MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (KANSAS – REVISION DATE 05-11-2004) FHLMC Loan No. 981208630
Prepared
by, and after recording
return
to:
Xxxx
& Xxxxxxx (EHK)
A
Professional Association
4800
Xxxxx Fargo Center
00
Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000-0000
MULTIFAMILY
MORTGAGE,
ASSIGNMENT
OF RENTS
(KANSAS
– REVISION DATE 05-11-2004)
FHLMC
Loan No. 981208630
MULTIFAMILY
MORTGAGE,
ASSIGNMENT
OF RENTS
(KANSAS
– REVISION DATE 05-11-2004)
THIS
MULTIFAMILY MORTGAGE, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is made as of September 14, 2007, between Chalet
I Acquisition, L.L.C., a limited liability company organized and existing under
the laws of Kansas,whose address is c/o Maxus Properties, Inc., 000 Xxxxxx
Xxxx,
Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000, as mortgagor
(“Borrower”), and NorthMarq Capital, Inc., a corporation
organized and existing under the laws of corporation, whose address is 0000
Xxxxxxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000, as
mortgagee (“Lender”). Borrower’s organizational
identification number, if applicable, is 3055605.
Borrower
is indebted to Lender in the principal amount of $8,070,000.00, as evidenced
by
Borrower’s Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on October 1, 2018 (the “Maturity
Date”).
TO
SECURE
TO LENDER the repayment of the Indebtedness, and all renewals, extensions and
modifications of the Indebtedness, and the performance of the covenants and
agreements of Borrower contained in the Loan Documents, Borrower hereby
mortgages, warrants, grants, conveys and assigns to Lender the Mortgaged
Property, including the Land located in Shawnee County, State of Kansas and
described in Exhibit A attached to this Instrument.
Borrower
represents and warrants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to grant, convey and assign
the
Mortgaged Property, and that the Mortgaged Property is unencumbered except
as
shown on the schedule of exceptions to coverage in the title policy issued
to
and accepted by Lender contemporaneously with the execution and recordation
of
this Instrument and insuring Lender’s interest in the Mortgaged Property (the
“Schedule of Title Exceptions”). Borrower covenants
that Borrower will warrant and defend generally the title to the Mortgaged
Property against all claims and demands, subject to any easements and
restrictions listed in the Schedule of Title Exceptions.
UNIFORM
COVENANTS
REVISION
DATE 01-30-2006
Covenants. In
consideration of the mutual promises set forth in this Instrument, 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:
PAGE
1
(a) “Attorneys’
Fees and Costs” means (i) fees and out-of-pocket costs of Lender’s
and Loan Servicer’s attorneys, as applicable, including costs of Lender’s and
Loan Servicer’s in-house counsel, support staff costs, costs of preparing for
litigation, computerized research, telephone and facsimile transmission
expenses, mileage, deposition costs, postage, duplicating, process service,
videotaping and similar costs and expenses; (ii) costs and fees of expert
witnesses, including appraisers; and (iii) investigatory fees.
(b) “Borrower”
means all persons or entities identified as “Borrower” in the first paragraph of
this Instrument, together with their successors and assigns.
(c) “Business
Day” means any day other than a Saturday, a Sunday or any other day on
which Lender or the national banking associations are not open for
business.
(d) “Collateral
Agreement” means any separate agreement between Borrower and Lender for
the purpose of establishing replacement reserves for the Mortgaged Property,
establishing a fund to assure the completion of repairs or improvements
specified in that agreement, or assuring reduction of the outstanding principal
balance of the Indebtedness if the occupancy of or income from the Mortgaged
Property does not increase to a level specified in that agreement, or any other
agreement or agreements between Borrower and Lender which provide for the
establishment of any other fund, reserve or account.
(e) “Controlling
Entity” means an entity which owns, directly or indirectly through one
or more intermediaries, (i) a general partnership interest or a Controlling
Interest of the limited partnership interests in Borrower (if Borrower is a
partnership or joint venture), (ii) a manager’s interest in Borrower or a
Controlling Interest of the ownership or membership interests in Borrower (if
Borrower is a limited liability company), (iii) a Controlling Interest of
any class of voting stock of Borrower (if Borrower is a corporation),
(iv) a trustee’s interest or a Controlling Interest of the beneficial
interests in Borrower (if Borrower is a trust), or (v) a managing partner’s
interest or a Controlling Interest of the partnership interests in Borrower
(if
Borrower is a limited liability partnership).
(f) “Controlling
Interest” means (i) 51 percent or more of the ownership
interests in an entity, or (ii) a percentage ownership interest in an
entity of less than 51 percent, if the owner(s) of that interest
actually direct(s) the business and affairs of the entity without the
requirement of consent of any other party. The Controlling Interest
shall be deemed to be 51 percent unless otherwise stated in Exhibit
B.
(g) “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.
(h) “Event
of Default” means the occurrence of any event listed in
Section 22.
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2
(i) “Fixtures”
means all property owned by Borrower which is so attached to the Land or the
Improvements as to constitute a fixture under applicable law, including:
machinery, equipment, engines, boilers, incinerators, installed building
materials; systems and equipment for the purpose of supplying or distributing
heating, cooling, electricity, gas, water, air, or light; antennas, cable,
wiring and conduits used in connection with radio, television, security, fire
prevention, or fire detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related machinery and equipment;
fire detection, prevention and extinguishing systems and apparatus; security
and
access control systems and apparatus; plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage disposers, washers,
dryers and other appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and plants;
swimming pools; and exercise equipment.
(j) “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.
(k) “Hazard
Insurance” is defined in Section 19.
(l) “Hazardous
Materials” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives; flammable
materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling and any other material or substance now or in the future that
(i) is defined as a “hazardous substance,” “hazardous material,”
“hazardous waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or
“pollutant” by or within the meaning of any Hazardous Materials Law, or
(ii) is regulated in any way by or within the meaning of any Hazardous
Materials Law.
(m) “Hazardous
Materials Laws” means all federal, state, and local laws, ordinances
and regulations and standards, rules, policies and other governmental
requirements, administrative rulings and court judgments and decrees in effect
now or in the future and including all amendments, that relate to Hazardous
Materials or the protection of human health or the environment and apply to
Borrower or to the Mortgaged Property. Hazardous Materials Laws include, but
are
not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901, et
seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601, et
seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101
et seq., and their state analogs.
PAGE
3
(n) “Impositions”
and “Imposition Deposits” are defined in
Section 7(a).
(o) “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.
(p) “Indebtedness”
means the principal of, interest at the fixed or variable rate set forth in
the
Note on, and all other amounts due at any time under, the Note, this Instrument
or any other Loan Document, including prepayment premiums, late charges, default
interest, and advances as provided in Section 12 to protect the security of
this Instrument.
(q) “Initial
Owners” means, with respect to Borrower or any other entity, the
persons or entities that (i) on the date of the Note, or (ii) on the
date of a Transfer to which Lender has consented, own in the aggregate
100 percent of the ownership interests in Borrower or that
entity.
(r) “Land”
means the land described in Exhibit A.
(s) “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.
(t) “Lender”
means the entity identified as “Lender” in the first paragraph of this
Instrument, or any subsequent holder of the Note.
(u) “Loan
Documents” means the Note, this Instrument, all guaranties, all
indemnity agreements, all Collateral Agreements, O&M Programs, the MMP and
any other documents now or in the future executed by Borrower, any guarantor
or
any other person in connection with the loan evidenced by the Note, as such
documents may be amended from time to time.
(v) “Loan
Servicer” means the entity that from time to time is designated by
Lender to collect payments and deposits and receive Notices under the Note,
this
Instrument and any other Loan Document, and otherwise to service the loan
evidenced by the Note for the benefit of Lender. Unless Borrower
receives Notice to the contrary, the Loan Servicer is the entity identified
as
“Lender” in the first paragraph of this Instrument.
(w) “MMP”
means a moisture management plan to control water intrusion and prevent the
development of Mold or moisture at the Mortgaged Property throughout the term
of
this Instrument. At a minimum, the MMP must contain a provision for
(i) staff training, (ii) information to be provided to tenants, (iii)
documentation of the plan, (iv) the appropriate protocol for incident response
and remediation and (v) routine, scheduled inspections of common space and
unit
interiors.
PAGE
4
(x) “Mold”
means mold, fungus, microbial contamination or pathogenic
organisms.
(y) “Mortgaged
Property” means all of Borrower’s present and future right, title and
interest in and to all of the following:
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(i)
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the
Land;
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(ii)
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the
Improvements;
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(iii)
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the
Fixtures;
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(iv)
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the
Personalty;
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(v)
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all
current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements, tenements,
rights-of-way, strips and gores of land, streets, alleys, roads,
sewer
rights, waters, watercourses, and appurtenances related to or benefiting
the Land or the Improvements, or both, and all rights-of-way, streets,
alleys and roads which may have been or may in the future be
vacated;
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(vi)
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all
proceeds paid or to be paid by any insurer of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property,
whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;
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(vii)
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all
awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property, including any awards or settlements resulting
from
condemnation proceedings or the total or partial taking of the Land,
the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property under the power of eminent domain or otherwise
and
including any conveyance in lieu
thereof;
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(viii)
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all
contracts, options and other agreements for the sale of the Land,
the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future,
including cash or securities deposited to secure performance by parties
of
their obligations;
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(ix)
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all
proceeds from the conversion, voluntary or involuntary, of any of
the
above into cash or liquidated claims, and the right to collect such
proceeds;
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5
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(x)
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all
Rents and Leases;
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(xi)
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all
earnings, royalties, accounts receivable, issues and profits from
the
Land, the Improvements or any other part of the Mortgaged Property,
and
all undisbursed proceeds of the loan secured by this Instrument and,
if
Borrower is a cooperative housing corporation, maintenance charges
or
assessments payable by shareholders or
residents;
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(xii)
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all
Imposition Deposits;
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(xiii)
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all
refunds or rebates of Impositions by any municipal, state or federal
authority or insurance company (other than refunds applicable to
periods
before the real property tax year in which this Instrument is
dated);
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(xiv)
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all
tenant security deposits which have not been forfeited by any tenant
under
any Lease and any bond or other security in lieu of such deposits;
and
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(xv)
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all
names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill
relating
to any of the Mortgaged Property.
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(z) “Note”
means the Multifamily Note described on page 1 of this Instrument, including
all
schedules, riders, allonges and addenda, as such Multifamily Note may be amended
from time to time.
(aa) “O&M
Program” is defined in Section 18(d).
(bb) “Personalty”
means all:
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(i)
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accounts
(including deposit accounts) of Borrower related to the Mortgaged
Property;
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(ii)
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equipment
and inventory owned by Borrower, which are used now or in the future
in
connection with the ownership, management or operation of the Land
or
Improvements or are located on the Land or Improvements, including
furniture, furnishings, machinery, building materials, goods, supplies,
tools, books, records (whether in written or electronic form), computer
equipment (hardware and software);
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(iii)
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other
tangible personal property owned by Borrower which is used now or
in the
future in connection with the ownership, management or operation
of the
Land or Improvements or is located on the Land or in the Improvements,
including ranges, stoves, microwave ovens,
refrigerators,
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6
dishwashers,
garbage disposers, washers, dryers and other appliances (other than
Fixtures);
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(iv)
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any
operating agreements relating to the Land or the
Improvements;
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(v)
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any
surveys, plans and specifications and contracts for architectural,
engineering and construction services relating to the Land or the
Improvements;
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(vi)
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all
other intangible property, general intangibles and rights relating
to the
operation of, or used in connection with, the Land or the Improvements,
including all governmental permits relating to any activities on
the Land
and including subsidy or similar payments received from any sources,
including a governmental authority;
and
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(vii)
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any
rights of Borrower in or under letters of
credit.
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(cc) “Property
Jurisdiction” is defined in Section 30(a).
(dd) “Rents”
means all rents (whether from residential or non-residential space), revenues
and other income of the Land or the Improvements, parking fees, laundry and
vending machine income and fees and charges for food, health care and other
services provided at the Mortgaged Property, whether now due, past due, or
to
become due, and deposits forfeited by tenants.
(ee) “Taxes”
means all taxes, assessments, vault rentals and other charges, if any, whether
general, special or otherwise, including all assessments for schools, public
betterments and general or local improvements, which are levied, assessed or
imposed by any public authority or quasi-public authority, and which, if not
paid, will become a lien on the Land or the Improvements.
(ff) “Transfer”
is defined in Section 21.
2. UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.
(a) This
Instrument is also a security agreement under the Uniform Commercial Code for
any of the Mortgaged Property which, under applicable law, may be subjected
to a
security interest under the Uniform Commercial Code, whether such Mortgaged
Property is owned now or acquired in the future, and all products and cash
and
non-cash proceeds thereof (collectively, “UCC Collateral”), and
Borrower hereby grants to Lender a security interest in the UCC
Collateral. Borrower hereby authorizes Lender to prepare and file
financing statements, continuation statements and financing statement amendments
in such form as Lender may require to perfect or continue the perfection of
this
security interest and Borrower agrees, if Lender so requests, to execute and
deliver to Lender such financing statements, continuation statements
and
PAGE
7
amendments. Borrower
shall pay all filing costs and all costs and expenses of any record searches
for
financing statements and/or amendments that Lender may
require. Without the prior written consent of Lender, Borrower shall
not create or permit to exist any other lien or security interest in any of
the
UCC Collateral.
(b) Unless
Borrower gives Notice to Lender within 30 days after the occurrence of any
of the following, and executes and delivers to Lender modifications or
supplements of this Instrument (and any financing statement which may be filed
in connection with this Instrument) as Lender may require, Borrower shall not
(i) change its name, identity, structure or jurisdiction of organization;
(ii) change the location of its place of business (or chief executive
office if more than one place of business); or (iii) add to or change any
location at which any of the Mortgaged Property is stored, held or
located.
(c) If
an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition
to
all remedies provided by this Instrument or existing under applicable
law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without
in
any way affecting the availability of Lender’s other remedies.
(d) This
Instrument constitutes a financing statement with respect to any part of the
Mortgaged Property that is or may become a Fixture, if permitted by applicable
law.
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. 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,
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8
Lender
hereby grants to Borrower a revocable license to collect and receive all Rents,
to hold all Rents in trust for the benefit of Lender and to apply all Rents
to
pay the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and expenses of
managing, operating and maintaining the Mortgaged Property, including utilities,
Taxes and insurance premiums (to the extent not included in Imposition
Deposits), tenant improvements and other capital expenditures. So
long as no Event of Default has occurred and is continuing, the Rents remaining
after application pursuant to the preceding sentence may be retained by Borrower
free and clear of, and released from, Lender’s rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of Default,
and
without the necessity of Lender entering upon and taking and maintaining control
of the Mortgaged Property directly, or by a receiver, Borrower’s license to
collect Rents shall automatically terminate and Lender shall without Notice
be
entitled to all Rents as they become due and payable, including Rents then
due
and unpaid. Borrower shall pay to Lender upon demand all Rents to
which Lender is entitled. At any time on or after the date of
Lender’s demand for Rents, (i) Lender may give, and Borrower hereby
irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged
Property instructing them to pay all Rents to Lender, (ii) no tenant shall
be obligated to inquire further as to the occurrence or continuance of an Event
of Default, and (iii) no tenant shall be obligated to pay to Borrower any
amounts which are actually paid to Lender in response to such a
notice. Any such notice by Lender shall be delivered to each tenant
personally, by mail or by delivering such demand to each rental
unit. Borrower shall not interfere with and shall cooperate with
Lender’s collection of such Rents.
(c) Borrower
represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing any prior
indebtedness that is being assigned to Lender, or paid off and discharged with
the proceeds of the loan evidenced by the Note), that 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
PAGE
9
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. Except to the
extent of Lender’s gross negligence or willful misconduct, Lender shall not be
liable to Borrower, anyone claiming under or through Borrower or anyone having
an interest in the Mortgaged Property, by reason of any act or omission of
Lender under Section 3(d), and Borrower hereby releases and discharges
Lender from any such liability to the fullest extent permitted by
law.
(f) If
the Rents are not sufficient to meet the costs of taking control of and managing
the Mortgaged Property and collecting the Rents, any funds expended by Lender
for such purposes shall become an additional part of the Indebtedness as
provided in Section 12.
(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
PAGE
10
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. However, if this present, absolute and unconditional
assignment of the Leases is not enforceable by its terms under the laws of
the
Property Jurisdiction, then the Leases shall be included as a part of the
Mortgaged Property and it is the intention of the Borrower that in this
circumstance this Instrument create and perfect a lien on the Leases in favor
of
Lender, which lien shall be effective as of the date of this
Instrument.
(b) Until
Lender gives Notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or
any other provision of this Instrument), including the right, power and
authority to modify the terms of any Lease or extend or terminate any
Lease. Upon the occurrence of an Event of Default, the permission
given to Borrower pursuant to the preceding sentence to exercise all rights,
power and authority under Leases shall automatically
terminate. Borrower shall comply with and observe Borrower’s
obligations under all Leases, including Borrower’s obligations pertaining to the
maintenance and disposition of tenant security deposits.
(c) Borrower
acknowledges and agrees that the exercise by Lender, either directly or by
a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property
so
long as Lender has not itself entered into actual possession of the Land and
the
Improvements. The acceptance by Lender of the assignment of the
Leases pursuant to Section 4(a) shall not at any time or in any event
obligate Lender to take any action under this Instrument or to expend any money
or to incur any expenses. Except to the extent of Lender’s gross
negligence or willful misconduct, Lender shall not be liable in any way for
any
injury or damage to person or property sustained by any person or persons,
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) Upon
delivery of Notice by Lender to Borrower of Lender’s exercise of Lender’s rights
under this Section 4 at any time after the occurrence of an Event of
Default, and without
PAGE
11
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 Borrower is a cooperative housing
corporation, association or other validly organized entity under municipal,
county, state or federal law, notwithstanding anything to the contrary contained
in this subsection, so long as Borrower is not in breach of any covenant of
this
Instrument, Lender hereby consents to the execution of leases of apartments
for
a term in excess of two years from Borrower to a tenant shareholder of Borrower,
to the surrender or termination of such leases of apartments where the
surrendered or terminated lease is immediately replaced or where the Borrower
makes its best efforts to secure such immediate replacement by a newly executed
lease of the same apartment to a tenant shareholder of the
Borrower. However, no consent is hereby given by Lender to any
execution, surrender, termination or assignment of a lease under terms that
would waive or reduce the obligation of the resulting tenant shareholder under
such lease to pay cooperative assessments in full when due or the obligation
of
the former tenant shareholder to pay any unpaid portion of such
assessments.
(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. However, Lender’s consent shall not be
required for the modification or extension of a non-residential Lease if such
modification or extension is on terms at least as favorable to Borrower as
those
customary at that time in the applicable market and the income from the extended
or modified Lease will not be less than the income received from the Lease
as of
the date of this Instrument. 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 (i) such Leases are subordinate to the lien of this Instrument;
(ii) 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; (iii) 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; (iv) the Lease shall not be terminated by
foreclosure or any other transfer of the Mortgaged Property; (v) 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
PAGE
12
Lease;
and (vi) 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
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) Unless
this requirement is waived in writing by Lender, which waiver may be contained
in this Section 7(a), Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or
on
another day designated in writing by Lender), until the Indebtedness is paid
in
full, an additional amount sufficient to accumulate with Lender the entire
sum
required to pay, when due, the items marked “Collect” below. Lender
will not require the Borrower to make Imposition Deposits with respect to the
items marked “Deferred” below.
|
[Deferred]
|
Hazard
Insurance premiums or other insurance premiums required
|
|
|
by
Lender under Section 19,
|
||
|
[Collect]
|
Taxes,
|
|
|
[Deferred]
|
water
and sewer charges (that could become a lien on the
|
|
|
Mortgaged
Property),
|
||
|
[N/A]
|
ground
rents,
|
|
|
[Deferred]
|
assessments
or other charges (that could become a lien on the
|
|
|
Mortgaged
Property)
|
The amounts deposited under the preceding sentence are collectively referred to in this Instrument as the “Imposition Deposits.” The obligations of Borrower for which the Imposition Deposits are required are collectively referred to in this Instrument as “Impositions.” The amount of the Imposition Deposits shall be sufficient to enable Lender to pay each Imposition before the last date upon which such payment may be made without any penalty or interest charge being added. Lender shall maintain records indicating how much of the monthly
PAGE
13
Imposition
Deposits and how much of the aggregate Imposition Deposits held by Lender are
held for the purpose of paying Taxes, insurance premiums and each other
Imposition.
(b)
Imposition Deposits shall be 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. As additional security for all of Borrower’s
obligations under this Instrument and the other Loan Documents, Borrower hereby
pledges and grants to Lender a security interest in the Imposition Deposits
and
all proceeds of, and all interest and dividends on, the Imposition
Deposits. Any amounts deposited with Lender under this Section 7
shall not be trust funds, nor shall they operate to reduce the Indebtedness,
unless applied by Lender for that purpose under Section 7(e).
(c) If
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.
(f) If
Lender does not collect an Imposition Deposit with respect to an Imposition
either marked “Deferred” in Section 7(a) or pursuant to a separate written
waiver by Lender, then on or before the date each such Imposition is due, or
on
the date this Instrument requires each such Imposition to be paid, Borrower
must
provide Lender with proof of payment of each such Imposition for which Lender
does not require collection of Imposition Deposits. Lender may revoke
its deferral or waiver and require Borrower to deposit with Lender any or all
of
the Imposition Deposits listed in Section 7(a), regardless of whether any
such item is marked
PAGE
14
“Deferred”
in such section, upon Notice to Borrower, (i) if Borrower does not timely
pay any of the Impositions, (ii) if Borrower fails to provide timely proof
to Lender of such payment, or (iii) at any time during the existence of an
Event of Default.
(g) In
the event of a Transfer prohibited by or requiring Lender’s approval under
Section 21, Lender’s waiver of the collection of any Imposition Deposit in
this Section 7 may be modified or rendered void by Lender at Lender’s
option by Notice to Borrower and the transferee(s) as a condition of Lender’s
approval of such Transfer.
8. COLLATERAL
AGREEMENTS. Borrower shall deposit with Lender such amounts
as may be required by any Collateral Agreement and shall perform all other
obligations of Borrower under each Collateral Agreement.
9. APPLICATION
OF PAYMENTS. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than
all
amounts due and payable at such time, then Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender’s discretion. Neither Lender’s acceptance of an
amount that is less than all amounts then due and payable nor Lender’s
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to
the Indebtedness, 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, disability accommodation, zoning and land use, and
Leases. Borrower also shall comply with all applicable laws that
pertain to the maintenance and disposition of tenant security
deposits. 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) allow changes in the use for which all or any part of the
Mortgaged Property is being used at the time this Instrument was executed,
except for any change in use approved by Lender, (b) convert any individual
dwelling units or common areas to commercial use, (c) initiate a change in
the zoning classification of the Mortgaged Property or acquiesce without Notice
to and
PAGE
15
consent
of Lender in a change in the zoning classification of the Mortgaged Property,
(d) establish any condominium or cooperative regime with respect to the
Mortgaged Property, (e) combine all or any part of the Mortgaged Property
with all or any part of a tax parcel which is not part of the Mortgaged
Property, or (f) subdivide or otherwise split any tax parcel constituting
all or any part of the Mortgaged Property without the prior consent of
Lender.
12. PROTECTION
OF LENDER’S SECURITY; INSTRUMENT SECURES FUTURE ADVANCES.
(a) If
Borrower fails to perform any of its obligations under this Instrument or any
other Loan Document, or if any action or proceeding is commenced which purports
to affect the Mortgaged Property, Lender’s security or Lender’s rights under
this Instrument, including eminent domain, insolvency, code enforcement, civil
or criminal forfeiture, enforcement of Hazardous Materials Laws, fraudulent
conveyance or reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender’s option may make such appearances, file such documents,
disburse such sums and take such actions as Lender reasonably deems necessary
to
perform such obligations of Borrower and to protect Lender’s interest, including
(i) payment of Attorneys’ Fees and Costs, (ii) payment of fees and
out-of-pocket expenses of accountants, inspectors and consultants,
(iii) entry upon the Mortgaged Property to make repairs or secure the
Mortgaged Property, (iv) procurement of the insurance required by
Section 19, and (v) 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 secured by this Instrument, shall be added to,
and become part of, the principal component of the Indebtedness, shall be
immediately due and payable and shall bear interest from the date of
disbursement until paid at the “Default Rate,” as defined in the
Note.
(c) Nothing
in this Section 12 shall require Lender to incur any expense or take any
action.
13. INSPECTION.
(a) Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of the Mortgaged Property (including environmental
inspections and tests) during normal business hours, or at any other
reasonable time, upon reasonable notice to Borrower if the inspection is to
include occupied residential units (which notice need not be in
writing). Notice to Borrower shall not be required in the case of an
emergency, as determined in Lender’s discretion, or when an Event of Default has
occurred and is continuing.
(b) If
Lender determines that Mold has developed as a result of a water intrusion
event
or leak, Lender, at Lender’s discretion, may require that a professional
inspector inspect the Mortgaged Property as frequently as Lender determines
is
necessary until any issue with Mold
PAGE
16
and
its
cause(s) are resolved to Lender’s satisfaction. Such inspection shall
be limited to a visual and olfactory inspection of the area that has experienced
the Mold, water intrusion event or leak. Borrower shall be
responsible for the cost of such professional inspection and any remediation
deemed to be necessary as a result of the professional
inspection. After any issue with Mold, water intrusion or leaks is
remedied to Lender’s satisfaction, Lender shall not require a professional
inspection any more frequently than once every three years unless Lender is
otherwise aware of Mold as a result of a subsequent water intrusion event or
leak.
(c) If
Lender or Loan Servicer determines not to conduct an annual inspection of the
Mortgaged Property, and in lieu thereof Lender requests a certification,
Borrower shall be prepared to provide and must actually provide to Lender a
factually correct certification each year that the annual inspection is waived
to the following effect:
Borrower
has not received any written complaint, notice, letter or other written
communication from tenants, management agent or governmental authorities
regarding odors, indoor air quality, mold, fungus, microbial contamination
or
pathogenic organisms (“Mold”) or any activity, condition, event or omission that
causes or facilitates the growth of Mold on or in any part of the Mortgaged
Property or if Borrower has received any such written complaint, notice, letter
or other written communication that Borrower has investigated and determined
that no Mold activity, condition or event exists or alternatively
has fully and properly remediated such activity, condition, event or
omission in compliance with the Moisture Management Plan for the Mortgaged
Property.
If
Borrower is unwilling or unable to provide such certification, Lender may
require a professional inspection of the Mortgaged Property at Borrower’s
expense.
14. BOOKS
AND RECORDS; FINANCIAL REPORTING.
(a) Borrower
shall keep and maintain at all times at the Mortgaged Property or the management
agent’s office, and upon Lender’s request shall make available at the Mortgaged
Property (or, at Borrower’s option, at the management agent’s office), complete
and accurate books of account and records (including copies of supporting bills
and invoices) adequate to reflect correctly the operation of the Mortgaged
Property, and copies of all written contracts, Leases, and other instruments
which affect the Mortgaged Property. The books, records, contracts,
Leases and other instruments shall be subject to examination and inspection
by
Lender at any reasonable time.
(b) Within
120 days after the end of each fiscal year of Borrower, Borrower shall furnish
to Lender 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
PAGE
17
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. If Borrower’s fiscal year
is other than the calendar year, Borrower must also submit to Lender a year-end
statement of income and expenses within 120 days after the end of the calendar
year.
(c) Within
120 days after the end of each calendar year, and at any other time, upon
Lender’s request, Borrower shall furnish to Lender each of the
following. However, Lender shall not require any of the following
more frequently than quarterly except when there has been an Event of Default
and such Event of Default is continuing, in which case Lender may, upon written
request to Borrower, require Borrower to furnish any of the following more
frequently:
|
|
(i)
|
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;
|
|
|
(ii)
|
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;
and
|
|
|
(iii)
|
a
statement that identifies all owners of any interest in Borrower
and any
Controlling Entity and the interest held by each (unless Borrower
or any
Controlling Entity is a publicly-traded entity in which case such
statement of ownership shall not be required), if Borrower or a
Controlling Entity is a corporation, all officers and directors of
Borrower and the Controlling Entity, and if Borrower or a Controlling
Entity is a limited liability company, all managers who are not
members.
|
(d) At
any time upon Lender’s request, Borrower shall furnish to Lender each of the
following. However, Lender shall not require any of the following
more frequently than quarterly except when there has been an Event of Default
and such Event of Default is continuing, in which case Lender may require
Borrower to furnish any of the following more frequently:
|
|
(i)
|
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;
|
PAGE
18
|
|
(ii)
|
a
quarterly or year-to-date income and expense statement for the Mortgaged
Property; and
|
|
|
(iii)
|
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.
|
(e) Upon
Lender’s request at any time when an Event of Default has occurred and is
continuing, Borrower shall furnish to Lender monthly income and expense
statements and rent schedules for the Mortgaged Property.
(f) An
individual having authority to bind Borrower shall certify each of the
statements, schedules and reports required by Sections 14(b) through
14(e) to be complete and accurate. Each of the statements,
schedules and reports required by Sections 14(b) through
14(e) shall be in such form and contain such detail as Lender may
reasonably require. Lender also may require that any of the
statements, schedules or reports listed in Section 14(b) and
14(c)(i) and (ii) be audited at Borrower’s expense by independent
certified public accountants acceptable to Lender, at any time when an Event
of
Default has occurred and is continuing or at any time that Lender, in its
reasonable judgment, determines that audited financial statements are required
for an accurate assessment of the financial condition of Borrower or of the
Mortgaged Property.
(g) If
Borrower fails to provide in a timely manner the statements, schedules and
reports required by Sections 14(b) through (e), Lender shall give
Borrower Notice specifying the statements, schedules and reports required by
Section 14(b) through (e) that Borrower has failed to
provide. If Borrower has not provided the required statements,
schedules and reports within 10 Business Days following such Notice, then Lender
shall have the right to have Borrower’s books and records audited, at Borrower’s
expense, by independent certified public accountants selected by 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. Notice to Borrower shall not be required in the case
of an emergency, as determined in Lender’s discretion, or when an Event of
Default has occurred and is continuing.
(h) 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.
(i) Borrower
authorizes Lender to obtain a credit report on Borrower at any
time.
15. TAXES;
OPERATING EXPENSES.
PAGE
19
(a) Subject
to the provisions of Section 15(c) and Section 15(d), Borrower
shall pay, or cause to be paid, all Taxes when due and before the addition
of
any interest, fine, penalty or cost for nonpayment.
(b) Subject
to the provisions of Section 15(c), Borrower shall (i) pay the
expenses of operating, managing, maintaining and repairing the Mortgaged
Property (including utilities, repairs and replacements) before the last
date upon which each such payment may be made without any penalty or interest
charge being added, and (ii) pay insurance premiums at least 30 days
prior to the expiration date of each policy of insurance, unless applicable
law
specifies some lesser period.
(c) If
Lender is collecting Imposition Deposits, to the extent that Lender holds
sufficient Imposition Deposits for the purpose of paying a specific Imposition,
then Borrower shall not be obligated to pay such Imposition, so long as no
Event
of Default exists and Borrower has timely delivered to Lender any bills or
premium notices that it has received. If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Borrower for failing to
pay any Impositions to the extent that (i) any Event of Default has
occurred and is continuing, (ii) insufficient Imposition Deposits are held
by Lender at the time an Imposition becomes due and payable or
(iii) Borrower has failed to provide Lender with bills and premium notices
as provided above.
(d) Borrower,
at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (i) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (ii) the
Mortgaged Property is not in danger of being sold or forfeited, (iii) if
Borrower has not already paid the Imposition, Borrower deposits with Lender
reserves sufficient to pay the contested Imposition, if requested by Lender,
and
(iv) Borrower furnishes whatever additional security is required in the
proceedings or is reasonably requested by Lender.
(e) Borrower
shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall
furnish to Lender on or before the date this Instrument requires such
Impositions to be paid, receipts evidencing that such payments were
made.
16. LIENS;
ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage,
deed of trust, deed to secure debt, security interest or other lien or
encumbrance (a “Lien”) on the Mortgaged Property (other
than the lien of this Instrument) or on certain ownership interests in
Borrower, whether voluntary, involuntary or by operation of law, and whether
or
not such Lien has priority over the lien of this Instrument, is a
“Transfer” which constitutes an Event of Default and subjects
Borrower to personal liability under the Note.
PAGE
20
17. PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
(a) Borrower
shall not commit waste or permit impairment or deterioration of the Mortgaged
Property.
(b) Borrower
shall not abandon the Mortgaged Property.
(c) Borrower
shall restore or repair promptly, in a good and workmanlike manner, any damaged
part of the Mortgaged Property to the equivalent of its original condition,
or
such other condition as Lender may approve in writing, whether or not insurance
proceeds or condemnation awards are available to cover any costs of such
restoration or repair; however, Borrower shall not be obligated to perform
such
restoration or repair if (i) no Event of Default has occurred and is
continuing, and (ii) Lender has elected to apply any available insurance
proceeds and/or condemnation awards to the payment of Indebtedness pursuant
to
Section 19(h)(ii), (iii), (iv) or (v), or pursuant to
Section 20.
(d) Borrower
shall keep the Mortgaged Property in good repair, including the replacement
of
Personalty and Fixtures with items of equal or better function and
quality.
(e) Borrower
shall provide for professional management of the Mortgaged Property by a
residential rental property manager satisfactory to Lender at all times under
a
contract approved by Lender in writing, which contract must be terminable upon
not more than 30 days notice without the necessity of establishing cause
and without payment of a penalty or termination fee by Borrower or its
successors.
(f) Borrower
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, including any removal, demolition or alteration
occurring in connection with a rehabilitation of all or part of the Mortgaged
Property, except (i) in connection with the replacement of tangible
Personalty, (ii) if Borrower is a cooperative housing corporation, to the
extent permitted with respect to individual dwelling units under the form of
proprietary lease or occupancy agreement and (iii) repairs and replacements
in connection with making an individual unit ready for a new
occupant.
(g) Unless
otherwise waived by Lender in writing, Borrower must have or must establish
and
must adhere to the MMP. If the Borrower is required to have an MMP,
the Borrower must keep all MMP documentation at the Mortgaged Property or at
the
management agent’s office and available for the Lender or the Loan Servicer to
review during any annual assessment or other inspection of the Mortgaged
Property that is required by Lender.
18. ENVIRONMENTAL
HAZARDS.
PAGE
21
(a) Except
for matters described in Section 18(b), Borrower shall not cause or permit
any of the following:
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|
(i)
|
the
presence, use, generation, release, treatment, processing, storage
(including storage in above ground and underground storage tanks),
handling, or disposal of any Hazardous Materials on or under the
Mortgaged
Property or any other property of Borrower that is adjacent to the
Mortgaged Property;
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(ii)
|
the
transportation of any Hazardous Materials to, from, or across the
Mortgaged Property;
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(iii)
|
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;
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|
|
(iv)
|
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;
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|
(v)
|
any
violation or noncompliance with the terms of any O&M Program as
defined in subsection (d).
|
The
matters described in clauses (i) through (v) above, except as
otherwise provided in Section 18(b), are referred to collectively in this
Section 18 as “Prohibited Activities or
Conditions.”
(b) Prohibited
Activities or Conditions shall not include lawful conditions permitted by an
O&M Program or the safe and lawful use and storage of quantities of
(i) pre-packaged supplies, cleaning materials and petroleum products
customarily used in the operation and maintenance of comparable multifamily
properties, (ii) cleaning materials, personal grooming items and other
items sold in pre-packaged containers for consumer use and used by tenants
and
occupants of residential dwelling units in the Mortgaged Property; and
(iii) petroleum products used in the operation and maintenance of motor
vehicles from time to time located on the Mortgaged Property’s parking areas, so
long as all of the foregoing are used, stored, handled, transported and disposed
of in compliance with Hazardous Materials Laws.
(c) Borrower
shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this
Instrument) to prevent its employees, agents, and contractors, and all
tenants and other occupants from causing or permitting any Prohibited Activities
or Conditions. Borrower shall not lease or allow the sublease or use
of all or any portion of the Mortgaged Property to any tenant or subtenant
for
PAGE
22
nonresidential
use by any user that, in the ordinary course of its business, would cause or
permit any Prohibited Activity or Condition.
(d) As
required by Lender, Borrower shall also have established a written operations
and maintenance program with respect to certain Hazardous
Materials. Each such operations and maintenance program and any
additional or revised operations and maintenance programs established for the
Mortgaged Property pursuant to this Section 18 must be approved by Lender
and shall be referred to herein as an “O&M
Program.” Borrower shall comply in a timely manner with, and
cause all employees, agents, and contractors of Borrower and any other persons
present on the Mortgaged Property to comply with each O&M
Program. Borrower shall pay all costs of performance of Borrower’s
obligations under any O&M Program, and Lender’s out-of-pocket costs incurred
in connection with the monitoring and review of each O&M Program and
Borrower’s performance shall be paid by Borrower upon demand by
Lender. Any such out-of-pocket costs of Lender that Borrower fails to
pay promptly shall become an additional part of the Indebtedness as provided
in
Section 12.
(e) Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing (which written disclosure may be in certain
environmental assessments and other written reports accepted by Lender in
connection with the funding of the Indebtedness and dated prior to the date
of
this Instrument):
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|
(i)
|
Borrower
has not at any time engaged in, caused or permitted any Prohibited
Activities or Conditions on the Mortgaged
Property;
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|
(ii)
|
to
the best of Borrower’s knowledge after reasonable and diligent inquiry, no
Prohibited Activities or Conditions exist or have existed on the
Mortgaged
Property;
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(iii)
|
the
Mortgaged Property does not now contain any underground storage tanks,
and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground
storage
tanks in the past. If there is an underground storage tank
located on the Mortgaged Property that has been previously disclosed
by
Borrower to Lender in writing, that tank complies with all requirements
of
Hazardous Materials Laws;
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|
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(iv)
|
to
the best of Borrower’s knowledge after reasonable and diligent inquiry,
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;
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PAGE
23
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(v)
|
to
the best of Borrower’s knowledge after reasonable and diligent inquiry, no
event has occurred with respect to the Mortgaged Property that
constitutes, or with the passing of time or the giving of notice
would
constitute, noncompliance with the terms of any Environmental
Permit;
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(vi)
|
there
are no actions, suits, claims or proceedings pending or, to the best
of
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
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(vii)
|
Borrower
has not received any written complaint, order, notice of violation
or
other communication from any Governmental Authority with regard to
air
emissions, water discharges, noise emissions or Hazardous Materials,
or
any other environmental, health or safety matters affecting the Mortgaged
Property or any other property of Borrower that is adjacent to the
Mortgaged Property.
|
(f) Borrower
shall promptly notify Lender in writing upon the occurrence of any of the
following events:
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|
(i)
|
Borrower’s
discovery of any Prohibited Activity or
Condition;
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|
|
(ii)
|
Borrower’s
receipt of or knowledge of any written complaint, order, notice of
violation or other communication from any tenant, management agent,
Governmental Authority or other person with regard to present or
future
alleged Prohibited Activities or Conditions, or any other environmental,
health or safety matters affecting the Mortgaged Property or any
other
property of Borrower that is adjacent to the Mortgaged Property;
or
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(iii)
|
Borrower’s
breach of any of its obligations under this
Section 18.
|
Any
such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the Note, or any other Loan
Document.
(g) Borrower
shall pay promptly the costs of any environmental inspections, tests or audits,
a purpose of which is to identify the extent or cause of or potential for a
Prohibited Activity or Condition (“Environmental
Inspections”), required by Lender in connection with any
foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s
consent to any Transfer under Section 21, or required by Lender following a
reasonable determination by Lender that Prohibited Activities or Conditions
may
exist. Any such costs incurred by Lender (including Attorneys’ Fees
and Costs and the costs of technical consultants whether incurred in connection
with any judicial or administrative process or otherwise) that Borrower
fails to pay promptly shall become an additional part of the Indebtedness as
provided in Section 12. As long as (i) no Event of Default
has occurred and is continuing, (ii) Borrower has actually paid for
or
PAGE
24
reimbursed
Lender for all costs of any such Environmental Inspections performed or required
by Lender, and (iii) Lender is not prohibited by law, contract or otherwise
from doing so, Lender shall make available to Borrower, without representation
of any kind, copies of Environmental Inspections prepared by third parties
and
delivered to Lender. Lender hereby reserves the right, and 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 or for Lender with respect
to
the Mortgaged Property. Borrower consents to Lender notifying any
party (either as part of a notice of sale or otherwise) of the results of
any Environmental Inspections made by or for Lender. Borrower
acknowledges that Lender cannot control or otherwise assure the truthfulness
or
accuracy of the results of any Environmental Inspections and that the release
of
such results to prospective bidders at a foreclosure sale of the Mortgaged
Property may have a material and adverse effect upon the amount that a party
may
bid at such sale. Borrower agrees that Lender shall have no liability
whatsoever as a result of delivering the results to any third party of any
Environmental Inspections made by or for Lender, and Borrower hereby releases
and forever discharges Lender from any and all claims, damages, or causes of
action, arising out of, connected with or incidental to the results of, the
delivery of any of Environmental Inspections made by or for Lender.
(h) If
any investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is necessary to comply
with any Hazardous Materials Law or order of any Governmental Authority that
has
or acquires jurisdiction over the Mortgaged Property or the use, operation
or
improvement of the Mortgaged Property, or is otherwise required by Lender as
a
consequence of any Prohibited Activity or Condition or to prevent the occurrence
of a Prohibited Activity or Condition, Borrower shall, by the earlier of
(i) the applicable deadline required by Hazardous Materials Law or
(ii) 30 days after Notice from Lender demanding such action, begin
performing the Remedial Work, and thereafter diligently prosecute it to
completion, and shall in any event complete the work by the time required by
applicable Hazardous Materials Law. If Borrower fails to begin on a
timely basis or diligently prosecute any required Remedial Work, Lender may,
at
its option, cause the Remedial Work to be completed, in which case Borrower
shall reimburse Lender on demand for the cost of doing so. Any
reimbursement due from Borrower to Lender shall become part of the Indebtedness
as provided in Section 12.
(i) Borrower
shall comply with all Hazardous Materials Laws applicable to the Mortgaged
Property. Without limiting the generality of the previous sentence,
Borrower shall (i) obtain and maintain all Environmental Permits required
by Hazardous Materials Laws and comply with all conditions of such Environmental
Permits; (ii) cooperate with any inquiry by any Governmental Authority; and
(iii) comply with any governmental or judicial order that arises from any
alleged Prohibited Activity or Condition.
(j) Borrower
shall indemnify, hold harmless and defend (i) 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
PAGE
25
heirs,
legal representatives, successors and assigns of each of the foregoing
(collectively, the “Indemnitees”) from and against all
proceedings, claims, damages, penalties and costs (whether initiated or sought
by Governmental Authorities or private parties), including Attorneys’ Fees and
Costs and remediation costs, whether incurred in connection with any judicial
or
administrative process or otherwise, arising directly or indirectly from any
of
the following:
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|
(i)
|
any
breach of any representation or warranty of Borrower in this
Section 18;
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(ii)
|
any
failure by Borrower to perform any of its obligations under this
Section 18;
|
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|
(iii)
|
the
existence or alleged existence of any Prohibited Activity or
Condition;
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|
(iv)
|
the
presence or alleged presence of Hazardous Materials on or under the
Mortgaged Property or in any of the Improvements or on or under any
property of Borrower that is adjacent to the Mortgaged Property;
and
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|
|
(v)
|
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. 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. However, unless an Event of Default has occurred and is
continuing, or the interests of Borrower and Lender are in conflict, as
determined by Lender in its discretion, Lender shall permit Borrower to
undertake the actions referenced in this Section 18 in accordance with this
Section 18(k) and Section 18(l) so long as Lender approves such
action, which approval shall not be unreasonably withheld or
delayed. Borrower shall reimburse Lender upon demand for all costs
and expenses incurred by Lender, including all costs of settlements entered
into
in good faith, consultants’ fees and Attorneys’ Fees and Costs.
(l) Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a “Claim”), settle
or compromise the Claim if the settlement (i) results in the entry of any
judgment that does not include as an unconditional term the delivery by the
claimant or plaintiff to Lender of a written release of those Indemnitees,
satisfactory in form and substance to Lender; or (ii) may materially and
adversely affect Lender, as determined by Lender in its discretion.
(m) Borrower’s
obligation to indemnify the Indemnitees shall not be limited or impaired by
any
of the following, or by any failure of Borrower or any guarantor to receive
notice of or consideration for any of the following:
PAGE
26
(i) any
amendment or modification of any Loan Document;
|
|
(ii)
|
any
extensions of time for performance required by any Loan
Document;
|
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|
(iii)
|
any
provision in any of the Loan Documents limiting Lender’s recourse to
property securing the Indebtedness, or limiting the personal liability
of
Borrower or any other party for payment of all or any part of the
Indebtedness;
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|
|
(iv)
|
the
accuracy or inaccuracy of any representations and warranties made
by
Borrower under this Instrument or any other Loan
Document;
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|
(v)
|
the
release of Borrower or any other person, by Lender or by operation
of law,
from performance of any obligation under any Loan
Document;
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|
(vi)
|
the
release or substitution in whole or in part of any security for the
Indebtedness; and
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|
(vii)
|
Lender’s
failure to properly perfect any lien or security interest given as
security for the Indebtedness.
|
(n) Borrower
shall, at its own cost and expense, do all of the following:
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|
(i)
|
pay
or satisfy any judgment or decree that may be entered against any
Indemnitee or Indemnitees in any legal or administrative proceeding
incident to any matters against which Indemnitees are entitled to
be
indemnified under this
Section 18;
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|
(ii)
|
reimburse
Indemnitees for any expenses paid or incurred in connection with
any
matters against which Indemnitees are entitled to be indemnified
under
this Section 18; and
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|
|
(iii)
|
reimburse
Indemnitees for any and all expenses, including Attorneys’ Fees and Costs,
paid or incurred in connection with the enforcement by Indemnitees
of
their rights under this Section 18, or in monitoring and
participating in any legal or administrative
proceeding.
|
(o) The
provisions of this Section 18 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or
under
other Loan Documents, and each Indemnitee shall be entitled to indemnification
under this Section 18 without regard to whether Lender or that Indemnitee
has exercised any rights against the 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
PAGE
27
Indemnitees
under this Section 18 shall be joint and several. The obligation of
Borrower to indemnify the Indemnitees under this Section 18 shall survive
any repayment or discharge of the Indebtedness, any foreclosure proceeding,
any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument. Notwithstanding the
foregoing, if Lender has never been a mortgagee-in-possession of, or held title
to, the Mortgaged Property, Borrower shall have no obligation to indemnify
the
Indemnitees under this Section 18 after the date of the release of record
of the lien of this Instrument by payment in full at the Maturity Date or by
voluntary prepayment in full.
19. PROPERTY
AND LIABILITY INSURANCE.
(a) 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, rent loss and extra expense insurance. 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. Borrower acknowledges and agrees that Lender’s insurance
requirements may change from time to time throughout the term of the
Indebtedness. If any of the Improvements is located in an area
identified by the Federal Emergency Management Agency (or any successor to
that
agency) as an area having special flood hazards, Borrower shall insure such
Improvements against loss by flood. All insurance required pursuant
to this Section 19(a) shall be referred to as “Hazard
Insurance.”
(b) All
premiums on Hazard 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 Hazard 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 5 days prior to
the expiration date of any Hazard Insurance policy, Borrower shall deliver
to
Lender evidence acceptable to Lender that the policy has been
renewed. If Borrower has not delivered the original (or a duplicate
original) of a renewal policy prior to the expiration date of any Hazard
Insurance policy, Borrower shall deliver the original (or a duplicate
original) of a renewal policy in a form satisfactory to Lender
within 120 days after the expiration date of the original
policy.
(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.
PAGE
28
(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 Hazard Insurance, to appear in and prosecute any
action arising from such Hazard Insurance policies, to collect and receive
the
proceeds of Hazard Insurance, and to deduct from such proceeds Lender’s expenses
incurred in the collection of such proceeds. This power of attorney
is coupled with an interest and therefore is irrevocable. However,
nothing contained in this Section 19 shall require Lender to incur any
expense or take any action. Lender may, at Lender’s option,
(i) require a “repair or replacement” settlement, in which
case the proceeds will be used to reimburse Borrower for
the cost of restoring and repairing the Mortgaged Property to the equivalent
of
its original condition or to a condition approved by Lender (the
“Restoration”), or (ii) require an “actual cash value”
settlement in which case the proceeds may be applied to the payment
of the Indebtedness, whether or not then due. To the extent Lender determines
to
require a repair or replacement settlement and apply insurance proceeds to
Restoration, Lender shall apply the proceeds in accordance with Lender’s
then-current policies relating to the restoration of casualty damage on similar
multifamily properties.
(g) Notwithstanding
any provision to the contrary in this Section 19, as long as no Event of
Default, or any event which, with the giving of Notice or the passage of time,
or both, would constitute an Event of Default, has occurred and is
continuing,
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|
(i)
|
in
the event of a casualty resulting in damage to the Mortgaged Property
which will cost $10,000 or less to repair, the Borrower shall have
the
sole right to make proof of loss, adjust and compromise the claim
and
collect and receive any proceeds directly without the approval or
prior
consent of the Lender so long as the insurance proceeds are used
solely
for the Restoration of the Mortgaged Property;
and
|
|
|
(ii)
|
in
the event of a casualty resulting in damage to the Mortgaged Property
which will cost more than $10,000 but less than $50,000 to repair,
the
Borrower is authorized to make proof of loss and adjust and compromise
the
claim without the prior consent of Lender, and Lender shall hold
the
applicable insurance proceeds to be used to reimburse Borrower for
the
cost of Restoration of the Mortgaged Property and shall not apply
such
proceeds to the payment of sums due under this
Instrument.
|
PAGE
29
|
|
(h)
|
Lender
will have the right to exercise its option to apply insurance proceeds
to
the payment of the Indebtedness only if Lender determines that at
least
one of the following conditions is
met:
|
|
|
(i)
|
an
Event of Default (or any event, which, with the giving of Notice
or the
passage of time, or both, would constitute an Event of Default) has
occurred and is continuing;
|
|
|
(ii)
|
Lender
determines, in its discretion, that there will not be sufficient
funds
from insurance proceeds, anticipated contributions of Borrower of
its own
funds or other sources acceptable to Lender to complete the
Restoration;
|
|
|
(iii)
|
Lender
determines, in its discretion, that the rental income from the Mortgaged
Property after completion of the Restoration will not be sufficient
to
meet all operating costs and other expenses, Imposition Deposits,
deposits
to reserves and loan repayment obligations relating to the Mortgaged
Property;
|
|
|
(iv)
|
Lender
determines, in its discretion, that the Restoration will not be completed
at least one year before the Maturity Date (or six months before the
Maturity Date if Lender determines in its discretion that re-leasing
of
the Mortgaged Property will be completed within such six-month period);
or
|
|
|
(v)
|
Lender
determines that the Restoration will not be completed within one
year
after the date of the loss or
casualty.
|
(i) If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title
to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any insurance policies and unearned insurance premiums and
in
and to the proceeds resulting from any damage to the Mortgaged Property prior
to
such sale or acquisition.
(j) Unless
Lender otherwise agrees in writing, any application of any insurance proceeds
to
the Indebtedness shall not extend or postpone the due date of any monthly
installments referred to in the Note, Section 7 of this Instrument or any
Collateral Agreement, or change the amount of such installments.
(k) Borrower
agrees to execute such further evidence of assignment of any insurance proceeds
as Lender may require.
20. CONDEMNATION.
(a) Borrower
shall promptly notify Lender in writing of any action or proceeding or notice
relating to any proposed or actual condemnation or other taking, or conveyance
in lieu
PAGE
30
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, after consultation with Borrower and consistent with commercially
reasonable standards of a prudent lender. This power of attorney is
coupled with an interest and therefore is irrevocable. However,
nothing contained in this Section 20 shall require Lender to incur any
expense or take any action. Borrower hereby transfers and assigns to
Lender all right, title and interest of 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 (including Attorneys’ Fees and
Costs) at Lender’s option, to the restoration or repair of the Mortgaged
Property or to the payment of the Indebtedness, with the balance, if any, to
Borrower. Unless Lender otherwise agrees in writing, any application
of any awards or proceeds to the Indebtedness shall not extend or postpone
the
due date of any monthly installments referred to in 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. [RIGHT TO
UNLIMITED TRANSFERS -- WITH LENDER APPROVAL].
(a) “Transfer”
means
|
|
(i)
|
a
sale, assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of
law);
|
|
|
(ii)
|
the
granting, creating or attachment of a lien, encumbrance or security
interest (whether voluntary, involuntary or by operation of
law);
|
|
|
(iii)
|
the
issuance or other creation of an ownership interest in a legal entity,
including a partnership interest, interest in a limited liability
company
or corporate stock;
|
|
|
(iv)
|
the
withdrawal, retirement, removal or involuntary resignation of a partner
in
a partnership or a member or manager in a limited liability company;
or
|
|
|
(v)
|
the
merger, dissolution, liquidation, or consolidation of a legal entity
or
the reconstitution of one type of legal entity into another type
of legal
entity.
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PAGE
31
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.
(b) “Transfer”
does not include
|
|
(i)
|
a
conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under this
Instrument,
|
|
|
(ii)
|
the
Mortgaged Property becoming part of a bankruptcy estate by operation
of
law under the United States Bankruptcy Code,
or
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|
(iii)
|
a
lien against the Mortgaged Property for local taxes and/or assessments
not
then due and payable.
|
(c) The
occurrence of any of the following Transfers shall not constitute an Event
of
Default under this Instrument, notwithstanding any provision of
Section 21(e) to the contrary:
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|
(i)
|
a
Transfer to which Lender has
consented;
|
|
|
(ii)
|
a
Transfer that occurs in accordance with
Section 21(d);
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(iii)
|
the
grant of a leasehold interest in an individual dwelling unit for
a term of
two years or less not containing an option to
purchase;
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|
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(iv)
|
a
Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and
quality, which are free of liens, encumbrances and security interests
other than those created by the Loan Documents or consented to by
Lender;
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|
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(v)
|
the
creation of a mechanic’s, materialman’s, or judgment lien against the
Mortgaged Property, which is released of record or otherwise remedied
to
Lender’s satisfaction within 60 days of the date of
creation;
|
|
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(vi)
|
if
Borrower is a housing cooperative, any Transfer of the shares in
the
housing cooperative or any assignment of the occupancy agreements
or
leases relating thereto by tenant shareholders of the housing cooperative;
and
|
|
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(vii)
|
any
Transfer of an interest in Borrower or any interest in a Controlling
Entity (which, if such Controlling Entity were Borrower, would result
in
an Event of Default) listed in (A) through (F) below (a
“Preapproved Transfer”), under the terms and conditions
listed as items (1) through (7)
below:
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PAGE
32
(A) a
sale or transfer to one or more of the transferor’s immediate family members;
or
|
|
(B)
|
a
sale or transfer to any trust having as its sole beneficiaries the
transferor and/or one or more of the transferor’s immediate family
members; or
|
|
|
(C)
|
a
sale or transfer from a trust to any one or more of its beneficiaries
who
are immediate family members of the transferor;
or
|
|
|
(D)
|
the
substitution or replacement of the trustee of any trust with a trustee
who
is an immediate family member of the transferor;
or
|
|
|
(E)
|
a
sale or transfer to an entity owned and controlled by the transferor
or
the transferor’s immediate family members;
or
|
|
|
(F)
|
a
sale or transfer to an individual or entity that has an existing
interest
in the Borrower or in a Controlling
Entity.
|
|
|
(1)
|
Borrower
shall provide Lender with prior written Notice of the proposed Preapproved
Transfer, which Notice must be accompanied by a non-refundable review
fee
in the amount of $3,000.00.
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(2)
|
For
the purposes of these Preapproved Transfers, a transferor’s immediate
family members will be deemed to include a spouse, parent, child
or
grandchild of such transferor.
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(3)
|
Either
directly or indirectly, Maxus Realty Trust, Inc. shall retain at
all times
a managing interest in the
Borrower.
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(4)
|
At
the time of the proposed Preapproved Transfer, no Event of Default
shall
have occurred and be continuing and no event or condition shall have
occurred and be continuing that, with the giving of Notice or the
passage
of time, or both, would become an Event of
Default.
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(5)
|
Lender
shall be entitled to collect all costs, including the cost of all
title
searches, title insurance and recording costs, and all Attorneys’ Fees and
Costs.
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(6)
|
Lender
shall not be entitled to collect a transfer fee as a result of these
Preapproved Transfers.
|
|
|
(7)
|
In
the event of a Transfer prohibited by or requiring Lender’s approval under
this Section 21, this Section (c)(vii) may be modified or
rendered void by
|
PAGE
33
Lender
at
Lender’s option by Notice to Borrower and the transferee(s), as a condition of
Lender’s consent.
(d) The
occurrence of any of the following Transfers shall not constitute an Event
of
Default under this Instrument, provided that Borrower has notified Lender in
writing within 30 days following the occurrence of any of the following,
and such Transfer does not constitute an Event of Default under any other
Section of this Instrument:
|
|
(i)
|
a
change of the Borrower’s name, provided that UCC financing statements
and/or amendments sufficient to continue the perfection of Lender’s
security interest have been properly filed and copies have been delivered
to Lender;
|
|
|
(ii)
|
a
change of the form of the Borrower not involving a transfer of the
Borrower’s assets and not resulting in any change in liability of any
Initial Owner, provided that UCC financing statements and/or amendments
sufficient to continue the perfection of Lender’s security interest have
been properly filed and copies have been delivered to
Lender;
|
|
|
(iii)
|
the
merger of the Borrower with another entity when the Borrower is the
surviving entity;
|
|
|
(iv)
|
a
Transfer that occurs by devise, descent, or by operation of law upon
the
death of a natural person; and
|
|
|
(v)
|
the
grant of an easement, if before the grant Lender determines that
the
easement will not materially affect the operation or value of the
Mortgaged Property or Lender’s interest in the Mortgaged Property, and
Borrower pays to Lender, upon demand, all costs and expenses, including
Attorneys’ Fees and Costs, incurred by Lender in connection with reviewing
Borrower’s request.
|
(e) The
occurrence of any of the following Transfers shall constitute an Event of
Default under this Instrument:
|
|
(i)
|
a
Transfer of all or any part of the Mortgaged Property or any interest
in
the Mortgaged Property;
|
|
|
(ii)
|
if
Borrower is a limited partnership, a Transfer of (A) any general
partnership interest, or (B) limited partnership interests in
Borrower that would cause the Initial Owners of Borrower to own less
than
a Controlling Interest of all limited partnership interests in
Borrower;
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PAGE
34
|
|
(iii)
|
if
Borrower is a general partnership or a joint venture, a Transfer
of any
general partnership or joint venture interest in
Borrower;
|
|
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(iv)
|
if
Borrower is a limited liability company, (A) a Transfer of any
membership interest in Borrower which would cause the Initial Owners
to
own less than a Controlling Interest of all the membership interests
in
Borrower, (B) a Transfer of any membership or other interest of a
manager in Borrower that results in a change of manager or (C) a
change in a nonmember manager;
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(v)
|
if
Borrower is a corporation (A) the Transfer of any voting stock in
Borrower which would cause the Initial Owners to own less than a
Controlling Interest of any class of voting stock in Borrower or
(B) if the outstanding voting stock in Borrower is held by 100 or
more shareholders, one or more Transfers by a single transferor within
a
12-month period affecting an aggregate of 5 percent or more of that
stock;
|
|
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(vi)
|
if
Borrower is a trust, (A) a Transfer of any beneficial interest in
Borrower which would cause the Initial Owners to own less than a
Controlling Interest of all the beneficial interests in Borrower,
(B) the termination or revocation of the trust, or (C) the
removal, appointment or substitution of a trustee of
Borrower;
|
|
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(vii)
|
if
Borrower is a limited liability partnership, (A) a Transfer of any
partnership interest in Borrower which would cause the Initial Owners
to
own less than a Controlling Interest of all partnership interests
in
Borrower, or (B) a transfer of any partnership or other interest
of a
managing partner in Borrower that results in a change of manager;
and
|
|
|
(viii)
|
a
Transfer of any interest in a Controlling Entity which, if such
Controlling Entity were Borrower, would result in an Event of Default
under any of Sections 21(e)(i) through
(vii) above.
|
Lender
shall not be required to demonstrate any actual impairment of its security
or
any increased risk of default in order to exercise any of its remedies with
respect to an Event of Default under this Section 21.
(f) Lender
shall consent, without any adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest or to any other economic terms of
the
Indebtedness set forth in the Note, to a Transfer that would otherwise violate
this Section 21 if, prior to the Transfer, Borrower has satisfied each of
the following requirements:
|
|
(i)
|
the
submission to Lender of all information required by Lender to make
the
determination required by this
Section 21(f);
|
PAGE
35
|
|
(ii)
|
the
absence of any Event of Default;
|
|
|
(iii)
|
the
transferee meets all of the eligibility, credit, management and other
standards (including but not limited to any standards with respect
to
previous relationships between Lender and 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 on multifamily
properties;
|
|
|
(iv)
|
the
transferee’s organization, credit and experience in the management of
similar properties are deemed by the Lender, in its discretion, to
be
appropriate to the overall structure and documentation of the existing
financing;
|
|
|
(v)
|
the
Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition, occupancy, net operating
income
and the collection of reserves 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;
|
|
|
(vi)
|
in
the case of a Transfer of all or any part of the Mortgaged Property,
(A) the execution by the transferee of Lender’s then-standard
assumption agreement that, among other things, requires the transferee
to
perform all obligations of Borrower set forth in the Note, this Instrument
and any other Loan Documents, and may require that the transferee
comply
with any provisions of this Instrument or any other Loan Document
which
previously may have been waived or modified by Lender, (B) if Lender
requires, the transferee causes one or more individuals or entities
acceptable to Lender to execute and deliver to Lender a guaranty
in a form
acceptable to Lender, and (C) the transferee executes such additional
Collateral Agreements as Lender may
require;
|
|
|
(vii)
|
in
the case of a Transfer of any interest in a Controlling Entity, if
a
guaranty has been executed and delivered in connection with the Note,
this
Instrument or any of the other Loan Documents, the Borrower causes
one or
more individuals or entities acceptable to Lender to execute and
deliver
to Lender a guaranty in a form acceptable to Lender;
and
|
|
|
(viii)
|
Lender’s
receipt of all of the following:
|
|
|
(A)
|
a
review fee in the amount of
$3,000;
|
PAGE
36
|
|
(B)
|
a
transfer fee in an amount equal to one percent of the unpaid principal
balance of the Indebtedness immediately before the applicable Transfer;
and
|
|
|
(C)
|
the
amount of Lender’s out-of-pocket costs (including reasonable Attorneys’
Fees and Costs) incurred in reviewing the Transfer
request.
|
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, any of its
officers, directors, trustees, general partners or managers or any guarantor
in
connection with (i) the application for or creation of the Indebtedness,
(ii) any financial statement, rent schedule, or other report or information
provided to Lender during the term of the Indebtedness, or (iii) any
request for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;
(e) any
failure to comply with the provisions of Section 20;
(f) any
Event of Default under Section 21;
(g) the
commencement of a forfeiture action or proceeding, whether civil or criminal,
which, in Lender’s reasonable judgment, could result in a forfeiture of the
Mortgaged Property or otherwise materially impair the lien created by this
Instrument or Lender’s interest in the Mortgaged Property;
(h) any
failure by Borrower to perform any of its obligations under this Instrument
(other than those specified in Sections 22(a) through (g)), as and
when required, which continues for a period of 30 days after Notice of such
failure by Lender to Borrower. However, if Borrower’s failure to
perform its obligations as described in this Section 22(h) is of the
nature that it cannot be cured within the 30 day grace period but
reasonably could be cured within 90 days, then Borrower shall have additional
time as determined by Lender in its discretion, not to exceed an additional
60 days, in which to cure such default, provided that Borrower has
diligently commenced to cure such default during the 30-day grace period and
diligently pursues the cure of such default. However, no such Notice
or grace periods shall apply in the case of any such failure which could, in
Lender’s judgment, absent immediate exercise by Lender of a right
PAGE
37
or
remedy
under this Instrument, result in harm to Lender, impairment of the Note or
this
Instrument or any other security given under any other Loan
Document;
(i) any
failure by Borrower to perform any of its obligations as and when required
under
any Loan Document other than this Instrument which continues beyond the
applicable cure period, if any, specified in that Loan Document;
(j) any
exercise by the holder of any other debt instrument secured by a mortgage,
deed
of trust or deed to secure debt on the Mortgaged Property of a right to declare
all amounts due under that debt instrument immediately due and
payable;
(k) Borrower
voluntarily files for bankruptcy protection under the United States Bankruptcy
Code or voluntarily becomes subject to any reorganization, receivership,
insolvency proceeding or other similar proceeding pursuant to any other federal
or state law affecting debtor and creditor rights, or an involuntary case is
commenced against Borrower by any creditor (other than Lender) of Borrower
pursuant to the United States Bankruptcy Code or other federal or state law
affecting debtor and creditor rights and is not dismissed or discharged within
90 days after filing; and
(l) any
of Borrower’s representations and warranties in this Instrument is false or
misleading in any material respect.
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,
or the subsequent exercise of any
PAGE
38
right
or
remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments on account of the Indebtedness
or
to exercise any remedies for any failure to make prompt payment. Enforcement
by
Lender of any security for the Indebtedness shall not constitute an election
by
Lender of remedies so as to preclude the exercise of any other right available
to Lender. Lender’s receipt of any awards or proceeds under
Sections 19 and 20 shall not operate to cure or waive any Event of
Default.
25. LOAN
CHARGES. If any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower is interpreted
so that any charge provided for in any Loan Document, whether considered
separately or together with other charges levied in connection with any other
Loan Document, violates that law, and Borrower is entitled to the benefit of
that law, that charge is hereby reduced to the extent necessary to eliminate
that violation. The amounts, if any, previously paid to Lender in
excess of the permitted amounts shall be applied by Lender to reduce the
principal of the Indebtedness. For the purpose of determining whether
any applicable law limiting the amount of interest or other charges permitted
to
be collected from Borrower has been violated, all Indebtedness which constitutes
interest, as well as all other charges levied in connection with the
Indebtedness which constitute interest, shall be deemed to be allocated and
spread over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term
of
the Note.
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 or amendments,
transfers and assurances as Lender may require
PAGE
39
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.
(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 may be litigated in the Property
Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have jurisdiction over all
controversies that shall arise under or in relation to the Note, any security
for the Indebtedness, or any other Loan Document. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for
any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise. However, nothing
in this Section 30 is intended to limit Lender’s right to bring any suit,
action or proceeding relating to matters under this Instrument in any court
of
any other jurisdiction.
31. NOTICE.
(a) All
Notices, demands and other communications (“Notice”) under
or concerning this Instrument shall be in writing. Each Notice shall
be addressed to the intended recipient at its address set forth in this
Instrument, and shall be deemed given on the earliest to occur of (i) the
date when the Notice is received by the addressee; (ii) the first Business
Day after the Notice is delivered to a recognized overnight courier service,
with arrangements made for payment of charges for next Business Day delivery;
or
(iii) the third Business Day after the Notice is deposited in the United
States mail with postage prepaid, certified mail, return receipt
requested.
PAGE
40
(b) Any
party to this Instrument may change the address to which Notices intended for
it
are to be directed by means of Notice given to the other party in accordance
with this Section 31. Each party agrees that it will not refuse
or reject delivery of any Notice given in accordance with this Section 31,
that it will acknowledge, in writing, the receipt of any Notice upon request
by
the other party and that any Notice rejected or refused by it shall be deemed
for purposes of this Section 31 to have been received by the rejecting
party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.
(c) Any
Notice under the Note and any other Loan Document that does not specify how
Notices are to be given shall be given in accordance with this
Section 31.
32. SALE
OF NOTE; CHANGE IN SERVICER; LOAN SERVICING. The Note or a
partial interest in the Note (together with this Instrument and the other Loan
Documents) may be sold one or more times without prior Notice to
Borrower. A sale may result in a change of the Loan
Servicer. There also may be one or more changes of the Loan Servicer
unrelated to a sale of the Note. If there is a change of the Loan
Servicer, Borrower will be given Notice of the change. All actions regarding
the
servicing of the loan evidenced by the Note, including the collection of
payments, the giving and receipt of Notice, inspections of the Mortgaged
Property, inspections of books and records, and the granting of consents and
approvals, may be taken by the Loan Servicer unless 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.
33. SINGLE
ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not own any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any
business other than the management and operation of the Mortgaged Property;
and
(c) shall not maintain its assets in a way difficult to segregate and
identify.
34. SUCCESSORS
AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors
and
assigns of Lender and Borrower. However, a Transfer not permitted by
Section 21 shall be an Event of Default.
35. JOINT
AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP
OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument shall create
any
other relationship between Lender and Borrower.
PAGE
41
(b) No
creditor of any party to this Instrument and no other person shall be a third
party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence,
(i) any arrangement (a “Servicing
Arrangement”) between the Lender and any Loan Servicer for loss
sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (ii) Borrower shall not be a
third party beneficiary of any Servicing Arrangement, and (iii) no payment
by the Loan Servicer under any Servicing Arrangement will reduce the amount
of
the Indebtedness.
37. SEVERABILITY;
AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability
of
any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the
parties as to the rights granted and the obligations assumed in this
Instrument. This Instrument may not be amended or modified except by
a writing signed by the party against whom enforcement is sought; provided,
however, that in the event of a Transfer prohibited by or requiring Lender’s
approval under Section 21, any or some or all of the Modifications to
Instrument set forth in Exhibit B (if any) may be modified or rendered void
by Lender at Lender’s option by Notice to Borrower and the
transferee(s).
38. CONSTRUCTION. The
captions and headings of the Sections of this Instrument are for
convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an “Exhibit” or a
“Section” shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Instrument or to a
Section of this Instrument. All Exhibits attached to or referred
to in this Instrument are incorporated by reference into this
Instrument. Any reference in this Instrument to a statute or
regulation shall be construed as referring to that statute or regulation as
amended from time to time. Use of the singular in this Agreement
includes the plural and use of the plural includes the singular. As
used in this Instrument, the term “including” means “including, but not limited
to.”
39. 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 but not limited to
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
but not limited to any right of privacy.
40. NO
CHANGE IN FACTS OR CIRCUMSTANCES. Borrower warrants that
(a) all information in the application for the loan submitted to Lender
(the “Loan Application”) and in all financial statements, rent schedules,
reports, certificates and other documents submitted in connection with the
Loan
Application are complete and accurate in all material respects; and
(b) there has been no material adverse change in any fact or circumstance
that would make any such information incomplete or inaccurate.
PAGE
42
41. 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.
42. ADJUSTABLE
RATE MORTGAGE - THIRD PARTY CAP AGREEMENT “CAP
COLLATERAL.”
(a) If
the Note provides for interest to accrue at an adjustable or variable interest
rate (other than during the “Extension Period,” as defined in the Note, if
applicable), then the definition of “Mortgaged Property” shall include the
“Cap Collateral.” The “Cap Collateral” shall
mean
|
|
(i)
|
any
interest rate cap agreement, interest rate swap agreement, or other
interest rate-hedging contract or agreement obtained by Borrower
as a
requirement of any Loan Document or as a condition of Lender’s making the
Loan (a “Cap
Agreement”);
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(ii)
|
any
and all moneys (collectively, “Cap Payments”) payable
pursuant to any Cap Agreement by the interest rate cap provider or
other
counterparty to a Cap Agreement or any guarantor of the obligations
of any
such cap provider or counterparty (a “Cap
Provider”);
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(iii)
|
all
rights of Borrower under any Cap Agreement and all rights of Borrower
to
all Cap Payments, including contract rights and general intangibles,
whether existing now or arising after the date of this
Instrument;
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(iv)
|
all
rights, liens and security interests or guaranties granted by a Cap
Provider or any other person to secure or guaranty payment of any
Cap
Payment whether existing now or granted after the date of this
Instrument;
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(v)
|
all
documents, writings, books, files, records and other documents arising
from or relating to any of the foregoing, whether existing now or
created
after the date of this Instrument;
and
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(vi)
|
all
cash and non-cash proceeds and products of (ii) – (v)
above.
|
(b) As
additional security for Borrower’s obligation under the Loan Documents, Borrower
hereby assigns and pledges to Lender all of Borrower’s right, title and interest
in and to the Cap Collateral. Borrower has instructed and will
instruct each Cap Provider and any
PAGE
43
guarantor
of a Cap Provider’s obligations to make Cap Payments directly to Lender or to
Loan Servicer on behalf of Lender.
(c) So
long as there is no Event of Default, Lender or Loan Servicer will remit to
Borrower each Cap Payment received by Lender or Loan Servicer with respect
to
any month for which Borrower has paid in full the monthly installment of
principal and interest or interest only, as applicable, due under the
Note. Alternatively, at Lender’s option so long as there is no Event
of Default, Lender may apply a Cap Payment received by Lender or Loan Servicer
with respect to any month to the applicable monthly payment of accrued interest
due under the Note if Borrower has paid in full the remaining portion of such
monthly payment of principal and interest or interest only, as
applicable.
(d) Following
an Event of Default, in addition to any other rights and remedies Lender may
have, Lender may retain any Cap Payments and apply them to the Indebtedness
in
such order and amounts as Lender determines. Neither the existence of
a Cap Agreement nor anything in this Instrument shall relieve Borrower of its
primary obligation to timely pay in full all amounts due under the Note and
otherwise due on account of the Indebtedness.
(e) If
the Note does not provide for interest to accrue at an adjustable or variable
interest rate (other than during the Extension Period) then this Section 42
shall be of no force or effect.
43. ACCELERATION;
REMEDIES. At any time during the existence of an Event of
Default, Lender, at Lender’s option, may declare the Indebtedness to be
immediately due and payable without further demand, and may foreclose this
Instrument by judicial proceeding and may invoke any other remedies permitted
by
applicable law or provided in this Instrument or in any other Loan
Document. Lender shall be entitled to collect all costs and expenses
incurred in pursuing such remedies, including costs of documentary evidence,
abstracts, title reports and attorneys’ fees and out of pocket
expenses.
44. RELEASE. Upon
payment of the Indebtedness, Lender shall, at its cost, release this
Instrument.
45. FINANCING
STATEMENT. As provided in Section 2, this Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture and for the purposes of such financing
statement: (a) the Debtor shall be Borrower and the Secured Party shall be
Lender; (b) the addresses of Borrower as Debtor and of Lender as Secured Party
are as specified above in the first paragraph of this Instrument; (c) the name
of the record owner is Borrower; (d) the types or items of collateral consist
of
any part of the Mortgaged Property which is or may become a Fixture; and (e)
the
social security number or the federal employer identification number of Borrower
as Debtor is 00-0000000.
PAGE
44
46. APPOINTMENT
OF RECEIVER. Section 3(b) and Section 4(d) are amended by
(i) deleting the following phrase, each time it appears: “Lender
entering upon and taking and maintaining control of the Mortgaged Property,” and
(ii) inserting the following new phrase in its place: “Lender entering upon and
taking and maintaining control or possession of the Mortgaged Property or any
equivalent action.”
47. WAIVER
OF REDEMPTION. Borrower waives all right of redemption of
the Mortgaged Property.
48. WAIVER
OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY 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:
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|X|
|
Exhibit
A
|
Description
of the Land (required).
|
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|X|
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Exhibit
B
|
Modifications
to Instrument
|
[The
remainder of this page is intentionally left blank, signature page
follows.]
PAGE
45
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.
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BORROWER:
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Chalet
I Acquisition, L.L.C.,
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a
Kansas limited liability company
|
| By: /s/ Xxxx X. Xxxxx |
| Name: Xxxx X. Xxxxx |
| Title: Manager |
STATE
OF
MISSOURI )
)
ss.
COUNTY
OF Clay
)
On
this
14th day of September, 2007, before me, Xxxxx X. Xxxxx, a Notary
Public of said State, duly commissioned and sworn, personally appeared Xxxx
X.
Xxxxx, the Manager of Chalet I Acquisition, L.L.C., a Kansas limited liability
company, personally known to me to be the person that executed the within
instrument on behalf of the limited liability company, and acknowledged to
me
that such limited liability company executed the same.
In
Witness Whereof, I have hereunto set my hand and affixed my official seal the
day and year in this certificate first above written.
/s/
Xxxxx X.
Xxxxx
Notary
Public in and
for Missouri
My
Commission
Expires:August 24, 2010
|
XXXXX
X. XXXXX
|
|
|
Notary
Public - Notary Seal
|
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STATE
OF MISSOURI
|
|
|
Clay
County
|
|
|
My
Commission Expires Aug. 24, 2010
|
|
|
Commission
# 0642903
|
EXHIBIT
A
[DESCRIPTION
OF THE LAND]
Tract
1:
Lot
1,
EXCEPT the South 20 feet thereof, Prospect Place Subdivision in the City of
Topeka, Shawnee County, Kansas, together with vacated Prospect Court lying
East
of and adjacent to said Xxx 0, XXX
Xxx
0,
Xxxxx X, Xxxxxxxx Xxxxxxx Subdivision in the City of Topeka, Shawnee County,
Kansas, together with vacated Prospect Court lying West of and Adjacent to
said
Xxx 0, XXX
Xxx
0,
Xxxxx X, Xxxxxxxx Xxxxxxx No. 2 in the City of Topeka, Shawnee County, Kansas,
EXCEPT a part of said Lot 1 described as follows: Beginning at the
Southeast corner of said Lot 1; thence on Az 268 degrees 28 minutes 09 seconds,
190.00 feet coincident with the South line of said Lot 1; thence on Az 359
degrees 58 minutes 36 seconds, 152.00 feet coincident with the West line of
said
Lot 1; thence on Az 88 degrees 28 minutes 09 seconds, 190.00 feet to the East
line of said Lot 1; thence on Az 179 degrees 58 minutes 36 seconds, 152.00
feet
coincident with the East line of said Lot 1 to the point of
beginning. ALSO EXCEPT a part of Lot 1 described as
follows: Beginning at the Northwest corner of said Lot 1; thence East
on Az 88 degrees 20 minutes 19 seconds, 169.93 feet coincident with the North
line of said Lot 1; thence on Az 179 degrees 58 minutes 36 seconds, 302.40
feet;
thence on Az 269 degrees 28 minutes 09 seconds, 287.31 feet to the Westerly
line
of said Lot 1; thence on Az 28 degrees 47 minutes 25 seconds, 246.07 feet
coincident with said Westerly line; thence on Az 359 degrees 10 minutes 40
seconds, 89.50 feet coincident with said Westerly line to the point of
beginning.
Tract
2A:
A
part of
Xxx 0, Xxxxx X, Xxxxxxxx Xxxxxxx No. 2, in the City of Topeka, Shawnee County,
Kansas, more particularly described as follows: Beginning at the
Southeast corner of said Lot 1; thence on Az 268 degrees 28 minutes 09 seconds,
190.00 feet coincident with the South line of said Lot 1; thence on Az 359
degrees 58 minutes 36 seconds, 152.00 feet coincident with the West line of
said
Lot 1; thence on Az 88 degrees 28 minutes 09 seconds, 190.00 feet to the East
line of said Lot 1; thence on Az 179 degrees 58 minutes 36 seconds, 152.00
feet
coincident with the East line of said Lot 1 to the point of beginning.
AND
Tract
2B:
PAGE
A-1
A
part of
Xxx 0, Xxxxx X, Xxxxxxxx Xxxxxxx No. 2, in the City of Topeka, Shawnee County,
Kansas, more particularly described as follows: Beginning at the
Northwest corner of said Lot 1; thence East on Az 88 degrees 20 minutes 19
seconds, 169.93 feet coincident with the North line of said Lot 1; thence on
Az
179 degrees 58 minutes 36 seconds, 302.40 feet; thence on Az 269
degrees 28 minutes 09 seconds, 287.31 feet to the Westerly line of said Lot
1;
thence on Az 28 degrees 47 minutes 25 seconds, 246.07 feet coincident with
said
Westerly line; thence on Az 359 degrees 10 minutes 40 seconds, 89.50 feet
coincident with said Westerly line to the point of beginning.
Also
Known As:
Lot
1,
EXCEPT the South 20 feet thereof, Prospect Place Subdivision AND Xxx 0, Xxxxx
X,
Xxxxxxxx Xxxxxxx Subdivision AND Xxx 0, Xxxxx X, Xxxxxxxx Xxxxxxx Xx. 0 in
the
City of Topeka, Shawnee County, Kansas, together with vacated Prospect Court
lying adjacent to above lots.
PAGE
A-2
EXHIBIT
B
MODIFICATIONS
TO INSTRUMENT
The
following modifications are made to the text of the Instrument that precedes
this Exhibit:
NONE.
PAGE
B-1
