FHLMC Loan No.: 002732939
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 this 20th day of November, 2000, among MAXUS REAL
PROPERTY INVESTORS-FOUR L.P., a limited partnership organized and existing under
the laws of Missouri, whose mailing address is 104 Armour Road, North
Kansas City, Missouri 64116, as grantor ("Borrower"), Joe A. Crutchfield, Jr.,
whose mailing address is 219 South Central, St. Lousi, Missouri 63105, as
trustee ("Trustee ), for the benefit of NORTHLAND/ MARQUETTE CAPITAL GROUP,INC.,
a corporation organized and existing under the laws of Minnesota, whose mailing
address is 3500 West 80th Street, Suite 500, Bloomington, Minnesota 55431-4501,
as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, bargains, sells, conveys, confirms and
assigns to Trustee, in trust, with power of sale, the Mortgaged Property,
including the Land located in Hancock County, State of Missouri 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 December 1, 2010, in the principal amount of
$9,900,000.00, 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 mortgage, grant,
bargain, sell, convey, confirm 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.
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(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
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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.
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(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 benefiting the Land or the
Improvements, or both, and all rights-of-way, streets, alleys and
roads which may have been or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property, whether or not Borrower obtained the
insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be made by
any municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, including any awards or
settlements resulting from condemnation proceedings or the total
or partial taking of the Land, the Improvements, the Fixtures,
the Personalty or any other part of the Mortgaged Property under
the power of eminent domain or otherwise and including any
conveyance in lieu thereof;
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(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
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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
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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
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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 Lenders 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
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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),
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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
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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
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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.
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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
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bankrupt or decedent, then Lender at Lende 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
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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.
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(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 furnisheswhatever 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.
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(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;
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(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' 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;
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(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;
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(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
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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
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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.
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(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
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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
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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;
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(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;
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(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;
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(6) in the case of a Transfer of any interest in a Controlling
Entity, if a guaranty has been executed and delivered in
connection with the Note, this Instrument or any of the other
Loan Documents, the Borrower causes one or more individuals or
entities acceptable to Lender to execute and deliver to Lender a
guaranty in a form acceptable to Lender; and
(7) Lender's receipt of all of the following:
(A) a review fee in the amount of $2,000;
(B) a transfer fee in an amount equal to 1% of the unpaid
principal balance of the Indebtedness immediately before the
applicable Transfer; and
(C) the amount of Lender's out-of-pocket costs (including
reasonable attorneys' fees) incurred in reviewing the
Transfer request.
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
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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
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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.
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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
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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.
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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
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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 request Trustee to
exercise the power of sale and Lender may exercise any other remedies permitted
by applicable law or provided in this Instrument or in any other Loan Document.
Borrower acknowledges that the power of sale granted in this Instrument may be
exercised by Trustee without prior judicial hearing. Borrower has the right to
bring an action to assert the non-existence of an Event of Default or any other
defense of Borrower to acceleration and sale. Lender shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including
attorneys' fees, costs of documentary evidence, abstracts and title reports.
If Lender invokes the power of sale, Lender or Trustee shall mail copies of
the notice of sale to Borrower and to other persons prescribed by applicable law
in the manner provided by applicable 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 sale of all or any parcel of the Mortgaged Property to any later
time on the same date 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, within a reasonable
time after the sale, a deed conveying the Mortgaged Property so sold without any
covenant or warranty, express or implied. The recitals in Trustee's deed shall
be prima facie evidence of the truth of the statements contained 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 in the
amount allowed by applicable law, 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 it.
Lender shall have the right on one or more occasions to institute one or
more actions or proceedings at law or in equity to enforce the rights and
remedies of Lender under this Instrument.
Trustee hereby lets the Mortgaged Property to Borrower until a sale is held
under the foregoing provisions or until the occurrence of an Event of Default,
upon the following terms and conditions: Borrower, and all persons claiming or
possessing the Mortgaged Property or any part thereof by, through or under
Borrower, shall pay rent therefor during said term at the rate of one cent (14)
per month, payable monthly upon demand, and shall surrender immediate peaceable
possession of the Mortgaged Property and any and every part thereof sold under
the foregoing power of sale to the purchaser at such sale, without notice or
demand therefor, and shall and will
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at once, without notice, surrender possession of the Mortgaged Property and
every part thereof in the event Lender shall take charge and enter the Mortgaged
Property as provided in this Instrument.
44. RELEASE. Upon payment of the Indebtedness, Lender shall release the
lien of this Instrument. Borrower shall pay Lender's reasonable costs incurred
in releasing this Instrument.
45. FINANCING STATEMENT. As provided in Section 2, this Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture and for the purposes of such financing
statement: (a) the Debtor shall be Borrower and the Secured Party shall be
Lender; (b) the addresses of Borrower as Debtor and of Lender as Secured Party
are as specified above in the first paragraph of this Instrument; (c) the name
of the record owner is Borrower; (d) the types or items of collateral consist of
any part of the Mortgaged Property which is or may become a Fixture; and (e) the
social security number or the federal employer identification number of Borrower
as Debtor is 43-1250566.
46. APPOINTMENT OF RECEIVER. Section 3(b) and Section 4(d) are amended by
(i) deleting the following phrase, each time it appears: "Lender entering upon
and taking and maintaining control of the Mortgaged Property," and (ii)
inserting the following new phrase in its place: "Lender entering upon and
taking and maintaining control or possession of the Mortgaged Property or any
equivalent action."
47. FURTHER ASSURANCES FOR TRUSTEE. 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 Trustee may require from time to time in order to better assure,
grant, and convey to Trustee the rights intended to be granted, now or in the
future, to Trustee under this Instrument.
48. SUCCESSOR TRUSTEE. Lender, at Lender's option, with or without cause,
may from time to time remove Trustee and appoint a successor trustee by an
instrument recorded in the city or county in which this Instrument is recorded.
Without conveyance of the Mortgaged Property, the successor trustee shall
succeed to all the title, power and duties conferred upon the Trustee in this
Instrument and by applicable law. For purposes of this Instrument, the term
"Trustee" means the person identified as Trustee in the first paragraph of this
Instrument and any successor trustee appointed by Lender pursuant to this
Section or otherwise appointed as permitted by law.
49. 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
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NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN
BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
[X] Exhibit A Description of the Land (required).
[X] Exhibit B Modifications to Instrument
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
BORROWER:
MAXUS REAL PROPERTY INVESTORS-FOUR L.P.,
a Missouri limited partnership
By: MAXUS CAPITAL CORP., a Missouri
corporation, its General Partner
By /s/ David L. Johnson
David L. Johnson
Its: Chief Executive Officer
Borrower's Employer ID Number: 43-1250566
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
On this 20th day of November, 2000, before me, a Notary Public in and
for said County and State, personally appeared David L. Johnson, to me
personally known, who being by me duly sworn (or affirmed), did say that he is
the Chief Executive Officer of Maxus Capital Corp., a Missouri corporation, the
General Partner of Maxus Real Property Investors-Four L.P., a Missouri limited
partnership, and that said instrument was signed in behalf of said corporation
by authority of its board of directors as general partner of said limited
partnership, and said person acknowledged said instrument to be the free act and
deed of said corporation in behalf of said limited partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal the
day and year last above written.
/s/Sharon E. Davis
Notary Public
My Commission Expires: 10-15-02
[NOTARY SEAL OMITTED]
<PAGE>
EXHIBIT A
[DESCRIPTION OF THE LAND]
The land referred to herein is situated in the State of Missouri, County of
St. Louis, and described as follows:
PARCEL 1: WOODHOLLOW PHASE ONE, according to the plat thereof recorded in Plat
Book 138 pages 78 and 79 of the St. Louis County Records.
PARCEL 2: WOODHOLLOW PHASE TWO, according to the plat thereof recorded in Plat
Book 145 page 39 of the St. Louis County Records.
<PAGE>
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that precedes
this Exhibit:
1. Borrower covenants and agrees that as long as the Indebtedness
is outstanding, (i) David L. Johnson must own at least fifty-one
percent (51%) of MJS Associates, Inc., and (ii) MJS Associates, Inc.
shall have a minimum net worth of One Million Five Hundred Thousand and
No/100 Dollars ($1,500,000.00) (the "Guarantor Requirements"). Failure
to maintain the Guarantor Requirements shall be an additional Event of
Default under this Instrument
2. The second sentence in paragraph 4(f) shall be modified to
read as follows:
Borrower shall not modify the terms of, or extend or terminate, any
Lease for non-residential use (including any Lease on the date of this
Instrument) without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed.
3. Section 7 is modified to add the following subsection:
(f) Notwithstanding the provisions of Subsection 7(a),
Lender will not require Borrower to deposit with
Lender amounts sufficient to accumulate with Lender
the entire sum required to pay the
[_] fire, hazard or other insurance premiums,
[_] taxes,
[X] water and sewer charges,
[X] ground rents,
[X] assessments or other charges
Borrower must provide Lender with proof of payment of all such
Impositions for which Lender is not collecting Imposition
Deposits on or before the date such Impositions are due or on
the date this Instrument requires such Impositions to be paid.
In the event that Borrower does not timely pay any of the
Impositions, or fails to provide Lender with proof of such
payment, or at any other time in Lender's discretion, Lender
may require Borrower to deposit with Lender the Imposition
Deposits as provided in Subsection 7(a).
4. Section 21(a)(2) is modified to read as follows:
if Borrower is a limited partnership, a Transfer of (A) any general
partnership interest, except the special general partnership interest
of John J. Nooney, provided that John J.
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Nooney is not exercising management control over the Borrower,
or (B) limited partnership interests in Borrower that would
cause the Initial Owners of Borrower to own less than 51% of
all limited partnership interest in Borrower;
5. Section 21(b) is supplemented and modified by adding the
following provision:
(7) A Transfer of the Mortgaged Property to a single
asset entity (the "Preapproved Entity") under the
following conditions:
(A) Borrower shall provide Lender with 45 days
advance written notice of the proposed transfer.
(B) The Preapproved Entity shall be a limited
liability company whose managing member must be Maxus
Realty Trust, Inc. ("Maxus") and whose sole member
shall be Maxus or an entity to which Maxus has
contributed or otherwise transferred all or
substantially all (which shall be not less than 95%)
of its assets and of which Maxus owns directly or
indirectly, a controlling interest (the "Maxus
Controlled Entity").
(C) The management of Maxus and any Maxus
Controlled Entity must be experienced in the
ownership and management of property similar to the
Mortgaged Property, as determined by Lender.
(D) Immediately after the transfer, David L.
Johnson must be and remain an executive officer and
trustee of Maxus.
(E) The loan-to-value ratio with respect to the
Mortgaged Property (calculated as a percentage), as
determined by Lender does not exceed seventy-five
(75%) after taking into consideration any principal
paydown made in connection with Maxus or any Maxus
Controlled Entity. Such loan to value ratio shall be
determined in Lender's sole discretion based upon
Lender's then current underwriting standards and
based upon Lender=s internal valuations.
(F) At least forty-five (45) days prior to such
Transfer, Borrower must provide Lender with all of
the material provisions of such Transfer including,
without limitation, the proposed date of such
Transfer, the name and address of Maxus or any
applicable Maxus Controlled Entity, pro forma
financial statements for Maxus and any Maxus
Controlled Entity, any offering prospectus of Maxus
issued within five years of the date of the Transfer,
and the purchase price which is specified for
the Mortgaged Property.
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(G) The sole member of the Preapproved Entity
shall be Maxus or a Maxus Controlled Entity.
(H) Lender has reviewed and approved the
documents transferring Borrower's interest in the
Mortgaged Property to the Preapproved Entity.
(I) Lender has reviewed and approved the
documents creating and governing the Preapproved
Entity, including Maxus and any Maxus Controlled
Entity.
(J) The Preapproved Entity executes Lender's
standard Assumption Agreement which requires the
Preapproved Entity to perform all obligations of
Borrower set forth in the Note, this Instrument and
in any other Loan Document.
(K) At the time of the Transfer, no Event of
Default shall have occurred and no event or condition
shall have occurred and be continuing that, with the
giving of notice or the passage of time, or both,
would become an Event of Default.
(L) Borrower pays to Lender upon demand by
Lender, the cost of all title searches, title
insurance and recording costs, and all fees and out
of pocket costs of Lender=s legal counsel related to
the Transfer and at the time it requests Lender's
consent, Borrower pays a review fee in the amount of
$2,000 (which fee shall not be refundable).
(M) Immediately after the Transfer, Borrower
provides Lender with i) a title endorsement to
Lender's mortgagee's title policy insuring the lien
of the Security Instrument changing the name of the
Borrower and evidencing that there are no intervening
liens from the date of the title policy until the
Transfer; ii) a certified copy of the recorded
assumption agreement; and iii) a certified copy of
the recorded transfer deed.
(N) Each Guarantor (if applicable) reaffirms in
writing its respective obligations under any Guaranty
and acknowledges and confirms that the Guaranty
remains in full force and effect and that each
Guarantor guarantees the Preapproved Entity's
obligations under the Note, this Instrument and the
other Loan Documents.
The modifications set forth in this Section 21(b)(7) shall be
null and void in the event title to the Mortgaged Property is
vested in an entity other than the Borrower at the time of
execution of this Instrument.
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6. The following subparagraph (d) shall be added to Section 21 of the
Security Instrument:
(d) Provided that Borrower has transferred the Property
to the Preapproved Entity pursuant to Section 21(b)(7) of this
Instrument, Lender shall consent to the substitution (the
"Substitution") of the Mortgaged Property for another
multifamily apartment rental property (the "Substituted
Property") owned by the Preapproved Entity, which shall not
result in an adjustment to the rate at which the Indebtedness
secured by this Instrument bears interest provided that the
Preapproved Entity has satisfied each of the following
requirements:
(1) not less than sixty (60) days prior to the
requested Substitution, the Preapproved Entity shall
deliver to Lender written notice of the requested
Substitution, which shall include a detailed
description of the Substituted Property and the
non-refundable review fee in the amount set forth in
subsection 21(d)(10) below;
(2) there shall not be more than one
Substitution in any 12-month period, and not more
than 2 Substitutions during the term of the loan
evidenced by the Note;
(3) there shall exist no Event of Default
uncured within any applicable grace period;
(4) the loan to value ratio with respect to the
Substituted Property at the time of the proposed
Substitution is not greater than the lesser of (i)
the loan to value ratio of the Mortgaged Property
which exists as of the date hereof, or (ii) the then
current loan to value ratio of the Mortgaged
Property at the time of any such Substitution based
on an MAI appraisal (prepared by an appraiser
acceptable to Lender and paid for by the Preapproved
Entity) at the time of any such Substitution. (As
used herein, "loan to value ratio" means the ratio
of (A) the outstanding principal balance of the
Indebtedness, and, if applicable, any other
indebtedness secured by a lien on the Mortgaged
Property to (B) the value of the Substituted Property
or the Mortgaged Property, as applicable, as
determined by Lender in its sole discretion,
expressed as a percentage);
(5) the debt service coverage ratio with respect
to the Substituted Property for the last twelve full
months preceding the proposed Substitution is not
less than the greater of (i) the debt service
coverage ratio for the Mortgaged Property which
exists as of the date hereof, or (ii) the then
current debt service coverage ratio for the Mortgaged
Property at the time of any such Substitution. (As
used herein, the term "debt service coverage ratio"
means the ratio of (A) the annual net operating
income from the Substituted Property's or the
Mortgaged Property's operations, as applicable,
during the
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preceding twelve month period which is available for
repayment of debt, after deducting reasonable and
customary operating expenses, to (B) the annual
principal and interest payable under the Note and
with respect to any indebtedness secured by a lien on
the Mortgaged Property, as determined by Lender in
its sole discretion);
(6) the appraised value of the Substituted
Property shall be equal to or greater than the
greater of (i) the appraised value of the Mortgaged
Property which exists as of the date of the closing
of the loan evidenced by the Note, or (ii)the
appraised value of the Mortgaged Property at the time
of the Substitution based on the MAI appraisal
described in Subsection 21(d)(4) above, as determined
by Lender in its sole discretion;
(7) no Substitution shall be permitted prior to
the date which is one year from the date of this
Instrument nor after the date which is one year prior
to the stated maturity of the Indebtedness as set
forth in the Note;
(8) Lender shall have received an environmental
report on the Substituted Property which is
acceptable to Lender, in Lender's sole discretion,
and shows that no Phase II environmental report is
required;
(9) Lender shall have received an engineering
report on the Substituted Property which is
acceptable to Lender, in Lender's sole discretion;
(10) Lender shall have received a review fee
equal to the greater of $10,000 or ten (10)
basis points multiplied by the unpaid principal
balance of the Note, and the Preapproved Entity shall
pay to Lender the amount of Lender's out-of-pocket
costs (including, without limitation, reasonable
attorneys' fees and the costs of engineering reports,
appraisals and environmental reports) incurred in
reviewing the Substitution request and implementing
the Substitution;
(11) Lender shall have received a application fee
equal to ten (10) basis points multiplied by the
unpaid principal balance of the Note,
(12) Lender shall have received a new currently
dated mortgagee's title insurance policy in the form
and containing the exceptions acceptable to Lender
according to its standards for title insurance
policies in place at the time of the Substitution,
insuring the first lien mortgage secured by the
Substituted Property;
(13) Lender shall have received a currently dated
survey of the Substituted Property, acceptable to
Lender in accordance with its standards and
requirements for surveys in place at the time of the
substitution;
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(14) the physical condition, location, market
condition, and other aspects of the Substituted
Property, shall be substantially comparable to the
Mortgaged Property as determined by Lender in its
sole and absolute discretion [in addition to local
market factors and conditions, market condition shall
also include, but not be limited to, Lender's
portfolio concentrations in such market];
(15) if the Substitution is approved, (i) the
Preapproved entity shall have executed and delivered
to Lender for recordation an amendment to this
Instrument in form and substance acceptable to Lender
in its discretion, or an entirely new Instrument in
form and substance acceptable to Lender, substituting
the Substituted Property for the Mortgaged Property;
and (ii) the Preapproved Entity shall have executed
and delivered such additional documentation,
including without limitation new Uniform Commercial
Code Financing Statements, as Lender may reasonably
require to grant Lender a perfected first lien and
security interest in the Substituted Property and to
otherwise implement the Substitution in accordance
with this Section;
(16) upon completion of the Substitution, at the
expense of the Preapproved Entity, the Mortgaged
Property will be released from the lien of this
Instrument; provided that any document effecting such
release or satisfaction must expressly provide that
the Indebtedness has not been paid in full and that
the recording of the release or satisfaction is not
intended to create any presumption to the contrary;
(17) The modifications set forth in this Section
21(d) shall be null and void in the event title to
the Mortgaged Property is vested in any other party
other than the Preapproved Entity.
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