Prepared by, and after recording
return to:
Edwin C. Cox, Esquire
Troutman Sanders LLP
P.O. Box 1122
Richmond, Virginia 23218-1122
MULTIFAMILY DEED
OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(Including Fixture Filing)
(TENNESSEE –
REVISION DATE 10-18-2007)
Maximum Principal
Indebtedness for Tennessee
Recording Tax Purposes is $24,000,000.00 .
1
FHLMC Loan
No. 504133543
Canyon Ridge
Apartments
MULTIFAMILY DEED OF
TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
(TENNESSEE – REVISION DATE 10-18-2007)
THIS MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND SECURITY AGREEMENT (the “
Instrument ”) is made as of this 15th day of
September, 2008, among G&E APARTMENT REIT CANYON RIDGE,
LLC , a limited liability company organized and existing under
the laws of Delaware, whose address is c/o Grubb & Ellis Realty
Investors, LLC, 1606 Santa Rosa Road, Suite 109, Richmond,
Virginia 23229, as grantor (“ Borrower ”), to
MID-SOUTH TITLE CORP. , as trustee, a resident of Shelby
County, Tennessee, whose address is 6363 Poplar Ave.,
Suite 208, Memphis, Tennessee (“ Trustee
”), for the benefit of CAPMARK BANK , an industrial
bank organized and existing under the laws of Utah, whose address
is 6955 Union Park Center, Suite 330, Midvale, Utah 84047,
Attn: President, as beneficiary (“ Lender ”).
Borrower’s organizational identification number, if
applicable, is 4587727.
This Instrument covers property which
is or may become so affixed to real property as to become fixtures
and also constitutes a fixture filing under § 47-9-502 of
Tennessee Code Annotated. NOTICE PURSUANT TO § 47-28-104 OF
TENNESSEE CODE ANNOTATED. This Instrument secures obligatory
advances for “commercial purposes” as such terms are
defined in §§ 47-28-103 and 47-28-104 of Tennessee Code
Annotated.
Borrower, in consideration of the
Indebtedness and the trust created by this Instrument, irrevocably
grants, conveys, bargains, sells, confirms and assigns to Trustee,
in trust, with power of sale, the Mortgaged Property, including the
Land located in the County of Davidson, State of Tennessee 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 October 1, 2015 (the " Maturity Date
”), in the principal amount of $24,000,000.00, and all
renewals, extensions and modifications of the Indebtedness, and the
performance of the covenants and agreements of Borrower contained
in the Loan Documents.
Borrower represents and warrants that
Borrower is lawfully seized of the Mortgaged Property and has the
right, power and authority to grant, convey and assign the
Mortgaged Property, and that the Mortgaged Property is unencumbered
except as shown on the schedule of exceptions to coverage in the
title policy issued to and accepted by Lender contemporaneously
with the execution and recordation of this Instrument and insuring
Lender’s interest in the Mortgaged Property (the "
Schedule of Title Exceptions ”). 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 the Schedule of Title
Exceptions.
UNIFORM
COVENANTS
REVISION DATE 02-15-2008
Covenants. In consideration of the mutual promises set
forth in this Instrument, 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) " Attorneys’ Fees
and Costs ” means (i) fees and out-of-pocket costs
of Lender’s and Loan Servicer’s attorneys, as
applicable, including costs of Lender’s and Loan
Servicer’s in-house counsel, support staff costs, costs of
preparing for litigation, computerized research, telephone and
facsimile transmission expenses, mileage, deposition costs,
postage, duplicating, process service, videotaping and similar
costs and expenses; (ii) costs and fees of expert witnesses,
including appraisers; and (iii) investigatory fees.
(b) " Borrower ”
means all persons or entities identified as “Borrower”
in the first paragraph of this Instrument, together with their
successors and assigns.
(c) " Business Day
” means any day other than a Saturday, a Sunday or any other
day on which Lender or the national banking associations are not
open for business.
(d) " 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.
(e) " Controlling Entity
” means an entity which owns, directly or indirectly through
one or more intermediaries, (i) a general partnership interest
or a Controlling Interest of the limited partnership interests in
Borrower (if Borrower is a partnership or joint venture),
(ii) a manager’s interest in Borrower or a Controlling
Interest of the ownership or membership interests in Borrower (if
Borrower is a limited liability company), (iii) a Controlling
Interest of any class of voting stock of Borrower (if Borrower is a
corporation), (iv) a trustee’s interest or a Controlling
Interest of the beneficial interests in Borrower (if Borrower is a
trust), or (v) a managing partner’s interest or a
Controlling Interest of the partnership interests in Borrower (if
Borrower is a limited liability partnership).
(f) " Controlling
Interest ” means (i) 51 percent or more of the
ownership interests in an entity, or (ii) a percentage
ownership interest in an entity of less than 51 percent, if
the owner(s) of that interest actually direct(s) the
business and affairs of the entity without the requirement of
consent of any other party. The Controlling Interest shall be
deemed to be 51 percent unless otherwise stated in
Exhibit B.
(g) " 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.
(h) " Event of Default
” means the occurrence of any event listed in
Section 22.
(i) " Fixtures ”
means all property owned by Borrower 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.
(j) " 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 or over the Borrower.
(k) " Hazard Insurance
” is defined in Section 19.
(l) " Hazardous Materials
” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials;
polychlorinated biphenyls (“PCBs”) and compounds
containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty
or containing any substance; any substance the presence of which on
the Mortgaged Property is prohibited by any federal, state or local
authority; any substance that requires special handling and any
other material or substance now or in the future that (i) is
defined as a “hazardous substance,” “hazardous
material,” “hazardous waste,” “toxic
substance,” “toxic pollutant,”
“contaminant,” or “pollutant” by or within
the meaning of any Hazardous Materials Law, or (ii) is
regulated in any way by or within the meaning of any Hazardous
Materials Law.
(m) " 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 or the
protection of human health or the environment 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 of 1976, 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 et seq. , and their state analogs.
(n) " Impositions ”
and “ Imposition Deposits ” are defined in
Section 7(a).
(o) " 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.
(p) " Indebtedness
” means the principal of, interest at the fixed or variable
rate set forth in the Note 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.
(q) " Initial Owners
” means, with respect to Borrower or any other entity, the
persons or entities that (i) on the date of the Note, or
(ii) on the date of a Transfer to which Lender has consented,
own in the aggregate 100 percent of the ownership interests in
Borrower or that entity.
(r) " Land ” means
the land described in Exhibit A.
(s) " 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.
(t) " Lender ”
means the entity identified as “Lender” in the first
paragraph of this Instrument, or any subsequent holder of the
Note.
(u) " Loan Documents
” means the Note, this Instrument, all guaranties, all
indemnity agreements, all Collateral Agreements, O&M Programs,
the MMP 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.
(v) " 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.
(w) " MMP ” means a
moisture management plan to control water intrusion and prevent the
development of Mold or moisture at the Mortgaged Property
throughout the term of this Instrument. At a minimum, the MMP must
contain a provision for (i) staff training,
(ii) information to be provided to tenants,
(iii) documentation of the plan, (iv) the appropriate
protocol for incident response and remediation and
(v) routine, scheduled inspections of common space and unit
interiors.
(x) " Mold ” means
mold, fungus, microbial contamination or pathogenic organisms.
(y) " Mortgaged Property
” means all of Borrower’s present and future right,
title and interest in and to all of the following:
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the Improvements;
the Fixtures;
the Personalty;
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(v)
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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;
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(vi)
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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;
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(vii)
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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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(viii)
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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;
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(ix)
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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;
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(x)
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all Rents and Leases;
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(xi)
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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;
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(xii)
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all Imposition Deposits;
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(xiii)
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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);
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(xiv)
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all tenant security deposits which have not
been forfeited by any tenant under any Lease and any bond or other
security in lieu of such deposits; and
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(xv)
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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.
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(z) " 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.
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" O&M Program ” is defined in
Section 18(d).
" Personalty ” means all:
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(i)
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accounts (including deposit accounts) of
Borrower related to the Mortgaged Property;
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(ii)
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equipment and inventory owned by Borrower,
which are used now or in the future in connection with the
ownership, management or operation of the Land or Improvements or
are located on the Land or Improvements, including furniture,
furnishings, machinery, building materials, goods, supplies, tools,
books, records (whether in written or electronic form), and
computer equipment (hardware and software);
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(iii)
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other tangible personal property owned by
Borrower which is used now or in the future in connection with the
ownership, management or operation of the Land or Improvements or
is located on the Land or in the Improvements, including ranges,
stoves, microwave ovens, refrigerators, dishwashers, garbage
disposers, washers, dryers and other appliances (other than
Fixtures);
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(iv)
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any operating agreements relating to the Land
or the Improvements;
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(v)
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any surveys, plans and specifications and
contracts for architectural, engineering and construction services
relating to the Land or the Improvements;
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(vi)
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all other intangible property, general
intangibles 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 and
including subsidy or similar payments received from any sources,
including a governmental authority; and
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(vii)any rights of Borrower in or under
letters of credit.
" Property Jurisdiction ” is defined in
Section 30(a).
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(dd) " Rents ”
means all rents (whether from residential or non-residential
space), revenues and other income of the Land or the Improvements,
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, and, if Borrower is a
cooperative housing corporation or association, maintenance fees,
charges or assessments payable by shareholders or residents under
proprietary leases or occupancy agreements, whether now due, past
due, or to become due.
(ee) " Taxes ”
means all taxes, assessments, vault rentals and other charges, if
any, whether 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.
(ff) " Transfer ”
is defined in Section 21.
2. UNIFORM COMMERCIAL CODE
SECURITY AGREEMENT.
(a) This Instrument is also a
security agreement under the Uniform Commercial Code for any of the
Mortgaged Property which, under applicable law, may be subjected to
a security interest under the Uniform Commercial Code, whether such
Mortgaged Property is owned now or acquired 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
hereby authorizes Lender to prepare and file financing statements,
continuation statements and financing statement amendments in such
form as Lender may require to perfect or continue the perfection of
this security interest and Borrower agrees, if Lender so requests,
to execute and deliver to Lender such financing statements,
continuation statements and amendments. Borrower shall pay all
filing costs and all costs and expenses of any record searches for
financing statements and/or amendments that Lender may require.
Without the prior written consent of Lender, Borrower shall not
create or permit to exist any other lien or security interest in
any of the UCC Collateral.
(b) Unless Borrower gives Notice
to Lender within 30 days after the occurrence of any of the
following, and executes and delivers to Lender modifications or
supplements of this Instrument (and any financing statement which
may be filed in connection with this Instrument) as Lender may
require, Borrower shall not (i) change its name, identity,
structure or jurisdiction of organization; (ii) change the
location of its place of business (or chief executive office if
more than one place of business); or (iii) add to or change
any location at which any of the Mortgaged Property is stored, held
or located.
(c) 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.
(d) This Instrument constitutes
a financing statement with respect to any part of the Mortgaged
Property that is or may become a Fixture, if permitted by
applicable law.
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. However, if this present, absolute and unconditional
assignment of Rents is not enforceable by its terms under the laws
of the Property Jurisdiction, then the Rents shall be included as a
part of the Mortgaged Property and it is the intention of the
Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be
effective as of the date of this Instrument.
(b) After the occurrence of an
Event of Default, Borrower authorizes Lender to collect, sue for
and compromise Rents and directs each tenant of the Mortgaged
Property to pay all Rents to, or as directed by, Lender. However,
until the occurrence of an Event of Default, Lender hereby grants
to Borrower a revocable license to collect and receive all Rents,
to hold all Rents in trust for the benefit of Lender and to apply
all Rents to pay the installments of interest and principal then
due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition
Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including
utilities, Taxes and insurance premiums (to the extent not included
in Imposition Deposits), tenant improvements and other capital
expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the
preceding sentence may be retained by Borrower free and clear of,
and released from, Lender’s rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and
taking and maintaining control of the Mortgaged Property directly,
or by a receiver, Borrower’s license to collect Rents shall
automatically terminate and Lender shall without Notice be entitled
to all Rents as they become due and payable, including Rents then
due and unpaid. Borrower shall pay to Lender upon demand all Rents
to which Lender is entitled. At any time on or after the date of
Lender’s demand for Rents, (i) 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, (ii) no tenant shall be obligated to inquire
further as to the occurrence or continuance of an Event of Default,
and (iii) 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 any
prior indebtedness that is being assigned to Lender, or paid off
and discharged with the proceeds of the loan evidenced by the
Note), that Borrower has not performed, and Borrower covenants and
agrees that it will not perform, any acts and has not executed, and
shall not execute, any instrument which would prevent Lender from
exercising its rights under this Section 3, and that at the
time of execution of this Instrument there has been no anticipation
or prepayment of any Rents for more than two months prior to the
due dates of such Rents. Borrower shall not collect or accept
payment of any Rents more than two months prior to the due dates of
such Rents.
(d) If an Event of Default has
occurred and is continuing, Lender may, regardless of the adequacy
of Lender’s security or the solvency of Borrower and even in
the absence of waste, enter upon and take and maintain full control
of the Mortgaged Property in order to perform all acts that Lender
in its discretion determines to be necessary or desirable for the
operation and maintenance of the Mortgaged Property, including the
execution, cancellation or modification of Leases, the collection
of all Rents, the making of repairs to the Mortgaged Property and
the execution or termination of contracts providing for the
management, operation or maintenance of the Mortgaged Property, for
the purposes of enforcing the assignment of Rents pursuant to
Section 3(a), protecting the Mortgaged Property or the
security of this Instrument, or for such other purposes as Lender
in its discretion may deem necessary or desirable. Alternatively,
if an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender’s security, without regard to
Borrower’s solvency and without the necessity of giving prior
notice (oral or written) to Borrower, Lender may apply to any
court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in
the preceding sentence. If Lender elects to seek the appointment of
a receiver for the Mortgaged Property at any time after an Event of
Default has occurred and is continuing, Borrower, by its execution
of this Instrument, expressly consents to the appointment of such
receiver, including the appointment of a receiver ex parte
if permitted by applicable law. If Borrower is a housing
cooperative corporation or association, Borrower hereby agrees that
if a receiver is appointed, the order appointing the receiver may
contain a provision requiring the receiver 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, it being acknowledged and
agreed that the Indebtedness is an obligation of the Borrower and
must be paid out of maintenance charges payable by the
Borrower’s tenant shareholders under their proprietary leases
or occupancy agreements. Lender or the receiver, as the case may
be, shall be entitled to receive a reasonable fee for managing the
Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon the Lender’s entering upon and taking
possession and control of the Mortgaged Property, Borrower shall
surrender possession of the Mortgaged Property to Lender or the
receiver, as the case may be, and shall deliver to Lender or the
receiver, as the case may be, all documents, records (including
records on electronic or magnetic media), accounts, surveys, plans,
and specifications relating to the Mortgaged Property and all
security deposits and prepaid Rents. In the event Lender takes
possession and control of the Mortgaged Property, Lender may
exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the exercise by
Lender of any of the rights conferred under this Section 3
shall not be construed to make Lender a mortgagee-in-possession of
the Mortgaged Property so long as Lender has not itself entered
into actual possession of the Land and Improvements.
(e) If Lender enters the
Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received. Except to the
extent of Lender’s gross negligence or willful misconduct,
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
Section 3(d), 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. However, if this present,
absolute and unconditional assignment of the Leases is not
enforceable by its terms under the laws of the Property
Jurisdiction, then the Leases shall be included as a part of the
Mortgaged Property and it is the intention of the Borrower that in
this circumstance this Instrument create and perfect a lien on the
Leases in favor of Lender, which lien shall be effective as of the
date of this Instrument.
(b) Until Lender gives Notice to
Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority
granted to Borrower under any Lease (except as otherwise limited by
this Section or any other provision of this Instrument),
including the right, power and authority to modify the terms of any
Lease or extend or terminate any Lease. Upon the occurrence of an
Event of Default, the permission given to Borrower pursuant to the
preceding sentence to exercise all rights, power and authority
under Leases shall automatically terminate. Borrower shall comply
with and observe Borrower’s obligations under all Leases,
including Borrower’s obligations pertaining to the
maintenance and disposition of tenant security deposits.
(c) Borrower acknowledges and
agrees that the exercise by Lender, either directly or by a
receiver, of any of the rights conferred under this Section 4
shall not be construed to make Lender a mortgagee-in-possession of
the Mortgaged Property so long as Lender has not itself entered
into actual possession of the Land and the Improvements. The
acceptance by Lender of the assignment of the Leases pursuant to
Section 4(a) shall not at any time or in any event
obligate Lender to take any action under this Instrument or to
expend any money or to incur any expenses. Except to the extent of
Lender’s gross negligence or willful misconduct, 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.
However, Lender’s consent shall not be required for the
modification or extension of a non-residential Lease if such
modification or extension is on terms at least as favorable to
Borrower as those customary at that time in the applicable market
and the income from the extended or modified Lease will not be less
than the income received from the Lease as of the date of this
Instrument. Borrower shall, without request by Lender, deliver an
executed copy of each non-residential Lease to Lender promptly
after such Lease is signed. All non-residential Leases, including
renewals or extensions of existing Leases, shall specifically
provide that (i) such Leases are subordinate to the lien of
this Instrument; (ii) 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; (iii) 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; (iv) the Lease
shall not be terminated by foreclosure or any other transfer of the
Mortgaged Property; (v) 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 (vi) 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.
(h) If Borrower is a cooperative
housing corporation or association, notwithstanding anything to the
contrary contained in this subsection or in Section 21, so
long as Borrower remains a cooperative housing corporation or
association and is not in breach of any covenant of this
Instrument, Lender hereby consents to:
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(i)
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the execution of leases of apartments for a
term in excess of two years from Borrower to a tenant shareholder
of Borrower, so long as such leases, including proprietary leases,
are and will remain subordinate to the lien of this Instrument;
and
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(ii)
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the surrender or termination of such leases of
apartments where the surrendered or terminated lease is immediately
replaced or where the Borrower makes its best efforts to secure
such immediate replacement by a newly executed lease of the same
apartment to a tenant shareholder of the Borrower. However, no
consent is hereby given by Lender to any execution, surrender,
termination or assignment of a lease under terms that would waive
or reduce the obligation of the resulting tenant shareholder under
such lease to pay cooperative assessments in full when due or the
obligation of the former tenant shareholder to pay any unpaid
portion of such assessments.
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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) Unless this requirement is
waived in writing by Lender, which waiver may be contained in this
Section 7(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, the items marked “Collect” below. Lender
will not require the Borrower to make Imposition Deposits with
respect to the items marked “Deferred” below.
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[ Collect ] Hazard
Insurance premiums or other insurance premiums required by Lender
under Section 19,
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[ Collect ] Taxes,
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[ Deferred ] water and sewer charges
(that could become a lien on the Mortgaged Property),
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[ N/A ] ground rents,
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[ Deferred ] assessments or other
charges (that could become a lien on the Mortgaged Property)
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The amounts deposited under the preceding sentence are
collectively referred to in this Instrument as the “
Imposition Deposits .” The obligations of Borrower for
which the Imposition Deposits are required are collectively
referred to in this Instrument as “ Impositions.
” The amount of the Imposition Deposits shall be sufficient
to enable Lender to pay each Imposition before the last date upon
which such payment may be made without any penalty or interest
charge being added. Lender shall maintain records indicating how
much of the monthly Imposition Deposits and how much of the
aggregate Imposition Deposits held by Lender are held for the
purpose of paying Taxes, insurance premiums and each other
Imposition.
(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. As additional security for all of
Borrower’s obligations under this Instrument and the other
Loan Documents, Borrower hereby pledges and grants to Lender a
security interest in the Imposition Deposits and all proceeds of,
and all interest and dividends on, the Imposition Deposits. 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, 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, 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.
(f) If Lender does not collect
an Imposition Deposit with respect to an Imposition either marked
“Deferred” in Section 7(a) or pursuant to a
separate written waiver by Lender, then on or before the date each
such Imposition is due, or on the date this Instrument requires
each such Imposition to be paid, Borrower must provide Lender with
proof of payment of each such Imposition for which Lender does not
require collection of Imposition Deposits. Lender may revoke its
deferral or waiver and require Borrower to deposit with Lender any
or all of the Imposition Deposits listed in Section 7(a),
regardless of whether any such item is marked
“Deferred” in such section, upon Notice to Borrower,
(i) if Borrower does not timely pay any of the Impositions,
(ii) if Borrower fails to provide timely proof to Lender of
such payment, or (iii) at any time during the existence of an
Event of Default.
(g) In the event of a Transfer
prohibited by or requiring Lender’s approval under
Section 21, Lender’s waiver of the collection of any
Imposition Deposit in this Section 7 may be modified or
rendered void by Lender at Lender’s option by Notice to
Borrower and the transferee(s) as a condition of Lender’s
approval of such Transfer.
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 that 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 AND
ORGANIZATIONAL DOCUMENTS.
(a) 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, disability
accommodation, 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.
(b) Borrower shall at all times
maintain records sufficient to demonstrate compliance with the
provisions of this Section 10.
(c) 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.
(d) Borrower shall at all times
comply with all laws, regulations and requirements of any
Governmental Authority relating to Borrower’s formation,
continued existence and good standing in the Property Jurisdiction.
Borrower shall at all times comply with its organizational
documents, including but not limited to its partnership agreement
(if Borrower is a partnership), its by-laws (if Borrower is a
corporation or housing cooperative corporation or association) or
its operating agreement (if Borrower is an limited liability
company, joint venture or tenancy-in-common ). If Borrower is a
housing cooperative corporation or association, Borrower shall at
all times maintain its status as a “cooperative housing
corporation” as such term is defined in Section 216(b) of the
Internal revenue Code of 1986, as amended, or any successor statute
thereto.
11. USE OF PROPERTY.
Unless required by applicable law, Borrower shall not
(a) 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, except for any change in use approved by Lender,
(b) convert any individual dwelling units or common areas to
commercial use, (c) initiate a change in the zoning
classification of the Mortgaged Property or acquiesce without
Notice to and consent of Lender in a change in the zoning
classification of the Mortgaged Property, (d) establish any
condominium or cooperative regime with respect to the Mortgaged
Property, (e) combine all or any part of the Mortgaged
Property with all or any part of a tax parcel which is not part of
the Mortgaged Property, or (f) subdivide or otherwise split
any tax parcel constituting all or any part of the Mortgaged
Property without the prior consent of Lender. Notwithstanding
anything contained in this Section to the contrary, if Borrower is
a housing cooperative corporation or association, Lender
acknowledges and consents to Borrower’s use of the Mortgaged
Property as a housing cooperative.
12. PROTECTION OF
LENDER’S SECURITY; INSTRUMENT SECURES FUTURE
ADVANCES.
(a) If Borrower fails to perform
any of its obligations under this Instrument or any other Loan
Document, or if any action or proceeding is commenced which
purports to affect the Mortgaged Property, Lender’s security
or Lender’s rights under this Instrument, including eminent
domain, insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or decedent,
then Lender at Lender’s option may make such appearances,
file such documents, 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
(i) payment of Attorneys’ Fees and Costs,
(ii) payment of fees and out-of-pocket expenses of
accountants, inspectors and consultants, (iii) entry upon the
Mortgaged Property to make repairs or secure the Mortgaged
Property, (iv) procurement of the insurance required by
Section 19, (v) payment of amounts which Borrower has
failed to pay under Sections 15 and 17, and
(vi) advances made by Lender 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 ”).
(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 secured by this Instrument, 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.
(a) 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, upon reasonable notice to
Borrower if the inspection is to include occupied residential units
(which notice need not be in writing). Notice to Borrower shall not
be required in the case of an emergency, as determined in
Lender’s discretion, or when an Event of Default has occurred
and is continuing.
(b) If Lender determines that
Mold has developed as a result of a water intrusion event or leak,
Lender, at Lender’s discretion, may require that a
professional inspector inspect the Mortgaged Property as frequently
as Lender determines is necessary until any issue with Mold and its
cause(s) are resolved to Lender’s satisfaction. Such
inspection shall be limited to a visual and olfactory inspection of
the area that has experienced the Mold, water intrusion event or
leak. Borrower shall be responsible for the cost of such
professional inspection and any remediation deemed to be necessary
as a result of the professional inspection. After any issue with
Mold, water intrusion or leaks is remedied to Lender’s
satisfaction, Lender shall not require a professional inspection
any more frequently than once every three years unless Lender is
otherwise aware of Mold as a result of a subsequent water intrusion
event or leak.
(c) If Lender or Loan Servicer
determines not to conduct an annual inspection of the Mortgaged
Property, and in lieu thereof Lender requests a certification,
Borrower shall be prepared to provide and must actually provide to
Lender a factually correct certification each year that the annual
inspection is waived to the following effect:
Borrower has not received any written complaint, notice, letter or
other written communication from tenants, management agent or
governmental authorities regarding mold, fungus, microbial
contamination or pathogenic organisms (“ Mold ”)
or any activity, condition, event or omission that causes or
facilitates the growth of Mold on or in any part of the Mortgaged
Property or if Borrower has received any such written complaint,
notice, letter or other written communication that Borrower has
investigated and determined that no Mold activity, condition or
event exists or alternatively has fully and properly remediated
such activity, condition, event or omission in compliance with the
Moisture Management Plan for the Mortgaged Property.
If Borrower is unwilling or
unable
