MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
THIS DEED OF TRUST (herein "Instrument") is made this 4th day of
December, 1997, among the Trustor/Grantor, GRAMERCY HILL ENTERPRISES, a Texas
general partnership whose address is c/o Andrew Jacobs, 1033 O Street, Suite
304, Lincoln, Nebraska 68508 (herein "Borrower"), TICOR TITLE INSURANCE COMPANY,
c/o Nebraska Title Company, 100 Court House Plaza, 9th Street, Lincoln, Nebraska
68508 (herein "Trustee"), and the Beneficiary, WASHINGTON MORTGAGE FINANCIAL
GROUP, LTD., a corporation organized and existing under the laws of the State of
Delaware, whose address is 1593 Spring Hill Road, Suite 400, Vienna, Virginia
22182 (herein "Lender").
BORROWER, in consideration of the indebtedness herein recited and the
trust herein created, irrevocably grants, conveys and assigns to Trustee, in
trust, with power of sale, the following described property located in Lincoln
(Lancaster County), State of Nebraska:
* Delete bracketed material if not completed.
For a complete legal description of the property subject to this Instrument, see
Exhibit A attached hereto and incorporated herein by this reference.
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*/all other equipment necessary for the operation of the foregoing and any and
all other personal property on the Property site, and together with the
following items: utility deposits, unearned premiums, accrued, accruing or to
accrue under insurance policies now or hereafter obtained by the Borrower and
all proceeds of any conversion of the "Property" (as hereinafter defined) or any
part thereof, including, without limitation, proceeds of hazard and title
insurance and all awards and compensation for the taking by eminent domain,
condemnation or otherwise, of all or any part of the Property or any easement
therein.
TOGETHER with all buildings, improvements and tenements now or
hereafter erected on the property, and all heretofore or hereafter vacated
alleys and streets abutting the property, and all easements, rights,
appurtenances, rents (subject however to the assignment of rents to Lender
herein), royalties, mineral, oil and gas rights and profits, water, water
rights, and water stock appurtenant to the property, and all fixtures,
machinery, equipment, engines, boilers, incinerators, building materials,
appliances and goods of every nature whatsoever now or hereafter located in, or
on, or used, or intended to be used in connection with the property, including,
but not limited to, those for the purposes of supplying or distributing heating,
cooling, electricity, gas, water, air and light; and all elevators, and related
machinery and equipment, fire prevention and extinguishing apparatus, security
and access control apparatus, plumbing, bath tubs, water heaters, water closets,
sinks, ranges, stoves, refrigerators, dishwashers, disposals, washers, dryers,
awnings, storm windows, storm doors, screens, blinds, shades, curtains and
curtain rods, mirrors, cabinets, paneling, rugs, attached floor coverings,
furniture, pictures, antennas, trees and plants, and *see above
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all of which, including replacements and additions thereto, shall be deemed to
be and remain a part of the real property covered by this Instrument; and all of
the foregoing, together with said property (or the leasehold estate in the event
this Instrument is on a leasehold) are herein referred to as the "Property".
TO SECURE TO LENDER (a) the repayment of the indebtedness evidenced by
Borrower's note dated of even date herewith (herein "Note") in the principal sum
of Six Million Four Hundred Thousand and No/100 Dollars, with interest thereon,
with the balance of the indebtedness, if not sooner paid, due and payable on
January 1, 2008, and all renewals, extensions and modifications thereof; (b) the
repayment of any future advances, with interest thereon, made by Lender to
Borrower pursuant to paragraph 31 hereof (herein "Future Advances"); (c) the
performance of the covenants and agreements of Borrower contained in a
Construction Loan Agreement between Lender and Borrower dated N/A , 19__, if
any, as provided in paragraph 25 hereof; (d) the payment of all other sums, with
interest thereon, advanced in accordance herewith to protect the security of
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this Instrument; and (e) the performance of the covenants and agreements of
Borrower herein contained.
Borrower covenants that Borrower is lawfully seised of the estate
hereby conveyed and has the right to grant, convey and assign the Property (and,
if this Instrument is on a leasehold, that the ground lease is in full force and
effect without modification except as noted above and without default on the
part of either lessor or lessee thereunder), that the Property is unencumbered,
and that Borrower will warrant and defend generally the title to the 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 insuring
Lender's interest in the Property.
1. PAYMENT OF PRINCIPAL AND INTEREST. Borrower shall promptly pay when due the
principal of and interest on the indebtedness evidenced by the Note, any
prepayment and late charges provided in the Note and all other sums secured by
this Instrument.
2. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES. Subject to applicable law or to
a written waiver by lender, borrower shall pay to lender on the day monthly
installments of principal or interest are payable under the note (or on another
day designated in writing by lender), until the note is paid in full, a sum
(herein "funds") equal to one-twelfth of (a) the yearly water and sewer rates
and taxes and assessments which may be levied on the property, (b) the yearly
ground rents, if any, (c) the yearly premium installments for fire and other
hazard insurance, rent loss insurance and such other insurance covering the
property as lender may require pursuant to paragraph 5 hereof, (d) the yearly
premium installments for mortgage insurance, if any, and (e) if this instrument
is on a leasehold, the yearly fixed rents, if any, under the ground lease, all
as reasonably estimated initially and from time to time by Lender on the basis
of assessments and bills and reasonable estimates thereof. Any waiver by Lender
of a requirement that Borrower pay such Funds may be revoked by Lender, in
Lender's sole discretion, at any time upon notice in writing to Borrower. Lender
may require Borrower to pay to Lender, in advance, such other Funds for other
taxes, charges, premiums, assessments and impositions in connection with
Borrower or the Property which Lender shall reasonably deem necessary to protect
Lender's interests (herein "Other Impositions"). Unless otherwise provided by
applicable law, Lender may require Funds for Other Impositions to be paid by
Borrower in a lump sum or in periodic installments, at Lender's option.
The Funds shall be held in an institution(s) the deposits or accounts
of which are insured or guaranteed by a Federal or state agency (including
Lender if Lender is such an institution). Lender shall apply the Funds to pay
said rates, rents, taxes, assessments, insurance premiums and Other Impositions
so long as Borrower is not in breach of any covenant or agreement of Borrower in
this Instrument. Lender shall make no charge for so holding and applying the
Funds, analyzing said account or for verifying and compiling said assessments
and bills, unless Lender pays Borrower interest, earnings or profits on the
Funds and applicable law permits Lender to make such a charge. Borrower and
Lender may agree in writing at the time of execution of this Instrument that
interest on the Funds shall be paid to Borrower, and unless such agreement is
made or applicable law requires interest, earnings or profits to be paid, Lender
shall not be required to pay Borrower any interest, earnings or profits on the
Funds. Lender shall give to Borrower, without charge, an annual accounting of
the Funds in Lender's normal format showing credits and debits to the Funds and
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the purpose for which each debit to the Funds was made. The Funds are pledged as
additional security for the sums secured by this Instrument.
If the amount of the Funds held by Lender at the time of the annual
accounting thereof shall exceed the amount deemed necessary by Lender to provide
for the payment of water and sewer rates, taxes, assessments, insurance
premiums, rents and Other Impositions, as they fall due, such excess shall be
credited to Borrower on the next monthly installment or installments of Funds
due. If at any time the amount of the Funds held by Lender shall be less than
the amount deemed necessary by Lender to pay water and sewer rates, taxes,
assessments, insurance premiums, rents and Other Impositions, as they fall due.
Borrower shall pay to Lender any amount necessary to make up the deficiency
within thirty days after notice from Lender to Borrower requesting payment
thereof.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, Lender may apply, in any amount and in any order as Lender shall
determine in Lender's sole discretion, any Funds held by Lender at the time of
Application (i) to pay rates, rents, taxes, assessments, insurance premiums and
Other Impositions which are now or will hereafter become due, or (ii) as a
credit against sums secured by this Instrument. Upon payment in full of all sums
secured by this Instrument, Lender shall promptly refund to Borrower any Funds
held by Lender.
3. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise, all
payments received by Lender from Borrower under the Note or this Instrument
shall be applied by Lender in the following order of priority: (i) amounts
payable to Lender by Borrower under paragraph 2 hereof; (ii) interest payable on
the Note; (iii) principal of the Note; (iv) interest payable on advances made
pursuant to paragraph 8 hereof, (v) principal of advances made pursuant to
paragraph 8 hereof; (vi) interest payable on any Future Advance, provided that
if more than one Future Advance is outstanding, Lender may apply payments
received among the amounts of interest payable on the Future Advances in such
order as Lender, in Lender's sole discretion, may determine; (vii) principal of
any Future Advance, provided that if more than one Future Advance is
outstanding, Lender may apply payments received among the principal balances of
the Future Advances in such order as Lender, in Lender's sole discretion, may
determine; and (viii) any other sums secured by this Instrument in such order as
Lender, at Lender's option, may determine; provided, however, that Lender may,
at Lender's option, apply any sums payable pursuant to paragraph 8 hereof prior
to interest on and principal of the Note, but such application shall not
otherwise affect the order of priority of application specified in this
paragraph 3.
4. CHARGES; LIENS. Borrower shall pay all water and sewer rates, rents, taxes,
assessments, premiums, and Other Impositions attributable to the Property at
Lender's option in the manner provided under paragraph 2 hereof or, if not paid
in such manner, by Borrower making payment when due, directly to the payee
thereof, or in such other manner as Lender may designate in writing. Borrower
shall promptly furnish to Lender all notices of amounts due under this paragraph
4, and in the event Borrower shall make payment directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments. Borrower shall
promptly discharge any lien which has, or may have, priority over or equality
with, the lien of this Instrument, and Borrower shall pay, when due, the claims
of all persons supplying labor or materials to or in connection with the
Property. Without Lender's prior written permission, Borrower shall not allow
any lien inferior to this Instrument to be perfected against the Property.
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5. HAZARD INSURANCE. Borrower shall keep the improvements now existing or
hereafter erected on the Property insured by carriers at all times satisfactory
to Lender against loss by fire, hazards included within the term "extended
coverage", rent loss and such other hazards, casualties, liabilities and
contingencies as Lender (and, if this Instrument is on a leasehold, the ground
lease) shall require and in such amounts and for such periods as Lender shall
require. All premiums on insurance policies shall be paid, at Lender's option,
in the manner provided under paragraph 2 hereof, or by Borrower making payment,
when due, directly to the carrier, or in such other manner as Lender may
designate in writing.
All insurance policies and renewals thereof shall be in a form
acceptable to Lender and shall include a standard mortgage clause in favor of
and in form acceptable to Lender. Lender shall have the right to hold the
policies, and Borrower shall promptly furnish to Lender all renewal notices and
all receipts of paid premiums. At least thirty days prior to the expiration date
of a policy, Borrower shall deliver to Lender a renewal policy in form
satisfactory to Lender. If this Instrument is on a leasehold, Borrower shall
furnish Lender a duplicate of all policies, renewal notices, renewal policies
and receipts of paid premiums if, by virtue of the ground lease, the originals
thereof may not be supplied by Borrower to Lender.
In the event of loss, Borrower shall give immediate written notice to
the insurance carrier and to Lender. Borrower hereby authorizes and empowers
Lender as attorney-in-fact for Borrower to make proof of loss, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom Lender's expenses incurred in the collection
of such proceeds; provided however, that nothing contained in this paragraph 5
shall require Lender to incur any expense or take any action hereunder. Borrower
further authorizes Lender, at Lender's option, (a) to hold the balance of such
proceeds to be used to reimburse Borrower for the cost of reconstruction or
repair of the Property or (b) to apply the balance of such proceeds to the
payment of the sums secured by this Instrument, whether or not then due, in the
order of application set forth in paragraph 3 hereof (subject, however, to the
rights of the lessor under the ground lease if this Instrument is on a
leasehold).
If the insurance proceeds are held by Lender to reimburse Borrower for
the cost of restoration and repair of the Property, the Property shall be
restored to the equivalent of its original condition or such other condition as
Lender may approve in writing. Lender may, at Lender's option, condition
disbursement of said proceeds on Lender's approval of such plans and
specifications of an architect satisfactory to Lender, contractor's cost
estimates, architect's certificates, waivers of liens, sworn statements of
mechanics and materialmen and such other evidence of costs, percentage
completion of construction, application of payments, and satisfaction of liens
as Lender may reasonably require. If the insurance proceeds are applied to the
payment of the sums secured by this Instrument, any such application of proceeds
to principal shall not extend or postpone the due dates of the monthly
installments referred to in paragraphs 1 and 2 hereof or change the amounts of
such installments. If the Property is sold pursuant to paragraph 27 hereof or if
Lender acquires title to the Property, Lender shall have all of the right, title
and interest of Borrower in and to any insurance policies and unearned premiums
thereon and in and to the proceeds resulting from any damage to the Property
prior to such sale or acquisition.
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6. PRESERVATION AND MAINTENANCE OF PROPERTY; LEASEHOLDS. Borrower (a) shall not
commit waste or permit impairment or deterioration of the Property, (b) shall
not abandon the Property, (c) shall restore or repair promptly and in a good and
workmanlike manner all or any part of the Property to the equivalent of its
original condition, or such other condition as Lender may approve in writing, in
the event of any damage, injury or loss thereto, whether or not insurance
proceeds are available to cover in whole or in part the costs of such
restoration or repair, (d) shall keep the Property, including improvements,
fixtures, equipment, machinery and appliances thereon in good repair and shall
replace fixtures, equipment, machinery and appliances on the Property when
necessary to keep such items in good repair, (e) shall comply with all laws,
ordinances, regulations and requirements of any governmental body applicable to
the Property, (f) shall provide for professional management of the Property by a
residential rental property manager satisfactory to Lender pursuant to a
contract approved by Lender in writing, unless such requirement shall be waived
by Lender in writing, (g) shall generally operate and maintain the Property in a
manner to ensure maximum rentals, and (h) shall give notice in writing to Lender
of and, unless otherwise directed in writing by Lender, appear in and defend any
action or proceeding purporting to affect the Property, the security of this
Instrument or the rights or powers of Lender. Neither Borrower nor any tenant or
other person shall remove, demolish or alter any improvement now existing or
hereafter erected on the Property or any fixture, equipment, machinery or
appliance in or on the Property except when incident to the replacement of
fixtures, equipment, machinery and appliances with items of like kind.
If this Instrument is on a leasehold, Borrower (i) shall comply with
the provisions of the ground lease, (ii) shall give immediate written notice to
Lender of any default by lessor under the ground lease or of any notice received
by Borrower from such lessor of any default under the ground lease by Borrower,
(iii) shall exercise any option to renew or extend the ground lease and give
written confirmation thereof to Lender within thirty days after such option
becomes exercisable, (iv) shall give immediate written notice to Lender of the
commencement of any remedial proceedings under the ground lease by any party
thereto and, if required by Lender, shall permit Lender as Borrower's
attorney-in-fact to control and act for Borrower in any such remedial
proceedings and (v) shall within thirty days after request by Lender obtain from
the lessor under the ground lease and deliver to Lender the lessor's estoppel
certificate required thereunder, if any. Borrower hereby expressly transfers and
assigns to Lender the benefit of all covenants contained in the ground lease,
whether or not such covenants run with the land, but Lender shall have no
liability with respect to such covenants nor any other covenants contained in
the ground lease.
Borrower shall not surrender the leasehold estate and interests herein
conveyed nor terminate or cancel the ground lease creating said estate and
interests, and Borrower shall not, without the express written consent of
Lender, alter or amend said ground lease. Borrower covenants and agrees that
there shall not be a merger of the ground lease, or of the leasehold estate
created thereby, with the fee estate covered by the ground lease by reason of
said leasehold estate or said fee estate, or any part of either, coming into
common ownership, unless Lender shall consent in writing to such merger, if
Borrower shall acquire such fee estate, then this Instrument shall
simultaneously and without further action be spread so as to become a lien on
such fee estate.
7. USE OF PROPERTY. Unless required by applicable law or unless Lender has
otherwise agreed in writing, Borrower shall not allow changes in the use for
which all or any part of the Property was intended at the time this Instrument
was executed. Borrower shall not initiate or acquiesce in a change in the zoning
classification of the Property without Lender's prior written consent.
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8. PROTECTION OF LENDER'S SECURITY. If Borrower fails to perform the covenants
and agreements contained in this Instrument, or if any action or proceeding is
commenced which affects the Property or title thereto or the interest of Lender
therein, including, but not limited to, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankruptcy or decedent,
then Lender at Lender's option may make such appearances, disburse such sums and
take such action as Lender deems necessary, in its sole discretion, to protect
Lender's interest, including, but not limited to, (i) disbursement of attorney's
fees, (ii) entry upon the Property to make repairs, (iii) procurement of
satisfactory insurance as provided in paragraph 5 hereof, and (iv) if this
Instrument is on a leasehold, exercise of any option to renew or extend the
ground lease on behalf of Borrower and the curing of any default of Borrower in
the terms and conditions of the ground lease.
Any amounts disbursed by Lender pursuant to this paragraph 8, with
interest thereon, shall become additional indebtedness of Borrower secured by
this Instrument. Unless Borrower and Lender agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the rate stated in the Note unless collection from
Borrower of interest at such rate would be contrary to applicable law, in which
event such amounts shall bear interest at the highest rate which may be
collected from Borrower under applicable law. Borrower hereby covenants and
agrees that Lender shall be subrogated to the lien of any mortgage or other lien
discharged, in whole or in part, by the indebtedness secured hereby. Nothing
contained in this paragraph 8 shall require Lender to incur any expense or take
any action hereunder.
9. INSPECTION. Lender may make or cause to be made reasonable entries upon and
inspections of the Property.
10. BOOKS AND RECORDS. SEE ATTACHED RIDER TO MULTIFAMILY
INSTRUMENT.
11. CONDEMNATION. Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, whether direct or
indirect, of the Property, or part thereof, and Borrower shall appear in and
prosecute any such action or proceeding unless otherwise directed by Lender in
writing. Borrower authorizes Lender, at Lender's option, 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 or other taking of the
Property, whether direct or indirect, and to settle or compromise any claim in
connection with any condemnation or other taking, whether direct or indirect, of
the Property, or part thereof, or for conveyances in lieu of condemnation, are
hereby assigned to and shall be paid to Lender subject, if this Instrument is on
a leasehold, to the rights of lessor under the ground lease.
Borrower authorizes Lender to apply such awards, payments, proceeds or
damages, after the deduction of Lender's expenses incurred in the collection of
such amounts, at Lender's option, to restoration or repair of the Property or to
payment of the sums secured by this Instrument, whether or not then due, in the
order of application set forth in paragraph 3 hereof, with the balance, if any,
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to Borrower. Unless Borrower and Lender otherwise agree in writing, any
application of proceeds to principal shall not extend or postpone the due date
of the monthly installments referred to in paragraphs 1 and 2 hereof or change
the amount of such installments. Borrower agrees to execute such further
evidence of assignment of any awards, proceeds, damages or claims arising in
connection with such condemnation or taking as Lender may require.
12. BORROWER AND LIEN NOT RELEASED. From time to time, Lender may, at Lender's
option, without giving notice to or obtaining the consent of Borrower,
Borrower's successors or assigns or of any junior lienholder or guarantors,
without liability on Lender's part and notwithstanding Borrower's breach of any
covenant or agreement of Borrower in this Instrument, extend the time for
payment of said indebtedness or any part thereof, reduce the payments thereon,
release anyone liable on any of said indebtedness, accept a renewal note or
notes therefor, modify the terms and time of payment of said indebtedness,
release from the lien of this Instrument any part of the Property, take or
release other or additional security, reconvey any part of the Property, consent
to any map or plan of the Property, consent to the granting of any easement,
join in any extension or subordination agreement, and agree in writing with
Borrower to modify the rate of interest or period of amortization of the Note or
change the amount of the monthly installments payable thereunder. Any actions
taken by Lender pursuant to the terms of this paragraph 12 shall not affect the
obligation of Borrower or Borrower's successors or assigns to pay the sums
secured by this Instrument and to observe the covenants of Borrower contained
herein, shall not affect the guaranty of any person, corporation, partnership or
other entity for payment of the indebtedness secured hereby, and shall not
affect the lien or priority of lien hereof on the Property. Borrower shall pay
Lender a reasonable service charge, together with such title insurance premiums
and attorney's fees as may be incurred at Lender's option, for any such action
if taken at Borrower's request.
13. FORBEARANCE BY LENDER NOT A WAIVER. Any forbearance by Lender in exercising
any right or remedy hereunder, 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 any sum secured by this Instrument after the
due date of such payment shall not be a waiver of Lender's right to either
require prompt payment when due of all other sums so secured or to declare a
default for failure to make prompt payment. The procurement of insurance or the
payment of taxes or other liens or charges by Lender shall not be a waiver of
Lender's right to accelerate the maturity of the indebtedness secured by this
Instrument, nor shall Lender's receipt of any awards, proceeds or damages under
paragraphs 5 and 11 hereof operate to cure or waive Borrower's default in
payment of sums secured by this Instrument.
14. ESTOPPEL CERTIFICATE. Borrower shall within ten days of a written request
from Lender furnish Lender with a written _________, ______ acknowledged,
setting forth the sums secured by this Instrument and any right of set-off,
counterclaim or other defense which exists against such sums and the obligations
of this Instrument.
15. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is intended to
be a security agreement pursuant to the Uniform Commercial Code for any of the
items specified above as part of the Property which, under applicable law, may
be subject to a security interest pursuant to the Uniform Commercial Code, and
Borrower hereby grants Lender a security interest in said items. Borrower agrees
that Lender may file this Instrument, or a reproduction therreof, in the real
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estate records or other appropriate index, as a financing statement for any of
the items specified above as part of the Property. Any reproduction of this
Instrument or of any other security agreement or financing statement shall be
sufficient as a financing statement. In addition, Borrower agrees to execute and
deliver to Lender, upon Lender's request, any financing statements, as well as
extensions, renewals and amendments thereof, and reproductions of this
Instrument in such form as Lender may require to perfect a security interest
with respect to said items. Borrower shall pay all costs of filing such
financing statements and any extensions, renewals, amendments and releases
thereof, and shall pay all reasonable costs and expenses of any record searches
for financing statements Lender may reasonably require. Without the prior
written consent of Lender, Borrower shall not create or suffer to be created
pursuant to the Uniform Commercial Code any other security interest in said
items, including replacements and additions thereto. Upon Borrower's breach of
any covenant or agreement of Borrower contained in this Instrument, including
the covenants to pay when due all sums secured by this Instrument, Lender shall
have the remedies of a secured party under the Uniform Commercial Code and, at
Lender's option, may also invoke the remedies provided in paragraph 27 of this
Instrument as to such items. In exercising any of said remedies, Lender may
proceed against the items of real property and any items of personal property
specified above as part of the Property separately or together in any order
whatsoever, without in any way affecting the availability of Lender's remedies
under the Uniform Commercial Code or of the remedies provided in paragraph 27 of
this Instrument.
16. LEASES OF THE PROPERTY. As used in this paragraph 16, the word "lease" shall
mean "sublease" if this Instrument is on a leasehold. Borrower shall comply with
and observe Borrower's obligations as landlord under all leases of the Property
or any part thereof. Borrower will not lease any portion of the Property for
non-residential use except with the prior written approval of Lender. Borrower,
at Lender's request, shall furnish Lender with executed copies of all leases now
existing or hereafter made of all or any part of the Property, and all leases
now or hereafter entered into will be in form and substance subject to the
approval of Lender. All leases of the Property shall specifically provide that
such leases are subordinate to this Instrument; that the tenant attorns to
Lender, such attornment to be effective under Lender's acquisition of title to
the Property; that the tenant agrees to execute such further evidences of
attornment as lender may from time to time request; that the attornment of the
tenant shall not be terminated by foreclosure; and that Lender may, at Lender's
option, accept or reject such attornments. Borrower shall not, without Lender's
written consent, execute, modify, surrender or terminate, either orally or in
writing, any lease now existing or hereafter made of all or any part of the
Property providing for a term of three years or more, permit an assignment or
sublease of such a lease without Lender's written consent, or request or consent
to the subordination of any lease of all or any part of the Property to any lien
subordinate to this Instrument. If Borrower becomes aware that any tenant
proposes to do, or is doing, any act or thing which may give rise to any right
of set-off against rent, Borrower shall (i) take such steps as shall be
reasonably calculated to prevent the accrual of any right to a set-off against
rent, (ii) notify Lender thereof and of the amount of said set-offs, and (iii)
within ten days after such accrual, reimburse the tenant who shall have acquired
such right to set-off or take such other steps as shall effectively discharge
such set-off and as shall assure that rents thereafter due shall continue to be
payable without set-off or deduction.
Upon Lender's request, Borrower shall assign to lender, by written
instrument satisfactory to Lender, all leases now existing or hereafter made of
all or any part of the Property and all security deposits made by tenants in
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connection with such leases of the Property. Upon assignment by Borrower to
lender of any leases of the Property, Lender shall have all of the rights and
powers possessed by Borrower prior to such assignment and Lender shall have the
right to modify, extend or terminate such existing leases and to execute new
leases, in Lender's sole discretion.
17. REMEDIES CUMULATIVE. Each remedy provided in this Instrument is distinct and
cumulative to all other rights or remedies under this Instrument or afforded by
law or equity, and may be exercised concurrently, independently, or
successively, in any order whatsoever.
18. ACCELERATION IN CASE OF BORROWER'S INSOLVENCY. If Borrower shall voluntarily
file a petition under the Federal Bankruptcy Act, as such Act may from time to
time be amended, or under any similar or successor Federal statute relating to
bankruptcy, insolvency, arrangements or reorganizations, or under any similar or
successor Federal statute relating to bankruptcy, insolvency, arrangements or
reorganizations, or under any state bankruptcy or insolvency act, or file an
answer in an involuntary proceeding admitting insolvency or inability to pay
debts, or if Borrower shall fail to obtain a vacation or stay of involuntary
proceedings brought for the reorganization, dissolution or liquidation of
Borrower, or if Borrower shall be adjudged a bankrupt, or if a trustee or
receiver shall, be appointed for Borrower or Borrower's property, or if the
Property shall become subject to the jurisdiction of a Federal bankruptcy court
or similar state court, or if Borrower shall make an assignment for the benefit
of Borrower's creditors, or if there is an attachment, execution or other
judicial seizure of any portion of Borrower's assets and such seizure is not
discharged within ten days, then lender may, at Lender's option, declare all of
the sums secured by this Instrument to be immediately due and payable without
prior notice to Borrower, and lender may invoke any remedies permitted by
paragraph 27 of this Instrument. Any attorney's fees and other expenses incurred
by Lender in connection with Borrower's bankruptcy or any of the other aforesaid
events shall be additional indebtedness of Borrower secured by this Instrument
pursuant to paragraph 8 hereof.
19. [removed]
20. SEE ATTACHED RIDER TO MULTIFAMILY INSTRUMENT
21. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY; AGENTS; CAPTIONS.
The covenants and agreements herein contained shall bind, and the rights
hereunder shall inure to, the respective successors and assigns of Lender and
Borrower, subject to the provisions of paragraph 19 hereof. All covenants and
agreements of Borrower shall be joint and several. In exercising any rights
hereunder or taking any actions provided for herein, Lender may act through its
employees, agents or independent contractors as authorized by Lender. The
captions and headings of the paragraphs of this Instrument are for convenience
only and are not to be used to interpret or define the provisions hereof.
22. UNIFORM MULTIFAMILY INSTRUMENT; GOVERNING LAW; SEVERABILITY. This form of
multifamily instrument combines uniform covenants for national use and
non-uniform covenants with limited variations by jurisdiction to constitute a
uniform security instruments covering real property and related fixtures and
personal property. This Instrument shall be governed by the law of the
jurisdiction in which the Property is located. In the event that any provision
of this Instrument or the Note conflicts with applicable law, such conflict
10
shall not affect other provisions of this Instrument or the Note which can be
given effect without the conflicting provisions, and to this end the provisions
of this Instrument and the Note are declared to be severable. In the event that
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
that Instrument or in the Note, whether considered separately or together with
other charges levied in connection with this Instrument and the Note, violates
such law, and Borrower is entitled to the benefit of such law, such charge is
hereby reduced to the extent necessary to eliminate such violation. The amounts,
if any, previously paid to Lender in excess of the amounts payable to Lender
pursuant to such charges as reduced shall be applied by Lender to reduce the
principal of the indebtedness evidenced by the Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
indebtedness which is secured by this Instrument or evidenced by the Note and
which constitutes interest, as well as all other charges levied in connection
with such 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 computed thereby is uniform throughout the
stated term of the Note.
23. 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 the Note or any other obligation
secured by this Instrument.
24. WAIVER OF MARSHALING. Notwithstanding the existence of any other security
interests in the 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 Property shall
be subjected to the remedies provided herein. Lender shall have the right to
determine the order in which any or all portions of the indebtedness secured
hereby are satisfied from the proceeds realized upon the exercise of the
remedies provided herein. Borrower, any party who consents to this Instrument
and any party who now or hereafter acquires a security interest in the Property
and who has actual or constructive notice hereof hereby waives any and all right
to require the marshaling of assets in connection with the exercise of any of
the remedies permitted by applicable law or provided herein.
25. [removed]
26. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION. As part
of the consideration for the indebtedness evidenced by the Note, Borrower hereby
absolutely and unconditionally assigns and transfers to Lender all the rents and
revenues of the Property, including those now due, past due, or to become due by
virtue of any lease or other agreement for the occupancy or use of all or any
part of the Property, regardless of to whom the rents and revenues of the
Property are payable. Borrower hereby authorizes Lender or Lender's agents to
collect the aforesaid rents and revenues and hereby directs each tenant of the
Property to pay such rents to Lender or Lender's agents, provided, however, that
prior to written notice given by Lender to Borrower of the breach by Borrower of
any covenant or agreement of Borrower in this Instrument, Borrower shall collect
and receive all rents and revenues of the Property as trustee for the benefit of
Lender and Borrower, to apply the rents and revenues so collected to the sums
secured by this Instrument in the order provided in paragraph 3 hereof with the
balance, so long as no such breach has occurred, to the account of Borrower, ,
11
it being intended by Borrower and Lender that this assignment of rents
constitutes an absolute assignment and not an assignment for additional security
only. Upon delivery of written notice by Lender to Borrower of the breach by
Borrower of any covenant or agreement of Borrower in this Instrument, and
without the necessity of Lender entering upon and taking and maintaining full
control of the Property in person, by agent or by a counter-appointed receiver,
Lender shall immediately be entitled to possession of all rents and revenues of
the Property as specified in this paragraph 26 of the same becoming due and
payable, including but not limited to rents then due and unpaid, and all such
rents shall immediately upon delivery of such notice be held by Borrower as
trustee for the benefit of Lender only provided, however, that the written
notice by Lender to Borrower of the breach by Borrower shall contain a statement
that Lender exercises its rights to such rents. Borrower agrees that commencing
upon delivery of such written notice of Borrower's breach by Lender to Borrower,
each tenant of the Property shall make such rents payable to and pay such rent
to Lender or Lender's agents on Lender's written demand to each tenant therefor,
delivered to each tenant personally, by mail or by delivering such demand to
each rental unit, without any liability on the part of said tenant to inquire
further as to the existence of a default by Borrower.
Borrower hereby covenants that Borrower has not executed any prior
assignment of said rents, that Borrower has not performed, and will not perform,
any acts or has not executed, and will not execute, any instrument which would
prevent Lender from exercising its rights under this paragraph 26, and that at
the time of execution of this Instrument there has been no anticipation or
prepayment of any of the rents of the Property for more than two months prior to
the due dates of such rents. Borrower covenants that Borrower will not hereafter
collect or accept payment of any rents of the Property more than two months
prior to the due dates of such rents. Borrower further covenants that Borrower
will execute and deliver to Lender such further assignments of rents and
revenues of the Property as Lender may from time to time request.
Upon Borrower's breach of any covenant or agreement of Borrower in this
Instrument, Lender may in person, by agent or by a court-appointed receiver,
regardless of the adequacy of Lender's security, enter upon and take and
maintain full control of the Property in order to perform all acts necessary and
appropriate for the operation and maintenance thereof including, but not limited
to, the execution, cancellation or modification of leases, the collection of all
rents and revenues of the Property, the making of repairs to the Property and
the execution or termination of contracts providing for the management or
maintenance of the Property, all on such terms as are deemed best to protect the
security of this Instrument. In the event Lender elects to seek the appointment
of a receiver for the Property upon Borrower's breach of any covenant or
agreement of Borrower in this Instrument, Borrower hereby expressly consents to
the appointment of such receiver. Lender or the receiver shall be entitled to
receive a reasonable fee for so managing the Property.
All rents and revenues collected subsequent to delivery of the written
notice by Lender to Borrower of the breach by Borrower of any covenant or
agreement of Borrower in this Instrument shall be applied first to the costs, if
any, of taking control of and managing the Property and collecting the rents,
including, but not limited to, attorney's fees, receiver's fees, premiums on
receiver's bonds, costs of repairs to the Property, premiums on insurance
policies, taxes, assessments and other charges on the Property, and the costs of
discharging any obligation or liability of Borrower as lessor or landlord of the
Property and then to the sums secured by this Instrument. Lender or the receiver
12
shall have access to the books and records used in the operation and maintenance
of the Property and shall be liable to account 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 Property by reason of
anything done or left undone by Lender under this paragraph 26.
If the rents of the Property are not sufficient to meet the costs, if
any, of taking control of and managing the Property and collecting the rents,
any funds expended by Lender for such purposes shall become indebtedness of
Borrower to Lender secured by this Instrument pursuant to paragraph 8 hereof.
Unless Lender and Borrower agree in writing to other terms of payment, such
amounts shall be payable upon notice from Lender to Borrower requesting payment
thereof and shall bear interest from the date of disbursement at the rate stated
in the Note unless payment of interest at such rate would be contrary to
applicable law, in which event such amounts shall bear interest at the highest
rate which may be collected from Borrower under applicable law.
Any entering upon and taking and maintaining of control of the Property
by Lender or the receiver and any application of rents as provided herein shall
not cure or waive any default hereunder or invalidate any other right or remedy
of Lender under applicable law or provided herein. This assignment of rents of
the Property shall terminate at such time as this Instrument ceases to secure
indebtedness held by Lender.
Non-Uniform Covenants. Borrower and Lender further covenant and agree as
follows:
27. ACCELERATION; REMEDIES. Upon Borrower's breach of any covenant or agreement
of Borrower in this Instrument, including, but not limited to, the covenants to
pay when due any sums secured by this Instrument, Lender at Lender's option may
declare all of the sums secured by this Instrument to be immediately due and
payable without further demand, and may invoke the power of sale and any other
remedies permitted by applicable law or provided herein. Borrower acknowledges
that the power of sale herein granted may be exercised by Lender without prior
judicial hearing. Borrower has the right to bring an action to assert the
non-existence of a breach or any other defense of Borrower to acceleration and
sale. Lender shall be entitled to collect all costs and expenses incurred in
pursuing such remedies, including, but not limited to, attorney's fees and costs
of documentary evidence, abstracts and title reports.
If the power of sale is invoked, Trustee shall record a notice of
default in each country in which the Property or some part thereof is located
and shall mail copies of such notice in the manner prescribed by applicable law
to Borrower and to the other persons prescribed by applicable law Trustee shall
give notice of sale and Trustee shall sell the Property according to the laws of
Nebraska. Trustee may sell the Property at the time and place and under the
terms designated in the notice of sale in one or more parcels and in such order
as Trustee may determine. Trustee may postpone sale of all or any parcel of the
Property by public announcement at the time and place of any previously
scheduled sale. Lender or Lender's designee may purchase the Property at any
sale.
Trustee shall deliver to the purchaser Trustee's deed conveying the
Property so sold without any covenant or warranty, expressed or implied. The
recitals in the Trustee's deed shall be prima facie evidence of the truth of the
statements made therein. Trustee shall apply the proceeds of the sale in the
following order, (a) to all costs and expenses of the sale, including, but not
limited to, Trustee's fees of not more than 5% of the gross sale price,
13
attorney's fees and costs of title evidence: (b) to all sums secured by this
Instrument in such order as Lender, in Lender's sold discretion, directs; and
(c) the excess, if any, to the person or persons legally entitled thereto.
28. RECONVEYANCE. Upon payment of all slums secured by this Instruments, Lender
shall request Trustee to reconvey the Property and shall surrender this
Instrument and all notes evidencing indebtedness secured by this Instrument to
Trustee. Trustee shall reconvey the Property without warranty to the person or
persons legally entitled thereto. such person or persons shall pay Trustee's
reasonable costs incurred in so reconveying the Property.
29. SUBSTITUTE TRUSTEE. Lender, at Lender's option, may from time to time remove
Trustee and appoint a successor trustee to any Trustee appointed hereunder by an
instrument recorded in the county in which this Instrument is recorded. Without
conveyance of the Property, the successor trustee shall succeed to all the
title, power and duties conferred upon the Trustee herein and by applicable law.
30. REQUEST FOR NOTICES. Borrower requests that copies of the notice of default
and notice of sale be sent to Borrower's address stated below.
31. FUTURE ADVANCES. Upon request of Borrower, Lender, at Lender's option so
long as this Instrument secures indebtedness held by Lender, may make Future
Advances to Borrower. Such Future Advances, with interest thereon, shall be
secured by this Instrument when evidenced by promissory notes stating that said
notes are secured hereby. At no time shall the principal amount of the
indebtedness secured by this Instrument, not including sums advanced in
accordance herewith to protect the security of this Instrument, exceed the
original amount of the Note (US$6,400,000.00) plus the additional sum of US$
N/A.
32. *See below.
* The attached Rider to Multifamily Instrument, dated the date of this
Multifamily Instrument, is incorporated into and deemed to amend and
supplement this Multifamily Instrument.
14
In Witness Whereof, Borrower has executed this Instrument or has caused
the same to be executed by its representative thereunto duly authorized.
BORROWER:
GRAMERCY HILL ENTERPRISES,
a Texas general partnership
By: Gramercy Hill Limited Partnership, a Nebraska
limited partnership, its general partner
By: Gramercy Hill Corp., a Nebraska
corporation, its general partner
By: /s/ Andrew C. Jacobs
-----------------------------
Andrew C. Jacobs,
Borrower's Address:
c/o Andrew C. Jacobs
1033 O Street, Suite 304
Lincoln, Nebraska 68508
STATE OF NEBRASKA, Lancaster County ss:
The foregoing instrument was acknowledged before me this 4th day of
December, 1997, by Andrew C. Jacobs, president of Gramercy Hill Corporation, a
Nebraska Corporation, general partner of Gramercy Hill Enterprises, a Texas
general partnership, on behalf of Gramercy Hill Enterprises.
Witness my hand and notarial seal in said state and county, the aforesaid
date.
/s/ Rhonda J. Jacob
-----------------------------------
Notary Public
My Commission Expires:
-----------------------
15
EXHIBIT A
LOT SEVENTY-NINE (79) OF IRREGULAR TRACTS IN THE SOUTHEAST QUARTER OF SECTION
28, TOWNSHIP 10 NORTH, RANGE 7 EAST OF THE 6TH P.M., LINCOLN, LANCASTER COUNTY,
NEBRASKA.
16
RIDER TO MULTIFAMILY INSTRUMENT
THIS RIDER TO MULTIFAMILY INSTRUMENT (the "Rider") is made this 4th day
of December, 1997, and is incorporated into and shall be deemed to amend and
supplement the Multifamily Mortgage, Deed of Trust or Deed to Secure Debt of the
same date (the "Instrument"), given by the undersigned GRAMERCY HILL
ENTERPRISES, a Texas general partnership (the "Borrower"), to secure Borrower's
Multifamily Note of the same date (the "Note") with Addendum to Multifamily Note
of the same date (the "Addendum") to WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
a Delaware corporation, 1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182
[Insert address of Lender], and its successors, assigns and transferees (the
"Lender"), covering the property described in the Instrument and defined therein
as the "Property," located at: 6800 A Street, Lincoln, Nebraska 68510 [Property
Address] The Property is located entirely within the State of Nebraska [Insert
name of state in which the Property is located] (the "Property Jurisdiction").
The term "Loan Documents" when used in this Rider shall mean,
collectively, the following documents: (i) the Instrument, as modified by this
Rider and any other riders to the Instrument given by Borrower to lender and
covering the Property; (ii) the Note, as modified by the Addendum and any other
addendum to the Note; and (iii) all other documents or agreements, including any
Collateral Agreements (as defined below) or O&M Agreements (as defined below),
arising under, related to, or made in connection with, the loan evidenced by the
Note, as such Loan Documents may be amended from time to time. Any conflict
between the provisions of the Instrument and the Rider shall be resolved in
favor of the Rider.
The covenants and agreements of this Rider, and the covenants and
agreements of any other riders to the Instrument given by Borrower to Lender and
covering the Property, shall be incorporated into and shall amend and supplement
the covenants and agreements of the Instrument as if this Rider and the other
riders were a part of the Instrument and all references to the Instrument in the
Loan Documents shall mean the Instrument as so amended and supplemented.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made
in the Instrument, Borrower and Lender further covenant and agree as follows:
A. Funds for Taxes, Insurance and Other Charges
Uniform Covenant 2 of the Instrument ("Funds for Taxes, Insurance and
Other Charges") is amended to change the title to "Funds for Taxes, Insurance
and Other Charges; Collateral Agreements." Existing Uniform Covenant 2 is
amended to become Uniform Covenant 2A. The following new Uniform Covenant 2B is
added at the end of Uniform Covenant 2A;
17
2B Replacement Reserve Agreement, Completion/Repair Agreement, Achievement
Agreement and Other Collateral Agreements
(a) Replacement Reserve Agreement
Borrower shall deposit with Lender the amounts required by the
Replacement Reserve and Security Agreement (the "Replacement Reserve Agreement")
between Borrower and Lender, dated the date of the Note, at the times required
by the Replacement Reserve Agreement, and shall perform all other obligations as
and when required pursuant to the Replacement Reserve Agreement.
(b) Completion/Repair Agreement
Borrower shall deposit with Lender the amount required by the
Completion/Repair and Security Agreement (the "Completion/Repair Agreement")
between Borrower and Lender (if any), dated the date of the Note, at the time
required by the Completion/Repair Agreement, and shall perform all other
obligations as and when required pursuant to the Completion/Repair Agreement.
(c) Achievement Agreement
Borrower shall perform all of its obligations as and when required
pursuant to the Achievement Agreement between Borrower and Lender (if any),
dated the date of the Note.
(d) Collateral Agreements
As used herein, the term "Collateral Agreement" shall mean any of the
Replacement Reserve Agreement, the Completion/Repair Agreement, the Achievement
Agreement and any similar agreement which has been entered into between Borrower
and Lender in connection with the loan evidenced by the Note.
B. Application of Payments
Uniform Covenant 3 of the Instrument ("Application of Payments") is
amended to add the following sentence at the end thereof:
Notwithstanding the preceding sentence, (i) Lender shall be permitted
to apply any partial payment received from Borrower in any manner determined by
Lender and in any order of priority of application as determined by Lender, in
Lender's sole discretion, and (ii) upon any breach of any covenant or agreement
of Borrower in the Instrument, the Note or any other Loan Document, Lender shall
be permitted to apply any funds held pursuant to any Collateral Agreement in any
manner which is permitted pursuant to such Collateral Agreement and in any order
of priority of application as determined by Lender, in Lender's sole discretion.
C. Hazard Insurance; Restoration of Property
Uniform Covenant 5 of the Instrument ("Hazard Insurance") is amended to
add the following sentence at the end thereof:
Lender shall not exercise Lender's option to apply insurance proceeds
to the payment of the sums secured by the Instrument if all of the following
conditions are met: (i) Borrower is not in breach or default of any provision of
18
the Instrument, the Note or any other Loan Document; (ii) Lender determines that
there will be sufficient funds to restore and repair the Property to a condition
approved by lender; (iii) Lender determines that the rental income of the
Property, after restoration and repair of the Property to a condition approved
by lender, will be sufficient to meet all operating costs and other expenses,
payments for reserves and loan repayment obligations relating to the Property;
and (iv) Lender determines that restoration and repair of the Property to a
condition approved by lender will be completed prior to the earlier of either
(1) the maturity date of the Note or (2) within one year of the date of the loss
or casualty to the Property.
D. Environmental Hazards Provision
In addition to Borrower's covenants and agreements under Uniform
Covenant 6 of the Instrument ("Preservation and Maintenance of Property;
Leaseholds"), Borrower further covenants and agrees that Borrower shall not:
(a) cause or permit the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage
(including aboveground and underground storage tanks for petroleum or
petroleum products), treatment, handling, or disposal of any Hazardous
Materials (as defined below) (excluding the safe and lawful use and
storage of quantities of hazardous Materials customarily used in the
operation and maintenance of comparably multifamily properties or for
normal household purposes) on or under the Property, or in any way
affecting the Property or its value, or which may form the basis for
any present or future demand, claim or liability relating to
contamination, exposure, cleanup or other remediation of the Property
or;
(b) cause or permit the transportation to, from or across the Property of
any Hazardous Material excluding the safe and lawful use and storage
of quantities of Hazardous Materials customarily used in the operation
and maintenance of comparable multifamily properties or from normal
household purposes); or
(c) cause or exacerbate any occurrence or condition on the Property that
is or may be in violation of Hazardous Materials Law (as defined
below).
(The matters described in (a), (b) and (c) above are referred to collectively
below as "Prohibited Activities or Conditions.")
Except with respect to any matters which have been disclosed in writing
by Borrower to lender prior to the date of the Instrument, or matters which have
been disclosed in an environmental hazard assessment report of the Property
received by lender prior to the date of the Instrument, Borrower represents and
warrants that it has not at any time caused or permitted any Prohibited
Activities or Conditions and to the best of its knowledge, no Prohibited
Activities or Conditions exist or have existed on or under the Property.
Borrower shall take all appropriate steps (including but not limited to
appropriate lease provisions) to prevent its employees, agents, and contractors,
and all tenants and other occupants on the Property, from causing, permitting or
exacerbating any Prohibited Activities or Conditions. Borrower shall not lease
or allow the sublease of all or any portion of the Property for non-residential
use to any tenant or subtenant that, in the ordinary course of its business,
19
would cause, permit or exacerbate any Prohibited Activities or Conditions, and
all non-residential leases and subleases shall provide that tenants and
subtenants shall not cause, permit or exacerbate any Prohibited Activities or
Conditions.
If Borrower has disclosed that Prohibited Activities or Conditions
exist on the Property, Borrower shall comply in a timely manner with, and cause
all employees, agents, and contractors of Borrower and any other persons present
on the Property to so comply with, (1) any program of operations and maintenance
("O&M Program") relating to the Property that is acceptable to lender with
respect to one or more Hazardous Materials (which O&M Program may be set forth
in an agreement of Borrower (an "O&M Agreement")) and all other obligations set
forth in any O&M Agreement, and (2) all Hazardous Materials Laws. Any O&M
Program shall be performed by qualified personnel. All costs and expenses of the
O&M Program shall be paid by Borrower, including without limitation Lender's
fees and costs incurred in connection with the monitoring and review of the O&M
Program and Borrower's performance thereunder. If Borrower fails to timely
commence or diligently continue and complete the O&M Program and comply with any
O&M Agreement, then Lender may, at Lender's option, declare all of the sums
secured by the Instrument to be immediately due and payable, and Lender may
invoke any remedies permitted by paragraph 27 of the Instrument.
Borrower represents that Borrower has not received, and has no
knowledge of the issuance of, any claim, citation or notice of any pending or
threatened suits, proceedings, orders, or governmental inquiries or opinions
involving the Property that allege the violation of any Hazardous Materials Law
("Governmental Actions").
Borrower shall promptly notify Lender in writing of: (i) the occurrence
of any Prohibited Activity of Condition on the Property; (ii) Borrower's actual
knowledge of the presence on or under any adjoining property of any Hazardous
Materials which can reasonably be expected to have a material adverse impact on
the Property or the value of the Property, discovery of any occurrence or
condition on the Property or any adjoining real property that could cause any
restrictions on the ownership, occupancy, transferability or use of the Property
under Hazardous Materials Law. Borrower shall cooperate with any governmental
inquiry, and shall comply with any governmental or judicial order which arises
from any alleged Prohibited Activities or Conditions; (iii) any Governmental
Action; and (iv) any claim made or threatened by any third party against
Borrower, Lender, or the Property relating to loss or injury resulting from any
Hazardous Materials. Any such notice by Borrower shall not relieve Borrower of,
or result in a waiver of any obligation of Borrower under this paragraph D.
Borrower shall pay promptly the costs of any environmental audits,
studies or investigations (including but not limited to advice of legal counsel)
and the removal of any Hazardous Materials from the Property required by Lender
as a condition of its consent to any sale or transfer under paragraph 19 of the
Instrument of all or any part of the Property or any transfer occurring upon a
foreclosure or a deed in lieu of foreclosure or any interest therein, or
required by lender following a reasonable determination by Lender that there may
be Prohibited Activities or Conditions on or under the Property. Borrower
authorizes Lender and its employees, agents and contractors to enter onto the
Property for the purpose of conducting such environmental audits, studies and
investigations. Any such costs and expenses incurred by Lender (including but
not limited to fees and expenses of attorneys and consultants, whether incurred
20
in connection with any judicial or administrative process or otherwise) which
Borrower fails to pay promptly shall become immediately due and payable and
shall become additional indebtedness secured by the Instrument pursuant to
Uniform Covenant 8 of the Instrument.
Borrower shall hold harmless, defend and indemnify Lender and its
officers, directors, trustees, employees, and agents from and against all
proceedings (including but not limited to Government Actions), claims, damages,
penalties, costs and expenses (including without limitation fees and expenses of
attorneys and expert witnesses, investigatory fees, and cleanup and remediation
expenses, whether or not incurred within the context of the judicial process),
arising directly or indirectly from (i) any breach of any representation,
warranty, or obligation of Borrower contained in this paragraph D or (ii) the
presence or alleged presence of hazardous Materials on or under the Property.
lender agrees that the liability created under this paragraph shall be limited
to the assets of Borrower and Lender shall not seek to recover any deficiency
from any natural persons who are general partners of Borrower (if Borrower is a
partnership).
The term "Hazardous Materials," for purposes of this paragraph D,
includes petroleum and petroleum products, flammable explosives, radioactive
materials (excluding radioactive materials in smoke detectors), polychlorinated
biphenyls, lead, asbestos in any form that is or could become friable, hazardous
waste, toxic or hazardous substances or other related materials whether in the
form of a chemical, element, compound, solution, mixture or otherwise including,
but not limited to, those materials defined as "hazardous substances,"
"extremely hazardous substances," "hazardous chemicals," "hazardous materials,"
"toxic substances," "solid waste," "toxic chemicals," "air pollutants," "toxic
pollutants," "hazardous wastes," "extremely hazardous waste," or "restricted
hazardous waste" by Hazardous Materials Law or regulated by Hazardous Materials
Law in any manner whatsoever.
The term "Hazardous Materials Law," for the purposes of this paragraph
D, means all federal, state, and local laws, ordinances and regulations and
standards, rules, policies and other binding governmental requirements and any
court judgments applicable to Borrower or to the Property relating to industrial
hygiene or to environmental or unsafe conditions or to human health including,
but not limited to, those relating to the generation, manufacture, storage,
handling, transportation, disposal, release, emission or discharge of Hazardous
Materials, those in connection with the construction, fuel supply power
generation and transmission, waste disposal of any other operations or processes
relating to the Property, and those relating to the atmosphere, soil, surface
and ground water, wetlands, stream sediments and vegetation on, under, in or
about the Property.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall be in addition to
any and all other obligations and liabilities that Borrower may have to Lender
under applicable law.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall continue and
survive notwithstanding the satisfaction, discharge, release, assignment,
termination, subordination or cancellation of the Instrument or the payment in
full of the principal of and interest on the Note and all other sums payable
under the Loan Documents or the foreclosure of the Instrument or the tender or
delivery of a deed in lieu of foreclosurer or the release of any portion of the
21
Property from the lien of the Instrument, except with respect to any Prohibited
Activities or Conditions or violation of any of the Hazardous Materials Laws
which first commences and occurs after the satisfaction, discharge, release,
assignment, termination or cancellation of the Instrument following the payment
in full of the principal of and interest on the Note and all other sums payable
under the Loan Documents or which first commences or occurs after the actual
dispossession from the entire Property of the Borrower and all entities which
control, are controlled by, or are under common control with the Borrower (each
of the foregoing persons or entities is hereinafter referred to as a
"Responsible Party") following foreclosure of the Instrument or acquisition of
the Property by a deed in lieu of foreclosure. Nothing in the foregoing sentence
shall relieve the Borrower from any liability with respect to any prohibited
Activities or Conditions or violation of Hazardous Materials Laws where such
Prohibited Activities or Conditions or violation of Hazardous Materials Laws
commences or occurs, or is present as a result of, any act or omission by any
Responsible Party or by any person or entity acting on behalf of a Responsible
Party.
E. Books, Records and Financial Information
Uniform Covenant 10 of the Instrument ("Books and Records") is amended
to read as follows:
Borrower shall keep and maintain at all times and upon Lender's
request, Borrower shall make available at the Property address, complete and
accurate books of accounts and records in sufficient detail to correctly reflect
the results of the operation of the Property and copies of all written
contracts, leases and other instruments which affect the Property (including but
not limited to all bills, invoices and contracts for electrical service, gas
service, water and sewer service, waste management service, telephone service
and management services). These books, records, contracts, leases and other
instruments shall be subject to examination and inspection at any reasonable
time by lender. Borrower shall furnish to lender the following: (i) within 120
days after the end of each fiscal year of Borrower, a statement of income and
expenses of the Property and a statement of changes in financial position, and
when requested by lender, a balance sheet, each in reasonable detail and
certified by Borrower and, if Lender shall require, the foregoing statements
shall be audited by an independent certified public accountant; (ii) together
with the foregoing financial statements and at any other time upon Lender's
request, a rent schedule for the Property, in the form required by lender and
certified by Borrower, showing the name of each tenant, and for each tenant, the
space occupied, the lese expiration date, the rent payable, the rent paid and
any other information requested by Lender; (iii) upon lender's request, an
accounting of all security deposits held in connection with any lease of any
part of the Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of the
financial institutions in which such security deposits are held and the name of
the person to contact at such financial institution, along with any authority or
release necessary for Lender to access information regarding such accounts; and
(iv) promptly upon Borrower's receipt, copies of any complaint filed against the
Borrower or the Property management alleging any violation of fair housing law,
handicap access or the Americans with Disabilities Act and any final
administrative or judicial dispositions of such complaints. If Borrower shall
fail to timely provide the financial statements required by clause (i) above,
Lender shall have the right to have the Borrower's books and records audited in
order to obtain such financial statements, and any such costs and expenses
incurred by Lender which Borrower fails to pay promptly shall become immediately
22
due and payable and shall become additional indebtedness secured by the
Instrument pursuant to paragraph 8 of the Instrument.
F. Transfers of the Property or Significant Interests in Borrower;
Transfer Fees
Uniform Covenant 19 of the Instrument ("Transfers of the Property or
Beneficial Interests in Borrower, Assumption") is amended to read as set forth
below:
Transfers of the Property or Significant Interests in Borrower; Transfer Fees
(a) Definitions
For purposes of the Instrument (and the Rider), the following terms
have the respective meanings set forth below:
(1) The term "Key Principal" means the natural person(s)
identified as such at the foot of the Rider, and any
natural person who becomes a Key Principal after the
date of the Note and are identified as such in an
amendment or supplement to the Loan Documents.
(2) The term "Transfer" means a sale, assignment,
transfer or other disposition (whether voluntary or
by operation of law) of, or the granting or creating
of a lien, encumbrance or security interest in, the
Property or in ownership interests, and the issuance
of other creation of ownership interests in an entity
and the reconstitution of one type of entity to
another type of entity.
(3) A "Significant Interest" in any entity shall mean the
following:
(i) if the entity is a general partnership or a
joint venture, (A) any partnership interest
in the general partnership, or (B) any
interest of a joint venturer in a joint
venture;
(ii) if the entity is a limited partnership, (A)
any limited partnership interest in the
entity which, together with all other
limited partnership interests in the entity
Transferred since the date of the Note,
exceeds 49% of all of the limited
partnership interests in the entity, or (B)
any general partnership interest in the
entity;
(iii) if the entity is a limited liability
company, any membership interest which,
together with all other membership interests
in the limited liability company Transferred
since the date of the Note, exceeds 49% of
all of the membership interests in the
limited liability company;
(iv) if the entity is a corporation, any voting
stock in the corporation which, together
with all other voting stock of the
corporation Transferred since the date of
23
the Note, exceeds d49% of alld of the voting
stock of the corporation; or
(v) if the entity is a trust, any beneficial
interest in such trust which, together with
all other beneficial interests in the trust
Transferred since the date of the Note,
exceeds 49% of all of the beneficial
interests in the trust.
(b) Acceleration of the Loan Upon Transfers of the Property or
Significant Interests
Lender may, at Lender's option, declare all sums secured by
the Instrument immediately due and payable and Lender may invoke any
remedies permitted by paragraph 27 of the Instrument if, without the
Lender's prior written consent, any of the following shall occur:
(1) a Transfer of all or any part of the Property or any
interest in the Property;
(2) a Transfer of any Significant Interest in Borrower;
(3) a Transfer of any Significant Interest in a
corporation, partnership, limited liability company,
joint venture, or trust which owns a Significant
Interest in the Borrower;
(4) if the Borrower is a trust, or if any trust owns a
Significant Interest in the Borrower, the addition,
deletion or substitution of a trustee of such trust,
which addition, deletion or substitution has not been
approved by Lender; or
(5) a Transfer of all or any part of any Key Principal's
ownership interest (other than the limited
partnership interests) in the Borrower, or in any
other entity which owns, directly or indirectly,
through one or more intermediate entities, an
ownership interest in the Borrower.
(c) Transfers Permitted with Lender's Prior Consent
Lender shall consent to a Transfer which would otherwise violate this
paragraph 19 if, prior to the Transfer:
(1) Borrower causes to be submitted to Lender all
information required by lender to evaluate the
transferee and the Property as if a new loan were
being made to the transferee and secured by the
Property, in the case of a Transfer of all or any
part of the Property or an interest therein, or to
the Borrower (as reconstituted after the proposed
Transfer), in the case of a Transfer of Significant
Interests;
(2) The transferee, in the case of a Transfer of all or
any part of the Property or an interest therein, or
the Borrower (as reconstituted after the proposed
24
Transfer), in the case of a Transfer of Significant
Interests, meet the eligibility, credit, management
and other standards, and the Property meets the
physical maintenance and replacement reserve
requirements, customarily applied by lender for
approval of new borrowers and properties for loans
secured by liens on multifamily properties;
(3) In the case of a Transfer of all or any part of the
Property, the proposed transferee (i) executes an
agreement acceptable to Lender pursuant to which the
proposed transferee agrees, upon consummation of the
Transfer, to assume and to pay and perform all
obligations of the Borrower under the Note, the
Instrument and the other Loan Documents, (ii) causes
one or more individuals acceptable to Lender to
execute and deliver to Lender an amendment or
supplement to the Loan Documents as "Key Principal,"
and (iii) executes such documents and otherwise
provides such documents and information as required
by lender in connection with the Transfer;
(4) In the case of a Transfer of a Principal's ownership
interest pursuant to paragraph 19(b)(5), (i) the
Borrower (as reconstituted after the proposed
Transfer) executes an agreement acceptable to Lender
that ratifies and confirms the obligations of
Borrower under the Note, the Instrument and the other
Loan Documents, (ii) one or more individuals
acceptable to lender execute and deliver to Lender an
amendment or supplement to the Loan Documents as "Key
Principal," and (iii) the Borrower executes such
documents and otherwise provides such documents and
information as required by Lender in connection with
the Transfer; and
(5) Borrower pays to lender a $3000 non-refundable
application fee and a transfer fee equal to one
percent (1%) of the sums secured by the Instrument.
In addition, Borrower shall be required to reimburse
Lender for all of Lender's out of pocket expenses
incurred in connection with the assumption, to the
extent such expenses exceed $3000.
(d) No Acceleration of the Loan For Transfers Caused By Certain
Events
Notwithstanding the foregoing provisions of this covenant, Lender shall
not be entitled to declare sums secured by the Instrument immediately
due and payable or to invoke any remedy permitted by paragraph 27 of
the Instrument solely upon the occurrence of any of the following:
(1) A Transfer that occurs by inheritance, devise, or
bequest or by operation of law upon the death of a
natural person who is an owner of the Property or the
owner of a direct or indirect ownership interest in
the Borrower.
(2) The grant of a leasehold interest in individual
dwelling units for a term of two years or less and
leases for commercial uses as long as commercial
leases do not exceed 20 percent of the rentable space
of the Property (measured as required by lender) and
25
provided that all such leasehold interests do not
contain an option to purchase the Property.
(3) A sale or other disposition of obsolete or worn out
personal property which is contemporaneously replaced
by comparable personal property of equal or greater
value which is free and clear of liens, encumbrances
and security interests other than those created by
the Loan Documents.
(4) The creation of a mechanic's or materialmen's lien or
judgment lien against the Property which is released
of record or otherwise remedied to Lender's
satisfaction, within 30 days of the date of creation.
(5) The grant of an easement, if prior to the granting of
the easement the Borrower causes to be submitted to
Lender all information required by Lender to evaluate
the easement, and if Lender determines the easement
will not materially affect the operation of the
property or Lender's interest in the Property and
Borrower pays to Lender, on demand, all cost and
expenses incurred by Lender in connection with
reviewing Borrower's request.
G. Notice
Uniform Covenant 20 of the Instrument ("Notice") is amended to read as
follows:
Each notice, demand, consent, or other approval (collectively,
"notices" and singly, "notice") given under the Note, the Instrument, and any
other Loan Document, shall be in writing to the other party, and if to Borrower,
at its address set forth below Borrower's signature on the Instrument, and if to
Lender at its address set forth at the beginning of the Rider, or at such other
address as such party may designate by notice to the other party and shall be
deemed given (a) three (3) Business Days after mailing, by certified or
registered U.S. mail, return receipt requested, postage prepaid, (b) one (1)
Business Day after delivery, fee prepaid, to a national overnight delivery
service (such as Federal Express, Purolator Courier, or U.P.S. Next Day Air), or
(c) when delivered, if personally delivered with proof of delivery thereof.
Borrower and Lender each agrees that it will not refuse or reject
delivery of any notice given hereunder, that it will acknowledge, in writing,
the receipt of the same upon request by the other party and that any notice
rejected or refused by it shall be deemed for all purposes of this Agreement to
have been received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the United States Postal Service or
the courier service. As used in the Instrument, 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.
Lender shall not be required to deliver notice to Key Principal in
connection with any notice given to Borrower. However, if Lender shall deliver
notice to Key Principal, such notice shall be given in the manner provided in
this Uniform Covenant 20, at Key Principal's address set forth at the foot of
the Rider.
26
H. Governing Law
In addition to the governing law provision of Uniform Covenant 22 of
the Instrument ("Uniform Multifamily Instrument; Governing Law; Severability"),
the Borrower and Lender covenant and agree as follows:
(a) Choice of Law
The validity of the Instrument and the other Loan Documents, each of
their terms and provisions, and the rights and obligations of Borrower under the
Instrument and the other Loan Documents, shall be governed by, interpreted,
construed, and enforced pursuant to and in accordance with the laws of the
Property Jurisdiction.
(b) Consent to Jurisdiction
Borrower consents to the exclusive jurisdiction of any and all state
and federal courts with jurisdiction in the Property Jurisdiction over Borrower
and the Borrower's assets. Borrower agrees that such assets shall be used first
to satisfy all claims of creditors organized or domiciled in the United States
of America ("USA") and that no assets of the Borrower in the USA shall be
considered part of any foreign bankruptcy estate.
Borrower agrees that any controversy arising under or in relation to
the Note, the Instrument or any of the other Loan Documents 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 may arise under or in relation to the
Note, and any security for the debt evidenced by the Note, including without
limitation those controversies relating to the execution, interpretation,
breach, enforcement, or compliance with the Note, the Instrument, or any other
issue arising under, related to, or in connection with any of the Loan
Documents. Borrower irrevocably consents to service, jurisdiction, and venue of
such courts for any litigation arising from the Note, the Instrument or any of
the other Loan Documents and waives any other venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise.
I. Acceleration; Remedies
Covenant 27 of the Instrument ("Acceleration; Remedies") is amended to
add the following at the end of the first paragraph:
Upon the breach of any covenant or agreement by Borrower in the
Instrument (including, but not limited to, the covenants to pay when due sums
secured by the Instrument), or any other Loan Document, Lender, at Lender's
option may, in addition to any remedies specified in this covenant, invoke any
other remedies provided in any Collateral Agreement.
If Borrower is in default under any promissory note (other than the
Note) evidencing a loan (the "Subordinate Loan") secured by a security
instrument (other than the Instrument) covering all or any portion of the
Property (the "Subordinate Instrument") or under any Subordinate Instrument or
other loan document executed in connection with the Subordinate Loan (and
whether or not the Borrower has obtained the prior approval of the Lender to the
27
placement of such Subordinate Instrument on the Property) which default remains
uncured after any applicable cure period. Borrower also then will be in default
under the Note and the Instrument. In that event, the entire unpaid principal
balance of the Note, accrued interest and any other sums due Lender secured by
the Instrument then will become due and payable, at Lender's option. If Lender
exercises this option to accelerate, Lender will do so in accordance with the
provisions of the Note and the Instrument, and the Lender may invoke any and all
remedies permitted by applicable law, the Note, the Instrument, or any of the
other Loan Documents.
J. Single Asset Borrower
Until the debt evidenced by the Note is paid in full, Borrower shall
not (1) acquire any real or personal property other than the Property and assets
(such as accounts) related to the operation and maintenance of the Property; or
(2) operate any business other than the management and operation of the
Property.
K. Non-Recourse Liability
Subject to the provisions of paragraph L and notwithstanding any other
provision in the Note or Instrument, the personal liability of Borrower, any
general partner of Borrower (if Borrower is a partnership), and any Key
Principal to pay the principal of and interest on the debt evidenced by the Note
and any other agreement evidencing Borrower's obligations under the Note and the
Instrument shall be limited to (1) the real and personal property described as
the "Property" in the Instrument, (2) the personal property described in and
pledged under any Collateral Agreement executed in connection with the loan
evidenced by the Note, (3) the rents, profits, issues, products and income of
the Property received or collected by or on behalf of Borrower (the "Rents and
Profits") to the extent such receipts are necessary, first, to pay the
reasonable expenses of operating, managing, maintaining and repairing the
Property, including but not limited to real estate taxes, utilities,
assessments, insurance premiums, repairs, replacements and ground rents, if any
(the "Operating Expenses") then due and payable as of the time of receipt of
such Rents and Profits, and then, to pay the principal and interest due under
the Note, and any other sums due under the Instrument or any other Loan Document
(including but not limited to deposits or reserves due under any Collateral
Agreement), except to the extent that Borrower did not have the legal right,
because of bankruptcy, receivership or similar judicial proceeding, to direct
the disbursement of such sums.
Except as provided in paragraph L, Lender shall not seek (a) any
judgment for a deficiency against Borrower, any general partner of Borrower (if
Borrower is a partnership) or any Key Principal, or Borrower's or any such
general partner's or Key Principal's heirs, legal representatives, successors or
assigns, in any action to enforce any right or remedy under the Instrument, or
(b) any judgment on the Note except as may be necessary in any action brought
under the Instrument to enforce the lien against the Property or to exercise any
remedies under any Collateral Agreement.
L. Exceptions to Non-Recourse Liability
If, without obtaining Lender's prior written consent, (i) a Transfer
shall occur which, pursuant to Uniform Covenant 19 of the Instrument, gives
Lender the right, at its option, to declare all sums secured by the Instrument
28
immediately due and payable, (ii) Borrower shall encumber the Property with the
lien of any Subordinate Instrument in connection with any financing by Borrower,
or (iii) Borrower shall violate the single asset covenant in paragraph J of the
Rider, any of such events shall constitute a default by Borrower under the Note,
the Instrument and the other Loan Documents and if such event shall continue for
30 days, paragraph K shall not apply from and after the date which is 30 days
after such event and the Borrower, any general partner of Borrower (if Borrower
is a partnership) and Key Principal (each individually on a joint and several
basis if more than one) shall be personally liable on a joint and several basis
for full recourse liability under the note and the other Loan Documents.
Notwithstanding paragraph K, Borrower, any general partner of Borrower
(if Borrower is a partnership) and Key Principal (each individually on a joint
and several basis if more than one), shall be personally liable on a joint and
several basis, in the amount of any loss, damage or cost (including but not
limited to attorneys' fees resulting from (A) fraud or intentional
misrepresentation by Borrower or Borrower's agents or employees or any Key
Principal or general partner of Borrower in connection with obtaining the loan
evidenced by the Note, or in complying with any of Borrower's obligations under
the Loan Documents, (B) insurance proceeds, condemnation awards, security
deposits from tenants and other sums or payments received by or on behalf of
Borrower in its capacity as owner of the Property and not applied in accordance
with the provisions of the Instrument (except to the extent that Borrower did
not have the legal right, because of a bankruptcy, receivership or similar
judicial proceeding, to direct disbursement of such sums or payments), (C) all
Rents and Profits (except to the extent that Borrower did not have the legal
right, because of bankruptcy, receivership or similar judicial proceeding, to
direct the disbursement of such sums), and not applied, first, to the payment of
the reasonable Operating Expenses as such Operating Expenses become due and
payable, and then, to the payment of principal and interest then due and payable
under the Note and all other sums due under the Instrument and all other Loan
Documents (including but not limited to deposits or reserves payable under any
Collateral Agreement), (D) Borrower's failure to pay transfer fees and charges
due under paragraph 19(c) of the Instrument, or (E) Borrower's failure following
a default under any of the Loan Documents to deliver to Lender on demand all
Rents and Profits, and security deposits (except to the extent that Borrower did
not have the legal right because of a bankruptcy, receivership or similar
judicial proceeding to direct disbursement of such sums), books and records
relating to the Property.
No provision of paragraphs K or L shall (i) affect any guaranty or
similar agreement executed in connection with the debt evidenced by the Note,
(ii) release or reduce the debt evidenced by the Note, (iii) impair the right of
Lender to enforce the provisions of paragraph D of the Rider, (iv) impair the
lien of the Instrument or (v) impair the right of Lender to enforce the
provisions of any Collateral Agreement.
M. Waiver of Jury Trial
Borrower and Key Principal (each for himself if more than one) (i)
covenant and agree not to elect a trial by jury with respect to any issue
arising under any of the Loan Documents triable by a jury and (ii) waive any
right to trial by jury to the extent that any such right shall now or hereafter
exist. This waiver of right to trial by jury is separately given, knowingly and
voluntarily with the benefit of competent legal counsel by the Borrower and Key
Principal, and this waiver is intended to encompass individually each instance
29
and each issue as to which the right to a jury trial would otherwise accrue.
Further, Borrower and Key Principal hereby certify that no representative or
agent of the Lender (including, but not limited to, the Lender's counsel) has
represented, expressly or otherwise, to Borrower or Key Principal that Lender
will not seek to enforce the provisions of this paragraph M.
BY SIGNING BELOW, Borrower accepts and agrees to the covenants and
agreements contained in this Rider.
BORROWER:
GRAMERCY HILL ENTERPRISES,
a Texas general partnership
By: Gramercy Hill Limited Partnership,
a Nebraska limited partnership,
its general partner
By: Gramercy Hill Corp.,
a Nebraska corporation,
its general partner
By: /s/ Andrew C. Jacobs
------------------------------
Andrew C. Jacobs, President
Acknowledgment and Agreement of Key Principal to
Personal Liability for the Exceptions to Non-Recourse
-----------------------------------------------------
Key Principal (each for himself if more than one) hereby represents to
Lender that he has a direct or indirect ownership interest in the Borrower and
that he participates in the management of the Borrower.
BY SIGNING BELOW, the undersigned Key Principal (each for himself, if
more than one) understands, accepts and agrees to the provisions of paragraphs
F, G, L and M above. No transfer of Key Principal's ownership interest in
Borrower or in any entity which directly or indirectly has ownership interest in
Borrower shall release Key Principal from liability hereunder, unless the
Borrower and Key Principal shall have complied with the provisions of paragraph
F above and Lender shall have approved the transfer and the substituted Key
Principal. Key Principal shall have no right of subrogation against the Borrower
or any general partner of Borrower by reason of any payment by Key Principal
pursuant to paragraph L.
30
KEY PRINCIPAL:
/s/ Andrew C. Jacobs (Seal)
-----------------------------------
Name: Andrew C. Jacobs
Address: 1033 O Street, Suite 304
Lincoln, Nebraska 68508
STATE OF NEBRASKA ss.
ss.
COUNTY OF LANCASTER ss.
The foregoing instrument was acknowledged before me this 4th day of
December, 1997, by Andrew C. Jacobs in his individual capacity.
Witness my hand and notarial seal in said state and county, the date
aforesaid.
/s/ Rhonda J. Jacob
----------------------------------------------
Notary Public in and for the State of Nebraska
Printed Name of Notary: _____________________
My Commission Expires: _____________________
31
SECOND RIDER TO MULTIFAMILY INSTRUMENT
(Seniors Housing)
THIS SECOND RIDER TO MULTIFAMILY INSTRUMENT (the "Rider") is made this
4th day of December, 1997, and is incorporated into and shall be deemed to amend
and supplement the Multifamily Mortgage Deed of Trust or Deed to Secure Debt of
the same date (the "Instrument"), given by the undersigned, GRAMERCY HILL
ENTERPRISES, a Texas general partnership (the "Borrower"), to secure Borrower's
Multifamily Note of the same date (the "Note") with Addendum to Multifamily Note
of the same date (the "Addendum") to WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
a Delaware corporation, 1593 Spring Hill Road, Suite 400, Vienna, Virginia 22182
and its successors, assigns and transferees (the "Lender"), covering the
property described in the instrument and defined therein as the "Property,"
located at 6800 A Street, Lincoln, Nebraska 68510. The Property is located
entirely within the State of Nebraska.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made
in the Instrument, Borrower and Lender further represent, covenant and agree as
follows:
A. DEFINITIONS.
1. The term "Property" shall also include, where applicable, payments
received from occupants, second-party charges added to base rental income, base
and/or additional meal sales, commercial operations located on the Property or
provided as a service to the occupants of the Property, rental from guest
suites, personal lease charges, furniture leases, and laundry services, and any
and all other services provided to third parties in connection with the
Property, and any and all other personal property on the real property site,
excluding personal property belonging to occupants of the real property (other
than property belonging to Borrower) and together with the following items:
permits, licenses and contracts, all rights to payments from Medicare or
Medicaid programs or similar federal, state or local programs, boards, bureaus
or agencies and rights to payment from residents or private insurers, arising
from the operation of the Property as a community residential, adult congregate
living facility, including independent assisted living or nursing care
facilities, all personal property acquired by Borrower after the date hereof or
in connection with the ownership and operation of the Property as a community
residence or adult congregate living facility, utility deposits, unearned
premiums, accrued, accruing or to accrue under insurance policies now or
hereafter obtained by the Borrower and all proceeds of any conversion of
Property or any part thereof including, without limitation, proceeds of hazard
and title insurance and all awards and compensating for the taking of eminent
domain, condemnation or otherwise, of all or any part of the Property or any
easement therein; including replacements and additions thereto.
2. The term "Lease" shall also include any occupancy agreements
pertaining to occupants of the Property, including both residential and
commercial agreements.
3. The term "Hazardous Materials" shall also include any medical
products or devices, including, but not limited to, those materials defined as
"medical waste" or "biological waste" under relevant statutes or regulations
pertaining to hazardous materials law.
32
B. BORROWER'S REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lender as follows:
1. The Property is duly licensed as an adult congregate living
facility, or otherwise legally authorized to operate as an adult congregate
living facility, under the applicable laws of Property Jurisdiction.
2. Borrower and the Property (and the operation thereof) are in
compliance in all material respects with the applicable provisions of all laws,
statutes regulations, ordinances, orders, standards, restrictions and rules of
any federal, state or local government or quasi-government body, agency, board,
or authority having jurisdiction over the operation of the Property, including,
without limitation: (a) health care and fire safety codes; (b) laws regulating
the handling and disposal of medical or biological waste; (c) the applicable
provisions of adult congregate living facility laws, rules, regulations and
published interpretations thereof to which the Borrower or the Property is
subject; and (d) all criteria established to classify the Property as housing
for older persons under the Fair Housing Amendments Act of 1988.
3. If required, Borrower has a current provider agreement under any and
all applicable federal, state and local laws for reimbursement: (a) to an adult
congregate living facility; or (b) for other type of care provided at such
facility. There is no decision not to renew any provider agreement related to
the Property, nor is there any action pending or threatened to impose material
intermediate or alternative sanctions with respect to the Property.
4. Borrower and the Property are not subject to any proceeding, suit or
investigation by any federal state or local government or quasi-government body,
board, authority, or other administrative or investigative body which may result
in the imposition of a fine, alternative, interim or final sanction, or which
would have a material adverse effect on Borrower or the operation of the
Property, or which would result in the appointment of a receiver or manager or
would result in the revocation, transfer, surrender, suspension or other
impairment of the operating certificate, license, permit, approval or
authorization of the Property to operate as an adult congregate facility.
5. Upon Lender's request, copies of resident care agreements shall be
provided to Lender. All resident records at the Property are true and correct in
all material respects.
6. Neither the execution and delivery of the Note, the Instrument or
the Loan Documents, Borrower's performance thereunder, the recordation of the
instrument, nor the exercise of any remedies by Lender will adversely affect the
licenses, regulations, permits, certificates, authorizations and approvals
necessary for the operation of the Property as an adult congregate living
facility in the Property jurisdiction.
7. Borrower is not a participant in any federal program whereby any
federal, state or local government or quasi-government body, agency, board or
other authority may have the right to recover funds by reason of the advance of
federal funds. Borrower has received no notice, and is not aware of any
violation of applicable antitrust laws of any federal, state or local government
or quasi-government body, agency, board or other authority.
33
8. In the event any existing management agreement is terminated or
Lender acquires the Property through foreclosure or otherwise, neither Borrower,
Lender, any subsequent manager, nor any subsequent purchaser (through
foreclosure or otherwise) must obtain a certificate of need from any applicable
state health care regulatory authority or agency (other than giving such notice
required under the applicable state law or regulation) prior to applying for any
applicable license, registration, permit, certificate, authorization or approval
necessary for the operation of the Property as an adult congregate living
facility, provided that no service or the unit compliment is changed.
C. ADDITIONAL DEFAULTS. The following shall constitute a breach of a covenant or
agreement under the Instrument.
1. If Borrower shall fail to correct, within the time deadlines set by
any federal, state or local licensing agency, any deficiency that justifies any
action by such agency with respect to the Property that may have a material
adverse affect on the income of the Property or Borrower's interest in the
Property, including, without limitation, a termination, revocation or suspension
of any applicable license, registration, permit, certificate, authorization or
approval necessary for the operation of the Property as an adult congregate
living facility.
2. If, without the consent of Lender: (a) Borrower ceases to operate
the Property as an adult congregate living facility; (b) Borrower ceases to
provide full kitchens (except ovens), separate bathrooms, and areas for eating,
sitting and sleeping in each unit (unless such kitchens did not exist at the
time the Instrument was executed); (c) Borrower ceases to provide other
facilities and services normally associated with "independent living units,"
including, without limitation, (i) central dining services providing one to
three meals per day; (ii) periodic housekeeping, (iii) laundry services, and
(iv) customary transportation services; (d) Borrower provides or contracts for
skilled nursing care for any of the units other than that level of care which
Borrower would be permitted to provide or contract for at an adult congregate
living facility under state, or local statutes, regulations, orders, standards,
rules or restrictions as may be amended from time to time; (e) skilled nursing
care is provided in a number of units exceeding twenty percent (20%) of the
total number of independent and assisted living units; (f) non-residential space
exceeds ten percent (10%) of the net rental area; or (g) the Property is no
longer classified as housing for older persons pursuant to the Fair Housing
Amendments Act of 1988, as it may be amended from time to time hereafter.
BY SIGNING BELOW, Borrower accepts and agrees to the covenants and
agreements contained in this Second Rider.
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BORROWER:
GRAMERCY HILL ENTERPRISES,
a Texas general partnership
By: Gramercy Hill Limited Partnership,
a Nebraska limited partnership,
its general partner
By: Gramercy Hill Corp.,
a Nebraska corporation,
its general partner
By: /s/ Andrew C. Jacobs
-----------------------------
Andrew C. Jacobs, President
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