MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (MISSOURI — REVISION DATE 11-01-2000) FHLMC Loan No. 002732432
Prepared
by, and after recording return to:
Xxxx
& Xxxxxxx (TLG)
A
Professional Association
4800
Xxxxx Fargo Center
00
Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000
MULTIFAMILY
DEED OF TRUST,
ASSIGNMENT
OF RENTS
AND
SECURITY AGREEMENT
(MISSOURI
— REVISION DATE 11-01-2000)
FHLMC
Loan No. 002732432
MULTIFAMILY
DEED OF TRUST,
ASSIGNMENT
OF RENTS AND
SECURITY
AGREEMENT
(MISSOURI
— REVISION DATE 11-01-2000)
THIS
MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
“Instrument”) is made as of the 27d’ day of December, 2000,
among Regency North Associates, L.P., a limited partnership organized and
existing under the laws of Missouri, whose mailing address is c/o Maxus
Properties, Inc., 000 Xxxxxx Xxxx, Xxxxx Xxxxxx Xxxx, Xxxxxxxx 00000, as grantor
(“Borrower”), Assured Quality Title Co., whose mailing address
is 0000 Xxxxxx, Xxxxxx Xxxx, Xxxxxxxx 00000, as trustee
(“Trustee”), for the benefit of Northland / Marquette Capital
Group, Inc., a corporation organized and existing under the laws of Minnesota,
whose mailing address 0000 Xxxx 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, as beneficiary (“Lender”).
Borrower,
in consideration of the Indebtedness and the trust created by this Instrument,
irrevocably grants, bargains, sells, conveys, confirms and assigns to Trustee,
in trust, with power of sale, the Mortgaged Property, including the Land located
in Clay County, State of Missouri and described in Exhibit A attached to
this Instrument.
TO
SECURE
TO LENDER the repayment of the Indebtedness evidenced by Borrower’s Multifamily
Note payable to Lender dated as of the date of this Instrument, and maturing
on
January 1, 2011, in the principal amount of $5,250,000.00, and all
renewals, extensions and modifications of the Indebtedness, and the performance
of the covenants and agreements of Borrower contained in the Loan
Documents.
Borrower
represents and warrants that Borrower is lawfully seized of the Mortgaged
Property and has the right, power and authority to mortgage, grant, bargain,
sell, convey, confirm and assign the Mortgaged Property, and that the Mortgaged
Property is unencumbered. Borrower covenants that Borrower will warrant and
defend generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in a schedule of
exceptions to coverage in any title insurance policy issued to Lender
contemporaneously with the execution and recordation of this Instrument and
insuring Lender’s interest in the Mortgaged Property.
Covenants. Borrower
and Lender covenant and agree as follows:
1. DEFINITIONS. The
following terms, when used in this Instrument (including when used in the above
recitals), shall have the following meanings:
PAGE
1
(a) “Borrower”
means all persons or entities identified as “Borrower” in the first paragraph of
this Instrument, together with their successors and assigns.
(b) “Collateral
Agreement” means any separate agreement between Borrower and Lender for
the purpose of establishing replacement reserves for the Mortgaged Property,
establishing a fund to assure 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.
(c) “Controlling
Entity” means an entity which owns, directly or indirectly through one
or more intermediaries, (A) a general partnership interest or more than 50%
of the limited partnership interests in Borrower (if Borrower is a partnership
or joint venture), (B) a manager’s interest in Borrower or more than 50% of
the ownership or membership interests in Borrower (if Borrower is a limited
liability company), or (C) more than 50% of any class of voting stock of
Borrower (if Borrower is a corporation).
(d) “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.
(e) “Event
of Default” means the occurrence of any event listed in
Section 22.
(f) “Fixtures”
means all property which is so attached to the Land or the Improvements as
to
constitute a fixture under applicable law, including: machinery, equipment,
engines, boilers, incinerators, installed building materials; systems and
equipment for the purpose of supplying or distributing heating, cooling,
electricity, gas, water, air, or light; antennas, cable, wiring and conduits
used in connection with radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals; telephone systems
and
equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
systems and apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers, washers, dryers
and other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings; fences, trees and plants; swimming
pools; and exercise equipment.
(g) “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.
PAGE
2
(h) “Hazardous
Materials” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives; flammable
materials; radioactive materials; polychlorinated biphenyls (“PCBs”) and
compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that requires
special handling; and any other material or substance now or in the future
defined as a “hazardous substance,” “hazardous material,” “hazardous waste,”
“toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant” within the
meaning of any Hazardous Materials Law.
(i) “Hazardous
Materials Laws” means all federal, state, and local laws, ordinances
and regulations and standards, rules, policies and other governmental
requirements, administrative rulings and court judgments and decrees in effect
now or in the future and including all amendments, that relate to Hazardous
Materials and apply to Borrower or to the Mortgaged Property. Hazardous
Materials Laws include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601,
et seq., the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, and
their state analogs.
(j) “Impositions”
and “Imposition Deposits” are defined in Section
7(a).
(k) “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.
(l) “Indebtedness”
means the principal of, interest on, and all other amounts due at any time
under, the Note, this Instrument or any other Loan Document, including
prepayment premiums, late charges, default interest, and advances as provided
in
Section 12 to protect the security of this Instrument.
(m) “Initial
Owners” means, with respect to Borrower or any other entity, the
persons or entities who on the date of the Note own in the aggregate 100% of
the
ownership interests in Borrower or that entity.
(n) “Land”
means the land described in Exhibit A.
(o) “Leases”
means all present and future leases, subleases, licenses, concessions or grants
or other possessory interests now or hereafter in force, whether oral or
written, covering or affecting the Mortgaged Property, or any portion of the
Mortgaged Property (including
PAGE
3
proprietary
leases or occupancy agreements if Borrower is a cooperative housing
corporation), and all modifications, extensions or renewals.
(p) “Lender”
means the entity identified as “Lender” in the first paragraph of this
Instrument, or any subsequent holder of the Note.
(q) “Loan
Documents” means the Note, this Instrument, all guaranties, all
indemnity agreements, all Collateral Agreements, O&M Programs, and any other
documents now or in the future executed by Borrower, any guarantor or any other
person in connection with the loan evidenced by the Note, as such documents
may
be amended from time to time.
(r) “Loan
Servicer” means the entity that from time to time is designated by
Lender to collect payments and deposits and receive notices under the Note,
this
Instrument and any other Loan Document, and otherwise to service the loan
evidenced by the Note for the benefit of Lender. Unless Borrower receives notice
to the contrary, the Loan Servicer is the entity identified as “Lender” in the
first paragraph of this Instrument.
(s) “Mortgaged
Property” means all of Borrower’s present and future right, title and
interest in and to all of the following:
|
|
(1)
|
the
Land;
|
|
|
(2)
|
the
Improvements;
|
|
|
(3)
|
the
Fixtures;
|
|
|
(4)
|
the
Personally;
|
|
|
(5)
|
all
current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements, tenements,
rights-of-way, strips and gores of land, streets, alleys, roads,
sewer
rights, waters, watercourses, and appurtenances related to or benefitting
the Land or the Improvements, or both, and all rights-of-way, streets,
alleys and roads which may have been or may in the future be
vacated;
|
|
|
(6)
|
all
proceeds paid or to be paid by any insurer of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property,
whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;
|
|
|
(7)
|
all
awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the Land,
the
|
PAGE
4
Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property,
including any awards or settlements resulting from condemnation proceedings
or
the total or partial taking of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property under the power of
eminent domain or otherwise and including any conveyance in lieu
thereof;
|
|
(8)
|
all
contracts, options and other agreements for the sale of the Land,
the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future,
including cash or securities deposited to secure performance by parties
of
their obligations;
|
|
|
(9)
|
all
proceeds from the conversion, voluntary or involuntary, of any of
the
above into cash or liquidated claims, and the right to collect such
proceeds;
|
|
|
(10)
|
all
Rents and Leases;
|
|
|
(11)
|
all
earnings, royalties, accounts receivable, issues and profits from
the
Land, the Improvements or any other part of the Mortgaged Property,
and
all undisbursed proceeds of the loan secured by this Instrument and,
if
Borrower is a cooperative housing corporation, maintenance charges
or
assessments payable by shareholders or
residents;
|
|
|
(12)
|
all
Imposition Deposits;
|
|
|
(13)
|
all
refunds or rebates of Impositions by any municipal, state or federal
authority or insurance company (other than refunds applicable to
periods
before the real property tax year in which this Instrument is
dated);
|
|
|
(14)
|
all
tenant security deposits which have not been forfeited by any tenant
under
any Lease; and
|
|
|
(15)
|
all
names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill
relating
to any of the Mortgaged Property.
|
(t) “Note”
means the Multifamily Note described on page I of this Instrument, including
all
schedules, riders, allonges and addenda, as such Multifamily Note may be amended
from time to time.
PAGE
5
(u) “O&M
Program” is defined in Section 18(a).
(v) “Personalty”
means all furniture, furnishings, equipment, machinery, building materials,
appliances, goods, supplies, tools, books, records (whether in written or
electronic form), computer equipment (hardware and software) and other tangible
personal property (other than Fixtures) which are used now or in the future
in
connection with the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the Improvements, and any
operating agreements relating to the Land or the Improvements, and any surveys,
plans and specifications and contracts for architectural, engineering and
construction services relating to the Land or the Improvements and all other
intangible property and rights relating to the operation of, or used in
connection with, the Land or the Improvements, including all governmental
permits relating to any activities on the Land.
(w) “Property
Jurisdiction” is defined in Section 30(a).
(x) “Rents”
means all rents (whether from residential or non-residential space), revenues
and other income of the Land or the Improvements, including parking fees,
laundry and vending machine income and fees and charges for food, health care
and other services provided at the Mortgaged Property, whether now due, past
due, or to become due, and deposits forfeited by tenants.
(y) “Taxes”
means all taxes, assessments, vault rentals and other charges, if any, general,
special or otherwise, including all assessments for schools, public betterments
and general or local improvements, which are levied, assessed or imposed by
any
public authority or quasi-public authority, and which, if not paid, will become
a lien, on the Land or the Improvements.
(z) “Transfer”
means (A) a sale, assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of law); (B) the granting, creating or attachment
of
a lien, encumbrance or security interest (whether voluntary, involuntary or
by
operation of law); (C) the issuance or other creation of an ownership interest
in a legal entity, including a partnership interest, interest in a limited
liability company or corporate stock; (D) the withdrawal, retirement, removal
or
involuntary resignation of a partner in a partnership or a member or manager
in
a limited liability company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity or the reconstitution of one type of legal
entity into another type of legal entity. “Transfer” does not include (i) a
conveyance of the Mortgaged Property at a judicial or non judicial foreclosure
sale under this Instrument or (ii) the Mortgaged Property becoming part of
a
bankruptcy estate by operation of law under the United States Bankruptcy Code.
For purposes of defining the term “Transfer,” the term “partnership” shall mean
a general partnership, a limited partnership, a joint venture and a limited
liability partnership, and the term “partner” shall mean a general partner, a
limited partner and a joint venturer.
PAGE
6
2. UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.
This
Instrument is also a security agreement under the Uniform Commercial Code for
any of the Mortgaged Property which, under applicable law, may be subject to
a
security interest under the Uniform Commercial Code, whether acquired now or
in
the future, and all products and cash and non-cash proceeds thereof
(collectively, “UCC Collateral”), and Borrower hereby grants to
Lender a security interest in the UCC Collateral. Borrower shall execute and
deliver to Lender, upon Lender’s request, financing statements, continuation
statements and amendments, in such form as Lender may require to perfect or
continue the perfection of this security interest. Borrower shall pay all filing
costs and all costs and expenses of any record searches for financing statements
that Lender may require. Without the prior written consent of Lender, Borrower
shall not create or permit to exist any other lien or security interest in
any
of the UCC Collateral. If an Event of Default has occurred and is continuing,
Lender shall have the remedies of a secured party under the Uniform Commercial
Code, in addition to all remedies provided by this Instrument or existing under
applicable law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without
in
any way affecting the availability of Lender’s other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT
OF
RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.
(a) As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention
of Borrower to establish a present, absolute and irrevocable transfer and
assignment to Lender of all Rents and to authorize and empower Lender to collect
and receive all Rents without the necessity of further action on the part of
Borrower. Promptly upon request by Lender, Borrower agrees to execute and
deliver such further assignments as Lender may from time to time require.
Borrower and Lender intend this assignment of Rents to be immediately effective
and to constitute an absolute present assignment and not an assignment for
additional security only. For purposes of giving effect to this absolute
assignment of Rents, and for no other purpose, Rents shall not be deemed to
be a
part of the “Mortgaged Property” as that term is defined in Section 1(s).
However, if this present, absolute and unconditional assignment of Rents is
not
enforceable by its terms under the laws of the Property Jurisdiction, then
the
Rents shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create
and
perfect a lien on Rents in favor of Lender, which lien shall be effective as
of
the date of this Instrument.
(b) After
the occurrence of an Event of Default, Borrower authorizes Lender to collect,
xxx for and compromise Rents and directs each tenant of the Mortgaged Property
to pay all Rents to, or as directed by, Lender. However, until the occurrence
of
an Event of Default, Lender hereby grants to Borrower a revocable license to
collect and receive all Rents, to hold all Rents in trust for the benefit of
Lender and to apply all Rents to pay the installments of interest
PAGE
7
and
principal then due and payable under the Note and the other amounts then due
and
payable under the other Loan Documents, including Imposition Deposits, and
to
pay the current costs and expenses of managing, operating and maintaining the
Mortgaged Property, including utilities, Taxes and insurance premiums (to the
extent not included in Imposition Deposits), tenant improvements and other
capital expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower free and clear of, and released from,
Lender’s rights with respect to Rents under this Instrument. From and after the
occurrence of an Event of Default, and without the necessity of Lender entering
upon and taking and maintaining control of the Mortgaged Property directly,
or
by a receiver, Borrower’s license to collect Rents shall automatically terminate
and Lender shall without notice be entitled to all Rents as they become due
and
payable, including Rents then due and unpaid. Borrower shall pay to Lender
upon
demand all Rents to which Lender is entitled. At any time on or after the date
of Lender’s demand for Rents, Lender may give, and Borrower hereby irrevocably
authorizes Lender to give, notice to all tenants of the Mortgaged Property
instructing them to pay all Rents to Lender, no tenant shall be obligated to
inquire further as to the occurrence or continuance of an Event of Default,
and
no tenant shall be obligated to pay to Borrower any amounts which are actually
paid to Lender in response to such a notice. Any such notice by Lender shall
be
delivered to each tenant personally, by mail or by delivering such demand to
each rental unit. Borrower shall not interfere with and shall cooperate with
Lender’s collection of such Rents.
(c) Borrower
represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing indebtedness
that will be paid off and discharged with the proceeds of the loan evidenced
by
the Note), that Borrower has not performed, and Borrower covenants and agrees
that it will not perform, any acts and has not executed, and shall not execute,
any instrument which would prevent Lender from exercising its rights under
this
Section 3, and that at the time of execution of this Instrument there has been
no anticipation or prepayment of any Rents for more than two months prior to
the
due dates of such Rents. Borrower shall not collect or accept payment of any
Rents more than two months prior to the due dates of such Rents.
(d) If
an Event of Default has occurred and is continuing, Lender may, regardless
of
the adequacy of Lender’s security or the solvency of Borrower and even in the
absence of waste, enter upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its discretion determines
to be necessary or desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of Leases,
the
collection of all Rents, the making of repairs to the Mortgaged Property and
the
execution or termination of contracts providing for the management, operation
or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged Property
or the security of this Instrument, or for such other purposes as Lender in
its
discretion may deem necessary or desirable. Alternatively, if an Event of
Default has occurred and is continuing, regardless of the adequacy of Lender’s
security,
PAGE
8
without
regard to Borrower’s solvency and without the necessity of giving prior notice
(oral or written) to Borrower, Lender may apply to any court having jurisdiction
for the appointment of a receiver for the Mortgaged Property to take any or
all
of the actions set forth in the preceding sentence. If Lender elects to seek
the
appointment of a receiver for the Mortgaged Property at any time after an Event
of Default has occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such receiver, including
the appointment of a receiver ex parte if permitted by applicable law. Lender
or
the receiver, as the case may be, shall be entitled to receive a reasonable
fee
for managing the Mortgaged Property. Immediately upon appointment of a receiver
or immediately upon the Lender’s entering upon and taking possession and control
of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged
Property to Lender or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the case may be, all documents, records (including
records on electronic or magnetic media), accounts, surveys, plans, and
specifications relating to the Mortgaged Property and all security deposits
and
prepaid Rents. In the event Lender takes possession and control of the Mortgaged
Property, Lender may exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the exercise by Lender of any
of
the rights conferred under this Section 3 shall not be construed to make Lender
a mortgagee-in-possession of the Mortgaged Property so long as Lender has not
itself entered into actual possession of the Land and Improvements.
(e) If
Lender enters the Mortgaged Property, Lender shall be liable to account only
to
Borrower and only for those Rents actually received. Lender shall not be liable
to Borrower, anyone claiming under or through Borrower or anyone having an
interest in the Mortgaged Property, by reason of any act or omission of Lender
under this Section 3, and Borrower hereby releases and discharges Lender from
any such liability to the fullest extent permitted by law.
(f) If
the Rents are not sufficient to meet the costs of taking control of and managing
the Mortgaged Property and collecting the Rents, any funds expended by Lender
for such purposes shall become an additional part of the Indebtedness as
provided in Section 12.
(g) Any
entering upon and taking of control of the Mortgaged Property by Lender or
the
receiver, as the case may be, and any application of Rents as provided in this
Instrument shall not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for in this
Instrument.
4. ASSIGNMENT
OF
LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As
part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower’s right, title
and interest in, to and under the Leases, including Borrower’s right, power and
authority to modify the terms of any such Lease, or extend or terminate any
such
Lease. It is the intention of Borrower to establish a
PAGE
9
present,
absolute and irrevocable transfer and assignment to Lender of all of Borrower’s
right, title and interest in, to and under the Leases. Borrower and Lender
intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional
security only. For purposes of giving effect to this absolute assignment of
the
Leases, and for no other purpose, the Leases shall not be deemed to be a part
of
the “Mortgaged Property” as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of the Leases is not
enforceable by its terms under the laws of the Property Jurisdiction, then
the
Leases shall be included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this Instrument create
and
perfect a lien on the Leases in favor of Lender, which lien shall be effective
as of the date of this Instrument.
(b) Until
Lender gives notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right, power and authority
to
modify the terms of any Lease or extend or terminate any Lease. Upon the
occurrence of an Event of Default, the permission given to Borrower pursuant
to
the preceding sentence to exercise all rights, power and authority under Leases
shall automatically terminate. Borrower shall comply with and observe Borrower’s
obligations under all Leases, including Borrower’s obligations pertaining to the
maintenance and disposition of tenant security deposits.
(c) Borrower
acknowledges and agrees that the exercise by Lender, either directly or by
a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property
so
long as Lender has not itself entered into actual possession of the Land and
the
Improvements. The acceptance by Lender of the assignment of the Leases pursuant
to Section 4(a) shall not at any time or in any event obligate Lender to
take any action under this Instrument or to expend any money or to incur any
expenses. Lender shall not be liable in any way for any injury or damage to
person or property sustained by any person or persons, firm or corporation
in or
about the Mortgaged Property. Prior to Lender’s actual entry into and taking
possession of the Mortgaged Property, Lender shall not (i) be obligated to
perform any of the terms, covenants and conditions contained in any Lease (or
otherwise have any obligation with respect to any Lease); (ii) be obligated
to appear in or defend any action or proceeding relating to the Lease or the
Mortgaged Property; or (iii) be responsible for the operation, control,
care, management or repair of the Mortgaged Property or any portion of the
Mortgaged Property. The execution of this Instrument by Borrower shall
constitute conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property is and shall
be
that of Borrower, prior to such actual entry and taking of
possession.
(d) Upon
delivery of notice by Lender to Borrower of Lender’s exercise of Lender’s rights
under this Section 4 at any time after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and taking and
maintaining control of the Mortgaged
PAGE
10
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.
(f) Borrower
shall not lease any portion of the Mortgaged Property for non-residential use
except with the prior written consent of Lender and Lender’s prior written
approval of the Lease agreement. Borrower shall not modify the terms of, or
extend or terminate, any Lease for non-residential use (including any Lease
in
existence on the date of this Instrument) without the prior written consent
of
Lender. Borrower shall, without request by Lender, deliver an executed copy
of
each non-residential Lease to Lender promptly after such Lease is signed. All
non-residential Leases, including renewals or extensions of existing Leases,
shall specifically provide that (1) such Leases are subordinate to the lien
of this Instrument; (2) the tenant shall attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a foreclosure
sale or by Lender in any manner; (3) the tenant agrees to execute such
further evidences of attornment as Lender or any purchaser at a foreclosure
sale
may from time to time request; (4) the Lease shall not be terminated by
foreclosure or any other transfer of the Mortgaged Property; (5) after a
foreclosure sale of the Mortgaged Property, Lender or any other purchaser at
such foreclosure sale may, at Lender’s or such purchaser’s option, accept or
terminate such Lease; and (6) the tenant shall, upon receipt after the
occurrence of an Event of Default of a written request from Lender, pay all
Rents payable under the Lease to Lender.
(g) Borrower
shall not receive or accept Rent under any Lease (whether residential or
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.
PAGE
11
7. DEPOSITS
FOR
TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower
shall deposit with Lender on the day monthly installments of principal or
interest, or both, are due under the Note (or on another day designated in
writing by Lender), until the Indebtedness is paid in full, an additional amount
sufficient to accumulate with Lender the entire sum required to pay, when due
(1) any water and sewer charges which, if not paid, may result in a lien on
all or any part of the Mortgaged Property, (2) the premiums for fire and
other hazard insurance, rent loss insurance and such other insurance as Lender
may require under Section 19, (3) Taxes, and (4) amounts for
other charges and expenses which Lender at any time reasonably deems necessary
to protect the Mortgaged Property, to prevent the imposition of liens on the
Mortgaged Property, or otherwise to protect Lender’s interests, all as
reasonably estimated from time to time by Lender, plus one-sixth of such
estimate. The amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the “Imposition Deposits.”
The obligations of Borrower for which the Imposition Deposits
are required are
collectively referred to in this Instrument as “Impositions.”
The amount of the Imposition Deposits shall be sufficient
to enable Lender to
pay each Imposition before the last date upon which such payment may be made
without any penalty or interest charge being added. Lender shall maintain
records indicating how much of the monthly Imposition Deposits and how much
of
the aggregate Imposition Deposits held by Lender are held for the purpose of
paying Taxes, insurance premiums and each other obligation of Borrower for
which
Imposition Deposits are required. Any waiver by Lender of the requirement that
Borrower remit Imposition Deposits to Lender may be revoked by Lender, in
Lender’s discretion, at any time upon notice to Borrower.
(b) Imposition
Deposits shall be held in an institution (which may be Lender, if Lender is
such
an institution) whose deposits or accounts are insured or guaranteed by a
federal agency. Lender shall not be obligated to open additional accounts or
deposit Imposition Deposits in additional institutions when the amount of the
Imposition Deposits exceeds the maximum amount of the federal deposit insurance
or guaranty. Lender shall apply the Imposition Deposits to pay Impositions
so
long as no Event of Default has occurred and is continuing. Unless applicable
law requires, Lender shall not be required to pay Borrower any interest,
earnings or profits on the Imposition Deposits. Borrower hereby pledges and
grants to Lender a security interest in the Imposition Deposits as additional
security for all of Borrower’s obligations under this Instrument and the other
Loan Documents. Any amounts deposited with Lender under this Section 7
shall not be trust funds, nor shall they operate to reduce the Indebtedness,
unless applied by Lender for that purpose under Section 7(e).
(c) If
Lender receives a xxxx or invoice for an Imposition, Lender shall pay the
Imposition from the Imposition Deposits held by Lender. Lender shall have no
obligation to pay any Imposition to the extent it exceeds Imposition Deposits
then held by Lender. Lender may pay an Imposition according to any xxxx,
statement or estimate from the appropriate public office
PAGE
12
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
plus one-sixth of such estimate, 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 plus one-sixth of such
estimate, Borrower shall pay to Lender the amount of the deficiency within
15
days after notice from Lender.
(e) If
an Event of Default has occurred and is continuing, Lender may apply any
Imposition Deposits, in any amounts and in any order as Lender determines,
in
Lender’s discretion, to pay any Impositions or as a credit against the
Indebtedness. Upon payment in full of the Indebtedness, Lender shall refund
to
Borrower any Imposition Deposits held by Lender.
8. COLLATERAL
AGREEMENTS. Borrower shall deposit with
Lender such amounts as may be required by any Collateral Agreement and shall
perform all other obligations of Borrower under each Collateral
Agreement.
9. APPLICATION
OF PAYMENTS. If at any time Lender
receives, from Borrower or otherwise, any amount applicable to the Indebtedness
which is less than all amounts due and payable at such time, then Lender may
apply that payment to amounts then due and payable in any manner and in any
order determined by Lender, in Lender’s discretion. Neither Lender’s acceptance
of an amount which is less than all amounts then due and payable nor Lender’s
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this Instrument and the Note shall
remain unchanged.
10. COMPLIANCE
WITH LAWS. Borrower shall comply with all
laws, ordinances, regulations and requirements of any Governmental Authority
and
all recorded lawful covenants and agreements relating to or affecting the
Mortgaged Property, including all laws, ordinances, regulations, requirements
and covenants pertaining to health and safety, construction of improvements
on
the Mortgaged Property, fair housing, zoning and land use, and Leases. Borrower
also shall comply with all applicable laws that pertain to the maintenance
and
disposition of tenant 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
PAGE
13
and
warrants to Lender that no portion of the Mortgaged Property has been or will
be
purchased with the proceeds of any illegal activity.
11. USE
OF
PROPERTY. Unless required by applicable law,
Borrower shall not (a) except for any change in use approved by Lender,
allow changes in the use for which all or any part of the Mortgaged Property
is
being used at the time this Instrument was executed, (b) convert any
individual dwelling units or common areas to commercial use, (c) initiate
or acquiesce in a change in the zoning classification of the Mortgaged Property,
or (d) establish any condominium or cooperative regime with respect to the
Mortgaged Property.
12. PROTECTION
OF
LENDER’S SECURITY.
(a) If
Borrower fails to perform
any of its obligations under this Instrument or any other Loan Document, or
if
any action or proceeding is commenced which purports to affect the Mortgaged
Property, Lender’s security or Lender’s rights under this Instrument, including
eminent domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then Lender
at
Lender’s option may make such appearances, disburse such sums and take such
actions as Lender reasonably deems necessary to perform such obligations of
Borrower and to protect Lender’s interest, including (1) payment of fees
and out of pocket expenses of attorneys, accountants, inspectors and
consultants, (2) entry upon the Mortgaged Property to make repairs or
secure the Mortgaged Property, (3) procurement of the insurance required by
Section 19, and (4) payment of amounts which Borrower has failed to
pay under Sections 15 and 17.
(b) Any
amounts disbursed by Lender under this Section 12, or under any other
provision of this Instrument that treats such disbursement as being made under
this Section 12, till be added to, and become part of, the principal
component of the Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the “Default
Rate,” as defined in the Note.
(c) Nothing
in this Section 12 shall require Lender to incur any expense or take any
action.
13. INSPECTION.
Lender, its agents, representatives, and designees may make or cause to be
made
entries upon and inspections of the Mortgaged Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time.
14. BOOKS
AND
RECORDS; FINANCIAL REPORTING.
PAGE
14
(a) Borrower
shall keep and maintain at all times at the Mortgaged Property or the management
agent’s offices, and upon Lender’s request shall make available at the Mortgaged
Property, complete and accurate books of account and records (including copies
of supporting bills and invoices) adequate to reflect correctly the operation
of
the Mortgaged Property, and copies of all written contracts, Leases, and other
instruments which affect the Mortgaged Property. The books, records, contracts,
Leases and other instruments shall be subject to examination and inspection
at
any reasonable time by Lender.
(b) Borrower
shall furnish to Lender all of the following:
|
|
(1)
|
within
120 days after the end of each fiscal year of Borrower, a statement
of
income and expenses for Borrower’s operation of the Mortgaged Property for
that fiscal year, a statement of changes in financial position of
Borrower
relating to the Mortgaged Property for that fiscal year and, when
requested by Lender, a balance sheet showing all assets and liabilities
of
Borrower relating to the Mortgaged Property as of the end of that
fiscal
year;
|
|
|
(2)
|
within
120 days after the end of each fiscal year of Borrower, and at any
other
time upon Lender’s request, a rent schedule for the Mortgaged Property
showing the name of each tenant, and for each tenant, the space occupied,
the lease expiration date, the rent payable for the current month,
the
date through which rent has been paid, and any related information
requested by Lender;
|
|
|
(3)
|
within
120 days after the end of each fiscal year of Borrower, and at any
other
time upon Lender’s request, an accounting of all security deposits held
pursuant to all Leases, including the name of the institution (if
any) and
the names and identification numbers of the accounts (if any) in
which
such security deposits are held and the name of the person to contact
at
such financial institution, along with any authority or release necessary
for Lender to access information regarding such
accounts;
|
|
|
(4)
|
within
120 days after the end of each fiscal year of Borrower, and at any
other
time upon Lender’s request, a statement that identifies all owners of any
interest in Borrower and any Controlling Entity and the interest
held by
each, 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;
|
PAGE
15
|
|
(5)
|
upon
Lender’s request, quarterly income and expense statements for the
Mortgaged Property;
|
|
|
(6)
|
upon
Lender’s request at any time when an Event of Default has occurred and is
continuing, monthly income and expense statements for the Mortgaged
Property;
|
|
|
(7)
|
upon
Lender’s request, a monthly property management report for the Mortgaged
Property, showing the number of inquiries made and rental applications
received from tenants or prospective tenants and deposits received
from
tenants and any other information requested by Lender;
and
|
|
|
(8)
|
upon
Lender’s request, a balance sheet, a statement of income and expenses for
Borrower and a statement of changes in financial position of Borrower
for
Borrower’s most recent fiscal year.
|
(c) Each
of the statements, schedules and reports required by Section 14(b) shall be
certified to be complete and accurate by an individual having authority to
bind
Borrower, and shall be in such form and contain such detail as Lender may
reasonably require. Lender also may require that any statements, schedules
or
reports be audited at Borrower’s expense by independent certified public
accountants acceptable to Lender.
(d) If
Borrower fails to provide in a timely manner the statements, schedules and
reports required by Section 14(b), Lender shall have the right to have
Borrower’s books and records audited, at Borrower’s expense, by independent
certified public accountants selected by Lender in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender
shall become immediately due and payable and shall become an additional part
of
the Indebtedness as provided in Section 12.
(e) If
an Event of Default has occurred and is continuing, Borrower shall deliver
to
Lender upon written demand all books and records relating to the Mortgaged
Property or its operation.
(f) Borrower
authorizes Lender to obtain a credit report on Borrower at any
time.
15. TAXES;
OPERATING EXPENSES.
(a) Subject
to the provisions of Section 15(c) and Section 15(d), Borrower shall pay, or
cause to be paid, all Taxes when due and before the addition of any interest,
fine, penalty or cost for nonpayment.
PAGE
16
(b) Subject
to the provisions of Section 15(c), Borrower shall pay the expenses of
operating, managing, maintaining and repairing the Mortgaged Property (including
insurance premiums, utilities, repairs and replacements) before the last date
upon which each such payment may be made without any penalty or interest charge
being added.
(c) As
long as no Event of Default exists and Borrower has timely delivered to Lender
any bills or premium notices that it has received, Borrower shall not be
obligated to pay Taxes, insurance premiums or any other individual Imposition
to
the extent that sufficient Imposition Deposits are held by Lender for the
purpose of paying that specific Imposition. If an Event of Default exists,
Lender may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and payable. Lender
shall have no liability to Borrower for failing to pay any Impositions to the
extent that any Event of Default has occurred and is continuing, insufficient
Imposition Deposits are held by Lender at the time an Imposition becomes due
and
payable or Borrower has failed to provide Lender with bills and premium notices
as provided above.
(d) Borrower,
at its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (1) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (2) the
Mortgaged Property is not in danger of being sold or forfeited,
(3) Borrower deposits with Lender reserves sufficient to pay the contested
Imposition, if requested by Lender, and (4) Borrower furnishes whatever
additional security is required in the proceedings or is reasonably requested
by
Lender, which may include the delivery to Lender of the reserves established
by
Borrower to pay the contested Imposition.
(e) Borrower
shall promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and if Borrower pays any Imposition directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments.
16. LIENS;
ENCUMBRANCES. Borrower acknowledges that, to
the extent provided in Section 21, the grant, creation or existence of any
mortgage, deed of trust, deed to secure debt, security interest or other lien
or
encumbrance (a “Lien”) on the Mortgaged Property (other than
the lien of this instrument) or on certain ownership interests in Borrower,
whether voluntary, involuntary or by operation of law, and whether or not such
Lien has priority over the lien of this Instrument, is a
“Transfer” which constitutes an Event of Default and subjects
Borrower to personal liability under the Note.
17. PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED
PROPERTY. Borrower (a) shall not
commit waste or permit impairment or deterioration of the Mortgaged Property,
(b) shall not abandon the Mortgaged Property, (c) 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
PAGE
17
may
approve in writing, whether or not insurance proceeds or condemnation awards
are
available to cover any costs of such restoration or repair, (d) 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) shall
provide for professional management of the Mortgaged Property by a residential
rental property manager satisfactory to Lender under a contract approved by
Lender in writing, and (f) shall give notice to Lender of and, unless
otherwise directed in writing by Lender, shall appear in and defend any action
or proceeding purporting to affect the Mortgaged Property, Lender’s security or
Lender’s rights under this Instrument. Borrower shall not (and shall not permit
any tenant or other person to) remove, demolish or alter the Mortgaged Property
or any part of the Mortgaged Property except in connection with the replacement
of tangible Personalty.
18. ENVIRONMENTAL
HAZARDS.
(a) Except
for matters covered by a written program of operations and maintenance approved
in writing by Lender (an “O&M Program”) or matters
described in Section 18(b), Borrower shall not cause or permit any of the
following:
|
|
(1)
|
the
presence, use, generation, release, treatment, processing, storage
(including storage in above ground and underground storage tanks),
handling, or disposal of any Hazardous Materials on or under the
Mortgaged
Property or any other property of Borrower that is adjacent to the
Mortgaged Property;
|
|
|
(2)
|
the
transportation of any Hazardous Materials to, from, or across the
Mortgaged Property;
|
|
|
(3)
|
any
occurrence or condition on the Mortgaged Property or any other property
of
Borrower that is adjacent to the Mortgaged Property, which occurrence
or
condition is or may be in violation of Hazardous Materials Laws;
or
|
|
|
(4)
|
any
violation of or noncompliance with the terms of any Environmental
Permit
with respect to the Mortgaged Property or any property of Borrower
that is
adjacent to the Mortgaged Property.
|
The
matters described in clauses (1) through (4) above are referred to collectively
in this Section 18 as “Prohibited Activities or
Conditions”.
(b) Prohibited
Activities and Conditions shall not include the safe and lawful use and storage
of quantities of (1) pre-packaged supplies, cleaning materials and
petroleum products customarily used in the operation and maintenance of
comparable multifamily properties, (2)
PAGE
18
cleaning
materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants of residential
dwelling units in the Mortgaged Property; and (3) petroleum products used
in the operation and maintenance of motor vehicles from time to time located
on
the Mortgaged Property’s parking areas, so long as all of the foregoing are
used, stored, handled, transported and disposed of in compliance with Hazardous
Materials Laws.
(c) Borrower
shall take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this Instrument)
to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or Conditions.
Borrower shall not lease or allow the sublease or use of all or any portion
of
the Mortgaged Property to any tenant or subtenant for nonresidential use by
any
user that, in the ordinary course of its business, would cause or permit any
Prohibited Activity or Condition.
(d) If
an O&M Program has been established with respect to Hazardous Materials,
Borrower shall comply in a timely manner with, and cause all employees, agents,
and contractors of Borrower and any other persons present on the Mortgaged
Property to comply with the O&M Program. All costs of performance of
Borrower’s obligations under any O&M Program shall be paid by Borrower, and
Lender’s out-of-pocket costs incurred in connection with the monitoring and
review of the O&M Program and Borrower’s performance shall be paid by
Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.
(e) Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing:
|
|
(1)
|
Borrower
has not at any time engaged in, caused or permitted any Prohibited
Activities or Conditions;
|
|
|
(2)
|
to
the best of Borrower’s knowledge after reasonable and diligent inquiry, no
Prohibited Activities or Conditions exist or have
existed;
|
|
|
(3)
|
except
to the extent previously disclosed by Borrower to Lender in writing,
the
Mortgaged Property does not now contain any underground storage tanks,
and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground
storage
tanks in the past. If there is an underground storage tank located
on the
Property which has been previously disclosed by Borrower to Lender
in
writing, that tank complies with all requirements of Hazardous Materials
Laws;
|
PAGE
19
|
|
(4)
|
Borrower
has complied with all Hazardous Materials Laws, including all requirements
for notification regarding releases of Hazardous Materials. Without
limiting the generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the Mortgaged
Property
in accordance with Hazardous Materials Laws now in effect and all
such
Environmental Permits are in full force and
effect;
|
|
|
(5)
|
no
event has occurred with respect to the Mortgaged Property that
constitutes, or with the passing of time or the giving of notice
would
constitute, noncompliance with the terms of any Environmental
Permit;
|
|
|
(6)
|
there
are no actions, suits, claims or proceedings pending or, to the best
of
Borrower’s knowledge after reasonable and diligent inquiry, threatened
that involve the Mortgaged Property and allege, arise out of, or
relate to
any Prohibited Activity or Condition;
and
|
|
|
(7)
|
Borrower
has not received any complaint, order, notice of violation or other
communication from any Governmental Authority with regard to air
emissions, water discharges, noise emissions or Hazardous Materials,
or
any other environmental, health or safety matters affecting the Mortgaged
Property or any other property of Borrower that is adjacent to the
Mortgaged Property.
|
The
representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.
(f) Borrower
shall promptly notify Lender in writing upon the occurrence of any of the
following events:
|
|
(1)
|
Borrower’s
discovery of any Prohibited Activity or
Condition;
|
|
|
(2)
|
Borrower’s
receipt of or knowledge of any complaint, order, notice of violation
or
other communication from any Governmental Authority or other person
with
regard to present or future alleged Prohibited Activities or Conditions
or
any other environmental, health or safety matters affecting the Mortgaged
Property or any other property of Borrower that is adjacent to the
Mortgaged Property; and
|
|
|
(3)
|
any
representation or warranty in this Section 18 becomes untrue after
the
date of this Agreement.
|
PAGE
20
Any
such
notice given by Borrower shall not relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the Note, or any other Loan
Document.
(g) Borrower
shall pay promptly the costs of any environmental inspections, tests or audits
(“Environmental Inspections”) required by Lender in connection
with any foreclosure or deed in lieu of foreclosure, or as a condition of
Lender’s consent to any Transfer under Section 21, or required by Lender
following a reasonable determination by Lender that Prohibited Activities or
Conditions may exist. Any such costs incurred by Lender (including the fees
and
out-of-pocket costs of attorneys and technical consultants whether incurred
in
connection with any judicial or administrative process or otherwise) which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of Lender
and
Lender shall have no obligation to disclose or otherwise make available to
Borrower or any other party such results or any other information obtained
by
Lender in connection with its Environmental Inspections. Lender hereby reserves
the right, and Borrower hereby expressly authorizes Lender, to make available
to
any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by Lender
with respect to the Mortgaged Property. Borrower consents to Lender notifying
any party (either as part of a notice of sale or otherwise) of the results
of
any of Lender’s Environmental Inspections. Borrower acknowledges that Lender
cannot control or otherwise assure the truthfulness or accuracy of the results
of any of its Environmental Inspections and that the release of such results
to
prospective bidders at a foreclosure sale of the Mortgaged Property may have
a
material and adverse effect upon the amount which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result
of
delivering the results of any of its Environmental Inspections to any third
party, and Borrower hereby releases and forever discharges Lender from any
and
all claims, damages, or causes of action, arising out of, connected with or
incidental to the results of, the delivery of any of Lender’s Environmental
Inspections.
(h) If
any investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is necessary to comply with any
Hazardous Materials Law or order of any Governmental Authority that has or
acquires jurisdiction over the Mortgaged Property or the use, operation or
improvement of the Mortgaged Property under any Hazardous Materials Law,
Borrower shall, by the earlier of (1) the applicable deadline required by
Hazardous Materials Law or (2) 30 days after notice from Lender demanding
such action, begin performing the Remedial Work, and thereafter diligently
prosecute it to completion, and shall in any event complete the work by the
time
required by applicable Hazardous Materials Law. If Borrower fails to begin
on a
timely basis or diligently prosecute any required Remedial Work, Lender may,
at
its option, cause the Remedial Work to be completed, in which case Borrower
shall reimburse Lender on demand for the cost of doing so. Any reimbursement
due
from Borrower to Lender shall become part of the Indebtedness as provided in
Section 12.
PAGE
21
(i) Borrower
shall cooperate with any inquiry by any Governmental Authority and shall comply
with any governmental or judicial order which arises from any alleged Prohibited
Activity or Condition.
(j) Borrower
shall indemnify, hold harmless and defend (i) Lender, (ii) any prior
owner or holder of the Note, (iii) the Loan Servicer, (iv) any prior
Loan Servicer, (v) the officers, directors, shareholders, partners,
employees and trustees of any of the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of each of the foregoing (collectively,
the “Indemnitees”) from and against all proceedings, claims,
damages, penalties and costs (whether initiated or sought by Governmental
Authorities or private parties), including fees and out of pocket expenses
of
attorneys and expert witnesses, investigatory fees, and remediation costs,
whether incurred in connection with any judicial or administrative process
or
otherwise, arising directly or indirectly from any of the
following:
|
|
(1)
|
any
breach of any representation or warranty of Borrower in this
Section 18;
|
|
|
(2)
|
any
failure by Borrower to perform any of its obligations under this
Section 18;
|
|
|
(3)
|
the
existence or alleged existence of any Prohibited Activity or
Condition;
|
|
|
(4)
|
the
presence or alleged presence of Hazardous Materials on or under the
Mortgaged Property or any property of Borrower that is adjacent to
the
Mortgaged Property; and
|
|
|
(5)
|
the
actual or alleged violation of any Hazardous Materials
Law.
|
(k) Counsel
selected by Borrower to defend Indemnitees shall be subject to the approval
of
those Indemnitees. However, any Indemnitee may elect to defend any claim or
legal or administrative proceeding at the Borrower’s expense.
(l) Borrower
shall not, without the prior written consent of those Indemnitees who are named
as parties to a claim or legal or administrative proceeding (a
“Claim”), settle or compromise the Claim if the settlement
(1) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a
written release of those Indemnitees, satisfactory in form and substance to
Lender; or (2) may materially and adversely affect Lender, as determined by
Lender in its discretion.
(m) 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
22
|
|
(1)
|
any
amendment or modification of any Loan
Document;
|
|
|
(2)
|
any
extensions of time for performance required by any Loan
Document;
|
|
|
(3)
|
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;
|
|
|
(4)
|
the
accuracy or inaccuracy of any representations and warranties made
by
Borrower under this Instrument or any other Loan
Document;
|
|
|
(5)
|
the
release of Borrower or any other person, by Lender or by operation of law,
from performance of any obligation under any Loan
Document;
|
|
|
(6)
|
the
release or substitution in whole or in part of any security for the
Indebtedness; and
|
|
|
(7)
|
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:
|
|
(1)
|
pay
or satisfy any judgment or decree that may be entered against any
Indemnitee or Indemnitees in any legal or administrative proceeding
incident to any matters against which Indemnitees are entitled to
be
indemnified under this Section 18;
|
|
|
(2)
|
reimburse
Indemnitees for any expenses paid or incurred in connection with
any
matters against which Indemnitees are entitled to be indemnified
under
this Section 18; and
|
|
|
(3)
|
reimburse
Indemnitees for any and all expenses, including fees and out of pocket
expenses of attorneys and expert witnesses, paid or incurred in connection
with the enforcement by Indemnitees of their rights under this Section
18,
or in monitoring and participating in any legal or administrative
proceeding.
|
(o) In
any circumstances in which the indemnity under this Section 18 applies, Lender
may employ its own legal counsel and consultants to prosecute, defend or
negotiate any claim or legal or administrative proceeding and Lender, with
the
prior written consent of Borrower (which
PAGE
23
shall
not
be unreasonably withheld, delayed or conditioned) may settle or compromise
any
action or legal or administrative proceeding. Borrower shall reimburse Lender
upon demand for all costs and expenses incurred by Lender, including all costs
of settlements entered into in good faith, and the fees and out of pocket
expenses of such attorneys and consultants.
(p) The
provisions of this Section 18 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or
under
other Loan Documents, and each Indemnitee shall be entitled to indemnification
under this Section 18 without regard to whether Lender or that Indemnitee has
exercised any rights against the Mortgaged Property or any other security,
pursued any rights against any guarantor, or pursued any other rights available
under the Loan Documents or applicable law. If Borrower consists of more than
one person or entity, the obligation of those persons or entities to indemnify
the Indemnitees under this Section 18 shall be joint and several. The obligation
of Borrower to indemnify the Indemnitees under this Section 18 shall survive
any
repayment or discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument.
19. PROPERTY
AND
LIABILITY INSURANCE.
(a) Borrower
shall keep the Improvements insured at all times against such hazards as Lender
may from time to time require, which insurance shall include but not be limited
to coverage against loss by fire and allied perils, general boiler and machinery
coverage, and business income coverage. Lender’s insurance requirements may
change from time to time throughout the term of the Indebtedness. If Lender
so
requires, such insurance shall also include sinkhole insurance, mine subsidence
insurance, earthquake insurance, and, if the Mortgaged Property does not conform
to applicable zoning or land use laws, building ordinance or law coverage.
If
any of the Improvements is located in an area identified by the Federal
Emergency Management Agency (or any successor to that agency) as an area having
special flood hazards, and if flood insurance is available in that area,
Borrower shall insure such Improvements against loss by flood.
(b) All
premiums on insurance policies required under Section 19(a) shall be paid in
the
manner provided in Section 7, unless Lender has designated in writing another
method of payment. All such policies shall also be in a form approved by Lender.
All policies of property damage insurance shall include a non-contributing,
non-reporting mortgage clause in favor of, and in a form approved by, Lender.
Lender shall have the right to hold the original policies or duplicate original
policies of all insurance required by Section 19(a). Borrower shall promptly
deliver to Lender a copy of all renewal and other notices received by Borrower
with respect to the policies and all receipts for paid premiums. At least 30
days prior to the expiration date of a policy, Borrower shall deliver to Lender
the original (or a duplicate original) of a renewal policy in form satisfactory
to Lender.
PAGE
24
(c) Borrower
shall maintain at all times commercial general liability insurance, workers’
compensation insurance and such other liability, errors and omissions and
fidelity insurance coverages as Lender may from time to time
require.
(d) All
insurance policies and renewals of insurance policies required by this
Section 19 shall be in such amounts and for such periods as Lender may from
time to time require, and shall be issued by insurance companies satisfactory
to
Lender.
(e) Borrower
shall comply with all insurance requirements and shall not permit any condition
to exist on the Mortgaged Property that would invalidate any part of any
insurance coverage that this Instrument requires Borrower to
maintain.
(f) In
the event of loss, Borrower shall give immediate written notice to the insurance
carrier and to Lender. Borrower hereby authorizes and appoints Lender as
attorney-in-fact for Borrower to make proof of loss, to adjust and compromise
any claims under policies of property damage insurance, to appear in and
prosecute any action arising from such property damage insurance policies,
to
collect and receive the proceeds of property damage insurance, and to deduct
from such proceeds Lender’s expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and therefore
is
irrevocable. However, nothing contained in this Section 19 shall require Lender
to incur any expense or take any action. Lender may, at Lender’s option,
(1) hold the balance of such proceeds to be used to reimburse Borrower for
the cost of restoring and repairing the Mortgaged Property to the equivalent
of
its original condition or to a condition approved by Lender (the
“Restoration”), or (2) apply the balance of such proceeds
to the payment of the Indebtedness, whether or not then due. To the extent
Lender determines to apply insurance proceeds to Restoration, Lender shall
do so
in accordance with Lender’s then-current policies relating to the restoration of
casualty damage on similar multifamily properties.
(g) Lender
shall not exercise its option to apply insurance proceeds to the payment of
the
Indebtedness if all of the following conditions are met: (1) no Event of
Default (or any event which, with the giving of notice or the passage of time,
or both, would constitute an Event of Default) has occurred and is continuing;
(2) Lender determines, in its discretion, that there will be sufficient
funds to complete the Restoration; (3) Lender determines, in its
discretion, that the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating costs and other
expenses, Imposition Deposits, deposits to reserves and loan repayment
obligations relating to the Mortgaged Property; and (4) Lender determines,
in its discretion, that the Restoration will be completed before the earlier
of
(A) one year before the maturity date of the Note or (B) one year
after the date of the loss or casualty.
(h) If
the Mortgaged Property is sold at a foreclosure sale or Lender acquires title
to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to
PAGE
25
any
insurance policies and unearned insurance premiums and in and to the proceeds
resulting from any damage to the Mortgaged Property prior to such sale or
acquisition.
20. CONDEMNATION.
(a) Borrower
shall promptly notify Lender of any action or proceeding relating to any
condemnation or other taking, or conveyance in lieu thereof, of all or any
part
of the Mortgaged Property, whether direct or indirect (a
“Condemnation”). Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation unless otherwise
directed by Lender in writing. Borrower authorizes and appoints Lender as
attorney-in-fact for Borrower to commence, appear in and prosecute, in Lender’s
or Borrower’s name, any action or proceeding relating to any Condemnation and to
settle or compromise any claim in connection with any Condemnation. This power
of attorney is coupled with an interest and therefore is irrevocable. However,
nothing contained in this Section 20 shall require Lender to incur any expense
or take any action. Borrower hereby transfers and assigns to Lender all right,
title and interest of Borrower in and to any award or payment with respect
to
(i) any Condemnation, or any conveyance in lieu of Condemnation, and
(ii) any damage to the Mortgaged Property caused by governmental action
that does not result in a Condemnation.
(b) Lender
may apply such awards or proceeds, after the deduction of Lender’s expenses
incurred in the collection of such amounts, at Lender’s option, to the
restoration or repair of the Mortgaged Property or to the payment of the
Indebtedness, with the balance, if any, to Borrower. Unless Lender otherwise
agrees in writing, any application of any awards or proceeds to the Indebtedness
shall not extend or postpone the due date of any monthly installments referred
to in the Note, Section 7 of this Instrument or any Collateral Agreement, or
change the amount of such installments. Borrower agrees to execute such further
evidence of assignment of any awards or proceeds as Lender may
require.
21. TRANSFERS
OF
THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER [RIGHT TO UNLIMITED TRANSFERS
--
WITH LENDER APPROVAL].
(a) The
occurrence of any of the following events shall constitute an Event of Default
under this Instrument:
|
|
(1)
|
a
Transfer of all or any part of the Mortgaged Property or any interest
in
the Mortgaged Property;
|
|
|
(2)
|
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
51% of all limited partnership interests in
Borrower;
|
PAGE
26
|
|
(3)
|
if
Borrower is a general partnership or a joint venture, a Transfer
of any
general partnership or joint venture interest in
Borrower;
|
|
|
(4)
|
if
Borrower is a limited liability company, a Transfer of (A) any
membership interest in Borrower which would cause the Initial Owners
to
own less than 51% of all the membership interests in Borrower, or
(B) any membership or other interest of a manager in
Borrower;
|
|
|
(5)
|
if
Borrower is a corporation, (A) the Transfer of any voting stock in
Borrower which would cause the Initial Owners to own less than 51%
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% or more of that
stock;
|
|
|
(6)
|
if
Borrower is a trust, (A) a Transfer of any beneficial interest in
Borrower which would cause the Initial Owners to own less than 51%
of all
the beneficial interests in Borrower, or (B) the termination or
revocation of the trust, or (C) the removal, appointment or
substitution of a trustee of Borrower;
and
|
|
|
(7)
|
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(a)(1) through (6)
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.
(b) The
occurrence of any of the following events shall not constitute an Event of
Default under this Instrument, notwithstanding any provision of Section 21(a)
to
the contrary:
|
|
(1)
|
a
Transfer to which Lender has
consented;
|
|
|
(2)
|
a
Transfer that occurs by devise, descent, or by operation of law upon
the
death of a natural person;
|
|
|
(3)
|
the
grant of a leasehold interest in an individual dwelling unit for
a term of
two years or less not containing an option to
purchase;
|
PAGE
27
|
|
(4)
|
a
Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and
quality, which are free of liens, encumbrances and security interests
other than those created by the Loan Documents or consented to by
Lender;
|
|
|
(5)
|
the
grant of an easement, if before the grant Lender determines that
the
easement will not materially affect the operation or value of the
Mortgaged Property or Lender’s interest in the Mortgaged Property, and
Borrower pays to Lender, upon demand, all costs and expenses incurred
by
Lender in connection with reviewing Borrower’s request;
and
|
|
|
(6)
|
the
creation of a mechanic’s, materialman’s, or judgment lien against the
Mortgaged Property which is released of record or otherwise remedied
to
Lender’s satisfaction within 30 days of the date of
creation.
|
(c) Lender
shall consent, without any adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest or to any other economic terms of
the
Indebtedness, to a Transfer that would otherwise violate this Section 21 if,
prior to the Transfer, Borrower has satisfied each of the following
requirements:
|
|
(1)
|
the
submission to Lender of all information required by Lender to make
the
determination required by this Section
21(c);
|
|
|
(2)
|
the
absence of any Event of Default;
|
|
|
(3)
|
the
transferee meets all of the eligibility, credit, management and other
standards (including but not limited to any standards with respect
to
previous relationships between Lender and the transferee and the
organization of the transferee) customarily applied by Lender at
the time
of the proposed Transfer to the approval of borrowers in connection
with
the origination or purchase of similar mortgages on multifamily
properties;
|
|
|
(4)
|
the
Mortgaged Property, at the time of the proposed Transfer, meets all
standards as to its physical condition that are customarily applied
by
Lender at the time of the proposed Transfer to the approval of properties
in connection with the origination or purchase of similar mortgages
on
multifamily properties;
|
|
|
(5)
|
in
the case of a Transfer of all or any part of the Mortgaged Property,
(A) the execution by the transferee of an assumption agreement that
is acceptable to Lender and that, among other things, requires the
transferee to perform all obligations of Borrower set forth in the
Note,
this
|
PAGE
28
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 by Lender, and (B) if a guaranty has been executed and
delivered in connection with the Note, this Instrument or any of the other
Loan
Documents, 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;
|
|
(6)
|
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
|
|
|
(7)
|
Lender’s
receipt of all of the following:
|
|
|
(A)
|
a
review fee in the amount of $2,000;
|
|
|
(B)
|
a
transfer fee in an amount equal to one percent (1%) 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) 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 (A) the application for or creation of the Indebtedness,
(B) any financial statement, rent roll, or other report or information
provided to Lender during the term of the Indebtedness, or (C) any request
for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;
PAGE
29
(e) any
Event of Default under Section 21;
(f) the
commencement of a forfeiture action or proceeding, whether civil or criminal,
which, in Lender’s reasonable judgment, could result in a forfeiture of the
Mortgaged Property or otherwise materially impair the lien created by this
Instrument or Lender’s interest in the Mortgaged Property;
(g) any
failure by Borrower to perform any of its obligations under this Instrument
(other than those specified in Sections 22(a) through (f)), as and when
required, which continues for a period of 30 days after notice of such failure
by Lender to Borrower. However, no such notice or grace period shall apply
in
the case of any such failure which could, in Lender’s judgment, absent immediate
exercise by Lender of a right or remedy under this Instrument, result in harm
to
Lender, impairment of the Note or this Instrument or any other security given
under any other Loan Document;
(h) any
failure by Borrower to perform any of its obligations as and when required
under
any Loan Document other than this Instrument which continues beyond the
applicable cure period, if any, specified in that Loan Document;
(i) any
exercise by the holder of any 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;
and
(j) 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
60 days after filing.
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:
PAGE
30
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 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
PAGE
31
applicable
law. Lender shall have the right to determine the order in which any or all
portions of the Indebtedness are satisfied from the proceeds realized upon
the
exercise of such remedies. Borrower and any party who now or in the future
acquires a security interest in the Mortgaged Property and who has actual or
constructive notice of this Instrument waives any and all right to require
the
marshalling of assets or to require that any of the Mortgaged Property be sold
in the inverse order of alienation or that any of the Mortgaged Property be
sold
in parcels or as an entirety in connection with the exercise of any of the
remedies permitted by applicable law or provided in this
Instrument.
28. FURTHER
ASSURANCES. Borrower shall execute,
acknowledge, and deliver, at its sole cost and expense, all further acts, deeds,
conveyances, assignments, estoppel certificates, financing statements, transfers
and assurances as Lender may require from time to lime 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 shall be litigated exclusively in the
Property Jurisdiction. The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction
over
all controversies which shall arise under or in relation to the Note, any
security for the Indebtedness, or any other Loan Document. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts for any such
litigation and waives any other venue to which it might be entitled by virtue
of
domicile, habitual residence or otherwise.
PAGE
32
31. NOTICE.
(a) All
notices, demands and other communications (“notice”) under or concerning this
Instrument shall be in writing. Each notice shall be addressed to the intended
recipient at its address set forth in this Instrument, and shall be deemed
given
on the earliest to occur of (1) the date when the notice is received by the
addressee; (2) the first Business Day after the notice is delivered to a
recognized overnight courier service, with arrangements made for payment of
charges for next Business Day delivery; or (3) the third Business Day after
the notice is deposited in the United States mail with postage prepaid,
certified mail, return receipt requested. As used in this Section 31, the term
“Business Day” means any day other than a Saturday, a Sunday or any other day on
which Lender is not open for business.
(b) Any
party to this Instrument may change the address to which notices intended for
it
are to be directed by means of notice given to the other party in accordance
with this Section 31. Each party agrees that it will not refuse or reject
delivery of any notice given in accordance with this Section 31, that it will
acknowledge, in writing, the receipt of any notice upon request by the other
party and that any notice rejected or refused by it shall be deemed for purposes
of this Section 31 to have been received by the rejecting party on the date
so
refused or rejected, as conclusively established by the records of the U.S.
Postal Service or the courier service.
(c) Any
notice under the Note and any other Loan Document which does not specify how
notices are to be given shall be given in accordance with this Section
31.
32. SALE
OF NOTE; CHANGE IN SERVICER. The Note or a
partial interest in the Note (together with this Instrument and the other Loan
Documents) may be sold one or more times without prior notice to Borrower.
A
sale may result in a change of the Loan Servicer. There also may be one or
more
changes of the Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given notice of the
change.
33. SINGLE
ASSET BORROWER. Until the Indebtedness is paid
in full, Borrower (a) shall not acquire any real or personal property other
than the Mortgaged Property and personal 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.
PAGE
33
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. RELATIONSIIIP
OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Instrument shall create
any
other relationship between Lender and Borrower.
(b) No
creditor of any party to this Instrument and no other person shall be a third
party beneficiary of this Instrument or any other Loan Document. Without
limiting the generality of the preceding sentence, (1) any arrangement (a
“Servicing Arrangement”) between the Lender and any Loan Servicer for loss
sharing or interim advancement of funds shall constitute a contractual
obligation of such Loan Servicer that is independent of the obligation of
Borrower for the payment of the Indebtedness, (2) Borrower shall not be a
third party beneficiary of any Servicing Arrangement, and (3) no payment by
the Loan Servicer under any Servicing Arrangement will reduce the amount of
the
Indebtedness.
37. SEVERABILITY;
AMENDMENTS. The invalidity or
unenforceability of any provision of this Instrument shall not affect the
validity or enforceability of any other provision, and all other provisions
shall remain in full force and effect. This Instrument contains the entire
agreement among the parties as to the rights granted and the obligations assumed
in this Instrument. This Instrument may not be amended or modified except by
a
writing signed by the party against whom enforcement is sought; provided,
however, that in the event of a Transfer, 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/transferee.
38. CONSTRUCTION.
The captions and headings of the sections of this Instrument are for convenience
only and shall be disregarded in construing this Instrument. My reference in
this Instrument to an “Exhibit” or a “Section” shall, unless otherwise
explicitly provided, be construed as referring, respectively, to an Exhibit
attached to this Instrument or to a Section of this Instrument. All Exhibits
attached to or referred to in this Instrument are incorporated by reference
into
this Instrument. Any reference in this Instrument to a statute or regulation
shall be construed as referring to that statute or regulation as amended from
time to time. Use of the singular in this Agreement includes the plural and
use
of the plural includes the singular. As used in this Instrument, the term
“including” means “including, but not limited to.”
39. LOAN
SERVICING. All actions regarding the
servicing of the loan evidenced by the Note, including the collection of
payments, the giving and receipt of notice, inspections of the Property,
inspections of books and records, and the granting of consents and approvals,
may be taken by the Loan Servicer unless Borrower receives notice to the
contrary. If Borrower
PAGE
34
receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
40. DISCLOSURE
OF INFORMATION. Lender may furnish
information regarding Borrower or the Mortgaged Property to third parties with
an existing or prospective interest in the servicing, enforcement, evaluation,
performance, purchase or securitization of the Indebtedness, including 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.
41. NO
CHANGE IN
FACTS OR CIRCUMSTANCES. All information
in the application for the loan submitted to Lender (the “Loan
Application”) and in all financial statements, rent
rolls, reports, certificates and other documents submitted in connection with
the Loan Application are complete and accurate in all material respects. There
has been no material adverse change in any fact or circumstance that would
make
any such information incomplete or inaccurate.
42. SUBROGATION.
If, and to the extent that, the proceeds of the loan evidenced by the Note
are
used to pay, satisfy or discharge any obligation of Borrower for the payment
of
money that is secured by a pre-existing mortgage, deed of trust or other lien
encumbering the Mortgaged Property (a “Prior Lien”), such loan
proceeds shall be deemed to have been advanced by Lender at Borrower’s request,
and Lender shall automatically, and without further action on its part, be
subrogated to the rights, including lien priority, of the owner or holder of
the
obligation secured by the Prior Lien, whether or not the Prior Lien is
released.
43. ACCELERATION;
REMEDIES. At any time during the
existence of an Event of Default, Lender, at Lender’s option, may declare the
Indebtedness to be immediately due and payable without further demand, and
may
request Trustee to exercise the power of sale and Lender may exercise any other
remedies permitted by applicable law or provided in this Instrument or in any
other Loan Document. Borrower acknowledges that the power of sale granted in
this Instrument may be exercised by Trustee without prior judicial hearing.
Borrower has the right to bring an action to assert the non-existence of an
Event of Default or any other defense of Borrower to acceleration and sale.
Lender shall be entitled to collect all costs and expenses incurred in pursuing
such remedies, including attorneys’ fees, costs of documentary evidence,
abstracts and title reports.
If
Lender
invokes the power of sale, Lender or Trustee shall mail copies of the notice
of
sale to Borrower and to other persons prescribed by applicable law in the manner
provided by applicable law. Trustee may sell the Mortgaged Property at the
time
and place and under the terms designated in the notice of sale in one or more
parcels and in such order as Trustee may determine. Trustee may postpone sale
of
all or any parcel of the Mortgaged Property to any later
PAGE
35
time
on
the same date by public announcement at the time and place of any previously
scheduled sale. Lender or Lender’s designee may purchase the Mortgaged Property
at any sale.
Trustee
shall deliver to the purchaser at the sale, within a reasonable time after
the
sale, a deed conveying the Mortgaged Property so sold without any covenant
or
warranty, express or implied. The recitals in Trustee’s deed shall be prima
facie evidence of the truth of the statements contained in those recitals.
Trustee shall apply the proceeds of the sale in the following order: (a) to
all costs and expenses of the sale, including Trustee’s fees in the amount
allowed by applicable law, attorneys’ fees and costs of title evidence;
(b) to the Indebtedness in such order as Lender, in Lender’s discretion,
directs; and (c) the excess, if any, to the person or persons legally
entitled to it.
Lender
shall have the right on one or more occasions to institute one or more actions
or proceedings at law or in equity to enforce the rights and remedies of Lender
under this Instrument.
Trustee
hereby lets the Mortgaged Property to Borrower until a sale is held under the
foregoing provisions or until the occurrence of an Event of Default, upon the
following terms and conditions: Borrower, and all persons claiming or possessing
the Mortgaged Property or any part thereof by, through or under Borrower, shall
pay rent therefore during said term at the rate of one cent (1¢) per month,
payable monthly upon demand, and shall surrender immediate peaceable possession
of the Mortgaged Property and any and every part thereof sold under the
foregoing power of sale to the purchaser at such sale, without notice or demand
therefore, and shall and will at once, without notice, surrender possession
of
the Mortgaged Property and every part thereof in the event Lender shall take
charge and enter the Mortgaged Property as provided in this
Instrument.
44. RELEASE.
Upon payment of the Indebtedness, Lender shall release the lien of this
Instrument. Borrower shall pay Lender’s reasonable costs incurred in releasing
this Instrument.
45. FINANCING
STATEMENT. As provided in Section 2, this
Instrument constitutes a financing statement with respect to any part of the
Mortgaged Property which is or may become a Fixture and for the purposes of
such
financing statement: (a) the Debtor shall be Borrower and the Secured Party
shall be Lender; (b) the addresses of Borrower as Debtor and of Lender as
Secured Party are as specified above in the first paragraph of this Instrument;
(c) the name of the record owner is Borrower; (d) the types or items
of collateral consist of any part of the Mortgaged Property which is or may
become a Fixture; and (e) the social security number or the federal
employer identification number of Borrower as Debtor is 00-0000000.
46. APPOINTMENT
OF RECEIVER. Section 3(b) and Section
4(d) are amended by (i) deleting the following phrase, each time it
appears: “Lender entering upon and taking and
PAGE
36
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. FURTHER
ASSURANCES FOR TRUSTEE. Borrower shall
execute, acknowledge, and deliver, at its sole cost and expense, all further
acts, deeds, conveyances, assignments, estoppel certificates, financing
statements, transfers and assurances as Trustee may require from time to time
in
order to better assure, grant, and convey to Trustee the rights intended to
be
granted, now or in the future, to Trustee under this Instrument.
48. SUCCESSOR
TRUSTEE. Lender, at Lender’s option, with
or without cause, may from time to time remove Trustee and appoint a successor
trustee by an instrument recorded in the city or county in which this Instrument
is recorded. Without conveyance of the Mortgaged Property, the successor trustee
shall succeed to all the title, power and duties conferred upon the Trustee
in
this Instrument and by applicable law. For purposes of this Instrument, the
term
“Trustee” means the person identified as Trustee in the first paragraph of this
Instrument and any successor trustee appointed by Lender pursuant to this
Section or otherwise appointed as permitted by law.
49. WAIVER
OF TRIAL BY
JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT
IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.
ATTACHED
EXHIBITS. The following Exhibits are attached to this
Instrument:
x Exhibit
A Description
of the Land (required).
x Exhibit
B Modifications
to Instrument
PAGE
37
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.
REGENCY
NORTH ASSOCIATES, LP., a
Missouri
limited partnership
|
|
By:
|
KELCOR,
INC., a Missouri
corporation
|
|
|
Its:
|
General
Partner
|
By:
/s/
Xxxxx X.
Xxxxxxx
Xxxxx X. Xxxxxxx, Vice President
STATE
OF
MISSOURI )
)
ss.
COUNTY
OF Clay )
On
this
20th day
of December, 2000, before me, a Notary Public in and for said County and State,
personally appeared Xxxxx X. Xxxxxxx, to me personally known, who being by
me
duly sworn (or affirmed), did say that he is the Vice President of KelCor,
Inc.,
a Missouri corporation, the General Partner of Regency North Associates, L.P.,
a
Missouri limited partnership, and that said instrument was signed on behalf
of
said corporation by authority of its board of directors as general partner
of
said limited partnership, and said person acknowledged said instrument to be
the
free act and deed of said corporation on behalf of said limited
partnership.
IN
WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the day and
year last above written.
/s/
Xxxxx X. Xxxxx
Notary
Public
My
Commission Expires:
Aug.
24, 2002
|
(seal)
|
|
|
XXXXX
X. XXXXX
|
|
|
Notary
Public – Notary Seal
|
|
|
STATE
OF MISSOURI
|
|
|
Clay
County
|
|
|
My
Commission Expires Aug. 24. 2002
|
PAGE
38
EXHIBIT
A
[DESCRIPTION
OF THE LAND]
Tracts
I
and II, REGENCY NORTH, a subdivision in Kansas City, Clay County,
Missouri.
PAGE
A-1
EXHIBIT
B
MODIFICATIONS
TO INSTRUMENT
The
following modifications are made to the text of the Instrument that precedes
this Exhibit:
|
1.
|
Borrower
covenants and agrees that as long as the Indebtedness is outstanding,
(i) Xxxxx X. Xxxxxxx must own at least fifty-one percent (51%)
of MJS Associates, Inc., and (ii) MJS Associates, Inc. shall have a
minimum net worth of One Million Five Hundred Thousand and No/100
Dollars
($1,500,000.00) (the “Guarantor Requirements”). Failure to maintain the
Guarantor Requirements shall be an additional Event of Default under
this
Instrument.
|
|
2.
|
The
second sentence in paragraph 4(f) shall be modified to read as
follows:
|
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, which consent shall
not
be unreasonably withheld or delayed.
|
3.
|
Section
7 is modified to add the following
subsection:
|
|
|
(f)
|
Notwithstanding
the provisions of Subsection 7(a), Lender will not require Borrower
to
deposit with Lender amounts sufficient to accumulate with Lender
the
entire sum required to pay the
|
¨ fire,
hazard or other insurance premiums,
¨ Taxes,
x water
and sewer charges,
x ground
rents,
x assessments
or other charges
Borrower
must provide Lender with proof of payment of all such Impositions for which
Lender is not collecting Imposition Deposits on or before the date such
Impositions are due or on the date this Instrument requires such Impositions
to
be paid. In the event that Borrower does not timely pay any of the Impositions,
or fails to provide Lender with proof of such payment, or at any other time
in
Lender’s discretion, Lender may require Borrower to deposit with Lender the
Imposition Deposits as provided in Subsection 7(a).
|
4.
|
Section
21(b) is supplemented and modified by adding the following
provision:
|
PAGE
B-1
|
|
(7)
|
A
Transfer of the Mortgaged Property to a single asset entity (The
“Preapproved Entity”) under the following
conditions:
|
|
|
(A)
|
Borrower
shall provide Lender with 45 days advance written notice of the proposed
transfer.
|
|
|
(B)
|
The
Preapproved Entity shall be a limited liability company whose managing
member must be Maxus Realty Trust, Inc. (“Maxus”) and whose sole member
shall be Maxus or an entity to which Maxus has contributed or otherwise
transferred all or substantially all (which shall be not less than
95%) of
its assets and of which Maxus owns directly or indirectly, a controlling
interest (the “Maxus Controlled
Entity”).
|
|
|
(C)
|
The
management of Maxus and any Maxus Controlled Entity must be experienced
in
the ownership and management of property similar to the Mortgaged
Property, as determined by Lender.
|
|
|
(D)
|
Immediately
after the transfer, Xxxxx X. Xxxxxxx must be and remain an executive
officer and trustee of Maxus.
|
|
|
(E)
|
The
loan-to-value ratio with respect to the Mortgaged Property (calculated
as
a percentage), as determined by Lender does not exceed eighty (80%)
after
taking into consideration any principal paydown made in connection
with
Maxus or any Maxus Controlled Entity. Such loan to value ratio shall
be
determined in Lender’s sole discretion based upon Lender’s then current
underwriting standards and based upon Lender’s internal
valuations.
|
|
|
(F)
|
At
least forty-five (45) days prior to such Transfer, Borrower must
provide
Lender with all of the material provisions of such Transfer including,
without limitation, the proposed date of such Transfer, the name
and
address of Maxus or any applicable Maxus Controlled Entity, pro forma
financial statements for Maxus and any Maxus Controlled Entity, any
offering prospectus of Maxus issued within five years of the date
of the
Transfer, and the purchase price which is specified for the Mortgaged
Property.
|
|
|
(G)
|
The
sole member of the Preapproved Entity shall be Maxus or a Maxus Controlled
Entity.
|
|
|
(H)
|
Lender
has reviewed and approved the documents transferring Borrower’s interest
in the Mortgaged Property to the Preapproved
Entity.
|
PAGE
B-2
|
|
(I)
|
Lender
has reviewed and approved the documents creating and governing the
Preapproved Entity, including Maxus and any Maxus Controlled
Entity.
|
|
|
(J)
|
The
Preapproved Entity executes Lender’s standard Assumption Agreement which
requires the Preapproved Entity to perform all obligations of Borrower
set
forth in the Note, this Instrument and in any other Loan
Document.
|
|
|
(K)
|
At
the time of the Transfer, no Event of Default shall have occurred
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.
|
|
|
(L)
|
Borrower
pays to Lender upon demand by Lender, the cost of all title searches,
title insurance and recording costs, and all fees and out of pocket
costs
of Lender’s legal counsel related to the Transfer and at the time it
requests Lender’s consent, Borrower pays a review fee in the amount of
$2,000 (which fee shall not be
refundable).
|
|
|
(M)
|
Immediately
after the Transfer, Borrower provides Lender with i) a tide
endorsement to Lender’s mortgagee’s title policy insuring the lien of the
Security Instrument changing the name of the Borrower and evidencing
that
there are no intervening liens from the date of the title policy
until the
Transfer; ii) a certified copy of the recorded assumption agreement;
and iii) a certified copy of the recorded transfer
deed.
|
|
|
(N)
|
Each
Guarantor (if applicable) reaffirms in writing its respective obligations
under any Guaranty and acknowledges and confirms that the Guaranty
remains
in full force and effect and that each Guarantor guarantees the
Preapproved Entity’s obligations under the Note, this Instrument and the
other Loan Documents.
|
The
modifications set forth in this Section 21(b)(7) shall be null and void in
the
event title to the Mortgaged Property is vested in an entity other than the
Borrower at the time of execution of this Instrument.
|
5.
|
The
following subparagraph (d) shall be added to Section 21 of the Security
Instrument:
|
|
|
(d)
|
Provided
that Borrower has transferred the Property to the Preapproved Entity
pursuant to Section 21(b)(7) of this Instrument, Lender shall consent
to
the substitution (the “Substitution”) of the Mortgaged Property for
another multifamily apartment rental property (the “Substituted Property”)
owned by the Preapproved Entity, which shall not result in an adjustment
to the rate at which the
Indebtedness
|
PAGE
B-3
secured
by this Instrument bears interest provided that the Preapproved Entity has
satisfied each of the following requirements:
|
|
(1)
|
not
less than sixty (60) days prior to the requested Substitution, the
Preapproved Entity shall deliver to Lender written notice of the
requested
Substitution, which shall include a detailed description of the
Substituted Property and the non-refundable review fee in the amount
set
forth in subsection 21(d)(10)
below;
|
|
|
(2)
|
there
shall not be more than one Substitution in any 12-month period, and
not
more than 2 Substitutions during the term of the loan evidenced by
the
Note;
|
|
|
(3)
|
there
shall exist no Event of Default uncured within any applicable grace
period;
|
|
|
(4)
|
the
loan to value ratio with respect to the Substituted Property at the
time
of the proposed Substitution is not greater than the lesser of (i)
the
loan to value ratio of the Mortgaged Property which exists as of
the date
hereof, or (ii) the then current loan to value ratio of the Mortgaged
Property at the time of any such Substitution based on an MAI appraisal
(prepared by an appraiser acceptable to Lender and paid for by the
Preapproved Entity) at the time of any such Substitution. (As used
herein,
“loan to value ratio” means the ratio of (A) the outstanding
principal balance of the Indebtedness, and , if applicable, any other
indebtedness secured by a lien on the Mortgaged Property to (B) the
value of the Substituted Property or the Mortgaged Property, as
applicable, as determined by Lender in its sole discretion, expressed
as a
percentage);
|
|
|
(5)
|
the
debt service coverage ratio with respect to the Substituted Property
for
the last twelve full months preceding the proposed Substitution is
not
less than the greater of (i) the debt service coverage ratio for the
Mortgaged Property which exists as of the date hereof, or (ii) the
then current debt service coverage ratio for the Mortgaged Property
at the
time of any such Substitution. (As used herein, the term “debt service
coverage ratio” means the ratio of (A) the annual net operating
income from the Substituted Property’s or the Mortgaged Property’s
operations, as applicable, during the preceding twelve month period
which
is available for repayment of debt, after deducting reasonable and
customary operating expenses, to (B) the annual principal and
interest payable under the Note and with respect to any indebtedness
secured by a lien on the Mortgaged Property, as determined by Lender
in
its sole discretion);
|
PAGE
B-4
|
|
(6)
|
the
appraised value of the Substituted Property shall be equal to or
greater
than the greater of (i) the appraised value of the Mortgaged Property
which exists as of the date of the closing of the loan evidenced
by the
Note, or (ii) the appraised value of the Mortgaged Property at the
time of the Substitution based on the MAI appraisal described in
Subsection 21(d)(4) above, as determined by Lender in its sole
discretion;
|
|
|
(7)
|
no
Substitution shall be permitted prior to the date which is one year
from
the date of this Instrument nor after the date which is one year
prior to
the stated maturity of the Indebtedness as set forth in the
Note;
|
|
|
(8)
|
Lender
shall have received an environmental report on the Substituted Property
which is acceptable to Lender, in Lender’s sole discretion, and shows that
no Phase II environmental report is
required;
|
|
|
(9)
|
Lender
shall have received an engineering report on the Substituted Property
which is acceptable to Lender, in Lender’s sole
discretion;
|
|
|
(10)
|
Lender
shall have received a review fee equal to the greater of $10,000
or ten
(10) basis points multiplied by the unpaid principal balance of the
Note,
and the Preapproved Entity shall pay to Lender the amount of Lender’s
out-of-pocket costs (including, without limitation, reasonable attorneys’
fees and the costs of engineering reports, appraisals and environmental
reports) incurred in reviewing the Substitution request and implementing
the Substitution;
|
|
|
(11)
|
Lender
shall have received a application fee equal to ten (10) basis points
multiplied by the unpaid principal balance of the
Note,
|
|
|
(12)
|
Lender
shall have received a new currently dated mortgagee’s title insurance
policy in the form and containing the exceptions acceptable to Lender
according to its standards for title insurance policies in place
at the
time of the Substitution, insuring the first lien mortgage secured
by the
Substituted Property;
|
|
|
(13)
|
Lender
shall have received a currently dated survey of the Substituted Property,
acceptable to Lender in accordance with its standards and requirements
for
surveys in place at the time of the
substitution;
|
|
|
(14)
|
the
physical condition, location, market condition, and other aspects
of the
Substituted Property, shall be substantially comparable to the Mortgaged
Property as determined by Lender in its sole and absolute discretion
[in
addition to local market factors and conditions, market condition
shall
also
|
PAGE
B-5
include,
but not be limited to, Lender’s portfolio concentrations in such
market];
|
|
(15)
|
if
the Substitution is approved, (i) the Preapproved entity shall have
executed and delivered to Lender for recordation an amendment to
this
Instrument in form and substance acceptable to Lender in its discretion,
or an entirely new Instrument in form and substance acceptable to
Lender,
substituting the Substituted Property for the Mortgaged Property;
and
(ii) the Preapproved Entity shall have executed and delivered such
additional documentation, including without limitation new Uniform
Commercial Code Financing Statements, as Lender may reasonably require
to
grant Lender a perfected first lien and security interest in the
Substituted Property and to otherwise implement the Substitution
in
accordance with this Section;
|
|
|
(16)
|
upon
completion of the Substitution, at the expense of the Preapproved
Entity,
the Mortgaged Property will be released from the lien of this -
Instrument; provided that any document effecting such release or
satisfaction must expressly provide that the Indebtedness has not
been
paid in full and that the recording of the release or satisfaction
is not
intended to create any presumption to the
contrary;
|
|
|
(17)
|
The
modifications set forth in this Section 21(d) shall be null and void
in
the event title to the Mortgaged Property is vested in any other
party
other than the Preapproved Entity.
|
PAGE
B-6
