RIDER TO MULTIFAMILY INSTRUMENT
THIS RIDER TO MULTIFAMILY INSTRUMENT (the "Rider") is made as of the
1st day of July 1996, and is incorporated into and shall be deemed to amend and
supplement the Multifamily Deed of Trust of the same date (the "Instrument"),
given by the undersigned OTC APARTMENTS LIMITED PARTNERSHIP a Florida limited
partnership (the "Borrower"), for the benefit of FEDERAL NATIONAL MORTGAGE
ASSOCIATION, a federally chartered corporation, C/O GMAC COMMERCIAL MORTGAGE
CORPORATION, 650 Dresher Road, Horsham, PA 19044-8015 [Insert address of
Lender], and its successors, assigns and transferees (the "Lender"), covering
the property described in the Instrument and defined therein as the "Property,"
located at:
9050 Vance Street, Westminster, Colorado
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[Property Address]
The Property is located entirely within STATE OF COLORADO [INSERT NAME
OF STATE IN WHICH THE PROPERTY IS LOCATED] (the "Property Jurisdiction").
The term "Loan Documents" when used in this Rider shall mean,
collectively, the following documents: (i) the Instrument, as modified by
this Rider, the Special Rider and any other riders to the Instrument given by
Borrower to Lender and covering the Property; (ii) the Reimbursement
Agreement (as defined in the Instrument); (iii) any other documents or
agreements as shall be required to evidence or secure the obligations of the
Borrower or otherwise arising under, related to, or made in connection with,
the Reimbursement Agreement, as such Loan documents may be amended from time
to time, including, but not limited to, any Collateral Agreement (as defined
below) or O&M Agreements (as defined below) and that certain Cash
Management, Security, Pledge and Assignment Agreement between Borrower and
Lender dated as of even date herewith; and (iv) the other Security
Instruments (as defined in the Special Rider).
The covenants and agreements of this Rider, and the covenants and
agreements of any other riders to the Instrument given by Borrower to Lender and
covering the Property (including without limitation the Special Rider), shall
be incorporated into and shall amend and supplement the covenants and agreements
of the Instrument as if this Rider and the other riders were a part of the
Instrument and all references to the Instrument in the Loan Documents shall mean
the Instrument as so amended and supplemented.
ADDITIONAL COVENANTS. In addition to the covenants and agreements made in
the Instrument, Borrower and Lender further covenant and agree as follows:
A. FUNDS FOR TAXES, INSURANCE AND OTHER CHARGES
Uniform Covenant 2 of the Instrument ("Funds for Taxes, Insurance and Other
Charges") is amended to change the title to "Funds for Taxes, Insurance and
Other Charges; Collateral Agreements." Existing Uniform Covenant 2 is amended
to become Uniform Covenant 2A. The following new Uniform Covenant 2B is added
at the end of Uniform Covenant 2A:
2B. REPLACEMENT RESERVE AGREEMENT, COMPLETION/REPAIR AGREEMENT, ACHIEVEMENT
AGREEMENT AND OTHER COLLATERAL AGREEMENTS
(a) REPLACEMENT RESERVE AGREEMENT
Borrower shall deposit with Lender the amounts required by the Replacement
Reserve and Security Agreement (the "Replacement Reserve Agreement") between
Borrower and Lender (if any) dated as of the date hereof, at the time
required by the Replacement Reserve Agreement, and shall perform all other
obligations as and when required pursuant to the Replacement Reserve Agreement.
(b) COMPLETION/REPAIR AGREEMENT
Borrower shall deposit with Lender the amount required by the
Completion/Repair and Security Agreement (the "Completion/Repair Agreement")
between Borrower and Lender (if any), dated the date hereof, at the times
required by the Completion/Repair Agreement, and shall perform all other
obligations as and when required pursuant to the Completion/Repair Agreement.
(d) COLLATERAL AGREEMENTS
As used herein, the term "Collateral Agreement" shall mean any of the
Replacement Reserve Agreement, the Completion/Repair Agreement, the Achievement
Agreement and any similar agreement which has been entered into between Borrower
and Lender in connection with the Reimbursement Agreement.
B. APPLICATION OF PAYMENTS
Uniform Covenant 3 of the Instrument ("Application of Payments") is amended
to add the following sentence at the end thereof:
Notwithstanding the preceding sentence, (i) Lender shall be permitted to
apply any partial payment received from Borrower in any manner determined by
Lender and in any order of priority of application as determined by Lender,
in Lender's sole discretion, and (ii) upon breach of any covenant or
agreement of Borrower in the Instrument or any other Loan Document. Lender
shall be permitted to apply any funds held pursuant to the Reimbursement
Agreement.
RIDER TO MULTIFAMILY INSTRUMENT WITH SEPARATE EXCEPTIONS TO NON-RECOURSE
GUARANTY
- -FANNIE MAE UNIFORM INSTRUMENT Form 4058 6/93 page 1 of 8 pages
any Collateral Agreement* in any manner which is permitted pursuant to such
Collateral Agreement* and in any order of priority of application as determined
by Lender, in Lender's sole discretion. * any Operations and Maintenance
Agreement or Cash Management Agreement
C. HAZARD INSURANCE; RESTORATION OF PROPERTY
Uniform Covenant 5 of the Instrument ("Hazard Insurance") is amended to add
the following sentence at the end thereof:
Lender shall not exercise Lender's option to apply insurance proceeds to the
payment of the sums secured by the Instrument if all of the following
conditions are met: (i) Borrower is not in breach or default of any provision of
the Instrument, the Note or any other Loan Document; (ii) Lender determines
that there will be sufficient funds to restore and repair the Property to a
condition approved by Lender; (iii) Lender determines that the rental income
of the Property, after restoration and repair of the Property to a condition
approved by Lender, will be sufficient to meet all operating costs and other
expenses, payments for reserves and loan repayment obligations relating to the
Property; and (iv) Lender determines that restoration and repair of the Property
to a condition approved by Lender will be completed prior to the earlier of
either (1) the maturity date of the Note or (2) within one year of the date of
the loss or casualty to the Property; and (v) Lender determines that upon
restoration and repair of the Property, there will not been a material
diminution in the value of the Property since the date immediately preceding
the casualty.
D. ENVIRONMENTAL HAZARDS PROVISION
In addition to Borrower's covenants and agreements under Uniform Covenant 6
of the Instrument ("Preservation and Maintenance of Property; [Illegible]").
Borrower further covenants and agrees that Borrower shall not:
(a) cause or permit the presence, use, generation, manufacture,
production, processing, installation, release, discharge, storage
(including aboveground and underground storage tanks for petroleum or
petroleum products), treatment, handling, or disposal of any Hazardous
Materials (as defined below) (excluding the safe and lawful use and
storage of quantities of Hazardous Materials customarily used in the
operation and maintenance of comparable multifamily properties or for
normal household purposes) on or under the Property, or in any way
affecting the Property or its value, or which may form the basis for any
present or future demand, claim or liability relating to contamination,
exposure, cleanup or other remediation of the Property or;
(b) cause or permit the transportation to, from or across the Property of
any Hazardous Material (excluding the safe and lawful use and storage of
quantities of Hazardous Materials customarily used in the operation and
maintenance of comparable multifamily properties or for normal household
purposes); or
(c) permit, cause or exacerbate any occurrence or condition on the
Property that is or may be in violation of Hazardous Materials Law (as
defined below).
(The matters described in (a), (b) and (c) above are referred to collectively
below as "Prohibited Activities or Conditions.")
Except with respect to any matters which have been disclosed in writing by
Borrower to Lender prior to the date of the Instrument, or matters which have
been disclosed in an environmental hazard assessment report of the Property
received by Lender prior to the date of the Instrument, Borrower represents
and warrants that it has not at any time caused or permitted any Prohibited
Activities or Conditions and to the best of its knowledge, no Prohibited
Activities or Conditions exist or have existed on or under the Property.
Borrower shall take all appropriate steps (including but not limited to
appropriate lease provisions) to prevent its employees, agents, and
contractors, and all tenants and other occupants on the Property, from
causing, permitting or exacerbating any Prohibited Activities or Conditions.
Borrower shall not lease or allow the sublease of all or any portion of the
Property for non-residential use to any tenant or subtenant that, in the
ordinary course of its business, would cause, permit or exacerbate any
Prohibited Activities or Conditions, and all non-residential leases and
subleases shall provide that tenants and sub-tenants shall not cause, permit
or exacerbate any Prohibited Activities or Conditions.
If any Prohibited Activities or Conditions exist on the Property **,
Borrower shall comply in a timely manner with, and cause all employees, agents,
and contractors of Borrower and any other persons present on the Property to so
comply with, (1) any program of operations and maintenance ("O&M Program")
relating to the Property that is acceptable to Lender with respect to one or
more Hazardous Materials (which O&M Program may be set forth in an agreement of
Borrower (an "O&M Agreement")) and all other obligations set forth in any O&M
Agreement ***, and (2) all Hazardous Materials Laws. Any O&M Program shall be
performed by qualified personnel. All costs and expenses of the O&M Program
shall be paid by Borrower, including without limitation Lender's fees and costs
incurred in connection with the monitoring and review of the O&M Program and
Borrower's performance thereunder. If Borrower fails to timely commence or
diligently continue and complete the O&M Program and comply with any O&M
Agreement, then Lender may, at Lender's option, declare all of the sums secured
by the Instrument to be immediately due and payable, and Lender may invoke any
remedies permitted by paragraph 27 of the Instrument without limiting the
foregoing, Borrower shall take prompt remedial action in the event of the
discovery of any Prohibited Activities or Conditions and obtain Lender's prior
written****
Borrower represents that Borrower has not received, and has no knowledge of
the issuance of, any claim, citation or notice of any pending or threatened
suits, proceedings, orders, or governmental inquiries or opinions involving
the Property that allege the violation of any Hazardous Materials Law
("Governmental Actions").
Borrower shall promptly notify Lender in writing of: (i) the occurrence of
any Prohibited Activity or Condition on the Property; (ii) Borrower's actual
knowledge of the presence on or under any adjoining property of any Hazardous
Materials which can reasonably be expected to have a material adverse impact
on the Property or the value of the Property, or Borrowers discovery of any
occurrence or condition on the Property or any adjoining real property that
could cause any restrictions on the ownership, occupancy, transferability or
use of the Property under Hazardous Materials
Form 4058 6/93 (page 2 of 8 pages)
* or if Lender shall otherwise require Borrower to do so in writing in
accordance with reasonable commercial practices
*** or other remedial action requested by Lender
**** approval of such remedial action.
Law. (Borrower shall cooperate with any governmental inquiry, and shall
comply with any governmental or judicial order which arises from any alleged
Prohibited Activities or Conditions; (iii) any Governmental Action; and (iv)
any claim made or threatened in writing by any third party against Borrower,
Lender, or the Property relating to loss or injury resulting from any
Hazardous Materials. Any such notice by Borrower shall not relieve Borrower
of, or result in a waiver of any obligation of Borrower under this paragraph D.
Borrower shall pay promptly the costs of any environmental audits, studies
or investigations (including but not limited to advice of legal counsel) and
the removal of any Hazardous Materials from the Property required by Lender
as a condition of its consent to any sale or transfer under paragraph 19 of
the Instrument of all or any part of the Property or any transfer occurring
upon a foreclosure or a deed in lieu of foreclosure or any interest therein,
or required by Lender following a reasonable determination by Lender that
there may be Prohibited Activities or Conditions on or under the Property.
Borrower authorizes Lender and its employees, agents and contractors to enter
onto the Property for the purpose of conducting such environmental audits,
studies and investigations. Any such costs and expenses incurred by Lender
(including but not limited to fees and expenses of attorneys and consultants,
whether incurred in connection with any judicial or administrative process or
otherwise) which Borrower fails to pay promptly shall become immediately due
and payable and shall become additional indebtedness secured by the
Instrument pursuant to Uniform Covenant 8 of the Instrument.
Borrower shall hold harmless, defend and indemnify Lender and its officers,
directors, trustees, employees, and agents from and against all proceedings
(including but not limited to Government Actions), claims, damages,
penalties, costs and expenses (including without limitation fees and expenses
of attorneys and expert witnesses, investigatory fees, and cleanup and
remediation expenses, whether or not incurred within the context of the
judicial process), arising directly or indirectly from (i) any breach of any
representation, warranty, or obligation of Borrower contained in this
paragraph D or (ii) the presence or alleged presence of Hazardous Materials
on or under the Property.
The term "Hazardous Materials," for purposes of this paragraph D, includes
petroleum and petroleum products, flammable explosives, radioactive materials
(excluding radioactive materials in smoke detectors), polychlorinated
biphenyls, lead, asbestos in any form that is or could become friable,
hazardous waste, toxic or hazardous substances or other related materials
whether in the form of a chemical, element, compound, solution, mixture or
otherwise including, but not limited to, those materials defined as
"hazardous substances," "extremely hazardous substances," "hazardous
chemicals," "hazardous materials," "toxic substances," "solid waste," "toxic
chemicals," "air pollutants," "toxic pollutants," "hazardous wastes,"
"extremely hazardous waste," or "restricted hazardous waste" by Hazardous
Materials Law or regulated by Hazardous Materials Law in any manner
whatsoever.
The term "Hazardous Materials Law," for the purposes of this paragraph D,
means all federal, state, and local laws, ordinances and regulations and
standards, rules, policies and other binding governmental requirements and
any court judgments applicable to Borrower or to the Property relating to
industrial hygiene or to environmental or unsafe conditions or to human
health including, but not limited to, those relating to the generation,
manufacture, storage, handling, transportation, disposal, release, emission
or discharge of Hazardous Materials, those in connection with the
construction, fuel supply, power generation and transmission, waste disposal
or any other operations or processes relating to the Property, and those
relating to the atmosphere, soil, surface and ground water, wetlands, stream
sediments and vegetation on, under, in or about the Property.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall be in addition
to any and all other obligations and liabilities that Borrower may have to
Lender under applicable law.
The representations, warranties, covenants, agreements, indemnities and
undertakings of Borrower contained in this paragraph D shall continue and
survive notwithstanding the satisfaction, discharge, release, assignment,
termination, subordination or cancellation of the Instrument or the payment
in full of the principal of and interest on the Note and all other sums
payable under the Loan Documents or the foreclosure of the Instrument or the
tender or delivery of a deed in lieu of foreclosure or the release of any
portion of the Property from the lien of the Instrument, except with respect
to any Prohibited Activities or Conditions or violation of any of the
Hazardous Materials Laws, which first commences and occurs after the
satisfaction, discharge, release, assignment, termination or cancellation of
the Instrument following the payment in full of the principal of and interest
on the Note and all other sums payable under the Loan Documents or which
first commences or occurs after the actual dispossession from the entire
Property of the Borrower and all entities which control, are controlled by,
or are under common control with the Borrower (each of the foregoing persons
or entities is hereinafter referred to as a "Responsible Party") following
foreclosure of the Instrument or acquisition of the Property by a deed in
lieu of foreclosure. Nothing in the foregoing sentence shall relieve the
Borrower from any liability with respect to any Prohibited Activities or
Conditions or violation of Hazardous Materials Laws where such Prohibited
Activities or Conditions or violation of Hazardous Materials Laws commences
or occurs, or is present as a result of, any act or omission by any
Responsible Party or by any person or entity acting on behalf of a
Responsible Party.
Form 4058 6/93 (page 3 of 8 pages)
F. TRANSFERS OF THE PROPERTY OR SIGNIFICANT INTERESTS IN BORROWER; TRANSFER FEES
Uniform Covenant 19 of the Instrument ("Transfers of the Property or
Beneficial Interests in Borrower, Assumption") is amended to read as set forth
below:
TRANSFERS OF THE PROPERTY OR SIGNIFICANT INTERESTS IN BORROWER; TRANSFER FEES
(a) DEFINITIONS
For purposes of the Instrument (and the Rider), the following terms have the
respective meanings set forth below:
(1) The term "Key Principal" means the entities who execute(s) the Payment
Guaranty to Lender dated the date of the Note and any person or entity
who subsequently execute an Guaranty to Lender in connection with the
Note.
(2) The term "Transfer" means a sale, assignment, substitution, transfer or
other disposition (whether voluntary or by operation of law) of, or the
granting or creating of a lien, encumbrance or security interest in, the
Property or in ownership interests, and the issuance or other creation of
ownership interests in an entity and the reconstitution of one type of
entity to another type of entity.
(3) A "Significant Interest" in any entity shall mean the following:
(i) if the entity is a general partnership or a joint venture, (A) any
partnership interest in the general partnership, or (B) any interest
of a joint venturer in a joint venture:
(ii) if the entity is a limited partnership, (A) any limited partnership
interest in the entity, or (B) any general partnership interest in
the entity;
(iii)if the entity is a limited liability company, any membership
interest
(iv) if the entity is a corporation, any voting stock in the corporation
(v) if the entity is a trust, any beneficial interest in such trust
(b) ACCELERATION OF THE LOAN UPON TRANSFERS OF THE PROPERTY OR SIGNIFICANT
INTERESTS
Lender may, at Lender's option, declare all sums secured by the Instrument
immediately due and payable and Lender may invoke any remedies permitted by
paragraph 27 of the Instrument if, without the Lender's prior written consent,
any of the following shall occur:
(1) a Transfer of all or any part of the Property or any interest in the
Property;
(2) a Transfer of any Significant Interest in Borrower;
(3) a Transfer of any Significant Interest in a corporation, partnership,
limited liability company, joint venture, or trust which owns a
Significant Interest in the Borrower;
(4) if the Borrower is a trust, or if any trust owns a Significant
Interest in the Borrower, the addition, deletion or substitution of a
trustee of such trust, which addition, deletion or substitution has
not been approved by Lender; or
Form 4058 6/93 (page 4 of 8 pages)
(5) a Transfer of all or any part of any Key Principal's ownership
interest (other than limited partnership interests) in the Borrower,
or in any other entity which owns, directly or indirectly, through
one or more intermediate entities, an ownership interest in the
Borrower.
(d) NO ACCELERATION OF THE LOAN FOR TRANSFERS CAUSED BY CERTAIN EVENTS
Notwithstanding the foregoing provisions of this covenant, Lender shall not be
entitled to declare sums secured by the Instrument immediately due and payable
or to invoke any remedy permitted by paragraph 27 of the Instrument solely upon
the occurrence of any of the following:
(1) A Transfer that occurs by inheritance, devise, or bequest or by
operation of law upon the death of a natural person who is an owner
of the Property or the owner of a direct or indirect ownership
interest in the Borrower.
(2) The grant of a leasehold interest in individual dwelling units for
a term of two years or less and leases for commercial uses as long as
commercial leases do not exceed 20 percent of the rentable space of
the Property (measured as required by Lender) and provided that all
such leasehold interests do not contain an option to purchase the
Property.
(3) A sale or other disposition of obsolete or worn out personal
property which is contemporaneously replaced by comparable personal
property of equal or greater value which is free and clear of liens,
encumbrances and security interests other than those created by the
Loan Documents.
(4) The creation of a mechanic's or materialmen's lien or judgment lien
against the Property which is released of record or otherwise remedied
to Lender's satisfaction, within 30 days of the date of creation.
(5) The grant of an easement, if prior to the granting of the easement the
Borrower causes to be submitted to Lender all information required by
Lender to evaluate the easement, and if Lender determines that the
easement will not materially affect the operation of the Property or
Lender's interest in the Property and Borrower pays to Lender, on
demand, all cost and expenses incurred by Lender in connection with
reviewing Borrower's request.
(6) A Transfer that occurs pursuant to Section 4.5 or Section 4.7 of the
Reimbursement Agreement
G. NOTICE
Form 4058 6/93 (page 5 of 8 pages)
H. GOVERNING LAW
SEE SPECIAL RIDER
I. ACCELERATION; REMEDIES
Covenant 27 of the Instrument ("Acceleration; Remedies") is amended to add the
following at the end of the first paragraph:
Upon the breach of any covenant or agreement by Borrower in the Instrument,
(including, but not limited to, the covenants to pay when due sums secured by
the Instrument) or any other Loan Document, Lender, at Lender's option may, in
addition to any remedies specified in this covenant, invoke any other remedies
provided in any Collateral Agreement.
If Borrower is in default under any promissory note (other than the Note)
evidencing a loan (the "Subordinate Loan") secured by a security instrument
(other than the Instrument) covering all or any portion of the Property (the
"Subordinate Instrument") or under any Subordinate Instrument or other loan
document executed in connection with the Subordinate Loan, (and whether or not
the Borrower has obtained the prior approval of Lender to the placement of such
Subordinate Instrument on the Property) which default remains uncured after any
applicable cure period, Borrower also then will be in default under the Note and
the Instrument. In that event, the entire unpaid principal balance of the Note,
accrued interest and any other sums due Lender secured by the Instrument then
will become due and payable, at Lender's option. If Lender exercises this option
to accelerate, Lender will do so in accordance with the provisions of the Note
and the Instrument, and the Lender may invoke any and all remedies permitted by
applicable law, the Note, the Instrument, or any of the other Loan Documents.
J. SINGLE ASSET BORROWER
SEE SPECIAL RIDER
K. NON-RECOURSE LIABILITY
Form 4058 6/93 (page 6 of 8 pages)
The liability of Borrower and any general partner of Borrower (if Borrower is a
Partnership) shall be limited to the same extent as provided in Section 3.11 of
the Reimbursement Agreement.
M. WAIVER OF JURY TRIAL
Borrower (i) covenant and agree not to elect a trial by jury with respect
to any issue arising under any of the Loan Documents triable by a jury and (ii)
waive any right to trial by jury to the extent that any such right shall now or
hereafter exist. This waiver of right to trial by jury is separately given,
knowingly and voluntarily with the benefit of competent legal counsel by the
Borrower, and this waiver is intended to encompass individually each instance
and each issue as to which the right to a jury trial would otherwise accrue.
Further, Borrower hereby certify that no representative or agent of the Lender
(including, but not limited to, the Lender's counsel) has represented, expressly
or otherwise, to Borrower that Lender will not seek to enforce the provisions of
this paragraph M.
Form 4058 6/93 (page 7 of 8 pages)
BY SIGNING BELOW, Borrower accepts and agrees to the covenants and agreements
contained in this Rider.
BORROWER:
OTC APARTMENTS LIMITED PARTNERSHIP,
a Florida limited partnership
By: AIMCO/OTC QRS, INC., a Delaware
corporation, its sole General Partner
By: /s/ Harry Alcock (SEAL)
----------------------------
Harry Alcock
Vice President
BORROWER'S ADDRESS:
1873 Bellaire Street, 17th Floor
Denver, Colorado 80222
Form 4058 6/93 (page 8 of 8 pages)