Prepared by, and after recording FHLMC Loan No.
679503102
return to:
Gary S. Smuckler, Esq.
Pepper, Hamilton & Scheetz
1300 Nineteenth Street, N.W.
Washington, D.C. 20036
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(COLORADO)
(Blue Ridge at Palomino Park)
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (the "Instrument") is made as of the 24th day of December, 1997,
by PARK AT HIGHLANDS LLC, a limited liability company organized and
existing under the laws of Colorado, whose address is 1623 Blake Street,
Suite 270, Denver, Colorado 80202, as trustor ("Borrower"), to the Public
Trustee of Douglas County, Colorado as trustee ("Trustee"), for the benefit
of GMAC COMMERCIAL MORTGAGE CORPORATION, a corporation organized and
existing under the laws of California, whose address is 650 Dresher Road,
Horsham, Pennsylvania 19044, as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created
by this Instrument, irrevocably grants, conveys and assigns to Trustee, in
trust, with power of sale, the Mortgaged Property, including the Land
located in Douglas County, State of Colorado and described in Exhibit A
attached to this Instrument.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower's Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on January 1, 2008 in the principal amount of
$34,500,000.00, and all renewals, extensions and modifications of the
Indebtedness, and the performance of the covenants and agreements of
Borrower contained in the Loan Documents.
Borrower represents and warrants that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to grant,
convey and assign the Mortgaged Property, and that the Mortgaged Property
is unencumbered. Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and
demands, subject to any easements and restrictions listed in a schedule of
exceptions to coverage in any title insurance policy issued to Lender
contemporaneously with the execution and recordation of this Instrument and
insuring Lender's interest in the Mortgaged Property.
Covenants. Borrower and Lender covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following
meanings:
(a) "Borrower" means all persons or entities identified as "Borrower"
in the first paragraph of this Instrument, together with their successors
and assigns.
(b) "Collateral Agreement" means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves
for the Mortgaged Property, establishing a fund to assure the completion of
repairs or improvements specified in that agreement, or assuring reduction
of the outstanding principal balance of the Indebtedness if the occupancy
of or income from the Mortgaged Property does not increase to a level
specified in that agreement, or any other agreement or agreements between
Borrower and Lender which provide for the establishment of any other fund,
reserve or account.
(c) "Controlling Entity" means an entity which owns, directly or
indirectly through one or more intermediaries, (A) a general partnership
interest or more than 50% of the limited partnership interests in Borrower
(if Borrower is a partnership or joint venture), (B) a manager's interest
in Borrower or more than 50% of the ownership or membership interests in
Borrower (if Borrower is a limited liability company), or (C) more than 50%
of any class of voting stock of Borrower (if Borrower is a corporation).
(d) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged
Property.
(e) "Event of Default" means the occurrence of any event listed in
Section 22.
(f) "Fixtures" means all property which is so attached to the Land or
the Improvements as to constitute a fixture under applicable law,
including: machinery, equipment, engines, boilers, incinerators, installed
building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light;
antennas, cable, wiring and conduits used in connection with radio,
television, security, fire prevention, or fire detection or otherwise used
to carry electronic signals; telephone systems and equipment; elevators and
related machinery and equipment; fire detection, prevention and
extinguishing systems and apparatus; security and access control systems
and apparatus; plumbing systems; water heaters, ranges, stoves, microwave
ovens, refrigerators, dishwashers, garbage disposers, washers, dryers and
other appliances; light fixtures, awnings, storm windows and storm doors;
pictures, screens, blinds, shades, curtains and curtain rods; mirrors;
cabinets, paneling, rugs and floor and wall coverings; fences, trees and
plants; swimming pools; and exercise equipment.
(g) "Governmental Authority" means any board, commission, department
or body of any municipal, county, state or federal governmental unit, or
any subdivision of any of them, that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the Mortgaged
Property.
(h) "Hazardous Materials" means petroleum and petroleum products and
compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls ("PCBs") and compounds containing them; lead and lead-based
paint; asbestos or asbestos-containing materials in any form that is or
could become friable; underground or above-ground storage tanks, whether
empty or containing any substance; any substance the presence of which on
the Mortgaged Property is prohibited by any federal, state or local
authority; any substance that requires special handling; and any other
material or substance now or in the future defined as a "hazardous
substance," "hazardous material," "hazardous waste," "toxic substance,"
"toxic pollutant," "contaminant," or "pollutant" within the meaning of any
Hazardous Materials Law.
(i) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that
relate to Hazardous Materials and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., the Toxic Substance Control Act, 15 U.S.C.
Section 2601, et seq., the Clean Water Act, 33 U.S.C. Section 1251, et
seq., and the Hazardous Materials Transportation Act, 49 U.S.C.
Section 5101, and their state analogs.
(j) "Impositions" and "Imposition Deposits" are defined in
Section 7(a).
(k) "Improvements" means the buildings, structures, improvements, and
alterations now constructed or at any time in the future constructed or
placed upon the Land, including any future replacements and additions.
(l) "Indebtedness" means the principal of, interest on, and all other
amounts due at any time under, the Note, this Instrument or any other Loan
Document, including prepayment premiums, late charges, default interest,
and advances as provided in Section 12 to protect the security of this
Instrument.
(m) "Initial Owners" means, with respect to Borrower or any other
entity, the persons or entities who on the date of the Note own in the
aggregate 100% of the ownership interests in Borrower or that entity.
(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or
hereafter in force, whether oral or written, covering or affecting the
Mortgaged Property, or any portion of the Mortgaged Property (including
proprietary leases or occupancy agreements if Borrower is a cooperative
housing corporation), and all modifications, extensions or renewals.
(p) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument, or any subsequent holder of the Note.
(q) "Loan Documents" means the Note, this Instrument, all guaranties,
all indemnity agreements, all Collateral Agreements, O&M Programs, and any
other documents now or in the future executed by Borrower, any guarantor or
any other person in connection with the loan evidenced by the Note, as such
documents may be amended from time to time.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices
under the Note, this Instrument and any other Loan Document, and otherwise
to service the loan evidenced by the Note for the benefit of Lender.
Unless Borrower receives notice to the contrary, the Loan Servicer is the
entity identified as "Lender" in the first paragraph of this Instrument.
(s) "Mortgaged Property" means all of Borrower's present and future
right, title and interest in and to all of the following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights,
development rights, zoning rights and other similar rights
or interests, easements, tenements, rights-of-way, strips
and gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all
rights-of-way, streets, alleys and roads which may have been
or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the Land,
the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, whether or not Borrower
obtained the insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be
made by any municipal, state or federal authority with
respect to the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property,
including any awards or settlements resulting from
condemnation proceedings or the total or partial taking of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property under the power of
eminent domain or otherwise and including any conveyance in
lieu thereof;
(8) all contracts, options and other agreements for the sale of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by
Borrower now or in the future, including cash or securities
deposited to secure performance by parties of their
obligations;
(9) all proceeds from the conversion, voluntary or involuntary,
of any of the above into cash or liquidated claims, and the
right to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of
the Mortgaged Property, and all undisbursed proceeds of the
loan secured by this Instrument and, if Borrower is a
cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any municipal,
state or federal authority or insurance company (other than
refunds applicable to periods before the real property tax
year in which this Instrument is dated);
(14) all tenant security deposits which have not been forfeited
by any tenant under any Lease; and
(15) all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade
names, and goodwill relating to any of the Mortgaged
Property.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including all schedules, riders, allonges and addenda, as such
Multifamily Note may be amended from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer equipment
(hardware and software) and other tangible personal property (other than
Fixtures) which are used now or in the future in connection with the
ownership, management or operation of the Land or the Improvements or are
located on the Land or in the Improvements, and any operating agreements
relating to the Land or the Improvements, and any surveys, plans and
specifications and contracts for architectural, engineering and
construction services relating to the Land or the Improvements and all
other intangible property and rights relating to the operation of, or used
in connection with, the Land or the Improvements, including all
governmental permits relating to any activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or non-
residential space), revenues and other income of the Land or the
Improvements, including parking fees, laundry and vending machine income
and fees and charges for food, health care and other services provided at
the Mortgaged Property, whether now due, past due, or to become due, and
deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments
for schools, public betterments and general or local improvements, which
are levied, assessed or imposed by any public authority or quasi-public
authority, and which, if not paid, will become a lien, on the Land or the
Improvements.
(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law); (B)
the granting, creating or attachment of a lien, encumbrance or security
interest (whether voluntary, involuntary or by operation of law); (C) the
issuance or other creation of an ownership interest in a legal entity,
including a partnership interest, interest in a limited liability company
or corporate stock; (D) the withdrawal, retirement, removal or involuntary
resignation of a partner in a partnership or a member or manager in a
limited liability company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity or the reconstitution of one type of legal
entity into another type of legal entity. "Transfer" does not include (i)
a conveyance of the Mortgaged Property at a judicial or non-judicial
foreclosure sale under this Instrument or (ii) the Mortgaged Property
becoming part of a bankruptcy estate by operation of law under the United
States Bankruptcy Code. For purposes of defining the term "Transfer," the
term "partnership" shall mean a general partnership, a limited partnership,
a joint venture and a limited liability partnership, and the term "partner"
shall mean a general partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is also a
security agreement under the Uniform Commercial Code for any of the
Mortgaged Property which, under applicable law, may be subject to a
security interest under the Uniform Commercial Code, whether acquired now
or in the future, and all products and cash and non-cash proceeds thereof
(collectively, "UCC Collateral"), and Borrower hereby grants to Lender a
security interest in the UCC Collateral. Borrower shall execute and
deliver to Lender, upon Lender's request, financing statements,
continuation statements and amendments, in such form as Lender may require
to perfect or continue the perfection of this security interest. Borrower
shall pay all filing costs and all costs and expenses of any record
searches for financing statements that Lender may require. Without the
prior written consent of Lender, Borrower shall not create or permit to
exist any other lien or security interest in any of the UCC Collateral. If
an Event of Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code, in addition
to all remedies provided by this Instrument or existing under applicable
law. In exercising any remedies, Lender may exercise its remedies against
the UCC Collateral separately or together, and in any order, without in any
way affecting the availability of Lender's other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all Rents.
It is the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all Rents and to authorize
and empower Lender to collect and receive all Rents without the necessity
of further action on the part of Borrower. Promptly upon request by
Lender, Borrower agrees to execute and deliver such further assignments as
Lender may from time to time require. Borrower and Lender intend this
assignment of Rents to be immediately effective and to constitute an
absolute present assignment and not an assignment for additional security
only. For purposes of giving effect to this absolute assignment of Rents,
and for no other purpose, Rents shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of Rents is not
enforceable by its terms under the laws of the Property Jurisdiction, then
the Rents shall be included as a part of the Mortgaged Property and it is
the intention of the Borrower that in this circumstance this Instrument
create and perfect a lien on Rents in favor of Lender, which lien shall be
effective as of the date of this Instrument.
(b) After the occurrence of an Event of Default, Borrower authorizes
Lender to collect, sue for and compromise Rents and directs each tenant of
the Mortgaged Property to pay all Rents to, or as directed by, Lender.
However, until the occurrence of an Event of Default, Lender hereby grants
to Borrower a revocable license to collect and receive all Rents, to hold
all Rents in trust for the benefit of Lender and to apply all Rents to pay
the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under the other Loan
Documents, including Imposition Deposits, and to pay the current costs and
expenses of managing, operating and maintaining the Mortgaged Property,
including utilities, Taxes and insurance premiums (to the extent not
included in Imposition Deposits), tenant improvements and other capital
expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding
sentence may be retained by Borrower free and clear of, and released from,
Lender's rights with respect to Rents under this Instrument. From and after
the occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower's license to collect Rents shall
automatically terminate and Lender shall without notice be entitled to all
Rents as they become due and payable, including Rents then due and unpaid.
Borrower shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender's demand for Rents,
Lender may give, and Borrower hereby irrevocably authorizes Lender to give,
notice to all tenants of the Mortgaged Property instructing them to pay all
Rents to Lender, no tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant shall be
obligated to pay to Borrower any amounts which are actually paid to Lender
in response to such a notice. Any such notice by Lender shall be delivered
to each tenant personally, by mail or by delivering such demand to each
rental unit. Borrower shall not interfere with and shall cooperate with
Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents (other than an assignment of Rents
securing indebtedness that will be paid off and discharged with the
proceeds of the loan evidenced by the Note), that Borrower has not
performed, and Borrower covenants and agrees that it will not perform, any
acts and has not executed, and shall not execute, any instrument which
would prevent Lender from exercising its rights under this Section 3, and
that at the time of execution of this Instrument there has been no
anticipation or prepayment of any Rents for more than two months prior to
the due dates of such Rents. Borrower shall not collect or accept payment
of any Rents more than two months prior to the due dates of such Rents.
(d) If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender's security or the solvency of
Borrower and even in the absence of waste, enter upon and take and maintain
full control of the Mortgaged Property in order to perform all acts that
Lender in its discretion determines to be necessary or desirable for the
operation and maintenance of the Mortgaged Property, including the
execution, cancellation or modification of Leases, the collection of all
Rents, the making of repairs to the Mortgaged Property and the execution or
termination of contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of enforcing the
assignment of Rents pursuant to Section 3(a), protecting the Mortgaged
Property or the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable. Alternatively,
if an Event of Default has occurred and is continuing, regardless of the
adequacy of Lender's security, without regard to Borrower's solvency and
without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a
receiver for the Mortgaged Property to take any or all of the actions set
forth in the preceding sentence. If Lender elects to seek the appointment
of a receiver for the Mortgaged Property at any time after an Event of
Default has occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such receiver,
including the appointment of a receiver ex parte if permitted by applicable
law. Lender or the receiver, as the case may be, shall be entitled to
receive a reasonable fee for managing the Mortgaged Property. Immediately
upon appointment of a receiver or immediately upon the Lender's entering
upon and taking possession and control of the Mortgaged Property, Borrower
shall surrender possession of the Mortgaged Property to Lender or the
receiver, as the case may be, and shall deliver to Lender or the receiver,
as the case may be, all documents, records (including records on electronic
or magnetic media), accounts, surveys, plans, and specifications relating
to the Mortgaged Property and all security deposits and prepaid Rents. In
the event Lender takes possession and control of the Mortgaged Property,
Lender may exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the exercise by Lender of
any of the rights conferred under this Section 3 shall not be construed to
make Lender a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and
Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be liable
to account only to Borrower and only for those Rents actually received.
Lender shall not be liable to Borrower, anyone claiming under or through
Borrower or anyone having an interest in the Mortgaged Property, by reason
of any act or omission of Lender under this Section 3, and Borrower hereby
releases and discharges Lender from any such liability to the fullest
extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an additional
part of the Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged Property
by Lender or the receiver, as the case may be, and any application of Rents
as provided in this Instrument shall not cure or waive any Event of Default
or invalidate any other right or remedy of Lender under applicable law or
provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender all of
Borrower's right, title and interest in, to and under the Leases, including
Borrower's right, power and authority to modify the terms of any such
Lease, or extend or terminate any such Lease. It is the intention of
Borrower to establish a present, absolute and irrevocable transfer and
assignment to Lender of all of Borrower's right, title and interest in, to
and under the Leases. Borrower and Lender intend this assignment of the
Leases to be immediately effective and to constitute an absolute present
assignment and not an assignment for additional security only. For
purposes of giving effect to this absolute assignment of the Leases, and
for no other purpose, the Leases shall not be deemed to be a part of the
"Mortgaged Property" as that term is defined in Section 1(s). However, if
this present, absolute and unconditional assignment of the Leases is not
enforceable by its terms under the laws of the Property Jurisdiction, then
the Leases shall be included as a part of the Mortgaged Property and it is
the intention of the Borrower that in this circumstance this Instrument
create and perfect a lien on the Leases in favor of Lender, which lien
shall be effective as of the date of this Instrument.
(b) Until Lender gives notice to Borrower of Lender's exercise of its
rights under this Section 4, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited
by this Section or any other provision of this Instrument), including the
right, power and authority to modify the terms of any Lease or extend or
terminate any Lease. Upon the occurrence of an Event of Default, the
permission given to Borrower pursuant to the preceding sentence to exercise
all rights, power and authority under Leases shall automatically terminate.
Borrower shall comply with and observe Borrower's obligations under all
Leases, including Borrower's obligations pertaining to the maintenance and
disposition of tenant security deposits.
(c) Borrower acknowledges and agrees that the exercise by Lender,
either directly or by a receiver, of any of the rights conferred under this
Section 4 shall not be construed to make Lender a mortgagee-in-possession
of the Mortgaged Property so long as Lender has not itself entered into
actual possession of the Land and the Improvements. The acceptance by
Lender of the assignment of the Leases pursuant to Section 4(a) shall not
at any time or in any event obligate Lender to take any action under this
Instrument or to expend any money or to incur any expenses. Lender shall
not be liable in any way for any injury or damage to person or property
sustained by any person or persons, firm or corporation in or about the
Mortgaged Property. Prior to Lender's actual entry into and taking
possession of the Mortgaged Property, Lender shall not (i) be obligated to
perform any of the terms, covenants and conditions contained in any Lease
(or otherwise have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding relating to the
Lease or the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any
portion of the Mortgaged Property. The execution of this Instrument by
Borrower shall constitute conclusive evidence that all responsibility for
the operation, control, care, management and repair of the Mortgaged
Property is and shall be that of Borrower, prior to such actual entry and
taking of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's
exercise of Lender's rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, by a receiver, or by any other manner or proceeding permitted by
the laws of the Property Jurisdiction, Lender immediately shall have all
rights, powers and authority granted to Borrower under any Lease, including
the right, power and authority to modify the terms of any such Lease, or
extend or terminate any such Lease.
(e) Borrower shall, promptly upon Lender's request, deliver to Lender
an executed copy of each residential Lease then in effect. All Leases for
residential dwelling units shall be on forms approved by Lender, shall be
for initial terms of at least six months and not more than two years, and
shall not include options to purchase.
(f) Borrower shall not lease any portion of the Mortgaged Property
for non-residential use except with the prior written consent of Lender and
Lender's prior written approval of the Lease agreement. Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential
use (including any Lease in existence on the date of this Instrument)
without the prior written consent of Lender. Borrower shall, without
request by Lender, deliver an executed copy of each non-residential Lease
to Lender promptly after such Lease is signed. All non-residential
Leases, including renewals or extensions of existing Leases, shall
specifically provide that (1) such Leases are subordinate to the lien of
this Instrument; (2) the tenant shall attorn to Lender and any purchaser at
a foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a
foreclosure sale or by Lender in any manner; (3) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser at
a foreclosure sale may from time to time request; (4) the Lease shall not
be terminated by foreclosure or any other transfer of the Mortgaged
Property; (5) after a foreclosure sale of the Mortgaged Property, Lender or
any other purchaser at such foreclosure sale may, at Lender's or such
purchaser's option, accept or terminate such Lease; and (6) the tenant
shall, upon receipt after the occurrence of an Event of Default of a
written request from Lender, pay all Rents payable under the Lease to
Lender.
(g) Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in
advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
PREMIUM. Borrower shall pay the Indebtedness when due in accordance with
the terms of the Note and the other Loan Documents and shall perform,
observe and comply with all other provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment premium in connection with
certain prepayments of the Indebtedness, including a payment made after
Lender's exercise of any right of acceleration of the Indebtedness, as
provided in the Note.
6. EXCULPATION. Borrower's personal liability for payment of the
Indebtedness and for performance of the other obligations to be performed
by it under this Instrument is limited in the manner, and to the extent,
provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note (or
on another day designated in writing by Lender), until the Indebtedness is
paid in full, an additional amount sufficient to accumulate with Lender the
entire sum required to pay, when due (1) any water and sewer charges which,
if not paid, may result in a lien on all or any part of the Mortgaged
Property, (2) the premiums for fire and other hazard insurance, rent loss
insurance and such other insurance as Lender may require under Section 19,
(3) Taxes, and (4) amounts for other charges and expenses which Lender at
any time reasonably deems necessary to protect the Mortgaged Property, to
prevent the imposition of liens on the Mortgaged Property, or otherwise to
protect Lender's interests, all as reasonably estimated from time to time
by Lender, plus one-sixth of such estimate. The amounts deposited under
the preceding sentence are collectively referred to in this Instrument as
the "Imposition Deposits". The obligations of Borrower for which the
Imposition Deposits are required are collectively referred to in this
Instrument as "Impositions". The amount of the Imposition Deposits shall
be sufficient to enable Lender to pay each Imposition before the last date
upon which such payment may be made without any penalty or interest charge
being added. Lender shall maintain records indicating how much of the
monthly Imposition Deposits and how much of the aggregate Imposition
Deposits held by Lender are held for the purpose of paying Taxes, insurance
premiums and each other obligation of Borrower for which Imposition
Deposits are required. Any waiver by Lender of the requirement that
Borrower remit Imposition Deposits to Lender may be revoked by Lender, in
Lender's discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which may be
Lender, if Lender is such an institution) whose deposits or accounts are
insured or guaranteed by a federal agency. Lender shall not be obligated
to open additional accounts or deposit Imposition Deposits in additional
institutions when the amount of the Imposition Deposits exceeds the maximum
amount of the federal deposit insurance or guaranty. Lender shall apply
the Imposition Deposits to pay Impositions so long as no Event of Default
has occurred and is continuing. Unless applicable law requires, Lender
shall not be required to pay Borrower any interest, earnings or profits on
the Imposition Deposits. Borrower hereby pledges and grants to Lender a
security interest in the Imposition Deposits as additional security for all
of Borrower's obligations under this Instrument and the other Loan
Documents. Any amounts deposited with Lender under this Section 7 shall
not be trust funds, nor shall they operate to reduce the Indebtedness,
unless applied by Lender for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by Lender.
Lender shall have no obligation to pay any Imposition to the extent it
exceeds Imposition Deposits then held by Lender. Lender may pay an
Imposition according to any bill, statement or estimate from the
appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement or estimate or into the validity of the
Imposition.
(d) If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition exceeds the amount reasonably
deemed necessary by Lender plus one-sixth of such estimate, the excess
shall be credited against future installments of Imposition Deposits. If
at any time the amount of the Imposition Deposits held by Lender for
payment of a specific Imposition is less than the amount reasonably
estimated by Lender to be necessary plus one-sixth of such estimate,
Borrower shall pay to Lender the amount of the deficiency within 15 days
after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender may
apply any Imposition Deposits, in any amounts and in any order as Lender
determines, in Lender's discretion, to pay any Impositions or as a credit
against the Indebtedness. Upon payment in full of the Indebtedness, Lender
shall refund to Borrower any Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform
all other obligations of Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is
less than all amounts due and payable at such time, then Lender may apply
that payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither Lender's acceptance
of an amount which is less than all amounts then due and payable nor
Lender's application of such payment in the manner authorized shall
constitute or be deemed to constitute either a waiver of the unpaid amounts
or an accord and satisfaction. Notwithstanding the application of any such
amount to the Indebtedness, Borrower's obligations under this Instrument
and the Note shall remain unchanged.
10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental Authority and
all recorded lawful covenants and agreements relating to or affecting the
Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety, construction of
improvements on the Mortgaged Property, fair housing, zoning and land use,
and Leases. Borrower also shall comply with all applicable laws that
pertain to the maintenance and disposition of tenant security deposits.
Borrower shall at all times maintain records sufficient to demonstrate
compliance with the provisions of this Section 10. Borrower shall take
appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could
endanger tenants or visitors, result in damage to the Mortgaged Property,
result in forfeiture of the Mortgaged Property, or otherwise materially
impair the lien created by this Instrument or Lender's interest in the
Mortgaged Property. Borrower represents and warrants to Lender that no
portion of the Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Borrower shall
not (a) except for any change in use approved by Lender, allow changes in
the use for which all or any part of the Mortgaged Property is being used
at the time this Instrument was executed, (b) convert any individual
dwelling units or common areas to commercial use, (c) initiate or acquiesce
in a change in the zoning classification of the Mortgaged Property, or (d)
establish any condominium or cooperative regime with respect to the
Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its obligations under this
Instrument or any other Loan Document, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender's
security or Lender's rights under this Instrument, including eminent
domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent, then
Lender at Lender's option may make such appearances, disburse such sums and
take such actions as Lender reasonably deems necessary to perform such
obligations of Borrower and to protect Lender's interest, including (1)
payment of fees and out of pocket expenses of attorneys, accountants,
inspectors and consultants, (2) entry upon the Mortgaged Property to make
repairs or secure the Mortgaged Property, (3) procurement of the insurance
required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or under
any other provision of this Instrument that treats such disbursement as
being made under this Section 12, shall be added to, and become part of,
the principal component of the Indebtedness, shall be immediately due and
payable and shall bear interest from the date of disbursement until paid at
the "Default Rate", as defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged
Property (including environmental inspections and tests) during normal
business hours, or at any other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon Lender's request shall
make available at the Mortgaged Property, complete and accurate books of
account and records (including copies of supporting bills and invoices)
adequate to reflect correctly the operation of the Mortgaged Property, and
copies of all written contracts, Leases, and other instruments which affect
the Mortgaged Property. The books, records, contracts, Leases and other
instruments shall be subject to examination and inspection at any
reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of
Borrower, a statement of income and expenses for Borrower's
operation of the Mortgaged Property for that fiscal year, a
statement of changes in financial position of Borrower
relating to the Mortgaged Property for that fiscal year and,
when requested by Lender, a balance sheet showing all assets
and liabilities of Borrower relating to the Mortgaged
Property as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, a
rent schedule for the Mortgaged Property showing the name of
each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable for the current
month, the date through which rent has been paid, and any
related information requested by Lender;
(3) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, an
accounting of all security deposits held pursuant to all
Leases, including the name of the institution (if any) and
the names and identification numbers of the accounts (if
any) in which such security deposits are held and the name
of the person to contact at such financial institution,
along with any authority or release necessary for Lender to
access information regarding such accounts;
(4) within 120 days after the end of each fiscal year of
Borrower, and at any other time upon Lender's request, a
statement that identifies all owners of any interest in
Borrower and any Controlling Entity and the interest held by
each, if Borrower or a Controlling Entity is a corporation,
all officers and directors of Borrower and the Controlling
Entity, and if Borrower or a Controlling Entity is a limited
liability company, all managers who are not members;
(5) upon Lender's request, quarterly income and expense
statements for the Mortgaged Property;
(6) upon Lender's request at any time when an Event of Default
has occurred and is continuing, monthly income and expense
statements for the Mortgaged Property;
(7) upon Lender's request, a monthly property management report
for the Mortgaged Property, showing the number of inquiries
made and rental applications received from tenants or
prospective tenants and deposits received from tenants and
any other information requested by Lender; and
(8) upon Lender's request, a balance sheet, a statement of
income and expenses for Borrower and a statement of changes
in financial position of Borrower for Borrower's most recent
fiscal year.
(c) Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate by an
individual having authority to bind Borrower, and shall be in such form and
contain such detail as Lender may reasonably require. Lender also may
require that any statements, schedules or reports be audited at Borrower's
expense by independent certified public accountants acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the statements,
schedules and reports required by Section 14(b), Lender shall have the
right to have Borrower's books and records audited, at Borrower's expense,
by independent certified public accountants selected by Lender in order to
obtain such statements, schedules and reports, and all related costs and
expenses of Lender shall become immediately due and payable and shall
become an additional part of the Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing, Borrower
shall deliver to Lender upon written demand all books and records relating
to the Mortgaged Property or its operation.
(f) Borrower authorizes Lender to obtain a credit report on Borrower
at any time.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Borrower shall pay, or cause to be paid, all Taxes when due and before the
addition of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall pay
the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including insurance premiums, utilities, repairs and
replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added.
(c) As long as no Event of Default exists and Borrower has timely
delivered to Lender any bills or premium notices that it has received,
Borrower shall not be obligated to pay Taxes, insurance premiums or any
other individual Imposition to the extent that sufficient Imposition
Deposits are held by Lender for the purpose of paying that specific
Imposition. If an Event of Default exists, Lender may exercise any rights
Lender may have with respect to Imposition Deposits without regard to
whether Impositions are then due and payable. Lender shall have no
liability to Borrower for failing to pay any Impositions to the extent that
any Event of Default has occurred and is continuing, insufficient
Imposition Deposits are held by Lender at the time an Imposition becomes
due and payable or Borrower has failed to provide Lender with bills and
premium notices as provided above.
(d) Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the amount or validity
of any Imposition other than insurance premiums, if (1) Borrower notifies
Lender of the commencement or expected commencement of such proceedings,
(2) the Mortgaged Property is not in danger of being sold or forfeited, (3)
Borrower deposits with Lender reserves sufficient to pay the contested
Imposition, if requested by Lender, and (4) Borrower furnishes whatever
additional security is required in the proceedings or is reasonably
requested by Lender, which may include the delivery to Lender of the
reserves established by Borrower to pay the contested Imposition.
(e) Borrower shall promptly deliver to Lender a copy of all notices
of, and invoices for, Impositions, and if Borrower pays any Imposition
directly, Borrower shall promptly furnish to Lender receipts evidencing
such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage,
deed of trust, deed to secure debt, security interest or other lien or
encumbrance (a "Lien") on the Mortgaged Property (other than the lien of
this Instrument) or on certain ownership interests in Borrower, whether
voluntary, involuntary or by operation of law, and whether or not such Lien
has priority over the lien of this Instrument, is a "Transfer" which
constitutes an Event of Default and subjects Borrower to personal liability
under the Note.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
Borrower (a) shall not commit waste or permit impairment or deterioration
of the Mortgaged Property, (b) shall not abandon the Mortgaged Property,
(c) shall restore or repair promptly, in a good and workmanlike manner, any
damaged part of the Mortgaged Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing,
whether or not insurance proceeds or condemnation awards are available to
cover any costs of such restoration or repair, (d) shall keep the Mortgaged
Property in good repair, including the replacement of Personalty and
Fixtures with items of equal or better function and quality, (e) shall
provide for professional management of the Mortgaged Property by a
residential rental property manager satisfactory to Lender under a contract
approved by Lender in writing, and (f) shall give notice to Lender of and,
unless otherwise directed in writing by Lender, shall appear in and defend
any action or proceeding purporting to affect the Mortgaged Property,
Lender's security or Lender's rights under this Instrument. Borrower shall
not (and shall not permit any tenant or other person to) remove, demolish
or alter the Mortgaged Property or any part of the Mortgaged Property
except in connection with the replacement of tangible Personalty.
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations and
maintenance approved in writing by Lender (an "O&M Program") or matters
described in Section 18(b), Borrower shall not cause or permit any of the
following:
(1) the presence, use, generation, release, treatment,
processing, storage (including storage in above ground and
underground storage tanks), handling, or disposal of any
Hazardous Materials on or under the Mortgaged Property or
any other property of Borrower that is adjacent to the
Mortgaged Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in
violation of Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property
or any property of Borrower that is adjacent to the
Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the safe
and lawful use and storage of quantities of (1) pre-packaged supplies,
cleaning materials and petroleum products customarily used in the operation
and maintenance of comparable multifamily properties, (2) cleaning
materials, personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants of
residential dwelling units in the Mortgaged Property; and (3) petroleum
products used in the operation and maintenance of motor vehicles from time
to time located on the Mortgaged Property's parking areas, so long as all
of the foregoing are used, stored, handled, transported and disposed of in
compliance with Hazardous Materials Laws.
(c) Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases executed
after the date of this Instrument) to prevent its employees, agents, and
contractors, and all tenants and other occupants from causing or permitting
any Prohibited Activities or Conditions. Borrower shall not lease or allow
the sublease or use of all or any portion of the Mortgaged Property to any
tenant or subtenant for nonresidential use by any user that, in the
ordinary course of its business, would cause or permit any Prohibited
Activity or Condition.
(d) If an O&M Program has been established with respect to Hazardous
Materials, Borrower shall comply in a timely manner with, and cause all
employees, agents, and contractors of Borrower and any other persons
present on the Mortgaged Property to comply with the O&M Program. All
costs of performance of Borrower's obligations under any O&M Program shall
be paid by Borrower, and Lender's out-of-pocket costs incurred in
connection with the monitoring and review of the O&M Program and Borrower's
performance shall be paid by Borrower upon demand by Lender. Any such out-
of-pocket costs of Lender which Borrower fails to pay promptly shall become
an additional part of the Indebtedness as provided in Section 12.
(e) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or permitted
any Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions
exist or have existed;
(3) except to the extent previously disclosed by Borrower to
Lender in writing, the Mortgaged Property does not now
contain any underground storage tanks, and, to the best of
Borrower's knowledge after reasonable and diligent inquiry,
the Mortgaged Property has not contained any underground
storage tanks in the past. If there is an underground
storage tank located on the Property which has been
previously disclosed by Borrower to Lender in writing, that
tank complies with all requirements of Hazardous Materials
Laws;
(4) Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding
releases of Hazardous Materials. Without limiting the
generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the
Mortgaged Property in accordance with Hazardous Materials
Laws now in effect and all such Environmental Permits are in
full force and effect;
(5) no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving
of notice would constitute, noncompliance with the terms of
any Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending
or, to the best of Borrower's knowledge after reasonable and
diligent inquiry, threatened that involve the Mortgaged
Property and allege, arise out of, or relate to any
Prohibited Activity or Condition; and
(7) Borrower has not received any complaint, order, notice of
violation or other communication from any Governmental
Authority with regard to air emissions, water discharges,
noise emissions or Hazardous Materials, or any other
environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is
adjacent to the Mortgaged Property.
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the
Indebtedness has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:
(1) Borrower's discovery of any Prohibited Activity or
Condition;
(2) Borrower's receipt of or knowledge of any complaint, order,
notice of violation or other communication from any
Governmental Authority or other person with regard to
present or future alleged Prohibited Activities or
Conditions or any other environmental, health or safety
matters affecting the Mortgaged Property or any other
property of Borrower that is adjacent to the Mortgaged
Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result
in a waiver of, any obligation under this Instrument, the Note, or any
other Loan Document.
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required by
Lender in connection with any foreclosure or deed in lieu of foreclosure,
or as a condition of Lender's consent to any Transfer under Section 21, or
required by Lender following a reasonable determination by Lender that
Prohibited Activities or Conditions may exist. Any such costs incurred by
Lender (including the fees and out-of-pocket costs of attorneys and
technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay promptly
shall become an additional part of the Indebtedness as provided in
Section 12. The results of all Environmental Inspections made by Lender
shall at all times remain the property of Lender and Lender shall have no
obligation to disclose or otherwise make available to Borrower or any other
party such results or any other information obtained by Lender in
connection with its Environmental Inspections. Lender hereby reserves the
right, and Borrower hereby expressly authorizes Lender, to make available
to any party, including any prospective bidder at a foreclosure sale of the
Mortgaged Property, the results of any Environmental Inspections made by
Lender with respect to the Mortgaged Property. Borrower consents to Lender
notifying any party (either as part of a notice of sale or otherwise) of
the results of any of Lender's Environmental Inspections. Borrower
acknowledges that Lender cannot control or otherwise assure the
truthfulness or accuracy of the results of any of its Environmental
Inspections and that the release of such results to prospective bidders at
a foreclosure sale of the Mortgaged Property may have a material and
adverse effect upon the amount which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a result
of delivering the results of any of its Environmental Inspections to any
third party, and Borrower hereby releases and forever discharges Lender
from any and all claims, damages, or causes of action, arising out of,
connected with or incidental to the results of, the delivery of any of
Lender's Environmental Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("Remedial Work") is necessary to comply
with any Hazardous Materials Law or order of any Governmental Authority
that has or acquires jurisdiction over the Mortgaged Property or the use,
operation or improvement of the Mortgaged Property under any Hazardous
Materials Law, Borrower shall, by the earlier of (1) the applicable
deadline required by Hazardous Materials Law or (2) 30 days after notice
from Lender demanding such action, begin performing the Remedial Work, and
thereafter diligently prosecute it to completion, and shall in any event
complete the work by the time required by applicable Hazardous Materials
Law. If Borrower fails to begin on a timely basis or diligently prosecute
any required Remedial Work, Lender may, at its option, cause the Remedial
Work to be completed, in which case Borrower shall reimburse Lender on
demand for the cost of doing so. Any reimbursement due from Borrower to
Lender shall become part of the Indebtedness as provided in Section 12.
(i) Borrower shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial order which
arises from any alleged Prohibited Activity or Condition.
(j) Borrower shall indemnify, hold harmless and defend (i) Lender,
(ii) any prior owner or holder of the Note, (iii) the Loan Servicer, (iv)
any prior Loan Servicer, (v) the officers, directors, shareholders,
partners, employees and trustees of any of the foregoing, and (vi) the
heirs, legal representatives, successors and assigns of each of the
foregoing (collectively, the "Indemnitees") from and against all
proceedings, claims, damages, penalties and costs (whether initiated or
sought by Governmental Authorities or private parties), including fees and
out of pocket expenses of attorneys and expert witnesses, investigatory
fees, and remediation costs, whether incurred in connection with any
judicial or administrative process or otherwise, arising directly or
indirectly from any of the following:
(1) any breach of any representation or warranty of Borrower in
this Section 18;
(2) any failure by Borrower to perform any of its obligations
under this Section 18;
(3) the existence or alleged existence of any Prohibited
Activity or Condition;
(4) the presence or alleged presence of Hazardous Materials on
or under the Mortgaged Property or any property of Borrower
that is adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials
Law.
(k) Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. However, any Indemnitee may
elect to defend any claim or legal or administrative proceeding at the
Borrower's expense.
(l) Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or administrative
proceeding (a "Claim"), settle or compromise the Claim if the settlement
(1) results in the entry of any judgment that does not include as an
unconditional term the delivery by the claimant or plaintiff to Lender of a
written release of those Indemnitees, satisfactory in form and substance to
Lender; or (2) may materially and adversely affect Lender, as determined by
Lender in its discretion.
(m) Borrower's obligation to indemnify the Indemnitees shall not be
limited or impaired by any of the following, or by any failure of Borrower
or any guarantor to receive notice of or consideration for any of the
following:
(1) any amendment or modification of any Loan Document;
(2) any extensions of time for performance required by any Loan
Document;
(3) any provision in any of the Loan Documents limiting Lender's
recourse to property securing the Indebtedness, or limiting
the personal liability of Borrower or any other party for
payment of all or any part of the Indebtedness;
(4) the accuracy or inaccuracy of any representations and
warranties made by Borrower under this Instrument or any
other Loan Document;
(5) the release of Borrower or any other person, by Lender or by
operation of law, from performance of any obligation under
any Loan Document;
(6) the release or substitution in whole or in part of any
security for the Indebtedness; and
(7) Lender's failure to properly perfect any lien or security
interest given as security for the Indebtedness.
(n) Borrower shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against
which Indemnitees are entitled to be indemnified under this
Section 18;
(2) reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are
entitled to be indemnified under this Section 18; and
(3) reimburse Indemnitees for any and all expenses, including
fees and out of pocket expenses of attorneys and expert
witnesses, paid or incurred in connection with the
enforcement by Indemnitees of their rights under this
Section 18, or in monitoring and participating in any legal
or administrative proceeding.
(o) In any circumstances in which the indemnity under this Section 18
applies, Lender may employ its own legal counsel and consultants to
prosecute, defend or negotiate any claim or legal or administrative
proceeding and Lender, with the prior written consent of Borrower (which
shall not be unreasonably withheld, delayed or conditioned) may settle or
compromise any action or legal or administrative proceeding. Borrower
shall reimburse Lender upon demand for all costs and expenses incurred by
Lender, including all costs of settlements entered into in good faith, and
the fees and out of pocket expenses of such attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any and
all other obligations and liabilities that Borrower may have under
applicable law or under other Loan Documents, and each Indemnitee shall be
entitled to indemnification under this Section 18 without regard to whether
Lender or that Indemnitee has exercised any rights against the Mortgaged
Property or any other security, pursued any rights against any guarantor,
or pursued any other rights available under the Loan Documents or
applicable law. If Borrower consists of more than one person or entity, the
obligation of those persons or entities to indemnify the Indemnitees under
this Section 18 shall be joint and several. The obligation of Borrower to
indemnify the Indemnitees under this Section 18 shall survive any repayment
or discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the lien of this Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times against
such hazards as Lender may from time to time require, which insurance shall
include but not be limited to coverage against loss by fire and allied
perils, general boiler and machinery coverage, and business income
coverage. Lender's insurance requirements may change from time to time
throughout the term of the Indebtedness. If Lender so requires, such
insurance shall also include sinkhole insurance, mine subsidence insurance,
earthquake insurance, and, if the Mortgaged Property does not conform to
applicable zoning or land use laws, building ordinance or law coverage. If
any of the Improvements is located in an area identified by the Federal
Emergency Management Agency (or any successor to that agency) as an area
having special flood hazards, and if flood insurance is available in that
area, Borrower shall insure such Improvements against loss by flood.
(b) All premiums on insurance policies required under Section 19(a)
shall be paid in the manner provided in Section 7, unless Lender has
designated in writing another method of payment. All such policies shall
also be in a form approved by Lender. All policies of property damage
insurance shall include a non-contributing, non-reporting mortgage clause
in favor of, and in a form approved by, Lender. Lender shall have the
right to hold the original policies or duplicate original policies of all
insurance required by Section 19(a). Borrower shall promptly deliver to
Lender a copy of all renewal and other notices received by Borrower with
respect to the policies and all receipts for paid premiums. At least 30
days prior to the expiration date of a policy, Borrower shall deliver to
Lender the original (or a duplicate original) of a renewal policy in form
satisfactory to Lender.
(c) Borrower shall maintain at all times commercial general liability
insurance, workers' compensation insurance and such other liability, errors
and omissions and fidelity insurance coverages as Lender may from time to
time require.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such periods
as Lender may from time to time require, and shall be issued by insurance
companies satisfactory to Lender.
(e) Borrower shall comply with all insurance requirements and shall
not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage that this Instrument requires
Borrower to maintain.
(f) In the event of loss, Borrower shall give immediate written
notice to the insurance carrier and to Lender. Borrower hereby authorizes
and appoints Lender as attorney-in-fact for Borrower to make proof of loss,
to adjust and compromise any claims under policies of property damage
insurance, to appear in and prosecute any action arising from such property
damage insurance policies, to collect and receive the proceeds of property
damage insurance, and to deduct from such proceeds Lender's expenses
incurred in the collection of such proceeds. This power of attorney is
coupled with an interest and therefore is irrevocable. However, nothing
contained in this Section 19 shall require Lender to incur any expense or
take any action. Lender may, at Lender's option, (1) hold the balance of
such proceeds to be used to reimburse Borrower for the cost of restoring
and repairing the Mortgaged Property to the equivalent of its original
condition or to a condition approved by Lender (the "Restoration"), or (2)
apply the balance of such proceeds to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to apply insurance
proceeds to Restoration, Lender shall do so in accordance with Lender's
then-current policies relating to the restoration of casualty damage on
similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance proceeds
to the payment of the Indebtedness if all of the following conditions are
met: (1) no Event of Default (or any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default) has occurred and is continuing; (2) Lender determines, in its
discretion, that there will be sufficient funds to complete the
Restoration; (3) Lender determines, in its discretion, that the rental
income from the Mortgaged Property after completion of the Restoration will
be sufficient to meet all operating costs and other expenses, Imposition
Deposits, deposits to reserves and loan repayment obligations relating to
the Mortgaged Property; and (4) Lender determines, in its discretion, that
the Restoration will be completed before the earlier of (A) one year before
the maturity date of the Note or (B) one year after the date of the loss or
casualty.
(h) If the Mortgaged Property is sold at a foreclosure sale or Lender
acquires title to the Mortgaged Property, Lender shall automatically
succeed to all rights of Borrower in and to any insurance policies and
unearned insurance premiums and in and to the proceeds resulting from any
damage to the Mortgaged Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or proceeding
relating to any condemnation or other taking, or conveyance in lieu
thereof, of all or any part of the Mortgaged Property, whether direct or
indirect (a "Condemnation"). Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation unless
otherwise directed by Lender in writing. Borrower authorizes and appoints
Lender as attorney-in-fact for Borrower to commence, appear in and
prosecute, in Lender's or Borrower's name, any action or proceeding
relating to any Condemnation and to settle or compromise any claim in
connection with any Condemnation. This power of attorney is coupled with
an interest and therefore is irrevocable. However, nothing contained in
this Section 20 shall require Lender to incur any expense or take any
action. Borrower hereby transfers and assigns to Lender all right, title
and interest of Borrower in and to any award or payment with respect to (i)
any Condemnation, or any conveyance in lieu of Condemnation, and (ii) any
damage to the Mortgaged Property caused by governmental action that does
not result in a Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction of
Lender's expenses incurred in the collection of such amounts, at Lender's
option, to the restoration or repair of the Mortgaged Property or to the
payment of the Indebtedness, with the balance, if any, to Borrower. Unless
Lender otherwise agrees in writing, any application of any awards or
proceeds to the Indebtedness shall not extend or postpone the due date of
any monthly installments referred to in the Note, Section 7 of this
Instrument or any Collateral Agreement, or change the amount of such
installments. Borrower agrees to execute such further evidence of
assignment of any awards or proceeds as Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
[RIGHT TO UNLIMITED TRANSFERS -- WITH LENDER APPROVAL]
(a) The occurrence of any of the following events shall constitute an
Event of Default under this Instrument:
(1) a Transfer of all or any part of the Mortgaged Property or
any interest in the Mortgaged Property;
(2) if Borrower is a limited partnership, a Transfer of (A) any
general partnership interest, or (B) limited partnership
interests in Borrower that would cause the Initial Owners of
Borrower to own less than 51% of all limited partnership
interests in Borrower;
(3) if Borrower is a general partnership or a joint venture, a
Transfer of any general partnership or joint venture
interest in Borrower;
(4) if Borrower is a limited liability company, a Transfer of
(A) any membership interest in Borrower which would cause
the Initial Owners to own less than 51% of all the
membership interests in Borrower, or (B) any membership or
other interest of a manager in Borrower;
(5) if Borrower is a corporation, (A) the Transfer of any voting
stock in Borrower which would cause the Initial Owners to
own less than 51% of any class of voting stock in Borrower
or (B) if the outstanding voting stock in Borrower is held
by 100 or more shareholders, one or more transfers by a
single transferor within a 12-month period affecting an
aggregate of 5% or more of that stock;
(6) if Borrower is a trust, (A) a Transfer of any beneficial
interest in Borrower which would cause the Initial Owners to
own less than 51% of all the beneficial interests in
Borrower, or (B) the termination or revocation of the trust,
or (C) the removal, appointment or substitution of a trustee
of Borrower; and
(7) a Transfer of any interest in a Controlling Entity which, if
such Controlling Entity were Borrower, would result in an
Event of Default under any of Sections 21(a)(1) through (6)
above.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument, notwithstanding any
provision of Section 21(a) to the contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation
of law upon the death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling
unit for a term of two years or less not containing an
option to purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures
that are contemporaneously replaced by items of equal or
better function and quality, which are free of liens,
encumbrances and security interests other than those created
by the Loan Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender
determines that the easement will not materially affect the
operation or value of the Mortgaged Property or Lender's
interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses incurred by
Lender in connection with reviewing Borrower's request; and
(6) the creation of a mechanic's, materialman's, or judgment
lien against the Mortgaged Property which is released of
record or otherwise remedied to Lender's satisfaction within
30 days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at which
the Indebtedness secured by this Instrument bears interest or to any other
economic terms of the Indebtedness, to a Transfer that would otherwise
violate this Section 21 if, prior to the Transfer, Borrower has satisfied
each of the following requirements:
(1) the submission to Lender of all information required by
Lender to make the determination required by this Section
21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit,
management and other standards (including but not limited to
any standards with respect to previous relationships between
Lender and the transferee and the organization of the
transferee) customarily applied by Lender at the time of the
proposed Transfer to the approval of borrowers in connection
with the origination or purchase of similar mortgages on
multifamily properties;
(4) the Mortgaged Property, at the time of the proposed
Transfer, meets all standards as to its physical condition
that are customarily applied by Lender at the time of the
proposed Transfer to the approval of properties in
connection with the origination or purchase of similar
mortgages on multifamily properties;
(5) in the case of a Transfer of all or any part of the
Mortgaged Property, (A) the execution by the transferee of
an assumption agreement that is acceptable to Lender and
that, among other things, requires the transferee to perform
all obligations of Borrower set forth in the Note, this
Instrument and any other Loan Documents, and may require
that the transferee comply with any provisions of this
Instrument or any other Loan Document which previously may
have been waived by Lender, and (B) if a guaranty has been
executed and delivered in connection with the Note, this
Instrument or any of the other Loan Documents, the
transferee causes one or more individuals or entities
acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender;
(6) in the case of a Transfer of any interest in a Controlling
Entity, if a guaranty has been executed and delivered in
connection with the Note, this Instrument or any of the
other Loan Documents, the Borrower causes one or more
individuals or entities acceptable to Lender to execute and
deliver to Lender a guaranty in a form acceptable to Lender;
and
(7) Lender's receipt of all of the following:
(A) a review fee in the amount of $2,000.00;
(B) a transfer fee in an amount equal to 1.0% of the unpaid
principal balance of the Indebtedness immediately
before the applicable Transfer; and
(C) the amount of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the
Transfer request.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan Document;
(b) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(c) any failure by Borrower to comply with the provisions of
Section 33;
(d) fraud or material misrepresentation or material omission by
Borrower, any of its officers, directors, trustees, general partners or
managers or any guarantor in connection with (A) the application for or
creation of the Indebtedness, (B) any financial statement, rent roll, or
other report or information provided to Lender during the term of the
Indebtedness, or (C) any request for Lender's consent to any proposed
action, including a request for disbursement of funds under any Collateral
Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender's reasonable judgment, could result in
a forfeiture of the Mortgaged Property or otherwise materially impair the
lien created by this Instrument or Lender's interest in the Mortgaged
Property;
(g) any failure by Borrower to perform any of its obligations under
this Instrument (other than those specified in Sections 22(a) through (f)),
as and when required, which continues for a period of 30 days after notice
of such failure by Lender to Borrower. However, no such notice or grace
period shall apply in the case of any such failure which could, in Lender's
judgment, absent immediate exercise by Lender of a right or remedy under
this Instrument, result in harm to Lender, impairment of the Note or this
Instrument or any other security given under any other Loan Document;
(h) any failure by Borrower to perform any of its obligations as and
when required under any Loan Document other than this Instrument which
continues beyond the applicable cure period, if any, specified in that Loan
Document;
(i) any exercise by the holder of any debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of
a right to declare all amounts due under that debt instrument immediately
due and payable; and
(j) Borrower voluntarily files for bankruptcy protection under the
United States Bankruptcy Code or voluntarily becomes subject to any
reorganization, receivership, insolvency proceeding or other similar
proceeding pursuant to any other federal or state law affecting debtor and
creditor rights, or an involuntary case is commenced against Borrower by
any creditor (other than Lender) of Borrower pursuant to the United States
Bankruptcy Code or other federal or state law affecting debtor and creditor
rights and is not dismissed or discharged within 60 days after filing.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this
Instrument or any other Loan Document or afforded by applicable law, and
each shall be cumulative and may be exercised concurrently, independently,
or successively, in any order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with Borrower,
from time to time, and without giving notice to, or obtaining the consent
of, or having any effect upon the obligations of, any guarantor or other
third party obligor, to take any of the following actions: extend the time
for payment of all or any part of the Indebtedness; reduce the payments due
under this Instrument, the Note, or any other Loan Document; release anyone
liable for the payment of any amounts under this Instrument, the Note, or
any other Loan Document; accept a renewal of the Note; modify the terms and
time of payment of the Indebtedness; join in any extension or subordination
agreement; release any Mortgaged Property; take or release other or
additional security; modify the rate of interest or period of amortization
of the Note or change the amount of the monthly installments payable under
the Note; and otherwise modify this Instrument, the Note, or any other Loan
Document.
(b) Any forbearance by Lender in exercising any right or remedy under
the Note, this Instrument, or any other Loan Document or otherwise afforded
by applicable law, shall not be a waiver of or preclude the exercise of any
right or remedy. The acceptance by Lender of payment of all or any part of
the Indebtedness after the due date of such payment, or in an amount which
is less than the required payment, shall not be a waiver of Lender's right
to require prompt payment when due of all other payments on account of the
Indebtedness or to exercise any remedies for any failure to make prompt
payment. Enforcement by Lender of any security for the Indebtedness shall
not constitute an election by Lender of remedies so as to preclude the
exercise of any other right available to Lender. Lender's receipt of any
awards or proceeds under Sections 19 and 20 shall not operate to cure or
waive any Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower is interpreted so
that any charge provided for in any Loan Document, whether considered
separately or together with other charges levied in connection with any
other Loan Document, violates that law, and Borrower is entitled to the
benefit of that law, that charge is hereby reduced to the extent necessary
to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to
reduce the principal of the Indebtedness. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness
which constitutes interest, as well as all other charges levied in
connection with the Indebtedness which constitute interest, shall be deemed
to be allocated and spread over the stated term of the Note. Unless
otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is
uniform throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right to
assert any statute of limitations as a bar to the enforcement of the lien
of this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or
all of the Mortgaged Property shall be subjected to the remedies provided
in this Instrument, the Note, any other Loan Document or applicable law.
Lender shall have the right to determine the order in which any or all
portions of the Indebtedness are satisfied from the proceeds realized upon
the exercise of such remedies. Borrower and any party who now or in the
future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Instrument waives any and all right
to require the marshalling of assets or to require that any of the
Mortgaged Property be sold in the inverse order of alienation or that any
of the Mortgaged Property be sold in parcels or as an entirety in
connection with the exercise of any of the remedies permitted by applicable
law or provided in this Instrument.
28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and deliver,
at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to better
assure, grant, and convey to Lender the rights intended to be granted, now
or in the future, to Lender under this Instrument and the Loan Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and
acknowledged by Borrower, certifying to Lender or any person designated by
Lender, as of the date of such statement, (i) that the Loan Documents are
unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect as
modified and setting forth such modifications); (ii) the unpaid principal
balance of the Note; (iii) the date to which interest under the Note has
been paid; (iv) that Borrower is not in default in paying the Indebtedness
or in performing or observing any of the covenants or agreements contained
in this Instrument or any of the other Loan Documents (or, if the Borrower
is in default, describing such default in reasonable detail); (v) whether
or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be governed by the
laws of the jurisdiction in which the Land is located (the "Property
Jurisdiction").
(b) Borrower agrees that any controversy arising under or in relation
to the Note, this Instrument, or any other Loan Document shall be litigated
exclusively in the Property Jurisdiction. The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which shall arise under or in
relation to the Note, any security for the Indebtedness, or any other Loan
Document. Borrower irrevocably consents to service, jurisdiction, and
venue of such courts for any such litigation and waives any other venue to
which it might be entitled by virtue of domicile, habitual residence or
otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice") under or
concerning this Instrument shall be in writing. Each notice shall be
addressed to the intended recipient at its address set forth in this
Instrument, and shall be deemed given on the earliest to occur of (1) the
date when the notice is received by the addressee; (2) the first Business
Day after the notice is delivered to a recognized overnight courier
service, with arrangements made for payment of charges for next Business
Day delivery; or (3) the third Business Day after the notice is deposited
in the United States mail with postage prepaid, certified mail, return
receipt requested. As used in this Section 31, the term "Business Day"
means any day other than a Saturday, a Sunday or any other day on which
Lender is not open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice given to the
other party in accordance with this Section 31. Each party agrees that it
will not refuse or reject delivery of any notice given in accordance with
this Section 31, that it will acknowledge, in writing, the receipt of any
notice upon request by the other party and that any notice rejected or
refused by it shall be deemed for purposes of this Section 31 to have been
received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the
courier service.
(c) Any notice under the Note and any other Loan Document which does
not specify how notices are to be given shall be given in accordance with
this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial interest in
the Note (together with this Instrument and the other Loan Documents) may
be sold one or more times without prior notice to Borrower. A sale may
result in a change of the Loan Servicer. There also may be one or more
changes of the Loan Servicer unrelated to a sale of the Note. If there is
a change of the Loan Servicer, Borrower will be given notice of the change.
33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any business
other than the management and operation of the Mortgaged Property; and (c)
shall not maintain its assets in a way difficult to segregate and identify.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors
and assigns of Lender and Borrower. However, a Transfer not permitted by
Section 21 shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity signs
this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely that
of creditor and debtor, respectively, and nothing contained in this
Instrument shall create any other relationship between Lender and Borrower.
(b) No creditor of any party to this Instrument and no other person
shall be a third party beneficiary of this Instrument or any other Loan
Document. Without limiting the generality of the preceding sentence, (1)
any arrangement (a "Servicing Arrangement") between the Lender and any Loan
Servicer for loss sharing or interim advancement of funds shall constitute
a contractual obligation of such Loan Servicer that is independent of the
obligation of Borrower for the payment of the Indebtedness, (2) Borrower
shall not be a third party beneficiary of any Servicing Arrangement, and
(3) no payment by the Loan Servicer under any Servicing Arrangement will
reduce the amount of the Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or
enforceability of any other provision, and all other provisions shall
remain in full force and effect. This Instrument contains the entire
agreement among the parties as to the rights granted and the obligations
assumed in this Instrument. This Instrument may not be amended or modified
except by a writing signed by the party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of this
Instrument are for convenience only and shall be disregarded in construing
this Instrument. Any reference in this Instrument to an "Exhibit" or a
"Section" shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Instrument or to a
Section of this Instrument. All Exhibits attached to or referred to in
this Instrument are incorporated by reference into this Instrument. Any
reference in this Instrument to a statute or regulation shall be construed
as referring to that statute or regulation as amended from time to time.
Use of the singular in this Agreement includes the plural and use of the
plural includes the singular. As used in this Instrument, the term
"including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the
Loan Servicer unless Borrower receives notice to the contrary. If Borrower
receives conflicting notices regarding the identity of the Loan Servicer or
any other subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding
Borrower or the Mortgaged Property to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation,
performance, purchase or securitization of the Indebtedness, including but
not limited to trustees, master servicers, special servicers, rating
agencies, and organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans. Borrower irrevocably waives any
and all rights it may have under applicable law to prohibit such
disclosure, including but not limited to any right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan Application") and
in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan Application are complete
and accurate in all material respects. There has been no material adverse
change in any fact or circumstance that would make any such information
incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation
of Borrower for the payment of money that is secured by a pre-existing
mortgage, deed of trust or other lien encumbering the Mortgaged Property (a
"Prior Lien"), such loan proceeds shall be deemed to have been advanced by
Lender at Borrower's request, and Lender shall automatically, and without
further action on its part, be subrogated to the rights, including lien
priority, of the owner or holder of the obligation secured by the Prior
Lien, whether or not the Prior Lien is released.
43. ACCELERATION; REMEDIES. At any time during the existence of an Event
of Default, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the
power of sale and any other remedies permitted by Colorado law or provided
in this Instrument or in any other Loan Document. Lender shall be entitled
to collect all costs and expenses incurred in pursuing such remedies,
including attorneys' fees, costs of documentary evidence, abstracts and
title reports.
If Lender invokes the power of sale, Trustee shall give notice of sale
in the manner required by Colorado law to Borrower and to all other persons
who are entitled to receive such notice under Colorado law, and shall sell
the Mortgaged Property according to Colorado law. Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in
the notice of sale in one or more parcels and in such order as Trustee may
determine. Trustee may postpone the sale of all or any part of the
Mortgaged Property by public announcement at the time and place of any
previously scheduled sale. Lender or Lender's designee may purchase the
Mortgaged Property at any sale. Trustee shall deliver to the purchaser at
the sale Trustee's certificate describing the Mortgaged Property and the
time when the purchaser will be entitled to Trustee's deed to the Mortgaged
Property. The recitals in Trustee's deed shall be prima facie evidence of
the truth of the statements made in those recitals.
Trustee shall apply the proceeds of the sale in the following order:
(a) to all costs and expenses of the sale, including Trustee's fees not to
exceed 5% of the gross sales price, attorneys' fees and costs of title
evidence; (b) to the Indebtedness in such order as Lender, in Lender's
discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled to the excess.
44. RELEASE. Upon payment of the Indebtedness, Lender shall request
Trustee to release this Instrument and shall deliver to Trustee the
canceled Note. Trustee shall release this Instrument without further
inquiry or liability. Borrower shall pay all costs of recordation, if any,
of the release and shall pay the statutory Trustee's fee.
45. WAIVER OF HOMESTEAD. Borrower waives all right of homestead exemption
in the Mortgaged Property.
46. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT
OF THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND
LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL
BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS
NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY
GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF
COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
|X| Exhibit A Description of the Land (required).
|X| Exhibit B Modifications to Instrument
[SIGNATURE APPEARS ON FOLLOWING PAGE]
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument
or has caused this Instrument to be signed and delivered by its duly
authorized representative.
PARK AT HIGHLANDS LLC, a Colorado limited
liability company
By:/s/ Al Feld
___________________________________(SEAL)
Al Feld
Managing Member
ACKNOWLEDGMENT
STATE OF CALIFORNIA
COUNTY OF _______________________ ss
On December ____, 1997 before me,
______________________________________
personally appeared Al Feld, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the same
in his authorized capacity, and that by his signature on the instrument the
person or the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
_________________________________
Signature
(This area for official notary seal)
EXHIBIT A
[DESCRIPTION OF THE LAND]
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
In the fourth paragraph of page one:
* at the end of the first sentence, add the phrase Aexcept for
those matters listed in a Schedule of Exceptions to Coverage in
any title insurance policy to be issued to Lender contemporaneously
with the execution and recordation of this Instrument and insuring Lender's
interest in the Mortgaged Property".
* in the second sentence, replace the phrase "easements and
restrictions" with the word "matters".
In paragraph 1(f), insert the phrase "owned by Borrower" after the word
"property".
At the end of paragraph 1(z)(C) insert after "stock": "(other than shares
in a corporation having more than 100 shareholders)". Also in paragraph
1(z) after the phrase "Bankruptcy Code" insert Aor the execution, delivery
and recording at any time after recording of this Instrument of the "Right
of First/Last Offer Agreement" as such term is defined in that certain
Restrictive Covenant Agreement dated May 30, 1997 between Wellsford Park
Highlands Corp. and ERP Operating Limited Partnership.
In paragraph 4(e), add the following sentence:
Notwithstanding the foregoing, not more than 5% of the Leases may
be for a term of less than 6 months but not less than 3 months,
and not more than 10% of the Leases may be corporate leases of
not less than one month.
In paragraph 10, add the following sentence:
Notwithstanding the foregoing, so long as there does not
otherwise exist a default under this Instrument or the
Multifamily Note secured hereby, Borrower may, upon providing
Lender with security satisfactory to Lender, proceed diligently
and in good faith to contest the validity or applicability of any
laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded covenants and agreements
relating to or affecting the Mortgaged Property.
On the second line of paragraph 14(c), insert the phrase "in all material
respects" after the word "accurate".
In the next to the last line of paragraph 17, replace the word "alter" with
the phrase "materially alter as to appearance".
In paragraph 18(a)(2), insert the phrase "(except for the gas lines and
sanitary sewer lines now in place)" after the word "Property".
In the tenth line of paragraph 18(g), replace the phrase "Borrower or any
other" with the phrase "any party (other than Borrower, upon such
Borrower's written request)".
In paragraph 18(j):
* "and" is deleted from the end of subparagraph (4)
* the period at the end of subparagraph (5) is replaced with the
phrase "; and"
* a new subparagraph (6) is added, as follows:
(6) Notwithstanding anything in the above subparagraphs (1)
through (5), Borrower is not obligated to indemnify, hold
harmless or defend against Indemnitees' own gross negligence and
willful misconduct.
In the fifth and sixth lines of paragraph 19(a), strike the phrase
"sinkhole insurance, mine subsidence insurance, earthquake insurance,
and,".
At the end of paragraph 19(f), add the following sentence:
"Lender shall exercise the power described in this paragraph only
if it has determined, in its discretion, that Borrower is not
timely taking the actions described above".
At the end of paragraph 19(g)(2), add the phrase " (including any funds
that Borrower may elect to contribute to the Restoration)".
14. Paragraph 21(b) is supplemented and modified by adding the
following provisions:
(7) Any transfer or series of transfers by one or more of the Initial
Owners (each a "Transferor") of all or a portion of the
Transferor's interests in the Borrower to any one or more of
Wellsford Park Highlands Corp. or Wellsford Real Properties,
Inc., a Maryland corporation ("WRP") or ERP Operating Limited
Partnership, an Illinois limited partnership ("ERP"), or an
entity owned and controlled by Wellsford Park Highlands Corp.,
WRP or ERP (collectively, the "Transferees") under the following
conditions:
(a) Lender has received and approved the documents transferring
Transferor's interest in the Borrower to the Transferee; and
(b) Lender has reviewed and approved the documents creating and
governing the Transferee if the Transferee is an entity
other than Wellsford Park Highlands Corp., WRP or ERP; and
(c) The Initial Owners or WRP, ERP or any combination of them
retain directly or indirectly at least 51% ownership
interest in Borrower; and
(d) There exists no breach by the Borrower of any covenant or
agreement in this Instrument, the Note or any other
instruments or documents executed and delivered in
connection therewith; and
(d) Borrower pays to Lender (1) at the time it requests Lender's
consent, a review fee in the amount of $2,000 (which fee
shall not be refundable); and (2) upon demand by Lender, all
reasonable fees and out of pocket costs of Lender's legal
counsel related to the transfer; and
(8) The transfer by Al Feld of all his interest in the Borrower to
Wellsford Park Highlands Corp. as contemplated under the
Operating Agreement of the Borrower, and the resignation of Al
Feld as a Member and Manager of the Borrower in connection with
such transfer.
15. At the end of paragraph 22(f), add the phrase "(If such action or
proceeding is not dismissed within 30 days thereof)".
16. In the 3rd line of paragraph 28, insert the word "reasonably" before
the word "require".