Exhibit 10.14
Prepared by, and after
recording
return to:
Ashante L. Smith, Esquire
Troutman Sanders LLP
P.O. Box 1122
Richmond, Virginia
23218-1122
(Form of)
MULTIFAMILY
MORTGAGE,
ASSIGNMENT OF
RENTS
AND SECURITY
AGREEMENT
(ILLINOIS – REVISION DATE
05-11-2004)
THIS INSTRUMENT IS NOT TO BE USED
FOR
MULTIFAMILY PROPERTIES CONTAINING 5 OR
6
RESIDENTIAL UNITS IF ANY RESIDENTIAL
UNIT
IS OWNER-OCCUPIED
FHLMC Loan No. 948698136
Lakeside Apartments
MULTIFAMILY MORTGAGE,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(ILLINOIS – REVISION DATE
05-11-2004)
THIS MULTIFAMILY MORTGAGE, ASSIGNMENT OF
RENTS AND SECURITY AGREEMENT (the " Instrument ") is made to
be effective as of the 30th day of
March, 2007 , between
NATIONAL PROPERTY
INVESTORS III , a California
limited partnership, a partnership organized
and existing under the laws of California , whose
address is c/o AIMCO, Stanford Place 3, 4582 S. Ulster St. Parkway,
Suite 1100, Denver, Colorado 80237, as mortgagor ("
Borrower "), and 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, with a copy to Capmark Finance Inc., 116 Welsh
Road, Horsham, Pennsylvania 19044, Attn: Servicing
– Executive Vice President, as mortgagee (" Lender ").
Borrower's organizational identification number, if
applicable, is 198421600039
.
Borrower is indebted to Lender in the
principal amount of $9,000,000.00, as evidenced by Borrower’s
Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on January
1, 2022 (the “ Maturity
Date ”).
TO SECURE TO LENDER the repayment of the
Indebtedness, 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 mortgages,
warrants, grants, conveys and assigns to Lender the Mortgaged
Property, including the Land located in DuPage County , State
of Illinois and described in Exhibit A attached to this
Instrument.
Borrower represents and warrants that
Borrower is lawfully seized of the Mortgaged Property and has the
right, power and authority to mortgage, 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
01-30-2006
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.
(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:
(i)
the Land;
(ii)
the Improvements;
(iii)
the Fixtures;
(iv)
the Personalty;
(v)
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;
(vi)
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;
(vii)
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;
(viii)
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;
(ix)
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;
(x)
all Rents and Leases;
(xi)
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;
(xii)
all Imposition Deposits;
(xiii)
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);
(xiv)
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
(xv)
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.
(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.
(aa)
" O&M Program " is defined in
Section 18(d).
(bb)
" Personalty " means
all:
(i)
accounts (including deposit accounts) of
Borrower related to the Mortgaged Property;
(ii)
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), computer
equipment (hardware and software);
(iii)
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);
(iv)
any operating agreements relating to the
Land or the Improvements;
(v)
any surveys, plans and specifications and
contracts for architectural, engineering and construction services
relating to the Land or the Improvements;
(vi)
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
(vii)
any rights of Borrower in or under
letters of credit.
(cc)
" Property Jurisdiction " is
defined in Section 30(a).
(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.
(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.
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. If Borrower is a cooperative
housing corporation, association or other validly organized entity
under municipal, county, state or federal law, notwithstanding
anything to the contrary contained in this subsection, so long as
Borrower is not in breach of any covenant of this Instrument,
Lender hereby consents to the execution of leases of apartments for
a term in excess of two years from Borrower to a tenant shareholder
of Borrower, to 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.
(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.
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.
[Deferred]
Hazard Insurance premiums or other
insurance premiums required by Lender under
Section 19,
[Deferred]
Taxes,
[Deferred]
water and sewer charges (that could
become a lien on the Mortgaged Property),
ground rents
[ N/A ]
[Deferred]
assessments or other charges (that could
become a lien on the Mortgaged Property)
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.
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.
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) 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.
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, and (v) 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 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
odors, indoor air quality, 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 to
provide such certification, Lender may require a professional
inspection of the Mortgaged Property at Borrower's
expense.
14.
BOOKS AND RECORDS; FINANCIAL
REPORTING.
(a)
Borrower shall keep and maintain at all
times at the Mortgaged Property or the management agent's office,
and upon Lender's request shall make available at the Mortgaged
Property (or, at Borrower's option, at the management agent's
office), 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 by Lender at any reasonable
time.
(b)
Within 120 days after the end of each
fiscal year of Borrower, Borrower shall furnish to Lender 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. If
Borrower's fiscal year is other than the calendar year, Borrower
must also submit to Lender a year-end statement of income and
expenses within 120 days after the end of the calendar
year.
(c)
Within 120 days after the end of each
calendar year, and at any other time, upon Lender's request,
Borrower shall furnish to Lender each of the following.
However, Lender shall not require any of the following more
frequently than quarterly except when there has been an Event of
Default and such Event of Default is continuing, in which case
Lender may, upon written request to Borrower, require Borrower to
furnish any of the following more frequently:
(i)
a rent schedule for the Mortgaged
Property showing the name of each tenant, and for each tenant, the
space occupied, the lease expiration date, the rent payable for the
current month, the date through which rent has been paid, and any
related information requested by Lender;
(ii)
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; and
(iii)
a statement that identifies all owners of
any interest in Borrower and any Controlling Entity and the
interest held by each (unless Borrower or any Controlling Entity is
a publicly-traded entity in which case such statement of ownership
shall not be required), 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.
(d)
At any time upon Lender's request,
Borrower shall furnish to Lender each of the following.
However, Lender shall not require any of the following more
frequently than quarterly except when there has been an Event of
Default and such Event of Default is continuing, in which case
Lender may require Borrower to furnish any of the following more
frequently:
(i)
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;
(ii)
a quarterly or year-to-date income and
expense statement for the Mortgaged Property; and
(iii)
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.
(e)
Upon Lender's request at any time when an
Event of Default has occurred and is continuing, Borrower shall
furnish to Lender monthly income and expense statements and rent
schedules for the Mortgaged Property.
(f)
An individual having authority to bind
Borrower shall certify each of the statements, schedules and
reports required by Sections 14(b) through 14(e) to
be complete and accurate. Each of the statements, schedules
and reports required by Sections 14(b) through
14(e) shall be in such form and contain such detail as Lender
may reasonably require. Lender also may require that any of
the statements, schedules or reports listed in
Section 14(b) and 14(c)(i) and (ii) be audited
at Borrower's expense by independent certified public accountants
acceptable to Lender, at any time when an Event of Default has
occurred and is continuing or at any time that Lender, in its
reasonable judgment, determines that audited financial statements
are required for an accurate assessment of the financial condition
of Borrower or of the Mortgaged Property.
(g)
If Borrower fails to provide in a timely
manner the statements, schedules and reports required by
Sections 14(b) through (e), Lender shall give Borrower
Notice specifying the statements, schedules and reports required by
Section 14(b) through (e) that Borrower has failed
to provide. If Borrower has not provided the required
statements, schedules and reports within 10 Business Days following
such Notice, then 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. 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.
(h)
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.
(i)
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 (i) pay the expenses of
operating, managing, maintaining and repairing the Mortgaged
Property (including utilities, repairs and
replacements) before the last date upon which each such
payment may be made without any penalty or interest charge being
added, and (ii) pay insurance premiums at least 30 days
prior to the expiration date of each policy of insurance, unless
applicable law specifies some lesser period.
(c)
If Lender is collecting Imposition
Deposits, to the extent that Lender holds sufficient Imposition
Deposits for the purpose of paying a specific Imposition, then
Borrower shall not be obligated to pay such Imposition, so long as
no Event of Default exists and Borrower has timely delivered to
Lender any bills or premium notices that it has received. 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 (i) any Event of Default has occurred and is
continuing, (ii) insufficient Imposition Deposits are held by
Lender at the time an Imposition becomes due and payable or
(iii) 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 (i) Borrower notifies Lender of the
commencement or expected commencement of such proceedings,
(ii) the Mortgaged Property is not in danger of being sold or
forfeited, (iii) if Borrower has not already paid the
Imposition, Borrower deposits with Lender reserves sufficient to
pay the contested Imposition, if requested by Lender, and
(iv) Borrower furnishes whatever additional security is
required in the proceedings or is reasonably requested by
Lender.
(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 furnish to
Lender on or before the date this Instrument requires such
Impositions to be paid, receipts evidencing that such payments were
made.
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.
(a)
Borrower shall not commit waste or permit
impairment or deterioration of the Mortgaged Property.
(b)
Borrower shall not abandon the Mortgaged
Property.
(c)
Borrower 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; however, Borrower
shall not be obligated to perform such restoration or repair if
(i) no Event of Default has occurred and is continuing, and
(ii) Lender has elected to apply any available insurance
proceeds and/or condemnation awards to the payment of Indebtedness
pursuant to Section 19(h)(ii), (iii), (iv) or (v), or
pursuant to Section 20.
(d)
Borrower 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)
Borrower shall provide for professional
management of the Mortgaged Property by a residential rental
property manager satisfactory to Lender at all times under a
contract approved by Lender in writing, which contract must be
terminable upon not more than 30 days notice without the
necessity of establishing cause and without payment of a penalty or
termination fee by Borrower or its successors.
(f)
Borrower 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, including
any removal, demolition or alteration occurring in connection with
a rehabilitation of all or part of the Mortgaged Property, except
(i) in connection with the replacement of tangible Personalty,
(ii) if Borrower is a cooperative housing corporation, to the
extent permitted with respect to individual dwelling units under
the form of proprietary lease or occupancy agreement and
(iii) repairs and replacements in connection with making an
individual unit ready for a new occupant.
(g)
Unless otherwise waived by Lender in
writing, Borrower must have or must establish and must adhere to
the MMP. If the Borrower is required to have an MMP, the
Borrower must keep all MMP documentation at the Mortgaged Property
or at the management agent's office and available for the Lender or
the Loan Servicer to review during any annual assessment or other
inspection of the Mortgaged Property that is required by
Lender.
18.
ENVIRONMENTAL HAZARDS.
(a)
Except for matters described in
Section 18(b), Borrower shall not cause or permit any of the
following:
(i)
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;
(ii)
the transportation of any Hazardous
Materials to, from, or across the Mortgaged Property;
(iii)
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;
(iv)
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;
(v)
any violation or noncompliance with the
terms of any O&M Program as defined in
subsection (d).
The matters described in clauses
(i) through (v) above, except as otherwise provided in
Section 18(b), are referred to collectively in this
Section 18 as " Prohibited Activities or Conditions
."
(b)
Prohibited Activities or Conditions shall
not include lawful conditions permitted by an O&M Program or
the safe and lawful use and storage of quantities of
(i) pre-packaged supplies, cleaning materials and petroleum
products customarily used in the operation and maintenance of
comparable multifamily properties, (ii) 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
(iii) 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)
As required by Lender, Borrower shall
also have established a written operations and maintenance program
with respect to certain Hazardous Materials. Each such
operations and maintenance program and any additional or revised
operations and maintenance programs established for the Mortgaged
Property pursuant to this Section 18 must be approved by
Lender and shall be referred to herein as an " O&M
Program ." 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
each O&M Program. Borrower shall pay all costs of
performance of Borrower's obligations under any O&M Program,
and Lender's out-of-pocket costs incurred in connection with the
monitoring and review of each O&M Program and Borrower's
performance shall be paid by Borrower upon demand by Lender.
Any such out-of-pocket costs of Lender that 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 (which written disclosure may be in certain
environmental assessments and other written reports accepted by
Lender in connection with the funding of the Indebtedness and dated
prior to the date of this Instrument):
(i)
Borrower has not at any time engaged in,
caused or permitted any Prohibited Activities or Conditions on the
Mortgaged Property;
(ii)
to the best of Borrower's knowledge after
reasonable and diligent inquiry, no Prohibited Activities or
Conditions exist or have existed on the Mortgaged
Property;
(iii)
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 Mortgaged Property that has been previously disclosed by
Borrower to Lender in writing, that tank complies with all
requirements of Hazardous Materials Laws;
(iv)
to the best of Borrower's knowledge after
reasonable and diligent inquiry, 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;
(v)
to the best of Borrower's knowledge after
reasonable and diligent inquiry, 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;
(vi)
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
(vii)
Borrower has not received any written
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.
(f)
Borrower shall promptly notify Lender in
writing upon the occurrence of any of the following
events:
(i)
Borrower's discovery of any Prohibited
Activity or Condition;
(ii)
Borrower's receipt of or knowledge of any
written complaint, order, notice of violation or other
communication from any tenant, management agent, 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; or
(iii)
Borrower's breach of any of its
obligations under this Section 18.
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, a purpose of which
is to identify the extent or cause of or potential for a Prohibited
Activity or Condition (" 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 Attorneys' Fees and Costs and the costs of
technical consultants whether incurred in connection with any
judicial or administrative process or otherwise) that Borrower
fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12. As long as
(i) no Event of Default has occurred and is continuing,
(ii) Borrower has actually paid for or reimbursed Lender for
all costs of any such Environmental Inspections performed or
required by Lender, and (iii) Lender is not prohibited by law,
contract or otherwise from doing so, Lender shall make available to
Borrower, without representation of any kind, copies of
Environmental Inspections prepared by third parties and delivered
to Lender. 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 or for 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
Environmental Inspections made by or for Lender. Borrower
acknowledges that Lender cannot control or otherwise assure the
truthfulness or accuracy of the results of any 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 that a party may bid at
such sale. Borrower agrees that Lender shall have no
liability whatsoever as a result of delivering the results to any
third party of any Environmental Inspections made by or for Lender,
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 Environmental Inspections made by or for Lender.
(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, or is
otherwise required by Lender as a consequence of any Prohibited
Activity or Condition or to prevent the occurrence of a Prohibited
Activity or Condition, Borrower shall, by the earlier of
(i) the applicable deadline required by Hazardous Materials
Law or (ii) 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 comply with all Hazardous
Materials Laws applicable to the Mortgaged Property. Without
limiting the generality of the previous sentence, Borrower
sh
