAL AND EXTENSION. The Note is [primarily
secured by the Vendor's Lien retained in the Deed, bearing the same date at this
Instrument, conveying the Mortgaged Property to Borrower, which Vendor's Lien
has been assigned to Lender, this Instrument being additional security
therefor.] [in renewal and extension, but not in extinguishment, of the
following indebtedness: ______________________________]
47. NO FIDUCIARY DUTY. Lender owes no fiduciary or other special duty
to Borrower.
48. FIXTURE FILING. This Instrument is also a fixture filing under the
Uniform
37
Commercial Code of Texas.
49. ADDITIONAL PROVISIONS REGARDING ASSIGNMENT OF RENTS. In no event
shall the assignment of Rents or Leases in Section 3 and Section 4 cause the
Indebtedness to be reduced by an amount greater than the Rents actually received
by Lender and applied by Lender to the Indebtedness, whether before, during or
after (i) an Event of Default, or (ii) a suspension or revocation of the license
granted to Borrower in Section 3(c) with regard to the Rents. Borrower and
Lender specifically intend that the assignment of Rents and Leases in Section 3
and Section 4 is not intended to result in a pro tanto reduction of the
Indebtedness. The assignment of Rents and Leases in Section 3 and Section 4 is
not intended to constitute a payment of, or with respect to, the Indebtedness
and, therefore, Borrower and Lender specifically intend that the Indebtedness
shall not be reduced by the value of the Rents and Leases assigned. Such
reduction shall occur only if, and to the extent that, Lender actually receives
Rents pursuant to Section 3 and applies such Rents to the Indebtedness. Borrower
agrees that the value of the license granted with regard to the Rents equals the
value of the absolute assignment of Rents to Lender. The assignment of Rents
contained in Section 3 shall terminate upon the release of this Instrument.
50. LOAN CHARGES. Borrower and Lender intend at all times to comply
with the laws of the State of Texas governing the maximum rate or amount of
interest payable on or in connection with the Indebtedness (or applicable United
States federal law to the extent that it permits Lender to contract for, charge,
take, reserve or receive a greater amount of interest than under Texas law). If
the applicable law is ever judicially interpreted so as to render usurious any
amount payable under the Note, this Instrument or any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to the
Indebtedness, or if acceleration of the maturity of the Indebtedness, or if any
prepayment by Borrower results in Borrower having paid any interest in excess of
that permitted by any applicable law, then Borrower and Lender expressly intend
that all excess amounts collected by Lender shall be applied to reduce the
unpaid principal balance of the Indebtedness (or, if the Indebtedness has been
or would thereby be paid in full, shall be refunded to Borrower), and the
provisions of the Note, this Instrument and the other Loan Documents immediately
shall be deemed reformed and the amounts thereafter collectible under the Loan
Documents reduced, without the necessity of the execution of any new documents,
so as to comply with any applicable law, but so as to permit the recovery of the
fullest amount otherwise payable under the Loan Documents. The right to
accelerate the maturity of the Indebtedness does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Lender does not intend to collect any unearned interest in the
event of acceleration. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of the Indebtedness shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of the Indebtedness until payment in full so that the rate or amount of
interest on account of the Indebtedness does not exceed the applicable usury
ceiling. Notwithstanding any provision contained in the Note, this Instrument or
any other Loan Document that permits the compounding of interest, including any
provision by which any accrued interest is added to the principal amount of the
Indebtedness, the total amount of interest that Borrower is obligated to pay and
Lender is entitled to receive with respect to the Indebtedness shall not exceed
the amount calculated on a simple (i.e., noncompounded) interest basis at the
maximum rate on
38
principal amounts actually advanced to or for the account of Borrower, including
all current and prior advances and any advances made pursuant to the Instrument
or any other Loan Document (such as for the payment of Impositions and similar
expenses or costs).
51. PROPERTY AND LIABILITY INSURANCE DELIVERY OF POLICY TO LENDER.
Notwithstanding the provisions of Section 19(b), Borrower shall not be required
to deliver the original (or a duplicate original) of any renewal policy of
insurance to Lender more than 15 days prior to the expiration date of the policy
then held by Lender.
52. ENTIRE AGREEMENT. THIS INSTRUMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
53. 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 JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this Instrument:
|X| Exhibit A Description of the Land (required).
|X| Exhibit B Modifications to Instrument
39
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.
BORROWER:
CAC III Limited Partnership,
a Virginia limited partnership
By: CAC III Special General, Inc.
a Virginia corporation
Its: General Partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Its: Vice President
00-0000000
Borrower's Social Security/Employer ID Number
40
KEY PRINCIPAL
KEY PRINCIPAL(S)
Cornerstone Realty Income Trust
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
41
EXHIBIT A
[DESCRIPTION OF THE LAND]
A-1
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that precedes
this Exhibit:
Item 46 is hereby deleted in its entirety.
-------------
Initials
B-1
