Form 8-K - CURRENT REPORT
(As last amended in Rel. No. 34-36968, eff. August 13, 1992.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 15, 2000
SHELTER PROPERTIES VI
(Exact name of registrant as specified in its charter)
California 0-13261 57-0755618
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification
Number)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (864) 239-1000
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
On December 15, 2000, the Partnership refinanced the mortgage note payable
with Reilly Mortgage Group, Inc. on Village Gardens Apartments. The new
mortgage was for $4,518,000 at a rate of 7.22%.
The Registrant is currently evaluating its cash needs to determine what portion
of funds can be distributed to its partners in the near future.
Item 7. Financial Statements and Exhibits
(c) Exhibits
10 (iii) (g) Multifamily Note dated December 15, 2000 between Shelter
Properties VI and Reilly Mortgage Group, Inc., a District
of Columbia corporation, securing Village Gardens
Apartments.
10 (iii) (h) Multifamily Deed of Trust, Assignment of Rents, and
Security Agreement dated December 15, 2000 between Shelter
Properties VI and Reilly Mortgage Group, Inc., a District
of Columbia corporation, securing Village Gardens
Apartments.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SHELTER PROPERTIES VI
By: Shelter Realty VI Corporation
Corporate General Partner
By: /s/ Patrick J. Foye
Patrick J. Foye
Executive Vice President
Date: January 31, 2001
EXHIBIT 10 (III) (G)
FHLMC Loan No. 002648555
(Village Gardens Apartments)
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $4,518,000.00 As of December 15, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of REILLY MORTGAGE GROUP, INC., a
District of Columbia corporation, the principal sum of Four Million Five Hundred
Eighteen Thousand and 00/100 Dollars (US $4,518,000.00), with interest on the
unpaid principal balance at the annual rate of Seven and Two Hundred Twenty
Thousandths percent (7.220%).
Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, and any other amounts due at any time under, this Note, the
Security Instrument or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances to protect the security of the
Security Instrument under Section 12 of the Security Instrument. "Event of
Default" and other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument.
Address for Payment. All payments due under this Note shall be payable at
2000 Corporate Ridge, Suite 925, McLean, Virginia 22102, or such other place as
may be designated by written notice to Borrower from or on behalf of Lender.
Payment of Principal and Interest. Principal and interest shall be paid
as follows: (a) Unless disbursement of principal is made by Lender to Borrower
on the first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Thirty Five Thousand Six Hundred Twenty Seven and 11/100 Dollars (US
$35,627.11), shall be payable on the first day of each month beginning on
February 1, 2001, until the entire unpaid principal balance evidenced by this
Note is fully paid.
(c) Any accrued interest remaining past due for 30 days or more may, at Lender's
discretion, be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on January 1, 2021 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(d) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
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, 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. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
Default Rate. So long as (a) any monthly installment under this Note
remains past due for thirty (30) days or more, or (b) any other Event of Default
has occurred and is continuing, interest under this Note shall accrue on the
unpaid principal balance from the earlier of the due date of the first unpaid
monthly installment or the occurrence of such other Event of Default, as
applicable, at a rate (the "Default Rate") equal to the lesser of four (4)
percentage points above the rate stated in the first paragraph of this Note and
the maximum interest rate which may be collected from Borrower under applicable
law. If the unpaid principal balance and all accrued interest are not paid in
full on the Maturity Date, the unpaid principal balance and all accrued interest
shall bear interest from the Maturity Date at the Default Rate. Borrower also
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan, that, during the time
that any monthly installment under this Note is delinquent for more than thirty
(30) days, Lender will incur additional costs and expenses arising from its loss
of the use of the money due and from the adverse impact on Lender's ability to
meet its other obligations and to take advantage of other investment
opportunities, and that it is extremely difficult and impractical to determine
those additional costs and expenses. Borrower also acknowledges that, during the
time that any monthly installment under this Note is delinquent for more than
thirty (30) days or any other Event of Default has occurred and is continuing,
Lender's risk of nonpayment of this Note will be materially increased and Lender
is entitled to be compensated for such increased risk. Borrower agrees that the
increase in the rate of interest payable under this Note to the Default Rate
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional costs and expenses Lender
will incur by reason of the Borrower's delinquent payment and the additional
compensation Lender is entitled to receive for the increased risks of nonpayment
associated with a delinquent loan.
Limits on Personal Liability.
(e) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(f) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(g) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(h) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(i) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(j) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(k) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
Voluntary and Involuntary Prepayments.
(l) A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on a Business Day designated as the date for such prepayment in a written
notice from Borrower to Lender given at least 30 days prior to the date of such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Paragraph 10(c). For all purposes including the accrual of interest, any
prepayment received by Lender on any day other than the last calendar day of the
month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
(m) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(n) Any prepayment premium payable under this Note shall be computed as follows:
(1) If the prepayment is made between the date of this Note and the
date that is 180 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the prepayment
premium shall be whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid, by (B) the excess
(if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
(o) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(p) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(q) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including fees and out-of-pocket
expenses of attorneys (including Lender's in-house attorneys) and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment 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 or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
Loan Charges. Neither this Note nor any of the other Loan Documents shall
be construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or 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 unpaid principal balance of this Note. 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 that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably 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.
Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household or agricultural
purposes.
Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modification to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (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 this Note. 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.
WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT
A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER 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 EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
BORROWER:
SHELTER PROPERTIES VI LIMITED
PARTNERSHIP, a South Carolina limited
partnership
By: Shelter Realty VI Corporation, a
South Carolina corporation, its
General Partner
By:_________________________________
Patti K. Fielding
Senior Vice President
57-0755618
Borrower's Social Security/Employer ID
Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS _____ DAY OF DECEMBER, 2000.
REILLY MORTGAGE GROUP, INC., a
District of Columbia corporation
By:_________________________________
Brenda R. Dutrow
Assistant Vice President
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph
(4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A shall
be null and void unless title to the Mortgaged Property is vested in
an entity whose Controlling Interest(s) are directly or indirectly
held by AIMCO REIT or AIMCO OP. The capitalized terms used in this
paragraph are defined in the Security Instrument.
EXHIBIT 10 (III) (H)
Prepared by, and after recording return to:
Bernice H. Cilley, Esquire
Mays & Valentine, L.L.P.
P.O. Box 1122
Richmond, Virginia 23218-1122
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(COLORADO - REVISION DATE 11-01-2000)
FHLMC Loan No.002648555
(Village Gardens Apartments)
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
(COLORADO - REVISION DATE 11-01-2000)
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the
"Instrument") is made as of this 15th day of December, 2000 by SHELTER
PROPERTIES VI LIMITED PARTNERSHIP, a limited partnership organized and existing
under the laws of South Carolina whose address is c/o AIMCO, 2000 S. Colorado
Blvd, Tower Two, Suite 2-1000, Denver, Colorado 80222 as trustor ("Borrower"),
to the Public Trustee of Larimer County, as trustee ("Trustee"), for the benefit
of REILLY MORTGAGE GROUP, INC., a corporation organized and existing under the
laws of the District of Columbia, whose address is 2000 Corporate Ridge, Suite
925, McLean, Virginia 22102, as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the Land located in the
County of Larimer, State of Colorado 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, 2021, in the principal amount of
$4,518,000.00 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 grant, convey and
assign the Mortgaged Property, and that the Mortgaged Property is unencumbered.
Borrower covenants that Borrower will warrant and defend generally the title to
the Mortgaged Property against all claims and demands, subject to any easements
and restrictions listed in a schedule of exceptions to coverage in any title
insurance policy issued to Lender contemporaneously with the execution and
recordation of this Instrument and insuring Lender's interest in the Mortgaged
Property.
Covenants. Borrower and Lender covenant and agree as follows:
DEFINITIONS. The following terms, when used in this Instrument (including
when used in the above recitals), shall have the following meanings:
(r) "Borrower" means all persons or entities identified as "Borrower" in
the first paragraph of this Instrument, together with their
successors and assigns.
(s) "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.
(t) "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).
(u) "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.
(v) "Event of Default" means the occurrence of any event listed in
Section 22.
(w) "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.
(x) "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.
(y) "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.
(z) "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.
(aa) "Impositions" and "Imposition Deposits" are defined in Section 7(a).
(bb) "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.
(cc) "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.
(dd) "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.
(ee) "Land" means the land described in Exhibit A.
(ff) "Leases" means all present and future leases, subleases, licenses,
concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the
Mortgaged Property, or any portion of the Mortgaged Property
(including proprietary leases or occupancy agreements if Borrower is
a cooperative housing corporation), and all modifications,
extensions or renewals.
(gg) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument, or any subsequent holder of the Note.
(hh) "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.
(ii) "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.
(jj) "Mortgaged Property" means all of Borrower's present and future
right, title and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights, development
rights, zoning rights and other similar rights or
interests, easements, tenements, rights-of-way, strips and
gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or
benefiting the Land or the Improvements, or both, and all
rights-of-way, streets, alleys and roads which may have
been or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the Land,
the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, whether or not Borrower
obtained the insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property, including any awards
or settlements resulting from condemnation proceedings or
the total or partial taking of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the
Mortgaged Property under the power of eminent domain or
otherwise and including any conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by
Borrower now or in the future, including cash or securities
deposited to secure performance by parties of their
obligations;
(9) all proceeds from the conversion, voluntary or involuntary, of
any of the above into cash or liquidated claims, and the right
to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of
the Mortgaged 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.
(kk) "Note" means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda,
as such Multifamily Note may be amended from time to time.
(ll) "O&M Program" is defined in Section 18(a).
(mm) "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.
(nn) "Property Jurisdiction" is defined in Section 30(a).
(oo) "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.
(pp) "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.
(qq) "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.
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.
ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. (rr) 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.
(ss) After the occurrence of an Event of Default, Borrower authorizes
Lender to collect, sue for and compromise Rents and directs each
tenant of the Mortgaged Property to pay all Rents to, or as directed
by, Lender. However, until the occurrence of an Event of Default,
Lender hereby grants to Borrower a revocable license to collect and
receive all Rents, to hold all Rents in trust for the benefit of
Lender and to apply all Rents to pay the installments of interest
and principal then due and payable under the Note and the other
amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and
expenses of managing, operating and maintaining the Mortgaged
Property, including utilities, Taxes and insurance premiums (to the
extent not included in Imposition Deposits), tenant improvements and
other capital expenditures. So long as no Event of Default has
occurred and is continuing, the Rents remaining after application
pursuant to the preceding sentence may be retained by Borrower free
and clear of, and released from, Lender's rights with respect to
Rents under this Instrument. From and after the occurrence of an
Event of Default, and without the necessity of Lender entering upon
and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower's license to collect Rents
shall automatically terminate and Lender shall without notice be
entitled to all Rents as they become due and payable, including
Rents then due and unpaid. Borrower shall pay to Lender upon demand
all Rents to which Lender is entitled. At any time on or after the
date of Lender's demand for Rents, Lender may give, and Borrower
hereby irrevocably authorizes Lender to give, notice to all tenants
of the Mortgaged Property instructing them to pay all Rents to
Lender, no tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant
shall be obligated to pay to Borrower any amounts which are actually
paid to Lender in response to such a notice. Any such notice by
Lender shall be delivered to each tenant personally, by mail or by
delivering such demand to each rental unit. Borrower shall not
interfere with and shall cooperate with Lender's collection of such
Rents.
(tt) 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.
(uu) If an Event of Default has occurred and is continuing, Lender may,
regardless of the adequacy of Lender's security or the solvency of
Borrower and even in the absence of waste, enter upon and take and
maintain full control of the Mortgaged Property in order to perform
all acts that Lender in its discretion determines to be necessary or
desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of
Leases, the collection of all Rents, the making of repairs to the
Mortgaged Property and the execution or termination of contracts
providing for the management, operation or maintenance of the
Mortgaged Property, for the purposes of enforcing the assignment of
Rents pursuant to Section 3(a), protecting the Mortgaged Property or
the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is
continuing, regardless of the adequacy of Lender's security, without
regard to Borrower's solvency and without the necessity of giving
prior notice (oral or written) to Borrower, Lender may apply to any
court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in
the preceding sentence. If Lender elects to seek the appointment of
a receiver for the Mortgaged Property at any time after an Event of
Default has occurred and is continuing, Borrower, by its execution
of this Instrument, expressly consents to the appointment of such
receiver, including the appointment of a receiver ex parte if
permitted by applicable law. Lender or the receiver, as the case may
be, shall be entitled to receive a reasonable fee for managing the
Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender's entering upon and taking possession
and control of the Mortgaged Property, Borrower shall surrender
possession of the Mortgaged Property to Lender or the receiver, as
the case may be, and shall deliver to Lender or the receiver, as the
case may be, all documents, records (including records on electronic
or magnetic media), accounts, surveys, plans, and specifications
relating to the Mortgaged Property and all security deposits and
prepaid Rents. In the event Lender takes possession and control of
the Mortgaged Property, Lender may exclude Borrower and its
representatives from the Mortgaged Property. Borrower acknowledges
and agrees that the exercise by Lender of any of the rights
conferred under this Section 3 shall not be construed to make Lender
a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and
Improvements.
(vv) 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.
(ww) 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.
(xx) 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.
ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(yy) As part of the consideration for the Indebtedness, Borrower absolutely
and unconditionally assigns and transfers to Lender all of
Borrower's right, title and interest in, to and under the Leases,
including Borrower's right, power and authority to modify the terms
of any such Lease, or extend or terminate any such Lease. It is the
intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Borrower's
right, title and interest in, to and under the Leases. Borrower and
Lender intend this assignment of the Leases to be immediately
effective and to constitute an absolute present assignment and not
an assignment for additional security only. For purposes of giving
effect to this absolute assignment of the Leases, and for no other
purpose, the Leases shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s).
However, if this present, absolute and unconditional assignment of
the Leases is not enforceable by its terms under the laws of the
Property Jurisdiction, then the Leases shall be included as a part
of the Mortgaged Property and it is the intention of the Borrower
that in this circumstance this Instrument create and perfect a lien
on the Leases in favor of Lender, which lien shall be effective as
of the date of this Instrument.
(zz) 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.
(aaa) 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.
(bbb) Upon delivery of notice by Lender to Borrower of Lender's exercise
of Lender's rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of
Lender entering upon and taking and maintaining control of the
Mortgaged Property directly, by a receiver, or by any other manner
or proceeding permitted by the laws of the Property Jurisdiction,
Lender immediately shall have all rights, powers and authority
granted to Borrower under any Lease, including the right, power and
authority to modify the terms of any such Lease, or extend or
terminate any such Lease.
(ccc) 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.
(ddd) 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.
(eee) Borrower shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.
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.
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.
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(fff) 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.
(ggg) 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).
(hhh) If Lender receives a bill 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 bill, statement or estimate from the
appropriate public office or insurance company without inquiring
into the accuracy of the bill, statement or estimate or into the
validity of the Imposition.
(iii) 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.
(jjj) 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.
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. 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.
COMPLIANCE WITH LAWS. Borrower shall comply with all laws, ordinances,
regulations and requirements of any Governmental Authority and all recorded
lawful covenants and agreements relating to or affecting the Mortgaged Property,
including all laws, ordinances, regulations, requirements and covenants
pertaining to health and safety, construction of improvements on the Mortgaged
Property, fair housing, zoning and land use, and Leases. Borrower also shall
comply with all applicable laws that pertain to the maintenance and disposition
of tenant security deposits. Borrower shall at all times maintain records
sufficient to demonstrate compliance with the provisions of this Section 10.
Borrower shall take appropriate measures to prevent, and shall not engage in or
knowingly permit, any illegal activities at the Mortgaged Property that could
endanger tenants or visitors, result in damage to the Mortgaged Property, result
in forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this Instrument or Lender's interest in the Mortgaged Property.
Borrower represents and warrants to Lender that no portion of the Mortgaged
Property has been or will be purchased with the proceeds of any illegal
activity. 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.
PROTECTION OF LENDER'S SECURITY.
(kkk) 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.
(lll) Any amounts disbursed by Lender under this Section 12, or under any
other provision of this Instrument that treats such disbursement as
being made under this Section 12, shall be added to, and become part
of, the principal component of the Indebtedness, shall be
immediately due and payable and shall bear interest from the date of
disbursement until paid at the "Default Rate", as defined in the
Note.
(mmm) Nothing in this Section 12 shall require Lender to incur any expense
or take any action.
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.
BOOKS AND RECORDS; FINANCIAL REPORTING.
(nnn) 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.
(ooo) 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;
(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.
(ppp) 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.
(qqq) 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.
(rrr) 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.
(sss) Borrower authorizes Lender to obtain a credit report on Borrower at any
time.
TAXES; OPERATING EXPENSES.
(ttt) 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.
(uuu) 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.
(vvv) 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.
(www) 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.
(xxx) 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.
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. 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 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.
ENVIRONMENTAL HAZARDS.
(yyy) 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". (zzz)
Prohibited Activities and Conditions shall not include the safe and
lawful use and storage of quantities of (1) pre-packaged supplies,
cleaning materials and petroleum products customarily used in the
operation and maintenance of comparable multifamily properties, (2)
cleaning materials, personal grooming items and other items sold in
pre-packaged containers for consumer use and used by tenants and
occupants of residential dwelling units in the Mortgaged Property;
and (3) petroleum products used in the operation and maintenance of
motor vehicles from time to time located on the Mortgaged Property's
parking areas, so long as all of the foregoing are used, stored,
handled, transported and disposed of in compliance with Hazardous
Materials Laws.
(aaaa) 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.
(bbbb) 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.
(cccc) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or permitted any
Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist
or have existed;
(3) except to the extent previously disclosed by Borrower to Lender in
writing, the Mortgaged Property does not now contain any
underground storage tanks, and, to the best of Borrower's
knowledge after reasonable and diligent inquiry, the
Mortgaged Property has not contained any underground
storage tanks in the past. If there is an underground
storage tank located on the Property which has been
previously disclosed by Borrower to Lender in writing, that
tank complies with all requirements of Hazardous Materials
Laws;
(4) Borrower has complied with all Hazardous Materials Laws, including all
requirements for notification regarding releases of
Hazardous Materials. Without limiting the generality of
the foregoing, Borrower has obtained all Environmental
Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in
effect and all such Environmental Permits are in full force
and effect;
(5) no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving of
notice would constitute, noncompliance with the terms of any
Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending or,
to the best of Borrower's knowledge after reasonable and
diligent inquiry, threatened that involve the Mortgaged
Property and allege, arise out of, or relate to any Prohibited
Activity or Condition; and
(7) Borrower has not received any complaint, order, notice of violation or
other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions
or Hazardous Materials, or any other environmental, health
or safety matters affecting the Mortgaged Property or any
other property of Borrower that is adjacent to the
Mortgaged Property.
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.
(dddd) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:
(1) Borrower's discovery of any Prohibited Activity or Condition;
(2) Borrower's receipt of or knowledge of any complaint, order, notice of
violation or other communication from any Governmental
Authority or other person with regard to present or future
alleged Prohibited Activities or Conditions or any other
environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that
is adjacent to the Mortgaged Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.
(eeee) 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.
(ffff) 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.
(gggg) 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.
(hhhh) 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.
(iiii) 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.
(jjjj) 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.
(kkkk) 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:
(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.
(llll) 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.
(mmmm) In any circumstances in which the indemnity under this Section 18
applies, Lender may employ its own legal counsel and consultants
to prosecute, defend or negotiate any claim or legal or
administrative proceeding and Lender, with the prior written
consent of Borrower (which shall not be unreasonably withheld,
delayed or conditioned) may settle or compromise any action or
legal or administrative proceeding. Borrower shall reimburse
Lender upon demand for all costs and expenses incurred by Lender,
including all costs of settlements entered into in good faith,
and the fees and out of pocket expenses of such attorneys and
consultants.
(nnnn) 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.
PROPERTY AND LIABILITY INSURANCE.
(oooo) 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.
(pppp) 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.
(qqqq) 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.
(rrrr) 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.
(ssss) 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.
(tttt) 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.
(uuuu) 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.
(vvvv) If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies
and unearned insurance premiums and in and to the proceeds resulting
from any damage to the Mortgaged Property prior to such sale or
acquisition.
CONDEMNATION.
(wwww) 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.
(xxxx) 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.
TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER. [RIGHT TO
UNLIMITED TRANSFERS -- WITH LENDER APPROVAL].
(yyyy) 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;
(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. (zzzz) The
occurrence of any of the following events shall not
constitute an Event of Default under this Instrument,
notwithstanding any provision of Section 21(a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation of law upon
the death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling unit for a
term of two years or less not containing an option to
purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures that
are contemporaneously replaced by items of equal or better
function and quality, which are free of liens, encumbrances
and security interests other than those created by the Loan
Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender
determines that the easement will not materially affect the
operation or value of the Mortgaged Property or Lender's
interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses incurred by Lender
in connection with reviewing Borrower's request; and
(6) the creation of a 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.
(aaaaa) 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
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 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.
EVENTS OF DEFAULT. The occurrence of any one or more of the following shall
constitute an Event of Default under this Instrument:
(bbbbb) any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan Document;
(ccccc) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(ddddd) any failure by Borrower to comply with the provisions of
Section 33;
(eeeee) 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;
(fffff) any Event of Default under Section 21;
(ggggg) 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;
(hhhhh) 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;
(iiiii) 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;
(jjjjj) 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
(kkkkk) 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.
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.
FORBEARANCE.
(lllll) Lender may (but shall not be obligated to) agree with Borrower,
from time to time, and without giving notice to, or obtaining the
consent of, or having any effect upon the obligations of, any
guarantor or other third party obligor, to take any of the
following actions: extend the time for payment of all or any
part of the Indebtedness; reduce the payments due under this
Instrument, the Note, or any other Loan Document; release anyone
liable for the payment of any amounts under this Instrument, the
Note, or any other Loan Document; accept a renewal of the Note;
modify the terms and time of payment of the Indebtedness; join in
any extension or subordination agreement; release any Mortgaged
Property; take or release other or additional security; modify
the rate of interest or period of amortization of the Note or
change the amount of the monthly installments payable under the
Note; and otherwise modify this Instrument, the Note, or any
other Loan Document.
(mmmmm) 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.
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. 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. WAIVER OF MARSHALLING. Notwithstanding the existence
of any other security interests in the Mortgaged Property held by Lender or by
any other party, Lender shall have the right to determine the order in which any
or all of the Mortgaged Property shall be subjected to the remedies provided in
this Instrument, the Note, any other Loan Document or applicable law. Lender
shall have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of such
remedies. Borrower and any party who now or in the future acquires a security
interest in the Mortgaged Property and who has actual or constructive notice of
this Instrument waives any and all right to require the marshalling of assets or
to require that any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in parcels or as an
entirety in connection with the exercise of any of the remedies permitted by
applicable law or provided in this Instrument. FURTHER ASSURANCES. Borrower
shall execute, acknowledge, and deliver, at its sole cost and expense, all
further acts, deeds, conveyances, assignments, estoppel certificates, financing
statements, transfers and assurances as Lender may require from time to time in
order to better assure, grant, and convey to Lender the rights intended to be
granted, now or in the future, to Lender under this Instrument and the Loan
Documents.
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.
GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(nnnnn) 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").
(ooooo) 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.
NOTICE.
(ppppp) 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.
(qqqqq) 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.
(rrrrr) 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.
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. 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. 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.
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.
RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(sssss) 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.
(ttttt) 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.
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.
CONSTRUCTION. The captions and headings of the sections of this Instrument
are for convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an "Exhibit" or a "Section"
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of
this Instrument. All Exhibits attached to or referred to in this Instrument
are incorporated by reference into this Instrument. Any reference in this
Instrument to a statute or regulation shall be construed as referring to that
statute or regulation as amended from time to time. Use of the singular in
this Agreement includes the plural and use of the plural includes the
singular. As used in this Instrument, the term "including" means "including, but
not limited to." LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the Loan
Servicer unless Borrower receives notice to the contrary. If Borrower receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
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.
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. 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.
ACCELERATION; REMEDIES. At any time during the existence of an Event of Default,
Lender, at Lender's option, may declare the Indebtedness to be immediately due
and payable without further demand, and may invoke the power of sale and any
other remedies permitted by Colorado law or provided in this Instrument or in
any other Loan Document. Lender shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title reports. If Lender invokes the power
of sale, Trustee shall give notice of sale in the manner required by Colorado
law to Borrower and to all other persons who are entitled to receive such notice
under Colorado law, and shall sell the Mortgaged Property according to Colorado
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 the sale of all or any part of
the Mortgaged Property by public announcement at the time and place of any
previously scheduled sale. Lender or Lender's designee may purchase the
Mortgaged Property at any sale. Trustee shall deliver to the purchaser at the
sale Trustee's certificate describing the Mortgaged Property and the time when
the purchaser will be entitled to Trustee's deed to the Mortgaged Property. The
recitals in Trustee's deed shall be prima facie evidence of the truth of the
statements made 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 not to exceed 5% of the
gross sales price, attorneys' fees and costs of title evidence; (b) to the
Indebtedness in such order as Lender, in Lender's discretion, directs; and (c)
the excess, if any, to the person or persons legally entitled to the excess.
RELEASE. Upon payment of the Indebtedness, Lender shall request Trustee to
release this Instrument and shall deliver to Trustee the canceled Note. Trustee
shall release this Instrument without further inquiry or liability. Borrower
shall pay all costs of recordation, if any, of the release and shall pay the
statutory Trustee's fee.
WAIVER OF HOMESTEAD. Borrower waives all right of homestead exemption in the
Mortgaged Property. 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
----
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
SHELTER PROPERTIES VI LIMITED
PARTNERSHIP, a South Carolina limited
partnership
By: Shelter Realty VI Corporation, a
South Carolina corporation, its
General Partner
By:_________________________________
Patti K. Fielding
Senior Vice President
STATE OF ______________________
CITY/COUNTY OF _______________, to-wit:
The foregoing instrument was acknowledged before me in the above-stated
jurisdiction this _____ day of _______________, ______ by Patti K. Fielding who
is Senior Vice President of Shelter Realty VI Corporation, a South Carolina
corporation, general partner of Shelter Properties VI Limited Partnership, a
South Carolina limited partnership, for and on behalf of the limited
partnership.
- ------------------------------------------------------------------------------
Notary Public
My commission expires:__________________________
EXHIBIT A
[DESCRIPTION OF THE LAND]
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
A. Section 1(i) is changed to read as follows:
(i) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances, rules, regulations, administrative rulings, court
judgments, and decrees, and all mandatory standards, policies and
other governmental requirements in effect now or in the future,
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.
B. Section 1(v) is modified to read as follows:
(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 exclusively 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 exclusively
relating to the operation of, or used exclusively in
connection with, the Land or the Improvements
including all governmental permits relating to any
activities on the Land.
C. The second sentence of Section 2 is modified to read as follows:
Borrower shall execute and deliver to Lender, upon
Lender's request, financing statements, continuation
statements and amendments, in such form as Lender
reasonably 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 reasonably may require.
D. Section 4(b) is changed to read as follows:
(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 and during the continuance 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.
E. Section 7(c) is modified to read as follows:
(c) Notwithstanding the provisions of Section
7(a), Lender will not require Borrower to deposit
with Lender amounts sufficient to accumulate with
Lender the entire sum required to pay the water and
sewer charges, Taxes, fire, hazard or other insurance
premiums, and ground rents. At least annually,
Borrower must provide Lender with proof of payment of
all such Impositions for which Lender is not
collecting Imposition Deposits. In the event that
Borrower does not timely pay any of the Impositions,
or fails to provide Lender with proof of such
payment, or upon the occurrence of an Event of
Default hereunder, or upon Borrower's failure to
maintain the Mortgaged Property in a satisfactory
manner in accordance with the requirements of the
Security Instrument, then in any such events, Lender
may require Borrower to deposit with Lender the
Imposition Deposits as provided in Section 7(a).
F. Except in a case where Lender in its discretion determines that an
emergency exists, Lender may take actions specified in Section 12(a)
only if Lender has notified Borrower of Borrower's failure to perform
any of its obligations under this Instrument or any other Loan Document
and Borrower does not cure the failure within 10 days after such
notice. If Lender so determines that an emergency exists, Lender shall
notify Borrower of the action taken within ten days after the action is
taken.
G. Sections 14(b)(4) and 14(b)(5) are modified to read as follows:
(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 each general partner in Borrower, and confirming
that the ownership of each other Controlling Entity has not
changed in a manner that violates Section 21(a);
(5) promptly following Lender's request, quarterly income and
expense statements for the Property relating to a quarterly
period ending no later than 45 days before the request;
H. For purposes of Section 14(b), Borrower shall be deemed to have delivered
any statement or document "upon Lender's request" if Borrower has
delivered the document promptly following Lender's request.
I. Notwithstanding Section (14)(c), unless an Event of Default has
occurred and is continuing, Lender may require that the financial
statements required by Sections 14(b)(1), 14(b)(2) and 14(b)(3) be
audited, but may not require that any other financial statements
required by Section 14 be audited. Certification of a statement by the
chief financial officer of the entity that is the subject of the
statement or, in the case of a partnership, the chief financial officer
of the general partner, will be acceptable to Lender as certification
by an individual having authority to bind Borrower.
J. Lender shall not have Borrower's books and records audited pursuant to
Section 14(d) unless Lender has given Borrower notice specifying the
statements, schedules and reports required by Section 14(b) that Borrower
has failed to provide, and Borrower has not provided such statements by
the expiration of ten days after such notice.
K. So long as Borrower is contesting the amount and validity of any
Imposition other than insurance premiums diligently and in good faith as
described in Section 15(d) and all of the conditions specified in clauses
(1) through (4) of Section 15(d) are satisfied, Lender will refrain from
applying Imposition Deposits to payment of the contested Imposition.
L. Section 15(e) and Section 16 are modified to read as follows:
15(e) Borrower shall promptly deliver to Lender a
copy of all notices of, and invoices for Impositions,
and if Borrower pays any Imposition directly (which
Borrower has no obligation to do unless Imposition
Deposits are insufficient and Lender has notified
Borrower of that insufficiency), 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 (i) the lien of this Instrument, and (ii) the
Subordinate Debt defined in Section HH of Exhibit B), 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.
M. For purposes of Section 18(b), "pre-packaged supplies, cleaning materials
and petroleum products customarily used in the operation and maintenance
of comparable multifamily properties" shall include, without limitation,
pool, spa, maintenance and gardening materials.
N. The second sentence of Section 18(c) is modified to read as follows:
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 be reasonably expected to cause or permit any
Prohibited Activity or Condition.
O. For purposes of Section 18(d), Borrower shall only be obligated to pay
out-of-pocket expenses incurred by Lender in connection with the
monitoring and review of an O&M Program and Borrower's performance to the
extent such expenses are reasonable.
P. Borrower's representation and warranty in Section 18(e)(4) regarding
requirements for notification regarding releases of Hazardous Materials
shall relate only to such releases, if any, at the Mortgaged Property.
Q. Section 18(e)(5) is modified to read as follows:
(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 reasonably be expected to
constitute, noncompliance with the terms of any Environmental
Permit;
R. Section 18(g) is modified to read as follows:
(g) Borrower shall pay promptly the costs of any
environmental inspections, tests or audits
("Environmental Inspections") required by Lender in
connection with or in preparation for any foreclosure
or deed in lieu of foreclosure. Borrower shall also
pay promptly the reasonable costs of any
Environmental Inspections required by Lender in
connection with, 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 in
connection with or in preparation for any foreclosure
or deed in lieu of foreclosure shall at all times
remain the property of Lender and Lender shall have
no obligation to disclose such results to or
otherwise make such results available to Borrower or
any other party. Lender will make available to
Borrower the results of all other Environmental
Inspections made by Lender. Lender hereby reserves
the right, and Borrower hereby expressly authorizes
Lender, to make available to any party, including any
prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental
Inspections made by 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. Except in the case of an
Environmental Inspection performed in connection with
a foreclosure or deed in lieu of foreclosure, or a
disclosure of Environmental Inspection results that
Lender is required by law to make, Lender shall
notify Borrower of its intention to disclose such
information and shall give Borrower ten days to
provide supplemental information, explanations or
corrections to accompany the disclosure. 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.
S. Lender shall not commence Remedial Work under the second sentence of
Section 18(h) unless Lender has given Borrower notice of its intention to
do so and Borrower has not begun performing the Remedial Work within 10
days after such notice.
T. The following sentence is added at the end of Section 18(j):
However, Borrower shall have no obligation to
indemnify any of the foregoing parties to the extent
that the proceedings, claims, damages, penalties or
costs arise out of the gross negligence or willful
misconduct of Lender, any prior owner or holder of
the Note, the Loan Servicer or any prior Loan
Servicer.
U. For purposes of Section 19(b), Lender will accept a duplicate original
of any insurance policy.
V. For purposes of Section 19(d), an insurance company will be acceptable to
Lender if it has a rating in Best's Key Rating Guide of at least "A-" and
a financial size category of at least "v".
W. Clause (2) of Section 19(g) is modified to read as follows:
(2) Lender determines, in its discretion, that the
combination of insurance proceeds and amounts
provided by the Borrower will be sufficient to
complete the Restoration.
X. For purposes of Section 19(h), Lender shall automatically succeed to
rights of Borrower in and to insurance policies and unearned premiums only
to the extent permitted by the applicable policies and insurance
companies.
Y. Intentionally omitted.
Z. Section 21(a)(2) is modified to read as follows:
(2) if Borrower is a limited partnership, a
Transfer of (A) any general partnership interest (except for a
Transfer to a Qualified REIT Subsidiary, as defined in Section
856(i)(2) of the Internal Revenue Code of 1986, of Apartment
Investment and Management Company, a Maryland corporation), 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;
New Section 21(a)(9) is added as follows:
(9) if, as a result of agreement, judicial determination or
otherwise (i) N. Barton Tuck, Jr. ("Tuck") is determined to
own and possess the right to receive distribution of profits,
losses, or capital from Borrower as a general partner of
Borrower, or (ii) Tuck is determined to own and possess rights
as a general partner of Borrower and the designation of AIMCO
Properties, L.P. with respect to such rights is ineffectual.
AA. New Sections 21(b)(7), 21(b)(8), 21(b)(9), and 21(b)(10) are added, as
follows:
(7) The Transfer of any limited or general partnership interests
in Borrower provided no Change of Control occurs as a result
of such Transfer.
(8) The Transfer of shares of common stock, limited partnership
interests or other beneficial or ownership interests or other
forms of securities in AIMCO REIT or AIMCO OP, and the
issuance of all varieties of convertible debt, equity and
other similar securities of AIMCO REIT or AIMCO OP, and the
subsequent Transfer of such securities; provided, however,
that no Change of Control occurs as a result of such Transfer,
either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.
(9) The issuance by AIMCO REIT or AIMCO OP of additional common
stock, limited partnership interests or other beneficial or
ownership interests, convertible debt, equity and other
similar securities, and the subsequent Transfer of such
convertible debt or securities; provided, however, that no
Change of Control occurs as the result of such Transfer,
either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.
(10) So long as AIMCO REIT owns 100% of the stock of
AIMCO-LP, Inc., a Transfer of limited
partnership interests that results in AIMCO-LP,
Inc. owning not less than 50.1% of the limited
partnership interests in AIMCO OP.
BB. Section 21(b)(8) shall apply only to a Transfer of an interest in a
Controlling Entity that is prohibited by Section 21(a)(7).
CC. A new Section 21(d) is added, as follows:
(d) For purposes of this Section 21, the following
terms shall be defined as follows:
(1) "Change of Control" shall mean the earliest to occur of
(A) the date an Acquiring Person becomes (by
acquisition, consolidation, merger or otherwise),
directly or indirectly, the beneficial owner of more
than forty percent (40%) of the total Voting Equity
Capital of AIMCO REIT then outstanding, or (B) the date
on which AIMCO REIT shall cease to hold (whether
directly or indirectly through a wholly owned
intermediary entity such as AIMCO-LP, Inc. or AIMCO-GP,
Inc.) at least 50.1% of the limited partnership
interests in AIMCO OP, or (C) the date on which AIMCO
REIT shall cease for any reason to hold (whether
directly or indirectly) (i) the interests in the
Managing General Partner held as of the date of this
Instrument (as evidenced by organizational charts and
documents submitted to Lender as of such date) and (ii)
the Controlling Interest(s) in the Borrower, or (D) the
replacement (other than solely by reason of retirement
at age sixty-five or older, death or disability) of more
than 50% (or such lesser percentage as is required for
decisionmaking by the board of directors of trustees, if
applicable) of the members of the board of directors (or
trustee, if applicable) of AIMCO REIT over a one-year
period where such replacement shall not have been
approved by a vote of at least a majority of the board
of directors (or trustees, if applicable) of AIMCO REIT
then still in office who either were members of such
board of directors (or trustees, if applicable) at the
beginning of such one year period or whose election as
members of the board of directors (or trustees, if
applicable) was previously so approved.
(2) "Acquiring Person" shall mean a "person" or group of
"persons" within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended.
However, notwithstanding the foregoing, "Acquiring
Person" shall not be deemed to include any member of the
Borrower Control Group unless such member has, directly
or indirectly, disposed of, sold or otherwise
transferred to, or encumbered or restricted (whether by
means of voting trust agreement or otherwise) for the
benefit of an Acquiring Person, all or any portion of
the Voting Equity Capital of AIMCO REIT directly or
indirectly owned or controlled by such member or such
member directly or indirectly votes all or any portion
of the Voting Equity Capital of AIMCO REIT, directly or
indirectly, owned or controlled by such member for the
taking of any action which, directly or indirectly
constitutes or would result in a Change of Control, in
which event such member of the Borrower Control Group
shall be deemed to constitute an Acquiring Person to the
extent of the Voting Equity Capital of AIMCO REIT owned
or controlled by such member.
(3) "Borrower Control Group" shall mean Terry
Considine, Peter K. Kompaniez, Richard S.
Ellwood, J. Landis Martin, Thomas L.
Rhodes and John D. Smith.
(4) A "Person" shall mean an individual, an estate, a trust,
a corporation, a partnership, a limited liability
company or any other organization or entity (whether
governmental or private).
(5) "Security" shall have the same meaning as in Section
2(1) of the Securities Act of 1933, as amended.
(6) "Controlling Interest(s)" shall mean (i) with respect to
a partnership, such majority and/or managing general
partner interests which, together with a majority of
limited partnership interests if necessary for consent
purposes, vest in the holder of such interests the sole
power, right and authority to control the day to day
operations of the Borrower; including, without
limitation, the authority to manage, operate and finance
the Mortgaged Property, (ii) with respect to a
corporation, the number of shares which entitle the
holder to elect a majority of the board of directors of
the Borrower, and (iii) with respect to a limited
liability company, such majority and/or managing member
interests as vest in the holder of such interests the
sole power, right and authority to control the day to
day operations of the Borrower; including, without
limitation, the authority to manage, operate and finance
the Mortgaged Property.
(7) "AIMCO REIT" shall mean Apartment Investment and
Management Company, a corporation organized and existing
under the laws of the State of Maryland.
(8) "AIMCO OP" shall mean AIMCO Properties,
L.P., a limited partnership organized and
existing under the laws of the State of
Delaware.
(9) "Managing General Partner" shall mean the entity executing
this Instrument on behalf of the Borrower and/or its
successors or assigns in interest.
(10) "Voting Equity Capital" shall mean Securities of any class
or classes, the holders of which are ordinarily, in the
absence of contingencies, entitled to elect a majority of
the board of directors (or Persons performing similar
functions).
DD. Section 21(e) is hereby added as follows:
(e) Lender shall consent to a one-time substitution of the
Mortgaged Property for another multifamily apartment rental property
(the "Substitution"), which shall not result in an adjustment to the
rate at which the Indebtedness secured by this Instrument bears
interest provided that Borrower has satisfied each of the following
requirements:
(1) there shall exist no Event of Default uncured within any
applicable grace period.
(2) the loan to value ratio with respect to the substituted
property (the "Substituted Property") at the time of the
proposed Substitution is not greater than the lesser of (1)
the loan to value ratio of the Mortgaged Property which exists
as of the date hereof, or (2) 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 Borrower) 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 to (B) the value of the
Substituted Property as determined by Lender in its
discretion, expressed as a percentage);
(3) 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 (1)
the debt service coverage ratio for the Mortgaged Property
which exists as of the date hereof, or (2) 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 operations
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);
(4) any such Substitution shall be approved only following the
date which is ten years from the date of this Instrument;
(5) Lender shall have received an environmental report on the
Substituted Property showing that no Phase II environmental
report is required;
(6) Lender shall have received an engineering report on the
Substituted Property showing that there are at least ten (10)
years of useful life remaining with respect to the Substituted
Property;
(7) Lender shall have received 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;
(8) 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 mortgage secured by the Substituted
Property;
(9) 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;
(10) The physical condition, location and other aspects of the
Substituted Property shall be substantially comparable to the
Mortgaged Property as determined by Lender in its reasonable
discretion;
(11) If the Substitution is approved, (i) Borrower shall have
executed and delivered to Lender for recordation an amendment
to this Instrument in form and substance acceptable to Lender
in its discretion, substituting the Substituted Property for
the Mortgaged Property; and (ii) Borrower 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.
EE. Section 22(a) is modified to read as follows:
(a) any failure by Borrower to pay or deposit (i) any payment of
principal or interest or any Imposition Deposit within three days
after it is due, or (ii) any other amount required by the Note, this
Instrument, or any other Loan Document when due.
FF. Section 28 shall obligate Borrower to provide only such further
assurances as Lender reasonably may require.
GG. The words "Except as otherwise disclosed to Lender in writing, before the
date of this Instrument" are added at the beginning of the second sentence
of Section 41.
HH. Section 47 Subordinate Debt is added as follows:
47 SUBORDINATE DEBT. Borrower may incur
indebtedness other than the Indebtedness provided
each of the following terms and conditions are
satisfied:
(a) any such indebtedness ("Subordinate Debt") shall be incurred by
Borrower solely for or in respect of the operation of the Mortgaged
Property in the ordinary course of business as a residential
apartment rental project. Such Subordinate Debt may include but
shall not be limited to amounts payable or reimbursable to a tenant
of the Mortgaged Property on account of work performed or costs
incurred (including, without limitation, costs incurred for tenant
improvements) by any such tenant in connection with its occupancy of
space at the Mortgaged Property; (b) except (1) as set forth in
Subsection (c), or (2) for any debt secured by an ownership interest
in Borrower, any such Subordinate Debt shall be unsecured, and shall
not be evidenced by a note or any like instrument; (c) any
Subordinate Debt may be evidenced by a note and/or secured by a lien
on the Mortgaged Property and/or the other assets of Borrower
provided that:
(1) the total debt service coverage ratio with respect to
the Mortgaged Property after the proposed Subordinate
Debt is incurred and/or secured by the Mortgaged
Property will equal at least a ratio of 1.10:1, as
determined by Lender in its reasonable discretion. (As
used herein, the term "total debt service coverage
ratio" means the ratio of (A) the annual net operating
income from the Mortgaged Property during the preceding
12 month period which is available for repayment of
debt, after deducting reasonable and customary operating
expenses, to (B) the aggregate annual principal and
interest payable under the Note, the proposed
Subordinate Debt and any other then existing Subordinate
Debt encumbering the Mortgaged Property);
(2) the principal amount of such Subordinate Debt, together
with the Indebtedness and all other Subordinate Debt
then encumbering the Mortgaged Property, shall not
exceed 85% of the value of the Mortgaged Property at the
time the Borrower incurs the proposed Subordinate Debt,
as determined by Lender, in Lender's sole discretion;
(3) any note and security instrument evidencing or securing
such Subordinate Debt (A) shall by its terms be
expressly subordinate to the Indebtedness and to all
amendments, extensions and renewals thereof; (B) shall
provide that the holder of any Subordinate Debt cannot
exercise its remedies for a default under such
Subordinate Debt without the prior written consent of
the Lender; (C) shall provide that, so long as the
Indebtedness is outstanding, all payments under any such
note and/or security therefor shall accrue if the same
are unpaid; (D) shall provide that payments shall be
made in the following order: (i) amounts due with
respect to the operation and maintenance of the
Mortgaged Property, including, without limitation, all
monthly installments of principal and interest on the
Indebtedness and any other operating expenses, capital
expenses and tax and insurance payments, (ii) amounts
due with respect to any Subordinate Debt which is
secured by a lien on the Mortgaged Property, and (iii)
amounts due with respect to any Subordinate Debt not
secured by a lien on the Mortgaged Property; and (E)
shall provide that the holder of any Subordinate Debt
shall provide Lender with notice of any default under
the Subordinate Debt not cured within any applicable
grace period at the same time it provides such notice to
the Borrower;
(4) Borrower delivers to Lender evidence in writing that the
Subordinate Debt loan documents, the total debt service
ratio and the aggregate loan to value ratio limitations
set forth herein comply in all respects with the
provisions of this Section; and
(5) Borrower's incurring of Subordinate Debt and, if
applicable, placement of a subordinate lien on the
Mortgaged Property securing such Subordinate Debt shall
not constitute an Event of Default under this
instrument.
(d) Borrower and any holder of any Subordinate Debt shall execute such
instruments and documents in connection with
the status of such Subordinate Debt as
Lender shall from time to time reasonably
request, such document to be in the form of
the subordination agreement attached hereto
as Appendix 1. Borrower shall bear any and
all expenses necessary in connection with
its compliance with the provisions of this
subsection (d), including, without
limitation, reasonable attorneys' fees.
II. Section 37 is modified by deleting: "; 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".
Except for Section JJ below and except for the definitions of the terms
used in Section JJ and not defined therein, the modifications set forth
in this Exhibit B shall be null and void unless title to the Mortgaged
Property is vested in an entity whose controlling Interest(s) are
directly or indirectly held by AIMCO REIT or AIMCO OP.
JJ. Section 48 AIMCO- Held Subordinate Debt is added as follows:
48 AIMCO-HELD SUBORDINATE DEBT. In connection with a Transfer of
the Mortgaged Property which has been consented to by Lender
pursuant to Section 21(c), and provided that no Change of Control
of Borrower has occurred prior to such Transfer, the proposed
transferee (the "New Borrower") may incur indebtedness, other than
the Indebtedness and such other indebtedness as is permitted under
the terms of this Instrument, secured by a lien upon the Mortgaged
Property, provided each of the following terms and conditions are
satisfied:
(a) any such indebtedness ("AIMCO-Held Subordinate Debt") shall be
incurred by the New Borrower solely in connection with its purchase
of the Mortgaged Property;
(b) The AIMCO-Held Subordinate Debt (and any and all documents
evidencing such Subordinate Debt) shall be and remain held by and in
favor of AIMCO REIT , AIMCO OP or any entity in which AIMCO REIT or
AIMCO OP holds Controlling Interest(s), whether directly or
indirectly, and which entity shall have a term of existence not
expiring prior to 10 years after the maturity date of the Note (the
"AIMCO Subordinate Lender");
(c) on the date of the Transfer, Lender and the AIMCO Subordinate
Lender shall execute and record among the applicable land records a
subordination agreement in the form of the subordination agreement
attached hereto as Appendix 1, or at Lender's option in
substantially the form of any subordination agreement which may have
been entered into by and between Lender (or predecessor to Lender's
interest hereunder) and any entity in which AIMCO REIT or AIMCO OP
holds Controlling Interest(s), whether directly or indirectly, prior
to the Transfer and whether or not in connection with the Mortgaged
Property, with such modifications as Lender reasonably requires;
provided, however, that (i) the AIMCO Subordinate Lender shall have
the right to further sell or otherwise transfer the AIMCO-Held
Subordinate Debt to AIMCO REIT, AIMCO OP or any entity in which
AIMCO REIT or AIMCO OP holds Controlling Interest(s), whether
directly or indirectly, and (ii) the AIMCO Subordinate Lender shall
have the right, without Lender's consent, to accept a Transfer of
title to the Mortgaged Property from Borrower by (A) deed in lieu of
foreclosure or (B) a foreclosure which results in AIMCO Subordinate
Lender or an entity in which AIMCO REIT or AIMCO OP hold Controlling
Interest(s), directly or indirectly, holding title to the Mortgaged
Property, in satisfaction of the AIMCO-Held Subordinate Debt, and
such Transfer shall not constitute an Event of Default under this
Instrument. As a prerequisite to foreclosure in satisfaction of the
AIMCO-Hold Subordinate Debt, AIMCO Subordinate Lender shall provide
Lender with thirty (30) days prior written notice of the
commencement of such foreclosure. Lender shall acknowledge its
receipt of such notice in writing within ten (10) business days, and
with such acknowledgement shall provide an estimate of the
reasonable fees and expenses it expects to incur in connection with
the foreclosure. AIMCO Subordinate Lender shall deposit such
estimated sum in escrow with Lender or a representative designated
by Lender. Promptly upon the conclusion of the foreclosure, any
excess sums not expended shall be returned to AIMCO Subordinate
Lender or AIMCO Subordinate Lender shall pay to Lender the amount by
which the Lender's actual reasonable expenditures exceed the
deposited sum.
(d) the combined debt service coverage ratio with respect to the
Mortgaged Property after the proposed AIMCO-Held Subordinate Debt is
incurred will equal at least a ratio of 1.10:1, as determined by
Lender in its reasonable discretion (if the AIMCO-Held Subordinate
Debt requires a balloon payment, such payment cannot be due prior to
the Maturity Date of the Note.); and Lender has advised the Borrower
and New Borrower in writing of such determination prior to the
Transfer; (e) the principal amount of the AIMCO-Held Subordinate
Debt, together with the Indebtedness and all other Subordinate Debt
then encumbering the Mortgaged Property, shall not exceed 85% of the
value of the Mortgaged Property at the time the Borrower incurs the
proposed AIMCO-Held Subordinate Debt, as determined by Lender in its
sole discretion; and Lender has advised the Borrower and New
Borrower in writing of such determination prior to the Transfer; (f)
(i) not less than 40 days prior to the Transfer, the New Borrower
must have submitted to Lender or, if Lender is then Freddie Mac, to
a party designated by Freddie Mac (the "Designated Seller"), a
complete and accurate application, together with all required
supporting documentation including a written term sheet specifying
all of the terms of the proposed AIMCO-Held Subordinate Debt, for a
subordinate mortgage loan in the principal amount of the proposed
AIMCO-Held Subordinate Debt (the "Subordinate Loan"); and (ii) 10
days prior to the Transfer, Lender or the Designated Seller must
have failed to issue to the proposed transferee a written commitment
to provide the Subordinate Loan at an interest rate and upon terms
at least as favorable to the proposed transferee as those of the
proposed AIMCO-Held Subordinate Debt (and if such commitment is
issued, Lender or the Designated Seller shall provide financing to
the New Borrower in the amount of the proposed AIMCO-Held
Subordinate Loan); and (g) Borrower has paid all costs and expenses
incurred by Lender in connection with the AIMCO-Held Subordinate
Debt, including, without limitation, a review fee equal to 0.1% of
the outstanding principal balance of the Loan and reasonable
attorneys' fees.
Notwithstanding anything in this Instrument which may be deemed to be to
the contrary, (i) AIMCO Subordinate Lender shall have the right to sell or
otherwise transfer the AIMCO-Held Subordinate Debt to AIMCO REIT, AIMCO OP
or any entity in which AIMCO REIT or AIMCO OP holds Controlling
Interest(s), whether directly or indirectly, and (ii) shall have the
right, without Lender's consent, to accept a Transfer of title to the
Mortgaged Property from Borrower by deed-in-lieu of foreclosure or a
foreclosure which results in AIMCO Subordinate Lender or an entity in
which AIMCO REIT or AIMCO OP hold Controlling Interest(s), directly or
indirectly, holding title to the Mortgaged Property, as more specifically
set forth above. Such Transfer shall not constitute an Event of Default
under this Instrument, and this entire Exhibit B shall automatically be
reinstated in its entirety including and without limitation, Sections HH
and JJ.
KK. Section 33 "SINGLE ASSET BORROWER" is deleted in its entirety and
replaced with the following:
33. LIMITS ON ASSETS OF BORROWER. Until the Indebtedness is paid in
full, Borrower (a) shall not acquire any real or personal property
other than (i) the Mortgaged Property and personal property related
to the operation and maintenance of the Mortgaged Property; and (ii)
Rocky Creek Apartments located in Atlanta, Georgia, Carriage House
Apartments located in Gastonia, North Carolina, Nottingham Square
Apartments located in Des Moines, Iowa, Foxfire Apartments, located
in Durham, North Carolina, and River Ranch Apartments, located in
Jacksonville, Florida (the "Permitted Property") and personal
property related to the operation and maintenance of the Permitted
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.
Without the prior written consent of Lender, Borrower shall
not obtain any financing secured by any of the Permitted
Properties or partnership interests of Borrower if the
result would be that the loan to value ratio - being the
ratio of the aggregate of all financing secured by such
Permitted Property or partnership interests of Borrower
to the then current value of such Permitted Property, as
determined by Lender - exceeds 65%.
In the event a Permitted Property is encumbered with a
first priority mortgage, trust deed, or deed of trust
purchased by Freddie Mac, then the terms and conditions
of that mortgage, trust deed, or deed of trust will
supersede the terms and conditions hereof.
Borrower shall not be restricted in its ability to incur
unsecured debt which relates to the operation of any of
the Permitted Properties in the ordinary course of
business.
APPENDIX 1 TO SECURITY INSTRUMENT
SUBORDINATION AND INTERCREDITOR AGREEMENT THIS SUBORDINATION
AND INTERCREDITOR AGREEMENT ("Agreement") made as of the day of , , by and
between , a, having an office at (hereinafter referred to as the "Subordinate
Mortgagee") and , a having an office at (hereinafter referred to as the "Senior
Mortgagee").
WITNESSETH:
WHEREAS, the Senior Mortgagee is the owner and holder of that certain mortgage
described on Exhibit A attached hereto (said mortgage, and any extensions,
modifications, substitutions and consolidations thereof, being hereinafter
referred to as the "Senior Mortgage"), covering the estate of (the "Borrower")
in certain premises located in the County of and State of
, as more particularly described on Exhibit B attached
hereto and made a part hereof, together with all improvements located thereon
(collectively, the "Mortgaged Property"), and the note secured thereby (said
note, and any extensions, modifications or substitutions thereof, being
hereinafter referred to as the "Senior Note"), evidencing and securing, a
certain loan made by the Senior Mortgagee to the Borrower (the "Senior Loan");
and WHEREAS, the Borrower is about to execute and deliver to the Subordinate
Mortgagee (i) a note (said note, and any extensions, modifications or
substitutions thereof, being hereinafter referred to as the "Subordinate Note")
in the principal sum of Dollars ($ ); (ii) a subordinate mortgage (said
mortgage, and any extensions, modifications, substitutions and consolidations
thereof, being hereinafter referred to as the "Subordinate Mortgage") securing
said Subordinate Note; and (iii) a collateral assignment of leases and rents
covering the Mortgaged Property, evidencing and securing a certain subordinate
loan to be made by the Subordinate Mortgagee to the Borrower (the "Subordinate
Loan"); and WHEREAS, the Subordinate Mortgage is intended to be recorded
immediately prior to this Agreement in the office of ___________ County, State
of ; and WHEREAS, the Senior Mortgagee is unwilling to allow the Borrower to
further encumber the Mortgaged Property with the Subordinate Mortgage unless the
Subordinate Mortgage is subordinated to the Senior Mortgage in the manner
hereinafter set forth; NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties hereto, the
Subordinate Mortgagee and the Senior Mortgagee hereby agree as follows:
(1) The Subordinate Mortgage, any other document evidencing,
securing or guaranteeing the indebtedness secured by the Subordinate Mortgage or
otherwise executed in connection with the Subordinate Mortgage (collectively,
together with any extensions, refinancing, modifications, substitutions or
consolidations thereof, being hereinafter collectively referred to as the
"Subordinate Loan Documents") and all advances made thereunder are hereby, and
shall continue to be, subject and subordinate in lien and in payment to the lien
and payment of the Senior Mortgage and any other document evidencing, securing
or guaranteeing, the indebtedness secured by the Senior Mortgage or otherwise
executed in connection with the Senior Mortgage (collectively, together with any
extensions, refinancing, modifications, substitutions or consolidations thereof,
being hereinafter collectively referred to as the "Senior Loan Documents") and
all advances made thereunder without regard to the application of such advances,
together with all interest, prepayment premiums and all other sums due under the
Senior Loan Documents. All of the terms, covenants and conditions of the
Subordinate Mortgage and the Subordinate Loan Documents are hereby, and shall
continue to be, subordinate to all of the terms, covenants and conditions of the
Senior Mortgage and the Senior Loan Documents. The foregoing shall apply,
notwithstanding the availability of other collateral to the Senior Mortgagee or
the actual date and time of execution, delivery, recordation, filing or
perfection of the Senior Mortgage or the Subordinate Mortgage, or the lien or
priority of payment thereof, and notwithstanding the fact that the Senior Loan
or any claim for the Senior Loan is subordinated, avoided or disallowed, in
whole or in part, under Title 11 of the United States Code (the "Bankruptcy
Code") or other applicable federal or state law. In the event of a proceeding,
whether voluntary or involuntary, for insolvency, liquidation, reorganization,
dissolution, bankruptcy or other similar proceeding pursuant to the Bankruptcy
Code or other applicable federal or state law, the Senior Loan shall include all
interest accrued on the Senior Loan, in accordance with and at the rates
specified in the Senior Loan Documents, both for periods before and for periods
after the commencement of any of such proceedings, even if the claim for such
interest is not allowed pursuant to applicable law.
(2) In addition, without limiting the foregoing, the Subordinate
Mortgagee agrees that all rights of the Subordinate Mortgagee under the
Subordinate Mortgage or under the Subordinate Loan Documents in and to the
Mortgaged Property and the proceeds thereof including assignments of leases and
rents, issues and profits and the rights with respect to insurance proceeds and
condemnation awards) shall be expressly subject and subordinate:
(a) to the rights of the Senior Mortgagee in and to the Mortgaged
Property and the proceeds thereof (including assignments of leases
and rents, issues and profits and rights with respect to insurance
proceeds and condemnation awards) on the terms set forth in the
Senior Mortgage and the Senior Loan Documents; and (b) to any and
all advances made and other expenses incurred under, and as
permitted in, the Senior Mortgage and the Senior Loan Documents.
(3) The Subordinate Mortgagee hereby represents and warrants that
(a) it is now the owner and holder of the Subordinate Mortgage; (b) the
Subordinate Mortgage is now in full force and effect; (c) the Subordinate
Mortgage has not been modified or amended; (d) the Borrower is not in default in
the observance and/or performance of any of the obligations thereunder required
to be observed and performed by the Borrower; (e) no event has occurred, which,
with the passing of time or the giving of notice or both would constitute a
default thereunder; (f) all payments due thereon to and including the date
hereof, have been paid in full; (g) the principal balance of the Subordinate
Mortgage is as set forth on Exhibit C hereto; (h) interest on the principal
balance shall be calculated at the annual rate of interest as set forth on
Exhibit C hereto; (i) no scheduled monthly payments under the Subordinate Note
have been prepaid; and (j) any rights of the Subordinate Mortgagee in and to the
lien, estate or other interest in the Mortgaged Property are not subject to the
rights of any third parties by way of subrogation, indemnification or otherwise.
(4) The Subordinate Mortgagee hereby agrees that so long as any sum
shall remain outstanding on the Senior Loan Documents:
(a) The Subordinate Mortgagee shall simultaneously send to the
Senior Mortgagee due notice of all defaults under the Subordinate
Loan Documents as well as copies of all notices required to be
delivered to the Borrower under the Subordinate Loan Documents.
Notice under the Subordinate Mortgage shall not be deemed effective
until such notice has been received by the Senior Mortgagee. The
Senior Mortgagee shall have the right, but shall not have any
obligation whatsoever, to cure any such default within ten (10) days
after the expiration of the applicable grace period permitted to the
Borrower under the Subordinate Loan Documents.
(b) The Subordinate Mortgagee shall not, without the prior written
consent of the Senior Mortgagee take any Enforcement Action
(hereinafter defined). For the purposes of this Agreement, the term
"Enforcement Action" shall mean with respect to the Subordinate Loan
Documents, the acceleration of all or any part of the indebtedness
secured by the Subordinate Loan Documents, any foreclosure
proceedings, the exercise of any power of sale, the acceptance by
the holder of the Subordinate Mortgage of a deed or assignment in
lieu of foreclosure, the obtaining of a receiver, the seeking of
default interest, the taking of possession or control of the
Mortgaged Property, the suing on the Subordinate Note or any
guaranty or other obligation contained in the Subordinate Loan
Documents, the exercising of any banker's lien or rights of set-off
or recoupment, the commencement of any bankruptcy, reorganization or
insolvency proceedings against the Mortgagor under any federal or
state law, or the taking of any other enforcement action against the
Mortgaged Property; (c) In the event (i) the Senior Loan becomes due
or is declared due and payable prior to its stated maturity, (ii)
the Subordinate Mortgagee receives any prepayment of principal or
interest, in part or in whole, under the Subordinate Mortgage
contrary to the terms of the Subordinate Loan Documents, (iii)
Borrower is in default under the Senior Loan Documents, or (iv) any
payment, distribution, division or application, partial or complete,
voluntary or involuntary, by operation of law or otherwise, by or on
behalf of Borrower, or of all or any part of the property, assets or
business of the Borrower or the proceeds thereof, in whatever form,
is made to any creditor or creditors of the Borrower or to any
holder of indebtedness of the Borrower by reason of or in connection
with any liquidation, dissolution or other winding up of the
Borrower or its business, or any receivership or custodianship for
the Borrower of all or substantially all of its property, or any
insolvency or bankruptcy proceedings or composition or restructuring
of any debts of Borrower or assignment for the benefit of creditors
or any proceeding by or against the Borrower for any relief under
any bankruptcy, reorganization or insolvency law or laws, federal or
state, or any law, federal or state, relating to the relief of
debtors, readjustment of indebtedness, reorganization, composition
or extension, then, and in any such event, any payment or
distribution of any kind or character, whether in cash, property or
securities which shall be payable or deliverable with respect to any
or all of the Subordinate Loan shall be paid forthwith or delivered
directly to the Senior Mortgagee for application to the payment of
the Senior Loan to the extent necessary to make payment in full of
all sums due under the Senior Loan remaining unpaid after giving
effect to any concurrent payment or distribution to the Senior
Mortgagee or, received by the Subordinate Mortgagee, shall be held
in trust by the Subordinate Mortgagee, for the benefit of the Senior
Mortgagee. In any such event, the Senior Mortgagee may, but shall
not be obligated to, demand, claim and collect any such payment or
distribution that would, but for these subordination provisions, be
payable or deliverable with respect to the Subordinate Loan.
Subordinate Mortgagee hereby grants to Senior Mortgagee an
irrevocable power of attorney coupled with an interest for the
purpose of exercising any and all rights and remedies available to
Senior Mortgagee pursuant to this Paragraph 4(c). In the event of
the occurrence of (i), (ii) or (iii) above and until the Senior Loan
shall have been fully paid and satisfied and all of the obligations
of the Borrower to the Senior Mortgagee have been performed in full,
no payment shall be made to or accepted by the Subordinate Mortgagee
in respect of the Subordinate Loan; (d) No tenant under any lease of
any portion of the Mortgaged Property will be made a party defendant
in any foreclosure of the Subordinate Mortgage nor will any
Enforcement Action or any other action be taken that would terminate
any leases or other rights held by or granted to or by third parties
with respect to the Mortgaged Property; (e) (i) If, after the
consent required under paragraph 4(b) above has been obtained, any
action or proceeding shall be brought to foreclose the Subordinate
Mortgage or commence any other Enforcement Action, no portion of the
rents, issues and profits of the Mortgaged Property shall be
collected except through a receiver appointed by the court in which
such foreclosure action or proceeding is brought, after due notice
of the application for the appointment of such receiver shall have
been given to the Senior Mortgagee and the rents, issues and profits
so collected by such receiver shall be applied first to the payment
of maintenance of taxes and insurance on the Mortgaged Property, and
then to the payment of principal and interest due and owing on the
Senior Mortgage prior to the payment, if any, of any principal or
interest due and owing on the Subordinate Mortgage; (ii) if during
the pendency of any such foreclosure action or proceeding, an action
or proceeding shall be brought by the Senior Mortgagee for the
foreclosure of the Senior Mortgage and an application is made by the
Senior Mortgagee for an extension of such receivership for the
benefit of the Senior Mortgagee, all such rents, issues and profits
held by such receiver as of the date of such application shall be
applied by the receiver solely for the benefit of the Senior
Mortgagee, and the Subordinate Mortgagee shall not be entitled to
any portion thereof until all sums due and owing pursuant to the
Senior Mortgage have been paid in full and applied as aforesaid;
(iii) notice of the announcement of any foreclosure of the
Subordinate Mortgage shall be given to the Senior Mortgagee and true
copies of all notices thereof and papers served or entered in such
action shall be delivered to the Senior Mortgagee; (f) In the event
the Senior Mortgagee shall release, for the purposes of restoration
of all or any part of the improvements on or within the Mortgaged
Property, its right, title and interest in and to the proceeds under
policies of insurance thereon, and/or its right, title and interest
in and to any awards, or its right, title and interest in and to
other compensation made for any damages, losses or compensation for
other rights by reason of a taking in eminent domain, the
Subordinate Mortgagee shall release for such purpose all of its
right, title and interest, if any, in and to all such insurance
proceeds, awards or compensation and the Subordinate Mortgagee
agrees that the balance of such proceeds remaining shall be applied
to the reduction of principal under the Senior Mortgage, and if the
Senior Mortgagee holds such proceeds, awards or compensation and/or
monitors the disbursement thereof, the Subordinate Mortgagee agrees
that the Senior Mortgagee shall also hold and monitor the
disbursement of such proceeds, awards and compensation to which the
Subordinate Mortgagee is entitled. Nothing contained in this
Agreement shall be deemed to require the Senior Mortgagee, in any
way whatsoever, to act for or on behalf of the Subordinate Mortgagee
or to hold or monitor any proceeds, awards or compensation in trust
for or on behalf of the Subordinate Mortgagee, and all or any of
such sums so held or monitored may be commingled with any funds of
the Senior Mortgagee; (g) If the Subordinate Mortgagee shall acquire
by indemnification, subordination or otherwise, any lien, estate,
right or other interest in the Mortgaged Property, that lien,
estate, right or other interest shall be subordinate to the Senior
Mortgage as provided herein, and the Subordinate Mortgagee hereby
waives any and all rights it may acquire by subrogation or otherwise
to the lien of the Senior Mortgage or any portion thereof; (h) The
Subordinate Mortgagee shall not pledge, assign, hypothecate,
transfer, convey or sell the Subordinate Loan or any interest in the
Subordinate Loan or modify, waive or amend any of the terms or
provisions of the Subordinate Mortgage, without the prior written
consent of the Senior Mortgagee; provided, however, that the
Subordinate Mortgagee may modify, amend and/or waive any provision
of the Subordinate Loan Documents without the consent or approval of
the Senior Mortgagee if, following such modification, amendment
and/or waiver, the Subordinate Loan Documents comply with the terms
and provisions of Subparagraph (c) of the Section of the Senior
Mortgage entitled "Subordinate Debt"; (i) As to all leases now or
hereafter in effect with respect to the Mortgaged Property, the
Subordinate Mortgagee agrees to approve all leases which are
approved by the Senior Mortgagee. The Subordinate Mortgagee shall
also enter into recognition and non-disturbance agreements with any
tenants to whom the Senior Mortgagee has granted recognition and
non-disturbance, on the same terms and conditions given by the
Senior Mortgagee; (j) The Subordinate Mortgagee hereby expressly
consents to and authorizes, at the option of the Senior Mortgagee,
the release of all or any portion of the Mortgaged Property from the
lien of the Senior Mortgage, and hereby waives any equitable right
in respect of marshalling it might have, in connection with any
release of all or any portion of the Mortgaged Property by the
Senior Mortgagee under the Senior Mortgage, to require the separate
sales of any portion of the Mortgaged Property or to require the
Senior Mortgagee to exhaust its remedies against any portion of the
Mortgaged Property, or any combination of the portions of the
Mortgaged Property or any other collateral, or to require the Senior
Mortgagee to proceed against any portion of the Mortgaged Property
or combination of the portions of the Mortgaged Property or any
other collateral, before proceeding against any other portion of the
Mortgaged Property or combination of the portions of the Mortgaged
Property, and further, in the event of any foreclosure, the
Subordinate Mortgagee hereby expressly consents to and authorizes,
at the option of the Senior Mortgagee, the sale, either separately
or together, of all or any portion of the Mortgaged Property; (k)
The Subordinate Mortgagee shall not collect payments for the purpose
of escrowing taxes, assessments or other charges imposed on the
Mortgaged Property or insurance premiums due on the insurance
policies required under the Senior Mortgage or the Subordinate
Mortgage if the Senior Mortgagee is collecting payments for such
purposes, however, the Subordinate Mortgagee may collect payments
for such purposes if the Senior Mortgagee is not collecting the
same, provided such payments shall be held in trust by the
Subordinate Mortgagee to be applied only for such purposes; (l)
After request by the Senior Mortgagee, the Subordinate Mortgagee
shall within ten (10) days furnish the Senior Mortgagee with a
statement, duly acknowledged and certified setting forth the
original principal amount of the Subordinate Note, the unpaid
principal balance, all accrued but unpaid interest and any other
sums due and owing thereunder, the rate of interest, the monthly
payments and that there exists no defaults under the Subordinate
Loan Documents; (m) In any case commenced by or against the Borrower
or a general partner of Borrower under Chapter 11 of the Bankruptcy
Code or any similar provision thereof or any similar federal or
state statute (a "Reorganization Proceeding"), the Senior Mortgagee
shall have the exclusive right to exercise any voting rights in
respect of the Senior Mortgagee and the other Senior Loan Documents,
and the Subordinate Mortgagee shall have the exclusive right to
exercise any voting rights in respect of its claims against the
Borrower or a general partner of the Borrower; (n) In any
Reorganization Proceeding with respect to the Borrower or any
general partner of the Borrower, upon any payment or distribution
(whether in cash, property, securities, or otherwise) to creditors
of the Borrower or any such general partner, (i) the indebtedness
under the Senior Loan Documents shall first be paid in full in cash
before the Subordinate Mortgagee shall be entitled to receive any
payment or other distribution on or in respect of indebtedness under
the Subordinate Loan Documents, and (ii) until all indebtedness
under the Senior Loan Documents is paid in full in cash, any payment
or distribution to which the Subordinate Mortgagee would be entitled
but for this Subordination and Intercreditor Agreement (whether in
cash, property, securities or otherwise) shall be made to the Senior
Mortgagee.
(o) In any Reorganization Proceeding with respect to the Borrower or
any general partner of the Borrower, (i) the Subordinate Mortgagee
shall file a proof of claim in respect of its claims against the
Borrower or any general partner of the Borrower and shall send to
the Senior Mortgagee a copy thereof together with evidence of the
filing with the appropriate court or other authority, (ii) if the
Subordinate Mortgagee should fail to file such proof of claim by the
tenth (10th) business day before the last day for filing of proofs
of claim, or if the Senior Mortgagee reasonably believes that the
proof of claim so filed is less than the proper amount thereof, then
the Senior Mortgagee may file such proof of claim, or corrected
proof of claim, on behalf of the Subordinate Mortgagee, and (iii) if
objection is made to the allowance of any claim of the Subordinate
Mortgagee, the Senior Mortgagee shall have the right to intervene
and fully participate in such proceedings and if such rights are
denied and the Subordinate Mortgagee fails to defend such claim,
then the Senior Mortgagee may defend such claim in the name of the
Subordinate Mortgagee and Subordinate Mortgagee grants to Senior
Mortgagee an irrevocable power of attorney coupled with an interest
for the purpose of exercising any and all rights and remedies
available to Senior Mortgagee at law and in equity, including
without limitation such rights and remedies available to Senior
Mortgagee pursuant to this Paragraph 4; and (p) To the extent any
payment under the Senior Loan Documents (whether by or on behalf of
the Borrower, as proceeds of security or enforcement of any right of
set-off or otherwise) is for any reason repaid or returned to the
Borrower or its insolvent estate, or avoided, set aside or required
to be paid to the Borrower, a trustee, receiver or other similar
party under any bankruptcy, insolvency, receivership or similar law,
then the Senior Loan or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding to the
extent of any repayment, return, or other action as if such payment
had not occurred.
(5) The Senior Mortgagee hereby consents to the placing of the
Subordinate Mortgage on the Mortgaged Property subject to the terms of this
Agreement. This consent is limited to the Subordinate Mortgage described above
and shall not be deemed to (a) be a consent to any future encumbrances or to any
modification, renewal, extension or increase of the Subordinate Mortgage, (b) be
a waiver of the limitation on further encumbrances contained in the Senior
Mortgage, (c) be a consent to or waiver of any other term or condition of the
Senior Mortgage, or (d) prejudice any right or rights which the Senior Mortgagee
may now or in the future have under or in connection with the Senior Mortgage.
(6) The Senior Mortgagee and the Subordinate Mortgagee shall
cooperate fully with each other in order to promptly and fully carry out the
terms and provisions of this Agreement. Each party hereto shall from time to
time execute and deliver such other agreements, documents or instruments and
take such other actions as may be reasonably necessary or desirable to
effectuate the terms of this Agreement.
(7) No failure or delay on the part of any party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
(8) Each party hereto acknowledges that to the extent that no
adequate remedy at law exists for breach of its obligations under this
Agreement, in the event either party fails to comply with its obligations
hereunder, the other party shall have the right to obtain specific performance
of the obligations of such defaulting party, injunctive relief or such other
equitable relief as may be available.
(9) Any notice to be given under this Agreement shall be in writing
and shall be deemed to be given when received by the party to whom it is
addressed. Notices shall be in writing and sent by registered mail, hand
delivery or by special courier (in each case, return receipt requested). Notices
to the other party hereto shall be sent to the address first set forth herein or
such other address or addressees as shall be designated by such party in a
written notice to the other parties.
(10) In the event of any conflict between the provisions of this
Agreement and the provisions of the Subordinate Mortgage or the other
Subordinate Loan Documents, the provisions of this Agreement shall prevail.
(11) No person, including, without limitation, Borrower, other than
the parties hereto and their successors and assigns as holders of the Senior
Mortgage and the Subordinate Mortgagee shall have any rights under this
Agreement.
(12) This Agreement may be executed in two or more counterparts each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
(13) No amendment, supplement, modification, waiver or termination
of this Agreement shall be effective against a party against whom the
enforcement of such amendment, supplement, modification, waiver or termination
would be asserted, unless such amendment, supplement, modification, waiver or
termination was made in a writing signed by such party.
(14) In case any one or more of the provisions contained in this
Agreement, or any application thereof, shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein, and. any other application thereof, shall
not in any way be affected or impaired thereby.
(15) This Agreement shall be construed in accordance with and
governed by the laws of the state where the Mortgaged Property is located.
(16) This Agreement shall bind and inure to the benefit of the
Senior Mortgagee and the Subordinate Mortgagee and their respective successors,
permitted transferees and assigns.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
[ADD SIGNATURES, ACKNOWLEDGMENTS AND EXHIBITS]