PROMISSORY NOTE SECURED BY DEEDS OF TRUST

 

$7,570,000.00

Texas

June 12, 2014

 

FOR VALUE RECEIVED, the undersigned (“Borrower”) promises to pay to SILVERGATE
BANK, a California corporation (“Lender”), or order, during regular business
hours at Silvergate Bank, 4275 Executive Square, Suite 800, La Jolla, California
92037-1492, Attention: Commercial Lending Department, or at such other place as
Lender may from time to time designate by written notice to Borrower, with
sufficient information to identify the source and application of such payment,
the sum of up to Seven Million Five Hundred Seventy Thousand Dollars
($7,570,000.00), together with interest on the balance of outstanding principal
from the disbursement dates thereof at the per annum rate set forth below. All
calculations of interest hereunder shall be computed on the basis of a 360 day
year for the actual number of days elapsed.

 

1. Interest Rate. The unpaid principal balance under this Note shall bear
interest at the rate (the “Contract Rate”) equal to the lesser of (i) the
maximum lawful interest rate or (ii) one percentage (1.00%) points over the
“PRIME RATE” as published in The Money Rates column of The Wall Street Journal
from time to time. Adjustments to the Contract Rate shall be made on a daily
basis (with reference to the PRIME RATE most recently published in The Wall
Street Journal on such day or if The Wall Street Journal is not published on
such date then the next earliest date upon which The Wall Street Journal is
published). If more than one “Prime Rate” is published in The Wall Street
Journal for a day, the highest of such “Prime Rates” shall be used. In the event
that The Wall Street Journal is no longer published or ceases to publish the
“Prime Rate”, Lender may substitute another reasonable publication publishing
the “Prime Rate”. In the event that “Prime Rates” are no longer generally
published or are limited, regulated or administered by a governmental or
quasi-governmental body, Lender may substitute another rate approximating the
“Prime Rate” in its reasonable discretion (and which substitute rate may be
reasonably adjusted by Lender to the effect that such substitute rate will
provide for an interest rate equivalent to the Contract Rate which would have
been effective if the “Prime Rate” were published). Notwithstanding the above
provisions, in no event may the Contract Rate be less than four and one-quarter
percent (4.25%) per annum.

 

2. Monthly Payments of Principal and Interest.

 

2.1 First Month. Commencing with the date of the initial disbursement of funds
through and including July 4, 2014, in which such disbursement occurs, interest
only shall be payable in advance on the date of this Note at the Contract Rate.
Interest for such partial month shall be computed on the basis of a 360-day year
and shall be equal to the sum of a per diem interest charge (for each day the
principal balance hereof is outstanding during such partial month) equal to the
product of (a) 1/360 and (b) the Contract Rate and (c) the outstanding principal
balance hereunder for the day in question.

 

 1Promissory Note

 

 

2.2 Interest Only Monthly Payments. Commencing on August 5, 2014 and continuing
on the fifth day of each calendar month through and including July 5, 2016,
Borrower shall pay interest in arrears for the prior calendar month.

 

2.3 Monthly Payments. Commencing on August 5, 2016 and continuing on the fifth
day of each of the next calendar months thereafter through and including June 5,
2019, Borrower shall pay to Lender monthly payments of principal and interest in
an amount equal to the amount which would be sufficient to amortize the
outstanding principal balance under this Note (as of the date of such payment)
at the then effective Contract Rate over the then remaining portion of an
amortization period commencing on July 5, 2016 and ending on July 4, 2041.

 

3. Maturity Date. The entire balance of principal and accrued interest and other
amounts then outstanding on this Note are due and payable on July 5, 2019 (the
“Maturity Date”). Borrower acknowledges that such balance will not equal the
regular monthly payment specified in Section 2.

 

4. Application of Payments. Each payment hereunder shall be applied when
received first to the payment of accrued interest on the principal balance
hereof from time to time remaining unpaid and then to reduce principal and then
to amounts payable, if any, into escrow accounts payable under the Loan
Documents for taxes or insurance and then to any unpaid “Past Due Charge” (as
defined below); provided, however, upon the occurrence of an “Event of Default”
(as defined below), payments may be applied to any amounts secured by any of the
“Deeds of Trust” (as defined below) in such order and amounts as is designated
by Lender in its sole and absolute discretion. No such application by Lender
shall constitute a cure or waiver of any default by Borrower under the
applicable Deed of Trust or under this Note. Borrower hereby waives any rights
and benefits, if any, that may arise under or by virtue of California Civil Code
Section 2822(a). Without limitation of the foregoing, in the event of any
partial payment hereunder, Lender shall have the sole right and authority to
determine which portion of the indebtedness evidenced hereby any partial payment
may be applied against, if any; provided that, nothing in the foregoing shall
impose upon Lender any duty or obligation to accept or apply any partial payment
received by Lender hereunder or under the applicable Deed of Trust.

 

5. Default; Acceleration. This Note is secured by those certain Deeds of Trust,
Assignments of Leases and Rents, Security Agreements and Fixture Filings of even
date herewith by Borrower for the benefit of Lender (individually, a “Deed of
Trust”, and collectively, the “Deeds of Trusts”). Upon the occurrence and during
the continuance of an “Event of Default” (as defined in any of the Deeds of
Trust), then, or at any time thereafter, the whole of the unpaid principal
hereof, together with accrued and outstanding interest and all other sums
required to be paid under this Note or the Deeds of Trust (including the
prepayment premium hereinafter described) shall, at the election of Lender and
with prior notice of such election, become due and payable. Lender’s election
may be exercised at any time after any such event, and the acceptance of one or
more payments hereon from any person thereafter shall not constitute a waiver of
Lender’s election, or of its option to make such election.

 

 2Promissory Note

 

 

6. Past Due Charge and Past Due Interest Rate. Borrower recognizes and
acknowledges that any default on any payment, or portion thereof, due hereunder
or to be made under any of the Deeds of Trust, will result in losses and
additional expenses to Lender in servicing the indebtedness evidenced hereby,
and in losses due to Lender’s loss of the use of funds not timely received.
Borrower further acknowledges and agrees that in the event of any such default,
Lender would be entitled to damages for the detriment proximately caused
thereby, but that it would be extremely difficult and impracticable to ascertain
the extent of or compute such damages. Therefore, if for any reason Borrower
fails to pay any interest or principal required to be paid under this Note,
including any payment due at maturity or upon acceleration, or fails to pay any
amounts due under any of the Deeds of Trust, within ten (10) days of when due,
Borrower shall pay to Lender, in addition to any such delinquent payment, an
amount equal to five percent (5%) of such delinquent payment (“Past Due
Charge”). In addition, upon the Maturity Date or upon the occurrence and during
the continuance of an Event of Default (or upon any acceleration), interest
shall accrue hereunder at the “Past Due Rate” (as defined below). Borrower
acknowledges that the Past Due Charge and interest at the Past Due Rate agreed
to hereunder represent the reasonable estimate of those damages which would be
incurred by Lender, and a fair return to Lender for the loss of the use of the
funds not timely received from Borrower on account of a default by Borrower as
herein specified, established by Borrower and Lender through good faith
consideration of the facts and circumstances surrounding the transaction
contemplated under this Note as of the date hereof, but that such Past Due
Charge and interest at the Past Due Rate are in addition to, and not in lieu of,
any other right or remedy available to Lender. If any applicable law proscribes
the imposition of a past due charge in the amount of the Past Due Charge herein
specified, or limits the rate of the additional interest that may be charged to
a rate less than the Past Due Rate herein specified, then the maximum charge or
rate permitted by such law shall be charged by Lender for purposes of this
Section. As used herein, the “Past Due Rate” shall be equal to the lesser of
(i) six (6) percentage points over the Contract Rate, or (ii) the maximum rate
of interest permitted to be charged by applicable laws or regulation governing
this Note until paid, such additional interest to be compounded annually.

 

7. Prepayment.

 

7.1 Borrower shall have no right to prepay any principal of this Note except
that, so long as no default or Event of Default exists under this Note or any of
the Deeds of Trust as of the date of such prepayment by Borrower, Borrower will
have the privilege, to prepay the principal of this Note (in whole only and not
in part) upon at least thirty (30) but not more than sixty (60) days advance
written notice and subject to the following terms and conditions:

 

A. Premium. Concurrently with such prepayment, Borrower shall pay all accrued
and unpaid interest under this Note (whether or not then due), all amounts then
due under this Note or each of the Deeds of Trust and a prepayment premium equal
to the following:

 

(1)A prepayment premium equal to three percent (3%) of the amount prepaid for a
prepayment on or before July 5, 2016; with no prepayment premium thereafter.

 

 3Promissory Note

 

 

B. EXCLUSIVE RIGHTS. BORROWER ACKNOWLEDGES AND AGREES THAT BORROWER HAS NO
RIGHTS OF PREPAYMENT OF THIS NOTE, EXCEPT AS PROVIDED ABOVE; AND BORROWER
FURTHER AGREES THAT, IF THE MATURITY OF THIS NOTE IS ACCELERATED BY LENDER BY
REASON OF BORROWER’S DEFAULT AND BORROWER OR ANY THIRD PERSON THEREAFTER SEEKS
TO PAY SUCH ACCELERATED INDEBTEDNESS OR PURCHASE ANY OR ALL THE PROPERTIES
(INDIVIDUALLY, A “PROPERTY”, AND COLLECTIVELY, THE “PROPERTIES”) ENCUMBERED BY
THE DEEDS OF TRUST SECURING THIS NOTE AT FORECLOSURE SALE (WHETHER JUDICIAL OR
BY THE TRUSTEE UNDER THE DEEDS OF TRUST), SUCH PAYOFF OR PURCHASE SHALL
CONSTITUTE A PREPAYMENT OF PRINCIPAL HEREUNDER AND A PREMIUM SHALL BE PAYABLE IN
AN AMOUNT WHICH SHALL BE COMPUTED PURSUANT TO THIS SECTION 7 (INCLUDING THE
PREPAYMENT PREMIUM).

 

8. Costs. Borrower promises to pay to Lender, within five (5) business days
after written notice from Lender, all out-of-pocket costs, expenses,
disbursements, property taxes, escrow fees, title charges and legal fees and
expenses actually incurred by Lender or its counsel (which must be reasonable
provided no Event of Default has occurred and is existing) in the negotiation,
funding, enforcement or attempted enforcement, by foreclosure or otherwise, of
this Note or any of the Deeds of Trust. Without limitation on the foregoing,
Borrower agrees to pay all out-of-pocket costs of collection, including
attorneys’ fees and costs (whether or not for salaried attorneys regularly
employed by Lender) and all costs of any action or proceeding (including any
bankruptcy proceeding or any non-judicial foreclosure or private sale) actually
incurred by Lender, in the event any payment is not paid when due, or in case it
becomes necessary to enforce any other obligation of Borrower hereunder or to
protect the security for the indebtedness evidenced hereby, or for the
foreclosure by Lender of any of the Deeds of Trust, or in the event Lender is
made a party to any litigation because of the existence of the indebtedness
evidenced by this Note, or because of the existence of any of the Deeds of
Trust. All such costs are secured by the Deeds of Trust. The obligation of
Borrower to repay all such out-of-pocket costs and any other advances by Lender
are secured the Deeds of Trust and shall be deemed to be evidenced by this Note
and shall accrue interest at the Contract Rate or the Past Due Rate, whichever
is then applicable.

 

9. Waivers. Borrower hereby waives diligence, presentment, protest and demand,
notice of protest, of demand, of nonpayment, of dishonor and of maturity and
agrees that time is of the essence of every provision hereof; and further agrees
that any such renewal, extension or modification, or the release or substitution
of any person or security for the indebtedness evidenced hereby, shall not
affect the liability of any of such parties for the indebtedness evidenced by
this Note or the obligations under any of the Deeds of Trust. Any such renewals,
extensions, modifications, releases or substitutions may be made without notice
to any of such parties.

 

10. Remedies Cumulative. The rights and remedies of Lender as provided in this
Note and in each of the Deeds of Trust shall be cumulative and concurrent and
may be pursued singly, successively or together against Borrower, any of the
Properties, or any other persons or entities who are, or may become liable for
all or any part of this indebtedness, and any other funds, property or security
held by Lender for the payment hereof, or otherwise, at the sole discretion of
Lender. Failure to exercise any such right or remedy shall in no event be
construed as a waiver or release of such rights or remedies, or the right to
exercise them at any later time. The right, if any, of Borrower, and all other
persons or entities, who are, or may become, liable for this indebtedness, to
plead any and all statutes of limitation as a defense is expressly waived by
each and all of such parties to the full extent permissible by law.

 

 4Promissory Note

 

 

11. Deeds of Trust Provisions Regarding Transfers; Successors. Each of the Deeds
of Trust securing this Note contains provisions for the acceleration of the
indebtedness evidenced hereby upon a “Transfer” (as therein defined). Subject to
the limitations on Transfer specified in each of the Deeds of Trust, the
provisions hereof shall be binding on the heirs, legal representatives,
successors and assigns of Borrower and shall inure to the benefit of Lender and
the successors and assigns of Lender.

 

12. Partial Release. Lender shall consent to causing a release from the lien of
the applicable Deed of Trust any applicable Property, such Property to be
released, the “Released Property”, but only upon the satisfaction of all of the
following conditions:

 

a. Lender shall have received from Borrower at least thirty (30) days' prior
written notice of the date proposed for such release (the “Release Date”) and
the identification of the Released Property;

 

b. No Event of Default in any of the Deeds of Trust shall have occurred and be
continuing as of the date of such notice and the Release Date and no event or
condition shall exist that, with the passage of time or giving of notice, would
constitute an Event of Default in any of the Deeds of Trust;

 

c. The release shall occur contemporaneously with the sale of the Released
Property pursuant to an arm's-length, bona fide contract to a person who is not
an affiliate of Borrower or any person or entity with any interest in Borrower,
whether direct or indirect;

 

d. Borrower shall pay to Lender on the Release Date an amount equal to the
“Release Price” amount as indicated for such Released Property on Exhibit “B”
attached to this Note (such greater amount, the “Release Price”). The Release
Price shall be applied to the Loan in such order as determined by Lender,
including the applicable prepayment premium;

 

e. Borrower shall have provided Lender with evidence reasonably acceptable to
Lender that the Released Property has been formally designated as a distinct tax
lot separate from the remaining Properties;

 

f. Borrower shall have provided Lender with evidence reasonably acceptable to
Lender that the Released Property and the remaining portion of the Properties
shall be legal lots or parcels in material compliance with the all Texas
subdivision acts and local ordinances thereunder and that the remaining portion
of the Property has adequate ingress and egress;

 

g. If requested by Lender, Borrower, at its sole cost and expense, shall have
delivered to Lender a T-38 endorsement (or comparable endorsement) to the
mortgagee policy of title insurance delivered to Lender on the date hereof in
connection with the Deeds of Trust insuring that, after giving effect to such
release, such title policy coverage has not been terminated or reduced by such
releases; and

 

 5Promissory Note

 

 

h. Borrower shall have paid all of Lender's reasonable out-of-pocket costs and
expenses actually incurred by Lender, including, without limitation, attorneys'
fees and expenses, in connection with the release of the Released Property.

 

Upon payment of the Release Price and the satisfaction of the other conditions
set forth in this Section 12 for the release of the Released Property, the
security interests and liens of Lender under the applicable Deed of Trust shall
be released from the Released Property, and Lender will execute and deliver any
agreements reasonably requested by Borrower to release and terminate the lien of
the applicable Deed of Trust as to the Released Property; provided, however,
that such release and termination shall be without recourse to Lender and made
without any representation or warranty. Upon the release and termination of
Lender's security interests and liens under the applicable Deed of Trust and the
other Loan Documents relating to the Released Property, all references in the
applicable Deed of Trust and the other Loan Documents relating to the Released
Property shall be deemed deleted, except as otherwise provided herein with
respect to indemnities.

 

13. Miscellaneous.

 

13.1 Manner of Payment; No Offsets. All payments due hereunder shall be made in
lawful money of the United States of America. Such payments shall be made by
check or, upon maturity and otherwise at the option of Lender, by transferring
the payment in federal or immediately available funds by bank wire or interbank
transfer for the account of Lender without presentment or surrender of this
Note, provided; however, that any payment of principal or interest received
after 5:00 p.m. Pacific time shall be deemed to have been received by Lender on
the next business day and shall bear interest accordingly. All sums due
hereunder shall be payable without offset, demand, abatement or counter-claim of
any kind or nature whatsoever, all of which are hereby waived by Borrower.

 

13.2 Fee for Statement. For any statement regarding the obligations evidenced
hereby to be furnished by Lender, Borrower shall pay the fee then charged by
Lender therefor, not to exceed, however, the maximum fee, if any, allowed by law
to be charged by Lender at the time such statement is requested.

 

13.3 No Amendment or Waiver Except in Writing. This Note may be amended or
modified only by a writing duly executed by Borrower and Lender, which expressly
refers to this Note and the intent of the parties so to amend this Note. No
provision of this Note will be deemed waived by Lender, unless waived in a
writing executed by Lender, which expressly refers to this Note, and no such
waiver shall be implied from any act or conduct of Lender, or any omission by
Lender to take action with respect to any provision of this Note or any of the
Deeds of Trust. No such express written waiver shall affect any other provision
of this Note, or cover any default or time period or event, other than the
matter as to which an express written waiver has been given. Without limitation,
acceptance of any partial payment shall not constitute a waiver of any of
Lender’s rights, including the right to insist on immediate payment of all
amounts due and payable.

 

 6Promissory Note

 

 

13.4 No Intent of Usury. None of the terms and provisions contained in this
Note, or in any of the Deeds of Trust, or in other documents or instruments
related hereto, shall ever be construed to create a contract for the use,
forbearance or detention of money requiring payment of interest or any other
consideration that constitutes interest under applicable law, as the case may
be, at a rate in excess of the maximum interest permitted to be charged by
applicable laws or regulation governing this Note (“Usury Laws”). Borrower shall
never be required to pay interest or any other consideration that constitutes
interest under applicable law, as the case may be, on this Note in excess of the
maximum interest that may be lawfully charged under such Usury Laws, as made
applicable by the final judgment of a court of competent jurisdiction, and the
provisions of this Section shall control over all other provisions hereof and of
any other instrument executed in connection herewith or executed to secure the
indebtedness evidenced hereby, which may be in apparent conflict with this
Section. If Lender collects monies which are deemed to constitute interest which
would otherwise increase the effective interest rate on this Note to a rate in
excess of that permitted to be charged by such Usury Laws, all such sums deemed
to constitute interest in excess of the maximum rate shall, at the option of
Lender, either be credited to the payment of principal or returned to Borrower.

 

13.5 Governing Law. This Note shall be governed by and construed and enforced in
accordance with the laws of the State of Texas (without regard to conflicts of
laws), except where federal law is applicable (including, without limitation,
any applicable federal usury ceiling or other federal law preempting state usury
laws).

 

13.6 Certain Rules of Construction. The headings of each Section of this Note
are for convenience only and do not define or limit any provision of this Note.
The provisions of this Note shall be construed as a whole according to their
common meaning, not strictly for or against any party, or any person or entity,
who is or may become liable for the payment of this Note, and to achieve the
objectives of the parties unconditionally to impose on Borrower the indebtedness
evidenced by this Note. Whenever the words “including”, “includes” or “include”
are used in this Note (including any Exhibit hereto), they shall be read
non-exclusively as though the phrase “, without limitation,” immediately
followed the same.

 

13.7 Severability. If any term of this Note, or the application thereof to any
person or circumstances, shall be invalid or unenforceable, the remainder of
this Note, or the application of such term to persons or circumstances other
than those as to which it is invalid or unenforceable, shall not be affected
thereby, and each term of this Note shall be valid and enforceable to the
fullest extent permitted by law.

 

13.8 Notices. Any notice which a party is required or may desire to give the
other shall be in writing and may be sent by personal delivery or by mail
(either [i] by United States registered or certified mail, return receipt
requested, postage prepaid, or [ii] by Federal Express or similar generally
recognized overnight carrier regularly providing proof of delivery), addressed
as follows (subject to the right of a party to designate a different address for
itself by notice similarly given at least 15 days in advance):

 

 7Promissory Note

 

 

To Lender:

 

Silvergate Bank

4275 Executive Square

Suite 800

La Jolla, California 92037-1492

Attention: Commercial Loan Department

 

To Borrower:

 

Reven Housing Texas, LLC

7911 Herschel Avenue

Suite 201

La Jolla, California 92037

Attention: Thad Meyer

 

Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier’s proof of delivery, as the case may be. Any
such notice not so given shall be deemed given upon receipt of the same by the
party to whom the same is to be given.

 

14. Lender Assignment. Lender may assign, sell or transfer at any time this Note
(and any documents relating thereto and any interest therein).

 

14. Addendum: The provisions of Exhibit “A” attached to this Note are
incorporated herein and made a part of this Note by this reference.

 

TO THE MAXIMUM EXTENT PERMITTED BY LAW, BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
NOTE, THE LOAN, OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTION OF BORROWER OR LENDER
OR ANY EXERCISE BY ANY PARTY OF THEIR RESPECTIVE RIGHTS UNDER THE LOAN DOCUMENTS
OR IN ANY WAY RELATING TO THE LOAN OR ANY OF THE PROPERTIES OR THIS NOTE. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN TO BORROWER.

 

 8Promissory Note

 

 

IN WITNESS WHEREOF, this Note is executed as of the date first written above.

 

  “BORROWER”               REVEN HOUSING TEXAS, LLC,     a Delaware limited
liability company           By: Reven Housing REIT, Inc.,       a Maryland
corporation,       its Sole Member                 By: /s/ Thad Meyer     Name:
Thad Meyer       Title: Chief Financial Officer  

 

 9Promissory Note

 

 

EXHIBIT “A”

 

ADDENDUM

 

The following provisions are made a part of the Note to which this Addendum is
attached:

 

1. Non-Recourse.

 

A. Except as provided below, Borrower shall not be personally liable for amounts
due under the “Loan Documents” (as defined in each of the Deeds of Trust), other
than under that certain Unsecured Environmental Indemnity of even date herewith
by Borrower in favor of Lender and under Section 6.20 of each of the Deeds of
Trust for which Borrower shall be personally liable. Borrower shall be
personally liable to Lender for any deficiency, loss or damage suffered by
Lender because of: (1) Borrower's commission of a criminal act, (2) the failure
to comply with provisions of the Loan Documents prohibiting the sale, transfer
or encumbrance of any of the Properties or any interest therein, or any other
collateral, or any direct or indirect ownership interest in Borrower, including,
without limitation, upon the occurrence of any Transfer; (3) physical waste to
any of the Properties, whether permissive or otherwise, (4) any bankruptcy,
insolvency, liquidation, reorganization, creditor assignment or similar relief
or proceeding relating to Borrower or any “Additional Essential Party” (as
defined in any of the Deeds of Trust), (5) the removal or disposal of any
personal property, improvements, or fixtures in violation of the terms of any of
the Deeds of Trust or any of the Loan Documents unless replaced by personal
property of reasonably equivalent value, (6) the misapplication by Borrower or
any Additional Essential Party of any funds derived from any of the Properties,
including security deposits, insurance proceeds and condemnation awards;
(7) theft, fraud, or misrepresentation by Borrower or any Additional Essential
Party made in or in connection with the Loan Documents or the Loan; (8) (i)
Borrower’s collection of rents more than one month in advance; or (ii) entering
into or modifying leases, or receipt of monies by Borrower or any Additional
Essential Party in connection with the modification of any leases, provided that
(ii) herein is in violation of any of the Deeds of Trust or any of the other
Loan Documents; (9) Borrower's failure to apply proceeds of rents or any other
payments in respect of the leases and other income of any of the Properties or
any other collateral to the costs of maintenance and operation of any of the
Properties and to the payment of taxes, lien claims, insurance premiums, debt
service and other amounts due under the Loan Documents or failure to deliver to
Lender rents or security deposits upon request after the occurrence of an Event
of Default but only to the extent such funds are or were in Borrower's
possession or control (including funds held by any management company); (10) the
interference, whether direct or indirect, by Borrower or any affiliate of
Borrower with Lender's exercise of rights or remedies under the Loan Documents
(including any foreclosure action or sale), whether by making any motion,
bringing any counterclaim, claiming any defense, seeking any injunction or other
restraint, commencing any action seeking to consolidate any such foreclosure or
other enforcement with any other action or otherwise (except this clause (10)
shall not apply if Borrower or such affiliate successfully contests such
enforcement and obtains a final non-appealable order as to the same), and
including reasonable out-of-pocket attorneys’ fees and costs incurred by Lender
in connection therewith; (11) Borrower's failure to maintain insurance as
required by the Loan Documents or to pay any taxes or assessments affecting any
of the Properties, provided that Borrower has the necessary cash flow from the
Properties to pay such expenses, but there shall be liability under this clause
(11) for failure to maintain required insurance, even if there is insufficient
cash flow unless Borrower provides Lender with thirty (30) days’ advance written
notice of any cancellation or termination, provided that Borrower has the
necessary cash flow from the Properties to pay such expenses; (12) intentional
damage or destruction to any of the Properties caused by the acts or omissions
of Borrower, its agents, employees, or contractors; (13) Borrower's failure to
pay for any reasonable loss, liability or expense (including reasonable
out-of-pocket attorneys' fees and the reasonable out-of-pocket costs and
expenses of in-house counsel allocated by Lender) incurred by Lender arising out
of any claim or allegation made by Borrower, its successors or assigns, or any
creditor of Borrower, that this Note or the transactions contemplated by the
Loan Documents establish a joint venture, partnership or other similar
arrangement between Borrower and Lender; (14) a “Transfer” (as defined in any of
the Deeds of Trust), other than a “Permitted Transfer” (as defined in the Loan
Agreement) occurs without the prior written consent of Lender (in its sole and
absolute discretion); and (15) all actual out-of-pocket costs and expenses,
including attorneys’ fees and costs, incurred by Lender in collecting any
amounts due under the Loan Documents.

 

  Promissory Note

 

 

B. None of the foregoing limitations on the personal liability of Borrower shall
modify, diminish or discharge the personal liability of (i) Borrower under the
Unsecured Environmental Indemnity, or (ii) any guarantor under any guaranty.
Nothing herein shall be deemed to be a waiver of any right which Lender may have
under Sections 506(a), 506(b), 1111(b) or any other provision of the United
States Bankruptcy Code, as such sections may be amended, or corresponding or
superseding sections of the Bankruptcy Amendments and Federal Judgeship Act of
1984, to file a claim for the full amount due to Lender under the Loan Documents
or to require that all collateral shall continue to secure the amounts due under
the Loan Documents. Notwithstanding anything to the contrary contained in any
Loan Document, nothing shall be deemed in any way to impair, limit or prejudice
the rights of Lender: (A) in foreclosure proceedings or in any ancillary
proceedings brought to facilitate Lender's foreclosure on any of the Properties
or any portion thereof; (B) to exercise any specific rights or remedies afforded
Lender under any other provisions of the Loan Documents or by law or in equity;
(C) to recover from Borrower the amount of any unpaid taxes, assessments, and/or
utility charges affecting any of the Properties and to collect from Borrower any
sums expended by Lender in fulfilling the obligations of Borrower, as lessor,
under any leases affecting any of the Properties; and/or (D) to recover from
Borrower all out-of-pocket legal fees and other expenses incurred by Lender in
enforcing any rights it may have under the Loan Documents following the
occurrence and during the continuance of an Event of Default.

 

  Promissory Note