RECORD AND RETURN TO:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
Two World Trade Center
New York, New York 10048
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Counsel's File No.: 16248-328
DEED OF TRUST, SECURITY AGREEMENT,
FIXTURE FILING and ASSIGNMENT OF LEASES AND RENTS
VMS APARTMENT PORTFOLIO ASSOCIATES II,
a California general partnership
(Trustor)
to
COMMONWEALTH LAND TITLE INSURANCE COMPANY,
(Trustee)
for the benefit of
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
D/B/A LEHMAN CAPITAL, A DIVISION OF
▇▇▇▇▇▇ BROTHERS HOLDINGS INC.
a Delaware corporation
(Lender)
Dated:As of December 31, 1997
Location: ▇▇▇▇▇▇▇▇▇▇ Highlands Apartments
Marin City, California
Marin County
THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security Instrument"), is
made as of the 31st day of December, 1997, by VMS APARTMENT PORTFOLIO ASSOCIATES
II, a California general partnership, having an address c/o Insignia Financial
Group, Inc., One Insignia Financial Plaza, Greenville, South Carolina 29601, as
grantor ("Borrower"), to COMMONWEALTH LAND TITLE INSURANCE COMPANY, having an
address at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as
trustee ("Trustee"), for the benefit of ▇▇▇▇▇▇ BROTHERS HOLDINGS INC. D/B/A
LEHMAN CAPITAL, A DIVISION OF ▇▇▇▇▇▇ BROTHERS HOLDINGS INC., a Delaware
corporation, having an address at Three World Financial Center, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as beneficiary ("Lender").
W I T N E S E T H :
To secure the payment of an indebtedness in the principal sum of
SIXTEEN MILLION NINE HUNDRED THOUSAND AND 00/100 DOLLARS ($16,900,000.00),
lawful money of the United States of America, to be paid with interest according
to a certain note dated the date hereof made by Borrower to Lender (the note,
together with all extensions, renewals or modifications thereof being
hereinafter collectively called the "Note") (said indebtedness, interest and all
other sums due hereunder and under the Note being collectively called the
"Debt"), ▇▇▇▇▇▇▇▇ has given, granted, bargained, sold, aliened, enfeoffed,
conveyed, confirmed, pledged, assigned, warranted and hypothecated and by these
presents does give, grant, bargain, sell, alien, enfeoff, convey, confirm,
pledge, assign, warrant, set over and hypothecate unto Trustee, its successors
and assigns, for the benefit of Lender with power of sale and right of entry and
possession, and grants a security interest in, the real property described in
the Exhibit A attached hereto (the "Premises");
TOGETHER WITH: all right, title, interest and estate of Borrower now
owned, or hereafter acquired, in and to the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements and
improvements now or hereafter located thereon (the "Improvements") and the
following property, rights, interests and estates (the foregoing fee and
leasehold estates, as the case may be, in the Premises, the Improvements
together with the following property, rights, interests and estates being
hereinafter collectively referred to as the "Property"):
(a) all easements, rights-of-way, strips and gores of land, streets,
ways, alleys, passages, sewer rights, water, water courses, water rights
and powers, air rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises and/or the Improvements, and the reversion and
reversions, remainder and remainders, and all land lying in the bed of any
street, road or avenue, opened or proposed, in front of or adjoining the
Premises, to the center line thereof and all the estates, rights, titles,
interests, dower and rights of dower, curtesy and rights of curtesy,
property, possession, claim and demand whatsoever, both at law and in
equity, of Borrower of, in and to the Premises and/or Improvements, and
every part and parcel thereof, with the appurtenances thereto;
(b) all machinery, equipment, fixtures (including but not limited to
all heating, air conditioning, plumbing, lighting, communications and
elevator fixtures) and other property of every kind and nature whatsoever
owned by Borrower, or in which Borrower has or shall have an interest, now
or hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future management,
maintenance operation and occupancy of the Premises and the Improvements
and all building equipment, materials and supplies of any nature whatsoever
owned by Borrower, or in which Borrower has or shall have an interest, now
or hereafter located upon the Premises and the Improvements, or appurtenant
thereto, or usable in connection with the present or future management,
maintenance operation and occupancy of the Premises and the Improvements
(hereinafter collectively called the "Equipment"), and the right, title and
interest of Borrower in and to any of the Equipment which may be subject to
any security interests, as defined in the Uniform Commercial Code, as
adopted and enacted by the state or states where any of the Property is
located (the "Uniform Commercial Code"), superior in lien to the lien of
this Security Instrument;
(c) all awards or payments, including interest thereon, which may
heretofore and hereafter be made with respect to the Property, whether from
the exercise of the right of eminent domain (including but not limited to
any transfer made in lieu of or in anticipation of the exercise of said
right), or for a change of grade, or for any other injury to or decrease in
the value of the Property;
(d) all leases and other agreements affecting the use, enjoyment or
occupancy of the Premises and the Improvements heretofore or hereafter
entered into (the "Leases") and all right, title and interest of ▇▇▇▇▇▇▇▇,
its successors and assigns therein and thereunder, including, without
limitation, cash or securities deposited thereunder to secure the
performance by the lessees of their obligations thereunder and all rents,
additional rents, revenues, issues and profits (including all oil and gas
or other mineral royalties and bonuses) from the Premises and the
Improvements (the "Rents") and all proceeds from the sale or other
disposition of the Leases and the right to receive and apply the Rents to
the payment of the Debt;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Property, including, without limitation, the right to
receive and apply the proceeds of any insurance, judgments, or settlements
made in lieu thereof, for damage to the Property;
(f) the right, in the name and on behalf of ▇▇▇▇▇▇▇▇, to appear in
and defend any action or proceeding brought with respect to the Property
and to commence any action or proceeding to protect the interest of ▇▇▇▇▇▇
in the Property;
(g) all contract rights, with respect to, or which may in any way
pertain to, the Premises or the business of the Borrower, including,
without limitation, all refunds, rebates, security deposits, or other
expectancy under or from any such account or contract right;
(h) all general intangibles with respect to, or which may in any way
pertain to, the Premises or the business of the Borrower, including without
limitation, any trade names, or other names under or by which the Premises
may at any time be operated or known, the good will of the Borrower in
connection therewith and the right of the Borrower to carry on business
under any or all such name or names and any variant or variants thereof,
insofar as the same may be transferable by the Borrower without breach of
any agreement pursuant to which the Borrower may have obtained its right to
use such name or names, and any and all trademarks, prints, labels,
advertising concepts and literature;
TO HAVE AND TO HOLD the above granted and described Property unto the
Trustee, and the successors and assigns of Trustee, forever;
IN TRUST, FOR THE USE, BENEFIT AND BEHOOF OF LENDER, WITH POWER OF SALE, to
secure the payment to Lender of the Debt at the time and in the manner provided
for its payment in the Note and in this Security Instrument;
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Borrower shall well and truly pay to Lender the Debt at the time and in the
manner provided in the Note and this Security Instrument and shall well and
truly abide by and comply with each and every covenant and condition set forth
herein and in the Note, these presents and the estate hereby granted shall
cease, terminate and be void;
AND ▇▇▇▇▇▇▇▇ represents and warrants to and covenants and agrees with
▇▇▇▇▇▇ as follows:
PROVISIONS OF GENERAL APPLICATION
1. Payment of Debt and Incorporation of Covenants, Conditions and
Agreements. ▇▇▇▇▇▇▇▇ will pay the Debt at the time and in the manner provided
in the Note and in this Security Instrument. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of the documents other
than the Note or this Security Instrument now or hereafter executed by Borrower
and/or others and by or in favor of Lender, which wholly or partially secure or
guaranty payment of the Note including but not limited to the Assignment of
Leases and Rents (the "Assignment of Rents") between Borrower, as assignor and
Lender, as assignee (collectively, the "Other Security Documents"), are hereby
made a part of this Security Instrument to the same extent and with the same
force as if fully set forth herein.
2. Warranty of Title. Borrower warrants that Borrower has good title to
the Property and has the right to mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, assign and hypothecate and grant a security
interest in the same and that Borrower possesses an unencumbered fee estate in
the Premises and the Improvements and that it owns the Property free and clear
of all liens, encumbrances and charges whatsoever except for those exceptions
shown in the title insurance policy insuring the lien of this Security
Instrument. Borrower shall forever warrant, defend and preserve such title and
the validity and priority of the lien of this Security Instrument and shall
forever warrant and defend the same to Lender against the claims of all persons
whomsoever.
3. Insurance. (a) Borrower will keep the Property insured against loss
or damage by fire, flood and such other hazards, risks and matters, as Lender
may from time to time reasonably require, including without limitation, rental
value insurance against the abatement in rent or business interruption insurance
for at least twelve (12) months and general public liability in an amount not
less than $1,000,000.00, including excess liability coverage and umbrella
liability insurance. Borrower shall pay the premiums for such insurance (the
"Insurance Premiums") as the same become due and payable. All policies of
insurance (the "Policies") shall (i) be issued under forms acceptable to Lender
(containing the standard New York mortgagee non-contribution clause naming the
Lender as the insured mortgagee and the person to which all payments made by the
Qualified Insurer (hereinafter defined) shall be paid); (ii) provide for at
least thirty (30) days prior written notice to the Lender of any cancellation,
reduction in an amount or change in insurance coverage; (iii) contain a
replacement cost endorsement for 100% of all replacement costs relating to the
Improvements (without deduction for depreciation); (iv) contain an "enforcement"
or "Law and Ordinance" endorsement in form and substance satisfactory to Lender;
and (v) be issued by insurers qualified under the laws of the State in which the
Property is located, duly authorized and licensed to transact insurance business
in such State and reflecting a claims-paying ability of A or better as
determined by Standard & Poors' Corporation ("S&P"), ▇▇▇▇ and ▇▇▇▇▇▇ Credit
Rating Co. ("Duff"), if rated by ▇▇▇▇, Fitch Investors Service, Inc. ("Fitch"),
if rated by Fitch, and a claims paying ability of A2 as determined by ▇▇▇▇▇'▇
Investors Service, Inc. ("Moody's"), if rated by Moody's (each such insurer
hereinafter referred to as a "Qualified Insurer", collectively "Qualified
Insurers"). Notwithstanding the foregoing, Travelers/Aetna Casualty and Surety
("Aetna") is an acceptable insurance company to Lender provided that if Aetna
has a senior unsecured debt rating of less than A by each of the Rating Agencies
(hereinafter defined), then such insurer shall be replaced with a Qualified
Insurer or Qualified Insurers within thirty (30) days after written notice by
the Lender of the reduction of such rating. Such insurance shall not be
invalidated due to the use or occupancy of the Property for purposes more
hazardous than are permitted by the policy. The maximum amount deductible
permitted under each insurance policy shall be such as is customarily carried by
owners or managing agents operating first class multi-family residences of
similar type and size of the Property of similar type, size and quality to the
Property as applicable. Borrower shall deliver the Policies, or duplicate
originals of the same, to Lender. Not later than forty five (45) days prior to
the expiration date of each of the Policies, Borrower will deliver evidence
satisfactory to Lender of the renewal of each of the Policies. The Borrower
shall not insure the Property under any insurance policy other than as expressly
set forth herein.
(b) If the Property shall be damaged or destroyed, in whole or in part, by
fire or other casualty, Borrower shall give prompt notice thereof to Lender.
The net amount of all insurance proceeds received by Lender with respect to such
damage or destruction, shall be held in a segregated account (the "Net Proceeds
Account") and invested in an Eligible Investment (hereinafter defined). Lender
shall be entitled to deduct from such insurance proceeds all of its out-of-
pocket administrative costs and expenses reasonably incurred in connection with
the investing and collection of such insurance proceeds, and the balance if any,
(the "Net Proceeds") shall be disbursed by Lender in accordance with the terms
and conditions set forth herein to pay for the costs and expenses of the
Restoration (hereinafter defined) provided (i) no Event of Default has occurred
and remains uncured under this Security Instrument, the Note or any of the Other
Security Documents, (ii) Borrower proceeds promptly after the insurance claims
are settled with the restoration, replacement, rebuilding or repair of the
Property as nearly as possible to the condition the Property was in immediately
prior to such fire or other casualty (the "Restoration"), (iii) the Restoration
shall be done in compliance with all applicable laws, rules and regulations,
and, following the Restoration, the Property shall be permitted under all
applicable zoning laws to be used for, and shall continue to be used for, all
purposes associated with multi-family residences, (iv) a set of the plans and
specifications in connection with the Restoration shall be submitted to Lender
and shall be reasonably acceptable to Lender in all respects, (v) all costs and
reasonable expenses incurred by Lender in connection with making the Net
Proceeds available for the Restoration of the Property including, without
limitation, counsel fees and inspecting engineer fees incurred by ▇▇▇▇▇▇, shall
be paid by ▇▇▇▇▇▇▇▇, (vi) rental loss insurance is available to offset fully any
abatement of rent to which any tenant of the Property may be entitled or any
rent loss arising out of the cancellation of any Lease as a result of the
casualty, throughout the Restoration and a reasonable lease-up period following
the Restoration, and (vii) in Lender's judgment, the Restoration must be able to
be completed within one (1) year after the loss and at least one (1) year prior
to the Maturity Date of the Note. The term "Eligible Investment" shall mean any
investment approved by Lender in its sole discretion.
(c) The Net Proceeds shall be held in trust in the Net Proceeds Account.
The Net Proceeds shall be paid by ▇▇▇▇▇▇ (or by a disbursing agent
("Depository") selected by ▇▇▇▇▇▇), to, or as directed by, Borrower from time to
time during the course of the Restoration, upon receipt of evidence, and
certification from Borrower, satisfactory to Lender, that (i) all materials
installed and work and labor performed (except to the extent they are to be paid
for out of the requested payment) in connection with the Restoration have been
paid for in full, (ii) no notices of intention, mechanics' or other liens or
encumbrances on the Property arising out of the Restoration exist, and (iii) the
balance of the Net Proceeds plus the balance of any deficiency deposits given by
Borrower to Lender or Depository pursuant to the provisions of this paragraph
hereinafter set forth shall be sufficient to pay in full the balance of the cost
of the Restoration. Borrower shall pay all fees and expenses of the Depository
in connection with the above.
(d) Notwithstanding anything to the contrary contained herein, if the Net
Proceeds shall be less than $50,000.00, only one disbursement shall be required
upon the completion of the Restoration to the satisfaction of Lender. If the
Net Proceeds shall be $50,000.00 or more, Lender shall disburse the Net Proceeds
as provided above, however, in no event shall Lender be required to disburse
such Net Proceeds, or any portion thereof, more often then once every thirty
(30) days. If at any time the Net Proceeds, or the undisbursed balance thereof,
shall not, be sufficient to pay in full the balance of the cost of the
Restoration, Borrower shall deposit the deficiency with Lender or Depositary
before any further disbursement of the Net Proceeds shall be made.
(e) Any amount of the Net Proceeds received by ▇▇▇▇▇▇ and not required to
be disbursed for the Restoration pursuant to the provisions of this paragraph
hereinabove set forth shall be retained and applied by Lender toward the payment
of the Debt whether or not then due and payable in such priority and proportions
as Lender in its discretion shall deem proper. Upon the receipt and retention
by ▇▇▇▇▇▇ of such insurance proceeds, the lien of this Security Instrument shall
be reduced only by the amount thereof received and retained by ▇▇▇▇▇▇ and
actually applied by Lender in reduction of the Debt.
(f) Notwithstanding anything to the contrary contained herein, Lender
shall not be obligated to make the Net Proceeds available for Restoration of the
Property unless the principal balance of the Note following the completion of
the Restoration (assuming the amount of Net Proceeds received by Lender in
excess of the cost of the Restoration (as estimated by Lender) is applied to the
prepayment of the Note) will be in an amount sufficient to cause (i) the Debt
Service Coverage Ratio (hereinafter defined) applicable to the Property
immediately following the Restoration to be not less than 1.20 to 1.0 and (ii)
in the event of any Restoration involving Net Proceeds of more than $250,000.00,
the ratio of (a) the then outstanding principal balance of the Note to (b) the
appraised value of the Property after completion of the Restoration (as
determined by an independent third-party appraiser holding an MAI designation
and having a national practice and at least ten (10) years real estate
experience appraising properties of a similar nature and type as the Property)
to be equal to or less than the Minimum Loan to Value Ratio (hereinafter
defined). The term "Minimum Loan to Value Ratio" means a ratio, expressed as a
percentage, equal to the lesser of (i) 80% or (ii) the ratio of (a) the then
outstanding principal balance of the Note to (b) the appraised value of the
Property on the date hereof. The fee for such appraisal shall be paid for by
Borrower.
4. Payment of Taxes, etc. Borrower shall pay all taxes, assessments,
water rates and sewer rents, now or hereafter levied or assessed or imposed
against the Property or any part thereof (the "Taxes") and all ground rents,
maintenance charges, other governmental impositions, and other charges,
including without limitation vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Property or any part thereof (the "Other
Charges") as same become due and payable. Upon written request from ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ will deliver to Lender evidence satisfactory to Lender that the Taxes
and Other Charges have been so paid or are not then delinquent. Borrower shall
not suffer and shall promptly cause to be paid and discharged any lien or charge
whatsoever which may be or become a lien or charge against the Property, and
shall promptly pay for all utility services provided to the Property. Borrower
shall furnish to Lender receipts for the payment of the Taxes, Other Charges and
said utility services prior to the date the same shall become delinquent.
Notwithstanding the above, after prior written notice to Lender, Borrower,
at its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any of the Taxes, provided that
(i) no Event of Default under the Note or this Security Instrument shall have
occurred and be continuing, (ii) Borrower is permitted to do so under the
provisions of any mortgage or deed of trust or deed to secure debt superior or
junior in lien to this Security Instrument, (iii) such proceeding shall suspend
the collection of the Taxes from Borrower and from the Property, (iv) such
proceeding shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and shall not
constitute a default thereunder, (v) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost, (vi) Borrower shall have set aside adequate reserves for the
payment of the Taxes, together with all interest and penalties thereon, and
(vii) Borrower shall have furnished such security as may be reasonably required
in the proceeding, or as may be requested by Lender to insure the payment of any
such Taxes, together with all interest and penalties thereon.
5. Escrow Fund. Upon (i) the occurrence of an Event of Default
(hereinafter defined), and for so long as such Event of Default shall be
continuing, or (ii) the transfer of the Property to any entity in accordance
with the terms of paragraph 9(c) hereof, Borrower shall pay to Lender upon
request on the fifteenth day of each calendar month thereafter (a) one-twelfth
of an amount which would be sufficient to pay the Taxes payable, or estimated by
Lender to be payable, during the next ensuing twelve (12) months and (b) one-
twelfth of an amount which would be sufficient to pay the Insurance Premiums due
for the renewal of the coverage afforded by the Policies upon the expiration
thereof (the amounts set forth in (a) and (b) above hereinafter called the
"Escrow Fund"). The Escrow Fund and the payments of interest or principal or
both, payable pursuant to the Note shall be added together and shall be paid as
an aggregate sum by Borrower to Lender. Borrower hereby pledges to Lender any
and all monies now or hereafter deposited in the Escrow Fund as additional
security for the payment of the Debt. Lender will apply the Escrow Fund to
payments of Taxes and Insurance Premiums required to be made by Borrower
pursuant to paragraphs 3 and 4 hereof. If the amount of the Escrow Fund shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to paragraphs 3
and 4 hereof, Lender shall credit such excess against future payments to be made
to the Escrow Fund. In allocating such excess, ▇▇▇▇▇▇ may deal with the person
shown on the records of ▇▇▇▇▇▇ to be the owner of the Property. If the Escrow
Fund is not sufficient to pay the items set forth in (a) and (b) above, Borrower
shall promptly pay to Lender, upon demand, an amount which Lender shall estimate
as sufficient to make up the deficiency. Lender may apply any sums then present
in the Escrow Fund to the payment of the following items in any order in its
uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of the Note;
(iv) Amortization of the unpaid principal balance of the Note;
(v) All other sums payable pursuant to the Note, this Security
Instrument and the Other Security Documents, including without
limitation advances made by Lender pursuant to the terms of this
Security Instrument.
Until expended or applied as above provided, any amounts in the Escrow Fund
shall constitute additional security for the Debt. The Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by ▇▇▇▇▇▇.
No earnings or interest on the Escrow Fund shall be payable to Borrower, except
after repayment in full of the Debt.
6. Condemnation. (a) Borrower shall give Lender prompt notice of the
actual or threatened commencement of any condemnation or eminent domain
proceeding and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. If less than 25% of the land constituting the
Property is taken, then the net amount of all awards and payments received by
Lender with respect to such taking shall be held in a segregated account (the
"Net Awards Account") and invested in an Eligible Investment. Lender shall be
entitled to deduct from the condemnation award all of its administrative costs
and expenses incurred in connection with investing and collecting such
condemnation award and the balance, if any, (hereinafter referred to as the "Net
Award"), will be disbursed by ▇▇▇▇▇▇ to pay for the costs and expenses of the
Condemnation Restoration (hereinafter defined), provided (i) Borrower is not in
default under this Security Instrument, the Note or any of the Other Security
Documents, (ii) Borrower proceeds promptly after the making of any award of
payment for such taking with the restoration, replacement, rebuilding or repair
of the Property as nearly as possible to the condition the Property was in
immediately prior to such taking (the "Condemnation Restoration"), (iii) the
Condemnation Restoration shall be done in compliance with all applicable laws,
rules and regulations, and, following the Condemnation Restoration, the Property
shall be permitted under all applicable zoning laws to be used for, and shall
continue to be used for, all purposes associated with multi-family residences,
(iv) a set of plans and specifications in connection with the Condemnation
Restoration shall be submitted to Lender and shall be satisfactory to Lender in
all respects, (v) Borrower shall have reimbursed Lender for all costs and
expenses incurred by Lender in connection with making the Net Award available
for the Condemnation Restoration of the Property, including, without limitation,
counsel fees, inspecting engineer fees and appraisal fees incurred by ▇▇▇▇▇▇,
(vi) rental loss proceeds are available to offset in full any loss in rents
throughout the Condemnation Restoration and a reasonable lease-up period
following the completion of the Condemnation Restoration, and (vii) in the
opinion of Lender the Condemnation Restoration of the Property can be completed
within one (1) year after the taking and at least one (1) year prior to the
maturity date of the Note.
(b) The Net Award shall be held in trust by ▇▇▇▇▇▇ in the Net Awards
Account and shall be paid by Lender or a Depository designated by Lender to, or
as directed by, Borrower from time to time during the course of the Condemnation
Restoration, upon receipt of evidence satisfactory to Lender, that (i) all
materials installed and work and labor performed (except to the extent they are
to be paid for out of the requested payment) in connection with the Condemnation
Restoration have been paid for in full, (ii) there exist no notices of
intention, mechanics' or other liens or encumbrances on the Property arising out
of the Condemnation Restoration, and (iii) the balance of the Net Award plus the
balance of any deficiency deposits given by Borrower to Lender or Depositary
pursuant to the provisions of this paragraph hereinafter set forth shall be
sufficient to pay in full the balance of the cost of the Condemnation
Restoration.
(c) Notwithstanding anything to the contrary contained herein, Lender
shall not be obligated to make the Net Award available for the Condemnation
Restoration of the Property unless the principal balance of the Note after the
completion of the Condemnation Restoration (assuming the amount of the Net Award
received by ▇▇▇▇▇▇ in excess of the cost of the Condemnation Restoration as
estimated by ▇▇▇▇▇▇ is applied to the prepayment of the Note) will be sufficient
to cause (i) the Debt Service Coverage Ratio applicable to the Property
immediately following the Condemnation Restoration to be not less than 1.2 to
1.0 and (ii) in the event of any Condemnation Restoration involving Net Award of
more than $250,000.00, the ratio of (a) the then outstanding principal balance
of the Note to (b) the appraised value of the Property after completion of the
Condemnation Restoration (as determined by an independent third-party appraiser
holding an MAI designation and having a national practice and at least ten (10)
years real estate experience appraising properties of a similar nature and type
as the Property) to be equal to or less than the Minimum Loan to Value Ratio.
(d) Notwithstanding anything to the contrary contained herein, if the Net
Award shall be less than $50,000.00, only one such disbursement shall be
required upon the completion of the Condemnation Restoration to the satisfaction
of Lender. If the Net Award shall be $50,000.00 or more, Lender shall disburse
the Net Award as provided above, however, in no event shall Lender be required
to disburse such Net Award, or any portion thereof, more often than once every
thirty (30) days. If at any time the Net Award, or the undisbursed balance
thereof, shall not, in the opinion of ▇▇▇▇▇▇, be sufficient to pay in full the
balance of the cost of Condemnation Restoration, Borrower shall deposit such
deficiency with Lender or Depository before any further disbursement of the Net
Award shall be made.
(e) Notwithstanding anything to the contrary contained herein, any taking
by any public or quasi public authority through eminent domain or otherwise
(including but not limited to any transfer made in lieu of or in anticipation of
the exercise of such taking), Borrower shall continue to pay the Debt at the
time and in the manner provided for in the Note and in this Security Instrument
and the Debt shall not be reduced until any award or payment therefor shall have
been actually received and applied in accordance with this paragraph 6. Lender
shall not be limited to the interest paid on the award by the condemning
authority but shall be entitled to receive out of the award interest at the rate
or rates provided herein and in the Note.
(f) Any amount of the Net Award received by ▇▇▇▇▇▇ and not required to be
disbursed for the Condemnation Restoration pursuant to the provisions of this
paragraph hereinabove set forth may be retained and applied by ▇▇▇▇▇▇ to the
discharge of the Debt, whether or not then due and payable, in such priority and
proportions as Lender in its discretion shall deem proper. If the Property is
sold through foreclosure or otherwise prior to the receipt by Lender of such
award or payment, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive
such award or payment or a portion thereof sufficient to pay the Debt, whichever
is less. Borrower shall file and prosecute its claim or claims for any such
award or payment in good faith and with due diligence and cause the same to be
collected and paid over to Lender, and Borrower hereby irrevocably authorizes
and empowers Lender, in the name of Borrower or otherwise, to collect and
receipt for any such award or payment and to file and prosecute such claim or
claims, and although it is hereby expressly agreed that the same shall not be
necessary in any event, Borrower shall upon demand of Lender make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning any such award or payment to Lender, free and clear of any
encumbrances of any kind or nature whatsoever.
7. Leases and Rents. (a) Trustee and Lender are hereby granted and
assigned by ▇▇▇▇▇▇▇▇ the right to enter the Property for the purpose of
enforcing its interest in the Leases and the Rents, this Security Instrument
constituting a present, absolute assignment of the Leases and the Rents.
Nevertheless, subject to the terms of this paragraph 7, Lender grants to
Borrower a revocable license to operate and manage the Property and to collect
the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to
discharge all current sums due on the Debt, for use in the payment of such sums.
Upon or at any time after an Event of Default, the license granted to Borrower
herein may be revoked by ▇▇▇▇▇▇, and Lender or Trustee may enter upon the
Property, and collect, retain and apply the Rents toward payment of the Debt in
such priority and proportions as Lender in its discretion shall deem proper.
(b) All Leases shall be written on the standard form of lease which has
been approved by Lender. Upon written request from ▇▇▇▇▇▇, Borrower shall
furnish Lender with executed copies of all Leases and all modifications thereto
as soon as may be practicable. No material changes may be made to the Lender-
approved standard forms except as may be required by applicable law. In
addition, all renewals of Leases and all proposed leases shall provide for
rental rates comparable to existing local market rates and shall be arms-length
transactions. Borrower shall not enter into any lease having a term of more
than three (3) years. All Leases shall provide that they are subordinate to
this Security Instrument and that the lessee agrees to attorn to ▇▇▇▇▇▇.
Borrower (i) shall observe and perform all the obligations imposed upon the
lessor under the Leases and shall not do or permit to be done anything to impair
the value of the Leases as security for the Debt; (ii) shall enforce all of the
terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed; (iii) shall not collect any of
the Rents more than one (1) month in advance; (iv) shall not execute any other
assignment of lessor's interest in the Leases or the Rents; (v) shall not
materially alter, modify or change the terms of the Leases, or cancel or
terminate the Leases or accept a surrender thereof or convey or transfer or
suffer or permit a conveyance or transfer of the Premises or of any interest
therein so as to effect a merger of the estates and rights of, or a termination
or diminution of the obligations of, lessees thereunder, except that Borrower
may terminate any Lease in exercising its rights as landlord thereunder upon a
default by the tenant under said Lease; (vi) shall not alter, modify or change
the terms of any guaranty of the Leases or cancel or terminate such guaranty;
(vii) shall not consent to any assignment of or subletting under the Leases not
in accordance with their terms; and (viii) shall execute and deliver all such
further assurances, confirmations and assignments in connection with the
Property as Lender shall from time to time require.
8. Maintenance of Property. (a) Borrower shall cause the Property to be
maintained in a good and safe condition and repair. The Improvements and the
Equipment shall not be removed, demolished or materially altered (except for
normal replacement of the Equipment). Borrower shall promptly comply with all
laws, orders and ordinances affecting the Property, or the use thereof.
Borrower shall promptly repair, replace or rebuild any part of the Property
which may be destroyed by any casualty, or become damaged, worn or dilapidated
or which may be affected by any proceeding of the character referred to in
paragraph 6 hereof and shall complete and pay for any structure at any time in
the process of construction or repair on the Premises. Borrower shall not
initiate, join in, acquiesce in, or consent to any change in any private
restrictive covenant, zoning law or other public or private restriction,
limiting or otherwise changing the uses which may be made of the Property or any
part thereof. If under applicable zoning provisions the use of all or any
portion of the Property is or shall become a nonconforming use, Borrower will
not cause or permit such nonconforming use to be discontinued or abandoned
without the express written consent of Lender.
(b) Borrower hereby represents that all inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Property and with respect to the use and occupancy of the same, including
but not limited to, certificates of occupancy and fire underwriter certificates,
have been made by or obtained from the appropriate governmental authorities.
Borrower hereby represents, warrants and covenants that it has obtained and will
maintain all permits and licenses required to operate the Property as a multi-
family residential development. Borrower has and shall continue to comply in
all material respects with and make all payments required under all laws,
ordinances, regulations, covenants, conditions and restrictions now or hereafter
affecting the Property or any part thereof or the business or the activity
conducted thereon. Borrower will not commit, suffer, permit or allow any act to
be done in or upon the Property in violation of any law, ordinance or
regulation. Borrower is in material compliance and shall continue to comply in
all material respects with all existing and future requirements of all
governmental authorities having jurisdiction over the Property.
9. Transfer or Encumbrance of the Property. (a) Borrower acknowledges
that ▇▇▇▇▇▇ has examined and relied on the creditworthiness of ▇▇▇▇▇▇▇▇ and the
experience of Borrower in owning properties such as the Property in agreeing to
make the loan secured hereby, and that ▇▇▇▇▇▇ will continue to rely on
▇▇▇▇▇▇▇▇'s ownership of the Property as a means of maintaining the value of the
Property as security for repayment of the Debt. Borrower acknowledges that
▇▇▇▇▇▇ has a valid interest in maintaining the value of the Property so as to
ensure that, should Borrower default in the repayment of the Debt, ▇▇▇▇▇▇ can
recover the Debt by a sale of the Property. Except as otherwise provided in
subparagraph 9(c) hereof, Borrower shall not sell, convey, alien, mortgage,
encumber, pledge or otherwise transfer the Property or any part thereof, or
permit the Property or any part thereof to be sold, conveyed, aliened,
mortgaged, encumbered, pledged or otherwise transferred.
(b) A sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer within the meaning of this paragraph 9 shall be deemed to include (i)
an installment sales agreement wherein Borrower agrees to sell the Property or
any part thereof for a price to be paid in installments; (ii) an agreement by
Borrower leasing all or a substantial part of the Property for other than actual
occupancy by a space tenant thereunder or a sale, assignment or other transfer
of, or the grant of a security interest in, ▇▇▇▇▇▇▇▇'s right, title and interest
in and to any Leases or any Rents; (iii) if Borrower or any general partner or
managing member of Borrower is a corporation, the voluntary or involuntary sale,
conveyance or transfer of such corporation's stock or the creation or issuance
of new stock by which an aggregate of more than 49% of such corporation's stock
shall be vested in a party or parties who are not now stockholders, except for
any sale, conveyance or transfer of such corporation's stock to an Affiliate
provided ▇▇▇▇▇▇ shall have received prior written notice of such transfer; (iv)
if Borrower or any general partner or managing member of Borrower is a limited
or general partnership or joint venture, the change, removal or resignation of a
general partner or managing partner or the transfer of the partnership interest
of any general partner or managing partner, except for any transfer of such
partnership interest to an Affiliate, and excluding the removal or resignation
of any non Affiliate or non managing general partner where the managing general
partner shall remain following such removal or resignation, provided, in either
case, ▇▇▇▇▇▇ shall have received prior written notice of such transfer
resignation or removal; (v) if Borrower or any Guarantor or any general partner
or managing member of Borrower or any Guarantor is a limited liability company,
the change, removal or resignation of the managing member of such company, or
the transfer or pledge of the membership interest of the managing member of such
company or any profits or proceeds relating to such membership interest or the
transfer of more than 49% in the aggregate of any membership interests in such
company whether in one transfer or a series of transfers, except for any
transfer of membership interests to an Affiliate, provided ▇▇▇▇▇▇ shall have
received prior written notice of such transfer, resignation or removal; (vi) any
transfer of any interest by the Manager (hereinafter defined) other than as
permitted under paragraph 53; and (vii) any transfer of the beneficial interest
of any Borrower in any trust holding legal title to the Property.
(c) Notwithstanding anything to the contrary contained herein:
(i) Upon sixty (60) days prior written notice to Lender, the
Borrower shall have the limited right to transfer legal title to the
Property to a Single Purpose Entity Transferee (hereinafter defined)
provided (a) such Single Purpose Entity Transferee assumes all of the
obligations of the Borrower under this Security Instrument, the Note
and the Other Security Documents in a manner satisfactory to Lender in
all respects, including, without limitation, by entering into an
assumption agreement with Borrower and Lender in form and substance
reasonably satisfactory to Lender (an "Assumption Agreement"), (b) the
Single Purpose Entity Transferee shall have been newly formed
exclusively and solely for the purpose of owning and operating the
Property and shall have been engaged in no other business activities
prior to the transfer of title to such Single Purpose Entity
Transferee and must be a "United States person" as defined by Section
7701(a)(30) of the United States Internal Revenue Code of 1986, as
amended, (c) the Single Purpose Entity Transferee or the management
agent it employs to manage the Property shall have Adequate Real
Estate Experience (hereinafter defined), (d) the Single Purpose Entity
Transferee shall deliver to Lender evidence of the fulfillment of the
requirements of subsection (b) above, (e) the Single Purpose Entity
Transferee shall deliver any and all organizational documentation
requested by Lender, which documentation shall be reasonably
satisfactory to Lender in all respects, and shall deliver an opinion
of counsel of the Single Purpose Entity Transferee covering the
Assumption Agreement in form and substance similar to the due
execution, delivery and enforcement opinions delivered by counsel to
Borrower in connection with the execution of this Security Instrument,
(f) the Single Purpose Entity Transferee shall deliver any
certificates and opinions of counsel, enter into agreements and
covenants, or cause each of its general partners (or any other
principal thereof) to deliver certificates, enter into agreements and
covenants, which certificates, agreements, opinions of counsel and
covenants shall be similar in nature to those delivered, executed and
made by Borrower or any general partner of Borrower in connection with
the execution of this Security Instrument or the Securitization
(hereinafter defined) relating to the single purpose nature of the
Single Purpose Entity Transferee or otherwise, and (g) Borrower shall
deliver, at its sole cost and expense, an endorsement to the existing
title policy insuring the Security Instrument as modified by the
Assumption Agreement as a valid first lien on the Property, naming the
Single Purpose Entity Transferee as owner of the fee estate of the
Property, which endorsement shall insure that, as of the date of the
recording of the Assumption Agreement, the Property shall not be
subject to any additional exceptions or liens other than those
contained in the original title policy insuring the lien of this
Security Instrument and delivered in connection with the execution of
this Security Instrument. Any and all reasonable costs incurred in
connection with the above (including ▇▇▇▇▇▇'s counsel's fees and
disbursements and expenses and all recording fees, mortgage or
intangible taxes, and title insurance premiums), shall be paid by
▇▇▇▇▇▇▇▇. Lender shall respond to ▇▇▇▇▇▇▇▇'s request to transfer
legal title to the Property within thirty (30) days of delivery of all
of the information required by subsections (a)-(g) above. The failure
of Lender to respond to such request shall not be deemed consent to
the transfer.
For purposes of this Security Instrument, the term "Adequate Real
Estate Experience" shall mean an entity which manages first class
multi-family residences of a type and size similar to the Property,
and which manages in the aggregate no less than 1,000 residential
units at the time of such transfer.
The term "Single Purpose Entity Transferee" shall mean an entity that:
A. shall not own any asset other than the Property;
B. shall not engage in any business other than those necessary for
the ownership, management or operation of the Property and any
such business transactions with any general partner, principal or
affiliate of the Single Purpose Entity Transferee or any
affiliate of the general partner of the Single Purpose Entity
Transferee shall be entered into upon terms and conditions that
are intrinsically fair and substantially similar to those that
would be available on an arms-length basis with third parties
other than an affiliate of the Single Purpose Entity Transferee
or the general partner or an affiliate of the general partner of
the Single Purpose Entity Transferee;
C. shall not incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than
the Debt, any Affiliate Advance (hereinafter defined) and the
Subordinate Debt (the "Subordinate Debt"), as defined in that
certain Subordination Agreement dated as of the date hereof
between Lender and IFSE Holding Co., L.L.C.;
D. shall not make any loans or advances to any third party
(including any affiliates of such Single Purpose Entity
Transferee or the general partner or managing member or an
affiliate of the general partner or managing member of such
Single Purpose Entity Transferee);
E. shall be solvent and pay its debts from its assets as the same
become due;
F. shall do or cause to be done all things necessary to preserve its
existence, and shall not amend, modify or otherwise change its
partnership certificate, partnership agreement, articles of
incorporation or by-laws in a manner which adversely affects such
Single Purpose Entity Transferee's existence as a single purpose
entity;
G. shall maintain books and records and bank accounts separate from
those of its affiliates, including its general partners;
H. shall be, and at all times shall hold itself out to the public
as, a legal entity separate and distinct from any other entity
(including any affiliate thereof, including the general partner
or any affiliate of the general partner of such Single Purpose
Entity Transferee);
I. shall file its own tax returns;
J. shall maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations;
K. shall not seek the dissolution or winding up, in whole or in
part, of the Single Purpose Entity Transferee or voluntarily
file, or consent to the filing of, a petition for bankruptcy,
reorganization, assignment for the benefit of creditors or
similar proceeding; and
L. shall not commingle its funds or other assets with any other
person or entity.
The term "Affiliate Advance" shall mean and be limited to a payment made by
an Affiliate to a third party on behalf of Borrower, the repayment of which
remains an unsecured obligation of the Borrower, provided: (i) such payment
shall have been made by the Affiliate to enable the Borrower to pay for its
ordinary and customary operating expenses or property or capital expense
(exclusive of any payments of debt service under any loan made to Borrower,
including, without limitation, the Debt secured by this Security Instrument),
(ii) upon an Event of Default under the Note, this Security Instrument or the
Other Security Documents, no payments of or accrual of interest or principal
shall be made or required on or before the repayment of all sums due under the
Note, this Security Instrument or the Other Security Documents, and (iii) the
obligation of Borrower, whether written or otherwise, shall be (a) subordinate
in lien and payment to the Debt, (b) non-defaultable and non-callable upon a
default (monetary or nonmonetary) or otherwise, prior to one year and a day from
the repayment of all sums due under the Note, this Security Instrument or the
Other Security Documents and (c) unsecured obligation of Borrower at all times.
(ii) [INTENTIONALLY OMITTED]
(iii) Borrower may sell, convey or transfer stock, partnership or
membership interest as described in subsections 9(b)(iii), (iv)
and (v) hereof in the Borrower or a general partner or managing
member of ▇▇▇▇▇▇▇▇ (but not by any subsequent Single Purpose
Entity Transferee), provided that:
1. No Event of Default shall have occurred and be continuing;
2. The Single Purpose Entity Transferee shall be a person, firm or
corporation whose character, financial strength, stability and
experience shall be similar to the existing Borrower and any
general partner of Borrower as of the date hereof and otherwise
reasonably satisfactory to Lender;
3. The Single Purpose Entity Transferee shall deliver such
organizational documentation and other material necessary to
establish the transfer; and
4. The Single Purpose Entity Transferee shall pay the costs and
expenses of Lender and ▇▇▇▇▇▇'s counsel incurred in connection
with the review and approval of such stock, partnership or
membership transfer.
The term "Affiliate" shall mean a corporation or other entity which shall
(i) control, (ii) be controlled by, or (iii) be under common control with either
Borrower, any general partner of Borrower, Insignia Financial Group, Inc. or a
corporation or other entity that would be considered an affiliate of Borrower or
Insignia Financial Group, Inc. under the regulations promulgated by the United
States Securities and Exchange Commission.
The term "Debt Service Coverage Ratio" shall mean the ratio of (a) the NOI
(hereinafter defined) produced by the operation of the Property during the
twelve (12) calendar month period immediately preceding the calculation to (b)
the projected aggregate payments of interest and principal due under this
Security Instrument and the Note and any other subordinate loans affecting the
Property for the twelve (12) calendar month period immediately following the
calculation.
The term "Expenses" shall mean the aggregate of the following items: (a)
real estate taxes, general and special assessments or similar charges; (b)
sales, use and personal property taxes; (c) management fees and disbursements;
(d) wages, salaries, pension costs and all fringe and other employee-related
benefits and expenses; (e) insurance premiums; (f) cost of utilities, and all
other administrative, management, ownership, operating, leasing and maintenance
expenses, excluding depreciation and other non-cash expenses incurred in
connection with the operation of the Property; (g) cost of necessary repair or
replacement of existing improvements on the Property with repairs or
replacements of like kind and quantity or such kind or quality which is
necessary to maintain the Property to the same standards as competitive rental
properties of similar size and location of the Property; and (h) the cost of
such other maintenance materials, HVAC repairs, parts and supplies, other
decorating supplies, floor covering repairs, other decorating contracts, drapes
and equipment. The Expenses shall be based on the above-described items
actually incurred by Borrower during the period for which the calculation is
being made.
The term "general partner" shall include the sole member or the managing
member of Borrower or a general partner of Borrower if Borrower or any general
partner of Borrower is a limited liability company.
The term "NOI" shall mean the gross income derived from the operation of
the Property, less Expenses. NOI shall include only Rents, and such other
income, including any rent loss or business interruption insurance proceeds,
vending income, pet charges, late fees, forfeited security deposits and other
miscellaneous tenant charges, which are actually received during the period for
which the NOI is being calculated. NOI shall be calculated on a cash basis in
accordance with customary accounting principles applicable to real estate.
(d) Lender reserves the right to condition the consent required hereunder
upon such other conditions as Lender shall determine in its reasonable
discretion to be in the interest of ▇▇▇▇▇▇. Lender shall not be required to
demonstrate any actual impairment of its security or any increased risk of
default hereunder in order to declare the Debt immediately due and payable upon
▇▇▇▇▇▇▇▇'s sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Property in violation of this Security Instrument without
▇▇▇▇▇▇'s consent. This provision shall apply to every sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the Property regardless
of whether voluntary or not, or whether or not Lender has consented to any
previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer
of the Property.
10. Estoppel Certificates. (a) After request by ▇▇▇▇▇▇, Borrower, within
ten (10) days, shall furnish Lender with a statement, duly acknowledged and
certified, setting forth (i) the amount of the original principal amount of the
Note, (ii) the unpaid principal amount of the Note, (iii) the rate of interest
of the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi)
that the Note and this Security Instrument are valid, legal and binding obliga-
tions and have not been modified or if modified, giving particulars of such
modification.
11. Changes in the Laws Regarding Taxation. If any law is enacted or
adopted or amended after the date of this Security Instrument which deducts the
Debt from the value of the Property for the purpose of taxation or which imposes
a tax, either directly or indirectly, on the Debt or ▇▇▇▇▇▇'s interest in the
Property, Borrower will pay such tax, with interest and penalties thereon, if
any. In the event Lender is advised by counsel chosen by it that the payment of
such tax or interest and penalties by ▇▇▇▇▇▇▇▇ would be unlawful or taxable to
Lender or unenforceable or provide the basis for a defense of usury, then in any
such event, Lender shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable.
12. No Credits on Account of the Debt. Borrower will not claim or demand
or be entitled to any credit or credits on account of the Debt for any part of
the Taxes or Other Charges assessed against the Property, or any part thereof,
and no deduction shall otherwise be made or claimed from the assessed value of
the Property, or any part thereof, for real estate tax purposes by reason of
this Security Instrument or the Debt. In the event such claim, credit or
deduction shall be required by law, Lender shall have the option, by written
notice of not less than ninety (90) days, to declare the Debt immediately due
and payable.
13. Documentary Stamps. If at any time the United States of America, any
State thereof or any subdivision of any such State shall require revenue or
other stamps to be affixed to the Note or this Security Instrument, or impose
any other tax or charge on the same, Borrower will pay for the same, with
interest and penalties thereon, if any.
14. Usury Laws. This Security Instrument and the Note are subject to the
express condition that at no time shall Borrower be obligated or required to pay
interest on the Debt at a rate which could subject the holder of the Note to
either civil or criminal liability as a result of being in excess of the maximum
interest rate which Borrower is permitted by applicable law to contract or agree
to pay. If by the terms of this Security Instrument or the Note, Borrower is at
any time required or obligated to pay interest on the Debt at a rate in excess
of such maximum rate, the rate of interest under the same shall be deemed to be
immediately reduced to such maximum rate and the interest payable shall be
computed at such maximum rate and all prior interest payments in excess of such
maximum rate shall be applied and shall be deemed to have been payments in
reduction of the principal balance of the Note.
15. Books and Records. Borrower shall keep adequate books and records of
account which accurately reflect the operations of, and income and expenses
attributable to, the Property and furnish to Lender the following statements,
all of which shall be in form and substance acceptable to Lender:
(i) a quarterly and annual, or as more frequently requested by Lender
or by the rating agencies in connection with securities issued in
connection with the loan secured hereby, occupancy statement
listing each and every Lease, identifying the leased premises,
names of all tenants, monthly rental and all other charges
payable under the Lease, date to which paid, date of occupancy,
date of expiration, any and every special provision, concession
or inducement granted to tenants and such other information as is
reasonably requested by ▇▇▇▇▇▇, signed, dated and certified as
true and accurate by the general partner of ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇;
(ii) an annual operating statement of the operation of the Property in
a form pre-approved by ▇▇▇▇▇▇ and otherwise satisfactory to
Lender, showing in reasonable detail total revenues received and
total expenses, prepared and certified by the general partner of
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇;
(iii) an annual balance sheet and profit and loss statement of
▇▇▇▇▇▇▇▇, prepared and certified by the general partner of
▇▇▇▇▇▇▇▇ and Borrower within ninety (90) days after the close of
each fiscal year; and
(iv) such annual and monthly (including, without limitation, with
respect to the Reserve Account and the Capital Improvements
Account) balance sheets and profit and loss statements and other
financial statements as may, from time to time, be required by
▇▇▇▇▇▇.
16. Performance of Other Agreements. Borrower shall observe and perform
each and every term to be observed or performed by Borrower pursuant to the
terms of any agreement or recorded instrument affecting or pertaining to the
Property.
17. Further Acts, etc. Borrower will, at the cost of ▇▇▇▇▇▇▇▇, and
without expense to ▇▇▇▇▇▇, do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Lender shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Lender the property and rights hereby mortgaged, given, granted,
bargained, sold, aliened, enfeoffed, conveyed, confirmed, pledged, assigned and
hypothecated or intended now or hereafter so to be, or which Borrower may be or
may hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this Security
Instrument or for filing, registering or recording this Security Instrument.
▇▇▇▇▇▇▇▇ on demand, will execute and deliver and hereby authorizes ▇▇▇▇▇▇ to
execute in the name of ▇▇▇▇▇▇▇▇ or without the signature of Borrower to the
extent Lender may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of ▇▇▇▇▇▇ in the Property. Borrower grants to Lender an irrevocable
power of attorney coupled with an interest for the purpose of perfecting any and
all rights and remedies available to Lender at law and in equity pursuant to the
terms of the Note, this Security Instrument or the Other Security Documents,
including without limitation such rights and remedies available to Lender
pursuant to this paragraph 17.
18. Recording of Security Instrument, etc. Borrower forthwith upon the
execution and delivery of this Security Instrument and thereafter, from time to
time, will cause this Security Instrument, and any security instrument creating
a lien or security interest or evidencing the lien hereof upon the Property and
each instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or security interest
hereof upon, and the interest of Lender in, the Property. Borrower will pay all
filing, registration or recording fees, and all expenses incident to the
preparation, execution and acknowledgment of this Security Instrument, any
mortgage supplemental hereto, any security instrument with respect to the
Property and any instrument of further assurance, and all federal, state, county
and municipal, taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of this Security Instrument, any
mortgage supplemental hereto, any security instrument with respect to the
Property or any instrument of further assurance, except where prohibited by law
so to do. Borrower shall hold harmless and indemnify Lender, its successors and
assigns, against any liability incurred by reason of the imposition of any tax
on the making and recording of this Security Instrument.
19. Prepayment. If permitted by the Note, the Debt may be prepaid in
accordance with the terms thereof.
20. Events of Default. The Lender may declare the Debt immediately due
and payable upon any one or more of the following events ("Event of Default"):
(a) if any portion of the Debt is not paid within ten (10) days after
written notice is delivered by the Lender notifying Borrower that the
same is overdue;
(b) except as otherwise provided in paragraph 4 hereof, if any of the
Taxes or Other Charges is not paid when the same is due and payable;
(c) if the Policies are not kept in full force and effect, or if the
Policies (or duplicate originals thereof) are not delivered to Lender
upon request;
(d) if Borrower violates or does not comply with any of the provi-
sions of paragraphs 7, 9, 34, 35 or 55 hereof;
(e) if any representation or warranty of Borrower made herein or in
any certificate, report, financial statement or other instrument or
document furnished to Lender shall have been false or misleading in
any material respect when made;
(f) if Borrower shall make an assignment for the benefit of creditors
or if Borrower shall generally not be paying its debts as they become
due;
(g) if a receiver, liquidator or trustee of Borrower shall be
appointed or if Borrower shall be adjudicated a bankrupt or insolvent,
or if any petition for bankruptcy, reorganization or arrangement
pursuant to federal bankruptcy law, or any similar federal or state
law, shall be filed by or against, consented to, or acquiesced in by,
Borrower or if any proceeding for the dissolution or liquidation of
Borrower shall be instituted; however, if such appointment, adjudica-
tion, petition or proceeding was involuntary and not consented to by
▇▇▇▇▇▇▇▇, upon the same not being discharged, stayed or dismissed
within ninety (90) days;
(h) [INTENTIONALLY OMITTED]
(i) if Borrower shall be in default under any other mortgage or
security agreement covering any part of the Property whether it be
superior or junior in lien to this Security Instrument;
(j) if the Property becomes subject to any mechanic's, materialman's
or other lien other than a lien for local real estate taxes and
assessments not then due and payable and such lien shall remain
undischarged of record (by payment, bonding or otherwise) on the
earlier of (i) forty-five (45) days after Borrower shall have notice
(written or oral) of such lien or (ii) following a judgment in favor
of the holder of such lien, one week prior to the date on which such
lien may be foreclosed;
(k) if Borrower fails to cure promptly any violations of laws or
ordinances affecting or which may be interpreted to affect the
Property; provided, however, after prior written notice to Lender,
Borrower, at its own expense, may contest by appropriate legal
proceeding, promptly initiated and conducted in good faith and with
due diligence, the validity or application of any building, fire or
zoning law or ordinance affecting the Property provided that (i) no
other Event of Default exists under the Note, this Security
Instrument, or the Other Security Documents, (ii) such proceeding
shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Borrower is subject and
shall not constitute a default thereunder, (iii) neither the Property
nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost, and (iv) if by the
terms of such law or ordinance, compliance therewith pending the
prosecution of any such proceeding may legally be delayed without
incurring any lien, charge or liability of any kind against the
Property, or any part thereof, and without subjecting the Borrower or
the Lender to any liability, civil or criminal, for failure to comply
therewith; or
(l) if Borrower shall continue to be in default under any of the
other terms, covenants or conditions of the Note, this Security
Instrument or the Other Security Documents for five (5) days after
notice from Lender in the case of any default which can be cured by
the payment of a sum of money or for thirty (30) days after notice
from Lender in the case of any other default, provided that if such
default cannot reasonably be cured within such thirty (30) day period
and Borrower shall have commenced to cure such default within such
thirty (30) day period and thereafter diligently and expeditiously
proceeds to cure the same, such thirty (30) day period shall be
extended for so long as it shall require Borrower in the exercise of
due diligence to cure such default, it being agreed that no such
extension shall be for a period in excess of ninety (90) days.
21. Remedies of Lender/Application of Proceeds. (a) Upon the occurrence
of an Event of Default, (a) Borrower will pay, from the date of that Event of
Default, interest on the unpaid principal balance of the Note at the rate of (i)
the greater of (A) five percent (5%) over the Applicable Interest Rate (as
defined in the Note) due under the Note and (B) two percent (2%) over the Prime
Rate (hereinafter defined) as the same shall change from time to time or (ii) at
the maximum interest rate which Borrower may by law pay, whichever is lower,
(the "Default Rate") and (b) Lender shall have the right to exercise any and all
rights and remedies available at law and in equity. The term "Prime Rate" shall
mean the daily "Prime Rate" published in The Wall Street Journal from the date
of the default, as such "Prime Rate" shall change from time to time. In the
event The Wall Street Journal ceases to publish the prime rate or in the event
such prime rates are no longer generally published or are limited, regulated or
administered by a governmental or quasi-governmental body, a comparable interest
rate index shall be substituted therefor by Lender.
(b) The purchase money, proceeds and avails of any disposition of the
Property, or any part thereof, pursuant to paragraph 22 of this Security
Instrument or any other sums collected by Lender pursuant to the Note, this
Security Instrument or the Other Security Documents, may be applied by Lender to
the payment of the Debt in such priority and proportions as Lender in its
discretion shall deem proper.
22. Sale of Property. (a) If this Security Instrument is foreclosed or
if the Property is sold pursuant to the exercise of a power of sale, the
Property, or any interest therein, may at the discretion of Lender, be sold in
one or more parcels or in several interests or portions and in any order or
manner.
(b) In addition, Borrower hereby vests Lender with full power and
authority, upon the happening of an Event of Default, at Lender's option, to
declare the entire Debt to be immediately due and payable, and at ▇▇▇▇▇▇'s
option, to take possession of the Property if and to the extent allowed by law,
and to sell the Property to the highest bidder at public auction in front of the
courthouse door in the county or counties, as may be required, where the
Property is located, either in person or by auctioneer, after having first given
notice of the time, place and terms of sale, together with a description of the
property to be sold, by publication once a week for four (4) successive weeks
prior to said sale in some newspaper published in said county or counties, as
may be required, and, upon payment of the purchase money, Lender or any person
conducting the sale for Lender is authorized to execute to the purchaser at said
sale a deed to the Property so purchased. Lender may bid at said sale and
purchase the Property, or any part thereof, if the highest bidder therefor. At
the foreclosure sale the Property may be offered for sale and sold as a whole
without first offering it in any other manner or may be offered for sale and
sold in any other manner as Lender may elect. The proceeds of any foreclosure
sale pursuant to this paragraph shall be applied first, to the payment of the
costs of said sale, including reasonable attorney's and auctioneer's fees;
second, to the payment of the Debt hereby secured, whether due or not, with the
unpaid interest thereon to the date of sale, and any amount that may be due
Lender by virtue of any of the special liens or agreements herein contained;
and, third, the balance, if any, to be paid over to Borrower, or as may
otherwise be provided by law.
23. Right to Cure Defaults. Upon the occurrence of any Event of Default,
if Borrower fails to make any payment or perform any act as herein provided
Lender may, but without any obligation to do so and without notice to or demand
on Borrower and without releasing Borrower from any obligation hereunder, make
or do the same in such manner and to such extent as Lender may deem necessary to
protect the security hereof. Lender is authorized to enter upon the Property
for such purposes, or appear in, defend, or bring any action or proceeding
to protect its interest in the Property or to foreclose this Security Instrument
or collect the Debt, and the cost and expense thereof (including reasonable
attorneys' fees to the extent permitted by law), with interest as provided in
this paragraph 23, shall constitute a portion of the Debt and shall be due and
payable to Lender upon demand. All such costs and expenses incurred by ▇▇▇▇▇▇
in remedying such Event of Default or in appearing in, defending, or bringing
any such action or proceeding shall bear interest at the Default Rate, for the
period after notice from Lender that such cost or expense was incurred to the
date of payment to Lender. All such costs and expenses incurred by Lender
together with interest thereon calculated at the Default Rate shall be deemed to
constitute a portion of the Debt and be secured by this Security Instrument and
the Other Security Documents and shall be immediately due and payable upon
demand by Lender therefor.
24. Late Payment Charge. If any portion of the Debt is not received by
Lender within five (5) days of the date on which it is due without taking into
account any applicable notice or grace period, Borrower shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of such unpaid portion
of the Debt or the maximum amount permitted by applicable law, to defray the
expense incurred by Lender in handling and processing such delinquent payment
and to compensate Lender for the loss of the use of such delinquent payment, and
such amount shall be secured by this Security Instrument and the Other Security
Documents.
25. Prepayment After Event of Default. If following the occurrence of any
Event of Default, Borrower shall tender payment of an amount sufficient to
satisfy the Debt in whole or in part at any time prior to a foreclosure sale of
the Property, or a sale of the Property pursuant to the exercise of a power of
sale, such tender shall be deemed to be a voluntary prepayment of the principal
balance of the Note and Borrower shall, in addition to the entire Debt, also pay
to Lender a sum equal to the interest which would have accrued on the principal
balance of the Note at the Applicable Interest Rate as defined in the Note from
the date of such tender to the earlier of (i) the Maturity Date as defined in
the Note or to (ii) the first day of the period during which prepayment of the
principal balance of the Note would have been permitted together with a
prepayment consideration equal to the prepayment consideration which would have
been payable as of the first day of the period during which prepayment would
have been permitted. If at the time of such tender prepayment of the principal
balance of the Note is permitted, such tender by Borrower shall be deemed to be
a voluntary prepayment of the principal balance of the Note, and Borrower shall,
in addition to the entire Debt, also pay to Lender the applicable prepayment
consideration specified in the Note and this Security Instrument, if any.
26. Right of Entry. Lender and its agents shall have the right to enter
and inspect the Property at all reasonable times.
27. Appointment of Receiver. The holder of this Security Instrument, upon
the occurrence of an Event of Default or in any action to foreclose this
Security Instrument or upon the actual or threatened waste to any part of the
Property, shall be entitled to the appointment of a receiver without notice and
without regard to the value of the Property as security for the Debt, or the
solvency or insolvency of any person liable for the payment of the Debt.
28. Reasonable Use and Occupancy. In addition to the rights which Lender
may have herein, upon the occurrence of any Event of Default, Lender, at its
option, may require Borrower to pay monthly in advance to Lender, or any
receiver appointed to collect the Rents, the fair and reasonable rental value
for the use and occupation of such part of the Property as may be occupied by
Borrower or may require Borrower to vacate and surrender possession of the
Property to Lender or to such receiver and, in default thereof, Borrower may be
evicted by summary proceedings or otherwise.
29. Security Agreement. This Security Instrument is both a real property
deed of trust and a "security agreement" within the meaning of the Uniform
Commercial Code. The Property includes both real and personal property and all
other rights and interests, whether tangible or intangible in nature, of
Borrower in the Property. Borrower by executing and delivering this Security
Instrument has granted and hereby grants to Lender, as security for the Debt, a
security interest in the Property to the full extent that the Property may be
subject to the Uniform Commercial Code (said portion of the Property so subject
to the Uniform Commercial Code being called in this paragraph 29 the
"Collateral"). If an Event of Default shall occur, Lender and Trustee, in
addition to any other rights and remedies which they may have, shall have and
may exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the Uniform Commercial Code,
including, without limiting the generality of the foregoing, the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Lender may deem necessary for the care, protection and preservation
of the Collateral. Upon request or demand of Lender or Trustee, Borrower shall
at its expense assemble the Collateral and make it available to Lender and
Trustee at a convenient place acceptable to Lender. Borrower shall pay to
Lender and Trustee on demand any and all reasonable expenses, including legal
expenses and attorneys' fees, incurred or paid by ▇▇▇▇▇▇ and Trustee in
protecting the interest in the Collateral and in enforcing the rights hereunder
with respect to the Collateral. Any notice of sale, disposition or other
intended action by Lender or Trustee with respect to the Collateral sent to
Borrower in accordance with the provisions hereof at least five (5) days prior
to such action, shall constitute commercially reasonable notice to Borrower
unless otherwise required by law. The proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Lender to the payment of the
Debt in such priority and proportions as Lender in its discretion shall deem
proper.
30. Actions and Proceedings. Lender or Trustee has the right to appear in
and defend any action or proceeding brought with respect to the Property and to
bring any action or proceeding, in the name and on behalf of ▇▇▇▇▇▇▇▇, which
▇▇▇▇▇▇, in its discretion, decides should be brought to protect their interest
in the Property. Lender shall, at its option, be subrogated to the lien of any
deed of trust, mortgage or other security instrument discharged in whole or in
part by the Debt, and any such subrogation rights shall constitute additional
security for the payment of the Debt.
31. Waivers. Borrower hereby waives the right to assert a counterclaim,
other than a mandatory or compulsory counterclaim, in any action or proceeding
brought against it by ▇▇▇▇▇▇, and waives trial by jury in any action or
proceeding brought by either party hereto against the other or in any coun-
terclaim asserted by Lender against Borrower, or in any matters whatsoever
arising out of or in any way connected with this Security Instrument, the Note,
any of the Other Security Documents or the Debt.
32. Recovery of Sums Required To Be Paid. Lender shall have the right
from time to time to take action to recover any sum or sums which constitute a
part of the Debt as the same become due, without regard to whether or not the
balance of the Debt shall be due, and without prejudice to the right of Lender
or Trustee thereafter to bring an action of foreclosure, or to sell the Property
pursuant to the exercise of a power of sale, or to bring any other action, for a
default or defaults by Borrower existing at the time such earlier action was
commenced.
33. Marshalling and Other Matters. Borrower hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of
marshalling in the event of any sale hereunder of the Property or any part
thereof or any interest therein. Further, Borrower hereby expressly waives any
and all rights of redemption from sale under any order or decree of foreclosure
of this Security Instrument on behalf of Borrower, and on behalf of each and
every person acquiring any interest in or title to the Property subsequent to
the date of this Security Instrument and on behalf of all persons to the extent
permitted by applicable law.
34. Hazardous Materials. Borrower represents and warrants that, except as
otherwise disclosed in that certain environmental report delivered by Borrower
to Lender in connection with the origination of this Security Instrument (the
"Environmental Report"), to the best of Borrower's knowledge, after due inquiry
and investigation, (a) there are no Hazardous Materials (hereinafter defined) on
the Property, except those in compliance with all applicable federal, state and
local laws, ordinances, rules and regulations, and (b) no owner or occupant nor,
to the best of ▇▇▇▇▇▇▇▇'s knowledge, any prior owner or occupant of the Property
has received any notice or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials on, from or affecting the
Property. Borrower covenants that the Property shall be kept free of Hazardous
Materials, and neither Borrower nor any occupant of the Property shall use,
transport, store, dispose of or in any manner deal with Hazardous Materials on
the Property, except in compliance with all applicable federal, state and local
laws, ordinances, rules and regulations. Borrower shall comply with, and ensure
compliance by all occupants of the Property with, all applicable federal, state
and local laws, ordinances, rules and regulations, and shall keep the Property
free and clear of any liens imposed pursuant to such laws, ordinances, rules or
regulations. At any time after the occurrence of an Event of Default and the
continuance thereof, Lender may enter upon the Property and conduct such
environmental tests and studies as Lender shall require. The cost and expense
of such tests and studies shall be borne by Borrower and such amounts shall be
secured by this Security Instrument. In the event that Borrower receives any
notice or advice from any governmental agency or any source whatsoever with
respect to Hazardous Materials on, from or affecting the Property, Borrower
shall immediately notify Lender. Borrower shall conduct and complete all
investigations, studies, sampling, and testing, and all remedial actions neces-
sary to clean up and remove all Hazardous Materials from the Property in accor-
dance with all applicable federal, state, and local laws, ordinances, rules and
regulations. The term "Hazardous Materials" as used in this Security Instrument
shall include, without limitation, gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related or similar
materials, or any other substance or material defined as a hazardous or toxic
substance or material by any federal, state or local law, ordinance, rule, or
regulation, but excluding Asbestos, as defined in paragraph 35 hereof. The
obligations and liabilities of Borrower under this paragraph 34 shall survive
any entry of a judgment of foreclosure, the sale of the Property pursuant to the
exercise of a power of sale, or the delivery of a deed in lieu of foreclosure of
this Security Instrument.
35. Asbestos. Borrower represents and warrants that, except as otherwise
disclosed in the Environmental Report, to the best of ▇▇▇▇▇▇▇▇'s knowledge,
after due inquiry and investigation, there is no asbestos or material containing
asbestos ("Asbestos") on the Property, and that no owner or occupant nor to the
best of Borrower's knowledge, any prior owner or occupant of the Property has
received any notice or advice from any governmental agency or any source
whatsoever with respect to Asbestos on, affecting or installed on the Property.
Borrower covenants that, except as otherwise disclosed in the Environmental
Report, the Property shall be kept free of Asbestos, and neither Borrower nor
any occupant of the Property shall install, or permit to be installed, Asbestos
on the Property. Borrower shall comply with, and ensure compliance by all
occupants of the Property with, all applicable federal, state and local laws,
ordinances, rules and regulations with respect to Asbestos, and shall keep the
Property free and clear of any liens imposed pursuant to such laws, ordinances,
rules or regulations. In the event that Borrower receives any notice or advice
from any governmental agency or any source whatsoever with respect to Asbestos
on, affecting or installed on the Property, Borrower shall immediately notify
Lender. Borrower shall conduct and complete all investigations, studies,
sampling, and testing, and all remedial actions necessary to manage and remove
all Asbestos from the Property in accordance with all applicable federal, state
and local laws, ordinances, rules and regulations. The obligations and
liabilities of Borrower under this paragraph 35 shall survive any entry of a
judgment of foreclosure, the sale of the Property pursuant to the exercise of a
power of sale, or delivery of a deed in lieu of foreclosure of this Security
Instrument.
36. Indemnification. Borrower shall protect, defend, indemnify and save
harmless Lender from and against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including without limitation
reasonable attorneys' fees and expenses), imposed upon or incurred by or
asserted against Lender (except any liability, obligation, claim, damage,
penalty, cause of action, cost or expense imposed upon or incurred by Lender by
reason of the gross negligence or willful misconduct of Lender) by reason of (a)
ownership of this Security Instrument, the Property or any interest therein
arising pursuant to the terms of this Security Instrument or receipt of any
Rents; (b) any accident, injury to or death of persons or loss of or damage to
property occurring in, on or about the Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) any use, nonuse or condition in, on or about the Property or any
part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (d) any failure on the part of Borrower to
perform or comply with any of the terms of this Security Instrument; (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Property or any part thereof; (f) the failure of any
person to file timely with the Internal Revenue Service an accurate Form 1099-B,
Statement for Recipients of Proceeds from Real Estate, Broker and Barter
Exchange Transactions, which may be required in connection with this Security
Instrument, or to supply a copy thereof in a timely fashion to the recipient of
the proceeds of the transaction in connection with which this Security
Instrument is made; (g) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release of any Hazardous
Materials on, from, or affecting the Property or any other property or the
presence of Asbestos on the Property; (h) any personal injury (including
wrongful death) or property damage (real or personal) arising out of or related
to such Hazardous Materials or Asbestos; (i) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Materials or
Asbestos; (j) the failure of Borrower to comply with the terms of the O&M Plan
(hereinafter defined); or (k) any violation of laws, orders, regulations,
requirements, or demands of government authorities, which are based upon or in
any way related to such Hazardous Materials or Asbestos including, without
limitation, the costs and expenses of any remedial action required by such
governmental authorities, attorney and consultant fees, investigation and
laboratory fees, court costs, and litigation expenses. Any amounts payable to
Lender by reason of the application of this paragraph 36 shall be secured by
this Security Instrument and shall become immediately due and payable upon
demand and shall bear interest at the Default Rate commencing on the tenth
(10th) day following such demand until paid. The obligations and liabilities of
Borrower under this paragraph 36 shall survive any termination, satisfaction,
assignment, entry of a judgment of foreclosure or delivery of a deed in lieu of
foreclosure of this Security Instrument.
37. Notices. All notices or other written communications hereunder shall
be deemed to have been properly given (i) upon delivery, if delivered in person
or by facsimile transmission with receipt acknowledged on a Business Day (or if
not on a Business Day, such notice will be deemed given on the next Business
Day) by the recipient thereof, (ii) one (1) Business Day (hereinafter defined)
after having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower: VMS Apartment Portfolio Associates, II
c/o Insignia Financial Group, Inc.
One Insignia Financial Plaza
Greenville, South Carolina 29601
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Insignia Financial Group, Inc.
One Insignia Financial Plaza
Greenville, South Carolina 29601
Attention: ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: ▇▇▇▇▇▇ Brothers Holdings Inc.
Three World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Commercial Contract Finance
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇/40th Floor
New York, New York 10048
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Trustee: Commonwealth Land Title Insurance Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile:
38. Authority. (a) ▇▇▇▇▇▇▇▇ (and the undersigned representative of
▇▇▇▇▇▇▇▇, if any) has full power, authority and legal right to execute this
Security Instrument, and to mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, hypothecate, assign and grant a security
interest in the Property pursuant to the terms hereof and to keep and observe
all of the terms of this Security Instrument on Borrower's part to be performed.
(b) Borrower represents and warrants that Borrower is not a "foreign
person" within the meaning of 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.
39. Waiver of Notice. Borrower shall not be entitled to any notices of
any nature whatsoever from Lender and Trustee except with respect to matters for
which this Security Instrument specifically and expressly provides for the
giving of notice by Lender or Trustee to Borrower and except with respect to
matters for which Lender or Trustee is required by applicable law to give
notice, and Borrower hereby expressly waives the right to receive any notice
from Lender or Trustee with respect to any matter for which this Security
Instrument does not specifically and expressly provide for the giving of notice
by ▇▇▇▇▇▇ or Trustee to Borrower.
40. Remedies of Borrower. In the event that a claim or adjudication is
made that ▇▇▇▇▇▇ has acted unreasonably or unreasonably delayed acting in any
case where by law or under the Note, this Security Instrument or the Other
Security Documents, it has an obligation to act reasonably or promptly, Lender
shall not be liable for any monetary damages, and ▇▇▇▇▇▇▇▇'s remedies shall be
limited to injunctive relief or declaratory judgment.
41. Sole Discretion of Lender. Wherever pursuant to this Security
Instrument, Lender exercises any right given to it to approve or disapprove, or
any arrangement or term is to be satisfactory to Lender, the decision of Lender
to approve or disapprove or to decide that arrangements or terms are satis-
factory or not satisfactory shall be in the sole discretion of Lender, except as
may be otherwise expressly and specifically provided herein.
42. Non-Waiver. The failure of Lender or Trustee to insist upon strict
performance of any term hereof shall not be deemed to be a waiver of any term of
this Security Instrument. Borrower shall not be relieved of Borrower's
obligations hereunder by reason of (a) the failure of Lender or Trustee to
comply with any request of Borrower or Guarantors to take any action to
foreclose this Security Instrument or otherwise enforce any of the provisions
hereof or of the Note or the Other Security Documents, (b) the release,
regardless of consideration, of the whole or any part of the Property, or of any
person liable for the Debt or any portion thereof, or (c) any agreement or
stipulation by Lender extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Security Instrument or the Other
Security Documents. Lender may resort for the payment of the Debt to any other
security held by ▇▇▇▇▇▇ in such order and manner as Lender, in its discretion,
may elect. Lender or Trustee may take action to recover the Debt, or any
portion thereof, or to enforce any covenant hereof without prejudice to the
right of Lender or Trustee thereafter to foreclose this Security Instrument.
The rights and remedies of Lender and Trustee under this Security Instrument
shall be separate, distinct and cumulative and none shall be given effect to the
exclusion of the others. No act of Lender or Trustee shall be construed as an
election to proceed under any one provision herein to the exclusion of any other
provision. Lender and Trustee shall not be limited exclusively to the rights
and remedies herein stated but shall be entitled to every right and remedy now
or hereafter afforded at law or in equity.
43. No Oral Change. This Security Instrument, and any provisions hereof,
may not be modified, amended, waived, extended, changed, discharged or
terminated orally or by any act or failure to act on the part of Borrower or
Lender, but only by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver, extension, change, discharge
or termination is sought.
44. Liability. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several. The foregoing sentence, however, is not intended to affect the limited
liability of any limited partner or stockholder or member of Borrower afforded
by applicable partnership or corporate law. This Security Instrument shall be
binding upon and inure to the benefit of ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ and their
respective successors and assigns forever.
45. Inapplicable Provisions. If any term, covenant or condition of the
Note or this Security Instrument is held to be invalid, illegal or unenforceable
in any respect, the Note and this Security Instrument shall be construed without
such provision.
46. Headings, etc. The headings and captions of various paragraphs of
this Security Instrument are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
47. Duplicate Originals. This Security Instrument may be executed in any
number of duplicate originals and each such duplicate original shall be deemed
to be an original.
48. Definitions. Unless the context clearly indicates a contrary intent
or unless otherwise specifically provided herein, words used in this Security
Instrument may be used interchangeably in singular or plural form and the word
"Borrower" shall mean "each Borrower and any subsequent owner or owners of the
Property or any part thereof or any interest therein," the word "Lender" shall
mean "Lender and any subsequent holder of the Note," the word "Trustee" shall
mean "Trustee and any subsequent holder of this Security Instrument," the word
"Note" shall mean "the Note and any other evidence of indebtedness secured by
this Security Instrument," the word "person" shall include an individual,
corporation, partnership, trust, unincorporated association, government,
governmental authority, and any other entity, and the words "Property" shall
include any portion of the Property and any interest therein. Whenever the
context may require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and pronouns
shall include the plural and vice versa.
49. CHOICE OF LAW. THIS SECURITY INSTRUMENT SHALL BE DEEMED TO BE A
CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE OF NEW YORK AND SHALL IN
ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH RESPECT TO THE
ATTACHMENT, CREATION, PERFECTION, PRIORITY AND ENFORCEMENT OF THE LIEN OF THIS
SECURITY INSTRUMENT, THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED SHALL
APPLY.
50. Exculpation. Lender shall not enforce the liability and obligation of
Borrower to perform and observe the obligations contained in the Note or this
Security Instrument by any action or proceeding wherein a money judgment shall
be sought against Borrower or any general or limited partner or member of
Borrower (hereafter collectively referred to as the "Exculpated Parties"),
except that Lender may bring a foreclosure action, action for specific
performance or other appropriate action or proceeding to enable Lender to
enforce and realize upon this Security Instrument, the Other Security Documents,
and the interest in the Property, the Rents and any other collateral given to
Lender created by this Security Instrument and the Other Security Documents;
provided, however, that any judgment in any such action or proceeding shall be
enforceable against the Exculpated Parties only to the extent of Borrower's
interest in the Property, in the Rents and in any other collateral given to
Lender. ▇▇▇▇▇▇, by accepting the Note and this Security Instrument, agrees that
it shall not sue for, seek or demand any deficiency judgment against the
Exculpated Parties in any such action or proceeding, under or by reason of or in
connection with the Note, the Other Security Documents or this Security
Instrument. The provisions of this paragraph shall not, however, (i) constitute
a waiver, release or impairment of any obligation evidenced or secured by the
Note, the Other Security Documents or this Security Instrument; (ii) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under this Security Instrument; (iii) affect the
validity or enforceability of any guaranty made in connection with the Note,
this Security Instrument, or the Other Security Documents; (iv) impair the right
of Lender to obtain the appointment of a receiver; (v) impair the enforcement of
the Assignment of Leases and Rents executed in connection herewith; (vi) impair
the right of Lender to bring suit with respect to fraud or intentional
misrepresentation by the Exculpated Parties or any other person or entity in
connection with the Note, this Security Instrument or the Other Security
Documents; (vii) impair the right of Lender to obtain the Rents received, and
not applied to the operating expenses of the Property, by any of the Exculpated
Parties after the occurrence of an Event of Default; (viii) impair the right of
Lender to bring suit with respect to the Exculpated Parties' misappropriation of
tenant security deposits or Rents collected in advance; (ix) impair the right of
Lender to obtain insurance proceeds or condemnation awards due to Lender under
this Security Instrument; (x) impair the right of Lender to enforce the
provisions of sub-paragraphs 36(g) through 36 (k), inclusive and paragraphs 34
and 35 of this Security Instrument against the Borrower (excluding any general
or limited partner or member thereof); or (xi) impair the right of Lender to
recover any part of the Debt from the Borrower (excluding the general and
limited partners and members of Borrower), following the breach of any covenant
contained in paragraph 9 or 55 hereof.
51. Intentionally Deleted.
52. Operations and Maintenance Plan. If required by ▇▇▇▇▇▇, Borrower
shall within thirty (30) days of the date hereof deliver to Lender an operation
and maintenance plan (the "O&M Plan") with respect to the maintenance or removal
of any asbestos, lead based paint, hazardous and toxic wastes and substances,
PCB's and storage tanks on the Property, which O&M Plan shall appoint an
"Program Manager" in charge of managing all asbestos-related activities on the
Property. Borrower shall (i) diligently perform and observe all of the terms,
covenants and conditions of the O&M Plan on the part of Borrower to be performed
and observed to the end that all things shall be done which are necessary to
keep unimpaired the rights of Borrower under the O&M Plan and (ii) promptly
notify Lender of the giving of any notice to Borrower of any default by the
Program Manager in the performance or observance of any of the terms, covenants
or conditions of the O&M Plan on the part of the Program Manager to be performed
and observed and deliver to Lender a true copy of each such notice. Lender
shall have the right to approve any O&M Plan which may affect the Property.
▇▇▇▇▇▇'s requirement that Borrower develop and comply with the O&M Plan shall
not be deemed to constitute a waiver or a modification of any of Borrower's
covenants and agreements with respect to paragraphs 34 or 35 hereof.
53. Management Agreements. The Improvements have been operated under
the terms and conditions of that certain management agreement entered into
between Borrower and the manager (the "Manager") set forth therein delivered to,
and approved by, Lender (hereinafter, together with any renewals or replacements
thereof, being referred to as the "Management Agreement"). ▇▇▇▇▇▇▇▇
acknowledges that ▇▇▇▇▇▇ has examined and relied on the Manager's experience in
operating properties such as the Property in agreeing to make the loan secured
hereby, and that ▇▇▇▇▇▇ will continue to rely on the Manager's management of the
Property as a means of maintaining the value of the Property as security for
repayment of the Debt. Borrower shall (i) diligently perform and observe all of
the terms, covenants and conditions of the Management Agreement on the part of
Borrower to be performed and observed to the end that all things shall be done
which are necessary to keep unimpaired the rights of Borrower under the
Management Agreement and (ii) promptly notify Lender of the giving of any notice
to Borrower of any default by Borrower in the performance or observance of any
of the terms, covenants or conditions of the Management Agreement on the part of
Borrower to be performed and observed and deliver to Lender a true copy of each
such notice. Borrower shall not surrender the Management Agreement, consent to
the assignment by the Manager of its rights and obligations under the Management
Agreement, or terminate or cancel the Management Agreement or modify, change,
supplement, alter or amend the Management Agreement, in any respect, either
orally or in writing, and Borrower hereby assigns to Lender as further security
for the payment of the Debt and for the performance and observance of the terms,
covenants and conditions of this Security Instrument, all the rights, privileges
and prerogatives of Borrower to surrender the Management Agreement or to
terminate, cancel, modify, change, supplement, alter or amend the Management
Agreement in any respect, and any such surrender of the Management Agreement or
termination, cancellation, modification, change, supplement, alteration or
amendment of the Management Agreement without the prior consent of Lender shall
be void and of no force and effect, provided, however, that this provision shall
not limit the Manager's right to assign any or the Borrower's right to consent
to any assignment by Manager of any revenues deriving from the Management
Agreement. If Borrower shall default in the performance or observance of any
material term, covenant or condition of the Management Agreement on the part of
Borrower to be performed or observed, then, without limiting the generality of
the other provisions of this Security Instrument, and without waiving or
releasing Borrower from any of its obligations hereunder, Lender shall have the
right, but shall be under no obligation, to pay any sums and to perform any act
or take any action as may be appropriate to cause all the terms, covenants and
conditions of the Management Agreement on the part of Borrower to be performed
or observed to be promptly performed or observed on behalf of Borrower, to the
end that the rights of Borrower in, to and under the Management Agreement shall
be kept unimpaired and free from default. Lender and any person designated by
Lender shall have, and are hereby granted, the right to enter upon the Property
at any time and from time to time for the purpose of taking any such action. If
the Manager under the Management Agreement shall deliver to Lender a copy of any
notice sent to Borrower of default under the Management Agreement, such notice
shall constitute full protection to Lender for any action taken or omitted to be
taken by Lender in good faith, in reliance thereon. Borrower shall, from time
to time, use its best efforts to obtain from the Manager under the Management
Agreement such certificates of estoppel with respect to compliance by Borrower
with the terms of the Management Agreement as may be requested by ▇▇▇▇▇▇.
Borrower shall exercise each individual option, if any, to extend or renew the
term of the Management Agreement upon demand by ▇▇▇▇▇▇ made at any time within
one (1) year of the last day upon which any such option may be exercised, and
Borrower hereby expressly authorizes and appoints Lender its attorney-in-fact to
exercise any such option in the name of and upon behalf of Borrower, which power
of attorney shall be irrevocable and shall be deemed to be coupled with an
interest.
Notwithstanding anything to the contrary contained herein, ▇▇▇▇▇▇▇▇
may replace the Manager or accept the resignation of the Manager or consent to a
transfer by the Manager, provided:
(1) No Event of Default shall have occurred and be continuing;
(2) the new manager or holder of the stock or partnership
interest shall be a person, firm or corporation whose character,
financial strength, stability and experience shall be similar to the
existing Manager and otherwise have Adequate Real Estate Experience;
(3) the new manager shall deliver all organizational
documentation and other materials evidencing its Adequate Real Estate
Experience and otherwise be acceptable to Lender;
(4) the Borrower shall pay the reasonable costs and expenses of
▇▇▇▇▇▇ and ▇▇▇▇▇▇'s counsel incurred in connection with the review and
approval of such new manager; and
(5) the terms of any new management agreement affecting the
Property must be acceptable to Lender in all respects, provided,
however, if the terms and conditions of the new management agreement
shall be substantially similar to the Management Agreement and the
management fee due thereunder is no greater than the fee provided in
the Management Agreement, such new management agreement shall be
deemed acceptable to Lender.
54. Rating Agencies. The term "Rating Agencies" shall mean any nationally
recognized rating agency(s) sought by Lender to obtain ratings with respect to
this Security Instrument or the Securitization (hereinafter defined). Lender
intends to, but is not required to, either (i) deposit this Security Instrument,
the Note and the Other Security Documents in a trust in exchange for the
issuance, to or at the direction of the Lender, of multiple classes of mortgage
pass-through certificates or other securities evidencing the entire beneficial
ownership interest in such trust or (ii) issue multiple classes of bonds (also,
"Securities") representing non-recourse obligations secured by this Security
Instrument, the Note and the Other Security Documents (the "Securities"). An
election will be made under the federal tax code to treat this Security
Instrument, the Note and the Other Security Documents and the related assets as
one or more real estate mortgage investment conduits. The Securities may be
sold either in a public offering or a private placement. The foregoing events
and all matters incidental thereto are herein referred to as the
"Securitization".
55. Single Purpose Entity. Borrower covenants and agrees that it has not
and shall not: (a) engage in any business or activity other than the ownership,
operation and maintenance of the Property and activities incidental thereto; (b)
acquire or own any material assets other than (i) the Property, and (ii) such
incidental Personal Property as may be necessary for the operation of the
Property; (c) merge into or consolidate with any person or entity or dissolve,
terminate or liquidate in whole or in part, transfer or otherwise dispose of all
or substantially all of its assets or change its legal structure, without in
each case Lender's consent; (d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the laws
of the jurisdiction of its organization or formation, or without the prior
written consent of Lender, amend, modify, terminate or fail to comply with the
provisions of Borrower's partnership agreement, articles or certificate of
incorporation or similar organizational documents, as the case may be, as same
may be further amended or supplemented, if such amendment, modification,
termination or failure to comply would adversely affect the ability of Borrower
to perform its obligations hereunder, under the Note or under the Other Security
Documents; (e) own any subsidiary or make any investment in, any person or
entity without the consent of Lender; (f) commingle its assets with the assets
of any of its general partners, affiliates, members, principals or of any other
person or entity; (g) incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than the Debt, except with
respect to trade payables in the ordinary course of its business of owning and
operating the Property, provided that such debt is paid when due, and any
Affiliate Advance or the Subordinate Debt; (h) fail to maintain its records,
books of account and bank accounts separate and apart from those of the general
partners, principals, members and affiliates of Borrower, the affiliates of a
general partner or member of Borrower, and any other person or entity; (i) enter
into any contract or agreement with any general partner, principal, member or
affiliate of Borrower, Guarantor or Indemnitor, or any general partner,
principal, member or affiliate thereof, except upon terms and conditions that
are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any general
partner, principal, member or affiliate of Borrower, Guarantor or Indemnitor, or
any general partner, principal, member or affiliate thereof; (j) seek the
dissolution or winding up in whole, or in part, of Borrower; (k) maintain its
assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any general partner,
principal, member or affiliate of Borrower, or any general partner, principal,
member or affiliate thereof or any other person; (l) hold itself out to be
responsible for the debts of another person; (m) make any loans or advances to
any third party, including any general partner, principal, member or affiliate
of Borrower, or any general partner, principal, member or affiliate thereof; (n)
fail either to hold itself out to the public as a legal entity separate and
distinct from any other entity or person or to conduct its business solely in
its own name in order not (i) to mislead others as to the identity with which
such other party is transacting business, or (ii) to suggest that Borrower is
responsible for the debts of any third party (including any general partner,
principal, member or affiliate of Borrower, or any general partner, principal,
member or affiliate thereof); (o) fail to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations; or (p) file or
consent to the filing of any petition, either voluntary or involuntary, to take
advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit of creditors.
The covenants set forth in (a) through (p) above shall apply to the
corporate general partner of Borrower (the "Controlling Party") provided that
all references to "Property" set forth above shall, with respect to the
Controlling Party, be deemed to refer to its general partnership interest in
Borrower.
56. Concerning the Trustee. Trustee shall be under no duty to take
any action hereunder except as expressly required hereunder or by law, or to
perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Security
Instrument, covenants to perform and fulfill the trusts herein created, being
liable, however, only for willful negligence or misconduct, and hereby waives
any statutory fee and agrees to accept reasonable compensation, in lieu thereof,
for any services rendered by Trustee in accordance with the terms hereof.
Trustee may resign at any time upon giving thirty (30) days' notice to ▇▇▇▇▇▇▇▇
and to Lender. Lender may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal, resignation,
refusal to act, or inability to act of Trustee, or in its sole discretion for
any reason whatsoever Lender may, without notice and without specifying any
reason therefor and without applying to any court, select and appoint a
successor trustee, by an instrument recorded wherever this Security Instrument
is recorded and all powers, rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor. Such substitute
trustee shall not be required to give bond for the faithful performance of the
duties of Trustee hereunder unless required by ▇▇▇▇▇▇. The procedure provided
for in this paragraph for substitution of Trustee shall be in addition to and
not in exclusion of any other provisions for substitution, by law or otherwise.
57. Trustee's Fees. Borrower shall pay all costs, fees and expenses
incurred by Trustee and Trustee's agents and counsel in connection with the
performance by Trustee of Trustee's duties hereunder and all such costs, fees
and expenses shall be secured by this Security Instrument.
58. Certain Rights. With the approval of ▇▇▇▇▇▇, Trustee shall
have the right to take any and all of the following actions: (i) to select,
employ, and advise with counsel (who may be, but need not be, counsel for
Lender) upon any matters arising hereunder, including the preparation,
execution, and interpretation of the Note, this Security Instrument or the
Other Security Documents, and shall be fully protected in relying as to
legal matters on the advice of counsel, (ii) to execute any of the trusts and
powers hereof and to perform any duty hereunder either directly or through
his/her agents or attorneys, (iii) to select and employ, in and about the
execution of his/her duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of Trustee, and Trustee shall not be answerable for any
act, default, negligence, or misconduct of any such accountant, engineer or
other expert, agent or attorney-in-fact, if selected with reasonable area, or
for any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever, except for
Trustee's gross negligence or bad faith, and (iv) any and all other lawful
action as Lender may instruct Trustee to take to protect or enforce ▇▇▇▇▇▇'s
rights hereunder. Trustee shall not be personally liable in case of entry by
Trustee, or anyone entering by virtue of the powers herein granted to Trustee,
upon the Property for debts contracted for or liability or damages incurred in
the management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by Trustee
in good faith to be genuine. Trustee shall be entitled to reimbursement for
actual expenses incurred by Trustee in the performance of ▇▇▇▇▇▇▇'s duties
hereunder and to reasonable compensation for such of Trustee's services
hereunder as shall be rendered.
59. Retention of Money. All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by applicable law) and Trustee shall be
under no liability for interest on any moneys received by Trustee hereunder.
60. Perfection of Appointment. Should any deed, conveyance, or
instrument of any nature be required from Borrower by any Trustee or substitute
trustee to more fully and certainly vest in and confirm to the Trustee or
substitute trustee such estates rights, powers, and duties, then, upon request
by the Trustee or substitute trustee, any and all such deeds, conveyances and
instruments shall be made, executed, acknowledged, and delivered and shall be
caused to be recorded and/or filed by Borrower.
61. Succession Instruments. Any substitute trustee appointed
pursuant to any of the provisions hereof shall, without any further act, deed,
or conveyance, become vested with all the estates, properties, rights, powers,
and trusts of its or his/her predecessor in the rights hereunder with like
effect as if originally named as Trustee herein; but nevertheless, upon the
written request of Lender or of the substitute trustee, the Trustee ceasing to
act shall execute and deliver any instrument transferring to such substitute
trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver any of the property and moneys held by such Trustee to the
substitute trustee so appointed in the Trustee's place.
62. California Provisions.
(a) In the event of any inconsistencies between the terms and
conditions of this Section 62 of this Security Instrument and any other terms of
this Security Instrument, the terms and conditions of this Section 62 shall
control and be binding.
(b) The word "grantor" is hereby deleted wherever it appears in this
Security Instrument and the word "Trustor" is substituted therefor.
(c) The paragraphs beginning "PROVIDED, HOWEVER" appearing at the end
of the Section of this Security Agreement entitled "Creation of Lien and Grant
of Security" is hereby deleted in its entirety and the following paragraph is
substituted therefor:
PROVIDED, HOWEVER, upon written request of ▇▇▇▇▇▇ stating
that all sums secured hereby have been paid, that Borrower has
well and truly abided by and complied with each and every
covenant and condition set forth herein and in the Note, and upon
the surrendering of this Security Instrument and the Note to
Trustee for cancellation and retention and upon payment by
Borrower of Trustee's fees, Trustee shall reconvey to Borrower,
or to the person or persons legally entitled thereto, without
warranty, any portion of the estate hereby granted and then held
hereunder. The recitals in such reconveyance of any matters or
facts shall be conclusive proof of the truthfulness thereof. The
grantee in any reconveyance may be described as "the person or
persons legally entitled thereto.
(d) The first sentence of Section 29 is hereby deleted and the
following is substituted therefor:
This Security Instrument is both a real property deed of
trust and a "security agreement" within the meaning of the
Uniform Commercial Code and is being recorded as a fixture
filing. With respect to said fixture filing, (i) the debtor is
▇▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇'s name and address appear in the first
paragraph of this Security Instrument, and (ii) the secured party
is ▇▇▇▇▇▇, and ▇▇▇▇▇▇'s name and address appear in the first
paragraph of the Security Instrument. The Mortgaged Property
includes both real and personal property and all other rights and
interests, whether tangible or intangible in nature, of Borrower
in the Mortgaged Property, including, but not limited to, the
Leases and Rents and all proceeds thereof and all fixtures.
(e) Borrower expressly agrees that upon a violation of Section 9 of
this Security Agreement by ▇▇▇▇▇▇▇▇ and acceleration of the principal balance of
the Note because of such violation, Borrower will pay all sums required to be
paid in connection with a prepayment, if any, as described in the Note, herein
imposed on prepayment after an Event of Default and acceleration of the
principal balance. Borrower expressly acknowledges that Borrower has received
adequate consideration for the foregoing agreement.
(f) POWER OF SALE.
After an Event of Default, the Lender, its successors and assigns, may
elect to cause the Mortgaged Property or any part thereof to be sold
as follows:
(1) Lender may proceed as if all of the Mortgaged
Property were real property, in accordance with subparagraph
(d) below, or Lender may elect to treat any of the Mortgaged
Property which consists of a right in action or which is
property that can be severed from the Land without causing
structural damage thereto as if the same were personal
property, and dispose of the same in accordance with
subparagraph (3) below, separate and apart from the sale of
real property, the remainder of the Mortgaged Property being
treated as real property.
(2) Lender may cause any such sale or other
disposition to be conducted immediately following the
expiration of any grace period, if any, herein provided (or
immediately upon the expiration of any redemption period
required by law) or Lender may delay any such sale or other
disposition for such period of time as Lender deems to be in
its best interest. Should Lender desire that more than one
such sale or other disposition be conducted, Lender may at
its option, cause the same to be conducted simultaneously,
or successively on the same day, or at such different days
or times and in such order as Lender may deem to be in its
best interest.
(3) Should Lender elect to cause any of the Mortgaged
Property to be disposed of as personal property as permitted
by subparagraph (1) above, it may dispose of any part hereof
in any manner now or hereafter permitted by Article 9 of the
Uniform Commercial Code or in accordance with any other
remedy provided by law. Both Borrower and Lender shall be
eligible to purchase any part or all of such property at any
such disposition. Any such disposition may be either public
or private as Lender may so elect, subject to the provisions
of the Uniform Commercial Code. Lender shall give Borrower
at least five (5) days' prior written notice of the time and
place of any public sale or other disposition of such
property or of the time at or after which any private sale
or any other intended disposition is to be made, and if such
notice is sent to Borrower as provided in subparagraph (11)
hereof, it shall constitute reasonable notice to Borrower.
(4) Should Lender elect to sell the Mortgaged Property
which is real property or which ▇▇▇▇▇▇ has elected to treat
as real property, upon such election Lender or Trustee shall
give such Notice of Default and Election to Sell as may then
be required by law. Thereafter, upon the expiration of such
time and the giving of such Notice of Sale as may then be
required by law, Trustee, at the time and place specified in
the Notice of Sale, shall sell such Mortgaged Property, or
any portion thereof specified by ▇▇▇▇▇▇, at public auction
to the highest bidder for cash in lawful money of the United
States, subject, however, to the provisions of subparagraph
(9) hereof. Trustee for good cause may, and upon request of
Lender shall, from time to time, postpone the sale by public
announcement thereof at the time and place noticed therefor.
If the Mortgaged Property consists of several lots or
parcels, Lender may designate the order in which such lots
or parcels shall be offered for sale or sold. Any person,
including Borrower, Trustee or Lender, may purchase at the
sale. Upon any sale Trustee shall execute and deliver to
the purchaser or purchasers a deed or deeds conveying the
property so sold, but without any covenant or warranty
whatsoever, express or implied, whereupon such purchaser or
purchasers shall be let into immediate possession.
(5) In the event of a sale or other disposition of any
such property, or any part thereof, and the execution of a
deed or other conveyance, pursuant thereto, the recitals
therein of facts, such as a default, the giving of notice of
default and notice of sale, demand that such sale should be
made, postponement of sale, terms of sale, sale, purchaser,
payment of purchase money, and any other fact affecting the
regularity or validity of such sale or disposition, shall be
conclusive proof of the truth of such facts; and any such
deed of conveyance shall be conclusive against all persons
as to such facts recited therein.
(6) Lender and/or Trustee shall apply the proceeds of
any sale or disposition hereunder to payment of the
following: (A) the expenses of such sale or disposition
together with Trustee's fees and reasonable attorneys' fees,
and the actual cost of publishing, recording, mailing and
posting notice; (B) the cost of any search and/or other
evidence of title procured in connection therewith and
transfer tax on any deed or conveyance; (C) all sums
expended under the terms hereof, not then repaid, with
accrued interest in the amount provided herein; (D) all
other sums secured hereby; and (E) the remainder if any to
the person or persons legally entitled thereto.
(7) The acknowledgment of the receipt of the purchase
money, contained in any deed or conveyance executed as
aforesaid, shall be sufficient discharge from all
obligations to see to the proper application of the
consideration therefor.
(8) Borrower hereby expressly waives any right which
it may have to direct the order in which any of the
Mortgaged Property shall be sold in the event of any sale or
sales pursuant hereto.
(9) Upon any sale of the Mortgaged Property, whether
made under a power of sale herein granted or pursuant to
judicial proceedings, if the holder of the Note is a
purchaser at such sale, it shall be entitled to use and
apply all or any portion of the indebtedness then secured
hereby for or in settlement or payment of all or any portion
of the purchase price of the property purchased, and, in
such case, this Security Instrument, the Note and documents
evidencing expenditures secured hereby shall be presented to
the person conducting the sale in order that the amount of
said indebtedness so used or applied may be credited ▇▇▇▇▇▇▇
as having been paid.
(10) No remedy herein conferred upon or reserved to
Trustee or Lender is intended to be exclusive of any other
remedy herein or by law provided, but each shall be cumula-
tive and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity
or by statute. Every power or remedy given by this
instrument to Trustee or Lender, or to which either of them
may be otherwise entitled, may be exercised from time to
time and as often as may be deemed expedient by Trustee or
▇▇▇▇▇▇, and either of them may pursue inconsistent remedies.
If there exists additional security for the performance of
the obligations secured hereby, the holder of the Note, at
its sole option and without limiting or affecting any rights
or remedies hereunder, may exercise any of the rights and
remedies to which it may be entitled hereunder either
concurrently with whatever other rights it may have in
connection with such other security or in such order as it
may determine.
(11) Borrower hereby requests that every notice of
default and every notice of sale be given in accordance with
the provisions of Section 37 hereof except as otherwise
required by statute. Borrower may, from time to time,
change the address to which notice of default and sale
hereunder shall be sent by both filing a request therefor,
in the manner provided by the California Civil Code, Section
2924b, and sending a copy of such request to ▇▇▇▇▇▇, its
successors or assigns in accordance with the provisions of
Section 37 hereof.
(g) Trustee accepts the trust created by this Security Instrument
when this Security Instrument, duly executed and acknowledged, is made a public
record as provided by law.
(h) Trustee is not obligated to notify any party hereto of pending
sale under any other deed of trust or of any action or proceeding in which
Borrower, Lender or Trustee shall be a party, unless brought by Trustee.
(i) Trustee shall be under no duty to take any action hereunder except
as expressly required hereunder or by law, or to perform any act which would
involve Trustee in any expense or liability or to institute or defend any suit
in respect hereof, unless properly indemnified to Trustee's reasonable
satisfaction. Trustee, by acceptance of this Security Instrument, covenants to
perform and fulfill the trusts herein created, being liable, however, only for
gross negligence or willful misconduct, and hereby waives any statutory fee and
agrees to accept reasonable compensation, in lieu thereof, for any services
rendered by Trustee in accordance with the terms hereof. Trustee may resign at
any time upon giving thirty (30) days' notice to ▇▇▇▇▇▇▇▇ and to Lender. Lender
may remove Trustee at any time or from time to time and select a successor
trustee. In the event of the death, removal, resignation, refusal to act, or
inability to act of Trustee, or in its sole discretion for any reason whatsoever
Lender may, without notice and without specifying any reason therefor and
without applying to any court, select and appoint a successor trustee, by an
instrument recorded wherever this Security Instrument is recorded and all
powers, rights, duties and authority of Trustee, as aforesaid, shall thereupon
become vested in such successor. Such substitute trustee shall not be required
to give bond for the faithful performance of the duties of Trustee hereunder
unless required by ▇▇▇▇▇▇. The procedure provided for in this paragraph for
substitution of Trustee shall be in addition to and not in exclusion of any
other provisions for substitution, by law or otherwise.
(j) Trustee shall be entitled to reasonable compensation for all
servicesrendered or expenses incurred in the administration or execution of the
trusts hereby created and ▇▇▇▇▇▇▇▇ hereby agrees to pay same. Trustee and
▇▇▇▇▇▇ shall be indemnified, held harmless and reimbursed by Borrower for any
liability, damage or expense, including attorneys' fees and amounts paid in
settlement, which they or either of them may incur or sustain in the execution
of this trust or in the doing of any act which they, or either of them, are
required or permitted to do by the terms hereof or by law.
(k) Lender may substitute the Trustee hereunder in any manner now or
hereafter provided by law, or in lieu thereof Lender may from time to time, by
an instrument in writing, substitute a successor or successors to any Trustee
named herein or acting hereunder, which instrument, executed and acknowledged by
▇▇▇▇▇▇ and recorded in the Office of the Recorder of Los Angeles County, shall
be conclusive proof of proper substitution of such successor Trustee or
Trustees, who shall thereupon and without conveyance from the predecessor
Trustee, succeed to all its title, estate, rights, powers and duties. Such
instrument must contain the name of the original Borrower, Trustee and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, the book and page where this Security Instrument is recorded, and the
name and address of the new Trustee.
(l) Section 49 entitled "CHOICE OF LAW" is hereby deleted in its
entirety and, subject to the exculpations contained in this Security Instrument,
the following is substituted therefor:
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY
INSTRUMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE INTERNAL LAW OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICTS-OF-LAW RULES AND PRINCIPALS OF SUCH STATE (EXCEPT FOR SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAW OF NEW YORK). ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇
FURTHER ACKNOWLEDGE, AGREE AND STIPULATE THAT THE STATE OF NEW YORK HAS A
SUBSTANTIAL RELATIONSHIP TO THE PARTIES INVOLVED IN THIS SECURITY
INSTRUMENT. NOTWITHSTANDING THE FOREGOING, THE PARTIES FURTHER AGREE THAT:
(1) THE PROCEDURES GOVERNING THE ENFORCEMENT BY ▇▇▇▇▇▇ AND TRUSTEE OF
PROVISIONAL REMEDIES AGAINST BORROWER DIRECTLY RELATING TO THE MORTGAGED
PROPERTY ENCUMBERED HEREBY, INCLUDING, BY WAY OF ILLUSTRATION BUT NOT
LIMITATION, ANY SUCH ACTIONS FOR REPLEVIN, FOR CLAIM AND DELIVERY OF
Mortgaged Property, OR FOR THE APPOINTMENT OF A RECEIVER, SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF CALIFORNIA; AND
(2) CALIFORNIA LAW SHALL APPLY TO THE EXTENT, BUT ONLY TO THE EXTENT,
NECESSARY IN ORDER TO CREATE, PERFECT AND FORECLOSE THE SECURITY INTERESTS,
LIENS AND ASSIGNMENTS OF RENTS AND LEASES ARISING UNDER THIS SECURITY
INSTRUMENT; PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION SHALL IN ANY
EVENT BE CONSTRUED TO PROVIDE THAT THE SUBSTANTIVE LAW OF THE STATE OF
CALIFORNIA SHALL APPLY TO THE OBLIGATIONS AND INDEBTEDNESS SECURED BY THIS
SECURITY INSTRUMENT, WHICH ARE AND SHALL CONTINUE TO BE GOVERNED BY THE
SUBSTANTIVE LAW OF THE STATE OF NEW YORK, IN SUCH CONNECTION, THE PARTIES
FURTHER AGREE THAT:
(A) LENDER MAY ENFORCE ITS RIGHTS UNDER THE LOAN DOCUMENTS
(INCLUDING WITHOUT LIMITATION ITS RIGHT TO SUE BORROWER TO COLLECT ANY
OUTSTANDING INDEBTEDNESS OR TO OBTAIN A JUDGMENT AGAINST BORROWER IN
CALIFORNIA, NEW YORK OR OTHER STATES FOR ANY DEFICIENCY PRIOR TO OR
FOLLOWING FORECLOSURE) IN ACCORDANCE WITH NEW YORK LAW, AND IF LENDER
OBTAINS A DEFICIENCY JUDGMENT IN A STATE OTHER THAN IN CALIFORNIA,
THEN LENDER SHALL HAVE THE RIGHT TO ENFORCE SUCH JUDGMENT IN
CALIFORNIA, AS WELL AS IN OTHER STATES;
(B) CALIFORNIA'S USURY LAWS AND ANTIDEFICIENCY, ONE-ACTION AND
SECURITY-FIRST RULES (INCLUDING WITHOUT LIMITATION CALIFORNIA CODE OF
CIVIL PROCEDURE SECTIONS 580A, 580b, 580c, 580d, AND 726) ARE
INAPPLICABLE TO THE OBLIGATIONS AND INDEBTEDNESS SECURED BY THIS
SECURITY INSTRUMENT AND TO THE ENFORCEMENT OR REALIZATION BY LENDER OF
ITS RIGHTS AND REMEDIES RELATING THERETO; AND
(C) SECTION 726 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE SHALL
NOT APPLY (A) TO PREVENT OR LIMIT EXERCISE OR ENFORCEMENT OF ANY OTHER
RIGHTS OR REMEDIES OF LENDER (INCLUDING WITHOUT LIMITATION LENDER'S
RIGHT TO OBTAIN A DEFICIENCY JUDGMENT) EITHER PRIOR TO OR FOLLOWING
FORECLOSURE OR (B) TO PREVENT OR LIMIT ▇▇▇▇▇▇'S RIGHT TO FORECLOSE
JUDICIALLY OR NONJUDICIALLY FOLLOWING ANY EXERCISE OR ENFORCEMENT OF
ANY OTHER RIGHTS OR REMEDIES OF LENDER.
(m) The term "Controlling Party" as used in section 55 shall mean GP
Services XIX, Inc.
IN WITNESS WHEREOF, this Security Instrument has been executed by
Borrower the day and year first above written.
VMS APARTMENT PORTFOLIO ASSOCIATES II, a
California general partnership
By: GP SERVICES XIX, INC.,
a South Carolina corporation,
its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
This instrument prepared by:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇
Two World Trade Center
New York, New York 10048
ACKNOWLEDGEMENT
STATE OF New York )
)
COUNTY OF New York )
I, the undersigned, a Notary Public of the County and State aforesaid,
certify that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, who is known to me, acknowledged before me that
he is Vice President, of GP Services XIX, Inc., a South Carolina corporation,
that by authority duly given and as the act of the corporation in its capacity
as a general partner in and on behalf of VMS Apartment Portfolio Associates II,
a California general partnership, signed the foregoing conveyance, and that
being informed of the contents of the conveyance he in his capacity as such
officer of the Corporation, executed the same voluntarily on behalf of the
Partnership on the day the same bears date.
Given under my hand this the 31st day of December, 1997.
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Notary Public
Name:▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Notary Public, State of New York
No. ▇▇-▇▇▇▇▇▇▇
Qualified in Queens County
Commission Expires September 30, 1998
EXHIBIT A
Legal Description