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EXHIBIT
10. 61
Prepared
by, and after recording
return
to:
Brian J.
Iwashyna, Esquire
Troutman
Sanders LLP
P.O. Box
1122
Richmond,
Virginia 23218-1122
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(NEBRASKA)
FANNIE MAE
MULTIFAMILY SECURITY INSTRUMENT -
Form 4028
11/01
NEBRASKA
Ó 1997-2001
Fannie Mae
TABLE OF
CONTENTS
PAGE
1.
DEFINITIONS
2.
UNIFORM COMMERCIAL CODE SECURITY AGREEMENT
3.
ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.
4.
ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
5.
PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN
DOCUMENTS; PREPAYMENT PREMIUM
6.
EXCULPATION
7.
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES
8.
COLLATERAL AGREEMENTS.
9.
APPLICATION OF PAYMENTS
10.
COMPLIANCE WITH LAWS
11.
USE OF PROPERTY.
12.
PROTECTION OF LENDER'S SECURITY
13.
INSPECTION
14.
BOOKS AND RECORDS; FINANCIAL REPORTING
15
TAXES; OPERATING EXPENSES
16
LIENS; ENCUMBRANCES.
17.
PRESERVATION, MANAGEMENT AND MAINTENANCE OF
MORTGAGED PROPERTY
18.
ENVIRONMENTAL HAZARDS.
19.
PROPERTY AND LIABILITY INSURANCE
20.
CONDEMNATION
21.
TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
FANNIE MAE
MULTIFAMILY SECURITY INSTRUMENT -
Form 4028
11/01
Page 1
NEBRASKA
Ó 1997-2001
Fannie Mae
22.
EVENTS OF DEFAULT
23.
REMEDIES CUMULATIVE
24.
FORBEARANCE
25.
LOAN CHARGES.
26.
WAIVER OF STATUTE OF LIMITATIONS
27.
WAIVER OF MARSHALLING
28.
FURTHER ASSURANCES.
29.
ESTOPPEL CERTIFICATE
30.
GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE
31.
NOTICE
32.
SALE OF NOTE; CHANGE IN SERVICER
33.
SINGLE ASSET BORROWER
34.
SUCCESSORS AND ASSIGNS BOUND
35.
JOINT AND SEVERAL LIABILITY.
36.
RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
37.
SEVERABILITY; AMENDMENTS
38.
CONSTRUCTION
39.
LOAN SERVICING
40.
DISCLOSURE OF INFORMATION
41
NO CHANGE IN FACTS OR CIRCUMSTANCES
42.
SUBROGATION
43.
ACCELERATION; REMEDIES.
44.
RECONVEYANCE
45.
SUBSTITUTE TRUSTEE
46.
REQUEST FOR NOTICES
47.
WAIVER OF TRIAL BY JURY
FANNIE MAE
MULTIFAMILY SECURITY INSTRUMENT -
Form 4028
11/01
Page 2
NEBRASKA
Ó 1997-2001
Fannie Mae
Terrace Garden
Apartments
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF
RENTS AND SECURITY AGREEMENT (the " Instrument ") is
dated as of the 18 th day of January, 2007, among
VMS NATIONAL PROPERTIES , a joint venture general
partnership organized and existing under the laws of Illinois,
whose address is c/o AIMCO, Stanford Place 3, 4582 South Ulster
Street Parkway, Suite 1100, Denver, Colorado 80237, as grantor
(“ Borrower ”), to STEWART TITLE GUARANTY
COMPANY , as trustee (“ Trustee ”), for
the benefit of CAPMARK FINANCE INC. , a corporation
organized and existing under the laws of California, whose
address is 116 Welsh Road, Horsham, Pennsylvania 19044, Attn:
Servicing-Executive Vice President, as beneficiary (“
Lender ”).
Borrower, in consideration of the Indebtedness
and the trust created by this Instrument, irrevocably grants,
conveys and assigns to Trustee, in trust, with power of sale,
the Mortgaged Property, including the Land located in the County
of Douglas, State of Nebraska 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 as
set forth in the Loan Agreement, in the principal amount of
$4,536,348.00, and all renewals, extensions and modifications of
the Indebtedness, and the performance of the covenants and
agreements of Borrower contained in the Loan Documents.
Borrower represents and warrants that Borrower
is lawfully seized of the Mortgaged Property and has the right,
power and authority to mortgage, grant, convey and assign the
Mortgaged Property, and that the Mortgaged Property is
unencumbered. Borrower covenants that Borrower will
warrant and defend generally the title to the Mortgaged Property
against all claims and demands, subject to any easements and
restrictions listed in a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously
with the execution and recordation of this Instrument and
insuring Lender's interest in the Mortgaged Property.
Covenants. Borrower and Lender
covenant and agree as follows:
1. DEFINITIONS. The following terms, when
used in this Instrument (including when used in the above
recitals), shall have the following meanings:
(a) " Borrower " means all persons or
entities identified as "Borrower" in the first paragraph of this
Instrument, together with their successors and assigns.
(b) " Collateral Agreement " means any
separate agreement between Borrower and Lender for the purpose
of establishing replacement reserves for the Mortgaged Property,
establishing a fund to assure completion of repairs or
improvements specified in that agreement, or assuring reduction
of the outstanding principal balance of the Indebtedness if the
occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other
agreement or agreements between Borrower and Lender which
provide for the establishment of any other fund, reserve or
account.
(c) "
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.
(d) " Event of Default " means the
occurrence of any event listed in Section 22.
(e) " Fixtures " means all property which
is so attached to the Land or the Improvements as to constitute
a fixture under applicable law, including: machinery, equipment,
engines, boilers, incinerators, installed building materials;
systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or
light; antennas, cable, wiring and conduits used in connection
with radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related machinery
and equipment; fire detection, prevention and extinguishing
systems and apparatus; security and access control systems and
apparatus; plumbing systems; water heaters, ranges, stoves,
microwave ovens, refrigerators, dishwashers, garbage disposers,
washers, dryers and other appliances; light fixtures, awnings,
storm windows and storm doors; pictures, screens, blinds,
shades, curtains and curtain rods; mirrors; cabinets, paneling,
rugs and floor and wall coverings; fences, trees and plants;
swimming pools; and exercise equipment.
(f) " 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.
(g) " Hazardous Materials " means
petroleum and petroleum products and compounds containing them,
including gasoline, diesel fuel and oil; explosives; flammable
materials; radioactive materials; polychlorinated biphenyls ("
PCBs ") and compounds containing them; lead and
lead-based paint; asbestos or asbestos-containing materials in
any form that is or could become friable; underground or
above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged
Property is prohibited by any federal, state or local authority;
any substance that requires special handling; and any other
material or substance now or in the future defined as a
"hazardous substance," "hazardous material," "hazardous waste,"
"toxic substance," "toxic pollutant," "contaminant," or
"pollutant" within the meaning of any Hazardous Materials
Law.
(h) " Hazardous Materials Laws " means
all federal, state, and local laws, ordinances and regulations
and standards, rules, policies and other governmental
requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all
amendments, that relate to Hazardous Materials and apply to
Borrower or to the Mortgaged Property. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq. , the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq. ,
the Toxic Substance Control Act, 15 U.S.C. Section 2601,
et seq. , the Clean Water Act, 33 U.S.C.
Section 1251, et seq. , and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq.
, and their state analogs.
(i) " Impositions " and " Imposition
Deposits " are defined in Section 7(a).
(j) " 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.
(k) "
Indebtedness " means the principal of, interest on, and
all other amounts due at any time under, the Note, this
Instrument or any other Loan Document, including prepayment
premiums, late charges, default interest, and advances as
provided in Section 12 to protect the security of this
Instrument.
(l) [Intentionally omitted]
(m) " Key Principal " means the natural
person(s) or entity identified as such at the foot of this
Instrument, and any person or entity who becomes a Key Principal
after the date of this Instrument and is identified as such in
an amendment or supplement to this Instrument.
(n) " Land " means the land described in
Exhibit A.
(o) " Leases " means all present and
future leases, subleases, licenses, concessions or grants or
other possessory interests now or hereafter in force, whether
oral or written, covering or affecting the Mortgaged Property,
or any portion of the Mortgaged Property (including proprietary
leases or occupancy agreements if Borrower is a cooperative
housing corporation), and all modifications, extensions or
renewals.
(p) " Lender " means the entity
identified as "Lender" in the first paragraph of this Instrument
and its successors and assigns, or any subsequent holder of the
Note.
(q) " Loan Documents " means the Note,
this Instrument, all guaranties, all indemnity agreements, all
Collateral Agreements, O&M Programs, and any other documents
now or in the future executed by Borrower, Key Principal, any
guarantor or any other person in connection with the loan
evidenced by the Note, as such documents may be amended from
time to time.
(r) " Loan Servicer " means the entity
that from time to time is designated by Lender to collect
payments and deposits and receive notices under the Note, this
Instrument and any other Loan Document, and otherwise to service
the loan evidenced by the Note for the benefit of Lender.
Unless Borrower receives notice to the contrary, the Loan
Servicer is the entity identified as "Lender" in the first
paragraph of this Instrument.
(s) " Mortgaged Property " means all of
Borrower's present and future right, title and interest in and
to all of the following:
(1)
the Land;
(2)
the Improvements;
(3)
the Fixtures;
(4)
the Personalty;
(5)
all current and future rights, including air
rights, development rights, zoning rights and other similar
rights or interests, easements, tenements, rights-of-way, strips
and gores of land, streets, alleys, roads, sewer rights, waters,
watercourses, and appurtenances related to or benefitting the
Land or the Improvements, or both, and all rights-of-way,
streets, alleys and roads which may have been or may in the
future be vacated;
(6)
all proceeds paid or to be paid by any insurer
of the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property, whether or not
Borrower obtained the insurance pursuant to Lender’s
requirement;
(7)
all awards, payments and other compensation made
or to be made by any municipal, state or federal authority with
respect to the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property,
including any awards or settlements resulting from condemnation
proceedings or the total or partial taking of the Land, the
Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property under the power of eminent domain or
otherwise and including any conveyance in lieu thereof;
(8)
all contracts, options and other agreements for
the sale of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property entered
into by Borrower now or in the future, including cash or
securities deposited to secure performance by parties of their
obligations;
(9)
all proceeds from the conversion, voluntary or
involuntary, of any of the above into cash or liquidated claims,
and the right to collect such proceeds;
(10)
all Rents and Leases;
(11)
all earnings, royalties, accounts receivable,
issues and profits from the Land, the Improvements or any other
part of the Mortgaged Property, and all undisbursed proceeds of
the loan secured by this Instrument and, if Borrower is a
cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
(12)
all Imposition Deposits;
(13)
all refunds or rebates of Impositions by any
municipal, state or federal authority or insurance company
(other than refunds applicable to periods before the real
property tax year in which this Instrument is dated);
(14)
all tenant security deposits which have not been
forfeited by any tenant under any Lease; and
(15)
all names under or by which any of the above
Mortgaged Property may be operated or known, and all trademarks,
trade names, and goodwill relating to any of the Mortgaged
Property.
(t) " Note " means the Multifamily Note
described on page 1 of this Instrument, including the
Acknowledgment and Agreement of Key Principal to Personal
Liability for Exceptions to Non-Recourse Liability (if any), and
all schedules, riders, allonges and addenda, as such Multifamily
Note may be amended from time to time.
(u) " O&M Program " is defined in
Section 18(a).
(v) "
Personalty " means all equipment, inventory, general
intangibles which are used now or in the future in connection
with the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the Improvements,
including furniture, furnishings, machinery, building materials,
appliances, goods, supplies, tools, books, records (whether in
written or electronic form), computer equipment (hardware and
software) and other tangible personal property (other than
Fixtures) which are used now or in the future in connection with
the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the Improvements,
and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and
contracts for architectural, engineering and construction
services relating to the Land or the Improvements and all other
intangible property and rights relating to the operation of, or
used in connection with, the Land or the Improvements, including
all governmental permits relating to any activities on the
Land.
(w) " Property Jurisdiction " is defined
in Section 30(a).
(x) " Rents " means all rents (whether
from residential or non-residential space), revenues and other
income of the Land or the Improvements, including subsidy
payments received from any sources (including, but not limited
to payments under any Housing Assistance Payments Contract)
parking fees, laundry and vending machine income and fees and
charges for food, health care and other services provided at the
Mortgaged Property, whether now due, past due, or to become due,
and deposits forfeited by tenants.
(y) " Taxes " means all taxes,
assessments, vault rentals and other charges, if any, general,
special or otherwise, including all assessments for schools,
public betterments and general or local improvements, which are
levied, assessed or imposed by any public authority or
quasi-public authority, and which, if not paid, will become a
lien, on the Land or the Improvements.
(z) " Transfer " means (A) a sale,
assignment, transfer or other disposition (whether voluntary,
involuntary or by operation of law); (B) the granting, creating
or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary or by operation of law); (C) the
issuance or other creation of an ownership interest in a legal
entity, including a partnership interest, interest in a limited
liability company or corporate stock; (D) the withdrawal,
retirement, removal or involuntary resignation of a partner in a
partnership or a member or manager in a limited liability
company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity. "Transfer" does not
include (i) a conveyance of the Mortgaged Property at a judicial
or non-judicial foreclosure sale under this Instrument or (ii)
the Mortgaged Property becoming part of a bankruptcy estate by
operation of law under the United States Bankruptcy Code.
For purposes of defining the term "Transfer," the term
"partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability
partnership, and the term "partner" shall mean a general
partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY
AGREEMENT. This Instrument is also a security agreement
under the Uniform Commercial Code for any of the Mortgaged
Property which, under applicable law, may be subject to a
security interest under the Uniform Commercial Code, whether
acquired now or in the future, and all products and cash and
non-cash proceeds thereof (collectively, " UCC Collateral
"), and Borrower hereby grants to Lender a security interest in
the UCC Collateral. Borrower hereby authorizes Lender to
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 that Lender may require. Without the prior
written consent of Lender, Borrower shall not create or permit
to exist any other lien or security interest in any of the UCC
Collateral. If an Event of Default has occurred and is
continuing, Lender shall have the remedies of a secured party
under the Uniform Commercial Code, in addition to all remedies
provided by this Instrument or existing under applicable law.
In exercising any remedies, Lender may exercise its
remedies against the UCC Collateral separately or together, and
in any order, without in any way affecting the availability of
Lender's other remedies. This Instrument constitutes a
financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF
RECEIVER; LENDER IN POSSESSION.
(a) As part of the consideration for the
Indebtedness, Borrower absolutely and unconditionally assigns
and transfers to Lender all Rents. It is the intention of
Borrower to establish a present, absolute and irrevocable
transfer and assignment to Lender of all Rents and to authorize
and empower Lender to collect and receive all Rents without the
necessity of further action on the part of Borrower.
Promptly upon request by Lender, Borrower agrees to
execute and deliver such further assignments as Lender may from
time to time require. Borrower and Lender intend this
assignment of Rents to be immediately effective and to
constitute an absolute present assignment and not an assignment
for additional security only. For purposes of giving
effect to this absolute assignment of Rents, and for no other
purpose, Rents shall not be deemed to be a part of the
"Mortgaged Property," as that term is defined in Section 1(s).
However, if this present, absolute and unconditional
assignment of Rents is not enforceable by its terms under the
laws of the Property Jurisdiction, then the Rents shall be
included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this
Instrument create and perfect a lien on Rents in favor of
Lender, which lien shall be effective as of the date of this
Instrument.
(b) After the occurrence of an Event of Default,
Borrower authorizes Lender to collect, sue for and compromise
Rents and directs each tenant of the Mortgaged Property to pay
all Rents to, or as directed by, Lender, and Borrower shall,
upon Borrower’s receipt of any Rents from any sources
(including, but not limited to subsidy payments under any
Housing Assistance Payments Contract), pay the total amount of
such receipts to the Lender. However, until the occurrence
of an Event of Default, Lender hereby grants to Borrower a
revocable license to collect and receive all Rents, to hold all
Rents in trust for the benefit of Lender and to apply all Rents
to pay the installments of interest and principal then due and
payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition
Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including
utilities, Taxes and insurance premiums (to the extent not
included in Imposition Deposits), tenant improvements and other
capital expenditures. So long as no Event of Default has
occurred and is continuing, the Rents remaining after
application pursuant to the preceding sentence may be retained
by Borrower free and clear of, and released from, Lender's
rights with respect to Rents under this Instrument. From
and after the occurrence of an Event of Default, and without the
necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, or by a receiver,
Borrower’s license to collect Rents shall automatically
terminate and Lender shall without notice be entitled to all
Rents as they become due and payable, including Rents then due
and unpaid. Borrower shall pay to Lender upon demand all
Rents to which Lender is entitled. At any time on or after
the date of Lender’s demand for Rents, Lender may give,
and Borrower hereby irrevocably authorizes Lender to give,
notice to all tenants of the Mortgaged Property instructing them
to pay all Rents to Lender, no
tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant
shall be obligated to pay to Borrower any amounts which are
actually paid to Lender in response to such a notice. Any
such notice by Lender shall be delivered to each tenant
personally, by mail or by delivering such demand to each rental
unit. Borrower shall not interfere with and shall
cooperate with Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender
that Borrower has not executed any prior assignment of Rents
(other than an assignment of Rents securing indebtedness that
will be paid off and discharged with the proceeds of the loan
evidenced by the Note), that Borrower has not performed, and
Borrower covenants and agrees that it will not perform, any acts
and has not executed, and shall not execute, any instrument
which would prevent Lender from exercising its rights under this
Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any
Rents for more than two months prior to the due dates of such
Rents. Borrower shall not collect or accept payment of any
Rents more than two months prior to the due dates of such
Rents.
(d) If an Event of Default has occurred and is
continuing, Lender may, regardless of the adequacy of Lender's
security or the solvency of Borrower and even in the absence of
waste, enter upon and take and maintain full control of the
Mortgaged Property in order to perform all acts that Lender in
its discretion determines to be necessary or desirable for the
operation and maintenance of the Mortgaged Property, including
the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged
Property and the execution or termination of contracts providing
for the management, operation or maintenance of the Mortgaged
Property, for the purposes of enforcing the assignment of Rents
pursuant to Section 3(a), protecting the Mortgaged Property or
the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable.
Alternatively, if an Event of Default has occurred and is
continuing, regardless of the adequacy of Lender's security,
without regard to Borrower’s solvency and without the
necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the
appointment of a receiver for the Mortgaged Property to take any
or all of the actions set forth in the preceding sentence.
If Lender elects to seek the appointment of a receiver for
the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Borrower, by its execution of this
Instrument, expressly consents to the appointment of such
receiver, including the appointment of a receiver ex
parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a
reasonable fee for managing the Mortgaged Property.
Immediately upon appointment of a receiver or immediately
upon the Lender's entering upon and taking possession and
control of the Mortgaged Property, Borrower shall surrender
possession of the Mortgaged Property to Lender or the receiver,
as the case may be, and shall deliver to Lender or the receiver,
as the case may be, all documents, records (including records on
electronic or magnetic media), accounts, surveys, plans, and
specifications relating to the Mortgaged Property and all
security deposits and prepaid Rents. In the event Lender
takes possession and control of the Mortgaged Property, Lender
may exclude Borrower and its representatives from the Mortgaged
Property. Borrower acknowledges and agrees that the
exercise by Lender of any of the rights conferred under this
Section 3 shall not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land
and Improvements.
(e) If Lender enters the Mortgaged Property,
Lender shall be liable to account only to Borrower and only for
those Rents actually received. Lender shall not be liable
to Borrower, anyone claiming under or through Borrower or anyone
having an interest in the Mortgaged Property, by reason of any
act or omission of Lender under this Section 3, and
Borrower hereby releases and discharges Lender from any such
liability to the fullest extent permitted by law.
(f) If the
Rents are not sufficient to meet the costs of taking control of
and managing the Mortgaged Property and collecting the Rents,
any funds expended by Lender for such purposes shall become an
additional part of the Indebtedness as provided in
Section 12.
(g) Any entering upon and taking of control of
the Mortgaged Property by Lender or the receiver, as the case
may be, and any application of Rents as provided in this
Instrument shall not cure or waive any Event of Default or
invalidate any other right or remedy of Lender under applicable
law or provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE
MORTGAGED PROPERTY.
(a) As part of the consideration for the
Indebtedness, Borrower absolutely and unconditionally assigns
and transfers to Lender all of Borrower's right, title and
interest in, to and under the Leases, including Borrower's
right, power and authority to modify the terms of any such
Lease, or extend or terminate any such Lease. It is
the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of
Borrower’s right, title and interest in, to and under the
Leases. Borrower and Lender intend this assignment of the
Leases to be immediately effective and to constitute an absolute
present assignment and not an assignment for additional security
only. For purposes of giving effect to this absolute
assignment of the Leases, and for no other purpose, the Leases
shall not be deemed to be a part of the “Mortgaged
Property,” as that term is defined in Section 1(s).
However, if this present, absolute and unconditional
assignment of the Leases is not enforceable by its terms under
the laws of the Property Jurisdiction, then the Leases shall be
included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this
Instrument create and perfect a lien on the Leases in favor of
Lender, which lien shall be effective as of the date of this
Instrument.
(b) Until Lender gives notice to Borrower of
Lender's exercise of its rights under this Section 4,
Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this
Section or any other provision of this Instrument),
including the right, power and authority to modify the terms of
any Lease or extend or terminate any Lease. Upon the
occurrence of an Event of Default, the permission given to
Borrower pursuant to the preceding sentence to exercise all
rights, power and authority under Leases shall automatically
terminate. Borrower shall comply with and observe
Borrower's obligations under all Leases, including Borrower's
obligations pertaining to the maintenance and disposition of
tenant security deposits.
(c) Borrower acknowledges and agrees that the
exercise by Lender, either directly or by a receiver, of any of
the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered into
actual possession of the Land and the Improvements. The
acceptance by Lender of the assignment of the Leases pursuant to
Section 4(a) shall not at any time or in any event obligate
Lender to take any action under this Instrument or to expend any
money or to incur any expenses. Lender shall not be liable
in any way for any injury or damage to person or property
sustained by any person or persons, firm or corporation in or
about the Mortgaged Property. Prior to Lender's actual
entry into and taking possession of the Mortgaged Property,
Lender shall not (i) be obligated to perform any of the terms,
covenants and conditions contained in any Lease (or otherwise
have any obligation with respect to any Lease); (ii) be
obligated to appear in or defend any action or proceeding
relating to the Lease or the Mortgaged Property; or (iii) be
responsible for the operation, control, care, management or
repair of the Mortgaged Property or any portion of the Mortgaged
Property. The execution of this Instrument by Borrower
shall constitute conclusive
evidence that all responsibility for the operation, control,
care, management and repair of the Mortgaged Property is and
shall be that of Borrower, prior to such actual entry and taking
of possession.
(d) Upon delivery of notice by Lender to
Borrower of Lender's exercise of Lender's rights under this
Section 4 at any time after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and
taking and maintaining control of the Mortgaged Property
directly, by a receiver, or by any other manner or proceeding
permitted by the laws of the Property Jurisdiction, Lender
immediately shall have all rights, powers and authority granted
to Borrower under any Lease, including the right, power and
authority to modify the terms of any such Lease, or extend or
terminate any such Lease.
(e) Borrower shall, promptly upon Lender's
request, deliver to Lender an executed copy of each residential
Lease then in effect. All Leases for residential dwelling units
shall be on forms approved by Lender, shall be for initial terms
of at least six months and not more than two years, and shall
not include options to purchase. If customary in the
applicable market, residential Leases with terms of less than
six months may be permitted with Lender's prior written
consent.
(f) Borrower shall not lease any portion of the
Mortgaged Property for non-residential use except with the prior
written consent of Lender and Lender's prior written approval of
the Lease agreement. Borrower shall not modify the terms
of, or extend or terminate, any Lease for non-residential use
(including any Lease in existence on the date of this
Instrument) without the prior written consent of Lender.
Borrower shall, without request by Lender, deliver an
executed copy of each non-residential Lease to Lender promptly
after such Lease is signed. All non-residential
Leases, including renewals or extensions of existing Leases,
shall specifically provide that (1) such Leases are subordinate
to the lien of this Instrument (unless waived in writing by
Lender); (2) the tenant shall attorn to Lender and any purchaser
at a foreclosure sale, such attornment to be self-executing and
effective upon acquisition of title to the Mortgaged Property by
any purchaser at a foreclosure sale or by Lender in any manner;
(3) the tenant agrees to execute such further evidences of
attornment as Lender or any purchaser at a foreclosure sale may
from time to time request; (4) the Lease shall not be terminated
by foreclosure or any other transfer of the Mortgaged Property;
(5) after a foreclosure sale of the Mortgaged Property, Lender
or any other purchaser at such foreclosure sale may, at Lender's
or such purchaser's option, accept or terminate such Lease; and
(6) the tenant shall, upon receipt after the occurrence of an
Event of Default of a written request from Lender, pay all Rents
payable under the Lease to Lender.
(g) Borrower shall not receive or accept Rent
under any Lease (whether residential or non-residential) for
more than two months in advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER
LOAN DOCUMENTS; PREPAYMENT PREMIUM. Borrower shall pay
the Indebtedness when due in accordance with the terms of the
Note and the other Loan Documents and shall perform, observe and
comply with all other provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment premium in
connection with certain prepayments of the Indebtedness,
including a payment made after Lender's exercise of any right of
acceleration of the Indebtedness, as provided in the Note.
6. EXCULPATION. Borrower’s
personal liability for payment of the Indebtedness and for
performance of the other obligations to be performed by it under
this Instrument is limited in the manner, and to the extent,
provided in the Note.
7.
DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the
day monthly installments of principal or interest, or both, are
due under the Note (or on another day designated in writing by
Lender), until the Indebtedness is paid in full, an additional
amount sufficient to accumulate with Lender the entire sum
required to pay, when due (1) any water and sewer charges which,
if not paid, may result in a lien on all or any part of the
Mortgaged Property, (2) the premiums for fire and other hazard
insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4)
amounts for other charges and expenses which Lender at any time
reasonably deems necessary to protect the Mortgaged Property, to
prevent the imposition of liens on the Mortgaged Property, or
otherwise to protect Lender's interests, all as reasonably
estimated from time to time by Lender. The amounts
deposited under the preceding sentence are collectively referred
to in this Instrument as the " Imposition Deposits ".
The obligations of Borrower for which the Imposition
Deposits are required are collectively referred to in this
Instrument as " Impositions ". The amount of the
Imposition Deposits shall be sufficient to enable Lender to pay
each Imposition before the last date upon which such payment may
be made without any penalty or interest charge being added.
Lender shall maintain records indicating how much of the
monthly Imposition Deposits and how much of the aggregate
Imposition Deposits held by Lender are held for the purpose of
paying Taxes, insurance premiums and each other obligation of
Borrower for which Imposition Deposits are required. Any
waiver by Lender of the requirement that Borrower remit
Imposition Deposits to Lender may be revoked by Lender, in
Lender's discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an
institution (which may be Lender, if Lender is such an
institution) whose deposits or accounts are insured or
guaranteed by a federal agency. Lender shall not be
obligated to open additional accounts or deposit Imposition
Deposits in additional institutions when the amount of the
Imposition Deposits exceeds the maximum amount of the federal
deposit insurance or guaranty. Lender shall apply the
Imposition Deposits to pay Impositions so long as no Event of
Default has occurred and is continuing. Unless applicable
law requires, Lender shall not be required to pay Borrower any
interest, earnings or profits on the Imposition Deposits.
Borrower hereby pledges and grants to Lender a security
interest in the Imposition Deposits as additional security for
all of Borrower's obligations under this Instrument and the
other Loan Documents. Any amounts deposited with Lender
under this Section 7 shall not be trust funds, nor shall
they operate to reduce the Indebtedness, unless applied by
Lender for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an
Imposition, Lender shall pay the Imposition from the Imposition
Deposits held by Lender. Lender shall have no obligation
to pay any Imposition to the extent it exceeds Imposition
Deposits then held by Lender. Lender may pay an Imposition
according to any bill, statement or estimate from the
appropriate public office or insurance company without inquiring
into the accuracy of the bill, statement or estimate or into the
validity of the Imposition.
(d) If at any time the amount of the Imposition
Deposits held by Lender for payment of a specific Imposition
exceeds the amount reasonably deemed necessary by Lender, 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.
8. COLLATERAL AGREEMENTS. Borrower
shall deposit with Lender such amounts as may be required by any
Collateral Agreement and shall perform all other obligations of
Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at
any time Lender receives, from Borrower or otherwise, any amount
applicable to the Indebtedness which is less than all amounts
due and payable at such time, then Lender may apply that payment
to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither
Lender's acceptance of an amount which is less than all amounts
then due and payable nor Lender's application of such payment in
the manner authorized shall constitute or be deemed to
constitute either a waiver of the unpaid amounts or an accord
and satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this
Instrument and the Note shall remain unchanged.
10. COMPLIANCE WITH LAWS. Borrower
shall comply with all laws, ordinances, regulations and
requirements of any Governmental Authority and all recorded
lawful covenants and agreements relating to or affecting the
Mortgaged Property, including all laws, ordinances, regulations,
requirements and covenants pertaining to health and safety,
construction of improvements on the Mortgaged Property, fair
housing, zoning and land use, and Leases. Borrower also
shall comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits.
Borrower shall at all times maintain records sufficient to
demonstrate compliance with the provisions of this
Section 10. Borrower shall take appropriate measures
to prevent, and shall not engage in or knowingly permit, any
illegal activities at the Mortgaged Property that could endanger
tenants or visitors, result in damage to the Mortgaged Property,
result in forfeiture of the Mortgaged Property, or otherwise
materially impair the lien created by this Instrument or
Lender's interest in the Mortgaged Property. Borrower
represents and warrants to Lender that no portion of the
Mortgaged Property has been or will be purchased with the
proceeds of any illegal activity.
11. USE OF PROPERTY. Unless
required by applicable law, Borrower shall not (a) except for
any change in use approved by Lender, allow changes in the use
for which all or any part of the Mortgaged Property is being
used at the time this Instrument was executed, (b) convert any
individual dwelling units or common areas to commercial use, (c)
initiate or acquiesce in a change in the zoning classification
of the Mortgaged Property, or (d) establish any condominium or
cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its
obligations under this Instrument or any other Loan Document, or
if any action or proceeding is commenced which purports to
affect the Mortgaged Property, Lender's security or Lender's
rights under this Instrument, including eminent domain,
insolvency, code enforcement, civil or criminal forfeiture,
enforcement of Hazardous Materials Laws, fraudulent conveyance
or reorganizations or proceedings involving a bankrupt or
decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such actions as Lender
reasonably deems necessary to perform such obligations of
Borrower and to protect Lender's interest, including (1) payment
of fees and out-of-pocket expenses of attorneys, accountants,
inspectors and consultants, (2) entry upon the Mortgaged
Property to make repairs or secure the Mortgaged Property, (3)
procurement of the insurance required by Section 19, and (4) payment
of amounts which Borrower has failed to pay under
Sections 15 and 17.
(b) Any amounts disbursed by Lender under this
Section 12, or under any other provision of this Instrument
that treats such disbursement as being made under this
Section 12, shall be added to, and become part of, the
principal component of the Indebtedness, shall be immediately
due and payable and shall bear interest from the date of
disbursement until paid at the " Default Rate ", as
defined in the Note.
(c) Nothing in this Section 12 shall
require Lender to incur any expense or take any action.
13. INSPECTION. Lender, its agents,
representatives, and designees may make or cause to be made
entries upon and inspections of the Mortgaged Property
(including environmental inspections and tests) during normal
business hours, or at any other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL
REPORTING.
(a) Borrower shall keep and maintain at all
times at the Mortgaged Property or the management agent's
offices, and upon Lender's request shall make available at the
Mortgaged Property, complete and accurate books of account and
records (including copies of supporting bills and invoices)
adequate to reflect correctly the operation of the Mortgaged
Property, and copies of all written contracts, Leases, and other
instruments which affect the Mortgaged Property. The
books, records, contracts, Leases and other instruments shall be
subject to examination and inspection at any reasonable time by
Lender.
(b) Borrower shall furnish to Lender all of the
following:
(1)
within 120 days after the end of each fiscal
year of Borrower, a statement of income and expenses for
Borrower's operation of the Mortgaged Property for that fiscal
year, a statement of changes in financial position of Borrower
relating to the Mortgaged Property for that fiscal year and,
when requested by Lender, a balance sheet showing all assets and
liabilities of Borrower relating to the Mortgaged Property as of
the end of that fiscal year;
(2)
within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request, a
rent schedule for the Mortgaged Property showing the name of
each tenant, and for each tenant, the space occupied, the lease
expiration date, the rent payable for the current month, the
date through which rent has been paid, and any related
information requested by Lender;
(3)
within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request,
an accounting of all security deposits held pursuant to all
Leases, including the name of the institution (if any) and the
names and identification numbers of the accounts (if any) in
which such security deposits are held and the name of the person
to contact at such financial institution, along with any
authority or release necessary for Lender to access information
regarding such accounts;
(4)
within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request, a
statement that identifies all owners of any interest in Borrower
and the interest held by each, if Borrower is a corporation, all
officers and directors of Borrower, and if Borrower is a limited
liability company, all managers who are not members;
(5)
upon Lender's request, a monthly property
management report for the Mortgaged Property, showing the number
of inquiries made and rental applications received from tenants
or prospective tenants and deposits received from tenants and
any other information requested by Lender;
(6)
upon Lender's request, a balance sheet, a
statement of income and expenses for Borrower and a statement of
changes in financial position of Borrower for Borrower's most
recent fiscal year; and
(7)
if required by Lender, a statement of income and
expense for the Mortgaged Property for the prior month or
quarter.
(c) Each of the statements, schedules and
reports required by Section 14(b) shall be certified to be
complete and accurate by an individual having authority to bind
Borrower, and shall be in such form and contain such detail as
Lender may reasonably require. Lender also may require
that any statements, schedules or reports be audited at
Borrower's expense by independent certified public accountants
acceptable to Lender.
(d) If Borrower fails to provide in a timely
manner the statements, schedules and reports required by
Section 14(b), Lender shall have the right to have
Borrower's books and records audited, at Borrower’s
expense, by independent certified public accountants selected by
Lender in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall
become immediately due and payable and shall become an
additional part of the Indebtedness as provided in
Section 12.
(e) If an Event of Default has occurred and is
continuing, Borrower shall deliver to Lender upon written demand
all books and records relating to the Mortgaged Property or its
operation.
(f) Borrower authorizes Lender to obtain a
credit report on Borrower at any time.
(g) If an Event of Default has occurred and
Lender has not previously required Borrower to furnish a
quarterly statement of income and expense for the Mortgaged
Property, Lender may require Borrower to furnish such a
statement within 45 days after the end of each fiscal quarter of
Borrower following such Event of Default
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of
Section 15(c) and Section 15(d), Borrower shall pay,
or cause to be paid, all Taxes when due and before the addition
of any interest, fine, penalty or cost for nonpayment.
(b) Subject to the provisions of
Section 15(c), Borrower shall pay the expenses of
operating, managing, maintaining and repairing the Mortgaged
Property (including insurance premiums, utilities, repairs and replacements)
before the last date upon which each such payment may be made
without any penalty or interest charge being added.
(c) As long as no Event of Default exists and
Borrower has timely delivered to Lender any bills or premium
notices that it has received, Borrower shall not be obligated to
pay Taxes, insurance premiums or any other individual Imposition
to the extent that sufficient Imposition Deposits are held by
Lender for the purpose of paying that specific Imposition.
If an Event of Default exists, Lender may exercise any
rights Lender may have with respect to Imposition Deposits
without regard to whether Impositions are then due and payable.
Lender shall have no liability to Borrower for failing to
pay any Impositions to the extent that any Event of Default has
occurred and is continuing, insufficient Imposition Deposits are
held by Lender at the time an Imposition becomes due and payable
or Borrower has failed to provide Lender with bills and premium
notices as provided above.
(d) Borrower, at its own expense, may contest by
appropriate legal proceedings, conducted diligently and in good
faith, the amount or validity of any Imposition other than
insurance premiums, if (1) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (2)
the Mortgaged Property is not in danger of being sold or
forfeited, (3) Borrower deposits with Lender reserves sufficient
to pay the contested Imposition, if requested by Lender, and (4)
Borrower furnishes whatever additional security is required in
the proceedings or is reasonably requested by Lender, which may
include the delivery to Lender of the reserves established by
Borrower to pay the contested Imposition.
(e) Borrower shall promptly deliver to Lender a
copy of all notices of, and invoices for, Impositions, and if
Borrower pays any Imposition directly, Borrower shall promptly
furnish to Lender receipts evidencing such payments.
16. LIENS; ENCUMBRANCES. Borrower
acknowledges that, to the extent provided in Section 21, the
grant, creation or existence of any mortgage, deed of trust,
deed to secure debt, security interest or other lien or
encumbrance (a " Lien ") on the Mortgaged Property (other
than the lien of this Instrument) or on certain ownership
interests in Borrower, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over
the lien of this Instrument, is a " Transfer " which
constitutes an Event of Default.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE
OF MORTGAGED PROPERTY.
(a) Borrower (1) shall not commit waste or
permit impairment or deterioration of the Mortgaged Property,
(2) shall not abandon the Mortgaged Property, (3) 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, (4) shall keep the Mortgaged Property in
good repair, including the replacement of Personalty and
Fixtures with items of equal or better function and quality, (5)
shall provide for professional management of the Mortgaged
Property by a residential rental property manager satisfactory
to Lender under a contract approved by Lender in writing, and
(6) shall give notice to Lender of and, unless otherwise
directed in writing by Lender, shall appear in and defend any
action or proceeding purporting to affect the Mortgaged
Property, Lender's security or Lender's rights under this
Instrument. Borrower shall not (and shall not permit any
tenant or other person to) remove, demolish or alter the
Mortgaged Property or any part of the Mortgaged Property except
in connection with the replacement of tangible Personalty.
(b) If, in
connection with the making of the loan evidenced by the Note or
at any later date, Lender waives in writing the requirement of
Section 17(a)(5) above that Borrower enter into a written
contract for management of the Mortgaged Property and if, after
the date of this Instrument, Borrower intends to change the
management of the Mortgaged Property, L
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