Loan No. 817768866
Prepared by, and after recording
return to:
Robert B. Joselow, Esq.
SEEGER POTTER RICHARDSON
LUXTON JOSELOW & BROOKS, L.L.P.
2121 K Street, N.W., Suite 700
Washington, D.C. 20037
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(ILLINOIS LAND TRUST)
THIS INSTRUMENT IS NOT TO BE USED FOR
MULTIFAMILY PROPERTIES CONTAINING 5 OR 6
RESIDENTIAL UNITS IF ANY RESIDENTIAL UNIT
IS OWNER-OCCUPIED
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(ILLINOIS LAND TRUST)
THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF
RENTS AND SECURITY AGREEMENT (the
"Instrument") is made as of the _____ day of
July, 1997, between AMERICAN NATIONAL BANK
AND TRUST COMPANY OF CHICAGO, not personally
or individually, but solely as Trustee under
the provisions of that certain Trust
Agreement dated December 1, 1972, as amended
on May 6, 1976 and further amended on
November 30, 1992, and known as Trust No.
77424 whose address is 33 North LaSalle
Street, Chicago, Illinois 60602, as mortgagor
("Borrower""), and 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 mortgagee
("Lender").
Borrower is indebted to Lender in the
principal amount of $5,280,000.00, as
evidenced by that certain Multifamily Note
made by Borrower and others as Co-Maker
payable to Lender, dated as of the date of
this Instrument, and maturing on August 1,
2007.
TO SECURE TO LENDER the repayment of the
Indebtedness, and all renewals, extensions
and modifications of the Indebtedness, and
the performance of the covenants and
agreements of Borrower contained in the Loan
Documents, Borrower mortgages, warrants,
grants, conveys and assigns to Lender the
Mortgaged Property, including the Land
located in DuPage County, State of Illinois
and described in Exhibit A attached to this
Instrument.
Borrower represents and warrants that
Borrower is lawfully seized of the Mortgaged
Property and has the right, power and
authority to mortgage, grant, convey and
assign the Mortgaged Property, and that the
Mortgaged Property is unencumbered. Borrower
covenants that Borrower will warrant and
defend generally the title to the Mortgaged
Property against all claims and demands,
subject to any easements and restrictions
listed in a schedule of exceptions to
coverage in any title insurance policy issued
to Lender contemporaneously with the
execution and recordation of this Instrument
and insuring Lender's interest in the
Mortgaged Property.
Covenants. Borrower and Lender covenant and
agree as follows:
1. DEFINITIONS. The following terms,
when used in this Instrument (including when
used in the above recitals), shall have the
following meanings:
(a) "Borrower" means all persons or
entities identified as "Borrower" in the
first paragraph of this Instrument, together
with their successors and assigns.
(b) "Collateral Agreement" means any
separate agreement between Borrower and
Lender for the purpose of establishing
replacement reserves for the Mortgaged
Property, establishing a fund to assure the
completion of repairs or improvements
specified in that agreement, or assuring
reduction of the outstanding principal
balance of the Indebtedness if the occupancy
of or income from the Mortgaged Property does
not increase to a level specified in that
agreement, or any other agreement or
agreements between Borrower and Lender which
provide for the establishment of any other
fund, reserve or account.
(c) "Controlling Entity" means an
entity which owns, directly or indirectly
through one or more intermediaries, (A) a
general partnership interest or more than 50%
of the limited partnership interests in
Borrower (if Borrower is a partnership or
joint venture), (B) a manager's interest in
Borrower or more than 50% of the ownership or
membership interests in Borrower (if Borrower
is a limited liability company), (C) more
than 50% of any class of voting stock of
Borrower (if Borrower is a corporation), or
(D) more than 50% of the beneficial interest
in Borrower (if Borrower is a trust).
(d) "Environmental Permit" means any
permit, license, or other authorization
issued under any Hazardous Materials Law with
respect to any activities or businesses
conducted on or in relation to the Mortgaged
Property.
(e) "Event of Default" means the
occurrence of any event listed in Section 22.
(f) "Fixtures" means all property which
is so attached to the Land or the
Improvements as to constitute a fixture under
applicable law, including: machinery,
equipment, engines, boilers, incinerators,
installed building materials; systems and
equipment for the purpose of supplying or
distributing heating, cooling, electricity,
gas, water, air, or light; antennas, cable,
wiring and conduits used in connection with
radio, television, security, fire prevention,
or fire detection or otherwise used to carry
electronic signals; telephone systems and
equipment; elevators and related machinery
and equipment; fire detection, prevention and
extinguishing systems and apparatus; security
and access control systems and apparatus;
plumbing systems; water heaters, ranges,
stoves, microwave ovens, refrigerators,
dishwashers, garbage disposers, washers,
dryers and other appliances; light fixtures,
awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains
and curtain rods; mirrors; cabinets,
paneling, rugs and floor and wall coverings;
fences, trees and plants; swimming pools; and
exercise equipment.
(g) "Governmental Authority" means any
board, commission, department or body of any
municipal, county, state or federal
governmental unit, or any subdivision of any
of them, that has or acquires jurisdiction
over the Mortgaged Property or the use,
operation or improvement of the Mortgaged
Property.
(h) "Hazardous Materials" means
petroleum and petroleum products and
compounds containing them, including
gasoline, diesel fuel and oil; explosives;
flammable materials; radioactive materials;
polychlorinated biphenyls ("PCBs") and
compounds containing them; lead and lead-
based paint; asbestos or asbestos-containing
materials in any form that is or could become
friable; underground or above-ground storage
tanks, whether empty or containing any
substance; any substance the presence of
which on the Mortgaged Property is prohibited
by any federal, state or local authority; any
substance that requires special handling; and
any other material or substance now or in the
future defined as a "hazardous substance,"
"hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant,"
"contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(i) "Hazardous Materials Laws" means
all federal, state, and local laws,
ordinances and regulations and standards,
rules, policies and other governmental
requirements, administrative rulings and
court judgments and decrees in effect now or
in the future and including all amendments,
that relate to Hazardous Materials and apply
to Borrower or to the Mortgaged Property.
Hazardous Materials Laws include, but are not
limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., the Toxic Substance
Control Act, 15 U.S.C. Section 2601, et seq.,
the Clean Water Act, 33 U.S.C. Section 1251,
et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801,
and their state analogs.
(j) "Impositions" and "Imposition
Deposits" are defined in Section 7(a).
(k) "Improvements" means the buildings,
structures, improvements, and alterations now
constructed or at any time in the future
constructed or placed upon the Land,
including any future replacements and
additions.
(l) "Indebtedness" means the principal
of, interest on, and all other amounts due at
any time under, the Note, this Instrument or
any other Loan Document, including prepayment
premiums, late charges, default interest, and
advances as provided in Section 12 to protect
the security of this Instrument.
(m) "Initial Owners" means, with
respect to Borrower or any other entity, the
persons or entities who on the date of the
Note own in the aggregate 100% of the
ownership interests in Borrower or that
entity, and if Borrower is a trust, the
persons or entities who on the date of the
Note own, directly or indirectly, in the
aggregate 100% of the ownership interests in
the beneficiary of such trust.
(n) "Land" means the land described in
Exhibit A.
(o) "Leases" means all present and
future leases, subleases, licenses,
concessions or grants or other possessory
interests now or hereafter in force, whether
oral or written, covering or affecting the
Mortgaged Property, or any portion of the
Mortgaged Property (including proprietary
leases or occupancy agreements if Borrower is
a cooperative housing corporation), and all
modifications, extensions or renewals.
(p) "Lender" means the entity
identified as "Lender" in the first paragraph
of this Instrument, or any subsequent holder
of the Note.
(q) "Loan Documents" means the Note,
this Instrument, the Beneficiary's
Undertaking executed by the beneficiary of
Borrower in favor of Lender, the Combined
Security Agreement and Assignment of Rents
and Leases executed by the beneficiary of
Borrower in favor of Lender, the Collateral
Assignment of Beneficial Interest executed by
the beneficiary of Borrower in favor of
Lender, all guaranties, all indemnity
agreements, all Collateral Agreements, O&M
Programs, and any other documents now or in
the future executed by Borrower, any
guarantor or any other person in connection
with the loan evidenced by the Note, as such
documents may be amended from time to time.
(r) "Loan Servicer" means the entity
that from time to time is designated by
Lender to collect payments and deposits and
receive notices under the Note, this
Instrument and any other Loan Document, and
otherwise to service the loan evidenced by
the Note for the benefit of Lender. Unless
Borrower receives notice to the contrary, the
Loan Servicer is the entity identified as
"Lender" in the first paragraph of this
Instrument.
(s) "Mortgaged Property" means all of
Borrower's present and future right, title
and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights,
including air rights, development
rights, zoning rights and other
similar rights or interests,
easements, tenements,
rights-of-way, strips and gores of
land, streets, alleys, roads, sewer
rights, waters, watercourses, and
appurtenances related to or
benefitting the Land or the
Improvements, or both, and all
rights-of-way, streets, alleys and
roads which may have been or may in
the future be vacated;
(6) all proceeds paid or to be
paid by any insurer of the Land,
the Improvements, the Fixtures, the
Personalty or any other part of the
Mortgaged Property, whether or not
Borrower obtained the insurance
pursuant to Lender's requirement;
(7) all awards, payments and other
compensation made or to be made by
any municipal, state or federal
authority with respect to the Land,
the Improvements, the Fixtures, the
Personalty or any other part of the
Mortgaged Property, including any
awards or settlements resulting
from condemnation proceedings or
the total or partial taking of the
Land, the Improvements, the
Fixtures, the Personalty or any
other part of the Mortgaged
Property under the power of eminent
domain or otherwise and including
any conveyance in lieu thereof;
(8) all contracts, options and
other agreements for the sale of
the Land, the Improvements, the
Fixtures, the Personalty or any
other part of the Mortgaged
Property entered into by Borrower
now or in the future, including
cash or securities deposited to
secure performance by parties of
their obligations;
(9) all proceeds from the
conversion, voluntary or
involuntary, of any of the above
into cash or liquidated claims, and
the right to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties,
accounts receivable, issues and
profits from the Land, the
Improvements or any other part of
the Mortgaged Property, and all
undisbursed proceeds of the loan
secured by this Instrument and, if
Borrower is a cooperative housing
corporation, maintenance charges or
assessments payable by shareholders
or residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of
Impositions by any municipal, state
or federal authority or insurance
company (other than refunds
applicable to periods before the
real property tax year in which
this Instrument is dated);
(14) all tenant security deposits
which have not been forfeited by
any tenant under any Lease; and
(15) all names under or by which
any of the above Mortgaged Property
may be operated or known, and all
trademarks, trade names, and
goodwill relating to any of the
Mortgaged Property.
(t) "Note" means the Multifamily Note
described on page 1 of this Instrument,
including all schedules, riders, allonges and
addenda, as such Multifamily Note may be
amended from time to time.
(u) "O&M Program" is defined in
Section 18(a).
(v) "Personalty" means all furniture,
furnishings, equipment, machinery, building
materials, appliances, goods, supplies,
tools, books, records (whether in written or
electronic form), computer equipment
(hardware and software) and other tangible
personal property (other than Fixtures) which
are used now or in the future in connection
with the ownership, management or operation
of the Land or the Improvements or are
located on the Land or in the Improvements,
and any operating agreements relating to the
Land or the Improvements, and any surveys,
plans and specifications and contracts for
architectural, engineering and construction
services relating to the Land or the
Improvements and all other intangible
property and rights relating to the operation
of, or used in connection with, the Land or
the Improvements, including all governmental
permits relating to any activities on the
Land.
(w) "Property Jurisdiction" is defined
in Section 30(a).
(x) "Rents" means all rents (whether
from residential or non-residential space),
revenues and other income of the Land or the
Improvements, including parking fees, laundry
and vending machine income and fees and
charges for food, health care and other
services provided at the Mortgaged Property,
whether now due, past due, or to become due,
and deposits forfeited by tenants.
(y) "Taxes" means all taxes,
assessments, vault rentals and other charges,
if any, general, special or otherwise,
including all assessments for schools, public
betterments and general or local
improvements, which are levied, assessed or
imposed by any public authority or quasi-
public authority, and which, if not paid,
will become a lien, on the Land or the
Improvements.
(z) "Transfer" means (A) a sale,
assignment, transfer or other disposition
(whether voluntary, involuntary or by
operation of law); (B) the granting, creating
or attachment of a lien, encumbrance or
security interest (whether voluntary,
involuntary or by operation of law); (C) the
issuance or other creation of an ownership
interest in a legal entity, including a
partnership interest, interest in a limited
liability company or corporate stock; (D)
the withdrawal, retirement, removal or
involuntary resignation of a partner in a
partnership or a member or manager in a
limited liability company; or (E) the merger,
dissolution, liquidation, or consolidation of
a legal entity or the reconstitution of one
type of legal entity into another type of
legal entity. "Transfer" does not include
(i) a conveyance of the Mortgaged Property at
a judicial or non-judicial foreclosure sale
under this Instrument or (ii) the Mortgaged
Property becoming part of a bankruptcy estate
by operation of law under the United States
Bankruptcy Code. For purposes of defining
the term "Transfer," the term "partnership"
shall mean a general partnership, a limited
partnership, a joint venture and a limited
liability partnership, and the term "partner"
shall mean a general partner, a limited
partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT. This Instrument is also a security
agreement under the Uniform Commercial Code
for any of the Mortgaged Property which,
under applicable law, may be subject to a
security interest under the Uniform
Commercial Code, whether acquired now or in
the future, and all products and cash and
non-cash proceeds thereof (collectively, "UCC
Collateral"), and Borrower hereby grants to
Lender a security interest in the UCC
Collateral. Borrower shall execute and
deliver to Lender, upon Lender's request,
financing statements, continuation statements
and amendments, in such form as Lender may
require to perfect or continue the perfection
of this security interest. Borrower shall
pay all filing costs and all costs and
expenses of any record searches for financing
statements that Lender may require. Without
the prior written consent of Lender, Borrower
shall not create or permit to exist any other
lien or security interest in any of the UCC
Collateral. If an Event of Default has
occurred and is continuing, Lender shall have
the remedies of a secured party under the
Uniform Commercial Code, in addition to all
remedies provided by this Instrument or
existing under applicable law. In exercising
any remedies, Lender may exercise its
remedies against the UCC Collateral
separately or together and in any order,
without in any way affecting the availability
of Lender's other remedies. This Instrument
constitutes a financing statement with
respect to any part of the Mortgaged Property
which is or may become a fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF
RECEIVER; LENDER IN POSSESSION.
(a) As part of the consideration for
the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to
Lender all Rents. It is the intention of
Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender
of all Rents and to authorize and empower
Lender to collect and receive all Rents
without the necessity of further action on
the part of Borrower. Promptly upon request
by Lender, Borrower agrees to execute and
deliver such further assignments as Lender
may from time to time require. 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, the lien created
by this Instrument. 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.
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.
(b) 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.
(c) 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 purpose of 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.
(d) 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.
(e) 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.
(f) Any entering upon and taking of
control of the Mortgaged Property by Lender
or the receiver, as the case may be, and any
application of Rents as provided in this
Instrument shall not cure or waive any Event
of Default or invalidate any other right or
remedy of Lender under applicable law or
provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES
AFFECTING THE MORTGAGED PROPERTY.
(a) As part of the consideration for
the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to
Lender all of Borrower's right, title and
interest in, to and under the Leases,
including Borrower's right, power and
authority to modify the terms of any such
Lease, or extend or terminate any such Lease.
It is the intention of Borrower to establish
a present, absolute and irrevocable transfer
and assignment to Lender of all of Borrower's
right, title and interest in, to and under
the Leases. However, 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 Section 4(d), Section
4(e) 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.
(b) 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 this assignment
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, this assignment shall not (i)
obligate Lender to perform any of the terms,
covenants and conditions contained in any
Lease (or otherwise impose any obligation
upon Lender with respect to any Lease); (ii)
obligate Lender to appear in or defend any
action or proceeding relating to the Lease or
the Mortgaged Property; or (iii) impose upon
Lender any responsibility 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.
(c) 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.
(d) 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.
(e) 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.
(f) Borrower shall not receive or
accept Rent under any Lease (whether
residential or non-residential) for more than
two months in advance.
5. PAYMENT OF INDEBTEDNESS;
PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
PREMIUM. Borrower shall pay the Indebtedness
when due in accordance with the terms of the
Note and the other Loan Documents and shall
perform, observe and comply with all other
provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment
premium in connection with certain
prepayments of the Indebtedness, including a
payment made after Lender's exercise of any
right of acceleration of the Indebtedness, as
provided in the Note.
6. EXCULPATION. Borrower's personal
liability for payment of the Indebtedness and
for performance of the other obligations to
be performed by it under this Instrument is
limited in the manner, and to the extent,
provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND
OTHER CHARGES.
(a) Borrower shall deposit with Lender
on the day monthly installments of principal
or interest, or both, are due under the Note
(or on another day designated in writing by
Lender), until the Indebtedness is paid in
full, an additional amount sufficient to
accumulate with Lender the entire sum
required to pay, when due (1) any water and
sewer charges which, if not paid, may result
in a lien on all or any part of the Mortgaged
Property, (2) the premiums for fire and other
hazard insurance, rent loss insurance and
such other insurance as Lender may require
under Section 19, (3) Taxes, and (4) amounts
for other charges and expenses which Lender
at any time reasonably deems necessary to
protect the Mortgaged Property, to prevent
the imposition of liens on the Mortgaged
Property, or otherwise to protect Lender's
interests, all as reasonably estimated from
time to time by Lender, plus one-sixth of
such estimate. The amounts deposited under
the preceding sentence are collectively
referred to in this Instrument as the
"Imposition Deposits". The obligations of
Borrower for which the Imposition Deposits
are required are collectively referred to in
this Instrument as "Impositions". The amount
of the Imposition Deposits shall be
sufficient to enable Lender to pay each
Imposition before the last date upon which
such payment may be made without any penalty
or interest charge being added. Lender shall
maintain records indicating how much of the
monthly Imposition Deposits and how much of
the aggregate Imposition Deposits held by
Lender are held for the purpose of paying
Taxes, insurance premiums and each other
obligation of Borrower for which Imposition
Deposits are required. Any waiver by Lender
of the requirement that Borrower remit
Imposition Deposits to Lender may be revoked
by Lender, in Lender's discretion, at any
time upon notice to Borrower.
(b) Imposition Deposits shall be held
in an institution (which may be Lender, if
Lender is such an institution) whose deposits
or accounts are insured or guaranteed by a
federal agency. Lender shall not be
obligated to open additional accounts or
deposit Imposition Deposits in additional
institutions when the amount of the
Imposition Deposits exceeds the maximum
amount of the federal deposit insurance or
guaranty. Lender shall apply the Imposition
Deposits to pay Impositions so long as no
Event of Default has occurred and is
continuing. Unless applicable law requires,
Lender shall not be required to pay Borrower
any interest, earnings or profits on the
Imposition Deposits. Borrower hereby pledges
and grants to Lender a security interest in
the Imposition Deposits as additional
security for all of Borrower's obligations
under this Instrument and the other Loan
Documents. Any amounts deposited with Lender
under this Section 7 shall not be trust
funds, nor shall they operate to reduce the
Indebtedness, unless applied by Lender for
that purpose under Section 7(e).
(c) If Lender receives a 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.
(d) If at any time the amount of the
Imposition Deposits held by Lender for
payment of a specific Imposition exceeds the
amount reasonably deemed necessary by Lender
plus one-sixth of such estimate, the excess
shall be credited against future installments
of Imposition Deposits. If at any time the
amount of the Imposition Deposits held by
Lender for payment of a specific Imposition
is less than the amount reasonably estimated
by Lender to be necessary plus one-sixth of
such estimate, Borrower shall pay to Lender
the amount of the deficiency within 15 days
after notice from Lender.
(e) If an Event of Default has occurred
and is continuing, Lender may apply any
Imposition Deposits, in any amounts and in
any order as Lender determines, in Lender's
discretion, to pay any Impositions or as a
credit against the Indebtedness. Upon payment
in full of the Indebtedness, Lender shall
refund to Borrower any Imposition Deposits
held by Lender.
8. COLLATERAL AGREEMENTS. Borrower
shall deposit with Lender such amounts as may
be required by any Collateral Agreement and
shall perform all other obligations of
Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any
time Lender receives, from Borrower or
otherwise, any amount applicable to the
Indebtedness which is less than all amounts
due and payable at such time, then Lender may
apply that payment to amounts then due and
payable in any manner and in any order
determined by Lender, in Lender's discretion.
Neither Lender's acceptance of an amount
which is less than all amounts then due and
payable nor Lender's application of such
payment in the manner authorized shall
constitute or be deemed to constitute either
a waiver of the unpaid amounts or an accord
and satisfaction. Notwithstanding the
application of any such amount to the
Indebtedness, Borrower's obligations under
this Instrument and the Note shall remain
unchanged.
10. COMPLIANCE WITH LAWS. Borrower
shall comply with all laws, ordinances,
regulations and requirements of any
Governmental Authority and all recorded
lawful covenants and agreements relating to
or affecting the Mortgaged Property,
including all laws, ordinances, regulations,
requirements and covenants pertaining to
health and safety, construction of
improvements on the Mortgaged Property, fair
housing, zoning and land use, and Leases.
Borrower also shall comply with all
applicable laws that pertain to the
maintenance and disposition of tenant
security deposits. Borrower shall at all
times maintain records sufficient to
demonstrate compliance with the provisions
of this Section 10. Borrower shall take
appropriate measures to prevent, and shall
not engage in or knowingly permit, any
illegal activities at the Mortgaged Property
that could endanger tenants or visitors,
result in damage to the Mortgaged Property,
result in forfeiture of the Mortgaged
Property, or otherwise materially impair the
lien created by this Instrument or Lender's
interest in the Mortgaged Property. Borrower
represents and warrants to Lender that no
portion of the Mortgaged Property has been or
will be purchased with the proceeds of any
illegal activity.
11. USE OF PROPERTY. Unless required
by applicable law, Borrower shall not (a)
except for any change in use approved by
Lender, allow changes in the use for which
all or any part of the Mortgaged Property is
being used at the time this Instrument was
executed, (b) convert any individual dwelling
units or common areas to commercial use, (c)
initiate or acquiesce in a change in the
zoning classification of the Mortgaged
Property, or (d) establish any condominium or
cooperative regime with respect to the
Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of
its obligations under this Instrument or any
other Loan Document, or if any action or
proceeding is commenced which purports to
affect the Mortgaged Property, Lender's
security or Lender's rights under this
Instrument, including eminent domain,
insolvency, code enforcement, civil or
criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a
bankrupt or decedent, then Lender at Lender's
option may make such appearances, disburse
such sums and take such actions as Lender
reasonably deems necessary to perform such
obligations of Borrower and to protect
Lender's interest, including (1) payment of
fees and out of pocket expenses of attorneys,
accountants, inspectors and consultants, (2)
entry upon the Mortgaged Property to make
repairs or secure the Mortgaged Property, (3)
procurement of the insurance required by
Section 19, and (4) payment of amounts which
Borrower has failed to pay under Sections 15
and 17.
(b) Any amounts disbursed by Lender
under this Section 12, or under any other
provision of this Instrument that treats such
disbursement as being made under this
Section 12, shall be added to, and become
part of, the principal component of the
Indebtedness, shall be immediately due and
payable and shall bear interest from the date
of disbursement until paid at the "Default
Rate", as defined in the Note.
(c) Nothing in this Section 12 shall
require Lender to incur any expense or take
any action.
13. INSPECTION. Lender, its agents,
representatives, and designees may make or
cause to be made entries upon and inspections
of the Mortgaged Property (including
environmental inspections and tests) during
normal business hours, or at any other
reasonable time.
14. BOOKS AND RECORDS; FINANCIAL
REPORTING.
(a) Borrower shall keep and maintain at
all times at the Mortgaged Property or the
management agent's offices, and upon Lender's
request shall make available at the Mortgaged
Property, complete and accurate books of
account and records (including copies of
supporting bills and invoices) adequate to
reflect correctly the operation of the
Mortgaged Property, and copies of all written
contracts, Leases, and other instruments
which affect the Mortgaged Property. The
books, records, contracts, Leases and other
instruments shall be subject to examination
and inspection at any reasonable time by
Lender.
(b) Borrower shall furnish to Lender
all of the following:
(1) within 120 days after the end
of each fiscal year of Borrower, a
statement of income and expenses
for Borrower's operation of the
Mortgaged Property for that fiscal
year, a statement of changes in
financial position of Borrower
relating to the Mortgaged Property
for that fiscal year and, when
requested by Lender, a balance
sheet showing all assets and
liabilities of Borrower relating to
the Mortgaged Property as of the
end of that fiscal year;
(2) within 120 days after the end
of each fiscal year of Borrower,
and at any other time upon Lender's
request, a rent schedule for the
Mortgaged Property showing the name
of each tenant, and for each
tenant, the space occupied, the
lease expiration date, the rent
payable for the current month, the
date through which rent has been
paid, and any related information
requested by Lender;
(3) within 120 days after the end
of each fiscal year of Borrower,
and at any other time upon Lender's
request, an accounting of all
security deposits held pursuant to
all Leases, including the name of
the institution (if any) and the
names and identification numbers of
the accounts (if any) in which such
security deposits are held and the
name of the person to contact at
such financial institution, along
with any authority or release
necessary for Lender to access
information regarding such
accounts;
(4) within 120 days after the end
of each fiscal year of Borrower,
and at any other time upon Lender's
request, a statement that
identifies all owners of any
interest in Borrower and any
Controlling Entity and the interest
held by each, if Borrower or a
Controlling Entity is a
corporation, all officers and
directors of Borrower and the
Controlling Entity, and if Borrower
or a Controlling Entity is a
limited liability company, all
managers who are not members;
(5) upon Lender's request,
quarterly income and expense
statements for the Mortgaged
Property;
(6) upon Lender's request at any
time when an Event of Default has
occurred and is continuing, monthly
income and expense statements for
the Mortgaged Property;
(7) upon Lender's request, a
monthly property management report
for the Mortgaged Property, showing
the number of inquiries made and
rental applications received from
tenants or prospective tenants and
deposits received from tenants and
any other information requested by
Lender; and
(8) upon Lender's request, a
balance sheet, a statement of
income and expenses for Borrower
and a statement of changes in
financial position of Borrower for
Borrower's most recent fiscal year.
(c) Each of the statements, schedules
and reports required by Section 14(b) shall
be certified to be complete and accurate by
an individual having authority to bind
Borrower, and shall be in such form and
contain such detail as Lender may reasonably
require. Lender also may require that any
statements, schedules or reports be audited
at Borrower's expense by independent
certified public accountants acceptable to
Lender.
(d) If Borrower fails to provide in a
timely manner the statements, schedules and
reports required by Section 14(b), Lender
shall have the right to have Borrower's books
and records audited, at Borrower's expense,
by independent certified public accountants
selected by Lender in order to obtain such
statements, schedules and reports, and all
related costs and expenses of Lender shall
become immediately due and payable and shall
become an additional part of the Indebtedness
as provided in Section 12.
(e) If an Event of Default has occurred
and is continuing, Borrower shall deliver to
Lender upon written demand all books and
records relating to the Mortgaged Property or
its operation.
(f) Borrower authorizes Lender to
obtain a credit report on Borrower at any
time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of
Section 15(c) and Section 15(d), Borrower
shall pay, or cause to be paid, all Taxes
when due and before the addition of any
interest, fine, penalty or cost for
nonpayment.
(b) Subject to the provisions of
Section 15(c), Borrower shall pay the
expenses of operating, managing, maintaining
and repairing the Mortgaged Property
(including insurance premiums, utilities,
repairs and replacements) before the last
date upon which each such payment may be made
without any penalty or interest charge being
added.
(c) As long as no Event of Default
exists and Borrower has timely delivered to
Lender any bills or premium notices that it
has received, Borrower shall not be obligated
to pay Taxes, insurance premiums or any other
individual Imposition to the extent that
sufficient Imposition Deposits are held by
Lender for the purpose of paying that
specific Imposition. If an Event of Default
exists, Lender may exercise any rights Lender
may have with respect to Imposition Deposits
without regard to whether Impositions are
then due and payable. Lender shall have no
liability to Borrower for failing to pay any
Impositions to the extent that any Event of
Default has occurred and is continuing,
insufficient Imposition Deposits are held by
Lender at the time an Imposition becomes due
and payable or Borrower has failed to provide
Lender with bills and premium notices as
provided above.
(d) Borrower, at its own expense, may
contest by appropriate legal proceedings,
conducted diligently and in good faith, the
amount or validity of any Imposition other
than insurance premiums, if (1) Borrower
notifies Lender of the commencement or
expected commencement of such proceedings,
(2) the Mortgaged Property is not in danger
of being sold or forfeited, (3) Borrower
deposits with Lender reserves sufficient to
pay the contested Imposition, if requested by
Lender, and (4) Borrower furnishes whatever
additional security is required in the
proceedings or is reasonably requested by
Lender, which may include the delivery to
Lender of the reserves established by
Borrower to pay the contested Imposition.
(e) Borrower shall promptly deliver to
Lender a copy of all notices of, and invoices
for, Impositions, and if Borrower pays any
Imposition directly, Borrower shall promptly
furnish to Lender receipts evidencing such
payments.
16. LIENS; ENCUMBRANCES. Borrower
acknowledges that, to the extent provided in
Section 21, the grant, creation or existence
of any mortgage, deed of trust, deed to
secure debt, security interest or other lien
or encumbrance (a "Lien") on the Mortgaged
Property (other than the lien of this
Instrument) or on certain ownership interests
in Borrower, whether voluntary, involuntary
or by operation of law, and whether or not
such Lien has priority over the lien of this
Instrument, is a "Transfer" which constitutes
an Event of Default and subjects Borrower to
personal liability under the Note.
17. PRESERVATION, MANAGEMENT AND
MAINTENANCE OF MORTGAGED PROPERTY. Borrower
(a) shall not commit waste or permit
impairment or deterioration of the Mortgaged
Property, (b) shall not abandon the Mortgaged
Property, (c) shall restore or repair
promptly, in a good and workmanlike manner,
any damaged part of the Mortgaged Property to
the equivalent of its original condition, or
such other condition as Lender may approve in
writing, whether or not insurance proceeds or
condemnation awards are available to cover
any costs of such restoration or repair, (d)
shall keep the Mortgaged Property in good
repair, including the replacement of
Personalty and Fixtures with items of equal
or better function and quality, (e) shall
provide for professional management of the
Mortgaged Property by a residential rental
property manager satisfactory to Lender under
a contract approved by Lender in writing, and
(f) shall give notice to Lender of and,
unless otherwise directed in writing by
Lender, shall appear in and defend any action
or proceeding purporting to affect the
Mortgaged Property, Lender's security or
Lender's rights under this Instrument.
Borrower shall not (and shall not permit any
tenant or other person to) remove, demolish
or alter the Mortgaged Property or any part
of the Mortgaged Property except in
connection with the replacement of tangible
Personalty.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a
written program of operations and maintenance
approved in writing by Lender (an "O&M
Program") or matters described in
Section 18(b), Borrower shall not cause or
permit any of the following:
(1) the presence, use, generation,
release, treatment, processing,
storage (including storage in above
ground and underground storage
tanks), handling, or disposal of
any Hazardous Materials on or under
the Mortgaged Property or any other
property of Borrower that is
adjacent to the Mortgaged Property;
(2) the transportation of any
Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on
the Mortgaged Property or any other
property of Borrower that is
adjacent to the Mortgaged Property,
which occurrence or condition is or
may be in violation of Hazardous
Materials Laws; or
(4) any violation of or
noncompliance with the terms of any
Environmental Permit with respect
to the Mortgaged Property or any
property of Borrower that is
adjacent to the Mortgaged Property.
The matters described in clauses (1) through
(4) above are referred to collectively in
this Section 18 as "Prohibited Activities or
Conditions".
(b) Prohibited Activities and
Conditions shall not include the safe and
lawful use and storage of quantities of (1)
pre-packaged supplies, cleaning materials and
petroleum products customarily used in the
operation and maintenance of comparable
multifamily properties, (2) cleaning
materials, personal grooming items and other
items sold in pre-packaged containers for
consumer use and used by tenants and
occupants of residential dwelling units in
the Mortgaged Property; and (3) petroleum
products used in the operation and
maintenance of motor vehicles from time to
time located on the Mortgaged Property's
parking areas, so long as all of the
foregoing are used, stored, handled,
transported and disposed of in compliance
with Hazardous Materials Laws.
(c) Borrower shall take all
commercially reasonable actions (including
the inclusion of appropriate provisions in
any Leases executed after the date of this
Instrument) to prevent its employees, agents,
and contractors, and all tenants and other
occupants from causing or permitting any
Prohibited Activities or Conditions.
Borrower shall not lease or allow the
sublease or use of all or any portion of the
Mortgaged Property to any tenant or subtenant
for nonresidential use by any user that, in
the ordinary course of its business, would
cause or permit any Prohibited Activity or
Condition.
(d) If an O&M Program has been
established with respect to Hazardous
Materials, Borrower shall comply in a timely
manner with, and cause all employees, agents,
and contractors of Borrower and any other
persons present on the Mortgaged Property to
comply with the O&M Program. All costs of
performance of Borrower's obligations under
any O&M Program shall be paid by Borrower,
and Lender's out-of-pocket costs incurred in
connection with the monitoring and review of
the O&M Program and Borrower's performance
shall be paid by Borrower upon demand by
Lender. Any such out-of-pocket costs of
Lender which Borrower fails to pay promptly
shall become an additional part of the
Indebtedness as provided in Section 12.
(e) Borrower represents and warrants to
Lender that, except as previously disclosed
by Borrower to Lender in writing:
(1) Borrower has not at any time
engaged in, caused or permitted any
Prohibited Activities or
Conditions;
(2) to the best of Borrower's
knowledge after reasonable and
diligent inquiry, no Prohibited
Activities or Conditions exist or
have existed;
(3) except to the extent
previously disclosed by Borrower to
Lender in writing, the Mortgaged
Property does not now contain any
underground storage tanks, and, to
the best of Borrower's knowledge
after reasonable and diligent
inquiry, the Mortgaged Property has
not contained any underground
storage tanks in the past. If
there is an underground storage
tank located on the Property which
has been previously disclosed by
Borrower to Lender in writing, that
tank complies with all requirements
of Hazardous Materials Laws;
(4) Borrower has complied with all
Hazardous Materials Laws, including
all requirements for notification
regarding releases of Hazardous
Materials. Without limiting the
generality of the foregoing,
Borrower has obtained all
Environmental Permits required for
the operation of the Mortgaged
Property in accordance with
Hazardous Materials Laws now in
effect and all such Environmental
Permits are in full force and
effect;
(5) no event has occurred with
respect to the Mortgaged Property
that constitutes, or with the
passing of time or the giving of
notice would constitute,
noncompliance with the terms of any
Environmental Permit;
(6) there are no actions, suits,
claims or proceedings pending or,
to the best of Borrower's knowledge
after reasonable and diligent
inquiry, threatened that involve
the Mortgaged Property and allege,
arise out of, or relate to any
Prohibited Activity or Condition;
and
(7) Borrower has not received any
complaint, order, notice of
violation or other communication
from any Governmental Authority
with regard to air emissions, water
discharges, noise emissions or
Hazardous Materials, or any other
environmental, health or safety
matters affecting the Mortgaged
Property or any other property of
Borrower that is adjacent to the
Mortgaged Property.
The representations and warranties in this
Section 18 shall be continuing
representations and warranties that shall be
deemed to be made by Borrower throughout the
term of the loan evidenced by the Note, until
the Indebtedness has been paid in full.
(f) Borrower shall promptly notify
Lender in writing upon the occurrence of any
of the following events:
(1) Borrower's discovery of any
Prohibited Activity or Condition;
(2) Borrower's receipt of or
knowledge of any complaint, order,
notice of violation or other
communication from any Governmental
Authority or other person with
regard to present or future alleged
Prohibited Activities or Conditions
or any other environmental, health
or safety matters affecting the
Mortgaged Property or any other
property of Borrower that is
adjacent to the Mortgaged Property;
and
(3) any representation or warranty
in this Section 18 becomes untrue
after the date of this Agreement.
Any such notice given by Borrower shall not
relieve Borrower of, or result in a waiver
of, any obligation under this Instrument, the
Note, or any other Loan Document.
(g) Borrower shall pay promptly the
costs of any environmental inspections, tests
or audits ("Environmental Inspections")
required by Lender in connection with any
foreclosure or deed in lieu of foreclosure,
or as a condition of Lender's consent to any
Transfer under Section 21, or required by
Lender following a reasonable determination
by Lender that Prohibited Activities or
Conditions may exist. Any such costs
incurred by Lender (including the fees and
out-of-pocket costs of attorneys and
technical consultants whether incurred in
connection with any judicial or
administrative process or otherwise) which
Borrower fails to pay promptly shall become
an additional part of the Indebtedness as
provided in Section 12. The results of all
Environmental Inspections made by Lender
shall at all times remain the property of
Lender and Lender shall have no obligation to
disclose or otherwise make available to
Borrower or any other party such results or
any other information obtained by Lender in
connection with its Environmental
Inspections. Lender hereby reserves the
right, and Borrower hereby expressly
authorizes Lender, to make available to any
party, including any prospective bidder at a
foreclosure sale of the Mortgaged Property,
the results of any Environmental Inspections
made by Lender with respect to the Mortgaged
Property. Borrower consents to Lender
notifying any party (either as part of a
notice of sale or otherwise) of the results
of any of Lender's Environmental Inspections.
Borrower acknowledges that Lender cannot
control or otherwise assure the truthfulness
or accuracy of the results of any of its
Environmental Inspections and that the
release of such results to prospective
bidders at a foreclosure sale of the
Mortgaged Property may have a material and
adverse effect upon the amount which a party
may bid at such sale. Borrower agrees that
Lender shall have no liability whatsoever as
a result of delivering the results of any of
its Environmental Inspections to any third
party, and Borrower hereby releases and
forever discharges Lender from any and all
claims, damages, or causes of action, arising
out of, connected with or incidental to the
results of, the delivery of any of Lender's
Environmental Inspections.
(h) If any investigation, site
monitoring, containment, clean-up,
restoration or other remedial work ("Remedial
Work") is necessary to comply with any
Hazardous Materials Law or order of any
Governmental Authority that has or acquires
jurisdiction over the Mortgaged Property or
the use, operation or improvement of the
Mortgaged Property under any Hazardous
Materials Law, Borrower shall, by the earlier
of (1) the applicable deadline required by
Hazardous Materials Law or (2) 30 days after
notice from Lender demanding such action,
begin performing the Remedial Work, and
thereafter diligently prosecute it to
completion, and shall in any event complete
the work by the time required by applicable
Hazardous Materials Law. If Borrower fails
to begin on a timely basis or diligently
prosecute any required Remedial Work, Lender
may, at its option, cause the Remedial Work
to be completed, in which case Borrower shall
reimburse Lender on demand for the cost of
doing so. Any reimbursement due from
Borrower to Lender shall become part of the
Indebtedness as provided in Section 12.
(i) Borrower shall cooperate with any
inquiry by any Governmental Authority and
shall comply with any governmental or
judicial order which arises from any alleged
Prohibited Activity or Condition.
(j) Borrower shall indemnify, hold
harmless and defend (i) Lender, (ii) any
prior owner or holder of the Note, (iii) the
Loan Servicer, (iv) any prior Loan Servicer,
(v) the officers, directors, shareholders,
partners, employees and trustees of any of
the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of
each of the foregoing (collectively, the
"Indemnitees") from and against all
proceedings claims, damages, penalties and
costs (whether initiated or sought by
Governmental Authorities or private parties),
including fees and out of pocket expenses of
attorneys and expert witnesses, investigatory
fees, and remediation costs, whether incurred
in connection with any judicial or
administrative process or otherwise, arising
directly or indirectly from any of the
following:
(1) any breach of any
representation or warranty of
Borrower in this Section 18;
(2) any failure by Borrower to
perform any of its obligations
under this Section 18;
(3) the existence or alleged
existence of any Prohibited
Activity or Condition;
(4) the presence or alleged
presence of Hazardous Materials on
or under the Mortgaged Property or
any property of Borrower that is
adjacent to the Mortgaged Property;
and
(5) the actual or alleged
violation of any Hazardous
Materials Law.
(k) Counsel selected by Borrower to
defend Indemnitees shall be subject to the
approval of those Indemnitees. However, any
Indemnitee may elect to defend any claim or
legal or administrative proceeding at the
Borrower's expense.
(l) Borrower shall not, without the
prior written consent of those Indemnitees
who are named as parties to a claim or legal
or administrative proceeding (a "Claim"),
settle or compromise the Claim if the
settlement (1) results in the entry of any
judgment that does not include as an
unconditional term the delivery by the
claimant or plaintiff to Lender of a written
release of those Indemnitees, satisfactory in
form and substance to Lender; or (2) may
materially and adversely affect Lender, as
determined by Lender in its discretion.
(m) Borrower's obligation to indemnify
the Indemnitees shall not be limited or
impaired by any of the following, or by any
failure of Borrower or any guarantor to
receive notice of or consideration for any of
the following:
(1) any amendment or modification
of any Loan Document;
(2) any extensions of time for
performance required by any Loan
Document;
(3) any provision in any of the
Loan Documents limiting Lender's
recourse to property securing the
Indebtedness, or limiting the
personal liability of Borrower or
any other party for payment of all
or any part of the Indebtedness;
(4) the accuracy or inaccuracy of
any representations and warranties
made by Borrower under this
Instrument or any other Loan
Document;
(5) the release of Borrower or any
other person, by Lender or by
operation of law, from performance
of any obligation under any Loan
Document;
(6) the release or substitution in
whole or in part of any security
for the Indebtedness; and
(7) Lender's failure to properly
perfect any lien or security
interest given as security for the
Indebtedness.
(n) Borrower shall, at its own cost and
expense, do all of the following:
(1) pay or satisfy any judgment or
decree that may be entered against
any Indemnitee or Indemnitees in
any legal or administrative
proceeding incident to any matters
against which Indemnitees are
entitled to be indemnified under
this Section 18;
(2) reimburse Indemnitees for any
expenses paid or incurred in
connection with any matters against
which Indemnitees are entitled to
be indemnified under this
Section 18; and
(3) reimburse Indemnitees for any
and all expenses, including fees
and out of pocket expenses of
attorneys and expert witnesses,
paid or incurred in connection with
the enforcement by Indemnitees of
their rights under this Section 18,
or in monitoring and participating
in any legal or administrative
proceeding.
(o) In any circumstances in which the
indemnity under this Section 18 applies,
Lender may employ its own legal counsel and
consultants to prosecute, defend or negotiate
any claim or legal or administrative
proceeding and Lender, with the prior written
consent of Borrower (which shall not be
unreasonably withheld, delayed or
conditioned) may settle or compromise any
action or legal or administrative proceeding.
Borrower shall reimburse Lender upon demand
for all costs and expenses incurred by
Lender, including all costs of settlements
entered into in good faith, and the fees and
out of pocket expenses of such attorneys and
consultants.
(p) The provisions of this Section 18
shall be in addition to any and all other
obligations and liabilities that Borrower may
have under applicable law or under other
Loan Documents, and each Indemnitee shall be
entitled to indemnification under this
Section 18 without regard to whether Lender
or that Indemnitee has exercised any rights
against the Mortgaged Property or any other
security, pursued any rights against any
guarantor, or pursued any other rights
available under the Loan Documents or
applicable law. If Borrower consists of more
than one person or entity, the obligation of
those persons or entities to indemnify the
Indemnitees under this Section 18 shall be
joint and several. The obligation of Borrower
to indemnify the Indemnitees under this
Section 18 shall survive any repayment or
discharge of the Indebtedness, any
foreclosure proceeding, any foreclosure sale,
any delivery of any deed in lieu of
foreclosure, and any release of record of the
lien of this Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the
Improvements insured at all times against
such hazards as Lender may from time to time
require, which insurance shall include but
not be limited to coverage against loss by
fire and allied perils, general boiler and
machinery coverage, and business income
coverage. Lender's insurance requirements
may change from time to time throughout the
term of the Indebtedness. If Lender so
requires, such insurance shall also include
sinkhole insurance, mine subsidence
insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to
applicable zoning or land use laws, building
ordinance or law coverage. If any of the
Improvements is located in an area identified
by the Federal Emergency Management Agency
(or any successor to that agency) as an area
having special flood hazards, and if flood
insurance is available in that area, Borrower
shall insure such Improvements against loss
by flood.
(b) All premiums on insurance policies
required under Section 19(a) shall be paid in
the manner provided in Section 7, unless
Lender has designated in writing another
method of payment. All such policies shall
also be in a form approved by Lender. All
policies of property damage insurance shall
include a non-contributing, non-reporting
mortgage clause in favor of, and in a form
approved by, Lender. Lender shall have the
right to hold the original policies or
duplicate original policies of all insurance
required by Section 19(a). Borrower shall
promptly deliver to Lender a copy of all
renewal and other notices received by
Borrower with respect to the policies and all
receipts for paid premiums. At least 30 days
prior to the expiration date of a policy,
Borrower shall deliver to Lender the original
(or a duplicate original) of a renewal policy
in form satisfactory to Lender.
(c) Borrower shall maintain at all
times commercial general liability insurance,
workers' compensation insurance and such
other liability, errors and omissions and
fidelity insurance coverages as Lender may
from time to time require.
(d) All insurance policies and renewals
of insurance policies required by this
Section 19 shall be in such amounts and for
such periods as Lender may from time to time
require, and shall be issued by insurance
companies satisfactory to Lender.
(e) Borrower shall comply with all
insurance requirements and shall not permit
any condition to exist on the Mortgaged
Property that would invalidate any part of
any insurance coverage that this Instrument
requires Borrower to maintain.
(f) In the event of loss, Borrower
shall give immediate written notice to the
insurance carrier and to Lender. Borrower
hereby authorizes and appoints Lender as
attorney-in-fact for Borrower to make proof
of loss, to adjust and compromise any claims
under policies of property damage insurance,
to appear in and prosecute any action arising
from such property damage insurance policies,
to collect and receive the proceeds of
property damage insurance, and to deduct from
such proceeds Lender's expenses incurred in
the collection of such proceeds. This power
of attorney is coupled with an interest and
therefore is irrevocable. However, nothing
contained in this Section 19 shall require
Lender to incur any expense or take any
action. Lender may, at Lender's option, (1)
hold the balance of such proceeds to be used
to reimburse Borrower for the cost of
restoring and repairing the Mortgaged
Property to the equivalent of its original
condition or to a condition approved by
Lender (the "Restoration"), or (2) apply the
balance of such proceeds to the payment of
the Indebtedness, whether or not then due. To
the extent Lender determines to apply
insurance proceeds to Restoration, Lender
shall do so in accordance with Lender's then-
current policies relating to the restoration
of casualty damage on similar multifamily
properties.
(g) Lender shall not exercise its
option to apply insurance proceeds to the
payment of the Indebtedness if all of the
following conditions are met: (1) no Event
of Default (or any event which, with the
giving of notice or the passage of time, or
both, would constitute an Event of Default)
has occurred and is continuing; (2) Lender
determines, in its discretion, that there
will be sufficient funds to complete the
Restoration; (3) Lender determines, in its
discretion, that the rental income from the
Mortgaged Property after completion of the
Restoration will be sufficient to meet all
operating costs and other expenses,
Imposition Deposits, deposits to reserves and
loan repayment obligations relating to the
Mortgaged Property; and (4) Lender
determines, in its discretion, that the
Restoration will be completed before the
earlier of (A) one year before the maturity
date of the Note or (B) one year after the
date of the loss or casualty.
(h) If the Mortgaged Property is sold
at a foreclosure sale or Lender acquires
title to the Mortgaged Property, Lender shall
automatically succeed to all rights of
Borrower in and to any insurance policies and
unearned insurance premiums and in and to the
proceeds resulting from any damaged to the
Mortgaged Property prior to such sale or
acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify
Lender of any action or proceeding relating
to any condemnation or other taking, or
conveyance in lieu thereof, of all or any
part of the Mortgaged Property, whether
direct or indirect (a "Condemnation").
Borrower shall appear in and prosecute or
defend any action or proceeding relating to
any Condemnation unless otherwise directed by
Lender in writing. Borrower authorizes and
appoints Lender as attorney-in-fact for
Borrower to commence, appear in and
prosecute, in Lender's or Borrower's name,
any action or proceeding relating to any
Condemnation and to settle or compromise any
claim in connection with any Condemnation.
This power of attorney is coupled with an
interest and therefore is irrevocable.
However, nothing contained in this Section 20
shall require Lender to incur any expense or
take any action. Borrower hereby transfers
and assigns to Lender all right, title and
interest of Borrower in and to any award or
payment with respect to (i) any
Condemnation, or any conveyance in lieu of
Condemnation, and (ii) any damage to the
Mortgaged Property caused by governmental
action that does not result in a
Condemnation.
(b) Lender may apply such awards or
proceeds, after the deduction of Lender's
expenses incurred in the collection of such
amounts, at Lender's option, to the
restoration or repair of the Mortgaged
Property or to the payment of the
Indebtedness, with the balance, if any, to
Borrower. Unless Lender otherwise agrees in
writing, any application of any awards or
proceeds to the Indebtedness shall not extend
or postpone the due date of any monthly
installments referred to in the Note,
Section 7 of this Instrument or any
Collateral Agreement, or change the amount of
such installments. Borrower agrees to
execute such further evidence of assignment
of any awards or proceeds as Lender may
require.
21. TRANSFERS OF THE MORTGAGED PROPERTY
OR INTERESTS IN BORROWER. [RIGHT TO ONE
TRANSFER ONLY -- WITH LENDER APPROVAL]
(a) The occurrence of any of the
following events shall constitute an Event of
Default under this Instrument:
(1) a Transfer of all or any part
of the Mortgaged Property or
any interest in the Mortgaged
Property;
(2) if Borrower is a limited
partnership, a Transfer of (A)
any general partnership
interest, or (B) limited
partnership interests in
Borrower that would cause the
Initial Owners of Borrower to
own less than 51% of all
limited partnership interests
in Borrower;
(3) if Borrower is a general
partnership or a joint
venture, a Transfer of any
general partnership or joint
venture interest in Borrower;
(4) if Borrower is a limited
liability company, a Transfer
of (A) any membership interest
in Borrower which would cause
the Initial Owners to own less
than 51% of all the membership
interests in Borrower, or (B)
any membership or other
interest of a manager in
Borrower;
(5) if Borrower is a corporation,
(A) the Transfer of any voting
stock in Borrower which would
cause the Initial Owners to
own less than 51% of any class
of voting stock in Borrower or
(B) if the outstanding voting
stock in Borrower is held by
100 or more shareholders, one
or more transfers by a single
transferor within a 12-month
period affecting an aggregate
of 5% or more of that stock;
(6) if Borrower is a trust, (A) a
Transfer of any beneficial
interest in Borrower which
would cause the Initial Owners
to own less than 51% of all
the beneficial interests in
Borrower, or (B) the
termination or revocation of
the trust, or (C) the removal,
appointment or substitution of
a trustee of Borrower; and
(7) a Transfer of any interest in
a Controlling Entity which, if
such Controlling Entity were
Borrower, would result in an
Event of Default under any of
Sections 21(a)(1) through (6)
above.
Lender shall not be required to demonstrate
any actual impairment of its security or any
increased risk of default in order to
exercise any of its remedies with respect to
an Event of Default under this Section 21.
(b) The occurrence of any of the
following events shall not constitute an
Event of Default under this Instrument,
notwithstanding any provision of
Section 21(a) to the contrary:
(1) a Transfer to which Lender has
consented;
(2) a Transfer that occurs by
devise, descent, or by
operation of law upon the
death of a natural person;
(3) the grant of a leasehold
interest in an individual
dwelling unit for a term of
two years or less not
containing an option to
purchase;
(4) a Transfer of obsolete or worn
out Personalty or Fixtures
that are contemporaneously
replaced by items of equal or
better function and quality,
which are free of liens,
encumbrances and security
interests other than those
created by the Loan Documents
or consented to by Lender;
(5) the grant of an easement, if
before the grant Lender
determines that the easement
will not materially affect the
operation or value of the
Mortgaged Property or Lender's
interest in the Mortgaged
Property, and Borrower pays to
Lender, upon demand, all costs
and expenses incurred by
Lender in connection with
reviewing Borrower's request;
and
(6) the creation of a mechanic's,
materialman's, or judgment
lien against the Mortgaged
Property which is released of
record or otherwise remedied
to Lender's satisfaction
within 30 days of the date of
creation.
(c) Lender shall consent, one time only
and without any adjustment to the rate at
which the Indebtedness secured by this
Instrument bears interest, 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) the loan to value ratio at the
time of the proposed Transfer
is 70% or less ("loan to value
ratio" means the ratio of (A)
the outstanding principal
balance of the Indebtedness to
(B) the value of the Mortgaged
Property, as determined by
Lender, expressed as a
percentage);
(6) the debt service coverage
ratio for the last twelve full
months preceding the proposed
Transfer was 1.35 or more
("debt service coverage ratio"
means the ratio of (A) the
annual net operating income
from the Mortgaged Property's
operations during that month
which is available for
repayment of debt, after
deducting operating expenses,
to (B) the annual principal
and interest payable under the
Note); and
(7) 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;
(8) 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
(9) Lender's receipt of all of the
following:
(A) a review fee in the
amount of $2,000.00;
(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.
22. EVENTS OF DEFAULT. The occurrence
of any one or more of the following shall
constitute an Event of Default under this
Instrument:
(a) any failure by Borrower to pay or
deposit when due any amount required by the
Note, this Instrument or any other Loan
Document;
(b) any failure by Borrower to maintain
the insurance coverage required by
Section 19;
(c) any failure by Borrower to comply
with the provisions of Section 33;
(d) fraud or material misrepresentation
or material omission by Borrower, any of its
officers, directors, trustees, general
partners or managers or any guarantor in
connection with (A) the application for or
creation of the Indebtedness, (B) any
financial statement, rent roll, or other
report or information provided to Lender
during the term of the Indebtedness, or (C)
any request for Lender's consent to any
proposed action, including a request for
disbursement of funds under any Collateral
Agreement;
(e) any Event of Default under
Section 21;
(f) the commencement of a forfeiture
action or proceeding, whether civil or
criminal, which, in Lender's reasonable
judgment, could result in a forfeiture of the
Mortgaged Property or otherwise materially
impair the lien created by this Instrument or
Lender's interest in the Mortgaged Property;
(g) any failure by Borrower to perform
any of its obligations under this Instrument
(other than those specified in Sections 22(a)
through (f)), as and when required, which
continues for a period of 30 days after
notice of such failure by Lender to Borrower.
However, no such notice or grace period shall
apply in the case of any such failure which
could, in Lender's judgment, absent
immediate exercise by Lender of a right or
remedy under this Instrument, result in harm
to Lender, impairment of the Note or this
Instrument or any other security given under
any other Loan Document;
(h) any failure by Borrower or any
beneficiary of Borrower to perform any of its
obligations as and when required under any
Loan Document other than this Instrument
which continues beyond the applicable cure
period, if any, specified in that Loan
Document;
(i) any exercise by the holder of any
debt instrument secured by a mortgage, deed
of trust or deed to secure debt on the
Mortgaged Property of a right to declare all
amounts due under that debt instrument
immediately due and payable; and
(j) Borrower voluntarily files for
bankruptcy protection under the United States
Bankruptcy Code or voluntarily becomes
subject to any reorganization, receivership,
insolvency proceeding or other similar
proceeding pursuant to any other federal or
state law affecting debtor and creditor
rights, or an involuntary case is commenced
against Borrower by any creditor (other than
Lender) of Borrower pursuant to the United
States Bankruptcy Code or other federal or
state law affecting debtor and creditor
rights and is not dismissed or discharged
within 60 days after filing.
23. REMEDIES CUMULATIVE. Each right
and remedy provided in this Instrument is
distinct from all other rights or remedies
under this Instrument or any other Loan
Document or afforded by applicable law, and
each shall be cumulative and may be exercised
concurrently, independently, or successively,
in any order.
24. FORBEARANCE.
(a) Lender may (but shall not be
obligated to) agree with Borrower, from time
to time, and without giving notice to, or
obtaining the consent of, or having any
effect upon the obligations of, any guarantor
or other third party obligor, to take any of
the following actions: extend the time for
payment of all or any part of the
Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan
Document; release anyone liable for the
payment of any amounts under this Instrument,
the Note, or any other Loan Document; accept
a renewal of the Note; modify the terms and
time of payment of the Indebtedness; join in
any extension or subordination agreement;
release any Mortgaged Property; take or
release other or additional security; modify
the rate of interest or period of
amortization of the Note or change the amount
of the monthly installments payable under the
Note; and otherwise modify this Instrument,
the Note, or any other Loan Document.
(b) Any forbearance by Lender in
exercising any right or remedy under the
Note, this Instrument, or any other Loan
Document or otherwise afforded by applicable
law, shall not be a waiver of or preclude the
exercise of any right or remedy. The
acceptance by Lender of payment of all or any
part of the Indebtedness after the due date
of such payment, or in an amount which is
less than the required payment, shall not be
a waiver of Lender's right to require prompt
payment when due of all other payments on
account of the Indebtedness or to exercise
any remedies for any failure to make prompt
payment. Enforcement by Lender of any
security for the Indebtedness shall not
constitute an election by Lender of remedies
so as to preclude the exercise of any other
right available to Lender. Lender's receipt
of any awards or proceeds under Sections 19
and 20 shall not operate to cure or waive any
Event of Default.
25. LOAN CHARGES. If any applicable
law limiting the amount of interest or other
charges permitted to be collected from
Borrower is interpreted so that any charge
provided for in any Loan Document, whether
considered separately or together with other
charges levied in connection with any other
Loan Document, violates that law, and
Borrower is entitled to the benefit of that
law, that charge is hereby reduced to the
extent necessary to eliminate that violation.
The amounts, if any, previously paid to
Lender in excess of the permitted amounts
shall be applied by Lender to reduce the
principal of the Indebtedness. For the
purpose of determining whether any applicable
law limiting the amount of interest or other
charges permitted to be collected from
Borrower has been violated, all Indebtedness
which constitutes interest, as well as all
other charges levied in connection with the
Indebtedness which constitute interest, shall
be deemed to be allocated and spread over the
stated term of the Note. Unless otherwise
required by applicable law, such allocation
and spreading shall be effected in such a
manner that the rate of interest so computed
is uniform throughout the stated term of the
Note.
26. WAIVER OF STATUTE OF LIMITATIONS.
Borrower hereby waives the right to assert
any statute of limitations as a bar to the
enforcement of the lien of this Instrument or
to any action brought to enforce any Loan
Document.
27. WAIVER OF MARSHALLING.
Notwithstanding the existence of any other
security interests in the Mortgaged Property
held by Lender or by any other party, Lender
shall have the right to determine the order
in which any or all of the Mortgaged Property
shall be subjected to the remedies provided
in this Instrument, the Note, any other Loan
Document or applicable law. Lender shall
have the right to determine the order in
which any or all portions of the Indebtedness
are satisfied from the proceeds realized upon
the exercise of such remedies. Borrower and
any party who now or in the future acquires a
security interest in the Mortgaged Property
and who has actual or constructive notice of
this Instrument waives any and all right to
require the marshalling of assets or to
require that any of the Mortgaged Property be
sold in the inverse order of alienation or
that any of the Mortgaged Property be sold in
parcels or as an entirety in connection with
the exercise of any of the remedies permitted
by applicable law or provided in this
Instrument.
28. FURTHER ASSURANCES. Borrower shall
execute, acknowledge, and deliver, at its
sole cost and expense, all further acts,
deeds, conveyances, assignments, estoppel
certificates, financing statements, transfers
and assurances as Lender may require from
time to time in order to better assure,
grant, and convey to Lender the rights
intended to be granted, now or in the future,
to Lender under this Instrument and the Loan
Documents.
29. ESTOPPEL CERTIFICATE. Within 10
days after a request from Lender, Borrower
shall deliver to Lender a written statement,
signed and acknowledged by Borrower,
certifying to Lender or any person designated
by Lender, as of the date of such statement,
(i) that the Loan Documents are unmodified
and in full force and effect (or, if there
have been modification, that the Loan
Documents are in full force and effect as
modified and setting forth such
modifications); (ii) the unpaid principal
balance of the Note; (iii) the date to which
interest under the Note has been paid; (iv)
that Borrower is not in default in paying the
Indebtedness or in performing or observing
any of the covenants or agreements contained
in this Instrument or any of the other Loan
Documents (or, if the Borrower is in default,
describing such default in reasonable
detail); (v) whether or not there are then
existing any setoffs or defenses known to
Borrower against the enforcement of any right
or remedy of Lender under the Loan Documents;
and (vi) any additional facts requested by
Lender.
30. GOVERNING LAW; CONSENT TO
JURISDICTION AND VENUE.
(a) This Instrument, and any Loan
Document which does not itself expressly
identify the law that is to apply to it,
shall be governed by the laws of the
jurisdiction in which the Land is located
(the "Property Jurisdiction").
(b) Borrower agrees that any
controversy arising under or in relation to
the Note, this Instrument, or any other Loan
Document shall be litigated exclusively in
the Property Jurisdiction. The state and
federal courts and authorities with
jurisdiction in the Property Jurisdiction
shall have exclusive jurisdiction over all
controversies which shall arise under or in
relation to the Note, any security for the
Indebtedness, or any other Loan Document.
Borrower irrevocably consents to service,
jurisdiction, and venue of such courts for
any such litigation and waives any other
venue to which it might be entitled by virtue
of domicile, habitual residence or otherwise.
31. NOTICE.
(a) All notices, demands and other
communications ("notice") under or concerning
this Instrument shall be in writing. Each
notice shall be addressed to the intended
recipient at its address set forth in this
Instrument, and shall be deemed given on the
earliest to occur of (1) the date when the
notice is received by the addressee; (2) the
first Business Day after the notice is
delivered to a recognized overnight courier
service, with arrangements made for payment
of charges for next Business Day delivery; or
(3) the third Business Day after the notice
is deposited in the United States mail with
postage prepaid, certified mail, return
receipt requested. As used in this
Section 31, the term "Business Day" means any
day other than a Saturday, a Sunday or any
other day on which Lender is not open for
business.
(b) Any party to this Instrument may
change the address to which notices intended
for it are to be directed by means of notice
given to the other party in accordance with
this Section 31. Each party agrees that it
will not refuse or reject delivery of any
notice given in accordance with this
Section 31, that it will acknowledge, in
writing, the receipt of any notice upon
request by the other party and that any
notice rejected or refused by it shall be
deemed for purposes of this Section 31 to
have been received by the rejecting party on
the date so refused or rejected, as
conclusively established by the records of
the U.S. Postal Service or the courier
service.
(c) Any notice under the Note and any
other Loan Document which does not specify
how notices are to be given shall be given in
accordance with this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER.
The Note or a partial interest in the Note
(together with this Instrument and the other
Loan Documents) may be sold one or more times
without prior notice to Borrower. A sale may
result in a change of the Loan Servicer.
There also may be one or more changes of the
Loan Servicer unrelated to a sale of the
Note. If there is a change of the Loan
Servicer, Borrower will be given notice of
the change.
33. SINGLE ASSET BORROWER/BENEFICIARY.
Until the Indebtedness is paid in full, (a)
Borrower and the beneficiary of Borrower (i)
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; (ii) shall not operate any business
other than the management and operation of
the Mortgaged Property; and (iii) shall not
maintain its assets in a way difficult to
segregate and identify, and (b) the
beneficiary of Borrower shall not acquire or
own the beneficial interest under any trust
other than the Borrower.
34. SUCCESSORS AND ASSIGNS BOUND. This
Instrument shall bind, and the rights granted
by this Instrument shall inure to, the
respective successors and assigns of Lender
and Borrower. However, a Transfer not
permitted by Section 21 shall be an Event of
Default.
35. JOINT AND SEVERAL LIABILITY. If
more than one person or entity signs this
Instrument as Borrower, the obligations of
such persons and entities shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD
PARTY BENEFICIARY.
(a) The relationship between Lender and
Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained
in this Instrument shall create any other
relationship between Lender and Borrower.
(b) No creditor of any party to this
Instrument and no other person shall be a
third party beneficiary of this Instrument or
any other Loan Document. Without limiting
the generality of the preceding sentence, (1)
any arrangement (a "Servicing Arrangement")
between the Lender and any Loan Servicer for
loss sharing or interim advancement of funds
shall constitute a contractual obligation of
such Loan Servicer that is independent of the
obligation of Borrower for the payment of the
Indebtedness, (2) Borrower shall not be a
third party beneficiary of any Servicing
Arrangement, and (3) no payment by the Loan
Servicer under any Servicing Arrangement will
reduce the amount of the Indebtedness.
37. SEVERABILITY; AMENDMENTS. The
invalidity or unenforceability of any
provision of this Instrument shall not affect
the validity or enforceability of any other
provision, and all other provisions shall
remain in full force and effect. This
Instrument contains the entire agreement
among the parties as to the rights granted
and the obligations assumed in this
Instrument. This Instrument may not be
amended or modified except by a writing
signed by the party against whom enforcement
is sought.
38. CONSTRUCTION. The captions and
headings of the sections of this Instrument
are for convenience only and shall be
disregarded in construing this Instrument.
Any reference in this Instrument to an
"Exhibit" or a "Section" shall, unless
otherwise explicitly provided, be construed
as referring, respectively, to an Exhibit
attached to this Instrument or to a
Section of this Instrument. All Exhibits
attached to or referred to in this Instrument
are incorporated by reference into this
Instrument. Any reference in this Instrument
to a statute or regulation shall be construed
as referring to that statute or regulation as
amended from time to time. Use of the
singular in this Agreement includes the
plural and use of the plural includes the
singular. As used in this Instrument, the
term "including" means "including, but not
limited to."
39. LOAN SERVICING. All actions
regarding the servicing of the loan evidenced
by the Note, including the collection of
payments, the giving and receipt of notice,
inspections of the Property, inspections of
books and records, and the granting of
consents and approvals, may be taken by the
Loan Servicer unless Borrower receives notice
to the contrary. If Borrower receives
conflicting notices regarding the identity of
the Loan Servicer or any other subject, any
such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender
may furnish information regarding Borrower or
the Mortgaged Property to third parties with
an existing or prospective interest in the
servicing, enforcement, evaluation,
performance, purchase or securitization of
the Indebtedness, including but not limited
to trustees, master servicers, special
servicers, rating agencies, and organizations
maintaining databases on the underwriting and
performance of multifamily mortgage loans.
Borrower irrevocably waives any and all
rights it may have under applicable law to
prohibit such disclosure, including but not
limited to any right of privacy.
41. NO CHANGE IN FACTS OR
CIRCUMSTANCES. All information in the
application for the loan submitted to Lender
(the "Loan Application") and in all financial
statements, rent rolls, reports, certificates
and other documents submitted in connection
with the Loan Application are complete and
accurate in all material respects. There has
been no material adverse change in any fact
or circumstance that would make any such
information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent
that, the proceeds of the loan evidenced by
the Note are used to pay, satisfy or
discharge any obligation of Borrower for the
payment of money that is secured by a pre-
existing mortgage, deed of trust or other
lien encumbering the Mortgaged Property (a
"Prior Lien"), such loan proceeds shall be
deemed to have been advanced by Lender at
Borrower's request, and Lender shall
automatically, and without further action on
its part, be subrogated to the rights,
including lien priority, of the owner or
holder of the obligation secured by the Prior
Lien, whether or not the Prior Lien is
released.
43. ACCELERATION; REMEDIES. At any
time during the existence of an Event of
Default, Lender, at Lender's option, may
declare all of the Indebtedness to be
immediately due and payable without further
demand, and may foreclose this Instrument by
judicial proceeding and may invoke any other
remedies permitted by Illinois law or
provided in this Instrument or in any other
Loan Document. The Indebtedness shall
include, Lender shall be entitled to collect,
and any decree which adjudicates the amount
secured by this Instrument shall include, all
costs and expenses incurred in pursuing such
remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title
reports, any of which my be estimated to
reflect the costs and expenses to be incurred
after the entry of such a decree.
44. RELEASE. Upon payment of the
Indebtedness, Lender shall release this
Instrument. Borrower shall pay Lender's
reasonable costs incurred in releasing this
Instrument.
45. WAIVER OF HOMESTEAD AND REDEMPTION.
Borrower releases and waives all rights under
the homestead and exemption laws of the State
of Illinois. Borrower acknowledges that the
Mortgaged Property does not include
"agricultural real estate" or "residential
real estate" as those terms are defined in
735 ILCS 5/15-1201 and 5/15-1219. Pursuant
to 735 ILCS 5/15-1601(b), Borrower waives any
and all rights of redemption from sale under
any order of foreclosure of this Instrument,
or other rights of redemption, which may run
to Borrower or any other Owner of Redemption,
as that term is defined in 735 ILCS 5/15-
1212. Borrower waives all rights of
reinstatement under 735 ILCS 5/15-1602 to the
fullest extent permitted by Illinois law.
46. MAXIMUM AMOUNT OF INDEBTEDNESS.
Notwithstanding any provision to the contrary
in this Instrument, the Note or any other
Loan Document which permits any additional
sums to be advanced on or after the date of
this Instrument, whether as additional loans
or for any payments authorized by this
Instrument, the total amount of the principal
component of the Indebtedness shall not at
any time exceed three hundred percent (300%)
of the original principal amount of the Note
set forth on the first page of this
Instrument.
47. TRUSTEE'S EXCULPATION. This
Instrument is executed by the undersigned
trustee, not personally or individually, but
solely in its capacity as trustee of the land
trust which holds title to the Mortgaged
Property, in the exercise of the power and
authority conferred upon and vested in it as
trustee. It is expressly understood and
agreed by each original and successive owner
or holder of this Instrument that nothing
contained in this Instrument, including
without limitation the provisions of Section
18(m)(3), shall be construed as creating any
liability on the undersigned trustee in its
personal or individual capacity to perform
any of the obligations of the Borrower set
forth herein, and that any recovery against
the undersigned trustee under this Instrument
shall be solely against and out of the
Mortgaged Property.
48. WAIVER OF TRIAL BY JURY. BORROWER
AND LENDER EACH (A) COVENANTS AND AGREES NOT
TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY
ISSUE ARISING OUT OF THIS INSTRUMENT OR THE
RELATIONSHIP BETWEEN THE PARTIES AS BORROWER
AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT
ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.
THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT
LEGAL COUNSEL.
ATTACHED EXHIBITS. The following
Exhibits are attached to this Instrument:
|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.
ATTEST/WITNESS: BORROWER:
AMERICAN
NATIONAL BANK AND TRUST
COMPANY OF
CHICAGO, not personally or
______________________________
individually, but solely as Trustee as set
forth above
By:
________________________________
Title:
________________________________
STATE OF ILLINOIS, ______________ County ss:
I, the undersigned, a Notary Public, in
and for the County and State aforesaid, do
hereby certify that _____________________ of
American National Bank and Trust Company of
Chicago, not personally or individually, but
solely as Trustee under the provisions of
Trust Agreement dated December 1, 1972, as
amended on May 6, 1976 and further amended on
November 30, 1992, and known as Trust Number
77424, personally known to me to be the same
person whose name is subscribed to the
foregoing instrument as such ______________
appeared before me this day, in person, and
acknowledged that (s)he signed and delivered
said instrument as his/her own free and
voluntary act, and as the free and voluntary
act of said banking corporation, as Trustee,
for the uses and purposes therein set forth;
and the said ____________________ did also
then and there acknowledge that he/she, as
custodian of the corporate seal of said
banking corporation, did affix the said
corporate seal of said banking corporation to
said instrument as his/her own free and
voluntary act, and as the free and voluntary
act of said banking corporation as Trustee for
the uses and purposes herein set forth.
Given under my hand and notarial seal this
_______ day of July, 1997.
______________________________
Notary Public
My Commission Expires:
___________________
EXHIBIT A
[DESCRIPTION OF THE LAND]