Prepared by, and after recording return to:
Xxxxxxx X. Xxxxxx
Xxxx & Valentine, L.L.P.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxxx 00000-0000
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(NEBRASKA)
XXXXXX MAE MULTIFAMILY SECURITY INSTRUMENT Form 4028
(NEBRASKA) 4/98
TABLE OF CONTENTS
-----------------
PAGE
1. DEFINITIONS..............................................................................................1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT...............................................................7
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER;
LENDER IN POSSESSION.....................................................................................7
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE
MORTGAGED PROPERTY......................................................................................10
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER
LOAN DOCUMENTS; PREPAYMENT PREMIUM......................................................................12
6. EXCULPATION.............................................................................................12
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.........................................................12
8. COLLATERAL AGREEMENTS...................................................................................13
9. APPLICATION OF PAYMENTS.................................................................................13
10. COMPLIANCE WITH LAWS....................................................................................14
11. USE OF PROPERTY.........................................................................................14
12. PROTECTION OF LENDER'S SECURITY.........................................................................14
13. INSPECTION..............................................................................................15
14. BOOKS AND RECORDS; FINANCIAL REPORTING..................................................................15
15. TAXES; OPERATING EXPENSES...............................................................................17
16. LIENS; ENCUMBRANCES.....................................................................................18
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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(i)
17. PRESERVATION, MANAGEMENT AND MAINTENANCE
OF MORTGAGED PROPERTY...................................................................................18
18. ENVIRONMENTAL HAZARDS...................................................................................19
19. PROPERTY AND LIABILITY INSURANCE........................................................................24
20. CONDEMNATION............................................................................................26
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS
IN BORROWER.............................................................................................27
22. EVENTS OF DEFAULT.......................................................................................30
23. REMEDIES CUMULATIVE.....................................................................................31
24. FORBEARANCE.............................................................................................32
25. LOAN CHARGES............................................................................................32
26. WAIVER OF STATUTE OF LIMITATIONS........................................................................33
27. WAIVER OF MARSHALLING...................................................................................33
28. FURTHER ASSURANCES......................................................................................33
29. ESTOPPEL CERTIFICATE....................................................................................33
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE........................................................33
31. NOTICE..................................................................................................34
32. SALE OF NOTE; CHANGE IN SERVICER........................................................................34
33. SINGLE ASSET BORROWER...................................................................................35
34. SUCCESSORS AND ASSIGNS BOUND............................................................................35
35. JOINT AND SEVERAL LIABILITY.............................................................................35
XXXXXX MAE MULTIFAMILY SECURITY INSTRUMENT Form 4028
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(ii)
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.....................................................35
37. SEVERABILITY; AMENDMENTS................................................................................35
38. CONSTRUCTION............................................................................................35
39. LOAN SERVICING..........................................................................................36
40. DISCLOSURE OF INFORMATION...............................................................................36
41. NO CHANGE IN FACTS OR CIRCUMSTANCES.....................................................................36
42. SUBROGATION.............................................................................................36
43. ACCELERATION; REMEDIES..................................................................................36
44. RECONVEYANCE............................................................................................37
45. SUBSTITUTE TRUSTEE......................................................................................37
46. REQUEST FOR NOTICES.....................................................................................37
47. WAIVER OF TRIAL BY JURY.................................................................................37
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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(iii)
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY
AGREEMENT (the "Instrument") is dated as of the 28th day of October, 1998, among
CAPITAL SENIOR LIVING PROPERTIES 2-GRAMERCY, INC., a corporation organized and
existing under the laws of Delaware, whose address is c/o Capital Senior Living
Corporation, 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, as grantor
("Borrower"), to CHICAGO TITLE INSURANCE COMPANY, c/o Nebraska Title Company,
000 Xxxxx Xxxxx Xxxxx, 0xx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, as trustee
("Trustee"), for the benefit of WMF WASHINGTON MORTGAGE CORP., formerly known as
Washington Mortgage Financial Group, Ltd., a corporation organized and existing
under the laws of Delaware, whose address is 0000 Xxxxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the Land located in the
County of Lancaster, State of Nebraska and described in Exhibit A attached to
this Instrument.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower's Multifamily Note payable to Lender dated as of the date of this
Instrument, and maturing on January 1, 2010, in the principal amount of
$1,980,000.00, and all renewals, extensions and modifications of the
Indebtedness, and the performance of the covenants and agreements of Borrower
contained in the Loan Documents.
Borrower represents and warrants that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to mortgage,
grant, convey and assign the Mortgaged Property, and that the Mortgaged Property
is unencumbered. Borrower covenants that Borrower will warrant and defend
generally the title to the Mortgaged Property against all claims and demands,
subject to any easements and restrictions listed in a schedule of exceptions to
coverage in any title insurance policy issued to Lender contemporaneously with
the execution and recordation of this Instrument and insuring Lender's interest
in the Mortgaged Property.
COVENANTS. Borrower and Lender covenant and agree as follows:
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the following meanings:
(a) "Borrower" means all persons or entities identified as
"Borrower" in the first paragraph of this Instrument, together with
their successors and assigns.
(b) "Collateral Agreement" means any separate agreement
between Borrower and Lender for the purpose of establishing replacement
reserves for the Mortgaged Property, establishing a fund to assure
completion of repairs or improvements specified in that agreement, or
assuring reduction of the outstanding principal balance of the
Indebtedness if the occupancy of or income from the Mortgaged Property
does not increase to a level specified in that agreement, or any other
agreement or agreements between Borrower and Lender which provide for
the establishment of any other fund, reserve or account.
(c) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to
any activities or businesses conducted on or in relation to the
Mortgaged Property.
(d) "Event of Default" means the occurrence of any event
listed in Section 22.
(e) "Fixtures" means all property which is so attached to the
Land or the Improvements as to constitute a fixture under applicable
law, including: machinery, equipment, engines, boilers, incinerators,
installed building materials; systems and equipment for the purpose of
supplying or distributing heating, cooling, electricity, gas, water,
air, or light; antennas, cable, wiring and conduits used in connection
with radio, television, security, fire prevention, or fire detection or
otherwise used to carry electronic signals; telephone systems and
equipment; elevators and related machinery and equipment; fire
detection, prevention and extinguishing systems and apparatus; security
and access control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators, dishwashers,
garbage disposers, washers, dryers and other appliances; light
fixtures, awnings, storm windows and storm doors; pictures, screens,
blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling,
rugs and floor and wall coverings; fences, trees and plants; swimming
pools; and exercise equipment.
(f) "Governmental Authority" means any board, commission,
department or body of any municipal, county, state or federal
governmental unit, or any subdivision of any of them, that has or
acquires jurisdiction over the Mortgaged Property or the use, operation
or improvement of the Mortgaged Property.
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(g) "Hazardous Materials" means petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel
and oil; explosives; flammable materials; radioactive materials;
polychlorinated biphenyls ("PCBs") and compounds containing them; lead
and lead-based paint; asbestos or asbestos-containing materials in any
form that is or could become friable; underground or above-ground
storage tanks, whether empty or containing any substance; any substance
the presence of which on the Mortgaged Property is prohibited by any
federal, state or local authority; any substance that requires special
handling; and any other material or substance now or in the future
defined as a "hazardous substance," "hazardous material," "hazardous
waste," "toxic substance," "toxic pollutant," "contaminant," or
"pollutant" within the meaning of any Hazardous Materials Law.
(h) "Hazardous Materials Laws" means all federal, state, and
local laws, ordinances and regulations and standards, rules, policies
and other governmental requirements, administrative rulings and court
judgments and decrees in effect now or in the future and including all
amendments, that relate to Hazardous Materials and apply to Borrower or
to the Mortgaged Property. Hazardous Materials Laws include, but are
not limited to, the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., the
Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq., the Clean
Water Act, 33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq., and their state
analogs.
(i) "Impositions" and "Imposition Deposits" are defined in
Section 7(a).
(j) "Improvements" means the buildings, structures,
improvements, and alterations now constructed or at any time in the
future constructed or placed upon the Land, including any future
replacements and additions.
(k) "Indebtedness" means the principal of, interest on, and
all other amounts due at any time under, the Note, this Instrument or
any other Loan Document, including prepayment premiums, late charges,
default interest, and advances as provided in Section 12 to protect the
security of this Instrument.
(l) [Intentionally omitted]
(m) "Key Principal" means the natural person(s) or entity
identified as such at the foot of this Instrument, and any person or
entity who becomes a Key Principal after the date of this Instrument
and is identified as such in an amendment or supplement to this
Instrument.
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or
hereafter in force, whether oral or written, covering or affecting the
Mortgaged Property, or any portion of the Mortgaged Property (including
proprietary leases or occupancy agreements if Borrower is a cooperative
housing corporation), and all modifications, extensions or renewals.
(p) "Lender" means the entity identified as "Lender" in the
first paragraph of this Instrument and its successors and assigns, or
any subsequent holder of the Note.
(q) "Loan Documents" means the Note, this Instrument, all
guaranties, all indemnity agreements, all Collateral Agreements, O&M
Programs, and any other documents now or in the future executed by
Borrower, Key Principal, any guarantor or any other person in
connection with the loan evidenced by the Note, as such documents may
be amended from time to time.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and receive
notices under the Note, this Instrument and any other Loan Document,
and otherwise to service the loan evidenced by the Note for the benefit
of Lender. Unless Borrower receives notice to the contrary, the Loan
Servicer is the entity identified as "Lender" in the first paragraph of
this Instrument.
(s) "Mortgaged Property" means all of Borrower's present and
future right, title and interest in and to all of the following:
(i) the Land;
(ii) the Improvements;
(iii) the Fixtures;
(iv) the Personalty;
(v) all current and future rights, including air
rights, development rights, zoning rights and other similar
rights or interests, easements, tenements, rights-of-way,
strips and gores of land, streets, alleys, roads, sewer
rights, waters, watercourses, and appurtenances related to or
benefitting the Land or the
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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Improvements, or both, and all rights-of-way, streets, alleys
and roads which may have been or may in the future be vacated;
(vi) all proceeds paid or to be paid by any insurer
of the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property, whether or not
Borrower obtained the insurance pursuant to Lender's
requirement;
(vii) all awards, payments and other compensation
made or to be made by any municipal, state or federal
authority with respect to the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged
Property, including any awards or settlements resulting from
condemnation proceedings or the total or partial taking of the
Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property under the power of
eminent domain or otherwise and including any conveyance in
lieu thereof;
(viii) all contracts, options and other agreements
for the sale of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property entered
into by Borrower now or in the future, including cash or
securities deposited to secure performance by parties of their
obligations;
(ix) all proceeds from the conversion, voluntary or
involuntary, of any of the above into cash or liquidated
claims, and the right to collect such proceeds;
(x) all Rents and Leases;
(xi) all earnings, royalties, accounts receivable,
issues and profits from the Land, the Improvements or any
other part of the Mortgaged Property, and all undisbursed
proceeds of the loan secured by this Instrument and, if
Borrower is a cooperative housing corporation, maintenance
charges or assessments payable by shareholders or residents;
(xii) all Imposition Deposits;
(xiii) all refunds or rebates of Impositions by any
municipal, state or federal authority or insurance company
(other than refunds applicable to periods before the real
property tax year in which this Instrument is dated);
XXXXXX MAE MULTIFAMILY SECURITY INSTRUMENT Form 4028
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(xiv) all tenant security deposits which have not
been forfeited by any tenant under any Lease; and
(xv) all names under or by which any of the above
Mortgaged Property may be operated or known, and all
trademarks, trade names, and goodwill relating to any of the
Mortgaged Property.
(t) "Note" means the Multifamily Note described on page 1 of
this Instrument, including the Acknowledgment and Agreement of Key
Principal to Personal Liability for Exceptions to Non-Recourse
Liability (if any), and all schedules, riders, allonges and addenda, as
such Multifamily Note may be amended from time to time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools,
books, records (whether in written or electronic form), computer
equipment (hardware and software) and other tangible personal property
(other than Fixtures) which are used now or in the future in connection
with the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the Improvements, and any
operating agreements relating to the Land or the Improvements, and any
surveys, plans and specifications and contracts for architectural,
engineering and construction services relating to the Land or the
Improvements and all other intangible property and rights relating to
the operation of, or used in connection with, the Land or the
Improvements, including all governmental permits relating to any
activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or
non-residential space), revenues and other income of the Land or the
Improvements, including parking fees, laundry and vending machine
income and fees and charges for food, health care and other services
provided at the Mortgaged Property, whether now due, past due, or to
become due, and deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and
other charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or local
improvements, which are levied, assessed or imposed by any public
authority or quasi-public authority, and which, if not paid, will
become a lien, on the Land or the Improvements.
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(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of law);
(B) the granting, creating or attachment of a lien, encumbrance or
security interest (whether voluntary, involuntary or by operation of
law); (C) the issuance or other creation of an ownership interest in a
legal entity, including a partnership interest, interest in a limited
liability company or corporate stock; (D) the withdrawal, retirement,
removal or involuntary resignation of a partner in a partnership or a
member or manager in a limited liability company; or (E) the merger,
dissolution, liquidation, or consolidation of a legal entity.
"Transfer" does not include (i) a conveyance of the Mortgaged Property
at a judicial or non-judicial foreclosure sale under this Instrument or
(ii) the Mortgaged Property becoming part of a bankruptcy estate by
operation of law under the United States Bankruptcy Code. For purposes
of defining the term "Transfer," the term "partnership" shall mean a
general partnership, a limited partnership, a joint venture and a
limited liability partnership, and the term "partner" shall mean a
general partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument
is also a security agreement under the Uniform Commercial Code for any of the
Mortgaged Property which, under applicable law, may be subject to a security
interest under the Uniform Commercial Code, whether acquired now or in the
future, and all products and cash and non-cash proceeds thereof (collectively,
"UCC Collateral"), and Borrower hereby grants to Lender a security interest in
the UCC Collateral. Borrower shall execute and deliver to Lender, upon Lender's
request, financing statements, continuation statements and amendments, in such
form as Lender may require to perfect or continue the perfection of this
security interest. Borrower shall pay all filing costs and all costs and
expenses of any record searches for financing statements that Lender may
require. Without the prior written consent of Lender, Borrower shall not create
or permit to exist any other lien or security interest in any of the UCC
Collateral. If an Event of Default has occurred and is continuing, Lender shall
have the remedies of a secured party under the Uniform Commercial Code, in
addition to all remedies provided by this Instrument or existing under
applicable law. In exercising any remedies, Lender may exercise its remedies
against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender's other remedies. This Instrument
constitutes a financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.
(a) As part of the consideration for the Indebtedness,
Borrower absolutely and unconditionally assigns and transfers to Lender
all Rents. It is the intention of Borrower to establish a present,
absolute and irrevocable transfer and assignment to Lender of all Rents
and to authorize and empower Lender to collect and receive all Rents
without the necessity of further action on the part of Borrower.
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Promptly upon request by lender, Borrower agrees to execute and
request by Lender, Borrower agrees to execute and deliver such further
assignments as Lender may from time to time require. Borrower and
Lender intend this assignment of Rents to be immediately effective and
to constitute an absolute present assignment and not an assignment for
additional security only. For purposes of giving effect to this
absolute assignment of Rents, and for no other purpose, Rents shall
not be deemed to be a part of the "Mortgaged Property," as that term
is defined in Section 1(s). However, if this present, absolute and
unconditional assignment of Rents is not enforceable by its terms
under the laws of the Property Jurisdiction, then the Rents shall be
included as a part of the Mortgaged Property and it is the intention
of the Borrower that in this circumstance this Instrument create and
perfect a lien on Rents in favor of Lender, which lien shall be
effective as of the date of this Instrument.
(b) After the occurrence of an Event of Default, Borrower
authorizes Lender to collect, xxx for and compromise Rents and directs
each tenant of the Mortgaged Property to pay all Rents to, or as
directed by, Lender. However, until the occurrence of an Event of
Default, Lender hereby grants to Borrower a revocable license to
collect and receive all Rents, to hold all Rents in trust for the
benefit of Lender and to apply all Rents to pay the installments of
interest and principal then due and payable under the Note and the
other amounts then due and payable under the other Loan Documents,
including Imposition Deposits, and to pay the current costs and
expenses of managing, operating and maintaining the Mortgaged Property,
including utilities, Taxes and insurance premiums (to the extent not
included in Imposition Deposits), tenant improvements and other capital
expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the
preceding sentence may be retained by Borrower free and clear of, and
released from, Lender's rights with respect to Rents under this
Instrument. From and after the occurrence of an Event of Default, and
without the necessity of Lender entering upon and taking and
maintaining control of the Mortgaged Property directly, or by a
receiver, Borrower's license to collect Rents shall automatically
terminate and Lender shall without notice be entitled to all Rents as
they become due and payable, including Rents then due and unpaid.
Borrower shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender's demand for
Rents, Lender may give, and Borrower hereby irrevocably authorizes
Lender to give, notice to all tenants of the Mortgaged Property
instructing them to pay all Rents to Lender, no tenant shall be
obligated to inquire further as to the occurrence or continuance of an
Event of Default, and no tenant shall be obligated to pay to Borrower
any amounts which are actually paid to Lender in response to such a
notice. Any such notice by Lender shall be delivered to each tenant
personally, by mail or by delivering such demand to each rental unit.
Borrower shall not interfere with and shall cooperate with Lender's
collection of such Rents.
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(c) Borrower represents and warrants to Lender that Borrower
has not executed any prior assignment of Rents (other than an
assignment of Rents securing indebtedness that will be paid off and
discharged with the proceeds of the loan evidenced by the Note), that
Borrower has not performed, and Borrower covenants and agrees that it
will not perform, any acts and has not executed, and shall not execute,
any instrument which would prevent Lender from exercising its rights
under this Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any Rents
for more than two months prior to the due dates of such Rents. Borrower
shall not collect or accept payment of any Rents more than two months
prior to the due dates of such Rents.
(d) If an Event of Default has occurred and is continuing,
Lender may, regardless of the adequacy of Lender's security or the
solvency of Borrower and even in the absence of waste, enter upon and
take and maintain full control of the Mortgaged Property in order to
perform all acts that Lender in its discretion determines to be
necessary or desirable for the operation and maintenance of the
Mortgaged Property, including the execution, cancellation or
modification of Leases, the collection of all Rents, the making of
repairs to the Mortgaged Property and the execution or termination of
contracts providing for the management, operation or maintenance of the
Mortgaged Property, for the purposes of enforcing the assignment of
Rents pursuant to Section 3(a), protecting the Mortgaged Property or
the security of this Instrument, or for such other purposes as Lender
in its discretion may deem necessary or desirable. Alternatively, if an
Event of Default has occurred and is continuing, regardless of the
adequacy of Lender's security, without regard to Borrower's solvency
and without the necessity of giving prior notice (oral or written) to
Borrower, Lender may apply to any court having jurisdiction for the
appointment of a receiver for the Mortgaged Property to take any or all
of the actions set forth in the preceding sentence. If Lender elects to
seek the appointment of a receiver for the Mortgaged Property at any
time after an Event of Default has occurred and is continuing,
Borrower, by its execution of this Instrument, expressly consents to
the appointment of such receiver, including the appointment of a
receiver ex parte if permitted by applicable law. Lender or the
receiver, as the case may be, shall be entitled to receive a reasonable
fee for managing the Mortgaged Property. Immediately upon appointment
of a receiver or immediately upon the Lender's entering upon and taking
possession and control of the Mortgaged Property, Borrower shall
surrender possession of the Mortgaged Property to Lender or the
receiver, as the case may be, and shall deliver to Lender or the
receiver, as the case may be, all documents, records (including records
on electronic or magnetic media), accounts, surveys, plans, and
specifications relating to the Mortgaged Property and all security
deposits and prepaid Rents. In the event Lender takes possession and
control of the Mortgaged Property, Lender may exclude Borrower and its
representatives from the Mortgaged Property. Borrower acknowledges and
agrees that the exercise by Lender of any of the rights conferred under
XXXXXX XXX MULTIFAMILY SECURITY INSTRUMENT Form 4028
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this Section 3 shall not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as Lender
has not itself entered into actual possession of the Land and
Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be
liable to account only to Borrower and only for those Rents actually
received. Lender shall not be liable to Borrower, anyone claiming under
or through Borrower or anyone having an interest in the Mortgaged
Property, by reason of any act or omission of Lender under this Section
3, and Borrower hereby releases and discharges Lender from any such
liability to the fullest extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of
taking control of and managing the Mortgaged Property and collecting
the Rents, any funds expended by Lender for such purposes shall become
an additional part of the Indebtedness as provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged
Property by Lender or the receiver, as the case may be, and any
application of Rents as provided in this Instrument shall not cure or
waive any Event of Default or invalidate any other right or remedy of
Lender under applicable law or provided for in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As part of the consideration for the Indebtedness,
Borrower absolutely and unconditionally assigns and transfers to Lender
all of Borrower's right, title and interest in, to and under the
Leases, including Borrower's right, power and authority to modify the
terms of any such Lease, or extend or terminate any such Lease. It is
the intention of Borrower to establish a present, absolute and
irrevocable transfer and assignment to Lender of all of Borrower's
right, title and interest in, to and under the Leases. Borrower and
Lender intend this assignment of the Leases to be immediately effective
and to constitute an absolute present assignment and not an assignment
for additional security only. For purposes of giving effect to this
absolute assignment of the Leases, and for no other purpose, the Leases
shall not be deemed to be a part of the "Mortgaged Property," as that
term is defined in Section 1(s). However, if this present, absolute and
unconditional assignment of the Leases is not enforceable by its terms
under the laws of the Property Jurisdiction, then the Leases shall be
included as a part of the Mortgaged Property and it is the intention of
the Borrower that in this circumstance this Instrument create and
perfect a lien on the Leases in favor of Lender, which lien shall be
effective as of the date of this Instrument.
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(b) Until Lender gives notice to Borrower of Lender's exercise
of its rights under this Section 4, Borrower shall have all rights,
power and authority granted to Borrower under any Lease (except as
otherwise limited by this Section or any other provision of this
Instrument), including the right, power and authority to modify the
terms of any Lease or extend or terminate any Lease. Upon the
occurrence of an Event of Default, the permission given to Borrower
pursuant to the preceding sentence to exercise all rights, power and
authority under Leases shall automatically terminate. Borrower shall
comply with and observe Borrower's obligations under all Leases,
including Borrower's obligations pertaining to the maintenance and
disposition of tenant security deposits.
(c) Borrower acknowledges and agrees that the exercise by
Lender, either directly or by a receiver, of any of the rights
conferred under this Section 4 shall not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as Lender has
not itself entered into actual possession of the Land and the
Improvements. The acceptance by Lender of the assignment of the Leases
pursuant to Section 4(a) shall not at any time or in any event obligate
Lender to take any action under this Instrument or to expend any money
or to incur any expenses. Lender shall not be liable in any way for any
injury or damage to person or property sustained by any person or
persons, firm or corporation in or about the Mortgaged Property. Prior
to Lender's actual entry into and taking possession of the Mortgaged
Property, Lender shall not (i) be obligated to perform any of the
terms, covenants and conditions contained in any Lease (or otherwise
have any obligation with respect to any Lease); (ii) be obligated to
appear in or defend any action or proceeding relating to the Lease or
the Mortgaged Property; or (iii) be responsible for the operation,
control, care, management or repair of the Mortgaged Property or any
portion of the Mortgaged Property. The execution of this Instrument by
Borrower shall constitute conclusive evidence that all responsibility
for the operation, control, care, management and repair of the
Mortgaged Property is and shall be that of Borrower, prior to such
actual entry and taking of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's
exercise of Lender's rights under this Section 4 at any time after the
occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged
Property directly, by a receiver, or by any other manner or proceeding
permitted by the laws of the Property Jurisdiction, Lender immediately
shall have all rights, powers and authority granted to Borrower under
any Lease, including the right, power and authority to modify the terms
of any such Lease, or extend or terminate any such Lease.
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(e) Borrower shall, promptly upon Lender's request, deliver to
Lender an executed copy of each residential Lease then in effect. All
Leases for residential dwelling units shall be on forms approved by
Lender, shall be for initial terms of at least six months and not more
than two years, and shall not include options to purchase. If customary
in the applicable market, residential Leases with terms of less than
six months may be permitted with Lender's prior written consent.
(f) Borrower shall not lease any portion of the Mortgaged
Property for non-residential use except with the prior written consent
of Lender and Lender's prior written approval of the Lease agreement.
Borrower shall not modify the terms of, or extend or terminate, any
Lease for non-residential use (including any Lease in existence on the
date of this Instrument) without the prior written consent of Lender.
Borrower shall, without request by Lender, deliver an executed copy of
each non-residential Lease to Lender promptly after such Lease is
signed. All non-residential Leases, including renewals or extensions of
existing Leases, shall specifically provide that (1) such Leases are
subordinate to the lien of this Instrument (unless waived in writing by
Lender); (2) the tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and effective
upon acquisition of title to the Mortgaged Property by any purchaser at
a foreclosure sale or by Lender in any manner; (3) the tenant agrees to
execute such further evidences of attornment as Lender or any purchaser
at a foreclosure sale may from time to time request; (4) the Lease
shall not be terminated by foreclosure or any other transfer of the
Mortgaged Property; (5) after a foreclosure sale of the Mortgaged
Property, Lender or any other purchaser at such foreclosure sale may,
at Lender's or such purchaser's option, accept or terminate such Lease;
and (6) the tenant shall, upon receipt after the occurrence of an Event
of Default of a written request from Lender, pay all Rents payable
under the Lease to Lender.
(g) Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two months in
advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when due in accordance
with the terms of the Note and the other Loan Documents and shall perform,
observe and comply with all other provisions of the Note and the other Loan
Documents. Borrower shall pay a prepayment premium in connection with certain
prepayments of the Indebtedness, including a payment made after Lender's
exercise of any right of acceleration of the Indebtedness, as provided in the
Note.
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6. EXCULPATION. Borrower's personal liability for payment of
the Indebtedness and for performance of the other obligations to be
performed by it under this Instrument is limited in the manner, and to
the extent, provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under the Note
(or on another day designated in writing by Lender), until the
Indebtedness is paid in full, an additional amount sufficient to
accumulate with Lender the entire sum required to pay, when due (1) any
water and sewer charges which, if not paid, may result in a lien on all
or any part of the Mortgaged Property, (2) the premiums for fire and
other hazard insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4) amounts for
other charges and expenses which Lender at any time reasonably deems
necessary to protect the Mortgaged Property, to prevent the imposition
of liens on the Mortgaged Property, or otherwise to protect Lender's
interests, all as reasonably estimated from time to time by Lender. The
amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the "Imposition Deposits". The
obligations of Borrower for which the Imposition Deposits are required
are collectively referred to in this Instrument as "Impositions". The
amount of the Imposition Deposits shall be sufficient to enable Lender
to pay each Imposition before the last date upon which such payment may
be made without any penalty or interest charge being added. Lender
shall maintain records indicating how much of the monthly Imposition
Deposits and how much of the aggregate Imposition Deposits held by
Lender are held for the purpose of paying Taxes, insurance premiums and
each other obligation of Borrower for which Imposition Deposits are
required. Any waiver by Lender of the requirement that Borrower remit
Imposition Deposits to Lender may be revoked by Lender, in Lender's
discretion, at any time upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which
may be Lender, if Lender is such an institution) whose deposits or
accounts are insured or guaranteed by a federal agency. Lender shall
not be obligated to open additional accounts or deposit Imposition
Deposits in additional institutions when the amount of the Imposition
Deposits exceeds the maximum amount of the federal deposit insurance or
guaranty. Lender shall apply the Imposition Deposits to pay Impositions
so long as no Event of Default has occurred and is continuing. Unless
applicable law requires, Lender shall not be required to pay Borrower
any interest, earnings or profits on the Imposition Deposits. Borrower
hereby pledges and grants to Lender a security interest in the
Imposition Deposits as additional security for all of Borrower's
obligations under this Instrument and the other Loan Documents. Any
amounts deposited with Lender under this Section 7 shall not be trust
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funds, nor shall they operate to reduce the Indebtedness, unless
applied by Lender for that purpose under Section 7(e).
(c) If Lender receives a xxxx or invoice for an Imposition,
Lender shall pay the Imposition from the Imposition Deposits held by
Lender. Lender shall have no obligation to pay any Imposition to the
extent it exceeds Imposition Deposits then held by Lender. Lender may
pay an Imposition according to any xxxx, statement or estimate from the
appropriate public office or insurance company without inquiring into
the accuracy of the xxxx, statement or estimate or into the validity of
the Imposition.
(d) If at any time the amount of the Imposition Deposits held
by Lender for payment of a specific Imposition exceeds the amount
reasonably deemed necessary by Lender, the excess shall be credited
against future installments of Imposition Deposits. If at any time the
amount of the Imposition Deposits held by Lender for payment of a
specific Imposition is less than the amount reasonably estimated by
Lender to be necessary, Borrower shall pay to Lender the amount of the
deficiency within 15 days after notice from Lender.
(e) If an Event of Default has occurred and is continuing,
Lender may apply any Imposition Deposits, in any amounts and in any
order as Lender determines, in Lender's discretion, to pay any
Impositions or as a credit against the Indebtedness. Upon payment in
full of the Indebtedness, Lender shall refund to Borrower any
Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and shall perform all
other obligations of Borrower under each Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, then Lender may apply that
payment to amounts then due and payable in any manner and in any order
determined by Lender, in Lender's discretion. Neither Lender's acceptance of an
amount which is less than all amounts then due and payable nor Lender's
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower's obligations under this Instrument and the Note shall
remain unchanged.
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10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental Authority and all
recorded lawful covenants and agreements relating to or affecting the Mortgaged
Property, including all laws, ordinances, regulations, requirements and
covenants pertaining to health and safety, construction of improvements on the
Mortgaged Property, fair housing, zoning and land use, and Leases. Borrower also
shall comply with all applicable laws that pertain to the maintenance and
disposition of tenant security deposits. Borrower shall at all times maintain
records sufficient to demonstrate compliance with the provisions of this Section
10. Borrower shall take appropriate measures to prevent, and shall not engage in
or knowingly permit, any illegal activities at the Mortgaged Property that could
endanger tenants or visitors, result in damage to the Mortgaged Property, result
in forfeiture of the Mortgaged Property, or otherwise materially impair the lien
created by this Instrument or Lender's interest in the Mortgaged Property.
Borrower represents and warrants to Lender that no portion of the Mortgaged
Property has been or will be purchased with the proceeds of any illegal
activity.
11. USE OF PROPERTY. Unless required by applicable law, Borrower shall
not (a) except for any change in use approved by Lender, allow changes in the
use for which all or any part of the Mortgaged Property is being used at the
time this Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in the
zoning classification of the Mortgaged Property, or (d) establish any
condominium or cooperative regime with respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its obligations under
this Instrument or any other Loan Document, or if any action or
proceeding is commenced which purports to affect the Mortgaged
Property, Lender's security or Lender's rights under this Instrument,
including eminent domain, insolvency, code enforcement, civil or
criminal forfeiture, enforcement of Hazardous Materials Laws,
fraudulent conveyance or reorganizations or proceedings involving a
bankrupt or decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such actions as Lender
reasonably deems necessary to perform such obligations of Borrower and
to protect Lender's interest, including (1) payment of fees and
out-of-pocket expenses of attorneys, accountants, inspectors and
consultants, (2) entry upon the Mortgaged Property to make repairs or
secure the Mortgaged Property, (3) procurement of the insurance
required by Section 19, and (4) payment of amounts which Borrower has
failed to pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or
under any other provision of this Instrument that treats such
disbursement as being made under this Section 12, shall be added to,
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and become part of, the principal component of the Indebtedness, shall
be immediately due and payable and shall bear interest from the date of
disbursement until paid at the "Default Rate", as defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur
any expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees may
make or cause to be made entries upon and inspections of the Mortgaged Property
(including environmental inspections and tests) during normal business hours, or
at any other reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the
Mortgaged Property or the management agent's offices, and upon Lender's
request shall make available at the Mortgaged Property, complete and
accurate books of account and records (including copies of supporting
bills and invoices) adequate to reflect correctly the operation of the
Mortgaged Property, and copies of all written contracts, Leases, and
other instruments which affect the Mortgaged Property. The books,
records, contracts, Leases and other instruments shall be subject to
examination and inspection at any reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(i) within 120 days after the end of each fiscal year
of Borrower, a statement of income and expenses for Borrower's
operation of the Mortgaged Property for that fiscal year, a
statement of changes in financial position of Borrower
relating to the Mortgaged Property for that fiscal year and,
when requested by Lender, a balance sheet showing all assets
and liabilities of Borrower relating to the Mortgaged Property
as of the end of that fiscal year;
(ii) within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request,
a rent schedule for the Mortgaged Property showing the name of
each tenant, and for each tenant, the space occupied, the
lease expiration date, the rent payable for the current month,
the date through which rent has been paid, and any related
information requested by Lender;
(iii) within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request,
an accounting of all security deposits held pursuant to all
Leases, including the name of the institution (if any) and the
names and identification numbers of the accounts (if any) in
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which such security deposits are held and the name of the
person to contact at such financial institution, along with
any authority or release necessary for Lender to access
information regarding such accounts;
(iv) within 120 days after the end of each fiscal
year of Borrower, and at any other time upon Lender's request,
a statement that identifies all owners of any interest in
Borrower and the interest held by each, if Borrower is a
corporation, all officers and directors of Borrower, and if
Borrower is a limited liability company, all managers who are
not members;
(v) upon Lender's request, a monthly property
management report for the Mortgaged Property, showing the
number of inquiries made and rental applications received from
tenants or prospective tenants and deposits received from
tenants and any other information requested by Lender;
(vi) upon Lender's request, a balance sheet, a
statement of income and expenses for Borrower and a statement
of changes in financial position of Borrower for Borrower's
most recent fiscal year; and
(vii) if required by Lender, a statement of income
and expense for the Mortgaged Property for the prior month or
quarter.
(c) Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate by an
individual having authority to bind Borrower, and shall be in such form
and contain such detail as Lender may reasonably require. Lender also
may require that any statements, schedules or reports be audited at
Borrower's expense by independent certified public accountants
acceptable to Lender.
(d) If Borrower fails to provide in a timely manner the
statements, schedules and reports required by Section 14(b), Lender
shall have the right to have Borrower's books and records audited, at
Borrower's expense, by independent certified public accountants
selected by Lender in order to obtain such statements, schedules and
reports, and all related costs and expenses of Lender shall become
immediately due and payable and shall become an additional part of the
Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing,
Borrower shall deliver to Lender upon written demand all books and
records relating to the Mortgaged Property or its operation.
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(f) Borrower authorizes Lender to obtain a credit report on
Borrower at any time.
(g) If an Event of Default has occurred and Lender has not
previously required Borrower to furnish a quarterly statement of income
and expense for the Mortgaged Property, Lender may require Borrower to
furnish such a statement within 45 days after the end of each fiscal
quarter of Borrower following such Event of Default.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section
15(d), Borrower shall pay, or cause to be paid, all Taxes when due and
before the addition of any interest, fine, penalty or cost for
nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall
pay the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including insurance premiums, utilities, repairs
and replacements) before the last date upon which each such payment may
be made without any penalty or interest charge being added.
(c) As long as no Event of Default exists and Borrower has
timely delivered to Lender any bills or premium notices that it has
received, Borrower shall not be obligated to pay Taxes, insurance
premiums or any other individual Imposition to the extent that
sufficient Imposition Deposits are held by Lender for the purpose of
paying that specific Imposition. If an Event of Default exists, Lender
may exercise any rights Lender may have with respect to Imposition
Deposits without regard to whether Impositions are then due and
payable. Lender shall have no liability to Borrower for failing to pay
any Impositions to the extent that any Event of Default has occurred
and is continuing, insufficient Imposition Deposits are held by Lender
at the time an Imposition becomes due and payable or Borrower has
failed to provide Lender with bills and premium notices as provided
above.
(d) Borrower, at its own expense, may contest by appropriate
legal proceedings, conducted diligently and in good faith, the amount
or validity of any Imposition other than insurance premiums, if (1)
Borrower notifies Lender of the commencement or expected commencement
of such proceedings, (2) the Mortgaged Property is not in danger of
being sold or forfeited, (3) Borrower deposits with Lender reserves
sufficient to pay the contested Imposition, if requested by Lender, and
(4) Borrower furnishes whatever additional security is required in the
proceedings or is reasonably requested by Lender, which may include the
delivery to Lender of the reserves established by Borrower to pay the
contested Imposition.
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(e) Borrower shall promptly deliver to Lender a copy of all
notices of, and invoices for, Impositions, and if Borrower pays any
Imposition directly, Borrower shall promptly furnish to Lender receipts
evidencing such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any mortgage, deed
of trust, deed to secure debt, security interest or other lien or encumbrance (a
"Lien") on the Mortgaged Property (other than the lien of this Instrument) or on
certain ownership interests in Borrower, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over the lien of
this Instrument, is a "Transfer" which constitutes an Event of Default.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.
(a) Borrower (1) shall not commit waste or permit impairment
or deterioration of the Mortgaged Property, (2) shall not abandon the
Mortgaged Property, (3) shall restore or repair promptly, in a good and
workmanlike manner, any damaged part of the Mortgaged Property to the
equivalent of its original condition, or such other condition as Lender
may approve in writing, whether or not insurance proceeds or
condemnation awards are available to cover any costs of such
restoration or repair, (4) shall keep the Mortgaged Property in good
repair, including the replacement of Personalty and Fixtures with items
of equal or better function and quality, (5) shall provide for
professional management of the Mortgaged Property by a residential
rental property manager satisfactory to Lender under a contract
approved by Lender in writing, and (6) shall give notice to Lender of
and, unless otherwise directed in writing by Lender, shall appear in
and defend any action or proceeding purporting to affect the Mortgaged
Property, Lender's security or Lender's rights under this Instrument.
Borrower shall not (and shall not permit any tenant or other person to)
remove, demolish or alter the Mortgaged Property or any part of the
Mortgaged Property except in connection with the replacement of
tangible Personalty.
(b) If, in connection with the making of the loan evidenced by
the Note or at any later date, Lender waives in writing the requirement
of Section 17(a)(5) above that Borrower enter into a written contract
for management of the Mortgaged Property and if, after the date of this
Instrument, Borrower intends to change the management of the Mortgaged
Property, Lender shall have the right to approve such new property
manager and the written contract for the management of the Mortgaged
Property and require that Borrower and such new property manager enter
into an Assignment of Management Agreement on a form approved by
Lender. If required by Lender (whether before or after an Event of
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Default), Borrower will cause any Affiliate of Borrower to whom fees
are payable for the management of the Mortgaged Property to enter into
an agreement with Lender, in a form approved by Lender, providing for
subordination of those fees and such other provisions as Lender may
require. "Affiliate of Borrower" means any corporation, partnership,
joint venture, limited liability company, limited liability
partnership, trust or individual controlled by, under common control
with, or which controls Borrower (the term "control" for these
purposes shall mean the ability, whether by the ownership of shares or
other equity interests, by contract or otherwise, to elect a majority
of the directors of a corporation, to make management decisions on
behalf of, or independently to select the managing partner of, a
partnership, or otherwise to have the power independently to remove
and then select a majority of those individuals exercising managerial
authority over an entity, and control shall be conclusively presumed
in the case of the ownership of 50% or more of the equity interests).
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of
operations and maintenance approved in writing by Lender (an "O&M
Program") or matters described in Section 18(b), Borrower shall not
cause or permit any of the following:
(i) the presence, use, generation, release,
treatment, processing, storage (including storage in above
ground and underground storage tanks), handling, or disposal
of any Hazardous Materials on or under the Mortgaged Property
or any other property of Borrower that is adjacent to the
Mortgaged Property;
(ii) the transportation of any Hazardous Materials
to, from, or across the Mortgaged Property;
(iii) any occurrence or condition on the Mortgaged
Property or any other property of Borrower that is adjacent to
the Mortgaged Property, which occurrence or condition is or
may be in violation of Hazardous Materials Laws; or
(iv) any violation of or noncompliance with the terms
of any Environmental Permit with respect to the Mortgaged
Property or any property of Borrower that is adjacent to the
Mortgaged Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
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(b) Prohibited Activities and Conditions shall not include the
safe and lawful use and storage of quantities of (1) pre-packaged
supplies, cleaning materials and petroleum products customarily used in
the operation and maintenance of comparable multifamily properties, (2)
cleaning materials, personal grooming items and other items sold in
pre-packaged containers for consumer use and used by tenants and
occupants of residential dwelling units in the Mortgaged Property; and
(3) petroleum products used in the operation and maintenance of motor
vehicles from time to time located on the Mortgaged Property's parking
areas, so long as all of the foregoing are used, stored, handled,
transported and disposed of in compliance with Hazardous Materials
Laws.
(c) Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any Leases
executed after the date of this Instrument) to prevent its employees,
agents, and contractors, and all tenants and other occupants from
causing or permitting any Prohibited Activities or Conditions. Borrower
shall not lease or allow the sublease or use of all or any portion of
the Mortgaged Property to any tenant or subtenant for nonresidential
use by any user that, in the ordinary course of its business, would
cause or permit any Prohibited Activity or Condition.
(d) If an O&M Program has been established with respect to
Hazardous Materials, Borrower shall comply in a timely manner with, and
cause all employees, agents, and contractors of Borrower and any other
persons present on the Mortgaged Property to comply with the O&M
Program. All costs of performance of Borrower's obligations under any
O&M Program shall be paid by Borrower, and Lender's out-of-pocket costs
incurred in connection with the monitoring and review of the O&M
Program and Borrower's performance shall be paid by Borrower upon
demand by Lender. Any such out-of-pocket costs of Lender which Borrower
fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.
(e) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(i) Borrower has not at any time engaged in, caused
or permitted any Prohibited Activities or Conditions;
(ii) to the best of Borrower's knowledge after
reasonable and diligent inquiry, no Prohibited Activities or
Conditions exist or have existed;
(iii) except to the extent previously disclosed by
Borrower to Lender in writing, the Mortgaged Property does not
now contain any underground storage tanks, and, to the best of
Borrower's knowledge after reasonable and diligent inquiry,
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the Mortgaged Property has not contained any underground
storage tanks in the past. If there is an underground storage
tank located on the Property which has been previously dis-
closed by Borrower to Lender in writing, that tank complies
with all requirements of Hazardous Materials Laws;
(iv) Borrower has complied with all Hazardous
Materials Laws, including all requirements for notification
regarding releases of Hazardous Materials. Without limiting
the generality of the foregoing, Borrower has obtained all
Environmental Permits required for the operation of the
Mortgaged Property in accordance with Hazardous Materials Laws
now in effect and all such Environmental Permits are in full
force and effect;
(v) no event has occurred with respect to the
Mortgaged Property that constitutes, or with the passing of
time or the giving of notice would constitute, noncompliance
with the terms of any Environmental Permit;
(vi) there are no actions, suits, claims or
proceedings pending or, to the best of Borrower's knowledge
after reasonable and diligent inquiry, threatened that involve
the Mortgaged Property and allege, arise out of, or relate to
any Prohibited Activity or Condition; and
(vii) Borrower has not received any complaint, order,
notice of violation or other communication from any
Governmental Authority with regard to air emissions, water
discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is
adjacent to the Mortgaged Property.
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events:
(i) Borrower's discovery of any Prohibited Activity
or Condition;
(ii) Borrower's receipt of or knowledge of any
complaint, order, notice of violation or other communication
from any Governmental Authority or other person with regard to
present or future alleged Prohibited Activities or Conditions
or any other environmental, health or safety matters affecting
the Mortgaged Property or cany other property of Borrower that
is adjacent to the Mortgaged Property; and
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(iii) any representation or warranty in this Section
18 becomes untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required by
Lender in connection with any foreclosure or deed in lieu of
foreclosure, or as a condition of Lender's consent to any Transfer
under Section 21, or required by Lender following a reasonable
determination by Lender that Prohibited Activities or Conditions may
exist. Any such costs incurred by Lender (including the fees and
out-of-pocket costs of attorneys and technical consultants whether
incurred in connection with any judicial or administrative process or
otherwise) which Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12. The
results of all Environmental Inspections made by Lender shall at all
times remain the property of Lender and Lender shall have no obligation
to disclose or otherwise make available to Borrower or any other party
such results or any other information obtained by Lender in connection
with its Environmental Inspections. Lender hereby reserves the right,
and Borrower hereby expressly authorizes Lender, to make available to
any party, including any prospective bidder at a foreclosure sale of
the Mortgaged Property, the results of any Environmental Inspections
made by Lender with respect to the Mortgaged Property. Borrower
consents to Lender notifying any party (either as part of a notice of
sale or otherwise) of the results of any of Lender's Environmental
Inspections. Borrower acknowledges that Lender cannot control or
otherwise assure the truthfulness or accuracy of the results of any of
its Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may
have a material and adverse effect upon the amount which a party may
bid at such sale. Borrower agrees that Lender shall have no liability
whatsoever as a result of delivering the results of any of its
Environmental Inspections to any third party, and Borrower hereby
releases and forever discharges Lender from any and all claims,
damages, or causes of action, arising out of, connected with or
incidental to the results of, the delivery of any of Lender's
Environmental Inspections.
(h) If any investigation, site monitoring, containment,
clean-up, restoration or other remedial work ("Remedial Work") is
necessary to comply with any Hazardous Materials Law or order of any
Governmental Authority that has or acquires jurisdiction over the
Mortgaged Property or the use, operation or improvement of the
Mortgaged Property under any Hazardous Materials Law, Borrower shall,
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by the earlier of (1) the applicable deadline required by Hazardous
Materials Law or (2) 30 days after notice from Lender demanding such
action, begin performing the Remedial Work, and thereafter diligently
prosecute it to completion, and shall in any event complete the work
by the time required by applicable Hazardous Materials Law. If
Borrower fails to begin on a timely basis or diligently prosecute any
required Remedial Work, Lender may, at its option, cause the Remedial
Work to be completed, in which case Borrower shall reimburse Lender on
demand for the cost of doing so. Any reimbursement due from Borrower
to Lender shall become part of the Indebtedness as provided in Section
12.
(i) Borrower shall cooperate with any inquiry by any
Governmental Authority and shall comply with any governmental or
judicial order which arises from any alleged Prohibited Activity or
Condition.
(j) Borrower shall indemnify, hold harmless and defend (i)
Lender, (ii) any prior owner or holder of the Note, (iii) the Loan
Servicer, (iv) any prior Loan Servicer, (v) the officers, directors,
shareholders, partners, employees and trustees of any of the foregoing,
and (vi) the heirs, legal representatives, successors and assigns of
each of the foregoing (collectively, the "Indemnitees") from and
against all proceedings, claims, damages, penalties and costs (whether
initiated or sought by Governmental Authorities or private parties),
including fees and out-of-pocket expenses of attorneys and expert
witnesses, investigatory fees, and remediation costs, whether incurred
in connection with any judicial or administrative process or otherwise,
arising directly or indirectly from any of the following:
(i) any breach of any representation or warranty of
Borrower in this Section 18;
(ii) any failure by Borrower to perform any of its
obligations under this Section 18;
(iii) the existence or alleged existence of any Pro-
hibited Activity or Condition;
(iv) the presence or alleged presence of Hazardous
Materials on or under the Mortgaged Property or any property
of Borrower that is adjacent to the Mortgaged Property; and
(v) the actual or alleged violation of any Hazardous
Materials Law.
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(k) Counsel selected by Borrower to defend Indemnitees shall
be subject to the approval of those Indemnitees. However, any
Indemnitee may elect to defend any claim or legal or administrative
proceeding at the Borrower's expense.
(l) Borrower shall not, without the prior written consent of
those Indemnitees who are named as parties to a claim or legal or
administrative proceeding (a "Claim"), settle or compromise the Claim
if the settlement (1) results in the entry of any judgment that does
not include as an unconditional term the delivery by the claimant or
plaintiff to Lender of a written release of those Indemnitees,
satisfactory in form and substance to Lender; or (2) may materially and
adversely affect Lender, as determined by Lender in its discretion.
(m) Lender agrees that the indemnity under this Section 18
shall be limited to the assets of Borrower and Lender shall not seek to
recover any deficiency from any natural persons who are general
partners of Borrower.
(n) Borrower shall, at its own cost and expense, do all of the
following:
(i) pay or satisfy any judgment or decree that may be
entered against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against
which Indemnitees are entitled to be indemnified under this
Section 18;
(ii) reimburse Indemnitees for any expenses paid or
incurred in connection with any matters against which
Indemnitees are entitled to be indemnified under this Section
18; and
(iii) reimburse Indemnitees for any and all expenses,
including fees and out-of-pocket expenses of attorneys and
expert witnesses, paid or incurred in connection with the
enforcement by Indemnitees of their rights under this Section
18, or in monitoring and participating in any legal or
administrative proceeding.
(o) In any circumstances in which the indemnity under this
Section 18 applies, Lender may employ its own legal counsel and
consultants to prosecute, defend or negotiate any claim or legal or
administrative proceeding and Lender, with the prior written consent of
Borrower (which shall not be unreasonably withheld, delayed or
conditioned), may settle or compromise any action or legal or
administrative proceeding. Borrower shall reimburse Lender upon demand
for all costs and expenses incurred by Lender, including all costs of
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settlements entered into in good faith, and the fees and out-of-pocket
expenses of such attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to
any and all other obligations and liabilities that Borrower may have
under applicable law or under other Loan Documents, and each Indemnitee
shall be entitled to indemnification under this Section 18 without
regard to whether Lender or that Indemnitee has exercised any rights
against the Mortgaged Property or any other security, pursued any
rights against any guarantor, or pursued any other rights available
under the Loan Documents or applicable law. If Borrower consists of
more than one person or entity, the obligation of those persons or
entities to indemnify the Indemnitees under this Section 18 shall be
joint and several. The obligation of Borrower to indemnify the
Indemnitees under this Section 18 shall survive any repayment or
discharge of the Indebtedness, any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and
any release of record of the lien of this Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times
against such hazards as Lender may from time to time require, which
insurance shall include but not be limited to coverage against loss by
fire and allied perils, general boiler and machinery coverage, and
business income coverage. Lender's insurance requirements may change
from time to time throughout the term of the Indebtedness. If Lender so
requires, such insurance shall also include sinkhole insurance, mine
subsidence insurance, earthquake insurance, and, if the Mortgaged
Property does not conform to applicable zoning or land use laws,
building ordinance or law coverage. If any of the Improvements is
located in an area identified by the Federal Emergency Management
Agency (or any successor to that agency) as an area having special
flood hazards, and if flood insurance is available in that area,
Borrower shall insure such Improvements against loss by flood.
(b) All premiums on insurance policies required under Section
19(a) shall be paid in the manner provided in Section 7, unless Lender
has designated in writing another method of payment. All such policies
shall also be in a form approved by Lender. All policies of property
damage insurance shall include a non-contributing, non-reporting
mortgage clause in favor of, and in a form approved by, Lender. Lender
shall have the right to hold the original policies or duplicate
original policies of all insurance required by Section 19(a). Borrower
shall promptly deliver to Lender a copy of all renewal and other
notices received by Borrower with respect to the policies and all
receipts for paid premiums. At least 30 days prior to the expiration
date of a policy, Borrower shall deliver to Lender the original (or a
duplicate original) of a renewal policy in form satisfactory to Lender.
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(c) Borrower shall maintain at all times commercial general
liability insurance, workers' compensation insurance and such other
liability, errors and omissions and fidelity insurance coverages as
Lender may from time to time require.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for such
periods as Lender may from time to time require, and shall be issued by
insurance companies satisfactory to Lender.
(e) Borrower shall comply with all insurance requirements and
shall not permit any condition to exist on the Mortgaged Property that
would invalidate any part of any insurance coverage that this
Instrument requires Borrower to maintain.
(f) In the event of loss, Borrower shall give immediate
written notice to the insurance carrier and to Lender. Borrower hereby
authorizes and appoints Lender as attorney-in-fact for Borrower to make
proof of loss, to adjust and compromise any claims under policies of
property damage insurance, to appear in and prosecute any action
arising from such property damage insurance policies, to collect and
receive the proceeds of property damage insurance, and to deduct from
such proceeds Lender's expenses incurred in the collection of such
proceeds. This power of attorney is coupled with an interest and
therefore is irrevocable. However, nothing contained in this Section 19
shall require Lender to incur any expense or take any action. Lender
may, at Lender's option, (1) hold the balance of such proceeds to be
used to reimburse Borrower for the cost of restoring and repairing the
Mortgaged Property to the equivalent of its original condition or to a
condition approved by Lender (the "Restoration"), or (2) apply the
balance of such proceeds to the payment of the Indebtedness, whether or
not then due. To the extent Lender determines to apply insurance
proceeds to Restoration, Lender shall do so in accordance with Lender's
then-current policies relating to the restoration of casualty damage on
similar multifamily properties.
(g) Lender shall not exercise its option to apply insurance
proceeds to the payment of the Indebtedness if all of the following
conditions are met: (1) no Event of Default (or any event which, with
the giving of notice or the passage of time, or both, would constitute
an Event of Default) has occurred and is continuing; (2) Lender
determines, in its discretion, that there will be sufficient funds to
complete the Restoration; (3) Lender determines, in its discretion,
that the rental income from the Mortgaged Property after completion of
the Restoration will be sufficient to meet all operating costs and
other expenses, Imposition Deposits, deposits to reserves and loan
repayment obligations relating to the Mortgaged Property; (4) Lender
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determines, in its discretion, that the Restoration will be completed
before the earlier of (A) one year before the maturity date of the
Note or (B) one year after the date of the loss or casualty; and (5)
upon Lender's request, Borrower provides Lender evidence of the
availability during and after the Restoration of the insurance
required to be maintained by Borrower pursuant to this Section 19.
(h) If the Mortgaged Property is sold at a foreclosure sale or
Lender acquires title to the Mortgaged Property, Lender shall
automatically succeed to all rights of Borrower in and to any insurance
policies and unearned insurance premiums and in and to the proceeds
resulting from any damage to the Mortgaged Property prior to such sale
or acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, or conveyance
in lieu thereof, of all or any part of the Mortgaged Property, whether
direct or indirect (a "Condemnation"). Borrower shall appear in and
prosecute or defend any action or proceeding relating to any
Condemnation unless otherwise directed by Lender in writing. Borrower
authorizes and appoints Lender as attorney-in-fact for Borrower to
commence, appear in and prosecute, in Lender's or Borrower's name, any
action or proceeding relating to any Condemnation and to settle or
compromise any claim in connection with any Condemnation. This power of
attorney is coupled with an interest and therefore is irrevocable.
However, nothing contained in this Section 20 shall require Lender to
incur any expense or take any action. Borrower hereby transfers and
assigns to Lender all right, title and interest of Borrower in and to
any award or payment with respect to (i) any Condemnation, or any
conveyance in lieu of Condemnation, and (ii) any damage to the
Mortgaged Property caused by governmental action that does not result
in a Condemnation.
(b) Lender may apply such awards or proceeds, after the
deduction of Lender's expenses incurred in the collection of such
amounts, at Lender's option, to the restoration or repair of the
Mortgaged Property or to the payment of the Indebtedness, with the
balance, if any, to Borrower. Unless Lender otherwise agrees in
writing, any application of any awards or proceeds to the Indebtedness
shall not extend or postpone the due date of any monthly installments
referred to in the Note, Section 7 of this Instrument or any Collateral
Agreement, or change the amount of such installments. Borrower agrees
to execute such further evidence of assignment of any awards or
proceeds as Lender may require.
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21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN
BORROWER.
(a) The occurrence of any of the following events shall
constitute an Event of Default under this Instrument:
(i) a Transfer of all or any part of the Mortgaged
Property or any interest in the Mortgaged Property;
(ii) a Transfer of a Controlling Interest in Borrower;
(iii) a Transfer of a Controlling Interest in any
entity which owns, directly or indirectly through one or more
intermediate entities, a Controlling Interest in Borrower;
(iv) a Transfer of all or any part of Key Principal's
ownership interests (other than limited partnership interests)
in Borrower, or in any other entity which owns, directly or
indirectly through one or more intermediate entities, an
ownership interest in Borrower;
(v) if Key Principal is an entity, (A) a Transfer of
a Controlling Interest in Key Principal, or (B) a Transfer of
a Controlling Interest in any entity which owns, directly or
indirectly through one or more intermediate entities, a
Controlling Interest in Key Principal;
(vi) if Borrower or Key Principal is a trust, the
termination or revocation of such trust; and
(vii) a conversion of Borrower from one type of legal
entity into another type of legal entity, whether or not there
is a Transfer.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument, notwithstanding
any provision of Section 21(a) to the contrary:
(i) a Transfer to which Lender has consented;
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(ii) a Transfer that occurs by devise, descent, or by
operation of law upon the death of a natural person;
(iii) the grant of a leasehold interest in an
individual dwelling unit for a term of two years or less not
containing an option to purchase;
(iv) a Transfer of obsolete or worn out Personalty or
Fixtures that are contemporaneously replaced by items of equal
or better function and quality, which are free of liens,
encumbrances and security interests other than those created
by the Loan Documents or consented to by Lender;
(v) the grant of an easement, if before the grant
Lender determines that the easement will not materially affect
the operation or value of the Mortgaged Property or Lender's
interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses incurred by Lender
in connection with reviewing Borrower's request; and
(vi) the creation of a tax lien or a mechanic's,
materialman's or judgment lien against the Mortgaged Property
which is bonded off, released of record or otherwise remedied
to Lender's satisfaction within 30 days of the date of
creation.
(c) Lender shall consent, without any adjustment to the rate
at which the Indebtedness secured by this Instrument bears interest or
to any other economic terms of the Indebtedness, to a Transfer that
would otherwise violate this Section 21 if, prior to the Transfer,
Borrower has satisfied each of the following requirements:
(i) the submission to Lender of all information re-
quired by Lender to make the determination required by this
Section 21(c);
(ii) the absence of any Event of Default;
(iii) the transferee meets all of the eligibility,
credit, management and other standards (including any
standards with respect to previous relationships between
Lender and the transferee and the organization of the
transferee) customarily applied by Lender at the time of the
proposed Transfer to the approval of borrowers in connection
with the origination or purchase of similar mortgages, deeds
of trust or deeds to secure debt on multifamily properties;
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(iv) the Mortgaged Property, at the time of the
proposed Transfer, meets all standards as to its physical
condition that are customarily applied by Lender at the time
of the proposed Transfer to the approval of properties in
connection with the origination or purchase of similar
mortgages on multifamily properties;
(v) in the case of a Transfer of all or any part of
the Mortgaged Property, or direct or indirect ownership
interests in Borrower or Key Principal (if an entity), if
transferor or any other person has obligations under any Loan
Document, the execution by the transferee or one or more
individuals or entities acceptable to Lender of an assumption
agreement (including, if applicable, an Acknowledgment and
Agreement of Key Principal to Personal Liability for
Exceptions to Non-Recourse Liability) that is acceptable to
Lender and that, among other things, requires the transferee
to perform all obligations of transferor or such person set
forth in such Loan Document, and may require that the
transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived
by Lender;
(vi) if a guaranty has been executed and delivered in
connection with the Note, this Instrument or any of the other
Loan Documents, the Borrower causes one or more individuals or
entities acceptable to Lender to execute and deliver to Lender
a guaranty in a form acceptable to Lender; and
(vii) Lender's receipt of all of the following:
(1) a non-refundable review fee in the
amount of $3,000 and a transfer fee equal to 1
percent of the outstanding Indebtedness immediately
prior to the Transfer.
(2) In addition, Borrower shall be required
to reimburse Lender for all of Lender's out-of-pocket
costs (including reasonable attorneys' fees) incurred
in reviewing the Transfer request, to the extent such
expenses exceed $3,000.
(d) For purposes of this Section, the following terms shall
have the meanings set forth below:
(i) "Initial Owners" means, with respect to Borrower
or any other entity, the persons or entities who on the date
of the Note own in the aggregate 100% of the ownership
interests in Borrower or that entity.
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(ii) A Transfer of a "Controlling Interest" shall
mean, with respect to any entity, the following:
(1) if such entity is a general partnership
or a joint venture, a Transfer of any general
partnership interest or joint venture interest which
would cause the Initial Owners to own less than 51%
of all general partnership or joint venture interests
in such entity;
(2) if such entity is a limited partnership,
a Transfer of any general partnership interest;
(3) if such entity is a limited liability
company or a limited liability partnership, a
Transfer of any membership or other ownership
interest which would cause the Initial Owners to own
less than 51% of all membership or other ownership
interests in such entity;
(4) if such entity is a corporation (other
than a Publicly-Held Corporation) with only one class
of voting stock, a Transfer of any voting stock which
would cause the Initial Owners to own less than 51%
of voting stock in such corporation;
(5) if such entity is a corporation (other
than a Publicly-Held Corporation) with more than one
class of voting stock, a Transfer of any voting stock
which would cause the Initial Owners to own less than
a sufficient number of shares of voting stock having
the power to elect the majority of directors of such
corporation; and
(6) if such entity is a trust, the removal,
appointment or substitution of a trustee of such
trust other than (A) in the case of a land trust, or
(B) if the trustee of such trust after such removal,
appointment or substitution is a trustee identified
in the trust agreement approved by Lender.
(iii) "Publicly-Held Corporation" shall mean a
corporation the outstanding voting stock of which is
registered under Section 12(b) or 12(g) of the Securities and
Exchange Act of 1934, as amended.
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22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this Instrument:
(a) any failure by Borrower to pay or deposit when due any
amount required by the Note, this Instrument or any other Loan
Document;
(b) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(c) any failure by Borrower to comply with the provisions of
Section 33;
(d) fraud or material misrepresentation or material omission
by Borrower, or any of its officers, directors, trustees, general
partners or managers, Key Principal or any guarantor in connection with
(A) the application for or creation of the Indebtedness, (B) any
financial statement, rent roll, or other report or information provided
to Lender during the term of the Indebtedness, or (C) any request for
Lender's consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding,
whether civil or criminal, which, in Lender's reasonable judgment,
could result in a forfeiture of the Mortgaged Property or otherwise
materially impair the lien created by this Instrument or Lender's
interest in the Mortgaged Property;
(g) any failure by Borrower to perform any of its obligations
under this Instrument (other than those specified in Sections 22(a)
through (f)), as and when required, which continues for a period of 30
days after notice of such failure by Lender to Borrower, but no such
notice or grace period shall apply in the case of any such failure
which could, in Lender's judgment, absent immediate exercise by Lender
of a right or remedy under this Instrument, result in harm to Lender,
impairment of the Note or this Instrument or any other security given
under any other Loan Document;
(h) any failure by Borrower to perform any of its obligations
as and when required under any Loan Document other than this Instrument
which continues beyond the applicable cure period, if any, specified in
that Loan Document; and
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(i) any exercise by the holder of any other debt instrument
secured by a mortgage, deed of trust or deed to secure debt on the
Mortgaged Property of a right to declare all amounts due under that
debt instrument immediately due and payable.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under this Instrument
or any other Loan Document or afforded by applicable law, and each shall be
cumulative and may be exercised concurrently, independently, or successively, in
any order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with
Borrower, from time to time, and without giving notice to, or obtaining
the consent of, or having any effect upon the obligations of, any
guarantor or other third party obligor, to take any of the following
actions: extend the time for payment of all or any part of the
Indebtedness; reduce the payments due under this Instrument, the Note,
or any other Loan Document; release anyone liable for the payment of
any amounts under this Instrument, the Note, or any other Loan
Document; accept a renewal of the Note; modify the terms and time of
payment of the Indebtedness; join in any extension or subordination
agreement; release any Mortgaged Property; take or release other or
additional security; modify the rate of interest or period of
amortization of the Note or change the amount of the monthly
installments payable under the Note; and otherwise modify this
Instrument, the Note, or any other Loan Document.
(b) Any forbearance by Lender in exercising any right or
remedy under the Note, this Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or
preclude the exercise of any other right or remedy. The acceptance by
Lender of payment of all or any part of the Indebtedness after the due
date of such payment, or in an amount which is less than the required
payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments on account of the Indebtedness
or to exercise any remedies for any failure to make prompt payment.
Enforcement by Lender of any security for the Indebtedness shall not
constitute an election by Lender of remedies so as to preclude the
exercise of any other right available to Lender. Lender's receipt of
any awards or proceeds under Sections 19 and 20 shall not operate to
cure or waive any Event of Default.
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25. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower is interpreted so that
any charge provided for in any Loan Document, whether considered separately or
together with other charges levied in connection with any other Loan Document,
violates that law, and Borrower is entitled to the benefit of that law, that
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the principal of the Indebtedness.
For the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the right
to assert any statute of limitations as a bar to the enforcement of the lien of
this Instrument or to any action brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any other
security interests in the Mortgaged Property held by Lender or by any other
party, Lender shall have the right to determine the order in which any or all of
the Mortgaged Property shall be subjected to the remedies provided in this
Instrument, the Note, any other Loan Document or applicable law. Lender shall
have the right to determine the order in which any or all portions of the
Indebtedness are satisfied from the proceeds realized upon the exercise of such
remedies. Borrower and any party who now or in the future acquires a security
interest in the Mortgaged Property and who has actual or constructive notice of
this Instrument waives any and all right to require the marshalling of assets or
to require that any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in parcels or as an
entirety in connection with the exercise of any of the remedies permitted by
applicable law or provided in this Instrument.
28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances,
assignments, estoppel certificates, financing statements, transfers and
assurances as Lender may require from time to time in order to better assure,
grant, and convey to Lender the rights intended to be granted, now or in the
future, to Lender under this Instrument and the Loan Documents.
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29. ESTOPPEL CERTIFICATE. Within 10 days after a request from Lender,
Borrower shall deliver to Lender a written statement, signed and acknowledged by
Borrower, certifying to Lender or any person designated by Lender, as of the
date of such statement, (i) that the Loan Documents are unmodified and in full
force and effect (or, if there have been modifications, that the Loan Documents
are in full force and effect as modified and setting forth such modifications);
(ii) the unpaid principal balance of the Note; (iii) the date to which interest
under the Note has been paid; (iv) that Borrower is not in default in paying the
Indebtedness or in performing or observing any of the covenants or agreements
contained in this Instrument or any of the other Loan Documents (or, if the
Borrower is in default, describing such default in reasonable detail); (v)
whether or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan
Documents; and (vi) any additional facts requested by Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not
itself expressly identify the law that is to apply to it, shall be
governed by the laws of the jurisdiction in which the Land is located
(the "Property Jurisdiction").
(b) Borrower agrees that any controversy arising under or in
relation to the Note, this Instrument, or any other Loan Document shall
be litigated exclusively in the Property Jurisdiction. The state and
federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies
which shall arise under or in relation to the Note, any security for
the Indebtedness, or any other Loan Document. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be
entitled by virtue of domicile, habitual residence or otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice")
under or concerning this Instrument shall be in writing. Each notice
shall be addressed to the intended recipient at its address set forth
in this Instrument, and shall be deemed given on the earliest to occur
of (1) the date when the notice is received by the addressee; (2) the
first Business Day after the notice is delivered to a recognized
overnight courier service, with arrangements made for payment of
charges for next Business Day delivery; or (3) the third Business Day
after the notice is deposited in the United States mail with postage
prepaid, certified mail, return receipt requested. As used in this
Section 31, the term "Business Day" means any day other than a
Saturday, a Sunday or any other day on which Lender is not open for
business.
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(b) Any party to this Instrument may change the address to
which notices intended for it are to be directed by means of notice
given to the other party in accordance with this Section 31. Each party
agrees that it will not refuse or reject delivery of any notice given
in accordance with this Section 31, that it will acknowledge, in
writing, the receipt of any notice upon request by the other party and
that any notice rejected or refused by it shall be deemed for purposes
of this Section 31 to have been received by the rejecting party on the
date so refused or rejected, as conclusively established by the records
of the U.S. Postal Service or the courier service.
(c) Any notice under the Note and any other Loan Document
which does not specify how notices are to be given shall be given in
accordance with this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial interest in
the Note (together with this Instrument and the other Loan Documents) may be
sold one or more times without prior notice to Borrower. A sale may result in a
change of the Loan Servicer. There also may be one or more changes of the Loan
Servicer unrelated to a sale of the Note. If there is a change of the Loan
Servicer, Borrower will be given notice of the change.
33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property other than the
Mortgaged Property and personal property related to the operation and
maintenance of the Mortgaged Property; (b) shall not operate any business other
than the management and operation of the Mortgaged Property; and (c) shall not
maintain its assets in a way difficult to segregate and identify.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and the
rights granted by this Instrument shall inure to, the respective successors and
assigns of Lender and Borrower. However, a Transfer not permitted by Section 21
shall be an Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be
solely that of creditor and debtor, respectively, and nothing contained
in this Instrument shall create any other relationship between Lender
and Borrower.
(b) No creditor of any party to this Instrument and no other
person shall be a third party beneficiary of this Instrument or any
other Loan Document. Without limiting the generality of the preceding
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sentence, (1) any arrangement (a "Servicing Arrangement") between the
Lender and any Loan Servicer for loss sharing or interim advancement
of funds shall constitute a contractual obligation of such Loan
Servicer that is independent of the obligation of Borrower for the
payment of the Indebtedness, (2) Borrower shall not be a third party
beneficiary of any Servicing Arrangement, and (3) no payment by the
Loan Servicer under any Servicing Arrangement will reduce the amount
of the Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of any
provision of this Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and
effect. This Instrument contains the entire agreement among the parties as to
the rights granted and the obligations assumed in this Instrument. This
Instrument may not be amended or modified except by a writing signed by the
party against whom enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of this
Instrument are for convenience only and shall be disregarded in construing this
Instrument. Any reference in this Instrument to an "Exhibit" or a "Section"
shall, unless otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to a Section of this
Instrument. All Exhibits attached to or referred to in this Instrument are
incorporated by reference into this Instrument. Any reference in this Instrument
to a statute or regulation shall be construed as referring to that statute or
regulation as amended from time to time. Use of the singular in this Agreement
includes the plural and use of the plural includes the singular. As used in this
Instrument, the term "including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the loan
evidenced by the Note, including the collection of payments, the giving and
receipt of notice, inspections of the Property, inspections of books and
records, and the granting of consents and approvals, may be taken by the Loan
Servicer unless Borrower receives notice to the contrary. If Borrower receives
conflicting notices regarding the identity of the Loan Servicer or any other
subject, any such notice from Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information regarding
Borrower or the Mortgaged Property to third parties with an existing or
prospective interest in the servicing, enforcement, evaluation, performance,
purchase or securitization of the Indebtedness, including trustees, master
servicers, special servicers, rating agencies, and organizations maintaining
databases on the underwriting and performance of multifamily mortgage loans.
Borrower irrevocably waives any and all rights it may have under applicable law
to prohibit such disclosure, including any right of privacy.
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41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan Application") and in all
financial statements, rent rolls, reports, certificates and other documents
submitted in connection with the Loan Application are complete and accurate in
all material respects. There has been no material adverse change in any fact or
circumstance that would make any such information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the loan
evidenced by the Note are used to pay, satisfy or discharge any obligation of
Borrower for the payment of money that is secured by a pre-existing mortgage,
deed of trust or other lien encumbering the Mortgaged Property (a "Prior Lien"),
such loan proceeds shall be deemed to have been advanced by Lender at Borrower's
request, and Lender shall automatically, and without further action on its part,
be subrogated to the rights, including lien priority, of the owner or holder of
the obligation secured by the Prior Lien, whether or not the Prior Lien is
released.
43. ACCELERATION; REMEDIES. At any time during the existence of an
Event of Default, Lender, at Lender's option, may declare the Indebtedness to be
immediately due and payable without further demand, and may invoke the power of
sale and any other remedies permitted by applicable law or provided in this
Instrument or in any other Loan Document. Borrower acknowledges that the power
of sale granted in this Instrument may be exercised by Lender without prior
judicial hearing. Borrower has the right to bring an action to assert the
non-existence of an Event of Default or any other defense of Borrower to
acceleration and sale. Lender shall be entitled to collect all costs and
expenses incurred in pursuing such remedies, including attorneys' fees, costs of
documentary evidence, abstracts and title reports.
If the power of sale is invoked, Trustee shall record a notice of
default in each county in which the Mortgaged Property is located and shall mail
copies of such notice in the manner prescribed by applicable law to Borrower and
to the other persons prescribed by applicable law. Trustee shall give notice of
sale and Trustee shall sell the Mortgaged Property according to the laws of
Nebraska. Trustee may sell the Mortgaged Property at the time and place and
under the terms designated in the notice of sale in one or more parcels and in
such order as Trustee may determine. Trustee may postpone sale of all or any
part of the Mortgaged Property by public announcement at the time and place of
any previously scheduled sale. Lender or Lender's designee may purchase the
Mortgaged Property at any sale.
Trustee shall deliver to the purchaser at the sale, within a reasonable
time after the sale, a Trustee's deed conveying the Mortgaged Property so sold
without any covenant or warranty, express or implied. The recitals in Trustee's
deed shall be prima facie evidence of the truth of the statements made therein.
Trustee shall apply the proceeds of the sale in the following order: (a) to all
costs and expenses of the sale, including Trustee's fees of not more than 5% of
the gross sale price, attorneys' fees and costs of title evidence; (b) to the
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Indebtedness in such order as Lender, in Lender's discretion, directs; and (c)
the excess, if any, to the person or persons legally entitled thereto.
44. RECONVEYANCE. Upon payment of the Indebtedness, Lender shall
request Trustee to reconvey the Mortgaged Property and shall surrender this
Instrument and the Note to Trustee. Trustee shall reconvey the Mortgaged
Property without warranty to the person or persons legally entitled thereto.
Such person or persons shall pay Trustee's reasonable costs incurred in so
reconveying the Mortgaged Property.
45. SUBSTITUTE TRUSTEE. Lender, at Lender's option, may from time to
time remove Trustee and appoint a successor trustee to any Trustee appointed
under this Instrument by an instrument recorded in the county in which this
Instrument is recorded. Without conveyance of the Mortgaged Property, the
successor trustee shall succeed to all the title, power and duties conferred
upon the Trustee herein and by applicable law.
46. REQUEST FOR NOTICES. Borrower requests that copies of the notice of
default and notice of sale be sent to Borrower at Borrower's address stated in
the first paragraph on page 1 of this Instrument.
47. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
[X] Exhibit A Description of the Land (Required)
[X] Exhibit B Modifications to Instrument (Second Lien)
[X] Exhibit C Modifications to Instrument (Seniors Housing)
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IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument
or has caused this Instrument to be signed and delivered by its duly authorized
representative.
CAPITAL SENIOR LIVING PROPERTIES
2-GRAMERCY, INC., a Delaware corporation
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------
Xxxxxxxx X. Xxxxx,
Chief Financial Officer
STATE OF NEW YORK )
) ss.
CITY/COUNTY OF NASSAU )
The foregoing instrument was acknowledged before me this 28th day of
October, 1998, by Xxxxxxxx X. Xxxxx, Chief Financial Officer on behalf of
Capital Senior Living Properties 2- Gramercy, Inc., a corporation, and
acknowledged the same to be his voluntary act and deed and the voluntary act and
deed of said corporation.
Witness my hand and notarial seal at New York City in said county, the
date aforesaid.
/s/ Xxxxx X. Xxx
--------------------------------
Notary Public
My commission expires:
5/5/98
----------------------
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KEY PRINCIPAL
Key Principal
Name: Capital Senior Living Corporation
Address: 00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
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EXHIBIT A
Lot Seventy-nine (79) of Irregular Tracts in the Southeast Quarter of Section
28, Township 10 North, Range 0 Xxxx xx Xxx 0xx X.X., Xxxxxxx, Xxxxxxxxx Xxxxxx,
Xxxxxxxx.
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EXHIBIT B
MODIFICATIONS TO INSTRUMENT
(Second Lien)
1. The following new Sections are added to the end of the Instrument
after the last number Section:
"48. SUBORDINATE MORTGAGE. Notwithstanding any provisions of
this Instrument or any other Loan Document to the contrary, it is
understood and agreed that the lien, terms, covenants and conditions of
this Instrument are and shall be subordinate in all respects, including
in right of payment, to the indebtedness evidenced by a Multifamily
Note dated October 28, 1998, in the original principal amount of
$1,980,000.00 (as the same may be modified, amended, or refinanced, the
"Senior Note") made by the Borrower and secured by a Multifamily Deed
of Trust, Assignment of Rents and Security Agreement dated the same
date as the Senior Note (the "Senior Instrument").
49. CROSS-DEFAULT. If Borrower is in default under the Senior
Note, the Senior Instrument, or any other loan document executed in
connection with the indebtedness evidenced by the Senior Note, which
default remains uncured after any applicable cure period, such default
shall constitute an Event of Default under the Note and this
Instrument. The occurrence of an Event of Default under the Note or
this Instrument shall constitute an Event of Default under the Senior
Note and Senior Instrument.
50. PARTIES INTENT REGARDING MERGER. It is the intent of the
parties hereto that (i) in the event that Lender or any of Lender's
successors, assigns or transferee, obtains title to the Mortgaged
Property (by virtue of a foreclosure sale, a deed in lieu of
foreclosure or otherwise) and such party is also or subsequently
becomes the holder of the Senior Note and Senior Instrument, such
party's title interest and lien interest SHALL NOT merge so as to
effect an extinguishment of the Senior Instrument by operation of the
doctrine of merger, and (ii) in the event that the holder of the Senior
Note and Senior Instrument obtains title to the Mortgaged Property
pursuant to the Senior Instrument (by virtue of a foreclosure sale, a
deed in lieu of foreclosure or otherwise) and such party is also or
subsequently becomes the holder of the Note and Instrument, such
party's title interest and lien interest SHALL NOT merge so as to
effect an extinguishment of this Instrument by operation of the
doctrine of merger. Borrower further acknowledges and agrees that no
course of conduct by Borrower, Lender or holder of the Senior Note, or
any of their successors, assigns or transferees subsequent to the date
hereof shall be used to demonstrate any intent contrary to the express
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intent stated herein. The parties agree that the holder of the Senior
Note is a third party beneficiary of the provisions of this paragraph
and that no amendments, modifications, waivers or other limitations of
this paragraph shall be effective without the prior written agreement
of the holder of the Senior Note.
51. WAIVER OF COLLECTION OF IMPOSITION DEPOSITS. Lender hereby
waives collection of funds for Imposition Deposits to be collected
under Section 7 of this Instrument so long as such amounts are
collected pursuant to the Senior Instrument. In the event that
Imposition Deposits are no longer collected from Borrower pursuant to
the Senior Instrument, Lender shall collect such amounts pursuant to
such Section 7 of this Instrument.
52. WAIVER OF COLLECTION OF REPLACEMENT RESERVES. Lender shall
waive collection of funds for replacement reserves pursuant to the
Replacement Reserve and Security Agreement executed in connection with
this Instrument (the "Subordinate Replacement Reserve Agreement") so
long as replacement reserves are collected pursuant to the Replacement
Reserve and Security Agreement executed in connection with the Senior
Instrument (the "Senior Replacement Reserve Agreement"). Borrower
hereby assigns to Lender all amounts in the "Replacement Reserve" (as
defined in the Senior Replacement Reserve Agreement) as additional
security for all of the Borrower's obligations under the Note."
2. All capitalized terms used in this Exhibit not specifically defined
herein shall have the meanings set forth in the text of the Instrument that
precedes this Exhibit.
/s/ LAC
------------------------------
INITIALS
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EXHIBIT C
MODIFICATIONS TO INSTRUMENT
(Seniors Housing)
The following modifications are made to the text of the Instrument that
precedes this Exhibit:
1. Section 1 of the Instrument is hereby amended to add the following
paragraph (aa) at the end thereof:
"(aa) "Seniors Housing congregate living facility" means a residential
housing facility which qualifies as "housing for older persons" under
the Fair Housing Amendments Act of 1988 and includes congregate living
units and assisted living units, but which does not include any nursing
care units."
2. Section 1(o) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"The term "Leases" shall also include any occupancy agreements
pertaining to occupants of the Mortgaged Property, including both
residential and commercial agreements."
3. Section 1(g) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"The term "Hazardous Materials" shall also include any medical products
or devices, including, but not limited to, those materials defined as
"medical waste" or "biological waste" under relevant statutes or
regulations pertaining to hazardous materials law."
4. Section 1(s)(11) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"payment of all proceeds from any private insurance for tenants to
cover rental charges and charges for services at the Mortgaged
Property, and the right to payments from Medicare or Medicaid programs,
or similar federal, state or local programs, boards, bureaus or
agencies and rights to payment from residents or private insurers
("Third Party Payments"), due for the rents of tenants or for the
services at the Mortgaged Property." Each of the foregoing shall be
considered "Rents" for the purposes of the actions and rights set forth
in Section 3 of the Instrument."
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5. Section 1(s) of the Instrument is hereby amended to add the
following paragraphs (16), (17), (18), and (19) at the end thereof:
"(16) all payments due, or received, from occupants, second party
charges added to base rental income, base and/or additional meal sales,
commercial operations located on the Mortgaged Property or provided as
a service to the occupants of the Mortgaged Property, rental from guest
suites, seasonal lease charges, furniture leases, and laundry services,
and any and all other services provided to third parties in connection
with the Mortgaged Property, and any and all other personal property on
the real property site, excluding personal property belonging to
occupants of the real property (other than property belonging to
Borrower);
(17) all permits, licenses and contracts relating to the operation and
authority to operate the Mortgaged Property as a Seniors Housing
congregate living facility;
(18) all rights to payments from Medicare or Medicaid programs, or
similar federal, state or local programs, boards, bureaus or agencies
and rights to payment from residents or private insurers ("Third Party
Payments"), arising from the operation of the Mortgaged Property as a
Seniors Housing congregate living facility, utility deposits, unearned
premiums, accrued, accruing or to accrue under insurance policies now
or hereafter obtained by the Borrower and all proceeds of any
conversion of the Mortgaged Property or any part thereof including,
without limitation, proceeds of hazard and title insurance and all
awards and compensation for the taking by eminent domain, condemnation
or otherwise, of all or any part of the Mortgaged Property or any
easement therein; and,
(19) all of Borrower's inventory, accounts, accounts receivable,
contract rights, general intangibles, and all proceeds thereof."
6. Section 1(v) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"The term "Personalty" shall also include all personal property
currently owned or acquired by Borrower after the date hereof of in
connection with the ownership and operation of the Mortgaged Property
as a Seniors Housing congregate living facility, all kitchen or
restaurant supplies, dining room facilities, medical facilities, or
related furniture and equipment, and any other equipment, supplies or
furniture owned by Borrower and leased to any third party service
provider or facility operator under any use, occupancy, or lease
agreements, as well as all licenses, permits, certificates, and
approvals required for the operation of the Mortgaged Property as a
Seniors Housing congregate living facility, including replacements and
additions thereto."
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7. Section 3(b) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"Lender is further authorized to give notice to all third party
providers, including insurers, any governmental provider, or Medicare
or Medicaid or any similar program or provider, at Lender's option,
instructing them to pay all Rents to Lender."
8. Section 3(c) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"Because of the special regulatory requirements applicable to the
Mortgaged Property as a Seniors Housing congregate living facility,
including the requirement that operators be approved and licensed,
Borrower (and any licensed operator of the Mortgaged Property), in
order to induce Lender to lend funds hereunder, hereby agrees that upon
the occurrence of an Event of Default, that it shall continue to
provide all necessary services required under any operating agreement
or applicable licensing or regulatory requirements and shall fully
cooperate with Lender and any receiver as may be appointed by a court,
in performing these services and agree to arrange for an orderly
transition to a replacement licensed operator or provider of the
necessary services."
9. Section 11 of the Instrument is hereby amended to add the following
sentences at the end thereof:
"Borrower further covenants and agrees that it shall not permit more
than 20% of its total units or more than 20% of its total income to be
derived from units relying on Medicaid or Medicare payments. Borrower
further covenants and agrees that it shall limit the use and occupancy
of the Mortgaged Property to tenants that meet the standards for
congregate living or assisted living, and that it shall not accept
tenants that require skilled nursing care or permit tenants requiring
skilled nursing care to remain at the Mortgaged Property as a routine
matter."
10. Section 12(a) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"and, (5) payments for any required licensing fees, permits, or other
expenses related to the operation of the Mortgaged Property by or on
behalf of the Lender as a Seniors Housing congregate living facility,
any fines or penalties that may be assessed against the Mortgaged
Property, any costs incurred to bring the Mortgaged Property into full
compliance with applicable codes and regulatory requirements, and any
fees or costs related to Lender's employment of a licensed operator for
the Mortgaged Property."
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11. Section 14(b) of the Instrument is hereby amended to add the
following sections (8) and (9) at the end thereof:
"(8) copies of all inspection reports, reviews, and certifications
prepared by, for, or on behalf of any licensing or regulatory authority
relating to the Mortgaged Property and any legal actions, orders,
notices, or reports relating to the Mortgaged Property issued by the
applicable regulatory or licensing authorities; and,
(9) Upon the request of Lender, copies of all reports relating to the
services and operations of the Mortgaged Property, including, if
applicable, Medicaid cost reports and records relating to account
balances due to or from Medicaid or any private insurer."
12. Section 17(a) of the Instrument is hereby amended to add the
following sentence at the end thereof:
"Borrower further covenants and agrees that it shall maintain and
operate the Mortgaged Property as a Seniors Housing congregate living
facility at all times in accordance with the standards required by any
applicable license or permit and as required by any regulatory
authority, that it shall maintain in good standing all operating
licenses and permits, and that it shall cause to renew and extend all
such required operating licenses or permits, and shall not fail to take
any action necessary to keep all such licenses and permits in good
standing and full force and effect. Borrower will immediately provide
lender with any notice or order which may adversely impact the
Mortgaged Property, its operations or its compliance with licensing and
regulatory requirements."
13. Section 21(a) of the Instrument is hereby amended to add the
following section (8) at the end thereof:
"and, (8) a Transfer to a separate entity, or change in the holder, of
the operating license or permit allowing the Mortgaged Property to
operate as a Seniors Housing congregate living facility."
14. Section 22(a) of the Instrument is hereby amended to add the
following sections (g), (h), and (i) at the end thereof:
"(g) any failure by Borrower to comply with the use and licensing
requirements set forth in Section 11, including but not limited to
Borrower's loss of its license or other legal authority to operate the
Mortgaged Property as a Seniors Housing congregate living facility;
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(h) any failure by Borrower to correct, within the time deadlines set
by any federal, state or local licensing agency, any deficiency that
justifies any action by such agency with respect to the Mortgaged
Property that may have a material adverse affect on the income and
operation of the Mortgaged Property or Borrower's interest in the
Mortgaged Property, including, without limitation, a termination,
revocation or suspension of any applicable license, registration,
permit, certificate, authorization or approval necessary for the
operation of the Mortgaged Property as Seniors Housing congregate
living facility.
(i) if, without the consent of Lender: (a) Borrower ceases to operate
the Mortgaged Property as a Seniors Housing congregate living facility;
(b) Borrower ceases to provide full kitchens (except ovens) separate
bathrooms, and areas for eating, sitting and sleeping in each unit
(unless such kitchens did not exist at the time the Instrument was
executed); (c) Borrower ceases to provide other facilities and services
normally associated with congregate or assisted living units,
including, without limitation, (i) central dining services providing
one to three meals per day, (ii) periodic housekeeping, (iii) laundry
services, and (iv) customary transportation services; (d) Borrower
provides or contracts for skilled nursing care for any of the units;
(e) non-residential space exceeds ten percent (10%) of the net rental
area; or, (f) the Mortgaged Property is no longer classified as housing
for older persons pursuant to the Fair Housing Amendments Act of 1988,
as it may be amended from time to time hereafter."
15. The former Sections 22 (g), (h), and (i) are hereby changed to be
Sections 22(j), (k), and (l), respectively.
16. Section 43 of the Instrument is hereby amended to add the following
sentence at the end thereof:
"In addition to the remedies set forth herein and elsewhere in this
Instrument, Lender shall be entitled to mandate the use of a lockbox
bank account, to be maintained under the control and supervision of
Lender, for all income of the Mortgaged Property, including, but not
limited to, Rents, service charges, insurance payments, third party
providers including Medicare and Medicaid and any other governmental or
private program by which the rents or occupancy charges are being paid.
Lender may, upon an Event of Default, cause the removal of Borrower
from any Mortgaged Property operations. Until such time as Lender has
located a replacement licensed operator, Borrower or its related or
affiliated entity acting as the licensed operator, shall continue to
provide all required services to maintain the Mortgaged Property in
full compliance with all licensing and regulatory requirements as a
Seniors Housing congregate living facility. Borrower acknowledges that
its failure to perform this service shall constitute a form of waste of
the
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Mortgaged Property, causing irreparable harm to Lender and the
Mortgaged Property, and shall constitute sufficient cause for the
appointment of a receiver."
17. The following new Section is added to the Instrument after the last
numbered Section:
53. BORROWER'S REPRESENTATIONS AND WARRANTIES. In
addition to any other representations and warranties contained in this
Instrument, Borrower hereby represents and warrants to Lender as
follows:
(a) The Mortgaged Property is duly licensed as a
Seniors Housing congregate living facility, and is in all respects
otherwise legally authorized to operate the Mortgaged Property as
Seniors Housing congregate living facility, under the applicable laws
of the Mortgaged Property Jurisdiction;
(b) Borrower and the Mortgaged Property (and the
operation thereof) are in compliance in all material respects with the
applicable provisions of all laws, statutes, regulations, ordinances,
orders, standards, restrictions and rules of any federal, state or
local government or quasi-government body, agency, board or authority
having jurisdiction over the operation of the Mortgaged Property,
including, without limitation: (a) health care and fire safety codes;
(b) laws regulating the handling and disposal of medical or biological
waste; (c) the applicable provisions of Seniors Housing congregate
living facility laws, rules, regulations and published interpretations
thereof to which the Borrower or the Mortgaged Property is subject; and
(d) all criteria established to classify the Mortgaged Property as
housing for older persons under the Fair Housing Amendments Act of
1988;
(c) If required, Borrower has a current provider
agreement under any and all applicable federal, state and local laws
for reimbursement: (a) to a Seniors Housing congregate living facility;
or (b) for other type of care provided at such facility. There is no
decision not to renew any provider agreement related to the Mortgaged
Property, nor is there any action pending or threatened to impose
material intermediate or alternative sanctions with respect to the
Mortgaged Property;
(d) Borrower and the Mortgaged Property are not
subject to any proceeding, suit or investigation by any federal, state
or local government or quasi-government body, agency, board authority
or any other administrative or investigative body which may result in
the imposition of a fine, alternative, interim or final sanction, or
which would have a material adverse effect on Borrower or the operation
of the Mortgaged Property, or which would result in the appointment of
a receiver or manager
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or would result in the revocation, transfer, surrender, suspension or
other impairment of the operating certificate, license, permit,
approval or authorization of the Mortgaged Property to operate as an
Seniors Housing congregate facility;
(e) Upon Lender's request, copies of resident care
agreements shall be provided to Lender. All resident records at the
Mortgaged Property are true and correct in all material respects;
(f) Neither the execution and delivery of the Note,
the Instrument or the Loan Documents, Borrower's performance
thereunder, the recordation of the Instrument, nor the exercise of any
remedies by Lender, will adversely affect the licenses, registrations,
permits, certificates, authorizations and approvals necessary for the
operation of the Mortgaged Property as a Seniors Housing congregate
living facility in the Mortgaged Property Jurisdiction;
(g) Borrower is not a participant in any federal
program whereby any federal, state or local, government or
quasi-governmental body, agency, board or other authority may have the
right to recover funds by reason of the advance of federal funds.
Borrower has received no notice, and is not aware of any violation of
applicable antitrust laws of any federal, state or local, government or
quasi-government body, agency, board or other authority; and,
(h) In the event any existing management agreement is
terminated or Lender acquires the Mortgaged Property through
foreclosure or otherwise, neither Borrower, Lender, any subsequent
manager, nor any subsequent purchaser (through foreclosure or
otherwise) must obtain a certificate of need from any applicable state
health care regulatory authority or agency (other than giving such
notice required under the applicable state law or regulation) prior to
applying for any applicable license, registration, permit, certificate,
authorization or approval necessary for the operation of the Mortgaged
Property as a Seniors Housing congregate living facility, provided that
no service or the unit complement is changed."
18. All capitalized terms used in this Exhibit not specifically defined
herein shall have the meanings set forth in the text of the Instrument that
precedes this Exhibit.
/s/ LAC
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INITIALS
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