Exhibit 10.14

 

LOAN AGREEMENT

 

Dated as of February 18, 2004

 

by and among

 

ARC COMMUNITIES 11 LLC

as Borrower,

 

and

 

CITIGROUP GLOBAL MARKETS REALTY CORP.

 

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LIST OF SCHEDULES

 

1

–

Immediate Repairs Reserved for in Deferred Maintenance Escrow Account

2

–

Organizational Chart

2.17

–

Allocated Loan Amounts

3

–

Homesites as of the Closing Date

4

–

Exceptions to Representations and Warranties

5

–

Addresses for Notices

6

–

Work Reserve Funding Conditions for Deferred Maintenance Escrow Account

7

–

Leases with Affiliated Borrowers

8

–

Form of Quarterly Statement

9

–

Form of Monthly Statement

10

–

Form of Standard Lease as of the Closing Date

 

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LOAN AGREEMENT

 

THIS LOAN AGREEMENT, made as of February     , 2004, is by and among ARC
COMMUNITIES 11 LLC, a Delaware limited liability company, having an address at
600 Grant Street, Suite 900, Denver, Colorado 80203 (“Borrower”), and CITIGROUP
GLOBAL MARKETS REALTY CORP., a New York corporation, having an address at 388
Greenwich Street, 11th Floor, New York, New York 10013 (together with its
successors and assigns, whether one or more, “Lender”).

 

RECITALS

 

WHEREAS, Borrower desires to obtain from Lender the Loan in an amount equal to
the Loan Amount (each as hereinafter defined) to, with respect to certain of the
Mortgaged Property (as hereinafter defined), finance a portion of the
acquisition cost of, and, with respect to other of the Mortgaged Property,
refinance existing debt at such Mortgaged Property and to pay certain other fees
and expenses;

 

WHEREAS, Lender is unwilling to make the Loan unless Borrower executes and
delivers this Agreement, the Note and the Loan Documents (each as hereinafter
defined) to which it is a party which shall establish the terms and conditions
of, and provide security for, the Loan; and

 

WHEREAS, Borrower has agreed to establish certain accounts and to grant to
Lender, a security interest therein upon the terms and conditions of the
security agreement set forth in Section 2.15.

 

NOW, THEREFORE, in consideration of the making of the Loan by Lender and for
other good and valuable consideration, the mutual receipt and legal sufficiency
of which are hereby acknowledged, the parties hereby covenant, agree, represent
and warrant as follows:

 

ARTICLE I.
CERTAIN DEFINITIONS

 

SECTION 1.1.                                   DEFINITIONS.  FOR ALL PURPOSES OF
THIS AGREEMENT:  (1) THE CAPITALIZED TERMS DEFINED IN THIS ARTICLE 1 HAVE THE
MEANINGS ASSIGNED TO THEM IN THIS ARTICLE 1 AND INCLUDE THE PLURAL AS WELL AS
THE SINGULAR; (2) ALL ACCOUNTING TERMS HAVE THE MEANINGS ASSIGNED TO THEM IN
ACCORDANCE WITH GAAP (AS HEREINAFTER DEFINED); (3) THE WORDS “HEREIN”, “HEREOF”,
AND “HEREUNDER” AND OTHER WORDS OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A
WHOLE AND NOT TO ANY PARTICULAR ARTICLE, SECTION, OR OTHER SUBDIVISION; AND (4)
THE FOLLOWING TERMS HAVE THE FOLLOWING MEANINGS:

 

“Account Collateral” has the meaning set forth in Section 2.15(a) hereof.

 

“Accounts” means all accounts (as defined in the relevant UCC), now owned or
hereafter acquired by Borrower, and arising out of or in connection with, the
operation of the Mortgaged Property and all other accounts described in the
Management Agreement and all

 

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present and future accounts receivable, inventory accounts, chattel paper,
notes, insurance policies, Instruments, Documents or other rights to payment and
all forms of obligations owing at any time to Borrower thereunder, whether now
existing or hereafter created or otherwise acquired by or on behalf of Borrower,
and all Proceeds thereof and all liens, security interests, guaranties,
remedies, privileges and other rights pertaining thereto, and all rights and
remedies of any kind forming the subject matter of any of the foregoing.

 

“Affiliate” of any specified Person means any other Person (i) controlling or
controlled by or under common control with such specified Person; (ii) directly
or indirectly owning or holding ten percent (10%) or more of any equity interest
in the first Person; or (iii) ten percent (10%) or more of whose equity
interests are directly or indirectly owned or held by the first Person.  For the
purposes of this definition, “control” when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interests, by contract or otherwise; and the terms
“controlling” and “controlled” have the meanings correlative to the foregoing.

 

“Agreement” means this Loan Agreement, together with the Schedules and Exhibits
hereto, as the same may from time to time hereafter be modified, supplemented or
amended.

 

“Appraisal” means each appraisal with respect to an individual Mortgaged
Property prepared by an Appraiser in accordance with the Uniform Standards of
Professional Appraisal Practice of the Appraisal Foundation, in compliance with
the requirements of Title 11 of the Financial Institution Reform, Recovery and
Enforcement Act and utilizing customary valuation methods such as the income,
sales/market or cost approaches.

 

“Appraiser” means a nationally recognized MAI appraiser selected by Borrower and
reasonably approved by Lender.

 

“Approved Capital Expenditures” has the meaning set forth in Section
2.13(a)(iii) hereof.

 

“Assignment of Rents and Leases” means, with respect to the Mortgaged Property,
an Assignment of Rents and Leases (and, if there are more than one, each and
every one of them), dated as of the Closing Date, granted by the Borrower to
Lender with respect to the Leases, as same may thereafter from time to time be
supplemented, amended, modified or extended.

 

“Assumed Loan Debt Service” means the greater of (i) the product of the Monthly
Debt Service Payment Amount multiplied by twelve (12) and (ii) the product of
the Principal Indebtedness multiplied by a market constant of 0.075.

 

“Basic Carrying Costs” means the following costs with respect to the Mortgaged
Property:  (i) Impositions and (ii) insurance premiums for policies of insurance
required to be maintained by Borrower pursuant to this Agreement or the other
Loan Documents.

 

“Borrower” has the meaning provided in the first paragraph of this Agreement.

 

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“Business Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks in the State of New York are authorized or obligated by law,
governmental decree or executive order to be closed.

 

“Capital Improvement Costs” means costs incurred or to be incurred in connection
with replacements and capital repairs made to the Mortgaged Property which would
be capitalized in accordance with GAAP.

 

“CERCLA” has the meaning set forth in Section 5.1(d)(i) hereof.

 

“Chattel Paper” means all of Borrower’s right, title and interest, whether now
owned or hereafter acquired, in, to and under all “chattel paper” as defined in
the UCC (whether tangible chattel paper or electronic chattel paper).

 

“Closing Date” means the date of the funding of the Loan.

 

“Code” means the Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

 

“Collateral” means, collectively, the Land, Improvements, Leases, Rents,
Personalty, and all Proceeds, and (to the full extent assignable) Permits, which
is or hereafter may become subject to a Lien in favor Lender as security for the
Loan (whether pursuant to the Mortgages, any other Loan Document or otherwise),
all whether now owned or hereafter acquired and all other property which is or
hereafter may become subject to a Lien in favor Lender as security for the Loan
and including all property of any kind described as part of the Mortgaged
Property under any of the Mortgages.

 

“Collateral Security Instrument” means any right, document or instrument, other
than the Mortgages, given as security for the Loan, including, without
limitation and the Contract Assignment.

 

“Collection Account” has the meaning set forth in Section 2.12(a) hereof.

 

“Collection Account Agreement” means the Collection Account Agreement, dated as
of the applicable date and executed by Borrower, Lender and the Collection
Account Bank, relating to the Collection Account and the Reserve Accounts and
any other accounts maintained with the Collection Account Bank.

 

“Collection Account Bank” means BancOne, N.A., or any successor financial
institution appointed by Lender.

 

“Condemnation Proceeds” means, in the event of a Taking with respect to the
Mortgaged Property, the proceeds in respect of such Taking less any reasonable
third party out-of-pocket expenses incurred in prosecuting the claim for and
otherwise collecting such proceeds.

 

“Contest” has the meaning set forth in Section 9.24(D)(1) hereof.

 

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“Contingent Obligation” means, as used in the definition of Other Borrowings,
without duplication, any obligation of Borrower guaranteeing any indebtedness,
leases, dividends or other obligations (“primary obligations”) of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly. 
Without limiting the generality of the foregoing, the term “Contingent
Obligation” shall include any obligation of Borrower:

 

(i)                                     to purchase any such primary obligation
or any property constituting direct or indirect security therefor;

 

(ii)                                  to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor;

 

(iii)                               to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation; or

 

(iv)                              otherwise to assure or hold harmless the
holder of such primary obligation against loss in respect thereof.

 

The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming Borrower
is required to perform thereunder) as determined by Lender in good faith.

 

“Contract Assignment” means, with respect to the Mortgaged Property, the
Assignment of Contracts, Licenses, Permits, Agreements, Warranties and
Approvals, dated as of the Closing Date and executed by the Borrower.

 

“Contracts” means the Management Agreement and all other agreements to which
Borrower is a party or which are assigned to Borrower by the Manager in the
Management Agreement and which are executed in connection with the construction,
operation and management of the Mortgaged Property (including, without
limitation, agreements for the sale, lease or exchange of goods or other
property and/or the performance of services by it, in each case whether now in
existence or hereafter arising or acquired) as any such agreements have been or
may be from time to time amended, supplemented or otherwise modified.

 

“Debt Service Coverage Ratio” means, as of any date of calculation with respect
to the Mortgaged Property, the quotient expressed to two decimal places of the
Underwritten Net Cash Flow divided by the Assumed Loan Debt Service.

 

“Debt Service Coverage Test” means, as of the Closing Date, a test which shall
be satisfied if the Underwritten Net Cash Flow is at least equal to the product
of 1.25 and the Assumed Loan Debt Service.

 

“Debt Service Reserve Account” has the meaning set forth in Section 2.13(c).

 

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“Deed of Trust Trustee” means the trustee under any Mortgage that constitutes a
“deed of trust” under applicable law.

 

“Default” means the occurrence of any event which, but for the giving of notice
or the passage of time, or both, would be an Event of Default.

 

“Default Rate” means the per annum interest rate equal to the lesser of (a) 5.0%
per annum in excess of the rate otherwise applicable hereunder and (b) the
maximum rate allowable by applicable law.

 

“Defeasance” means any of a Total Defeasance or a Partial Defeasance.

 

“Defeasance Collateral” shall mean Partial Defeasance Collateral or Total
Defeasance Collateral, as applicable.

 

“Defeasance Collateral Account” has the meaning set forth in Section 2.7.

 

“Defeasance Date” has the meaning set forth in Section 2.7.

 

“Defeased Note” has the meaning set forth in Section 2.7.

 

“Deferred Maintenance Escrow Account” has the meaning set forth in Section
2.13(a).

 

“Deposit Account” means all of Borrower’s right, title and interest, whether now
owned or hereafter acquired, in, to and under all “deposit accounts” as defined
in the UCC.

 

“Disclosure Certificate” has the meaning set forth in Section 5.1(w) hereof.

 

“Disclosure Documents” has the meaning set forth in Section 5.1(w) hereof.

 

“Documents” means all of Borrower’s right, title and interest, whether now owned
or hereafter acquired, in, to and under all “documents” as defined in the UCC
(whether negotiable or non-negotiable) or other receipts covering, evidencing or
representing goods.

 

“EO13224” has the meaning set forth in Section 4.1(v) hereof.

 

“Eligible Account” means a separate and identifiable account from all other
funds held by the holding institution, which account is either (i) an account
maintained with a federal or state chartered depository institution or trust
company that (A) satisfies the Rating Criteria and (B) insures the deposits made
to such account through the Federal Deposit Insurance Corporation, or (ii) a
segregated trust account maintained with the corporate trust department of a
federal or state chartered depository institution or trust company subject to
regulations regarding fiduciary funds on deposit similar to Title 12 of the Code
of Federal Regulations Section 9.10(b) which, in either case, has corporate
trust powers, acting in its fiduciary capacity and in either case having
combined capital and surplus of at least $100,000,000 or otherwise acceptable to
the Rating Agencies.  An Eligible Account shall not be evidenced by a
certificate of deposit, passbook, other instrument or any other physical indicia
of ownership.  Following a

 

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downgrade below the Rating Criteria, withdrawal, qualification or suspension of
such institution’s rating, each account must at Lender’s request promptly (and
in any case within not more than thirty (30) calendar days) be moved to a
qualifying institution or to one or more segregated trust accounts in the trust
department of such institution, if permitted.

 

“Engineer” means an Independent Engineer selected by Borrower and reasonably
approved by Lender.

 

“Environmental Auditor” means an Independent environmental auditor selected by
Borrower and reasonably approved by Lender.

 

“Environmental Claim” means any notice, notification, request for information,
claim, administrative, regulatory or judicial action, suit, judgment, demand or
other written communication (whether written or oral) by any Person or
Governmental Authority alleging or asserting liability with respect to Borrower
or any Mortgaged Property (whether for damages, contribution, indemnification,
cost recovery, compensation, injunctive relief, investigatory, response,
remedial or cleanup costs, damages to natural resources, personal injuries,
fines or penalties) arising out of, based on or resulting from (i) the presence,
Use or Release into the environment of any Hazardous Substance at any location
(whether or not owned, managed or operated by Borrower) that affects Borrower or
any Mortgaged Property, (ii) any fact, circumstance, condition or occurrence
forming the basis of any violation, or alleged violation, of any Environmental
Law or (iii) any alleged injury or threat of injury to human health, safety or
the environment.

 

“Environmental Indemnity Agreement” means the Environmental Indemnity Agreement
dated as of the Closing Date, from Borrower and the Guarantor, collectively, as
indemnitor, to Lender, as indemnitee, as the same may be amended, modified or
supplemented from time to time.

 

“Environmental Laws” means any and all present and future federal, state or
local laws, statutes, ordinances, rules or regulations, or any judicial
interpretation thereof, any judicial or administrative orders, decrees or
judgments thereunder issued by a Governmental Authority, and any permits,
approvals, licenses, registrations, filings and authorizations, in each case as
now or hereafter in effect, relating to the environment, human health or safety,
or the Release or threatened Release of Hazardous Substances or otherwise
relating to the Use of Hazardous Substances.

 

“Environmental Reports” means each and every “Phase I Environmental Site
Assessment” (and, if applicable, “Phase II Environment Site Assessment”) as
referred to in the ASTM Standards on Environmental Site Assessments for
Commercial Real Estate, E 1527-2000 and an asbestos survey, with respect to each
Mortgaged Property, prepared by one or more Environmental Auditors and delivered
to Lender and any amendments or supplements thereto delivered to Lender.

 

“Equipment” means all of Borrower’s right, title and interest, whether now owned
or hereafter acquired, in, to and under (i) all “equipment” as defined in the
UCC, and (ii) all of the following (regardless of how classified under the
UCC):  all building materials, construction

 

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materials, personal property constituting furniture, fittings, appliances,
apparatus, leasehold improvements, machinery, devices, interior improvements,
appurtenances, equipment, plant, furnishings, fixtures, computers, electronic
data processing equipment, telecommunications equipment and other fixed assets
now owned or hereafter acquired by Borrower, and all Proceeds of (i) and (ii) as
well as all additions to, substitutions for, replacements of or accessions to
any of the items recited as aforesaid and all attachments, components, parts
(including spare parts) and accessories, whether installed thereon or affixed
thereto, all regardless of whether the same are located on any Mortgaged
Property or are located elsewhere (including, without limitation, in warehouses
or other storage facilities or in the possession of or on the premises of a
bailee, vendor or manufacturer) for purposes of manufacture, storage,
fabrication or transportation and all extensions and replacements to, and
proceeds of, any of the foregoing.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated thereunder.  Section
references to ERISA are to ERISA, as in effect at the date of this Agreement
and, as of the relevant date, any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.

 

“ERISA Affiliate” means any corporation or trade or business that is a member of
any group of organizations (i) described in Section 414(b) or (c) of the Code of
which Borrower is a member and (ii) solely for purposes of potential liability
under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code and the
lien created under Section 302(f) of ERISA and Section 412(n) of the Code,
described in Section 414(m) or (o) of the Code of which Borrower is a member.

 

“Event of Default” has the meaning set forth in Section 7.1 hereof.

 

“First Open Defeasance Date” shall mean the earlier of (i) the Payment Date in
March, 2008, or (ii) the date that is two (2) years from the “start up day”
(within the meaning of Section 860G(a)(9) of the IRC) of the REMIC Trust
established in connection with the final Securitization involving the Loan.

 

“First Open Prepayment Date” is the Payment Date which is in the second month
preceding the month in which the Scheduled Maturity Date occurs.  For example,
if the Scheduled Maturity Date is February 1, 2013, the First Open Prepayment
Date is the Payment Date in the month of December, 2012.

 

“First Payment Date” has the meaning set forth in Section 2.5 hereof.

 

“Fiscal Year” means the 12-month period ending on December 31st of each year
(or, in the case of the first fiscal year, such shorter period from the Closing
Date through such date) or such other fiscal year of Borrower as Borrower may
select from time to time with the prior consent of Lender.

 

“Fitch” means Fitch, Inc. and its successors.

 

“Foreign Lender” has the meaning set forth in Section 2.10(b) hereof.

 

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“Fund” has the meaning set forth in the definition of “Permitted Investments”.

 

“Funding Losses” has the meaning set forth in Section 2.5(e) hereof.

 

“GAAP” means generally accepted accounting principles in the United States of
America as of the date of the applicable financial report, consistently applied.

 

“General Intangibles” means all of Borrower’s right, title and interest, whether
now owned or hereafter acquired, in, to and under (i) all “general intangibles”
as defined in the relevant UCC, now owned or hereafter acquired by Borrower and
(ii) all of the following (regardless of how characterized):  all agreements,
covenants, restrictions or encumbrances affecting the Mortgaged Property or any
part thereof.

 

“Governmental Authority” means any nation or government, any state, county,
municipality or other political subdivision thereof or any governmental body,
agency, authority, department or commission (including, without limitation, any
taxing authority) or any instrumentality or officer of any of the foregoing
(including, without limitation, any court or tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any corporation, partnership or other entity directly or
indirectly owned or controlled by the foregoing.

 

“Gross Revenue” means, for any period, the total dollar amount of all income and
receipts received by, or for the account of, Borrower in the ordinary course of
business with respect to the Mortgaged Property, but excluding Loss Proceeds
(other than the proceeds of business interruption insurance or the proceeds of a
temporary Taking in lieu of Rents which shall be included in Gross Revenue).

 

“Guarantor” means Affordable Residential Communities Inc., a Maryland
corporation, and Affordable Residential Communities LP, a Delaware limited
partnership, on a joint and several basis.

 

“Guaranty of Nonrecourse Obligations” means, with respect to the Loan, the
Guaranty of Nonrecourse Obligations guaranteeing the exceptions to the
nonrecourse provisions of the Loan Documents for which liability is retained as
described in Section 9.24 hereof from the Guarantor to Lender.

 

“Hazardous Substance” means, collectively, (i) any petroleum or petroleum
products or waste oils, explosives, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), lead in
drinking water, lead-based paint and radon, (ii) any chemicals or other
materials or substances which are now or hereafter become defined as or included
in the definitions of “hazardous substances”, “hazardous wastes”, “hazardous
materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic
substances”, “toxic pollutants”, “contaminants”, “pollutants” or words of
similar import under any Environmental Law, and (iii) any other chemical or any
other hazardous material or substance, exposure to which is now or hereafter
prohibited, limited or regulated under any Environmental Law.

 

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“Homesites” means, with respect to each Mortgaged Property, the manufactured
housing sites located thereon which are capable of being leased to a Person to
accommodate a manufactured or mobile home, the number of each of which is set
forth on Schedule 3 attached hereto, as such number may be updated from time to
time with the mutual written agreement of Lender and Borrower.  Such schedule
shall include a breakdown of manufactured housing sites that are capable of
accommodating single and double wide manufactured homes, to the extent such
information is reasonably available to the Borrower.

 

“Immediate Repairs” has the meaning set forth in Section 2.13(a)(ii) hereof.

 

“Impositions” means all taxes (including, without limitation, all real estate,
ad valorem, sales (including those imposed on lease rentals), use, single
business, gross receipts, value added, intangible transaction privilege,
privilege or license or similar taxes), assessments (including, without
limitation, all assessments for public improvements or benefits, whether or not
commenced or completed within the term of the Loan), ground rents, water, sewer
or other rents and charges, excises, levies, governmental fees (including,
without limitation, license, permit, inspection, authorization and similar
fees), and all other governmental charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, in respect of each
Mortgaged Property (including all interest and penalties thereon), accruing
during or in respect of the term hereof and which may be assessed against or
imposed on or in respect of or be a Lien upon (1) Borrower (including, without
limitation, all income, franchise, single business or other taxes imposed on
Borrower for the privilege of doing business in the jurisdiction in which each
Mortgaged Property, or any other collateral delivered or pledged to Lender in
connection with the Loan, is located) or Lender, or (2) any Mortgaged Property,
or any other collateral delivered or pledged to Lender in connection with the
Loan, or any part thereof or any Rents therefrom or any estate, right, title or
interest therein, or (3) any occupancy, operation, use or possession of, or
sales from, or activity conducted on, or in connection with any Mortgaged
Property or the leasing or use of any Mortgaged Property or any part thereof, or
the acquisition or financing of the acquisition of any Mortgaged Property by
Borrower.

 

“Improvements” means all buildings, structures, fixtures and improvements now or
hereafter owned by Borrower of every nature whatsoever situated on any Land
constituting part of the Mortgaged Property (including, without limitation, all
gas and electric fixtures, radiators, heaters, engines and machinery, boilers,
ranges, elevators and motors, plumbing and heating fixtures, carpeting and other
floor coverings, water heaters, awnings and storm sashes, and cleaning apparatus
which are or shall be affixed to the Land or said buildings, structures or
improvements and including any additions, enlargements, extensions,
modifications, repairs or replacements thereto).

 

“Indebtedness” means the Principal Indebtedness, together with all other
obligations and liabilities due or to become due to Lender pursuant hereto,
under the Note or in accordance with any of the other Loan Documents, and all
other amounts, sums and expenses paid by or payable to Lender hereunder or
pursuant to the Note or any of the other Loan Documents.

 

“Indemnified Parties” has the meaning set forth in Section 5.1(i).

 

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“Independent” means, when used with respect to any Person, a Person that (i)
does not have any direct financial interest or any material indirect financial
interest in Borrower or in any Affiliate of Borrower, (ii) is not connected with
Borrower or any Affiliate of Borrower as an officer, employee, trustee, partner,
director or person performing similar functions, and (iii) is not a member of
the immediate family of any Person described in clauses (i) or (ii).

 

“Independent Manager” has the meaning set forth in Section 8.1(ee).

 

“Instruments” means all of Borrower’s right, title and interest, whether now
owned or hereafter acquired, in, to and under all “instruments” as defined in
the UCC.

 

“Insurance Escrow Account” has the meaning set forth in Section 2.13(b).

 

“Insurance Premiums” has the meaning set forth in Section 5.1(x)(iii).

 

“Insurance Proceeds” means, in the event of a casualty with respect to the
Mortgaged Property, the proceeds received under any insurance policy applicable
thereto.

 

“Insurance Requirements” means all material terms of any insurance policy
required pursuant to this Agreement or any of the Mortgages and all material
regulations, rules and other requirements of the National Board of Fire
Underwriters or such other body exercising similar functions applicable to or
affecting the Mortgaged Property or any part thereof or any use or condition
thereof.

 

“Insured Casualty” has the meaning set forth in Section 5.1(x)(iv)(B).

 

“Intellectual Property” means all of Borrower’s right, title and interest,
whether now owned or hereafter acquired, in, to and under the trademark
licenses, trademarks, rights in intellectual property, trade names, service
marks and copyrights, copyright licenses, patents, patent licenses or the
license to use intellectual property such as computer software owned or licensed
by Borrower or other proprietary business information relating to Borrower’s
policies, procedures, manuals and trade secrets.

 

“Interested Parties” has the meaning set forth in Section 5.1(w) hereof.

 

“Inventory” means all of Borrower’s right, title and interest, whether now owned
or hereafter acquired, in, to and under all “inventory” as defined in the UCC
and shall include all Documents representing the same.

 

“Investment Property” means all of Borrower’s right, title and interest, whether
now owned or hereafter acquired, in, to and under all “investment property” as
defined in the UCC.

 

“IRS” has the meaning provided in Section 2.10(b) hereof.

 

“Land” means the parcels of real estate described on Exhibit A attached to the
Mortgages and made a part hereof.

 

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“Leases” means all leases, subleases, lettings, occupancy agreements, tenancies
and licenses by Borrower as landlord of the Mortgaged Property or any part
thereof now or hereafter entered into, and all amendments, extensions, renewals
and guarantees thereof, and all security therefor.

 

“Leasing Commissions” means leasing commissions incurred by Borrower in
connection with leasing any Mortgaged Property or any portion thereof (including
renewals of existing Leases).

 

“Legal Requirements” means all governmental statutes, laws, rules, orders,
regulations, ordinances, judgments, decrees and injunctions of Governmental
Authorities (including, without limitation, any of the foregoing relating to
zoning, parking or land use, any and all Environmental Laws and the Americans
with Disabilities Act) affecting Borrower or any Mortgaged Property or any part
thereof or the construction, use, alteration or operation thereof, or any part
thereof (whether now or hereafter enacted and in force), and all permits,
licenses and authorizations and regulations relating thereto, and all covenants,
agreements, restrictions and encumbrances contained in any instruments, at any
time in force affecting the Mortgaged Property or any part thereof or any
utility services or septic systems or other infrastructure serving any portion
of the Mortgaged Property (including, without limitation, any which may (i)
require repairs, modifications or alterations in or to the Mortgaged Property or
any part thereof or any utility services or septic systems or other
infrastructure serving any portion of the Mortgaged Property, or (ii) in any way
limit the use and enjoyment thereof).

 

“Lender” has the meaning provided in the first paragraph of this Agreement.

 

“Letter of Credit Rights” means all of Borrower’s right, title and interest,
whether now owned or hereafter acquired, in, to and under all “letter of credit
rights” as defined in the UCC.

 

“Lien” means any mortgage, deed of trust, lien (statutory or other), pledge,
hypothecation, assignment, security interest, or any other encumbrance or charge
on or affecting Borrower or any Mortgaged Property or any portion thereof, or
any interest therein (including, without limitation, any conditional sale or
other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, and mechanic’s, materialmen’s and
other similar liens and encumbrances).

 

“Loan” means the loan made by Lender to Borrower pursuant to the terms of this
Agreement.

 

“Loan Amount” means an amount equal to $34,254,000.00.

 

“Loan Documents” means this Agreement, the Note, the Contract Assignment, the
Management Agreement, the Manager’s Subordination, the Mortgages, the
Assignments of Rents and Leases, the Environmental Indemnity Agreement, the
Guaranty of Non-Recourse Obligations, the Side Agreement and all other
agreements, instruments, certificates and documents delivered by or on behalf of
Borrower or an Affiliate of Borrower to evidence or secure the Loan as same may
be amended or modified from time to time.

 

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“Local Collection Account” and “Local Collection Account Bank” have the meanings
set forth in Section 2.12(a).

 

“Local Collection Account Agreement” means with respect to the Local Collection
Account, the lockbox agreement, dated as of the applicable date and executed by
Borrower, Lender and the Local Collection Account Bank.

 

“Loss Proceeds” means Condemnation Proceeds and/or Insurance Proceeds.

 

“Loss Proceeds Account” has the meaning set forth in Section 2.12(f) hereof.

 

“Losses” has the meaning set forth in Section 5.1(j).

 

“Management Agreement” means with respect to any Mortgaged Property, the
property management agreement entered into between Borrower and the Manager, in
such form as may be reasonably approved by Lender, as such agreement(s) may be
amended, modified or supplemented in accordance with the terms and conditions
hereof from time to time, and any management agreement which may hereafter be
entered into with respect to any Mortgaged Property in accordance with the terms
and conditions hereof, as the same may be amended, modified or supplemented in
accordance with the terms and conditions hereof from time to time.

 

“Manager” means ARC Management Services, Inc., a Delaware corporation, the
current manager of the Mortgaged Property under the current Management
Agreement, or such other Person as may hereafter be charged with management of
any Mortgaged Property pursuant to a Management Agreement entered into in
accordance with the terms and conditions hereof.

 

“Manager’s Subordination” means, with respect to each Mortgaged Property,
initially each Manager’s Consent and Subordination of Management Agreement, each
executed by the Manager, Borrower and Lender, dated as of the Closing Date, and
in the event a successor or assignee Manager is engaged at any Mortgaged
Property, a subordination agreement executed by Manager, Borrower and Lender in
form and substance satisfactory to Lender, whereby, among other things, the
Management Agreement is subordinated to the Indebtedness and to the Lien of the
Mortgages so long as the Loan remains outstanding.

 

“Master Homesite Lease Agreement” means, with respect to each legal entity
comprising the Borrower, the related Master Homesite Lease Agreement, dated as
of February __, 2004, by and between ARC Housing, LLC (or with respect to any
Mortgaged Property located in Texas, ARC Housing TX LP, a Delaware limited
partnership) and such entity comprising the Borrower.

 

“Master Homesite Lease Documentation” means, individually or collectively, as
applicable, each and every Master Homesite Lease Agreement.

 

“Master Lease Deposits” means the security deposits under the Master Homesite
Lease Documentation.

 

“Master Lease Deposit Account” has the meaning set forth in Section 2.12(a)(i).

 

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“Material Adverse Effect” means a material adverse effect upon (i) the business
operations, properties, assets or condition (financial or otherwise) of
Borrower, (ii) the ability of Borrower to perform, or of Lender to enforce, any
of the Loan Documents or (iii) the aggregate value of the Mortgaged Property.

 

“Maturity Date” means the earlier of (a) the Scheduled Maturity Date or (b) such
earlier date on which the entire Loan is required to be paid in full, by
acceleration or otherwise under this Agreement or any of the other Loan
Documents.

 

“Maximum Rate” has the meaning set forth in Section 2.5(i) hereof.

 

“Member” means ARC Real Estate Holdings, LLC, a Delaware limited liability
company.

 

“Moody’s” means Moody’s Investors Services, Inc. and its successors.

 

“Money” means all of Borrower’s right, title and interest, whether now owned or
hereafter acquired, in, to and under (i) all “money” as defined in the UCC and
(ii) all moneys, cash, or other items of legal tender generated from the use or
operation of the Mortgaged Property.

 

“Monthly Debt Service Payment” has the meaning set forth in Section 2.5 hereof.

 

“Monthly Debt Service Payment Amount” has the meaning set forth in Section 2.5
hereof.

 

“Mortgage” means, with respect to the Mortgaged Property, a first priority
Mortgage or Deed of Trust (as applicable), Assignment of Leases and Rents,
Security Agreement and Fixture Filing, dated as of the Closing Date (and, if
there are more than one, each and every one of them), granted by the Borrower to
or for the benefit of Lender or Deed of Trust Trustee for the benefit of Lender,
respectively, with respect to the Mortgaged Property as security for the Loan,
as same may thereafter from time to time be supplemented, amended, modified or
extended by one or more agreements supplemental thereto.

 

“Mortgaged Property” means, at any time, individually or collectively, as
applicable, the Land, the Improvements, the Personalty, the Leases and the
Rents, and all rights, titles, interests and estates appurtenant thereto,
encumbered by, and more particularly described in, each of the Mortgages.

 

“Multiemployer Plan” means a multiemployer plan defined as such in Section 3(37)
of ERISA and which is covered by Title IV of ERISA (i) to which contributions
have been, or were required to have been made by Borrower or any ERISA Affiliate
within the past six years or (ii) with respect to which Borrower could
reasonably be expected to incur liability.

 

“Net Proceeds” means either (x) the purchase price (at foreclosure or otherwise)
actually received by Lender from a third party purchaser with respect to any
Mortgaged Property, as a result of the exercise by Lender of its rights, powers,
privileges and other remedies after the occurrence of an Event of Default or (y)
in the event that Lender (or its nominee) is the

 

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purchaser at foreclosure of any Mortgaged Property, the higher of (i) the amount
of Lender’s credit bid or (ii) such amount as shall be determined in accordance
with applicable law, and in either case minus all reasonable third party, out of
pocket costs and expenses (including, without limitation, all attorneys’ fees
and disbursements and any brokerage fees, if applicable) incurred by Lender (and
its nominee, if applicable) in connection with the exercise of such remedies;
provided, however, that such costs and expenses shall not be deducted to the
extent such amounts previously have been added to the Indebtedness in accordance
with the terms of the Loan Documents or applicable law.

 

“Note” means one or more promissory notes made by Borrower to Lender pursuant to
this Agreement, as such note may be modified, amended, supplemented, restated or
extended, and any replacement notes therefor.

 

“O&M Program” has the meaning set forth in Section 5.1(d)(iv) hereof.

 

“OFAC” has the meaning set forth in Section 4.1(v) hereof.

 

“Officer’s Certificate” means a certificate delivered to Lender by Borrower
which is signed by an authorized officer of Borrower.

 

“Operating Budget” means, with respect to any Fiscal Year, the operating budget
for the Mortgaged Property reflecting Borrower’s projections of Gross Revenues
and Property Expenses for the Mortgaged Property for such Fiscal Year and on an
annual and monthly basis and submitted by Borrower to Lender in accordance with
the provisions of Section 5.1(r)(viii), which Operating Budget shall include, as
a component thereof, a Working Capital Budget.

 

“Operating Expense Account” has the meaning provided in Section 2.13(c).

 

“Operating Expenses” means, for any period of calculation, all expenditures
incurred and required to be expensed under GAAP during such period in connection
with the ownership, operation, maintenance, repair and/or leasing of the
Mortgaged Property, including without limitation (or duplication) Property
Expenses.  Notwithstanding the foregoing, Operating Expenses shall not include
(a) Capital Improvement Costs, (b) any extraordinary items (unless Lender and
Borrower approve of the inclusion of such items as Operating Expenses), (c)
depreciation, amortization and other non-cash charges or (d) any payments of
principal or interest on the Indebtedness or otherwise payable to the holder of
the Indebtedness.  Operating Expenses shall be calculated on the accrual basis
of accounting.

 

“Operating Revenues” means, for any period, all regular ongoing income during
such period from the operation of the Mortgaged Property that, in accordance
with GAAP, is included in annual financial statements as revenue. 
Notwithstanding the foregoing, Operating Revenues shall not include (a) any Loss
Proceeds (other than business interruption proceeds or Condemnation Proceeds in
connection with a temporary Taking and, in either case, only to the extent
allocable to such period or other applicable reporting period), (b) any proceeds
resulting from the sale, exchange, transfer, financing or refinancing of the
Mortgaged Property, (c) any Rent attributable to a Lease more than one month
prior to the date on which the actual payment of Rent is required to be made
thereunder, (d) any interest income from any source, or (e) any

 

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other extraordinary items as reasonably determined by Lender.  Operating
Revenues shall be calculated on the accrual basis of accounting.

 

“Organizational Agreements” means, individually or collectively, (i) the
certificate of formation and operating agreement, (ii) the certificate of
limited partnership and partnership agreement, (iii) the certificate of
incorporation and by-laws or (iv) the trust agreement or other organizational
documents, as applicable of any Person, each as amended or restated from time to
time.

 

“Origination Fee” means 0.5% of the Loan Amount, payable to Lender on the
Closing Date.

 

“Other Borrowings” means, with respect to Borrower, without duplication (but not
including the Indebtedness or any interest rate protection agreement entered
into pursuant hereto) (i) all indebtedness of Borrower for borrowed money or for
the deferred purchase price of property or services, (ii) all indebtedness of
Borrower evidenced by a note, bond, debenture or similar instrument, (iii) the
face amount of all letters of credit issued for the account of Borrower and,
without duplication, all unreimbursed amounts drawn thereunder, and obligations
evidenced by bankers’ acceptances, (iv) all indebtedness of Borrower secured by
a Lien on any property owned by Borrower (whether or not such indebtedness has
been assumed), (v) all Contingent Obligations of Borrower, (vi) liabilities and
obligations for the payment of money relating to a capitalized lease obligation
or sale/leaseback obligation, (vii) liabilities and obligations representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of Borrower’s business that would
constitute ordinarily a trade payable to trade creditors, and (viii) all payment
obligations of Borrower, if any, under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
or similar agreements) and similar agreements.

 

“Partial Defeasance” has the meaning set forth in Section 2.7.

 

“Partial Defeasance Amount” has the meaning set forth in Section 2.17

 

“Partial Defeasance Collateral” shall mean U.S. Obligations, which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under the Defeased Note after the
Defeasance Date and up to and including the Scheduled Maturity Date, and (ii) in
amounts equal to or greater than the respective Scheduled Defeasance Payments
related to such Payment Dates.

 

“Partial Release” has the meaning set forth in Section 2.17.

 

“Partial Release Property” has the meaning set forth in Section 2.17.

 

“Payment Date” has the meaning provided in Section 2.5(a).

 

“Payment Intangibles” means all of Borrower’s right, title and interest, whether
now owned or hereafter acquired, in, to and under all “payment intangibles” as
defined in the UCC.

 

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“PBGC” means the Pension Benefit Guaranty Corporation established under ERISA,
or any successor thereto.

 

“Permits” means all licenses, permits, variances and certificates required by
Legal Requirements to be obtained by Borrower and used in connection with the
ownership, operation, use or occupancy of the Mortgaged Property (including,
without limitation, certificates of occupancy, building permits, business
licenses, state health department licenses, licenses to conduct business and all
such other permits, licenses and rights, obtained from any Governmental
Authority or private Person concerning ownership, operation, use or occupancy of
the Mortgaged Property).

 

“Permitted Encumbrances” means, with respect to the Mortgaged Property,
collectively, (i) the Lien created by the related Mortgages, or any other Loan
Documents of record encumbering each Mortgaged Property, (ii) all Liens and
other matters disclosed on the Title Insurance Policy concerning each Mortgaged
Property, (iii) Liens, if any, for Impositions imposed by any Governmental
Authority not yet delinquent or being contested in good faith and by appropriate
proceedings in accordance with Section 5.1(b)(ii) hereof and the related
Mortgages, (iv) mechanic’s or materialmen’s Liens, if any, being contested in
good faith and by appropriate proceedings in accordance with Section 5.1(b)(ii)
hereof and the related Mortgages, provided that no foreclosure has been
commenced by the lien claimant, (v) rights of existing and future tenants and
residents as tenants only pursuant to Leases, (vi) Liens for public utilities
and (vii) claims against Homesites incurred by tenants or other occupants of the
Mortgaged Property which claims, to the extent they affect the Mortgaged
Property, are contested in good faith and by appropriate proceedings in
accordance with Section 5.1(b)(ii) hereof, which Liens and encumbrances referred
to in clauses (i)-(vii) above do not materially and adversely affect (1) the
ability of Borrower to pay in full the Principal Indebtedness and interest
thereon in a timely manner or (2) the use of any Mortgaged Property for the use
currently being made thereof, the operation of any Mortgaged Property as
currently being operated.

 

“Permitted Investments” means any one or more of the following obligations or
securities acquired at a purchase price of not greater than par:

 

(i)                                     obligations of, or obligations fully
guaranteed as to payment of principal and interest by, the United States or any
agency or instrumentality thereof provided such obligations are backed by the
full faith and credit of the United States of America;

 

(ii)                                  obligations of the following United States
of America government sponsored agencies, provided such obligations are backed
by the full faith and credit of the United States of America: Federal Home Loan
Mortgage Corp. (debt obligations), the Farm Credit System (consolidated
systemwide bonds and notes), the Federal Home Loan Banks (consolidated debt
obligations), the Federal National Mortgage Association (debt obligations), the
Financing Corp. (debt obligations), and the Resolution Funding Corp. (debt
obligations);

 

(iii)                               federal funds, unsecured certificates of
deposit, time deposits, bankers’ acceptances and repurchase agreements with
maturities of not more than 365 days of any

 

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bank, the short-term obligations of which are rated in the highest short-term
rating category by the Rating Agencies;

 

(iv)                              certificates of deposit, time deposits, demand
deposits or banker’s acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state banking
authorities, the short-term obligations of which are rated in the highest
short-term rating category by the Rating Agencies, which investments are fully
insured by the Federal Deposit Insurance Corp.;

 

(v)                                 debt obligations with maturities of not more
than 365 days and rated by the Rating Agencies in its highest long-term
unsecured rating category;

 

(vi)                              commercial paper (including both
non-interest-bearing discount obligations and interest-bearing obligations
payable on demand or on a specified date not more than one year after the date
of issuance thereof) with maturities of not more than 270 days and that is rated
by the Rating Agencies in their highest short-term unsecured debt rating; and

 

(vii)                           any other demand, money market or time deposit,
demand obligation or any other obligation, security or investment, which Lender
shall have approved in writing and for which Borrower shall have delivered a
Rating Confirmation;

 

provided, however, that (A) the investments described in clauses (i) through
(vii) above must have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if such investments have a variable rate of
interest, such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, (C) such
investments must not be subject to liquidation prior to their maturity or have
an “r” highlighter affixed to its rating by S&P, and (D) such investments must
not be subject to liquidation prior to their maturity; and provided, further,
that, in the judgment of Lender, such instrument continues to qualify as a “cash
flow investment” pursuant to Code Section 860G(a)(6) earning a passive return in
the nature of interest and that no instrument or security shall be a Permitted
Investment if such instrument or security evidences (x) a right to receive only
interest payments or (y) the right to receive principal and interest payments
derived from an underlying investment at a yield to maturity in excess of 120%
of the yield to maturity at par of such underlying investment.

 

“Permitted Transfer” means any conveyance, assignment, sale or other disposition
(and not a mortgaging, encumbrance, pledging, hypothecation, or granting of a
security interest) (directly or indirectly) of not more than 49% of the voting
and beneficial ownership interests in any legal entity comprising Borrower or
the Member following which Affordable Residential Communities LP (i) owns
(directly or indirectly) 51% or more of such voting and beneficial ownership
interests in each legal entity comprising Borrower and (ii) controls the
operations and management of Borrower; provided, that any such Transfer referred
to above which takes the form of a Transfer of the equity ownership interests in
any legal entity comprising Borrower or the Member to a transferee which
(collectively amongst itself and its Affiliates that own such equity ownership
interests) acquires (directly or indirectly) a greater than 49% ownership
interest

 

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in such legal entity comprising Borrower or the Member, or which acquires
control over the operations and management of such legal entity comprising
Borrower or the Member, shall not be permitted unless, in addition to
satisfaction of the conditions set forth in clauses (i) and (ii) of this
definition above, Borrower delivers to Lender (1) a substantive
non-consolidation opinion in form and substance reasonably acceptable to Lender
and the Rating Agencies, if required by Lender or the Rating Agencies and (2) a
Rating Confirmation.

 

“Person” means any individual, corporation, limited liability company,
partnership, joint venture, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.

 

“Personalty” means all right, title and interest of Borrower in and to all
Equipment, Inventory, Accounts, General Intangibles, Instruments, Investment
Property, Receivables, Pledged Accounts, Deposit Accounts, Contracts and
Intellectual Property and all other personal property as defined in the relevant
UCC, now owned or hereafter acquired by Borrower and now or hereafter affixed
to, placed upon, used in connection with, arising from or otherwise related to
the Mortgaged Property or which may be used in or relating to the planning,
development, financing or operation of such Mortgaged Property, including,
without limitation, furniture, furnishings, equipment, machinery, money,
insurance proceeds, accounts, contract rights, trademarks, goodwill, chattel
paper, documents, trade names, licenses and/or franchise agreements, rights of
Borrower under leases of fixtures or other personal property or equipment,
inventory, all refundable, returnable or reimbursable fees, deposits or other
funds or evidences of credit or indebtedness deposited by or on behalf of
Borrower with any governmental authorities, boards, corporations, providers of
utility services, public or private, including specifically, but without
limitation, all refundable, returnable or reimbursable tap fees, utility
deposits, commitment fees and development costs.

 

“Plan” means an employee benefit or other plan, other than a Multiemployer Plan,
that is covered by Title IV of ERISA or Section 302 of ERISA or Section 412 of
the Code, and (i) was established or maintained by Borrower or any ERISA
Affiliate during the five year period ended prior to the date of this Agreement
or to which Borrower or any ERISA Affiliate makes, is obligated to make or has,
within the five year period ended prior to the date of this Agreement, been
required to make contributions or (ii) with respect to which Borrower could
reasonably be expected to incur liability.

 

“Pledged Accounts” means the Local Collection Account(s), the Collection
Account, the Reserve Accounts, the Loss Proceeds Account, the Security Deposit
Account, the Master Lease Deposit Account, any additional accounts now or
hereafter maintained by or on behalf of Borrower hereunder and any sub-accounts
of any of the foregoing and any successor accounts to any of the foregoing.

 

“Policies” has the meaning provided in Section 5.1(x)(iii).

 

“Pre-existing Condition” has the meaning set forth in Section 5.1(x)(iii)(B)
hereof.

 

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“Principal Indebtedness” means the principal amount of the Loan outstanding as
adjusted by each increase (including advances made by Lender to protect the
Collateral), or decrease in such principal amount of the Loan outstanding,
whether as a result of prepayment or otherwise, from time to time.

 

“Prepaid Rent Account” has the meaning provided in 2.13(d).

 

“Prepayment Consideration” has the meaning set forth in Section 2.6(c) hereof.

 

“Proceeds” shall have the meaning given in the UCC and, in any event, shall
include, without limitation, all of Borrower’s right, title and interest in and
to proceeds, product, offspring, rents, profits or receipts, in whatever form,
arising from the Collateral.

 

“Prohibited Person” has the meaning set forth in Section 4.1(v) hereof.

 

“Property Expenses” means, with respect to the Mortgaged Property, the following
costs and expenses but only, in the case of costs and expenses in respect of
goods and services, to the extent that they (x) are paid to Persons who are
generally in the business of providing such goods and services, (y) are
customary for the types of goods or services provided in the geographical area
in which such goods or services are provided and (z) do not constitute Capital
Improvement Costs:

 

(i)                                     Impositions;

 

(ii)                                  insurance premiums for policies of
insurance required to be maintained by Borrower pursuant to this Agreement or
the other Loan Documents or otherwise maintained by Borrower or an Affiliate of
Borrower on behalf of Borrower in the ordinary course of business with respect
to the Mortgaged Property;

 

(iii)                               the cost of all electricity, oil, gas,
water, steam, heat, ventilation, air conditioning and any other energy, utility
or similar item and overtime services with respect to the Mortgaged Property;

 

(iv)                              payments required under service contracts for
any services or items used at the Mortgaged Property or otherwise used in the
operation of the Mortgaged Property (including, without limitation, service
contracts for heating, ventilation and air conditioning systems, elevators,
landscape maintenance, pest extermination, security, furniture, trash removal,
answering service and credit checks);

 

(v)                                 wages, benefits, payroll taxes, uniforms,
the cost of cleaning supplies and all related expenses for on-site personnel
directly involved in the day-to-day operation of the Mortgaged Property
(including, without limitation, full time, part time, or seasonal employees,
allocated between a number of properties and general repair, maintenance and
security employees), whether hired by Borrower, Manager or any other Person;

 

(vi)                              costs required in connection with the
enforcement of any Lease (including, without limitation, reasonable attorneys’
fees, charges for lock changes and storage and moving expenses for furniture,
fixtures and equipment);

 

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(vii)                           advertising and rent-up expenses (including,
without limitation, leasing services, tenant rent concessions, promotions for
existing and prospective tenants, banners and signs);

 

(viii)                        out-of-pocket cleaning, maintenance and repair
expenses;

 

(ix)                                any expense the total cost of which is
passed through to tenants pursuant to executed Leases;

 

(x)                                   legal, accounting, auditing and other
professional fees and expenses incurred in connection with the ownership,
leasing and operation of the Mortgaged Property (including, without limitation,
collection costs and expenses);

 

(xi)                                permits, licenses and registration fees and
costs;

 

(xii)                             any expense necessary in order to prevent a
breach under a Lease;

 

(xiii)                          any expense necessary in order to prevent or
cure a violation of any Legal Requirement (including Environmental Law),
regulation, code or ordinance;

 

(xiv)                         costs and expenses of any appraisals, valuations,
surveys, inspections, environmental assessments or market studies, zoning
reports;

 

(xv)                            costs and expenses of security and security
systems provided to and/or installed and maintained with respect to the
Mortgaged Property;

 

(xvi)                         costs of title, UCC, litigation and other searches
and costs of maintaining the Lien of the Mortgages thereon and the security
interest in any related Collateral;

 

(xvii)                      fees and expenses of property managers contracted
with by Borrower to perform management, administrative, payroll or other
services in connection with the operation of the Mortgaged Property (including,
without limitation, the fees and expenses owed to Manager under any Management
Agreement which the Lender has approved in accordance with this Agreement);

 

(xviii)                   any other costs and expenses contemplated by the
Operating Budget and customarily incurred in connection with operating
properties similar in type and character to the Mortgaged Property; and

 

(xix)                           any other category of property expense that is
customary for a property of the type and size as the Mortgaged Property and is
reasonably approved by Lender.

 

“Quarterly Statement” has the meaning provided in Section 2.12(e).

 

“Rating Agencies” means at least two of Fitch, Moody’s and S&P (or, if a
Secondary Market Transaction has occurred in which Securities have been issued,
each of the foregoing that rated such Securities).

 

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“Rating Criteria” with respect to any Person, means that (i) the short-term
unsecured debt obligations of such Person are rated at least “A-1” by S&P, “P-1”
by Moody’s and “F-1” by Fitch, if deposits are held by such Person for a period
of less than one month, or (ii) the long-term unsecured debt obligations of such
Person are rated at least “AA-” by S&P, “Aa3” by Moody’s and “AA-” by Fitch, if
deposits are held by such Person for a period of one month or more.

 

“Rating Confirmation” with respect to any transaction, matter or action in
question, means: (i) if all or any portion of the Loan, by itself or together
with other loans, has been the subject of a Secondary Market Transaction, the
written confirmation of the Rating Agencies that such transaction, matter or
action shall not, in and of itself, result in the downgrading, withdrawal or
qualification of the then-current ratings assigned to any of the Securities
issued in connection with a Secondary Market Transaction; and (ii) if any
portion of the Loan has not been the subject of a Secondary Market Transaction,
Lender shall have determined in its reasonable discretion (taking into
consideration such factors as Lender may determine, including the attributes of
the loan pool in which any portion of the Loan reasonably be expected to be
securitized) that no rating for any Securities that would be issued in
connection with a Secondary Market Transaction involving any of such portion of
the Loan would be downgraded, qualified, or withheld by reason of such
transaction, matter or action.

 

“Real Estate Taxes Escrow Account” has the meaning provided in Section 2.13(b).

 

“Receivables” means all of Borrower’s right, title and interest, whether now
owned or hereafter acquired, in, to and under (i)  any Accounts, Chattel Paper,
Instruments, Payment Intangibles, Letter of Credit Rights, Documents, insurance
policies, drafts, bills of exchange, trade acceptances, notes or other
indebtedness owing to Borrower from whatever source arising, (ii) to the extent
not otherwise included above, (a) all income, Rents, issues, profits, revenues,
deposits and other benefits from the Mortgaged Property and (b) all receivables
and other obligations now existing or hereafter arising, or created out of the
sale, lease, sublease, license, concession or other grant of the right of the
use and occupancy of property or rendering of services by Borrower or any
operator or manager of the Mortgaged Property or other commercial space located
at the Mortgaged Property or acquired from others (including, without limiting
the generality of the foregoing, from rental of space, halls, stores, and
offices, and deposits securing reservations of such space, exhibit or sales
space of every kind, license, lease, sublease and concession fees and rentals,
wholesale and retail sales of merchandise, service charges, vending machine
sales and proceeds, if any, from business interruption or other loss of income
insurance,  (iii) all of the books and records (whether in tangible, electronic
or other form) now or hereafter maintained by or on behalf of Borrower in
connection with the operation of the Mortgaged Property or in connection with
any of the foregoing and (iv) all Supporting Obligations and all liens and
security interests securing any of the foregoing and all other rights,
privileges and remedies relating to any of the foregoing.

 

“Release” means any active or passive release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
the movement of Hazardous Substances through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata).

 

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“Remedial Work” has the meaning set forth in Section 5.1(d)(i).

 

“Rents” means all income, rents (including base rent), issues, profits, revenues
(including all oil and gas or other mineral royalties and bonuses), deposits
(other than utility and security deposits) and other benefits from the Mortgaged
Property.

 

“Replacement Reserve Account” has the meaning set forth in Section 2.13(a).

 

“Replacement Reserve Deposit Amount” means an amount equal to one-twelfth
(1/12th) of the product of $50.00 and the number of Homesites at the Mortgaged
Property; provided, that, notwithstanding the foregoing, in the event the Lender
determines in its reasonable discretion that an increase in such amount is
necessary to maintain proper operation of the Mortgaged Properties, then upon
not less than thirty (30) days prior written notice to the Borrower, the Lender
may increase the aforementioned amount based upon its reassessment of the amount
necessary for Capital Improvement Costs from time to time.

 

“Replacement Reserve Threshold Amount” means the product of $50.00 (or such
higher amount as the Lender shall reasonably determine pursuant to the proviso
to the definition of Replacement Reserve Deposit Amount) and the number of
Homesites at the Mortgaged Property.

 

“Reserve Account(s)” means the Deferred Maintenance Escrow Account, the
Replacement Reserve Account, the Real Estate Taxes Escrow Account, the Insurance
Escrow Account, the Operating Expense Account, Working Capital Reserve Account,
the Debt Service Reserve Account and the Prepaid Rent Account, collectively, and
any successor accounts to any of the foregoing.

 

“Restoration” has the meaning set forth in Section 5.1(x)(iii)(B).

 

“Scheduled Defeasance Payments” shall mean scheduled payments of interest and
principal under the Note in the case of a Total Defeasance and under the
Defeased Note in the case of a Partial Defeasance for all Payment Dates
occurring after the Defeasance Date and up to and including the Scheduled
Maturity Date (including, in the case of a Total Defeasance, the outstanding
principal balance of the Loan as of the Scheduled Maturity Date and, in the case
of a Partial Defeasance, the outstanding principal balance of the Defeased Note
as of the Scheduled Maturity Date), and all payments required after the
Defeasance Date, if any, under the Loan Documents for servicing fees, and other
similar charges.

 

“Scheduled Maturity Date” mean March 1, 2014.

 

“S&P” shall mean Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc and its successors.

 

“Secondary Market Transaction” has the meaning set forth in Section 5.1(w).

 

“Security Agreement” shall mean a security agreement in form and substance that
would be satisfactory to a prudent lender pursuant to which Borrower grants
Lender a perfected,

 

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first priority security interest in the Defeasance Collateral Account and the
Defeasance Collateral.

 

“Securities” means mortgage pass-through certificates or other securities issued
in a Secondary Market Transaction and evidencing a beneficial interest in or
secured in whole or in part by the Loan in a rated or unrated public offering or
private placement.

 

“Security Deposit Account” has the meaning set forth in Section 2.12(a)(i).

 

“Side Agreement” means that certain Side Agreement dated as of the date hereof,
by and among Guarantor, Borrower and Lender.

 

“Single Member” has the meaning set forth in Section 8.1(ee).

 

“Supporting Obligations” means all of Borrower’s right, title and interest,
whether now owned or hereafter acquired, in, to and under (i) all “supporting
obligations” as defined in the UCC and (ii) any other guarantee, letter of
credit, secondary obligation, right or privilege that supports or pertains to
any of the Mortgaged Property.

 

“Survey” means a certified ALTA/ACSM survey of each Mortgaged Property prepared
by a registered Independent surveyor, containing the form of survey or
certification provided to Borrower by Lender and in form and content reasonably
satisfactory to Lender and the company issuing the Title Insurance Policy for
each Mortgaged Property.

 

“Taking” means a taking or voluntary conveyance during the term hereof of all or
part of any Mortgaged Property, or any interest therein or right accruing
thereto or use thereof, as the result of, or in settlement of, any condemnation
or other eminent domain proceeding by any Governmental Authority affecting the
Mortgaged Property or any portion thereof whether or not the same shall have
actually been commenced.

 

“Tax Liabilities” has the meaning set forth in Section 2.10(a) hereof.

 

“Title Insurance Policy” means a mortgagee’s title insurance policy or policies
(i) issued by one or more title companies reasonably satisfactory to Lender
which policy or policies shall (unless Lender otherwise requires or consents) be
in form ALTA 1992, where available (with waiver of arbitration provisions),
naming Lender as the insured party, (ii) insuring the Mortgages as being a first
and prior lien upon the Mortgaged Property, (iii) showing no encumbrances
against any Mortgaged Property (whether junior or superior to the Mortgages)
which are not reasonably acceptable to Lender other than Permitted Encumbrances,
(iv) in an amount reasonably satisfactory to Lender (it being understood and
agreed that because multiple Mortgaged Properties secure the Loan, a reasonable
requirement shall be deemed to include requiring title insurance for a Mortgaged
Property in the amount of the allocated loan amount (as reasonably determined by
Lender) for such Mortgaged Property if a tie-in endorsement is available in the
State where such Mortgaged Property is located or 125% of the appraised value of
a Mortgaged Property if a tie-in endorsement is not available in the State where
such Mortgaged Property is located or such Mortgaged Property cannot be tied
together with other Mortgaged Properties for any reason), and (v) otherwise in
form and content reasonably acceptable to Lender.  Such Title Insurance Policy
shall include the following endorsements or

 

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affirmative coverages in form and substance reasonably acceptable to Lender, to
the extent available in the jurisdiction in which the Land is located: variable
rate endorsement; survey endorsement; comprehensive endorsement; zoning (ALTA
3.1 with parking added) endorsement; first loss, last dollar and tie-in
endorsement; access coverage; separate tax parcel coverage; contiguity (if
applicable) coverage; and such other endorsements as Lender shall reasonably
require with respect to a particular Mortgaged Property in order to provide
insurance against specific risks identified by Lender in connection with the
Mortgaged Property.

 

“Total Defeasance” shall have the meaning set forth in Section 2.3.

 

“Total Defeasance Collateral” shall mean U.S. Obligations, which provide
payments (i) on or prior to, but as close as possible to, all Payment Dates and
other scheduled payment dates, if any, under the Note after the Defeasance Date
and up to and including the Scheduled Maturity Date, and (ii) in amounts equal
to or greater than the respective Scheduled Defeasance Payments related to such
Payment Dates.

 

“Transaction” means the transactions contemplated by the Loan Documents.

 

“Transaction Costs” means all costs and expenses paid or payable by Borrower
relating to the Transaction (including, without limitation, appraisal fees,
legal fees and accounting fees and the costs and expenses described in Section
9.23).

 

“Transfer” means the conveyance, assignment, sale, mortgaging, encumbrance
(other than a Permitted Encumbrance), pledging, hypothecation, granting of a
security interest in, granting of options with respect to, or other disposition
of (directly or indirectly, voluntarily or involuntarily, by operation of law or
otherwise, and whether or not for consideration or of record) all or any portion
of any direct or indirect (irrespective of the number of tiers of ownership)
legal or beneficial interest (a) in all or any portion of the Mortgaged
Property; or (b) any stock, partnership interests, membership interests or other
ownership interests in Borrower or the Member or the constituent entities
directly or indirectly (irrespective of the number of tiers of ownership) owning
any such stock, partnership interests, membership interests or other ownership
interests.  A Transfer shall also include, without limitation to the foregoing,
the following: an installment sales agreement wherein Borrower agrees to sell
the Mortgaged Property or any part thereof or any interest therein for a price
to be paid in installments; an agreement by Borrower leasing all or a
substantial part of the Mortgaged Property to one or more Persons pursuant to a
single or related transactions, or a sale, assignment or other transfer of, or
the grant of a security interest in, Borrower’s right, title and interest in and
to any Leases or any Rent; execution or consent by Borrower of any instrument
subjecting the Mortgaged Property to a condominium regime or transferring
ownership to a cooperative corporation; and any change of control of Borrower or
the Member.

 

“Treasury Rate” means, on the date on which such rate is calculated, the yield
on the ten year “on the run” U.S. Treasury issue (primary issue) with such yield
being based on the bid price for such issue as reasonably determined by Lender.

 

“UCC” means with respect to any Collateral, the Uniform Commercial Code as in
effect from time to time in the State of New York; provided, that if by reason
of mandatory

 

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provisions of law, the perfection or the effect of perfection or non-perfection
or priority of the security interest in any item or portion of the Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, “UCC” shall mean the Uniform Commercial Code as in
effect in such other jurisdiction for purposes of the provisions hereof relating
to such perfection or effect of perfection or non-perfection or priority. 
Wherever this agreement refers to terms as defined in the UCC, if such term is
defined in more than one Article of the UCC, the definition in Article 9 of the
UCC shall control.

 

“UCC Searches” has the meaning set forth in Section 3.1(v) hereof.

 

“Undefeased Note” has the meaning set forth in Section 2.7.

 

“Underwritten Net Cash Flow” means, as of any date of calculation with respect
to the Mortgaged Property, (i) the Operating Revenues calculated based upon the
base rent portion of the Rents during the most recent three month period for
which such information was furnished to Lender pursuant to Section 5.1(r)(v)
hereof, annualized, plus (ii) any utility and other income during the most
recent twelve month period for which such information was furnished to Lender
pursuant to Section 5.1(r)(v) hereof, minus (iii) the Operating Expenses with
respect to the Mortgaged Property during the most recent twelve month period for
which such information was furnished to Lender pursuant to Section 5.1(r)(v)
hereof, each as determined by Lender and after Lender makes adjustments, if
necessary, for

 

(1)                                  expenses for management fees equal to the
greater of actual management fees or 5.00% of Operating Revenues for such
period,

 

(2)                                  a minimum vacancy allowance equal to 5.00%,

 

(3)                                  an annual minimum capital expenditure
reserve equal to the product of $50.00 multiplied by the total number of
Homesites at the Mortgaged Property,

 

(4)                                  exclusion of rental income and expenses
from manufactured homes owned by Borrower,

 

(5)                                  exclusion of any other revenue items
reasonably deemed nonrecurring by Lender, and

 

(6)                                  inclusion of increases in future operating
costs as determined by Lender, in its sole discretion, so that, assuming current
occupancy, the annualized underwritten Operating Expenses fully reflect the
operating costs expected to be incurred over the next twelve month period.

 

“U.S. Obligations” shall mean securities that are (i) direct obligations of the
United States of America for the full and timely payment of which its full faith
and credit is pledged or (ii) obligations of an entity controlled or supervised
by and acting as an agency or instrumentality and guaranteed as a full faith and
credit obligation which shall be fully and timely paid by the United States of
America, which in either case are not callable or redeemable at the option of
the issuer thereof (including a depository receipt issued by a bank (as defined
in Section 3(a)(2) of the United States Securities Act)) as custodian with
respect to any such U.S.

 

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Obligations or a specific payment of principal of or interest on any such U.S.
Obligations held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the securities or the specific payment of principal of or interest on the
securities evidenced by such depository receipt.

 

“Use” means, with respect to any Hazardous Substance, the generation,
manufacture, processing, distribution, handling, use, treatment, recycling or
storage of such Hazardous Substance or transportation of such Hazardous
Substance in connection with or affecting Borrower or the Mortgaged Property.

 

“Welfare Plan” means an employee welfare benefit plan as defined in Section 3(1)
of ERISA established or maintained by Borrower or any ERISA Affiliate or with
respect to which Borrower or any ERISA Affiliate has an obligation to make
contributions and covers any current or former employee of Borrower or any ERISA
Affiliate.

 

“Working Capital Budget” means, with respect to any Fiscal Year, the component
of the Operating Budget for such fiscal year submitted by Borrower to Lender in
accordance with the provisions of Section 5.1(r)(viii) which sets forth, for
each calendar month or other applicable time period, the amount of the working
capital reserve budgeted for such time period and changed thereto over the
course of such budget period (such working capital reserve amount for any given
time period is herein referred to as the “Working Capital Reserve Amount”).

 

“Working Capital Reserve Account” has the meaning set forth in Section 2.13(d)
hereof.

 

“Working Capital Reserve Amount” has the meaning set forth in the definition of
Working Capital Budget.

 

ARTICLE II.
GENERAL TERMS

 

SECTION 2.1.                                   THE LOAN.

 

(A)                                  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, LENDER SHALL LEND TO BORROWER ON THE CLOSING DATE THE LOAN AMOUNT. 
THE PROCEEDS OF THE LOAN SHALL BE USED SOLELY FOR THE PURPOSES IDENTIFIED IN
SECTION 2.2 HEREOF.  LENDER IS HEREBY AUTHORIZED TO FUND DIRECTLY FROM THE
PROCEEDS OF THE LOAN ADVANCED AT CLOSING (NET OF ANY DEPOSITS OR PAYMENTS MADE
BY BORROWER OR ITS AFFILIATES PRIOR TO CLOSING) (I) THE ORIGINATION FEE, (II)
THE DEPOSITS TO THE DEFERRED MAINTENANCE ESCROW ACCOUNT, THE REAL ESTATE TAXES
ESCROW ACCOUNT, THE INSURANCE ESCROW ACCOUNT AND THE REPLACEMENT RESERVE ACCOUNT
REQUIRED TO BE FUNDED FROM LOAN PROCEEDS PURSUANT TO SECTION 2.13, (III) THE
OUT-OF-POCKET EXPENSES INCURRED BY LENDER IN CONNECTION WITH THE ORIGINATION AND
FUNDING OF THE LOAN AND (IV) THE REASONABLE FEES AND EXPENSES OF LENDER’S AND
BORROWER’S COUNSEL.

 

(B)                                 THE LOAN SHALL CONSTITUTE ONE GENERAL
OBLIGATION OF BORROWER TO LENDER AND SHALL BE SECURED BY THE SECURITY INTEREST
IN AND LIENS GRANTED UPON ALL OF THE COLLATERAL, AND

 

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BY ALL OTHER SECURITY INTERESTS AND LIENS AT ANY TIME OR TIMES HEREAFTER GRANTED
BY BORROWER TO LENDER AS SECURITY FOR THE LOAN.

 

SECTION 2.2.                                   USE OF PROCEEDS.  PROCEEDS OF THE
LOAN SHALL BE USED ONLY FOR THE FOLLOWING PURPOSES:  (A) TO, WITH RESPECT TO
CERTAIN OF THE MORTGAGED PROPERTY, FINANCE A PORTION OF THE ACQUISITION COST OF,
AND, WITH RESPECT TO OTHER OF THE MORTGAGED PROPERTY, REFINANCE EXISTING
MORTGAGE DEBT AT SUCH MORTGAGED PROPERTY, (B) TO PAY TO LENDER THE ORIGINATION
FEE, (C) TO MAKE THE REQUIRED DEPOSITS TO THE DEFERRED MAINTENANCE ESCROW
ACCOUNT, THE REAL ESTATE TAXES ESCROW ACCOUNT, THE INSURANCE ESCROW ACCOUNT AND
THE REPLACEMENT RESERVE ACCOUNT, (D) TO PAY TRANSACTION COSTS (INCLUDING THE
REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY LENDER IN CONNECTION WITH THE
ORIGINATION AND FUNDING OF THE LOAN) AND (E) TO PAY REASONABLE FEES, EXPENSES
AND DISBURSEMENTS OF LENDER’S AND BORROWER’S COUNSEL.  ANY PROCEEDS OF THE LOAN
IN EXCESS OF THE AMOUNTS APPLIED IN ACCORDANCE WITH SECTIONS 2.1(A) AND
2.2(A)-(E) MAY BE USED BY THE BORROWER FOR ITS GENERAL PURPOSES (INCLUDING TO
MAKE A DISTRIBUTION TO THE MEMBER).

 

SECTION 2.3.                                   SECURITY FOR THE LOAN.  THE NOTE
AND BORROWER’S OBLIGATIONS HEREUNDER AND UNDER ALL OTHER LOAN DOCUMENTS SHALL BE
SECURED BY (A) LIENS UPON THE MORTGAGED PROPERTY PURSUANT TO THE MORTGAGES, (B)
THE CONTRACT ASSIGNMENT, (C) THE MANAGER’S SUBORDINATION, (D) THE ASSIGNMENT OF
RENTS AND LEASES, AND ALL OTHER SECURITY INTERESTS AND LIENS GRANTED IN THIS
AGREEMENT AND IN THE OTHER LOAN DOCUMENTS.

 

SECTION 2.4.                                   BORROWER’S NOTE.  BORROWER’S
OBLIGATION TO PAY THE PRINCIPAL OF AND INTEREST ON THE LOAN AND ALL OTHER
AMOUNTS DUE UNDER THE LOAN DOCUMENTS SHALL BE EVIDENCED INITIALLY BY THE NOTE,
DULY EXECUTED AND DELIVERED BY BORROWER ON THE CLOSING DATE.  THE NOTE SHALL BE
PAYABLE AS TO PRINCIPAL, INTEREST AND ALL OTHER AMOUNTS DUE UNDER THE LOAN
DOCUMENTS, AS SPECIFIED IN THIS AGREEMENT, WITH A FINAL MATURITY ON THE MATURITY
DATE.  LENDER SHALL HAVE THE RIGHT TO HAVE THE NOTE SUBDIVIDED, BY EXCHANGE FOR
PROMISSORY NOTES OF LESSER DENOMINATIONS IN THE FORM OF THE INITIAL NOTE, UPON
WRITTEN REQUEST TO BORROWER AND, IN SUCH EVENT, BORROWER SHALL PROMPTLY EXECUTE
ADDITIONAL OR REPLACEMENT NOTES, AT THE LENDER’S SOLE EXPENSE WITH RESPECT TO
BORROWER’S REASONABLE OUT-OF-POCKET COSTS IN THE EVENT AND TO THE EXTENT
BORROWER INCURS COSTS IN CONNECTION THEREWITH OTHER THAN IN CONNECTION WITH THE
EXECUTION OF SUCH ADDITIONAL OR REPLACEMENT NOTES.  AT NO TIME SHALL THE
AGGREGATE ORIGINAL PRINCIPAL AMOUNT OF THE NOTE (OR OF SUCH REPLACEMENT NOTES)
EXCEED THE LOAN AMOUNT.

 

SECTION 2.5.                                   PRINCIPAL AND INTEREST.

 

(A)                                  INTEREST ON THE LOAN SHALL ACCRUE AT THE
RATE SET FORTH IN SECTION 2.5(B) BELOW COMMENCING ON THE CLOSING DATE.  BORROWER
SHALL MAKE A PAYMENT TO LENDER OF INTEREST ONLY ON THE CLOSING DATE FOR THE
PERIOD FROM THE CLOSING DATE THROUGH THE LAST DAY OF THE CALENDAR MONTH IN WHICH
THE CLOSING DATE OCCURS.  COMMENCING ON THE FIRST DAY OF THE SECOND CALENDAR
MONTH FOLLOWING THE CALENDAR MONTH IN WHICH THE CLOSING DATE OCCURS (THE “FIRST
PAYMENT DATE”) AND ON THE FIRST DAY OF EACH CALENDAR MONTH THEREAFTER (EACH,
WITH THE FIRST PAYMENT DATE, A “PAYMENT DATE”), BORROWER SHALL MAKE EQUAL
MONTHLY PAYMENTS (EACH, A “MONTHLY DEBT SERVICE PAYMENT”) OF PRINCIPAL AND
INTEREST IN THE AMOUNT OF $195,135.68 (THE “MONTHLY DEBT SERVICE PAYMENT
AMOUNT”).  THE ENTIRE OUTSTANDING PRINCIPAL INDEBTEDNESS OF THE LOAN AND THE
NOTE, TOGETHER WITH ALL ACCRUED BUT UNPAID INTEREST THEREON AND ALL OTHER
AMOUNTS DUE UNDER THE LOAN DOCUMENTS, SHALL BE DUE AND PAYABLE BY BORROWER TO
LENDER ON THE

 

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Maturity Date.  Interest shall be computed on the basis of a 360 day year and
the actual number of days elapsed during any month or other accrual period.

 

(B)                                 THE PRINCIPAL INDEBTEDNESS SHALL BEAR
INTEREST AT A RATE PER ANNUM EQUAL TO 5.53%, INCREASING, HOWEVER, TO THE DEFAULT
RATE WHILE AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, AS PROVIDED IN
SECTION 2.5(C) BELOW.

 

(C)                                  WHILE AN EVENT OF DEFAULT HAS OCCURRED AND
IS CONTINUING, BORROWER SHALL PAY TO LENDER INTEREST AT THE DEFAULT RATE ON ANY
AMOUNT OWING TO LENDER NOT PAID WHEN DUE UNTIL SUCH AMOUNT IS PAID IN FULL.

 

(D)                                 IF ANY PAYMENT OF PRINCIPAL, INTEREST OR
OTHER SUMS SHALL NOT BE MADE TO LENDER ON THE DATE THE SAME IS DUE HEREUNDER OR
UNDER ANY OF THE OTHER LOAN DOCUMENTS, THEN BORROWER SHALL PAY TO LENDER, IN
ADDITION TO ALL SUMS OTHERWISE DUE AND PAYABLE, A LATE FEE IN AN AMOUNT EQUAL TO
FIVE PERCENT (5.0%) OF SUCH PRINCIPAL, INTEREST OR OTHER SUMS DUE HEREUNDER
(OTHER THAN THE ENTIRE PRINCIPAL BALANCE OF THE LOAN DUE UPON ACCELERATION OF
THE LOAN OR UPON MATURITY) OR UNDER ANY OTHER LOAN DOCUMENT (OR, IN THE CASE OF
A PARTIAL PAYMENT, THE UNPAID PORTION THEREOF), SUCH LATE CHARGE TO BE
IMMEDIATELY DUE AND PAYABLE WITHOUT DEMAND BY LENDER.

 

(E)                                  NOTWITHSTANDING ANY PROVISION TO THE
CONTRARY CONTAINED IN THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, BORROWER SHALL
NOT BE REQUIRED TO PAY, AND LENDER SHALL NOT BE PERMITTED TO COLLECT, ANY AMOUNT
OF INTEREST IN EXCESS OF THE MAXIMUM AMOUNT OF INTEREST PERMITTED BY LAW
(“EXCESS INTEREST”).  IF ANY EXCESS INTEREST IS PROVIDED FOR OR DETERMINED BY A
COURT OF COMPETENT JURISDICTION TO HAVE BEEN PROVIDED FOR IN THIS AGREEMENT OR
IN ANY OF THE OTHER LOAN DOCUMENTS, THEN IN SUCH EVENT: (1) THE PROVISIONS OF
THIS PARAGRAPH SHALL GOVERN AND CONTROL; (2) BORROWER SHALL NOT BE OBLIGATED TO
PAY ANY EXCESS INTEREST; (3) ANY EXCESS INTEREST THAT LENDER MAY HAVE RECEIVED
HEREUNDER SHALL BE, AT LENDER’S OPTION, (A) APPLIED AS A CREDIT AGAINST EITHER
OR BOTH OF THE PRINCIPAL INDEBTEDNESS OF THE LOAN OR ACCRUED AND UNPAID INTEREST
THEREUNDER (NOT TO EXCEED THE MAXIMUM AMOUNT PERMITTED BY LAW), (B) REFUNDED TO
THE PAYOR THEREOF, OR (C) ANY COMBINATION OF THE FOREGOING; (4) THE INTEREST
RATE(S) PROVIDED FOR HEREIN SHALL BE AUTOMATICALLY REDUCED TO THE MAXIMUM LAWFUL
RATE ALLOWED FROM TIME TO TIME UNDER APPLICABLE LAW (THE “MAXIMUM RATE”), AND
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN AND
SHALL BE, REFORMED AND MODIFIED TO REFLECT SUCH REDUCTION; AND (5) BORROWER
SHALL NOT HAVE ANY ACTION AGAINST LENDER FOR ANY DAMAGES ARISING OUT OF THE
PAYMENT OR COLLECTION OF ANY EXCESS INTEREST.  NOTWITHSTANDING THE FOREGOING, IF
FOR ANY PERIOD OF TIME INTEREST ON ANY INDEBTEDNESS IS CALCULATED AT THE MAXIMUM
RATE RATHER THAN THE APPLICABLE RATE UNDER THIS AGREEMENT, AND THEREAFTER SUCH
APPLICABLE RATE BECOMES LESS THAN THE MAXIMUM RATE, THE RATE OF INTEREST PAYABLE
ON SUCH INDEBTEDNESS SHALL, TO THE EXTENT PERMITTED BY LAW, REMAIN AT THE
MAXIMUM RATE UNTIL LENDER SHALL HAVE RECEIVED OR ACCRUED THE AMOUNT OF INTEREST
WHICH LENDER WOULD HAVE RECEIVED OR ACCRUED DURING SUCH PERIOD ON INDEBTEDNESS
HAD THE RATE OF INTEREST NOT BEEN LIMITED TO THE MAXIMUM RATE DURING SUCH
PERIOD.  IF THE DEFAULT RATE SHALL BE FINALLY DETERMINED TO BE UNLAWFUL, THEN
THE MAXIMUM RATE SHALL BE APPLICABLE DURING ANY TIME WHEN THE DEFAULT RATE WOULD
HAVE BEEN APPLICABLE HEREUNDER, PROVIDED HOWEVER THAT IF THE MAXIMUM RATE IS
GREATER THAN THE APPLICABLE INTEREST RATE, THEN THE FOREGOING PROVISIONS OF THIS
PARAGRAPH SHALL APPLY.

 

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SECTION 2.6.                                   PREPAYMENT.

 

(A)                                  LIMITATION ON PREPAYMENT; PREPAYMENT
CONSIDERATION DUE ON ACCELERATION.  BORROWER SHALL HAVE NO RIGHT TO PREPAY THE
LOAN IN WHOLE OR PART AT ANY TIME, EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION
2.6(A). COMMENCING ON THE FIRST OPEN PREPAYMENT DATE, BORROWER MAY PREPAY THE
LOAN IN WHOLE, BUT NOT IN PART, WITHOUT PAYMENT OF PREPAYMENT CONSIDERATION,
PROVIDED THAT (I) BORROWER SHALL PROVIDE TO LENDER NOT LESS THAN THIRTY (30)
DAYS’ PRIOR WRITTEN NOTICE OF SUCH PREPAYMENT, (II) TOGETHER WITH SUCH
PREPAYMENT BORROWER ALSO SHALL PAY ALL ACCRUED AND UNPAID INTEREST AND ALL OTHER
OBLIGATIONS AND (III) IF SUCH PREPAYMENT OCCURS ON ANY DAY OTHER THAN A PAYMENT
DATE, THEN TOGETHER THEREWITH BORROWER ALSO SHALL PAY TO LENDER THE AMOUNT OF
INTEREST THAT WOULD HAVE ACCRUED ON THE AMOUNT BEING PREPAID FROM AND INCLUDING
THE DATE OF SUCH PREPAYMENT TO (BUT EXCLUDING) THE FIRST DAY OF THE FOLLOWING
CALENDAR MONTH. BORROWER SHALL NOT BE REQUIRED TO PAY ANY PREPAYMENT
CONSIDERATION WITH RESPECT TO AN APPLICATION OF INSURANCE PROCEEDS OR
CONDEMNATION AWARDS BY LENDER PURSUANT TO THE LOAN AGREEMENT OR MORTGAGE IN THE
ABSENCE OF AN EVENT OF DEFAULT.

 

(B)                                 PREPAYMENT CONSIDERATION DUE.  IF THE
MATURITY DATE SHALL BE ACCELERATED TO A DATE PRIOR TO THE SCHEDULED MATURITY
DATE, OR IF ANY PREPAYMENT OF ALL OR ANY PORTION OF THE PRINCIPAL INDEBTEDNESS
HEREUNDER OCCURS, WHETHER IN CONNECTION WITH LENDER’S ACCELERATION OF THE UNPAID
PRINCIPAL INDEBTEDNESS OF THE LOAN OR IN ANY OTHER CIRCUMSTANCES WHATSOEVER, OR
IF THE MORTGAGE IS SATISFIED OR RELEASED BY FORECLOSURE (WHETHER BY POWER OF
SALE OR JUDICIAL PROCEEDING), DEED IN LIEU OF FORECLOSURE OR BY ANY OTHER MEANS,
THEN THE PREPAYMENT CONSIDERATION SHALL BECOME IMMEDIATELY DUE AND OWING AND
BORROWER SHALL FORTHWITH PAY THE PREPAYMENT CONSIDERATION TO LENDER. THE
FOREGOING SHALL NOT CREATE ANY RIGHT OF PREPAYMENT. BORROWER SHALL HAVE NO RIGHT
WHATSOEVER TO PREPAY ALL OR ANY PORTION OF THE PRINCIPAL INDEBTEDNESS OF THE
NOTE, EXCEPT AS SET FORTH IN SECTION 2.6(A) ABOVE.

 

(C)                                  DEFINITIONS.  THE FOLLOWING TERMS SHALL
HAVE THE MEANINGS INDICATED:

 

The “Prepayment Consideration” shall be the amount equal to the sum of (i) an
amount equal to the interest which would have accrued on the Principal
Indebtedness of the Note during the remaining days of the full calendar month
containing the date (the “Event Date”) which is the earlier of (x) the date of
prepayment of the Loan or (y) such earlier date upon which the entire remaining
Principal Indebtedness of the Loan shall become due and payable, whether as a
result of acceleration of the maturity of the Loan or otherwise, plus (ii) the
greater of (x) four percent of the Loan balance on the Event Date, or (y) the
sum of two percent of the Loan balance on the Event Date plus an amount equal to
the “Present Value Yield Differential”, calculated as the excess, if any, of (A)
the amount of the monthly interest which would otherwise be payable on the
principal balance of this Note from (1) the date (the “Yield Determination
Date”) which is either (xx) the Event Date (if the required interest payment
described in clause (i) above has not been made through the end of the calendar
month in which the Event Date occurs) or (yy) if the required interest payment
described in clause (i) above has been made through the end of the calendar
month in which the Event Date occurs, the first day of the calendar month
following the month containing the Event Date, through and including (2) the
Scheduled Maturity Date, over (B) the amount of the monthly interest Lender
would earn if an amount equal to the Principal Indebtedness of the Loan as of
the Event Date were invested for the period from the Yield Determination Date
through the Scheduled Maturity Date at the Yield Rate (as hereinafter defined),
such difference (the “Yield Differential”) to be discounted to present value at
the Yield Rate using the following formula:

 

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Present Value Yield
Differential

=

Yield Differential

(1 + r)-n

 

where:

 

r=                                     Yield Rate, and

 

n=                                  the remaining Weighted Average Life to
Maturity
(as defined below)from the Yield Determination Date.

 

The “Yield Rate” shall be the annualized yield on securities issued by the
United States Treasury having a maturity corresponding to the then remaining
Weighted Average Life to Maturity (as defined below) of this Note as determined
by Payee, as quoted in Federal Reserve Statistical Release [H. 15(519)] under
the heading “U.S. Government Securities - Treasury Constant Maturities” for the
Yield Rate Determination Date (as defined below), converted to a monthly
equivalent yield.  If yields for such securities of such maturity are not shown
in such publication, then the Yield Rate shall be determined by Lender by linear
interpolation between the yields of securities of the next longer and next
shorter maturities. If said Federal Reserve Statistical Release or any other
information necessary for determination of the Yield Rate in accordance with the
foregoing is no longer published or is otherwise unavailable, then the Yield
Rate shall be determined by Payee based on comparable data.  The term “Yield
Rate Determination Date” shall mean the date which is five (5) Business Days
prior to the Yield Determination Date.  The term “Weighted Average Life to
Maturity” shall mean, at any date, the number of years (including fractional
years, expressed as a decimal (e.g., three years and three moths = 3.25 years))
obtained by dividing (x) the outstanding Principal Indebtedness of the Loan on
the Event Date into (y) the sum total of the Weighted Amortization Products (as
defined below) for each Scheduled Principal Payment (as defined below).  The
“Scheduled Principal Payment(s)” shall mean each then remaining scheduled
principal payment (assuming no prepayment or Loan acceleration), including
payment of the outstanding principal balance of the Loan on the Scheduled
Maturity Date, in respect of the Loan.  The “Weighted Amortization Product” for
each Scheduled Principal Payment shall mean the product of (A) the amount of
such Scheduled Principal Payment multiplied by (B) the number of years
(including fractional years, expressed as a decimal) which will elapse between
the Yield Determination Date and the date on which such Scheduled Principal
Payment is to be made under this Loan Agreement.

 

Borrower agrees that the Prepayment Consideration required hereunder is
reasonable.  Borrower has given individual weight to the consideration in this
transaction for this waiver and agreement.

 

SECTION 2.7.                                   DEFEASANCE.

 

(A)                                  TOTAL DEFEASANCE.  BORROWER SHALL HAVE THE
RIGHT AT ANY TIME AFTER THE FIRST OPEN DEFEASANCE DATE AND PRIOR TO THE FIRST
OPEN PREPAYMENT DATE TO OBTAIN A RELEASE OF THE LIEN OF THE MORTGAGE ENCUMBERING
THE MORTGAGED PROPERTY (A “TOTAL DEFEASANCE”) UPON SATISFACTION OF THE FOLLOWING
CONDITIONS:

 

(I)                                     BORROWER SHALL PROVIDE LENDER AT LEAST
THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE (OR SUCH SHORTER PERIOD OF TIME IF
PERMITTED BY LENDER IN ITS SOLE DISCRETION)

 

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SPECIFYING A DATE (THE “DEFEASANCE DATE”) ON WHICH BORROWER SHALL HAVE SATISFIED
THE CONDITIONS IN THIS SECTION 2.7(A) AND ON WHICH IT SHALL EFFECT THE TOTAL
DEFEASANCE;

 

(II)                                  BORROWER SHALL PAY TO LENDER (A) ALL
PAYMENTS OF INTEREST DUE ON THE LOAN TO AND INCLUDING THE DEFEASANCE DATE AND
(B) ALL OTHER SUMS, THEN DUE UNDER THE NOTE, THIS LOAN AGREEMENT, THE MORTGAGE
AND THE OTHER LOAN DOCUMENTS;

 

(III)                               BORROWER SHALL IRREVOCABLY DEPOSIT THE TOTAL
DEFEASANCE COLLATERAL INTO THE DEFEASANCE COLLATERAL ACCOUNT AND OTHERWISE
COMPLY WITH THE PROVISIONS OF THIS SECTION 2.7(A) AND SECTIONS 2.7(C) AND (D)
HEREOF;

 

(IV)                              BORROWER SHALL EXECUTE AND DELIVER TO LENDER A
SECURITY AGREEMENT IN RESPECT OF THE DEFEASANCE COLLATERAL ACCOUNT AND THE TOTAL
DEFEASANCE COLLATERAL;

 

(V)                                 BORROWER SHALL DELIVER TO LENDER AN OPINION
OF COUNSEL FOR BORROWER THAT IS CUSTOMARY IN COMMERCIAL LENDING TRANSACTIONS AND
SUBJECT ONLY TO NORMAL QUALIFICATIONS, ASSUMPTIONS AND EXCEPTIONS OPINING, AMONG
OTHER THINGS, THAT (W) LENDER HAS A LEGAL AND VALID PERFECTED FIRST PRIORITY
SECURITY INTEREST IN THE DEFEASANCE COLLATERAL ACCOUNT AND THE TOTAL DEFEASANCE
COLLATERAL, (X) IF A SECURITIZATION HAS OCCURRED, THE REMIC TRUST FORMED
PURSUANT TO SUCH SECURITIZATION WILL NOT FAIL TO MAINTAIN ITS STATUS AS A “REAL
ESTATE MORTGAGE INVESTMENT CONDUIT” WITHIN THE MEANING OF SECTION 860D OF THE
CODE AS A RESULT OF THE TOTAL DEFEASANCE PURSUANT TO THIS SECTION 2.7(A), (Y) A
TOTAL DEFEASANCE PURSUANT TO THIS SECTION 2.7 WILL NOT RESULT IN A DEEMED
EXCHANGE FOR PURPOSES OF THE CODE AND WILL NOT ADVERSELY AFFECT THE STATUS OF
THE LOAN AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES, (Z) DELIVERY OF THE
TOTAL DEFEASANCE COLLATERAL AND THE GRANT OF A SECURITY INTEREST THEREIN TO
LENDER SHALL NOT CONSTITUTE AN AVOIDABLE PREFERENCE UNDER SECTION 547 OF THE
BANKRUPTCY CODE OR APPLICABLE STATE LAW;

 

(VI)                              IF AND TO THE EXTENT REQUIRED BY THE RATING
AGENCIES, A NON-CONSOLIDATION OPINION WITH RESPECT TO THE SUCCESSOR BORROWER;

 

(VII)                           BORROWER SHALL DELIVER TO LENDER A CONFIRMATION
IN WRITING FROM THE APPLICABLE RATING AGENCIES TO THE EFFECT THAT THE RELEASE OF
THE MORTGAGED PROPERTY FROM THE LIEN OF THE MORTGAGE AS CONTEMPLATED BY THIS
SECTION 2.7(A) AND THE SUBSTITUTION OF THE TOTAL DEFEASANCE COLLATERAL WILL NOT
RESULT IN A DOWNGRADING, WITHDRAWAL OR QUALIFICATION OF THE RESPECTIVE RATINGS
IN EFFECT IMMEDIATELY PRIOR TO SUCH DEFEASANCE FOR THE CERTIFICATES ISSUED IN
CONNECTION WITH THE SECURITIZATION WHICH ARE THEN OUTSTANDING;

 

(VIII)                        BORROWER SHALL DELIVER AN OFFICER’S CERTIFICATE
CERTIFYING THAT THE REQUIREMENTS SET FORTH IN THIS SECTION 2.7 HAVE BEEN
SATISFIED;

 

(IX)                                BORROWER SHALL DELIVER A CERTIFICATE OF A
NATIONALLY RECOGNIZED PUBLIC ACCOUNTING FIRM REASONABLY ACCEPTABLE TO LENDER
CERTIFYING THAT THE TOTAL DEFEASANCE COLLATERAL WILL GENERATE MONTHLY AMOUNTS
EQUAL TO OR GREATER THAN THE SCHEDULED DEFEASANCE PAYMENTS;

 

(X)                                   BORROWER SHALL DELIVER SUCH OTHER
CERTIFICATES, OPINIONS, DOCUMENTS AND INSTRUMENTS AS LENDER MAY REASONABLY
REQUEST; AND

 

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(XI)                                BORROWER SHALL PAY ALL COSTS AND EXPENSES OF
LENDER INCURRED IN CONNECTION WITH THE DEFEASANCE, INCLUDING LENDER’S REASONABLE
ATTORNEYS’ FEES AND EXPENSES AND RATING AGENCY FEES AND EXPENSES.

 

If a Total Defeasance occurs and all of the requirements of this Section 2.7
have been satisfied, (i) Lender shall execute any and all documents required to
release the Mortgaged Property from the Lien of the Mortgage and the Assignment
of Leases and the Total Defeasance Collateral, pledged pursuant to the Security
Agreement, shall be the sole source of collateral securing the Loan.  In
connection with any such release of the Lien, Borrower shall submit to Lender,
not less than thirty (30) days prior to the Defeasance Date (or such shorter
time as permitted by Lender in its sole discretion), a release of Lien (and
related Loan Documents) for execution by Lender. Such release shall be in a form
appropriate in the jurisdiction in which the Mortgaged Property is located and
contain standard provisions protecting the rights of a releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release. Borrower
shall pay all costs, taxes and expenses associated with the release of the Lien
of the Mortgage and the Assignment of Leases, including Lender’s reasonable
attorneys’ fees.  Except as set forth in this Section 2.7(a)(or in Section
2.7(b) below), no repayment, prepayment or defeasance of all or any portion of
the Loan shall cause, give rise to a right to require, or otherwise result in,
the release of the Lien of the Mortgage on the Mortgaged Property.

 

(B)                                 PARTIAL DEFEASANCE.   BORROWER SHALL, AS A
CONDITION TO AND ONLY IN CONNECTION WITH A PARTIAL RELEASE OF A PARTIAL RELEASE
PROPERTY AFTER THE FIRST OPEN DEFEASANCE DATE AND PRIOR TO THE FIRST OPEN
PREPAYMENT DATE AS PROVIDED IN SECTION 2.17 BELOW, HAVE THE RIGHT TO DEFEASE A
PORTION OF THE LOAN (A “PARTIAL DEFEASANCE”) UPON SATISFACTION OF THE FOLLOWING
CONDITIONS:

 

(I)                                     BORROWER SHALL PROVIDE LENDER AT LEAST
THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE (OR SUCH SHORTER PERIOD OF TIME IF
PERMITTED BY LENDER IN ITS SOLE DISCRETION) SPECIFYING A DATE (THE “PARTIAL
DEFEASANCE DATE”) ON WHICH BORROWER SHALL HAVE SATISFIED THE CONDITIONS IN THIS
SECTION 2.7(B) AND ON WHICH IT SHALL EFFECT THE PARTIAL DEFEASANCE;

 

(II)                                  BORROWER SHALL PAY TO LENDER (A) ALL
PAYMENTS OF INTEREST DUE ON THE LOAN TO AND INCLUDING THE PARTIAL DEFEASANCE
DATE AND (B) ALL OTHER SUMS, THEN DUE UNDER THE NOTE, THIS LOAN AGREEMENT, THE
MORTGAGE AND THE OTHER LOAN DOCUMENTS;

 

(III)                               BORROWER SHALL IRREVOCABLY DEPOSIT THE
PARTIAL DEFEASANCE COLLATERAL INTO THE DEFEASANCE COLLATERAL ACCOUNT AND
OTHERWISE COMPLY WITH THE PROVISIONS OF THIS SECTION 2.7(B) AND SECTIONS 2.7(C)
AND (D) HEREOF;

 

(IV)                              LENDER SHALL PREPARE (AT BORROWER’S EXPENSE)
ALL NECESSARY DOCUMENTS TO MODIFY THIS LOAN AGREEMENT AND TO AMEND AND RESTATE
THE NOTE AND ISSUE TWO SUBSTITUTE NOTES, ONE NOTE HAVING A PRINCIPAL BALANCE
EQUAL TO THE PARTIAL DEFEASANCE AMOUNT (THE “DEFEASED NOTE”), AND THE OTHER NOTE
HAVING A PRINCIPAL BALANCE EQUAL TO THE EXCESS OF (A) THE THEN-OUTSTANDING
PRINCIPAL AMOUNT OF THE LOAN, OVER (B) THE AMOUNT OF THE DEFEASED NOTE (THE
“UNDEFEASED NOTE”). THE DEFEASED NOTE AND UNDEFEASED NOTE SHALL HAVE IDENTICAL
TERMS AS THE NOTE EXCEPT FOR THE PRINCIPAL BALANCE AND MONTHLY PAYMENTS.

 

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THE DEFEASED NOTE AND THE UNDEFEASED NOTE SHALL BE CROSS DEFAULTED AND CROSS
COLLATERALIZED UNLESS THE RATING AGENCIES SHALL REQUIRE OTHERWISE OR UNLESS A
SUCCESSOR BORROWER THAT IS NOT AN AFFILIATE OF BORROWER IS ESTABLISHED PURSUANT
TO SECTION 2.7(D). A DEFEASED NOTE MAY NOT BE THE SUBJECT OF ANY FURTHER
DEFEASANCE;

 

(V)                                 BORROWER SHALL EXECUTE AND DELIVER TO LENDER
A SECURITY AGREEMENT IN RESPECT OF THE DEFEASANCE COLLATERAL ACCOUNT AND THE
PARTIAL DEFEASANCE COLLATERAL;

 

(VI)                              BORROWER SHALL DELIVER TO LENDER AN OPINION OF
COUNSEL FOR BORROWER THAT IS CUSTOMARY IN COMMERCIAL LENDING TRANSACTIONS AND
SUBJECT ONLY TO NORMAL QUALIFICATIONS, ASSUMPTIONS AND EXCEPTIONS OPINING, AMONG
OTHER THINGS, THAT (W) LENDER HAS A LEGAL AND VALID PERFECTED FIRST PRIORITY
SECURITY INTEREST IN THE DEFEASANCE COLLATERAL ACCOUNT AND THE PARTIAL
DEFEASANCE COLLATERAL, (X) IF A SECURITIZATION HAS OCCURRED, THE REMIC TRUST
FORMED PURSUANT TO SUCH SECURITIZATION WILL NOT FAIL TO MAINTAIN ITS STATUS AS A
“REAL ESTATE MORTGAGE INVESTMENT CONDUIT” WITHIN THE MEANING OF SECTION 860D OF
THE CODE AS A RESULT OF THE PARTIAL DEFEASANCE PURSUANT TO THIS SECTION 2.7(B),
(Y) A PARTIAL DEFEASANCE PURSUANT TO THIS SECTION 2.7 WILL NOT RESULT IN A
DEEMED EXCHANGE FOR PURPOSES OF THE CODE AND WILL NOT ADVERSELY AFFECT THE
STATUS OF THE LOAN AS INDEBTEDNESS FOR FEDERAL INCOME TAX PURPOSES, (Z) DELIVERY
OF THE PARTIAL DEFEASANCE COLLATERAL AND THE GRANT OF A SECURITY INTEREST
THEREIN TO LENDER SHALL NOT CONSTITUTE AN AVOIDABLE PREFERENCE UNDER SECTION 547
OF THE BANKRUPTCY CODE OR APPLICABLE STATE LAW;

 

(VII)                           IF AND TO THE EXTENT REQUIRED BY THE RATING
AGENCIES, A NON-CONSOLIDATION OPINION WITH RESPECT TO THE SUCCESSOR BORROWER;

 

(VIII)                        BORROWER SHALL DELIVER TO LENDER A CONFIRMATION IN
WRITING FROM THE APPLICABLE RATING AGENCIES TO THE EFFECT THAT THE RELEASE OF
THE PARTIAL RELEASE PROPERTY FROM THE LIEN OF THE MORTGAGE AS CONTEMPLATED BY
THIS SECTION 2.7(B) AND THE SUBSTITUTION OF THE PARTIAL DEFEASANCE COLLATERAL
WILL NOT RESULT IN A DOWNGRADING, WITHDRAWAL OR QUALIFICATION OF THE RESPECTIVE
RATINGS IN EFFECT IMMEDIATELY PRIOR TO SUCH DEFEASANCE FOR THE CERTIFICATES
ISSUED IN CONNECTION WITH THE SECURITIZATION WHICH ARE THEN OUTSTANDING;

 

(IX)                                BORROWER SHALL DELIVER AN OFFICER’S
CERTIFICATE CERTIFYING THAT THE REQUIREMENTS SET FORTH IN THIS SECTION 2.7 HAVE
BEEN SATISFIED;

 

(X)                                   BORROWER SHALL DELIVER A CERTIFICATE OF A
NATIONALLY RECOGNIZED PUBLIC ACCOUNTING FIRM REASONABLY ACCEPTABLE TO LENDER
CERTIFYING THAT THE PARTIAL DEFEASANCE COLLATERAL WILL GENERATE MONTHLY AMOUNTS
EQUAL TO OR GREATER THAN THE SCHEDULED DEFEASANCE PAYMENTS;

 

(XI)                                BORROWER SHALL DELIVER SUCH OTHER
CERTIFICATES, OPINIONS, DOCUMENTS AND INSTRUMENTS AS LENDER MAY REASONABLY
REQUEST; AND

 

(XII)                             BORROWER SHALL PAY ALL COSTS AND EXPENSES OF
LENDER INCURRED IN CONNECTION WITH THE DEFEASANCE, INCLUDING LENDER’S REASONABLE
ATTORNEYS’ FEES AND EXPENSES AND RATING AGENCY FEES AND EXPENSES.

 

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(C)                                  DEFEASANCE COLLATERAL ACCOUNT.  ON OR
BEFORE THE DATE ON WHICH BORROWER DELIVERS THE DEFEASANCE COLLATERAL, BORROWER
OR SUCCESSOR BORROWER (AS APPLICABLE) SHALL OPEN AT ANY ELIGIBLE BANK THE
DEFEASANCE COLLATERAL ACCOUNT (THE “DEFEASANCE COLLATERAL ACCOUNT”) WHICH SHALL
AT ALL TIMES BE AN ELIGIBLE ACCOUNT. THE DEFEASANCE COLLATERAL ACCOUNT SHALL
CONTAIN ONLY (I) DEFEASANCE COLLATERAL AND (II) CASH FROM INTEREST AND PRINCIPAL
PAID ON THE DEFEASANCE COLLATERAL. ALL CASH FROM INTEREST AND PRINCIPAL PAYMENTS
PAID ON THE DEFEASANCE COLLATERAL SHALL BE PAID OVER TO LENDER ON EACH PAYMENT
DATE AND APPLIED TO THE MONTHLY INSTALLMENTS OF INTEREST ON THE LOAN (AND IN THE
CASE OF A PARTIAL DEFEASANCE, THE PORTION THEREOF EVIDENCED BY THE DEFEASED
NOTE) AND, UPON MATURITY, TO ACCRUED INTEREST AND THE PRINCIPAL BALANCE OF THE
LOAN (AND IN THE CASE OF A PARTIAL DEFEASANCE, THE PORTION THEREOF EVIDENCED BY
THE DEFEASED NOTE)  BORROWER SHALL CAUSE THE ELIGIBLE BANK AT WHICH THE
DEFEASANCE COLLATERAL IS DEPOSITED TO ENTER AN AGREEMENT WITH BORROWER AND
LENDER, SATISFACTORY TO LENDER IN ITS SOLE DISCRETION, PURSUANT TO WHICH SUCH
ELIGIBLE BANK SHALL AGREE TO HOLD AND DISTRIBUTE THE DEFEASANCE COLLATERAL IN
ACCORDANCE WITH THIS LOAN AGREEMENT. BORROWER (OR SUCCESSOR BORROWER, AS
APPLICABLE) SHALL BE THE OWNER OF THE DEFEASANCE COLLATERAL ACCOUNT AND SHALL
REPORT ALL INCOME ACCRUED ON DEFEASANCE COLLATERAL FOR FEDERAL, STATE AND LOCAL
INCOME TAX PURPOSES IN ITS INCOME TAX RETURN. BORROWER SHALL PREPAY ALL COSTS
AND EXPENSES ASSOCIATED WITH OPENING AND MAINTAINING THE DEFEASANCE COLLATERAL
ACCOUNT. LENDER SHALL NOT IN ANY WAY BE LIABLE BY REASON OF ANY INSUFFICIENCY IN
THE DEFEASANCE COLLATERAL ACCOUNT.

 

(D)                                 SUCCESSOR BORROWER.  IN CONNECTION WITH A
DEFEASANCE UNDER THIS SECTION 2.7, BORROWER SHALL, IF REQUIRED BY THE RATING
AGENCIES OR IF BORROWER SO ELECTS OR LENDER REQUIRES, ESTABLISH OR DESIGNATE A
SUCCESSOR ENTITY (THE “SUCCESSOR BORROWER”) WHICH SHALL BE A SINGLE PURPOSE
BANKRUPTCY REMOTE ENTITY AND WHICH SHALL BE APPROVED BY THE RATING AGENCIES. ANY
SUCH SUCCESSOR BORROWER MAY, AT BORROWER’S OPTION, BE AN AFFILIATE OF BORROWER
UNLESS THE RATING AGENCIES OR LENDER SHALL REQUIRE OTHERWISE. BORROWER SHALL
TRANSFER AND ASSIGN ALL OBLIGATIONS, RIGHTS AND DUTIES UNDER AND TO THE NOTE,
TOGETHER WITH THE DEFEASANCE COLLATERAL, TO SUCH SUCCESSOR BORROWER.  SUCH
SUCCESSOR BORROWER SHALL ASSUME THE OBLIGATIONS UNDER THE NOTE AND THE SECURITY
AGREEMENT. BORROWER SHALL PAY $1,000 TO ANY SUCH SUCCESSOR BORROWER AS
CONSIDERATION FOR ASSUMING THE OBLIGATIONS UNDER THE NOTE AND THE SECURITY
AGREEMENT. BORROWER SHALL PAY ALL REASONABLE COSTS AND EXPENSES INCURRED BY
LENDER, INCLUDING LENDER’S ATTORNEY’S FEES AND EXPENSES INCURRED IN CONNECTION
THEREWITH, AND ALL FEES, EXPENSES AND OTHER CHARGES OF THE RATING AGENCIES.

 

SECTION 2.8.                                   APPLICATION OF PAYMENTS AFTER
EVENT OF DEFAULT.  AFTER AN EVENT OF DEFAULT, BORROWER IRREVOCABLY WAIVES THE
RIGHT TO DIRECT THE APPLICATION OF ANY AND ALL PAYMENTS AT ANY TIME HEREAFTER
RECEIVED BY LENDER FROM OR ON BEHALF OF BORROWER, AND BORROWER IRREVOCABLY
AGREES THAT LENDER SHALL HAVE THE CONTINUING EXCLUSIVE RIGHT TO APPLY ANY AND
ALL SUCH PAYMENTS AND ANY AND ALL PROCEEDS AND RECOVERIES FROM THE PLEDGED
ACCOUNTS, THE MORTGAGED PROPERTY OR BORROWER AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, IN LENDER’S SOLE DISCRETION, TO THE
INDEBTEDNESS AND OTHER AMOUNTS THEN OUTSTANDING UNDER THIS AGREEMENT, IN SUCH
ORDER AND MANNER AS LENDER MAY DETERMINE IN ITS SOLE AND ABSOLUTE DISCRETION,
INCLUDING, WITHOUT LIMITATION, REASONABLE OUT-OF-POCKET COSTS AND EXPENSES OF
LENDER REIMBURSABLE PURSUANT TO THE TERMS OF THIS AGREEMENT ARISING AS A RESULT
OF SUCH REPAYMENT, ANY ACCRUED AND UNPAID INTEREST THEN PAYABLE WITH RESPECT TO
THE LOAN OR THE PORTION THEREOF BEING REPAID, THE PRINCIPAL INDEBTEDNESS, ANY
ACCRUED AND UNPAID PREPAYMENT CONSIDERATION IN RESPECT OF ANY SUCH PRINCIPAL
INDEBTEDNESS OR THE PORTION THEREOF BEING REPAID, ANY OTHER SUMS THEN DUE

 

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AND PAYABLE TO OR FOR THE BENEFIT OF LENDER PURSUANT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT(S), OR TO PROPERTY EXPENSES AND CAPITAL IMPROVEMENT COSTS
FOR THE MORTGAGED PROPERTY, OR TO FUND RESERVE ACCOUNTS.

 

SECTION 2.9.                                   METHOD AND PLACE OF PAYMENT. 
EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, ALL PAYMENTS AND PREPAYMENTS
UNDER THIS AGREEMENT AND THE NOTE SHALL BE MADE TO LENDER NOT LATER THAN 12:00
P.M., EASTERN TIME, ON THE DATE WHEN DUE AND SHALL BE MADE IN LAWFUL MONEY OF
THE UNITED STATES OF AMERICA BY WIRE TRANSFER IN FEDERAL OR OTHER IMMEDIATELY
AVAILABLE FUNDS TO ITS ACCOUNT AT SUCH BANK(S) AS LENDER MAY FROM TIME TO TIME
DESIGNATE.  ANY FUNDS RECEIVED BY LENDER AFTER SUCH TIME SHALL, FOR ALL PURPOSES
HEREOF, BE DEEMED TO HAVE BEEN PAID ON THE NEXT SUCCEEDING BUSINESS DAY.  LENDER
SHALL NOTIFY BORROWER IN WRITING OF ANY CHANGES IN THE ACCOUNT TO WHICH PAYMENTS
ARE TO BE MADE.  ALL PAYMENTS MADE BY BORROWER HEREUNDER, OR BY BORROWER UNDER
THE OTHER LOAN DOCUMENTS, SHALL BE MADE IRRESPECTIVE OF, AND WITHOUT ANY
DEDUCTION FOR, ANY DEFENSES, SET-OFFS OR COUNTERCLAIMS.  WHENEVER ANY PAYMENT TO
BE MADE HEREUNDER SHALL BE STATED TO BE DUE ON A DAY THAT IS NOT A BUSINESS DAY,
THE PAYMENT MAY BE MADE ON THE NEXT SUCCEEDING BUSINESS DAY.

 

SECTION 2.10.                             TAXES.

 

(A)                                  ALL PAYMENTS MADE BY OR ON BEHALF OF
BORROWER UNDER THIS AGREEMENT SHALL BE MADE FREE AND CLEAR OF, AND WITHOUT
DEDUCTION OR WITHHOLDING FOR OR ON ACCOUNT OF, ANY PRESENT OR FUTURE INCOME,
STAMP OR OTHER TAXES, LEVIES, IMPOSTS, DUTIES, CHARGES, FEES, DEDUCTIONS OR
WITHHOLDINGS, NOW OR HEREAFTER IMPOSED, LEVIED, COLLECTED, WITHHELD OR ASSESSED
BY ANY GOVERNMENTAL AUTHORITY (THE “TAX LIABILITIES”), EXCLUDING NET INCOME
TAXES AND FRANCHISE TAXES (IMPOSED IN LIEU OF NET INCOME TAXES) IMPOSED ON THE
LENDER AS A RESULT OF A PRESENT OR FORMER CONNECTION BETWEEN SUCH LENDER AND THE
JURISDICTION OF THE GOVERNMENTAL AUTHORITY IMPOSING SUCH TAX OR ANY POLITICAL
SUBDIVISION OR TAXING AUTHORITY THEREOF OR THEREIN INCLUDING BEING A CITIZEN OR
RESIDENT OR NATIONAL OF, OR CARRYING ON A BUSINESS OR MAINTAINING A PERMANENT
ESTABLISHMENT IN SUCH JURISDICTION (OTHER THAN ANY SUCH CONNECTION ARISING
SOLELY FROM SUCH LENDER’S HAVING EXECUTED, DELIVERED OR PERFORMED ITS
OBLIGATIONS OR RECEIVED A PAYMENT UNDER, OR ENFORCED, THIS AGREEMENT IF, AT THE
TIME SUCH LENDER FIRST BECAME A PARTY TO THIS AGREEMENT, THE APPLICABLE
GOVERNMENTAL AUTHORITY WOULD NOT HAVE IMPOSED SUCH TAXES BUT INSTEAD SUCH TAXES
ARE A RESULT OF A CHANGE IN RELEVANT TAX LAW INCLUDING, BUT NOT LIMITED TO A
CHANGE IN THE GENERALLY ACCEPTED INTERPRETATION OF EXISTING TAX LAW).  IF
BORROWER SHALL BE REQUIRED BY LAW TO DEDUCT ANY SUCH TAX LIABILITIES (OR AMOUNTS
IN ESTIMATION OR REIMBURSEMENT FOR THE SAME) FROM OR IN RESPECT OF ANY SUM
PAYABLE HEREUNDER TO LENDER, THEN THE SUM PAYABLE HEREUNDER SHALL BE INCREASED
(SUCH INCREASE, “ADDITIONAL AMOUNTS”) AS MAY BE NECESSARY SO THAT, AFTER MAKING
ALL REQUIRED DEDUCTIONS, LENDER RECEIVES AN AMOUNT EQUAL TO THE SUM IT WOULD
HAVE RECEIVED HAD NO SUCH DEDUCTIONS BEEN MADE.

 

(B)                                 IF LENDER IS NOT A “UNITED STATES PERSON”
WITHIN THE MEANING OF SECTION 7701(A)(30) OF THE CODE (A “FOREIGN LENDER”)
LENDER SHALL DELIVER TO BORROWER, PRIOR TO RECEIPT OF ANY PAYMENT SUBJECT TO
WITHHOLDING UNDER THE CODE (OR UPON ACCEPTING AN ASSIGNMENT OF AN INTEREST
HEREIN), TWO DULY SIGNED COMPLETED COPIES OF EITHER INTERNAL REVENUE SERVICE
(“IRS”) FORM W-8BEN OR ANY SUCCESSOR THERETO (RELATING TO FOREIGN LENDER AND
ENTITLING IT TO AN EXEMPTION FROM, OR REDUCTION OF, WITHHOLDING TAX ON ALL
PAYMENTS TO BE MADE TO FOREIGN LENDER BY BORROWER PURSUANT TO THIS AGREEMENT) OR
IRS FORM W-8ECI OR ANY SUCCESSOR THERETO (RELATING

 

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TO ALL PAYMENTS TO BE MADE TO FOREIGN LENDER BY BORROWER PURSUANT TO THIS
AGREEMENT) OR SUCH OTHER EVIDENCE SATISFACTORY TO BORROWER AND BORROWER THAT
FOREIGN LENDER IS ENTITLED TO AN EXEMPTION FROM, OR REDUCTION OF, U.S.
WITHHOLDING TAX, INCLUDING ANY EXEMPTION PURSUANT TO SECTION 881(C) OF THE
CODE.  IF THE FORM W-8BEN OR W-8ECI PROVIDED BY LENDER AT THE TIME SUCH LENDER
FIRST BECOMES A PARTY TO THIS AGREEMENT INDICATES A UNITED STATES INTEREST
WITHHOLDING TAX RATE IN EXCESS OF ZERO, WITHHOLDING TAX AT SUCH RATE SHALL BE
CONSIDERED EXCLUDED FROM TAX LIABILITIES REIMBURSABLE BY BORROWER TO LENDER
UNDER SECTION 2.10(A) HEREOF, EXCEPT TO THE EXTENT THAT SUCH LENDER’S ASSIGNOR
(IF ANY) WAS ENTITLED, AT THE TIME OF ASSIGNMENT, TO RECEIVE ADDITIONAL AMOUNTS
FROM BORROWER PURSUANT TO SECTION 2.10(A).  THEREAFTER AND FROM TIME TO TIME,
FOREIGN LENDER SHALL (I) PROMPTLY SUBMIT TO BORROWER SUCH ADDITIONAL DULY
COMPLETED AND SIGNED COPIES OF ONE OF SUCH FORMS (OR SUCH SUCCESSOR FORMS AS
SHALL BE ADOPTED FROM TIME TO TIME BY THE RELEVANT UNITED STATES TAXING
AUTHORITIES) AS MAY THEN BE AVAILABLE UNDER THEN CURRENT UNITED STATES LAWS AND
REGULATIONS TO AVOID, OR SUCH EVIDENCE AS IS SATISFACTORY TO BORROWER AND
BORROWER OF ANY AVAILABLE EXEMPTION FROM OR REDUCTION OF, UNITED STATES
WITHHOLDING TAXES IN RESPECT OF ALL PAYMENTS TO BE MADE TO FOREIGN LENDER BY
BORROWER PURSUANT TO THIS AGREEMENT, (II) PROMPTLY NOTIFY BORROWER OF ANY CHANGE
IN CIRCUMSTANCES WHICH WOULD MODIFY OR RENDER INVALID ANY CLAIMED EXEMPTION OR
REDUCTION, AND (III) TAKE SUCH STEPS AS SHALL NOT BE MATERIALLY DISADVANTAGEOUS
TO IT, IN THE REASONABLE JUDGMENT OF SUCH LENDER, AND AS MAY BE REASONABLY
NECESSARY (INCLUDING THE REDESIGNATION OF ITS LENDING OFFICE) TO AVOID ANY
REQUIREMENT OF APPLICABLE LAWS THAT BORROWER MAKE ANY DEDUCTION OR WITHHOLDING
FOR TAXES FROM AMOUNTS PAYABLE TO SUCH FOREIGN LENDER.  NOTWITHSTANDING ANY
OTHER PROVISION OF THIS PARAGRAPH, A FOREIGN LENDER SHALL NOT BE REQUIRED TO
DELIVER ANY FORM PURSUANT TO THIS PARAGRAPH THAT SUCH FOREIGN LENDER IS NOT
LEGALLY ABLE TO DELIVER.

 

(C)                                  IF A LENDER TRANSFERS ITS RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT FROM ITS LENDING OFFICE TO ANOTHER LENDING
OFFICE, WITHHOLDING TAX (WHICH SHALL BE SET FORTH IN THE IRS FORM OR FORMS
DESCRIBED IN THIS SECTION 2.10 PROVIDED BY SUCH LENDER TO BORROWER UPON SUCH
TRANSFER, TAKING INTO ACCOUNT THE TRANSFER) IMPOSED ON THE LENDER AFTER THE
TRANSFER IN EXCESS OF THE RATE IMPOSED PRIOR TO SUCH TRANSFER SHALL BE DEEMED TO
BE FOR PURPOSES OF THIS AGREEMENT EXCLUDED FROM TAX LIABILITIES REIMBURSABLE BY
BORROWER TO LENDER FOR PERIODS AFTER THE TRANSFER.  THIS SECTION 2.10(C) SHALL
NOT APPLY WITH RESPECT TO A CHANGE IN LENDING OFFICE REQUIRED FOR THE PARTICULAR
RIGHT OR OBLIGATION AS A RESULT OF ANY CHANGE IN, OR THE ADOPTION OR PHASE-IN
OF, ANY LAW, RULE OR REGULATION APPLICABLE TO SUCH LENDER AND OCCURRING AFTER
THE DATE OF THIS AGREEMENT AND THE APPLICABLE LENDER IS UNABLE, USING
COMMERCIALLY REASONABLE EFFORTS, TO CHANGE SUCH LENDING OFFICE TO ANOTHER
LENDING OFFICE THAT IS SUBJECT TO A LOWER WITHHOLDING TAX RATE.

 

(D)                                 IF ANY LENDER VOLUNTARILY CHANGES ITS
RESIDENCE OR PLACE OF BUSINESS OR TAKES ANY OTHER SIMILAR ACTION, AND THE EFFECT
OF SUCH CHANGE OR ACTION, AS OF THE DATE THEREOF, WOULD BE TO INCREASE THE TAX
LIABILITIES OF SUCH LENDER, THE BORROWER SHALL NOT BE OBLIGATED TO PAY ANY
ADDITIONAL AMOUNTS IN RESPECT OF SUCH INCREASE.

 

(E)                                  IF AND TO THE EXTENT THAT A FOREIGN LENDER
SELLS A PARTICIPATING INTEREST TO A PARTICIPANT WHICH, PURSUANT TO SECTION
9.9(A), SEEKS TO OBTAIN THE BENEFITS OF SECTION 2.10, THEN SUCH FOREIGN LENDER
SHALL PROMPTLY DELIVER TO BORROWER (I) TWO DULY SIGNED COMPLETED COPIES OF THE
FORMS OR STATEMENTS REQUIRED TO BE PROVIDED BY SUCH LENDER AS SET FORTH ABOVE,
TO ESTABLISH THE PORTION OF ANY SUCH SUMS PAID OR PAYABLE WITH RESPECT TO WHICH
SUCH LENDER ACTS FOR ITS OWN ACCOUNT THAT IS NOT SUBJECT TO U.S. WITHHOLDING
TAX, AND (II) TWO DULY SIGNED COMPLETED COPIES OF

 

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IRS FORM W-8IMY (OR ANY SUCCESSOR THERETO), TOGETHER WITH ANY INFORMATION SUCH
LENDER CHOOSES TO TRANSMIT WITH SUCH FORM, AND ANY OTHER CERTIFICATE OR
STATEMENT OF EXEMPTION REQUIRED UNDER THE CODE, TO ESTABLISH THAT SUCH LENDER IS
NOT ACTING FOR ITS OWN ACCOUNT WITH RESPECT TO A PORTION OF ANY SUCH SUMS
PAYABLE TO SUCH LENDER.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS PARAGRAPH,
A FOREIGN LENDER SHALL NOT BE REQUIRED TO DELIVER ANY FORM PURSUANT TO THIS
PARAGRAPH THAT SUCH FOREIGN LENDER IS NOT LEGALLY ABLE TO DELIVER.

 

(F)                                    FOR ANY PERIOD WITH RESPECT TO WHICH A
LENDER HAS FAILED TO COMPLY WITH THE REQUIREMENTS OF SECTION 2.10(B), (E) OR (H)
(OTHER THAN TO THE EXTENT SUCH FAILURE IS DUE TO A CHANGE IN LAW, RULE OR
REGULATION OCCURRING SUBSEQUENT TO THE DATE ON WHICH A FORM ORIGINALLY WAS
REQUIRED TO BE PROVIDED), BORROWER SHALL NOT BE REQUIRED TO PAY ADDITIONAL
AMOUNTS TO THE LENDER PURSUANT TO THIS SECTION 2.10 WITH RESPECT TO TAX
LIABILITIES IMPOSED AS A RESULT OF SUCH FAILURE.

 

(G)                                 BORROWER MAY, WITHOUT REDUCTION, WITHHOLD
ANY TAX LIABILITIES REQUIRED TO BE DEDUCTED AND WITHHELD FROM ANY PAYMENT UNDER
ANY OF THE LOAN DOCUMENTS WITH RESPECT TO WHICH BORROWER IS NOT REQUIRED TO PAY
ADDITIONAL AMOUNTS UNDER THIS SECTION 2.10.

 

(H)                                 UPON BORROWER’S REQUEST, IF THE LENDER IS A
“UNITED STATES PERSON” WITHIN THE MEANING OF SECTION 7701(A)(30) OF THE CODE,
LENDER SHALL, IF AND TO THE EXTENT REQUIRED BY LAW, EXECUTE AND DELIVER TO
BORROWER AN IRS FORM W-9.

 

SECTION 2.11.                             INTENTIONALLY OMITTED.

 

SECTION 2.12.                             CENTRAL CASH MANAGEMENT.

 

(A)                                  LOCAL COLLECTION ACCOUNTS; COLLECTION
ACCOUNT; DEPOSITS TO AND WITHDRAWALS FROM THE COLLECTION ACCOUNT.

 

(I)                                     ON OR BEFORE THE CLOSING DATE, LENDER
SHALL (1) ESTABLISH ON BEHALF OF THE BORROWER AND MAINTAIN WITH THE COLLECTION
ACCOUNT BANK A COLLECTION ACCOUNT (THE “COLLECTION ACCOUNT”), WHICH SHALL BE AN
ELIGIBLE ACCOUNT WITH A SEPARATE AND UNIQUE IDENTIFICATION NUMBER IN THE NAME OF
LENDER, AS SECURED PARTY, OR, AT LENDER’S OPTION, IN THE NAME OF BORROWER FOR
THE BENEFIT OF LENDER, AS SECURED PARTY, AND (2) CAUSE THE COLLECTION ACCOUNT
BANK TO DELIVER TO LENDER THE COLLECTION ACCOUNT AGREEMENT IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO LENDER ACKNOWLEDGING LENDER’S SECURITY INTEREST IN AND
SOLE DOMINION AND CONTROL OVER THE COLLECTION ACCOUNT.  ON OR BEFORE THE CLOSING
DATE, BORROWER MAY (X) ESTABLISH AND MAINTAIN WITH ONE OR MORE FINANCIAL
INSTITUTIONS ACCEPTABLE TO LENDER IN ITS SOLE REASONABLE DISCRETION
(INDIVIDUALLY EACH, AND COLLECTIVELY, THE “LOCAL COLLECTION ACCOUNT BANK”), ONE
OR MORE LOCAL COLLECTION ACCOUNTS FOR THE MORTGAGED PROPERTY (INDIVIDUALLY EACH,
AND COLLECTIVELY, THE “LOCAL COLLECTION ACCOUNT”) AND ONE OR MORE SECURITY
DEPOSIT ACCOUNTS (OTHER THAN MASTER LEASE DEPOSITS) FOR THE MORTGAGED PROPERTY
(INDIVIDUALLY EACH, AND COLLECTIVELY, THE “SECURITY DEPOSIT ACCOUNT”), EACH OF
WHICH SHALL BE AN ELIGIBLE ACCOUNT WITH A SEPARATE AND UNIQUE IDENTIFICATION
NUMBER AND ENTITLED IN THE SAME NAME AS THE COLLECTION ACCOUNT AND (Y) CAUSE
EACH LOCAL COLLECTION ACCOUNT BANK TO DELIVER TO LENDER A LOCAL COLLECTION
ACCOUNT AGREEMENT IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO LENDER
ACKNOWLEDGING LENDER’S SECURITY INTEREST IN AND SOLE DOMINION AND CONTROL OVER
EACH

 

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LOCAL COLLECTION ACCOUNT AND SECURITY DEPOSIT ACCOUNT; PROVIDED THAT BORROWER
MAY DEPOSIT, HOLD AND ADMINISTER SECURITY DEPOSITS (OTHER THAN MASTER LEASE
DEPOSITS) FROM THAT PORTION OF THE MORTGAGED PROPERTY, IF ANY, LOCATED IN NORTH
CAROLINA IN A SECURITY DEPOSIT ACCOUNT MAINTAINED WITH BANK OF AMERICA, N.A. OR
OTHER FINANCIAL INSTITUTION WITH A NORTH CAROLINA BRANCH REASONABLY ACCEPTABLE
TO LENDER, WHICH, IT IS UNDERSTOOD, MAY NOT EXECUTE A LOCAL COLLECTION ACCOUNT
AGREEMENT, ALTHOUGH BORROWER SHALL MAKE COMMERCIALLY REASONABLE EFFORTS TO
OBTAIN SUCH FINANCIAL INSTITUTION’S EXECUTION AND DELIVERY OF A LOCAL COLLECTION
ACCOUNT AGREEMENT.  ON THE CLOSING DATE, BORROWER SHALL DEPOSIT $301,285.64 IN
THE SECURITY DEPOSIT ACCOUNT.  ON OR BEFORE THE CLOSING DATE, LENDER SHALL
ESTABLISH ON BEHALF OF BORROWER AND MAINTAIN WITH THE COLLECTION ACCOUNT BANK A
SEPARATE ACCOUNT FOR MASTER LEASE DEPOSITS (THE “MASTER LEASE DEPOSIT ACCOUNT”),
WHICH SHALL BE AN ELIGIBLE ACCOUNT AND SHALL HAVE THE SAME TITLE AS THE
COLLECTION ACCOUNT, FOR THE BENEFIT OF LENDER UNTIL THE LOAN IS PAID IN FULL. 
ON THE CLOSING DATE BORROWER SHALL DEPOSIT THE AMOUNT OF THE MASTER LEASE
DEPOSITS IN THE MASTER LEASE DEPOSIT ACCOUNT.  SUBJECT TO SECTION 2.12(A)(II),
BORROWER SHALL

 

(A)                              DEPOSIT OR CAUSE THE MANAGER TO DEPOSIT IN THE
SECURITY DEPOSIT ACCOUNT (OR INTO THE MASTER LEASE DEPOSIT ACCOUNT, WITH RESPECT
TO MASTER LEASE DEPOSITS) NOT LESS THAN ONE TIME DURING EACH CALENDAR MONTH ALL
SECURITY DEPOSITS IN THE FORM OF MONEY RECEIVED FROM THE TENANTS, SINCE THE DATE
OF THE PREVIOUS DEPOSIT (OR IN THE CASE OF THE INITIAL DEPOSIT, SINCE THE
CLOSING DATE),

 

(B)                                DEPOSIT OR CAUSE THE MANAGER TO DEPOSIT IN
THE COLLECTION ACCOUNT OR LOCAL COLLECTION ACCOUNT, ALL RENTS AND MONEY RECEIVED
FROM ACCOUNTS OR UNDER LEASES AND DERIVED FROM THE MORTGAGED PROPERTY AND ALL
PROCEEDS THEREOF, IN EACH CASE ON EACH BUSINESS DAY FOLLOWING THE COLLECTION AND
RECEIPT THEREOF DURING THE FIRST SEVEN (7) BUSINESS DAYS OF EACH CALENDAR MONTH
AND NOT LESS THAN ONCE DURING EACH CALENDAR WEEK OF SUCH MONTH COMMENCING AFTER
SUCH SEVENTH (7TH) DAY, AND

 

(C)                                SWEEP OR CAUSE TO BE SWEPT BY EACH LOCAL
COLLECTION ACCOUNT BANK ALL MONEY ON DEPOSIT IN THE LOCAL COLLECTION ACCOUNT IN
EXCESS OF $10,000 (WHICH THE LOCAL COLLECTION ACCOUNT BANK SHALL BE ENTITLED TO
USE TO OFFSET ANY RETURNED ITEMS) TO THE COLLECTION ACCOUNT ON EACH BUSINESS
DAY.

 

Borrower shall not have any right to withdraw Money from the Local Collection
Account, the Security Deposit Account, the Master Lease Deposit Account or the
Collection Account, which shall be under the sole dominion and control, and the
“control” within the meaning of Sections 9-104 and 9-106 of the UCC, of Lender;
provided, that notwithstanding the foregoing, so long as an Event of Default has
not occurred and is not continuing (or if an Event of Default has occurred and
is continuing but Borrower is required to return the security deposit in
accordance with applicable Legal Requirements), Borrower may instruct the Local
Collection Account Bank to withdraw from the Security Deposit Account security
deposits (other than Master Lease Deposits) in order to satisfy Borrower’s
obligations to return the same to tenants entitled to them under and in
accordance with the Leases.  Any disbursement of Master Lease Deposits shall in
each case be subject to Lender’s prior approval and direction, provided

 

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that Lender shall authorize, upon Borrower’s request made not more frequently
than on a monthly basis, disbursements reflecting any reduction in Master Lease
Deposits to which the tenant under the applicable Master Homesite Lease
Documentation is entitled.  In the event of a Lease default or other occurrence
whereby Borrower, as landlord, shall become entitled to retain any security
deposits or apply the same to amounts owed under the applicable Lease, any such
security deposits so retained and/or applied by Borrower shall, upon such
retention or application, be transferred from the Security Deposit Account to
the Local Collection Account or the Collection Account and treated in the same
manner as Rents; provided, that in the event of a default under the Master
Homesite Lease Documentation entitling the landlord to retain Master Lease
Deposits, the Master Lease Deposits shall not be transferred to the Collection
Account and treated as Rents but instead shall continue to be held in the Master
Lease Deposit Account as additional collateral for the Indebtedness.  Any such
Rents, Money or Proceeds held by Borrower or the Manager prior to deposit into
the Local Collection Account shall be held in trust for the benefit of Lender. 
Borrower shall be responsible for the payment of all costs and expenses in
connection with establishing and maintaining the Collection Account, the Local
Collection Account, the Security Deposit Account, the Master Lease Deposit
Account and the Reserve Accounts (including, without limitation, Collection
Account Bank’s and Local Collection Account Bank’s fees and charges) and shall
reimburse Lender upon demand for any such costs or expenses incurred by Lender.

 

(II)                                  IN THE EVENT THAT ANY EVENT OF DEFAULT HAS
OCCURRED AND IS CONTINUING,

 

(A)                              UPON REQUEST OF LENDER, BORROWER SHALL DELIVER
TO EACH TENANT UNDER A LEASE AN IRREVOCABLE DIRECTION LETTER IN A FORM APPROVED
BY LENDER REQUIRING THE TENANT TO PAY ALL RENTS AND OTHER MONEY UNDER LEASES,
AND ANY MONEY RECEIVED FROM ACCOUNTS OR OTHERWISE DERIVED FROM THE MORTGAGED
PROPERTY AND PROCEEDS THEREOF OWED TO BORROWER DIRECTLY TO THE COLLECTION
ACCOUNT OR (IF LENDER ELECTS) A LOCAL COLLECTION ACCOUNT AND SHALL DELIVER AN
IRREVOCABLE DIRECTION LETTER IN SUCH FORM TO EACH TENANT UNDER A NEW LEASE
ENTERED INTO THEREAFTER PRIOR TO THE COMMENCEMENT OF SUCH LEASE,

 

(B)                                UPON REQUEST OF LENDER, ALL RENTS AND MONEY
RECEIVED FROM ACCOUNTS OR UNDER LEASES AND DERIVED FROM THE MORTGAGED PROPERTY
AND ALL PROCEEDS THEREOF SHALL BE PAYABLE TO LENDER OR AS OTHERWISE DIRECTED BY
LENDER,

 

(C)                                IF A TENANT UNDER A LEASE FORWARDS ANY RENTS,
MONEY OR PROCEEDS TO BORROWER OR MANAGER RATHER THAN DIRECTLY TO THE COLLECTION
ACCOUNT OR APPLICABLE LOCAL COLLECTION ACCOUNT, BORROWER SHALL (I) IF THE LENDER
HAS MADE THE REQUEST REFERRED TO IN SECTION 2,12(A)(II)(A) ABOVE, DELIVER AN
ADDITIONAL IRREVOCABLE DIRECTION LETTER TO THE TENANT AND MAKE OTHER
COMMERCIALLY REASONABLE EFFORTS TO CAUSE THE TENANT TO THEREAFTER FORWARD SUCH
RENTS, MONEY OR PROCEEDS DIRECTLY TO THE COLLECTION ACCOUNT OR (IF LENDER
ELECTS) A LOCAL COLLECTION ACCOUNT, AND (II) IMMEDIATELY DEPOSIT OR CAUSE THE
MANAGER TO DEPOSIT IN THE COLLECTION ACCOUNT ANY SUCH RENTS, MONEY OR PROCEEDS
RECEIVED BY BORROWER OR MANAGER,

 

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(D)                               BORROWER SHALL NOT HAVE ANY RIGHT TO MAKE OR
DIRECT ANY WITHDRAWALS FROM THE COLLECTION ACCOUNT OR THE RESERVE ACCOUNT
WITHOUT THE PRIOR WRITTEN CONSENT OF LENDER (IT BEING UNDERSTOOD AND AGREED THAT
BORROWER MAY CONTINUE TO MAKE WITHDRAWALS FROM THE SECURITY DEPOSIT ACCOUNT AS
DESCRIBED ABOVE), AND

 

(E)                                 ANY AND ALL FUNDS ON DEPOSIT IN THE
COLLECTION ACCOUNT AND THE RESERVE ACCOUNTS MAY BE ALLOCATED BY LENDER IN ITS
SOLE DISCRETION FOR THE PAYMENT OF THE INDEBTEDNESS PURSUANT TO SECTION 2.8 OF
THIS AGREEMENT OR TO THE OPERATING EXPENSE ACCOUNT, THE WORKING CAPITAL RESERVE
ACCOUNT OR THE DEBT SERVICE RESERVE ACCOUNT.

 

(III)                               BORROWER SHALL DEPOSIT IN THE COLLECTION
ACCOUNT ALL LOSS PROCEEDS RECEIVED BY BORROWER.

 

(B)                                 DISTRIBUTION OF CASH.  SO LONG AS AN EVENT
OF DEFAULT HAS NOT OCCURRED AND IS NOT CONTINUING (AND THEREAFTER AT LENDER’S
SOLE OPTION AND DISCRETION), LENDER SHALL APPLY FUNDS ON DEPOSIT IN THE
COLLECTION ACCOUNT (TO THE EXTENT NOT HELD IN RESERVE ACCOUNTS CONSTITUTING
SUB-ACCOUNTS OF THE COLLECTION ACCOUNT, IF ANY, AND WITH THE EXCEPTION OF LOSS
PROCEEDS, WHICH SHALL BE APPLIED AS PROVIDED IN SECTION 2.12(E) AND SECTION
5.1(X) OF THIS AGREEMENT) ON EACH PAYMENT DATE AS FOLLOWS:

 

(I)                                     FIRST, TO THE REAL ESTATE TAXES ESCROW
ACCOUNT AND THE INSURANCE ESCROW ACCOUNT, IN THAT ORDER, IN THE RESPECTIVE
AMOUNTS REQUIRED TO BE DEPOSITED THEREIN AS DESCRIBED IN SECTION 2.13(B);

 

(II)                                  SECOND, TO THE PAYMENT TO LENDER OF ANY
EXPENSES THEN DUE AND PAYABLE TO LENDER OR ITS SERVICER(S) PURSUANT TO THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS;

 

(III)                               THIRD, TO THE PAYMENT TO LENDER OF THE
MONTHLY DEBT SERVICE PAYMENT DUE UPON SUCH PAYMENT DATE;

 

(IV)                              FOURTH, TO THE REPLACEMENT RESERVE ACCOUNT IN
THE AMOUNT REQUIRED TO BE DEPOSITED THEREIN AS DESCRIBED IN SECTION 2.13(A);

 

(V)                                 FIFTH, TO THE PAYMENT OF ANY OUTSTANDING
INDEMNIFICATION PAYMENT TO WHICH AN INDEMNIFIED PARTY IS THEN ENTITLED PURSUANT
TO SECTIONS 5.1(I) AND 5.1(J), AND ANY OTHER AMOUNTS THEN DUE AND PAYABLE TO
LENDER PURSUANT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS WHICH ARE NOT
PAID FROM APPLICATIONS UNDER CLAUSE (III) ABOVE;

 

(VI)                              SIXTH, TO THE PREPAID RENT ACCOUNT IN THE
AMOUNT REQUIRED TO BE DEPOSITED THEREIN AS DESCRIBED IN SECTION 2.13(D);

 

(VII)                           SEVENTH, IF NO EVENT OF DEFAULT EXISTS, TO
BORROWER IN AN AMOUNT EQUAL TO REMAINING AVAILABLE FUNDS, IF ANY; PROVIDED, THAT
IF ANY EVENT OF DEFAULT EXISTS, NO DISBURSEMENT SHALL BE MADE UNDER THIS CLAUSE
SEVENTH; AND

 

40

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(VIII)                        EIGHTH, IF ANY EVENT OF DEFAULT EXISTS, THEN TO
THE EXTENT LENDER HAS NOT MADE OTHER APPLICATION OF SUCH REMAINING AVAILABLE
FUNDS IN LENDER’S DISCRETION AS PROVIDED HEREUNDER, ALL REMAINING AVAILABLE
FUNDS SHALL BE ALLOCATED AS DETERMINED BY LENDER IN LENDER’S SOLE AND ABSOLUTE
DISCRETION (AND RE-ALLOCATED FROM TIME TO TIME AS LENDER MAY ELECT) AND RETAINED
IN THE DEBT SERVICE RESERVE ACCOUNT, THE WORKING CAPITAL RESERVE ACCOUNT AND/OR
THE OPERATING EXPENSE ACCOUNT OR, AT LENDER’S OPTION, IN OTHER LENDER-CONTROLLED
ACCOUNTS.

 

(C)                                  PERMITTED INVESTMENTS.  SO LONG AS NO EVENT
OF DEFAULT HAS OCCURRED AND IS CONTINUING, BORROWER SHALL DIRECT LENDER IN
WRITING TO INVEST AND REINVEST ANY BALANCE IN THE COLLECTION ACCOUNT, FROM TIME
TO TIME IN PERMITTED INVESTMENTS (SUBJECT TO THE AVAILABILITY OF SUCH PERMITTED
INVESTMENTS WITH THE COLLECTION ACCOUNT BANK); PROVIDED, HOWEVER, THAT

 

(I)                                     THE MATURITY OF THE PERMITTED
INVESTMENTS ON DEPOSIT THEREIN SHALL BE AT THE DISCRETION OF BORROWER, BUT IN
ANY EVENT NO LATER THAN THE BUSINESS DAY IMMEDIATELY PRECEDING THE DATE ON WHICH
SUCH FUNDS ARE REQUIRED TO BE WITHDRAWN THEREFROM PURSUANT TO SECTION 2.12(A) OR
2.12(B) OF THIS AGREEMENT,

 

(II)                                  AFTER AN EVENT OF DEFAULT HAS OCCURRED AND
FOR SO LONG AS SUCH EVENT OF DEFAULT IS CONTINUING BORROWER SHALL NOT HAVE ANY
RIGHT TO DIRECT INVESTMENT OF THE BALANCE IN THE COLLECTION ACCOUNT,

 

(III)                               ALL SUCH PERMITTED INVESTMENTS SHALL BE HELD
IN THE NAME OF LENDER OR ITS SERVICER AND SHALL BE CREDITED TO THE COLLECTION
ACCOUNT, AND

 

(IV)                              IF NO WRITTEN INVESTMENT DIRECTION IS PROVIDED
TO LENDER BY BORROWER, LENDER MAY AT LENDER’S OPTION INVEST ANY BALANCE IN THE
COLLECTION ACCOUNT IN SUCH PERMITTED INVESTMENTS AS MAY BE SELECTED BY LENDER.

 

Lender shall have no liability for any loss in investments of funds in the
Collection Account that are invested in Permitted Investments and no such loss
shall affect Borrower’s obligation to fund, or liability for funding, the
Collection Account.  All interest paid or other earnings on funds deposited into
the Collection Account made hereunder shall be deposited into the Collection
Account.  Borrower shall include all earnings on the Collection Account as
income of Borrower for federal and applicable state tax purposes.

 

(D)                                 INTENTIONALLY OMITTED.

 

(E)                                  LOSS PROCEEDS.  IN THE EVENT OF A CASUALTY
OR TAKING WITH RESPECT TO THE MORTGAGED PROPERTY, ALL OF BORROWER’S INTEREST IN
LOSS PROCEEDS SHALL BE PAID DIRECTLY TO THE COLLECTION ACCOUNT.  SUBJECT TO THE
PROVISIONS OF SECTION 5.1(X) OF THIS AGREEMENT, WHEREBY LOSS PROCEEDS MAY IN
CERTAIN CASES AND UPON SATISFACTION OF THE TERMS AND CONDITIONS SET FORTH IN
SECTION 5.1(X) BE MADE AVAILABLE FOR RESTORATION, LOSS PROCEEDS MAY, AT LENDER’S
OPTION EXERCISED IN LENDER’S SOLE DISCRETION, BE APPLIED TO THE INDEBTEDNESS
AND, UPON PAYMENT IN FULL OF THE INDEBTEDNESS OR, IF AN EVENT OF DEFAULT EXISTS,
IN ANY MANNER DETERMINED BY LENDER IN LENDER’S SOLE DISCRETION IN ACCORDANCE
WITH SECTION 2.8 HEREOF.  IF THE LOSS PROCEEDS ARE TO BE MADE AVAILABLE FOR
RESTORATION PURSUANT TO SECTION 5.1(X) OF THIS AGREEMENT, SUCH LOSS PROCEEDS
SHALL BE HELD BY LENDER IN A SEGREGATED INTEREST-BEARING ELIGIBLE ACCOUNT IN THE
NAME OF LENDER

 

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AND UNDER THE SOLE DOMINION AND CONTROL OF LENDER TO BE OPENED (IF NOT
PREVIOUSLY OPENED AND MAINTAINED BY THE COLLECTION ACCOUNT BANK UNDER THE
COLLECTION ACCOUNT AGREEMENT BY THE LENDER) BY LENDER AT A FINANCIAL INSTITUTION
SELECTED BY LENDER (THE “LOSS PROCEEDS ACCOUNT”).  FUNDS ON DEPOSIT IN THE LOSS
PROCEEDS ACCOUNT SHALL BE INVESTED IN PERMITTED INVESTMENTS (SUBJECT TO THE
AVAILABILITY OF SUCH PERMITTED INVESTMENTS WITH THE COLLECTION ACCOUNT BANK) IN
THE SAME MANNER AND SUBJECT TO THE SAME RESTRICTIONS AS SET FORTH IN SECTION
2.12(C) WITH RESPECT TO THE COLLECTION ACCOUNT (EXCEPT THAT THE MATURITY SHALL
BE NOT LATER THAN AS NECESSARY TO SATISFY ANY SCHEDULE OF DISTRIBUTIONS FOR
RESTORATION REQUIRED OR APPROVED BY LENDER).  IF ANY LOSS PROCEEDS ARE RECEIVED
BY BORROWER, SUCH LOSS PROCEEDS SHALL BE RECEIVED IN TRUST FOR LENDER, SHALL BE
SEGREGATED FROM OTHER FUNDS OF BORROWER, AND SHALL BE FORTHWITH PAID TO LENDER
TO THE EXTENT NECESSARY TO COMPLY WITH THIS AGREEMENT.

 

SECTION 2.13.                             RESERVE ACCOUNTS.

 

(A)                                  DEFERRED MAINTENANCE ESCROW ACCOUNT AND
REPLACEMENT RESERVE ACCOUNT.

 

(I)                                     ON OR BEFORE THE CLOSING DATE, LENDER
SHALL ESTABLISH ON BEHALF OF BORROWER AND MAINTAIN WITH THE COLLECTION ACCOUNT
BANK TWO SEPARATE ACCOUNTS FOR DEFERRED MAINTENANCE AND REPLACEMENT RESERVES,
EACH OF WHICH SHALL BE AN ELIGIBLE ACCOUNT AND SHALL HAVE THE SAME TITLE AS THE
COLLECTION ACCOUNT, FOR THE BENEFIT OF LENDER UNTIL THE LOAN IS PAID IN FULL. 
THE TWO ACCOUNTS SHALL BE DESIGNATED THE “DEFERRED MAINTENANCE ESCROW ACCOUNT”
(THE “DEFERRED MAINTENANCE ESCROW ACCOUNT”) AND THE “REPLACEMENT RESERVE
ACCOUNT” (THE “REPLACEMENT RESERVE ACCOUNT”).  ON THE CLOSING DATE, LENDER SHALL
DEPOSIT OUT OF THE LOAN PROCEEDS $127,043.75 IN THE DEFERRED MAINTENANCE ESCROW
ACCOUNT AND $6,395.83 IN THE REPLACEMENT RESERVE ACCOUNT.  ON EACH PAYMENT DATE,
COMMENCING WITH THE APRIL 2004 PAYMENT DATE, BORROWER SHALL DEPOSIT FROM THE
COLLECTION ACCOUNT (OR IF THE FUNDS FOR SUCH DEPOSIT ARE NOT AVAILABLE PURSUANT
TO SECTION 2.12(B), SHALL MAKE AN ADDITIONAL DEPOSIT OF BORROWER’S FUNDS SOURCED
FROM EQUITY CAPITAL CONTRIBUTIONS) TO THE REPLACEMENT RESERVE ACCOUNT, OF AN
AMOUNT EQUAL TO THE REPLACEMENT RESERVE DEPOSIT AMOUNT UNTIL THE AMOUNT ON
DEPOSIT IN THE REPLACEMENT RESERVE ACCOUNT EQUALS THE REPLACEMENT RESERVE
THRESHOLD AMOUNT FOR THE INITIAL TIME.  DURING THE PERIOD COMMENCING ON THE
APRIL 2004 PAYMENT DATE WHEN SUCH DEPOSITS ARE BEING MADE TO THE REPLACEMENT
RESERVE ACCOUNT UNTIL THE FUNDS ON DEPOSIT THEREIN EQUAL THE REPLACEMENT RESERVE
THRESHOLD AMOUNT FOR THE INITIAL TIME, NO WITHDRAWALS MAY BE MADE FROM THE
REPLACEMENT RESERVE ACCOUNT.  AFTER THE AMOUNT ON DEPOSIT IN THE REPLACEMENT
RESERVE ACCOUNT EQUALS THE REPLACEMENT RESERVE THRESHOLD AMOUNT FOR THE INITIAL
TIME, THE BORROWER MAY REQUEST WITHDRAWALS FROM THE REPLACEMENT RESERVE ACCOUNT
PURSUANT TO THE PROCEDURE SET FORTH IN SECTION 2.13(A)(III) BELOW.  IN THE EVENT
FOLLOWING SUCH WITHDRAWAL, THE AMOUNT ON DEPOSIT IN THE REPLACEMENT RESERVE
ACCOUNT SHALL BE LESS THAN THE REPLACEMENT RESERVE THRESHOLD AMOUNT THEN ON EACH
SUBSEQUENT PAYMENT DATE BORROWER SHALL DEPOSIT FROM THE COLLECTION ACCOUNT (OR
IF THE FUNDS FOR SUCH DEPOSIT ARE NOT AVAILABLE PURSUANT TO SECTION 2.12(B),
SHALL MAKE AN ADDITIONAL DEPOSIT OF BORROWER’S FUNDS SOURCED FROM EQUITY CAPITAL
CONTRIBUTIONS) TO THE REPLACEMENT RESERVE ACCOUNT, OF AN AMOUNT EQUAL TO THE
REPLACEMENT RESERVE DEPOSIT AMOUNT UNTIL THE AMOUNT ON THE DEPOSIT IN THE
REPLACEMENT RESERVE ACCOUNT ONCE AGAIN

 

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EQUALS THE REPLACEMENT RESERVE THRESHOLD AMOUNT (FOLLOWING WHICH EVENT THE
BORROWER SHALL ONCE AGAIN NOT BE OBLIGATED TO MAKE DEPOSITS TO THE REPLACEMENT
RESERVE ACCOUNT).

 

(II)                                  ANY AND ALL MONEYS REMITTED TO THE
DEFERRED MAINTENANCE ESCROW ACCOUNT, TOGETHER WITH ANY INTEREST, EARNINGS OR
INCOME EARNED THEREON, SHALL BE HELD IN THE DEFERRED MAINTENANCE ESCROW ACCOUNT
TO BE WITHDRAWN BY LENDER UPON WRITTEN REQUEST OF BORROWER MADE NOT MORE THAN
ONCE EACH MONTH IN AN AMOUNT NOT LESS THAN $10,000, AND APPLIED TO PAY DIRECTLY
OR REIMBURSE BORROWER FOR REPAIRS SET FORTH ON SCHEDULE 1 ATTACHED HERETO (THE
“IMMEDIATE REPAIRS”) UPON SATISFACTION OF THE DISBURSEMENT CONDITIONS LISTED ON
SCHEDULE 6 HEREOF.  WITHIN THE APPLICABLE TIME PERIOD(S) FOR COMPLETION SET
FORTH ON SCHEDULE 1, BORROWER SHALL COMPLETE SUCH IMMEDIATE REPAIRS AND SHALL
PROVIDE TO LENDER SUCH DOCUMENTATION, AND OTHER EVIDENCE OF COMPLIANCE WITH LAW
AS LENDER MAY REASONABLY REQUIRE. THE FUNDS CONTAINED IN THE DEFERRED
MAINTENANCE ESCROW ACCOUNT SHALL BE UTILIZED BY BORROWER SOLELY FOR PERFORMANCE
OF THE IMMEDIATE REPAIRS IN ACCORDANCE WITH THE PROPERTY CONDITION ASSESSMENTS
AND ENVIRONMENTAL REPORTS, AND SHALL NOT BE USED BY BORROWER FOR PURPOSES FOR
WHICH ANY OTHER RESERVE ACCOUNT IS ESTABLISHED. UPON WRITTEN APPLICATION OF
BORROWER (WHICH MAY BE DONE BY ELECTRONIC MAIL OR E-MAIL), BORROWER SHALL BE
ENTITLED TO OBTAIN DISBURSEMENTS BY LENDER FROM THE DEFERRED MAINTENANCE ESCROW
ACCOUNT TO PAY COSTS INCURRED BY BORROWER FOR SUCH IMMEDIATE REPAIRS, PROVIDED
THAT (A) NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, (B) BORROWER SHALL
PROVIDE TO LENDER (INCLUDING ELECTRONIC MAIL OR E-MAIL) SUCH DOCUMENTATION AND
CERTIFICATIONS AS LENDER MAY REASONABLY REQUEST TO SUBSTANTIATE THE REQUIREMENT
FOR AND ENTITLEMENT TO SUCH DISBURSEMENT, (C) BORROWER SHALL PROVIDE TO LENDER
(INCLUDING BY ELECTRONIC MAIL OR E-MAIL) WITH ALL INVOICES, RECEIPTS, LIEN
WAIVERS AND OTHER DOCUMENTATION OF LAWFUL AND WORKMANLIKE PROGRESS OR
COMPLETION, LIEN-FREE STATUS, AND AVAILABILITY OF SUFFICIENT FUNDS, ALL AS MAY
BE REASONABLY REQUESTED BY LENDER, AND (D) BORROWER SHALL PROVIDE LENDER SUCH
EVIDENCE AS MAY BE REASONABLY SATISFACTORY TO LENDER THAT AFTER PAYMENT OF ANY
DRAW FOR IMMEDIATE REPAIRS, THE FUNDS REMAINING IN THE DEFERRED MAINTENANCE
ESCROW ACCOUNT SHALL BE SUFFICIENT TO PAY FOR THE REMAINDER OF SUCH IMMEDIATE
REPAIRS.   IN THE EVENT BORROWER COMPLETES THE REPAIRS FOR WHICH FUNDS WERE
RESERVED IN THE DEFERRED MAINTENANCE ESCROW ACCOUNT TO THE REASONABLE
SATISFACTION OF LENDER, LENDER SHALL DISBURSE ANY AND ALL AMOUNTS THEN ON
DEPOSIT IN THE DEFERRED MAINTENANCE ESCROW ACCOUNT TO THE COLLECTION ACCOUNT.

 

(III)                               SUBJECT TO THE PROVISIONS OF SECTION
2.13(A)(I), ANY AND ALL MONEYS REMITTED TO THE REPLACEMENT RESERVE ACCOUNT,
TOGETHER WITH ANY INTEREST, EARNINGS OR INCOME THEREON, SHALL BE HELD IN THE
REPLACEMENT RESERVE ACCOUNT TO BE WITHDRAWN BY LENDER UPON WRITTEN REQUEST OF
BORROWER MADE NOT MORE THAN ONCE EACH MONTH IN AN AMOUNT NOT LESS THAN $10,000,
AND APPLIED TO REIMBURSE BORROWER FOR CAPITAL IMPROVEMENT COSTS (OTHER THAN
THOSE FOR IMMEDIATE REPAIRS) REASONABLY APPROVED BY LENDER FOR DISBURSEMENTS
FROM THE REPLACEMENT RESERVE (“APPROVED CAPITAL EXPENDITURES”) UPON SATISFACTION
OF THE DISBURSEMENT CONDITIONS LISTED ON SCHEDULE 6 HEREOF, PROVIDED THAT FUNDS
IN THE REPLACEMENT RESERVE ACCOUNT SHALL NOT BE USED BY BORROWER FOR PURPOSES
FOR WHICH ANY OTHER RESERVE ACCOUNT IS ESTABLISHED.

 

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(B)                                 REAL ESTATE TAXES ESCROW ACCOUNT AND
INSURANCE ESCROW ACCOUNT.  ON OR BEFORE THE CLOSING DATE, LENDER SHALL ON BEHALF
OF THE BORROWER ESTABLISH AND MAINTAIN WITH THE COLLECTION ACCOUNT BANK TWO
SEPARATE ACCOUNTS FOR BASIC CARRYING COSTS, EACH OF WHICH SHALL BE AN ELIGIBLE
ACCOUNT AND SHALL HAVE THE SAME TITLE AS THE COLLECTION ACCOUNT FOR THE BENEFIT
OF LENDER UNTIL THE LOAN IS PAID IN FULL.  THE TWO ACCOUNTS SHALL BE DESIGNATED
THE “REAL ESTATE TAXES ESCROW ACCOUNT” (THE “REAL ESTATE TAXES ESCROW ACCOUNT”)
AND THE “INSURANCE ESCROW ACCOUNT” (THE “INSURANCE ESCROW ACCOUNT”).  ON THE
CLOSING DATE, THE LENDER SHALL DEPOSIT OUT OF THE LOAN PROCEEDS $165,320.88 IN
THE REAL ESTATE TAXES ESCROW ACCOUNT AND $25,766.76 IN THE INSURANCE ESCROW
ACCOUNT (I.E. THE AMOUNT NECESSARY TO MEET THE FIRST BILL WITH CREDIT FOR
EXISTING MONTHLY ESCROW PAYMENTS MADE PRIOR TO THE APPLICABLE DUE DATE).  WITH
RESPECT TO EACH PAYMENT DATE, BORROWER SHALL DEPOSIT FROM THE COLLECTION ACCOUNT
(OR, IF THE FUNDS FOR SUCH DEPOSIT ARE NOT AVAILABLE PURSUANT TO SECTION
2.12(B), SHALL MAKE AN ADDITIONAL DEPOSIT OF BORROWER’S FUNDS SOURCED FROM
EQUITY CAPITAL CONTRIBUTIONS),

 

(1)                                  an amount equal to (1/12th) one-twelfth of
the annual real estate taxes and any other Impositions that if not paid in a
timely manner will result in a Lien on a Mortgaged Property in the Real Estate
Taxes Escrow Account,

 

(2)                                  an amount equal to one-twelfth (1/12th) of
the annual insurance premiums for policies of insurance required to be
maintained by Borrower with respect to the Mortgaged Property pursuant to this
Agreement, and any additional insurance required under any of the other Loan
Documents, in the Insurance Escrow Account.

 

Any and all Moneys remitted to the Real Estate Taxes Escrow Account or Insurance
Escrow Account (which shall not bear interest for the benefit of Borrower) shall
be held in the Real Estate Taxes Escrow Account or Insurance Escrow Account to
be withdrawn from the Real Estate Taxes Escrow Account or Insurance Escrow
Account, as applicable, by Lender or its servicer upon written request of
Borrower delivered to Lender and its servicer together with documentation and
other evidence (including invoices and in the case of a reimbursement of
Borrower, evidence that the related costs have been paid) with respect to the
respective Basic Carrying Costs towards which such funds are to be applied, and
applied to pay directly (or reimburse Borrower, in the case of insurance
premiums only) for (x) any Impositions (in the case of the Real Estate Taxes
Escrow Account) or (y) any insurance premiums for policies of insurance required
to be maintained by Borrower with respect to the Mortgaged Property pursuant to
this Agreement, and any additional insurance required under any of the other
Loan Documents (in the case of the Insurance Escrow Account).  Borrower shall
provide Lender or its servicer with bills and other documents necessary for
payment of Impositions and insurance premiums at least ten (10) Business Days
prior to the due dates therefor.  In the event the amount on deposit in the Real
Estate Taxes Escrow Account or the Insurance Escrow Account exceeds the amount
due for Impositions by more than one-twelfth (1/12th) of the annual real estate
taxes (in the case of the Real Estate Taxes Escrow Account) or the amount due
for insurance premiums (in the case of the Insurance Escrow Account),
respectively, Lender or its servicer shall in its sole discretion credit such
excess against future payment obligations to the Real Estate Taxes Escrow
Account or the Insurance Escrow Account, as applicable.

 

(C)                                  OPERATING EXPENSE ACCOUNT, WORKING CAPITAL
RESERVE ACCOUNT AND THE DEBT SERVICE RESERVE ACCOUNT.  ON OR BEFORE THE CLOSING
DATE, LENDER SHALL ON BEHALF OF THE

 

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BORROWER ESTABLISH AND MAINTAIN WITH THE COLLECTION ACCOUNT BANK THREE ACCOUNTS
FOR THE REMITTANCE OF FUNDS BY LENDER OR ITS SERVICER IN ITS SOLE DISCRETION
AFTER AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, EACH OF WHICH SHALL BE
AN ELIGIBLE ACCOUNT AND SHALL HAVE THE SAME TITLE AS THE COLLECTION ACCOUNT FOR
THE BENEFIT OF LENDER UNTIL THE LOAN IS PAID IN FULL.  THE THREE ACCOUNTS SHALL
BE DESIGNATED THE “OPERATING EXPENSE ACCOUNT” (THE “OPERATING EXPENSE ACCOUNT”),
THE “WORKING CAPITAL RESERVE ACCOUNT” (THE “WORKING CAPITAL RESERVE ACCOUNT”)
AND THE “DEBT SERVICE RESERVE ACCOUNT” (THE “DEBT SERVICE RESERVE ACCOUNT”).  ON
ANY BUSINESS DAY AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT, LENDER OR ITS SERVICER MAY IN ITS SOLE DISCRETION DEPOSIT INTO THE
OPERATING EXPENSE ACCOUNT, THE WORKING CAPITAL RESERVE ACCOUNT OR THE DEBT
SERVICE RESERVE ACCOUNT ANY FUNDS THEN ON DEPOSIT IN THE LOCAL COLLECTION
ACCOUNT OR THE COLLECTION ACCOUNT.  ANY AND ALL MONEYS REMITTED TO THE OPERATING
EXPENSE ACCOUNT, THE WORKING CAPITAL RESERVE ACCOUNT OR THE DEBT SERVICE RESERVE
ACCOUNT SHALL, UNTIL OTHERWISE APPLIED BY LENDER FROM TIME TO TIME AT LENDER’S
SOLE DISCRETION DURING THE EXISTENCE OF ANY EVENT OF DEFAULT, BE HELD IN THE
OPERATING EXPENSE ACCOUNT, THE WORKING CAPITAL RESERVE ACCOUNT OR THE DEBT
SERVICE RESERVE ACCOUNT, AS APPLICABLE, AND APPLIED, IF LENDER ELECTS IN ITS
SOLE DISCRETION TO MAKE SUCH FUNDS AVAILABLE FOR SUCH APPLICATION,

 

(x)                                   with respect to the Operating Expense
Account only, to pay Property Expenses provided for in the Operating Budget
approved by Lender, or for other Property Expenses approved by Lender,

 

(y)                                 with respect to the Working Capital Reserve
Account only, as a working capital reserve up to the then applicable Working
Capital Reserve Amount, as the same adjusts from time to time under the then
applicable Working Capital Budget, or in such greater or lesser amount as Lender
may determine from time to time, with disbursements from time to time at
Lender’s option from the Working Capital Reserve Account to the Operating
Expense Account as working capital needs arise which may not be satisfied from
the funds on hand in the Operating Expense Account, all at the sole election of
Lender, and

 

(z)                                   with respect to the Debt Service Reserve
Account only, applied to pay the Indebtedness at the sole election of Lender;

 

provided, that (1) notwithstanding the foregoing, Lender may at any time, in its
sole discretion, elect to apply the funds on deposit in the Operating Expense
Account and/or the Working Capital Reserve Account to pay the Indebtedness
(including without limitation any Prepayment Consideration and other amounts due
Lender in connection with such prepayment) while any Event of Default exists,
and (2) in the event Lender accepts in writing a proposed cure of the Event of
Default which precipitated the deposits to the Operating Expense Account, the
Working Capital Reserve Account and the Debt Service Reserve Account and no
other Event of Default exists, then the funds on deposit in the Operating
Expense Account, the Working Capital Reserve Account and the Debt Service
Reserve Account shall be released to Borrower.

 

(D)                                 PREPAID RENT ACCOUNT.  ON OR BEFORE THE
CLOSING DATE, LENDER SHALL ON BEHALF OF THE BORROWER ESTABLISH AND MAINTAIN WITH
THE COLLECTION ACCOUNT BANK AN ACCOUNT FOR THE REMITTANCE OF PREPAID RENT
DESIGNATED THE PREPAID RENT ACCOUNT (THE “PREPAID RENT ACCOUNT”) WHICH SHALL BE
AN ELIGIBLE ACCOUNT AND SHALL HAVE THE SAME TITLE AS COLLECTION

 

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ACCOUNT FOR THE BENEFIT OF THE LENDERS UNTIL THE LOAN IS PAID IN FULL.  ON THE
CLOSING DATE, THE INITIAL LENDER SHALL DEPOSIT OUT OF THE LOAN PROCEEDS $0.00 IN
THE PREPAID RENT ACCOUNT, WHICH SHALL BE AN ESTIMATE OF PREPAID RENT HELD BY
BORROWER.  AT LEAST FIVE (5) BUSINESS DAYS PRIOR TO THE FIRST PAYMENT DATE,
BORROWER WILL PROVIDE TO LENDER A CERTIFIED PREPAID RENT ROLL IN THE FORM
ATTACHED AS SCHEDULE 9 SHOWING THE AMOUNT OF PREPAID RENT HELD BY BORROWER, AND
THE AMOUNT OF THE PREPAID RENT DEPOSITED IN THE PREPAID RENT ACCOUNT SHALL BE
ADJUSTED ACCORDINGLY ON THE FIRST PAYMENT DATE, BY A TRANSFER OF FUNDS BETWEEN
THE COLLECTION ACCOUNT AND THE PREPAID RENT ACCOUNT.  ON ANY PAYMENT DATE AS OF
WHICH THE MOST RECENT MONTHLY STATEMENT INDICATES THAT THE PREPAID RENT EXCEEDS
$15,000, LENDER SHALL DEPOSIT OR CAUSE TO BE DEPOSITED IN THE PREPAID RENT
ACCOUNT PURSUANT TO CLAUSE SIXTH OF SECTION 2.12(B) AN AMOUNT EQUAL TO THE
POSITIVE DIFFERENCE, IF ANY, BETWEEN THE AMOUNT INDICATED IN THE MONTHLY
STATEMENT AND THE AMOUNT THEN ON DEPOSIT IN THE PREPAID RENT ACCOUNT.  ON ANY
PAYMENT DATE AS OF WHICH THE MOST RECENT MONTHLY STATEMENT INDICATES THAT THE
PREPAID RENT EXCEEDS $15,000 BUT IS LESS THAN THE AMOUNT THEN ON DEPOSIT IN THE
PREPAID RENT ACCOUNT, THE LENDER SHALL WITHDRAW FROM THE PREPAID RENT ACCOUNT
AND TRANSFER TO THE COLLECTION ACCOUNT THE POSITIVE DIFFERENCE BETWEEN THE
AMOUNT ON DEPOSIT IN THE PREPAID RENT ACCOUNT AND SUCH AMOUNT CONTAINED IN THE
MOST RECENT MONTHLY STATEMENT TO BE APPLIED TOGETHER WITH THE OTHER COLLECTIONS
FROM THE MORTGAGED PROPERTIES PURSUANT TO SECTION 2.12(B) ON SUCH PAYMENT DATE. 
ON ANY PAYMENT DATE AS OF WHICH THE MOST RECENT MONTHLY STATEMENT INDICATES THAT
THE PREPAID RENT WHICH WAS PREVIOUSLY IN EXCESS OF $15,000 HAS BEEN REDUCED
BELOW $15,000, THE LENDER SHALL WITHDRAW FROM THE PREPAID RENT ACCOUNT AND
TRANSFER TO THE COLLECTION ACCOUNT THE ENTIRE AMOUNT OF FUNDS THEN ON DEPOSIT IN
THE PREPAID RENT ACCOUNT TO BE APPLIED TOGETHER WITH THE OTHER COLLECTIONS FROM
THE MORTGAGED PROPERTIES PURSUANT TO SECTION 2.12(B) ON SUCH PAYMENT DATE.  IN
THE EVENT OF AND AFTER A RELEASE OF A MORTGAGED PROPERTY, ALL OF THE REFERENCES
ABOVE IN THIS PARAGRAPH TO $15,000 SHALL BE ADJUSTED TO EQUAL ONE-TWELFTH
(1/12TH) OF THE PRODUCT OF 5.60% AND THE UNDERWRITTEN NET CASH FLOW OF ALL OF
THE REMAINING MORTGAGED PROPERTIES.

 

(E)                                  INVESTMENT OF FUNDS.  ALL OR A PORTION OF
ANY MONEYS IN THE RESERVE ACCOUNTS (OTHER THAN THE REAL ESTATE TAX ESCROW
ACCOUNT, THE INSURANCE ESCROW ACCOUNT, THE OPERATING EXPENSE ACCOUNT, THE
WORKING CAPITAL RESERVE ACCOUNT AND THE DEBT SERVICE RESERVE ACCOUNT, NONE OF
WHICH SHALL BEAR INTEREST FOR THE BENEFIT OF BORROWER) SHALL, SO LONG AS NO
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BE INVESTED AND REINVESTED BY
LENDER IN ACCORDANCE WITH WRITTEN INSTRUCTIONS DELIVERED BY BORROWER, OR AFTER
AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, BY LENDER, IN ONE OR MORE
PERMITTED INVESTMENTS (SUBJECT TO THE AVAILABILITY OF SUCH PERMITTED INVESTMENTS
WITH THE COLLECTION ACCOUNT BANK).  IF NO WRITTEN INVESTMENT DIRECTION IS
PROVIDED TO LENDER BY BORROWER, LENDER MAY AT ITS OPTION INVEST SUCH MONEYS IN A
PERMITTED INVESTMENT SELECTED BY LENDER.  ALL INTEREST PAID OR OTHER EARNINGS ON
FUNDS DEPOSITED INTO THE RESERVE ACCOUNTS MADE HEREUNDER SHALL BE DEPOSITED INTO
THE RESERVE ACCOUNTS (OTHER THAN WITH RESPECT TO THE REAL ESTATE TAXES ESCROW
ACCOUNT AND THE INSURANCE ESCROW ACCOUNT FOR WHICH LENDER AND ITS SERVICER SHALL
NOT HAVE ANY OBLIGATION TO DEPOSIT SUCH INTEREST OR EARNINGS INTO SUCH
ACCOUNTS).  LENDER SHALL HAVE NO LIABILITY FOR ANY LOSS IN INVESTMENTS OF FUNDS
IN ANY RESERVE ACCOUNT THAT ARE INVESTED IN PERMITTED INVESTMENTS AND NO SUCH
LOSS SHALL AFFECT BORROWER’S OBLIGATION TO FUND, OR LIABILITY FOR FUNDING, THE
RESERVE ACCOUNTS.  UNLESS AND UNTIL TITLE TO THE FUNDS THEREIN SHALL HAVE VESTED
IN ANY PERSON OTHER THAN BORROWER, BORROWER SHALL INCLUDE ALL SUCH INCOME OR
GAIN ON ANY ACCOUNT OF THE RESERVE ACCOUNT AS INCOME OF BORROWER FOR FEDERAL AND
APPLICABLE STATE TAX PURPOSES.

 

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(F)                                    EVENT OF DEFAULT.  AFTER AN EVENT OF
DEFAULT HAS OCCURRED AND IS CONTINUING, BORROWER SHALL NOT BE PERMITTED TO MAKE
ANY WITHDRAWAL(S) FROM ANY PLEDGED ACCOUNTS AND LENDER MAY LIQUIDATE ANY
PERMITTED INVESTMENTS OF THE AMOUNT ON DEPOSIT IN SUCH ACCOUNT, WITHDRAW AND USE
SUCH AMOUNT ON DEPOSIT IN THE PLEDGED ACCOUNTS TO MAKE PAYMENTS ON ACCOUNT OF
THE INDEBTEDNESS OR OTHERWISE AS PROVIDED IN SECTION 2.8.  WITHOUT IN ANY WAY
LIMITING THE FOREGOING OR LENDER’S RIGHTS AND REMEDIES UPON AN EVENT OF DEFAULT,
AND SUBJECT TO LENDER’S DIRECTION OTHERWISE FROM TIME TO TIME, IN WHOLE OR IN
PART, IN LENDER’S SOLE AND ABSOLUTE DISCRETION, AFTER AND DURING THE CONTINUANCE
OF AN EVENT OF DEFAULT LENDER MAY DIRECT THE COLLECTION ACCOUNT BANK OR THE
LOCAL COLLECTION ACCOUNT BANK TO DISBURSE TO LENDER OR ALLOCATE ALL AVAILABLE
FUNDS ON DEPOSIT IN THE PLEDGED ACCOUNTS TO: (A) ANY DEBT SERVICE OR OTHER
INDEBTEDNESS DUE UNDER THIS LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS; (B) ANY
RESERVE ACCOUNT ESTABLISHED UNDER THIS LOAN AGREEMENT; (C) OTHERWISE AS A
RESERVE FOR PROPERTY EXPENSES, CAPITAL IMPROVEMENT COSTS, IMPOSITIONS AND OTHER
EXPENDITURES RELATING TO THE USE, MANAGEMENT, OPERATION OR LEASING OF THE
MORTGAGED PROPERTY; AND/OR (D) ANY COSTS AND EXPENSES INCURRED BY LENDER IN
CONNECTION WITH SUCH EVENT OF DEFAULT, OR EXPENDED BY LENDER TO PROTECT OR
PRESERVE THE VALUE OF THE MORTGAGED PROPERTY.

 

SECTION 2.14.                             ADDITIONAL PROVISIONS RELATING TO THE
PLEDGED ACCOUNTS.

 

(A)                                  BORROWER COVENANTS AND AGREES THAT:  (I)
ALL SECURITIES OR OTHER PROPERTY UNDERLYING ANY FINANCIAL ASSETS CREDITED TO ANY
PLEDGED ACCOUNT SHALL BE REGISTERED IN THE NAME OF LENDER, INDORSED TO LENDER OR
INDORSED IN BLANK OR CREDITED TO ANOTHER SECURITIES ACCOUNT MAINTAINED IN THE
NAME OF LENDER AND IN NO CASE WILL ANY FINANCIAL ASSET CREDITED TO ANY PLEDGED
ACCOUNT BE REGISTERED IN THE NAME OF BORROWER, PAYABLE TO THE ORDER OF BORROWER
OR SPECIALLY INDORSED TO BORROWER EXCEPT TO THE EXTENT THE FOREGOING HAVE BEEN
SPECIALLY INDORSED TO LENDER OR IN BLANK; AND (II) ALL PERMITTED INVESTMENTS AND
ALL OTHER PROPERTY DELIVERED TO LENDER PURSUANT TO THIS AGREEMENT WILL BE
PROMPTLY CREDITED TO ONE OF THE PLEDGED ACCOUNTS.

 

(B)                                 BORROWER HEREBY AGREES THAT EACH ITEM OF
PROPERTY (WHETHER INVESTMENT PROPERTY, FINANCIAL ASSET, SECURITY, INSTRUMENT,
CASH OR OTHERWISE) CREDITED TO ANY PLEDGED ACCOUNT SHALL BE TREATED AS A
“FINANCIAL ASSET”  WITHIN THE MEANING OF SECTION 8-102(A)(9) OF THE UCC.

 

(C)                                  BORROWER ACKNOWLEDGES AND AGREES THAT THE
COLLECTION ACCOUNT BANK AND LOCAL COLLECTION ACCOUNT BANK SHALL COMPLY WITH ALL
“ENTITLEMENT ORDERS” (I.E. AN ORDER DIRECTING TRANSFER OR REDEMPTION OF ANY
FINANCIAL ASSET RELATING TO A PLEDGED ACCOUNT, AND ANY “ENTITLEMENT ORDER” AS
DEFINED IN SECTION 8-102(A)(8) OF THE UCC) AND INSTRUCTIONS (INCLUDING ANY
“INSTRUCTION” WITHIN THE MEANING OF SECTION 9-104 OF THE UCC) ORIGINATED BY
LENDER WITHOUT FURTHER ACTION OR CONSENT BY BORROWER, MANAGER OR ANY OTHER
PERSON.

 

(D)                                 REGARDLESS OF ANY PROVISION IN ANY OTHER
AGREEMENT, FOR PURPOSES OF THE UCC, WITH RESPECT TO EACH PLEDGED ACCOUNT, NEW
YORK SHALL BE DEEMED TO BE THE BANK’S JURISDICTION (WITHIN THE MEANING OF
SECTION 9-304 OF THE UCC) AND THE SECURITIES INTERMEDIARY’S JURISDICTION (WITHIN
THE MEANING OF SECTION 8-110 OF THE UCC). THE PLEDGED ACCOUNTS SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.

 

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(E)                                  EXCEPT FOR THE CLAIMS AND INTEREST OF
LENDER AND OF BORROWER IN THE PLEDGED ACCOUNTS, BORROWER REPRESENTS AND WARRANTS
THAT IT DOES NOT KNOW OF ANY LIEN ON OR CLAIM TO, OR INTEREST IN, ANY PLEDGED
ACCOUNT OR IN ANY “FINANCIAL ASSET” (AS DEFINED IN SECTION 8-102(A) OF THE UCC)
CREDITED THERETO.  IF ANY PERSON ASSERTS ANY LIEN, ENCUMBRANCE OR ADVERSE CLAIM
(INCLUDING ANY WRIT, GARNISHMENT, JUDGMENT, WARRANT OF ATTACHMENT, EXECUTION OR
SIMILAR PROCESS) AGAINST THE PLEDGED ACCOUNTS OR IN ANY FINANCIAL ASSET CARRIED
THEREIN, BORROWER WILL PROMPTLY NOTIFY LENDER THEREOF AND SHALL INDEMNIFY,
DEFEND AND HOLD LENDER AND EACH OF THE INDEMNIFIED PARTIES HARMLESS FROM AND
AGAINST ANY SUCH LIEN, ENCUMBRANCE OR CLAIM.

 

SECTION 2.15.                             SECURITY AGREEMENT.

 

(A)                                  PLEDGE OF PLEDGED ACCOUNTS.  TO SECURE THE
FULL AND PUNCTUAL PAYMENT AND PERFORMANCE OF ALL OF THE INDEBTEDNESS, BORROWER
HEREBY ASSIGNS, CONVEYS, PLEDGES AND TRANSFERS TO LENDER, AS SECURED PARTY, AND
GRANTS LENDER A FIRST AND CONTINUING SECURITY INTEREST IN AND TO, THE FOLLOWING
PROPERTY, WHETHER NOW OWNED OR EXISTING OR HEREAFTER ACQUIRED OR ARISING AND
REGARDLESS OF WHERE LOCATED (COLLECTIVELY, THE “ACCOUNT COLLATERAL”):

 

(I)                                     ALL OF BORROWER’S RIGHT, TITLE AND
INTEREST IN THE PLEDGED ACCOUNTS AND ALL MONEY AND PERMITTED INVESTMENTS, IF
ANY, FROM TIME TO TIME DEPOSITED OR HELD IN THE PLEDGED ACCOUNTS OR PURCHASED
WITH FUNDS OR ASSETS ON DEPOSIT IN THE PLEDGED ACCOUNTS;

 

(II)                                  ALL OF BORROWER’S RIGHT, TITLE AND
INTEREST IN INTEREST, DIVIDENDS, MONEY, INSTRUMENTS AND OTHER PROPERTY FROM TIME
TO TIME RECEIVED, RECEIVABLE OR OTHERWISE PAYABLE IN RESPECT OF, OR IN EXCHANGE
FOR, ANY OF THE FOREGOING UNTIL SUCH TIME AS SUCH ITEMS ARE DISBURSED FROM THE
PLEDGED ACCOUNTS; AND

 

(III)                               TO THE EXTENT NOT COVERED BY CLAUSE (I) OR
(II) ABOVE, ALL PROCEEDS OF ANY OR ALL OF THE FOREGOING UNTIL SUCH TIME AS SUCH
ITEMS ARE DISBURSED FROM THE PLEDGED ACCOUNTS.

 

Lender and Collection Account Bank and Local Collection Account Bank, each as
agent for Lender, shall have with respect to the foregoing collateral, in
addition to the rights and remedies herein set forth, all of the rights and
remedies available to a secured party under the UCC, as if such rights and
remedies were fully set forth herein.

 

(B)                                 COVENANTS; SOLE DOMINION AND CONTROL.  SO
LONG AS ANY PORTION OF THE INDEBTEDNESS IS OUTSTANDING, BORROWER SHALL NOT OPEN
ANY ACCOUNT OTHER THAN THE LOCAL COLLECTION ACCOUNT FOR THE DEPOSIT OF RENTS OR
MONEY RECEIVED FROM ACCOUNTS OR UNDER LEASES AND DERIVED FROM THE MORTGAGED
PROPERTY AND ALL PROCEEDS TO PAY AMOUNTS OWING HEREUNDER, OTHER THAN ANY ACCOUNT
FOR AMOUNTS REQUIRED BY LAW TO BE SEGREGATED BY BORROWER.  BORROWER SHALL NOT
HAVE ANY RIGHT TO WITHDRAW MONEY FROM THE PLEDGED ACCOUNTS.  BORROWER
ACKNOWLEDGES AND AGREES THAT THE PLEDGED ACCOUNTS ARE AND SHALL AT ALL TIMES
CONTINUE TO BE SUBJECT TO AND UNDER THE SOLE DOMINION AND CONTROL, AND THE
“CONTROL” WITHIN THE MEANING OF SECTIONS 9-104 AND 9-106 OF THE UCC, OF LENDER. 
NOTWITHSTANDING ANYTHING SET FORTH HEREIN TO THE CONTRARY, NEITHER BORROWER NOR
MANAGER NOR ANY OTHER PERSON OR ENTITY, THROUGH OR UNDER BORROWER, SHALL HAVE
ANY CONTROL OVER THE USE OF, OR ANY RIGHT TO WITHDRAW ANY AMOUNT FROM, ANY
PLEDGED ACCOUNTS, AND BORROWER ACKNOWLEDGES THAT THE COLLECTION ACCOUNT BANK AND
THE LOCAL COLLECTION ACCOUNT BANK SHALL

 

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COMPLY WITH ALL INSTRUCTIONS ORIGINATED BY LENDER WITHOUT FURTHER CONSENT BY
BORROWER.  BORROWER ACKNOWLEDGES AND AGREES THAT THE COLLECTION ACCOUNT BANK AND
LOCAL COLLECTION ACCOUNT BANK SHALL COMPLY WITH THE INSTRUCTIONS OF LENDER WITH
RESPECT TO THE PLEDGED ACCOUNTS WITHOUT THE FURTHER CONSENT OF BORROWER OR
MANAGER.  THE ACCOUNT COLLATERAL SHALL BE SUBJECT TO SUCH APPLICABLE LAWS, AND
SUCH APPLICABLE REGULATIONS OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE
SYSTEM AND OF ANY OTHER BANKING AUTHORITY OR GOVERNMENTAL AUTHORITY, AS MAY NOW
OR HEREAFTER BE IN EFFECT, AND TO THE RULES, REGULATIONS AND PROCEDURES OF THE
FINANCIAL INSTITUTION WHERE THE ACCOUNT COLLATERAL IS MAINTAINED RELATING TO
DEMAND DEPOSIT ACCOUNTS GENERALLY FROM TIME TO TIME IN EFFECT.

 

(C)                                  FINANCING STATEMENTS; FURTHER ASSURANCES. 
BORROWER HEREBY IRREVOCABLY AUTHORIZES LENDER AT ANY TIME AND FROM TIME TO TIME
TO FILE ANY FINANCING STATEMENTS OR CONTINUATION STATEMENTS, AND AMENDMENTS TO
FINANCING STATEMENTS, IN ANY JURISDICTIONS AND WITH ANY FILING OFFICES AS LENDER
MAY DETERMINE, IN ITS SOLE DISCRETION, ARE NECESSARY OR ADVISABLE TO PERFECT THE
SECURITY INTERESTS GRANTED TO LENDER IN CONNECTION HEREWITH.  SUCH FINANCING
STATEMENTS MAY DESCRIBE THE COLLATERAL IN THE SAME MANNER AS DESCRIBED IN ANY
SECURITY AGREEMENT OR PLEDGE AGREEMENT ENTERED INTO BY THE PARTIES IN CONNECTION
HEREWITH OR MAY CONTAIN AN INDICATION OR DESCRIPTION OF COLLATERAL THAT
DESCRIBES SUCH PROPERTY IN ANY OTHER MANNER AS LENDER MAY DETERMINE, IN ITS SOLE
DISCRETION, IS NECESSARY, ADVISABLE OR PRUDENT TO ENSURE THE PERFECTION OF THE
SECURITY INTEREST IN THE COLLATERAL GRANTED TO LENDER IN CONNECTION HEREWITH,
INCLUDING, WITHOUT LIMITATION, DESCRIBING SUCH PROPERTY AS “ALL ASSETS” OR “ALL
PERSONAL PROPERTY” OF BORROWER WHETHER NOW OWNED OR HEREAFTER ACQUIRED.  FROM
TIME TO TIME, AT THE EXPENSE OF BORROWER, BORROWER SHALL PROMPTLY EXECUTE AND
DELIVER ALL FURTHER INSTRUMENTS, AND TAKE ALL FURTHER ACTION, THAT LENDER MAY
REASONABLY REQUEST, IN ORDER TO CONTINUE THE PERFECTION AND PROTECTION OF THE
PLEDGE AND SECURITY INTEREST GRANTED OR PURPORTED TO BE GRANTED HEREBY.

 

(D)                                 TRANSFERS AND OTHER LIENS.  BORROWER SHALL
NOT SELL OR OTHERWISE DISPOSE OF ANY OF THE ACCOUNT COLLATERAL OTHER THAN
PURSUANT TO THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, OR CREATE
OR PERMIT TO EXIST ANY LIEN UPON OR WITH RESPECT TO ALL OR ANY OF THE ACCOUNT
COLLATERAL, EXCEPT FOR THE LIEN GRANTED TO LENDER UNDER OR AS CONTEMPLATED BY
THIS AGREEMENT.

 

(E)                                  NO WAIVER.  EVERY RIGHT AND REMEDY GRANTED
TO LENDER UNDER THIS AGREEMENT OR BY LAW MAY BE EXERCISED BY LENDER AT ANY TIME
AND FROM TIME TO TIME, AND AS OFTEN AS LENDER MAY DEEM IT EXPEDIENT.  ANY AND
ALL OF LENDER’S RIGHTS WITH RESPECT TO THE PLEDGE OF AND SECURITY INTEREST IN
THE ACCOUNT COLLATERAL GRANTED HEREUNDER SHALL CONTINUE UNIMPAIRED, AND TO THE
EXTENT PERMITTED BY LAW, BORROWER SHALL BE AND REMAIN OBLIGATED IN ACCORDANCE
WITH THE TERMS HEREOF, NOTWITHSTANDING (I) ANY PROCEEDING OF BORROWER UNDER THE
UNITED STATES BANKRUPTCY CODE OR ANY BANKRUPTCY, INSOLVENCY OR REORGANIZATION
LAWS OR STATUTES OF ANY STATE, (II) THE RELEASE OR SUBSTITUTION OF ACCOUNT
COLLATERAL AT ANY TIME, OR OF ANY RIGHTS OR INTERESTS THEREIN OR (III) ANY
DELAY, EXTENSION OF TIME, RENEWAL, COMPROMISE OR OTHER INDULGENCE GRANTED BY
LENDER IN THE EVENT OF ANY DEFAULT WITH RESPECT TO THE ACCOUNT COLLATERAL OR
OTHERWISE HEREUNDER.  NO DELAY OR EXTENSION OF TIME BY LENDER IN EXERCISING ANY
POWER OF SALE, OPTION OR OTHER RIGHT OR REMEDY HEREUNDER, AND NO NOTICE OR
DEMAND WHICH MAY BE GIVEN TO OR MADE UPON BORROWER BY LENDER, SHALL CONSTITUTE A
WAIVER THEREOF, OR LIMIT, IMPAIR OR PREJUDICE LENDER’S RIGHT, WITHOUT NOTICE OR
DEMAND, TO TAKE ANY ACTION AGAINST BORROWER OR TO EXERCISE ANY OTHER POWER OF
SALE, OPTION OR ANY OTHER RIGHT OR REMEDY.

 

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(F)                                    LENDER APPOINTED ATTORNEY-IN-FACT. 
BORROWER HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS LENDER AS BORROWER’S TRUE
AND LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER OF SUBSTITUTION, AT ANY TIME AFTER
THE OCCURRENCE AND DURING THE CONTINUATION OF AN EVENT OF DEFAULT, TO EXECUTE,
ACKNOWLEDGE AND DELIVER ANY INSTRUMENTS AND TO EXERCISE AND ENFORCE EVERY RIGHT,
POWER, REMEDY, OPTION AND PRIVILEGE OF BORROWER WITH RESPECT TO THE ACCOUNT
COLLATERAL, AND DO IN THE NAME, PLACE AND STEAD OF BORROWER, ALL SUCH ACTS,
THINGS AND DEEDS FOR AND ON BEHALF OF AND IN THE NAME OF BORROWER WITH RESPECT
TO THE ACCOUNT COLLATERAL, WHICH BORROWER COULD OR MIGHT DO OR WHICH LENDER MAY
DEEM NECESSARY OR DESIRABLE TO MORE FULLY VEST IN LENDER THE RIGHTS AND REMEDIES
PROVIDED FOR HEREIN WITH RESPECT TO THE ACCOUNT COLLATERAL AND TO ACCOMPLISH THE
PURPOSES OF THIS AGREEMENT.  THE FOREGOING POWERS OF ATTORNEY ARE IRREVOCABLE
AND COUPLED WITH AN INTEREST AND SHALL TERMINATE UPON REPAYMENT OF THE
INDEBTEDNESS IN FULL.

 

(G)                                 CONTINUING SECURITY INTEREST; TERMINATION. 
THIS SECTION 2.15 SHALL CREATE A CONTINUING PLEDGE OF AND SECURITY INTEREST IN
THE ACCOUNT COLLATERAL AND SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL PAYMENT
IN FULL BY BORROWER OF THE INDEBTEDNESS.  UPON PAYMENT IN FULL BY BORROWER OF
THE INDEBTEDNESS, LENDER SHALL RETURN TO BORROWER SUCH OF THE ACCOUNT COLLATERAL
AS SHALL NOT HAVE BEEN APPLIED PURSUANT TO THE TERMS HEREOF, AND SHALL EXECUTE
SUCH INSTRUMENTS AND DOCUMENTS AS MAY BE REASONABLY REQUESTED BY BORROWER TO
EVIDENCE SUCH TERMINATION AND THE RELEASE OF THE PLEDGE AND LIEN HEREOF.

 

SECTION 2.16.                             MORTGAGE RECORDING TAXES.  THE LIEN TO
BE CREATED BY THE MORTGAGES IS INTENDED TO ENCUMBER THE MORTGAGED PROPERTY TO
THE FULL EXTENT OF THE LOAN AMOUNT; PROVIDED, THAT, NOTWITHSTANDING THE
FOREGOING, WITH RESPECT TO ANY MORTGAGED PROPERTY LOCATED IN A STATE THAT
IMPOSES MORTGAGE RECORDING TAXES WHERE THE IMPOSITION OF A LOWER AMOUNT WOULD
ALLOW TAX SAVINGS TO THE BORROWER, THE LIEN TO BE CREATED BY THE RELATED
MORTGAGE IS INTENDED TO ENCUMBER THE MORTGAGED PROPERTY IN AN AMOUNT ACCEPTABLE
TO THE LENDER WHICH AMOUNT SHALL IN NO EVENT BE LESS THAN 125% OF THE VALUE OF
THE MORTGAGED PROPERTY AS DETERMINED BY THE LENDER APPRAISALS.  ON THE CLOSING
DATE, BORROWER SHALL HAVE PAID ALL STATE, COUNTY AND MUNICIPAL RECORDING AND ALL
OTHER TAXES IMPOSED UPON THE EXECUTION AND RECORDATION OF THE MORTGAGES, IF ANY.

 

SECTION 2.17.                             PARTIAL RELEASE.  AFTER THE FIRST OPEN
DEFEASANCE DATE AND PRIOR TO THE FIRST OPEN PAYMENT DATE, AND PROVIDED NO EVENT
OF DEFAULT EXISTS, BORROWER MAY FROM TIME TO TIME OBTAIN A PARTIAL RELEASE (A
“PARTIAL RELEASE”) FROM THE LIEN OF THE MORTGAGE AND THE LOAN DOCUMENTS OF UP TO
TWO OF THE INDIVIDUAL MORTGAGED PROPERTIES LISTED ON SCHEDULE 2.17 HERETO (EACH
SUCH INDIVIDUAL MORTGAGED PROPERTY TO BE RELEASED, A “PARTIAL RELEASE
PROPERTY”), PROVIDED THAT ALL OF THE FOLLOWING CONDITIONS PRECEDENT HAVE BEEN
SATISFIED WITH RESPECT TO ANY SUCH PARTIAL RELEASE OF ANY SUCH PARTIAL RELEASE
PROPERTY:

 

(A)                                  NO PARTIAL RELEASE OF A PARTIAL RELEASE
PROPERTY WILL BE PERMITTED UNTIL AFTER THE FIRST OPEN DEFEASANCE DATE OR IF ANY
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING. NO PARTIAL RELEASE OF THE
PARTIAL RELEASE PROPERTY WILL BE PERMITTED ON OR AFTER THE FIRST OPEN PAYMENT
DATE.  NO MORE THAN TWO PARTIAL RELEASE PROPERTIES MAY BE RELEASED DURING THE
TERM OF THE LOAN.

 

(B)                                 NO PARTIAL RELEASE OF THE PARTIAL RELEASE
PARCEL WILL BE PERMITTED UNLESS BORROWER ESTABLISHES TO LENDER’S SATISFACTION
THAT THE DEBT SERVICE COVERAGE RATIO FOR THE

 

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REMAINDER OF THE MORTGAGED PROPERTY (I.E., EXCLUSIVE OF ANY INCOME FROM THE
PARTIAL RELEASE PROPERTY) IS AND SHALL CONTINUE TO BE EQUAL TO OR GREATER THAN
THE GREATER OF (I) THE DEBT SERVICE COVERAGE RATIO FOR THE MORTGAGED PROPERTY
CALCULATED IMMEDIATELY PRIOR TO THE PARTIAL RELEASE (I.E., INCLUSIVE OF THE
INCOME FROM THE PARTIAL RELEASE PROPERTY), AND (II) 1.30:1.00.  IF THE FOREGOING
CONDITION WOULD NOT BE SATISFIED BY DEFEASANCE OF THE PARTIAL DEFEASANCE AMOUNT
INDICATED IN SUBPARAGRAPH (E) BELOW, BORROWER MAY BY WRITTEN NOTICE TO LENDER
GIVEN NOT LESS THAN TEN (10) DAYS PRIOR TO THE PARTIAL DEFEASANCE INCREASE THE
PARTIAL DEFEASANCE AMOUNT TO AN AMOUNT WHICH WOULD RESULT IN THE FOREGOING
CONDITION BEING SATISFIED UPON COMPLETION OF THE PARTIAL DEFEASANCE OF SUCH
LARGER PARTIAL DEFEASANCE AMOUNT.  NO PARTIAL DEFEASANCE, NOR ANY INCREASE IN
ANY PARTIAL DEFEASANCE AMOUNT UNDER THIS PARAGRAPH (B) OR PARAGRAPHS (C) BELOW,
SHALL AFFECT THE ALLOCATED LOAN AMOUNTS FOR THE REMAINING MORTGAGED PROPERTY AS
SET FORTH ON SCHEDULE 2.17.

 

(C)                                  NO PARTIAL RELEASE OF THE PARTIAL RELEASE
PARCEL WILL BE PERMITTED UNLESS BORROWER ESTABLISHES TO LENDER’S SATISFACTION
THAT THE VALUE OF THE REMAINDER OF THE MORTGAGED PROPERTY (AS DETERMINED BY
THEN-CURRENT APPRAISALS PREPARED BY APPRAISERS APPROVED BY LENDER, THE FEES AND
EXPENSES OF WHICH SHALL BE PAID BY BORROWER) IS SUFFICIENT TO SATISFY A
LOAN-TO-VALUE RATIO (BASED ON THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN
IMMEDIATELY PRIOR TO THE PARTIAL RELEASE, LESS THE ALLOCATED LOAN AMOUNT FOR THE
PARTIAL RELEASE PROPERTY) WHICH IS THE LESSER OF (I) 75% AND (II) THE
LOAN-TO-VALUE RATIO FOR THE MORTGAGED PROPERTY (INCLUSIVE OF THE PARTIAL RELEASE
PROPERTY, AND BASED ON THE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN IMMEDIATELY
PRIOR TO THE PARTIAL RELEASE) CALCULATED IMMEDIATELY PRIOR TO THE PARTIAL
RELEASE.  IF THE FOREGOING CONDITION WOULD NOT BE SATISFIED BY DEFEASANCE OF THE
PARTIAL DEFEASANCE AMOUNT INDICATED IN SUBPARAGRAPH (E) BELOW, BORROWER MAY BY
WRITTEN NOTICE TO LENDER GIVEN NOT LESS THAN TEN (10) DAYS PRIOR TO THE PARTIAL
DEFEASANCE INCREASE THE PARTIAL DEFEASANCE AMOUNT TO AN AMOUNT WHICH WOULD
RESULT IN THE FOREGOING CONDITION BEING SATISFIED UPON COMPLETION OF THE PARTIAL
DEFEASANCE OF SUCH LARGER PARTIAL DEFEASANCE AMOUNT.

 

(D)                                 THE PARTIAL RELEASE SHALL BE ALLOWED ONLY IN
CONNECTION WITH A BONA FIDE ALL-CASH SALE OF THE PARTIAL RELEASE PARCEL TO AN
UNAFFILIATED THIRD PARTY ON ARMS-LENGTH TERMS AND CONDITIONS, AND UPON CLOSING
OF SUCH SALE (AND THEREAFTER) SHALL NOT BE OWNED, PURCHASED OR ACQUIRED BY
BORROWER OR ANY AFFILIATE OF BORROWER.

 

(E)                                  BORROWER WILL ON THE DATE OF THE PARTIAL
RELEASE (THE “PARTIAL RELEASE DATE”) COMPLETE A PARTIAL DEFEASANCE, PURSUANT TO
SECTION 2.7 HEREOF, OF A PORTION OF THE LOAN (THE “PARTIAL DEFEASANCE AMOUNT”
FOR SUCH PARTIAL RELEASE PROPERTY) EQUAL TO 125% OF THE ALLOCATED LOAN AMOUNT
FOR THE PARTIAL RELEASE PROPERTY SET FORTH ON SCHEDULE 2.17 HERETO; PROVIDED,
THAT IF BORROWER ELECTS IN CONNECTION WITH A PARTIAL DEFEASANCE OF A PARTIAL
RELEASE PROPERTY TO INCREASE THE PARTIAL DEFEASANCE AMOUNT FOR SUCH PARTIAL
RELEASE PROPERTY PURSUANT TO THE PROVISIONS OF PARAGRAPHS (B) AND/OR (C) ABOVE,
THE PARTIAL DEFEASANCE AMOUNT FOR SUCH PARTIAL RELEASE PROPERTY SHALL BE SUCH
HIGHER AMOUNT FOR PURPOSES OF SUCH PARTIAL DEFEASANCE.

 

(F)                                    BORROWER WILL EXECUTE (AND GUARANTOR WILL
CONSENT IN WRITING THERETO AND REAFFIRM THEIR OBLIGATIONS UNDER THE LOAN
DOCUMENTS TO WHICH THEY ARE A PARTY NOTWITHSTANDING THE PARTIAL RELEASE) AND
DELIVER ALL SUCH AMENDMENTS TO THE LOAN DOCUMENTS AND OTHER INSTRUMENTS OR
DOCUMENTS AS MAY BE REQUIRED BY LENDER (USING COMMERCIAL STANDARDS

 

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CUSTOMARILY APPLIED WITH RESPECT TO MORTGAGE LOANS SUCH AS THE LOAN) IN ORDER TO
CONTINUE TO FULLY PROTECT LENDER’S LIEN AND SECURITY INTEREST IN THE REMAINDER
OF THE MORTGAGED PROPERTY.

 

(G)                                 BORROWER WILL CAUSE THE MASTER HOMESITE
LEASE(S) TO BE AMENDED TO EXCLUDE THE PARTIAL RELEASE PROPERTY PURSUANT TO
DOCUMENTATION REASONABLY SATISFACTORY TO LENDER.

 

(H)                                 BORROWER, AT ITS SOLE COST AND EXPENSE,
SHALL OBTAIN ENDORSEMENTS TO LENDER’S LOAN POLICY OF TITLE INSURANCE
SATISFACTORY IN FORM AND CONTENT TO LENDER, WHICH ENDORSEMENTS WILL (A)
AFFIRMATIVELY EVIDENCE THE CONTINUED VALIDITY OF LENDER’S FIRST LIEN POSITION
CREATED BY THE LOAN DOCUMENTS THROUGH THE DATE OF RECORDATION OF THE PARTIAL
RELEASE OF THE PARTIAL RELEASE PROPERTY, AND (B) INSURE THAT THE LIEN CREATED BY
THE LOAN DOCUMENTS REMAINS A VALID FIRST LIEN ON THE REMAINDER OF THE MORTGAGED
PROPERTY.

 

(I)                                     BORROWER SHALL PAY FOR THE COSTS OF
PREPARING AND RECORDING PARTIAL RELEASES, UCC-3 RELEASES, AND ANY LOAN
MODIFICATION DOCUMENTS, EASEMENTS, DECLARATIONS, AND/OR RESTRICTIVE COVENANTS
REQUIRED BY LENDER, LENDER’S REASONABLE ATTORNEYS’ FEES AND COSTS, ALL SURVEY
CHARGES AND COSTS, ALL TITLE PREMIUMS AND COSTS, DOCUMENTARY STAMPS INCURRED IN
CONNECTION WITH THE RELEASE OF THE PARTIAL RELEASE PROPERTY IN ACCORDANCE WITH
THE REQUIREMENTS CONTAINED HEREIN, AND ALL OTHER REASONABLE OUT-OF-POCKET COSTS,
FEES, AND EXPENSES INCURRED BY LENDER IN CONNECTION WITH THE REQUESTED RELEASE
OF THE PARTIAL RELEASE PROPERTY.

 

(J)                                     BORROWER SHALL HAVE PROVIDED LENDER WITH
A RATING CONFIRMATION WITH RESPECT TO THE PARTIAL RELEASE.

 

(K)                                  BORROWER SHALL PAY LENDER’S REASONABLE
COSTS AND EXPENSES IN CONNECTION WITH THE PARTIAL RELEASE, AS SET FORTH BELOW.

 

Borrower shall pay or reimburse Lender for all reasonable costs and expenses
incurred by Lender in connection with such request for a Partial Release,
including, but not limited to, the preparation, negotiation and review of any
and all materials required to be provided in connection therewith (including
Lender’s reasonable attorneys’ fees and expenses).

 

SECTION 2.18.                             LAUNDRY LEASES.  CERTAIN LAUNDRY
FACILITIES AT CERTAIN OF THE MORTGAGED PROPERTIES HAVE BEEN LEASED TO LAUNDRY
OPERATORS UNDER LAUNDRY ROOM OR LAUNDRY FACILITY LEASES (THE “LAUNDRY LEASES”). 
BORROWER COVENANTS AND AGREES THAT IT SHALL, WITHIN SIXTY (60) DAYS AFTER THE
DATE HEREOF (OR SUCH LONGER TIME AS LENDER MAY DETERMINE TO PROVIDE TO BORROWER
AT LENDER’S SOLE OPTION) PROVIDE COPIES OF SUCH LAUNDRY LEASES TO LENDER AND, IF
SUCH LAUNDRY LEASES ARE NOT BY THEIR TERMS SUBORDINATE TO THE APPLICABLE
MORTGAGES, BORROWER SHALL, WITHIN SIXTY (60) DAYS AFTER THE DATE HEREOF (OR SUCH
LONGER TIME AS LENDER MAY DETERMINE TO PROVIDE TO BORROWER AT LENDER’S SOLE
OPTION) EITHER PROVIDE EXECUTED SUBORDINATION AGREEMENTS SUBORDINATING THE
LAUNDRY LEASES TO THE APPLICABLE MORTGAGES OR DEMONSTRATE TO LENDER’S REASONABLE
SATISFACTION THAT THE LAUNDRY LEASES MAY BE TERMINATED BY THE LANDLORD
THEREUNDER AT A COST PER LAUNDRY LEASE OF NOT MORE THAN $10,000.

 

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ARTICLE III.
CONDITIONS PRECEDENT

 

SECTION 3.1.                                   CONDITIONS PRECEDENT TO CLOSING. 
THE OBLIGATION OF THE LENDER TO MAKE THE LOAN IS SUBJECT TO THE SATISFACTION BY
BORROWER (AND GUARANTOR, WHERE APPLICABLE) OR WAIVER BY LENDER IN WRITING OF THE
FOLLOWING CONDITIONS NO LATER THAN THE CLOSING DATE:

 

(A)                                  LOAN AGREEMENT.  BORROWER AND LENDER SHALL
HAVE EXECUTED AND DELIVERED THIS AGREEMENT.

 

(B)                                 NOTE.  BORROWER SHALL HAVE EXECUTED AND
DELIVERED TO LENDER THE NOTE.

 

(C)                                  ENVIRONMENTAL INDEMNITY AGREEMENT; GUARANTY
OF NON-RECOURSE OBLIGATIONS.  BORROWER AND GUARANTOR SHALL HAVE EXECUTED AND
DELIVERED THE ENVIRONMENTAL INDEMNITY AGREEMENT TO LENDER.  GUARANTOR SHALL HAVE
EXECUTED AND DELIVERED THE GUARANTY OF NON-RECOURSE OBLIGATIONS.

 

(D)                                 OPINIONS OF COUNSEL.  LENDER SHALL HAVE
RECEIVED FROM COUNSEL TO BORROWER, THE MEMBER AND THE GUARANTOR, LEGAL OPINIONS
IN FORM AND SUBSTANCE ACCEPTABLE TO LENDER, WITH RESPECT TO CORPORATE MATTERS
AND WITH RESPECT TO SUBSTANTIVE NON-CONSOLIDATION OF AFFORDABLE RESIDENTIAL
COMMUNITIES LP, THE MEMBER AND THE MANAGER, ON THE ONE HAND, AND BORROWER, ON
THE OTHER, IN THE EVENT OF THE BANKRUPTCY OF AFFORDABLE RESIDENTIAL COMMUNITIES
LP, THE MEMBER OR THE MANAGER.  SUCH LEGAL OPINIONS SHALL BE ADDRESSED TO LENDER
AND ITS SUCCESSORS AND ASSIGNS, DATED THE CLOSING DATE, AND IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO LENDER AND ITS COUNSEL.

 

(E)                                  ORGANIZATIONAL DOCUMENTS.  LENDER SHALL
HAVE RECEIVED WITH RESPECT TO EACH OF BORROWER, THE MEMBER AND THE GUARANTOR ITS
CERTIFICATE OF FORMATION, CERTIFICATE OF LIMITED PARTNERSHIP OR CERTIFICATE OF
INCORPORATION, AS APPLICABLE, AS AMENDED, MODIFIED OR SUPPLEMENTED TO THE
CLOSING DATE, AS FILED WITH THE SECRETARY OF STATE IN THE JURISDICTION OF
ORGANIZATION AND IN EFFECT ON THE CLOSING DATE AND CERTIFIED TO BE TRUE, CORRECT
AND COMPLETE BY THE APPROPRIATE SECRETARY OF STATE AS OF A DATE NOT MORE THAN
THIRTY (30) DAYS PRIOR TO THE CLOSING DATE, TOGETHER WITH A GOOD STANDING
CERTIFICATE FROM SUCH SECRETARY OF STATE DATED NOT MORE THAN THIRTY (30) DAYS
PRIOR TO THE CLOSING DATE AND, FOR BORROWER AND THE MEMBER TO THE EXTENT
REQUIRED BY APPLICABLE LAW, A GOOD STANDING CERTIFICATE FROM THE SECRETARIES OF
STATE (OR THE EQUIVALENT THEREOF) OF EACH OTHER STATE IN WHICH BORROWER OR THE
MEMBER IS REQUIRED TO BE QUALIFIED TO TRANSACT BUSINESS, EACH DATED NOT MORE
THAN THIRTY (30) DAYS PRIOR TO THE CLOSING DATE.

 

(F)                                    CERTIFIED RESOLUTIONS, ETC.  LENDER SHALL
HAVE RECEIVED A CERTIFICATE OF EACH OF BORROWER, THE MEMBER AND THE GUARANTOR
DATED THE CLOSING DATE, CERTIFYING (I) THE NAMES AND TRUE SIGNATURES OF ITS
INCUMBENT OFFICERS AUTHORIZED TO SIGN THE LOAN DOCUMENTS TO WHICH BORROWER, THE
MEMBER OR THE GUARANTOR IS A PARTY, (II) THE ORGANIZATIONAL AGREEMENT OF EACH OF
BORROWER, THE MEMBER AND GUARANTOR, IN EACH CASE AS IN EFFECT ON THE CLOSING
DATE, (III) THE RESOLUTIONS OF EACH OF BORROWER, THE MEMBER AND THE GUARANTOR,
APPROVING AND AUTHORIZING THE EXECUTION, DELIVERY AND PERFORMANCE OF THE LOAN
DOCUMENTS TO WHICH IT IS A PARTY, AND (IV) THAT THERE HAVE BEEN NO CHANGES IN
ANY ORGANIZATIONAL AGREEMENT SINCE THE DATE OF EXECUTION OR PREPARATION THEREOF.

 

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(G)                                 ADDITIONAL MATTERS.  LENDER SHALL HAVE
RECEIVED SUCH OTHER CERTIFICATES, OPINIONS, DOCUMENTS AND INSTRUMENTS RELATING
TO THE LOAN AS MAY HAVE BEEN REASONABLY REQUESTED BY LENDER.  ALL CORPORATE AND
OTHER ORGANIZATIONAL PROCEEDINGS, ALL OTHER DOCUMENTS (INCLUDING, WITHOUT
LIMITATION, ALL DOCUMENTS REFERRED TO HEREIN AND NOT APPEARING AS EXHIBITS
HERETO) AND ALL LEGAL MATTERS IN CONNECTION WITH THE LOAN SHALL BE REASONABLY
SATISFACTORY IN FORM AND SUBSTANCE TO LENDER IN ITS SOLE AND ABSOLUTE
DISCRETION.

 

(H)                                 TRANSACTION COSTS.  BORROWER SHALL HAVE PAID
ALL TRANSACTION COSTS FOR WHICH BILLS HAVE BEEN SUBMITTED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 8.23.

 

(I)                                     NO DEFAULT OR EVENT OF DEFAULT.  NO
EVENT WHICH WOULD CONSTITUTE EITHER A DEFAULT OR EVENT OF DEFAULT UNDER THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL HAVE OCCURRED AND BE CONTINUING ON
THE CLOSING DATE.

 

(J)                                     NO INJUNCTION.  NO LAW OR REGULATION
SHALL HAVE BEEN ADOPTED, NO ORDER, JUDGMENT OR DECREE OF ANY GOVERNMENTAL
AUTHORITY SHALL HAVE BEEN ISSUED, AND NO LITIGATION SHALL BE PENDING OR
THREATENED, WHICH IN THE GOOD FAITH JUDGMENT OF LENDER WOULD ENJOIN, PROHIBIT OR
RESTRAIN, OR IMPOSE OR RESULT IN THE IMPOSITION OF ANY MATERIAL ADVERSE
CONDITION UPON, THE MAKING OR REPAYMENT OF THE LOAN OR THE CONSUMMATION OF THE
TRANSACTION.

 

(K)                                  REPRESENTATIONS AND WARRANTIES.  THE
REPRESENTATIONS AND WARRANTIES HEREIN AND IN THE OTHER LOAN DOCUMENTS SHALL BE
TRUE AND CORRECT IN ALL MATERIAL RESPECTS ON THE CLOSING DATE.

 

(L)                                     SURVEY; APPRAISAL.  LENDER SHALL HAVE
RECEIVED THE SURVEY AND THE APPRAISAL WITH RESPECT TO EACH MORTGAGED PROPERTY,
WHICH SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO LENDER IN ITS SOLE AND
ABSOLUTE DISCRETION.

 

(M)                               PROPERTY CONDITION ASSESSMENT.  LENDER SHALL
HAVE RECEIVED THE PROPERTY CONDITION ASSESSMENT WITH RESPECT TO EACH MORTGAGED
PROPERTY PREPARED BY THE ENGINEER OR ANOTHER PERSON ACCEPTABLE TO THE LENDER,
WHICH PROPERTY CONDITION ASSESSMENT SHALL BE ACCEPTABLE TO LENDER IN ITS SOLE
AND ABSOLUTE DISCRETION.

 

(N)                                 ENVIRONMENTAL MATTERS.  LENDER SHALL HAVE
RECEIVED AN ENVIRONMENTAL REPORT PREPARED BY AN ENVIRONMENTAL AUDITOR WITH
RESPECT TO THE MORTGAGED PROPERTY, WHICH ENVIRONMENTAL REPORT SHALL BE
ACCEPTABLE TO LENDER IN ITS SOLE AND ABSOLUTE DISCRETION.

 

(O)                                 FINANCIAL INFORMATION.  LENDER SHALL HAVE
RECEIVED FINANCIAL INFORMATION RELATING TO THE GUARANTOR, BORROWER AND THE
MORTGAGED PROPERTY SATISFACTORY TO LENDER IN ITS SOLE AND ABSOLUTE DISCRETION. 
SUCH INFORMATION SHALL INCLUDE, WITHOUT LIMITATION, THE FOLLOWING, TO THE EXTENT
REASONABLY AVAILABLE:

 

(I)                                     OPERATING STATEMENTS FOR THE CURRENT
YEAR (INCLUDING ACTUAL TO DATE INFORMATION, AN ANNUAL BUDGET AND TRAILING TWELVE
MONTH DATA IN HARD COPY AND ON DISKETTE) AND FOR NOT LESS THAN THE THREE
PRECEDING YEARS;

 

(II)                                  A COPY OF THE STANDARD LEASE FORM, IF ANY;

 

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(III)                               CURRENT PROPERTY RENT ROLL DATA ON A TENANT
BY TENANT BASIS IN HARD COPY INCLUDING THE NAME OF EACH TENANT AND THE
ASSOCIATED HOMESITE, SECURITY DEPOSIT, AMOUNT DUE AT THE BEGINNING OF THE MONTH,
CHARGES IN THE CURRENT MONTH (INCLUDING HOMESITE RENT, WATER/SEWER,
GAS/ELECTRIC, TRASH, MOBILE HOME RENT, NOTES AND OTHER CHARGES), PAYMENTS MADE
DURING THE MONTH, AMOUNT DUE AT THE END OF THE MONTH, TOTAL HOMESITES AT THE
MORTGAGED PROPERTY AND TOTAL OCCUPIED HOMESITES AT THE MORTGAGED PROPERTY, WITH
THE OCCUPANCY LEVEL EXPRESSED AS A PERCENTAGE);

 

(IV)                              THE TAX BILLS FOR 2003 AND THE HISTORICAL TAX
RECORDS FOR 2002;

 

(V)                                 THE MOST RECENT ANNUAL FINANCIAL STATEMENTS
AND UNAUDITED QUARTERLY FINANCIAL STATEMENTS; AND

 

(VI)                              SUCH OTHER FINANCIAL INFORMATION AS IS
CUSTOMARILY REQUIRED BY INSTITUTIONAL LENDERS FOR LOANS SIMILAR IN SIZE AND TYPE
AS THE LOAN.

 

The annual financial statements relating to the Guarantor shall be either (x)
audited by a “Big Four” accounting firm or another firm of certified public
accountants reasonably acceptable to Lender or (y) prepared in accordance with
agreed upon procedures reasonably acceptable to Lender to be performed by a “Big
Four” accounting firm or another firm of certified public accountants reasonably
acceptable to Lender to create similar information.

 

(P)                                 PRO-FORMA FINANCIAL STATEMENT; OPERATING
BUDGET.  LENDER SHALL HAVE RECEIVED (I) THE INITIAL PRO-FORMA FINANCIAL
STATEMENT AND OPERATING BUDGET FOR THE MORTGAGED PROPERTY FOR THE FOLLOWING
TWELVE MONTHS (INCLUDING ON AN ANNUAL AND MONTHLY BASIS A BREAK-DOWN OF
PROJECTED GROSS REVENUES, PROPERTY EXPENSES, CAPITAL IMPROVEMENT COSTS,
REPLACEMENT RESERVE COSTS AND AVERAGE OCCUPANCY LEVEL (EXPRESSED AS A
PERCENTAGE)) AND (II) A FINANCIAL STATEMENT THAT FORECASTS PROJECTED REVENUES
AND OPERATING EXPENSES FOR NOT LESS THAN THREE YEARS (INCLUDING THE ASSUMPTIONS
USED IN SUCH FORECAST).

 

(Q)                                 SITE INSPECTION.  BORROWER SHALL HAVE
PROVIDED TO LENDER THE OPPORTUNITY TO PERFORM, OR CAUSE TO BE PERFORMED ON ITS
BEHALF, AN ON-SITE DUE DILIGENCE REVIEW OF THE MORTGAGED PROPERTY, WHICH
INSPECTION IS SATISFACTORY TO LENDER IN ITS SOLE DISCRETION.

 

(R)                                    MORTGAGED PROPERTY DOCUMENTS.

 

(I)                                     MORTGAGES; ASSIGNMENTS OF RENTS AND
LEASES.  BORROWER SHALL HAVE EXECUTED AND DELIVERED TO LENDER THE MORTGAGES AND
THE ASSIGNMENTS OF RENTS AND LEASES WITH RESPECT TO THE MORTGAGED PROPERTY AND
SUCH MORTGAGES AND ASSIGNMENTS OF RENTS AND LEASES SHALL HAVE BEEN FILED OF
RECORD IN THE APPROPRIATE FILING OFFICE IN THE JURISDICTION IN WHICH THE
MORTGAGED PROPERTY IS LOCATED OR IRREVOCABLY DELIVERED TO A TITLE AGENT FOR SUCH
RECORDATION.

 

(II)                                  FINANCING STATEMENTS.  BORROWER SHALL HAVE
EXECUTED AND DELIVERED TO LENDER ALL FINANCING STATEMENTS REQUIRED BY LENDER
PURSUANT HERETO AND SUCH FINANCING STATEMENTS SHALL HAVE BEEN FILED OF RECORD IN
THE APPROPRIATE FILING OFFICES IN EACH OF THE APPROPRIATE JURISDICTIONS OR
IRREVOCABLY DELIVERED TO A TITLE AGENT FOR SUCH RECORDATION.

 

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(III)                               MANAGEMENT AGREEMENT AND MANAGER’S
SUBORDINATION.  LENDER SHALL HAVE RECEIVED THE EXECUTED MANAGEMENT AGREEMENT FOR
THE MORTGAGED PROPERTY AND THE MANAGER SHALL HAVE EXECUTED AND DELIVERED THE
MANAGER’S SUBORDINATION TO LENDER.

 

(IV)                              CONTRACT ASSIGNMENT.  WITH RESPECT TO THE
MORTGAGED PROPERTY, BORROWER SHALL HAVE EXECUTED AND DELIVERED TO LENDER A
CONTRACT ASSIGNMENT WITH RESPECT TO THE MORTGAGED PROPERTY.

 

(S)                                  OPINIONS OF COUNSEL.  LENDER SHALL HAVE
RECEIVED FROM COUNSEL TO BORROWER REASONABLY ACCEPTABLE TO LENDER IN EACH STATE
IN WHICH ANY MORTGAGED PROPERTY IS LOCATED ITS LEGAL OPINION IN FORM AND
SUBSTANCE SATISFACTORY TO LENDER, AS TO (I) THE ENFORCEABILITY OF THE MORTGAGES,
ASSIGNMENTS OF RENTS AND LEASES AND ANY OTHER LOAN DOCUMENTS GOVERNED BY THE LAW
OF SUCH JURISDICTION, (II) PERFECTION OF LIENS AND SECURITY INTERESTS AND (III)
OTHER MATTERS REFERRED TO THEREIN WITH RESPECT TO EACH MORTGAGED PROPERTY.  THE
LEGAL OPINIONS WILL BE ADDRESSED TO LENDER AND ITS SUCCESSORS AND ASSIGNS, DATED
THE CLOSING DATE, AND IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO LENDER
AND ITS COUNSEL.

 

(T)                                    INSURANCE.  LENDER SHALL HAVE RECEIVED
CERTIFICATES OF INSURANCE DEMONSTRATING INSURANCE COVERAGE IN RESPECT OF EACH
MORTGAGED PROPERTY OF TYPES, IN AMOUNTS, WITH INSURERS AND OTHERWISE IN
COMPLIANCE WITH THE TERMS, PROVISIONS AND CONDITIONS SET FORTH IN THIS
AGREEMENT.  SUCH CERTIFICATES SHALL INDICATE THAT LENDER IS A NAMED ADDITIONAL
INSURED AND SHALL CONTAIN A LOSS PAYEE ENDORSEMENT IN FAVOR OF LENDER WITH
RESPECT TO THE PROPERTY POLICIES REQUIRED TO BE MAINTAINED UNDER THIS AGREEMENT.

 

(U)                                 TITLE INSURANCE POLICY.  LENDER SHALL HAVE
RECEIVED COUNTERSIGNED PRO FORMA TITLE POLICIES OR MARKED BINDERS CONSTITUTING
THE UNCONDITIONAL COMMITMENT (IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
LENDER) TO ISSUE THE TITLE INSURANCE POLICY COVERING THE MORTGAGED PROPERTY WITH
AN AGGREGATE AMOUNT AT LEAST EQUAL TO THE LOAN AMOUNT.

 

(V)                                 LIEN SEARCH REPORTS.  LENDER SHALL HAVE
RECEIVED SATISFACTORY REPORTS OF UCC (COLLECTIVELY, THE “UCC SEARCHES”), TAX
LIEN, JUDGMENT AND LITIGATION SEARCHES AND TITLE UPDATES CONDUCTED BY THE
COMPANIES ISSUING THE TITLE INSURANCE POLICY WITH RESPECT TO THE COLLATERAL,
GUARANTOR, BORROWER AND THE MEMBER, SUCH SEARCHES TO BE CONDUCTED IN EACH OF THE
LOCATIONS REQUIRED BY LENDER.

 

(W)                               CONSENTS, LICENSES, APPROVALS, ETC.  LENDER
SHALL HAVE RECEIVED COPIES OF ALL CONSENTS, LICENSES AND APPROVALS, IF ANY,
REQUIRED IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE BY BORROWER,
MEMBER AND GUARANTOR AND THE VALIDITY AND ENFORCEABILITY, OF THE LOAN DOCUMENTS,
AND SUCH CONSENTS, LICENSES AND APPROVALS SHALL BE IN FULL FORCE AND EFFECT.

 

(X)                                   ADDITIONAL REAL ESTATE MATTERS.  LENDER
SHALL HAVE RECEIVED SUCH OTHER REAL ESTATE RELATED CERTIFICATES AND
DOCUMENTATION RELATING TO THE MORTGAGED PROPERTY AS LENDER MAY HAVE REASONABLY
REQUESTED.  SUCH DOCUMENTATION SHALL INCLUDE THE FOLLOWING AS REQUESTED BY
LENDER AND TO THE EXTENT REASONABLY AVAILABLE:

 

(I)                                     CERTIFICATES OF OCCUPANCY ISSUED BY THE
APPROPRIATE GOVERNMENTAL AUTHORITIES OF THE JURISDICTION IN WHICH EACH MORTGAGED
PROPERTY IS LOCATED REFLECTING, AND CONSISTENT WITH, THE USE OF EACH MORTGAGED
PROPERTY AS OF THE CLOSING DATE;

 

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(II)                                  LETTERS FROM THE APPROPRIATE LOCAL
GOVERNMENTAL AUTHORITIES OF THE JURISDICTION IN WHICH EACH MORTGAGED PROPERTY IS
LOCATED, CERTIFYING THAT EACH MORTGAGED PROPERTY IS IN COMPLIANCE WITH ALL
APPLICABLE ZONING LAWS, RULES AND REGULATIONS, A ZONING ENDORSEMENT TO THE
APPLICABLE TITLE INSURANCE POLICY WITH RESPECT TO EACH MORTGAGED PROPERTY AND/OR
AN ACCEPTABLE ZONING LETTER FROM ZONING INFORMATION SERVICES INC.;

 

(III)                               COPIES OF THE LEASES IN EFFECT AT EACH
MORTGAGED PROPERTY AS LENDER MAY REQUEST (IN ADDITION TO THE COPIES DELIVERED
ABOVE); AND

 

(IV)                              A CERTIFIED COPY OF THE PURCHASE AND SALE
AGREEMENT (WITH EXHIBITS), IF ANY, FOR THE MORTGAGED PROPERTY.

 

(Y)                                 CLOSING STATEMENT.  LENDER AND BORROWER
SHALL HAVE AGREED UPON A DETAILED CLOSING STATEMENT IN A FORM REASONABLY
ACCEPTABLE TO LENDER, WHICH INCLUDES A COMPLETE DESCRIPTION OF BORROWER’S
SOURCES AND USES OF FUNDS ON THE CLOSING DATE.

 

(Z)                                   LOAN-TO-VALUE RATIO; DEBT SERVICE COVERAGE
TEST.  LENDER SHALL HAVE DETERMINED THAT (I) THE LOAN AMOUNT IS NOT GREATER THAN
80% OF THE AGGREGATE VALUE OF THE MORTGAGED PROPERTY AS SET FORTH IN THE
APPRAISALS DELIVERED ON THE CLOSING DATE AND (II) THE DEBT SERVICE COVERAGE TEST
IS SATISFIED AS OF THE CLOSING DATE.

 

(AA)                            ORIGINATION FEE.  LENDER SHALL HAVE RECEIVED ITS
ORIGINATION FEE, WHICH MAY BE RETAINED BY LENDER FROM THE PROCEEDS OF THE LOAN.

 

SECTION 3.2.                                   EXECUTION AND DELIVERY OF
AGREEMENT.  THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY EACH PARTY TO THIS
AGREEMENT SHALL BE DEEMED TO CONSTITUTE THE SATISFACTION OR WAIVER OF THE
CONDITIONS SET FORTH IN SECTION 3.1; PROVIDED, THAT ANY SUCH DEEMED SATISFACTION
OR WAIVER SHALL BE SOLELY FOR THE PURPOSES OF SECTION 3.1 AND SHALL NOT BE
DEEMED OR CONSTRUED TO CONSTITUTE A WAIVER OF ANY OTHER PROVISION OF THIS
AGREEMENT OR OF ANY PROVISIONS OF ANY OF THE OTHER LOAN DOCUMENTS, INCLUDING,
WITHOUT LIMITATION, ANY UNDELIVERED ITEMS UNDERTAKING OR AGREEMENT OR OTHER
POST-CLOSING AGREEMENT OR UNDERTAKING ENTERED INTO BY BORROWER AND/OR GUARANTOR.

 

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES

 

SECTION 4.1.                                   REPRESENTATIONS AND WARRANTIES AS
TO BORROWER.  BORROWER REPRESENTS AND WARRANTS THAT, AS OF THE CLOSING DATE:

 

(A)                                  ORGANIZATION.  BORROWER (I) IS A DULY
ORGANIZED AND VALIDLY EXISTING LIMITED LIABILITY COMPANY IN GOOD STANDING UNDER
THE LAWS OF THE STATE OF DELAWARE, (II) HAS THE REQUISITE POWER AND AUTHORITY TO
OWN ITS PROPERTIES (INCLUDING, WITHOUT LIMITATION, THE MORTGAGED PROPERTY) AND
TO CARRY ON ITS BUSINESS AS NOW BEING CONDUCTED AND IS QUALIFIED TO DO BUSINESS
IN THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, AND (III) HAS
THE REQUISITE POWER TO EXECUTE AND DELIVER, AND PERFORM ITS OBLIGATIONS UNDER,
THIS AGREEMENT, THE NOTE AND ALL OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS A
PARTY.

 

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(B)                                 AUTHORIZATION; NO CONFLICT; CONSENTS AND
APPROVALS.  THE EXECUTION AND DELIVERY BY BORROWER OF THIS AGREEMENT, THE NOTE
AND EACH OF THE OTHER LOAN DOCUMENTS, BORROWER’S PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER AND UNDER THE OTHER LOAN DOCUMENTS AND THE CREATION OF THE SECURITY
INTERESTS AND LIENS PROVIDED FOR IN THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
TO WHICH IT IS A PARTY (I) HAVE BEEN DULY AUTHORIZED BY ALL REQUISITE ACTION ON
THE PART OF BORROWER, (II) WILL NOT VIOLATE ANY PROVISION OF ANY LEGAL
REQUIREMENTS, ANY ORDER OF ANY COURT OR OTHER GOVERNMENTAL AUTHORITY, THE
ORGANIZATIONAL AGREEMENT OR ANY INDENTURE OR AGREEMENT OR OTHER INSTRUMENT TO
WHICH BORROWER IS A PARTY OR BY WHICH BORROWER IS BOUND, AND (III) WILL NOT BE
IN CONFLICT WITH, RESULT IN A BREACH OF, OR CONSTITUTE (WITH DUE NOTICE OR LAPSE
OF TIME OR BOTH) A DEFAULT UNDER, OR RESULT IN THE CREATION OR IMPOSITION OF ANY
LIEN OF ANY NATURE WHATSOEVER UPON THE MORTGAGED PROPERTY PURSUANT TO, ANY SUCH
INDENTURE OR AGREEMENT OR MATERIAL INSTRUMENT OTHER THAN THE LOAN DOCUMENTS. 
OTHER THAN THOSE OBTAINED OR FILED ON OR PRIOR TO THE CLOSING DATE, BORROWER IS
NOT REQUIRED TO OBTAIN ANY CONSENT, APPROVAL OR AUTHORIZATION FROM, OR TO FILE
ANY DECLARATION OR STATEMENT WITH, ANY GOVERNMENTAL AUTHORITY OR OTHER AGENCY IN
CONNECTION WITH OR AS A CONDITION TO THE EXECUTION, DELIVERY OR PERFORMANCE OF
THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS EXECUTED AND DELIVERED BY
BORROWER.

 

(C)                                  ENFORCEABILITY.  THIS AGREEMENT, THE NOTE
AND EACH OTHER LOAN DOCUMENT EXECUTED BY BORROWER IN CONNECTION WITH THE LOAN
(INCLUDING, WITHOUT LIMITATION, ANY COLLATERAL SECURITY INSTRUMENT), IS THE
LEGAL, VALID AND BINDING OBLIGATION OF BORROWER, ENFORCEABLE AGAINST BORROWER IN
ACCORDANCE WITH ITS TERMS, SUBJECT TO BANKRUPTCY, INSOLVENCY, AND OTHER
LIMITATIONS ON CREDITORS’ RIGHTS GENERALLY AND TO EQUITABLE PRINCIPLES.  THIS
AGREEMENT, THE NOTE AND SUCH OTHER LOAN DOCUMENTS ARE NOT SUBJECT TO ANY RIGHT
OF RESCISSION, SET-OFF, COUNTERCLAIM OR DEFENSE BY BORROWER (INCLUDING THE
DEFENSE OF USURY), AND BORROWER HAS NOT ASSERTED ANY RIGHT OF RESCISSION,
SET-OFF, COUNTERCLAIM OR DEFENSE WITH RESPECT THERETO.

 

(D)                                 LITIGATION.  THERE ARE NO ACTIONS, SUITS OR
PROCEEDINGS AT LAW OR IN EQUITY BY OR BEFORE ANY GOVERNMENTAL AUTHORITY OR OTHER
AGENCY NOW PENDING AND SERVED OR, TO THE BEST KNOWLEDGE OF BORROWER, THREATENED
AGAINST BORROWER, GUARANTOR OR ANY COLLATERAL, WHICH ACTIONS, SUITS OR
PROCEEDINGS, IF DETERMINED AGAINST BORROWER, GUARANTOR OR SUCH COLLATERAL, ARE
REASONABLY LIKELY TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(E)                                  AGREEMENTS.  BORROWER IS NOT IN DEFAULT IN
THE PERFORMANCE, OBSERVANCE OR FULFILLMENT OF ANY OF THE MATERIAL OBLIGATIONS,
COVENANTS OR CONDITIONS CONTAINED IN ANY AGREEMENT OR INSTRUMENT TO WHICH IT IS
A PARTY OR BY WHICH BORROWER OR ANY COLLATERAL IS BOUND WHICH DEFAULT IS
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  NEITHER BORROWER NOR
GUARANTOR IS A PARTY TO ANY AGREEMENT OR INSTRUMENT OR SUBJECT TO ANY
RESTRICTION WHICH RESTRICTS SUCH PERSON’S ABILITY TO CONDUCT ITS BUSINESS IN THE
ORDINARY COURSE OR THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.

 

(F)                                    NO BANKRUPTCY FILING.  NEITHER BORROWER
NOR GUARANTOR IS CONTEMPLATING EITHER THE FILING OF A PETITION BY IT UNDER ANY
STATE OR FEDERAL BANKRUPTCY OR INSOLVENCY LAWS OR THE LIQUIDATION OF ALL OR A
MATERIAL PORTION OF ITS ASSETS OR PROPERTY.  TO THE BEST KNOWLEDGE OF BORROWER,
NO PERSON IS CONTEMPLATING THE FILING OF ANY SUCH PETITION AGAINST BORROWER.

 

(G)                                 SOLVENCY.  GIVING EFFECT TO THE TRANSACTIONS
CONTEMPLATED HEREBY, THE FAIR MARKET VALUE OF BORROWER’S ASSETS EXCEEDS AND
WILL, IMMEDIATELY FOLLOWING THE MAKING OF THE

 

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LOAN, EXCEED BORROWER’S TOTAL LIABILITIES (INCLUDING, WITHOUT LIMITATION,
SUBORDINATED, UNLIQUIDATED, DISPUTED AND CONTINGENT LIABILITIES).  THE FAIR
MARKET VALUE OF BORROWER’S ASSETS IS AND WILL, IMMEDIATELY FOLLOWING THE MAKING
OF THE LOAN, BE GREATER THAN BORROWER’S PROBABLE LIABILITIES (INCLUDING THE
MAXIMUM AMOUNT OF ITS CONTINGENT LIABILITIES ON ITS DEBTS AS SUCH DEBTS BECOME
ABSOLUTE AND MATURED).  BORROWER’S ASSETS DO NOT AND, IMMEDIATELY FOLLOWING THE
MAKING OF THE LOAN WILL NOT, CONSTITUTE UNREASONABLY SMALL CAPITAL TO CARRY OUT
ITS BUSINESS AS CONDUCTED OR AS PROPOSED TO BE CONDUCTED.  BORROWER DOES NOT
INTEND TO, AND DOES NOT BELIEVE THAT IT WILL, INCUR DEBTS AND LIABILITIES
(INCLUDING, WITHOUT LIMITATION, CONTINGENT LIABILITIES AND OTHER COMMITMENTS)
BEYOND ITS ABILITY TO PAY SUCH DEBTS AS THEY MATURE (TAKING INTO ACCOUNT THE
TIMING AND AMOUNTS TO BE PAYABLE ON OR IN RESPECT OF OBLIGATIONS OF BORROWER).

 

(H)                                 OTHER DEBT.  BORROWER HAS NOT BORROWED OR
RECEIVED OTHER DEBT FINANCING WHETHER UNSECURED OR SECURED BY THE MORTGAGED
PROPERTY OR ANY PART THEREOF WHICH IS OUTSTANDING AS OF THE CLOSING DATE.  AS OF
THE CLOSING DATE, BORROWER HAS NO OTHER BORROWINGS OTHER THAN TRADE DEBT
EXPRESSLY PERMITTED UNDER ARTICLE VIII OF THIS AGREEMENT.

 

(I)                                     FULL AND ACCURATE DISCLOSURE.  NO
STATEMENT OF FACT MADE BY OR ON BEHALF OF BORROWER IN THIS AGREEMENT OR IN ANY
OF THE OTHER LOAN DOCUMENTS CONTAINS ANY UNTRUE STATEMENT OF MATERIAL FACT OR
OMITS TO STATE ANY MATERIAL FACT NECESSARY TO MAKE STATEMENTS CONTAINED HEREIN
OR THEREIN NOT MISLEADING.  TO THE BEST KNOWLEDGE OF BORROWER, NO FINANCIAL
STATEMENTS OR ANY OTHER DOCUMENT, CERTIFICATE OR WRITTEN STATEMENT FURNISHED TO
LENDER BY BORROWER OR GUARANTOR, OR BY ANY THIRD PARTY ON BEHALF OF BORROWER OR
GUARANTOR, FOR USE IN CONNECTION WITH THE LOAN CONTAINS ANY UNTRUE
REPRESENTATION, WARRANTY OR STATEMENT OF A MATERIAL FACT, AND NONE OMITS OR WILL
OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS
CONTAINED HEREIN OR THEREIN NOT MISLEADING.  TO THE BEST KNOWLEDGE OF BORROWER,
THERE IS NO FACT THAT HAS NOT BEEN DISCLOSED TO LENDER THAT IS REASONABLY LIKELY
TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(J)                                     FINANCIAL INFORMATION.  ALL FINANCIAL
STATEMENTS AND OTHER DATA CONCERNING BORROWER, GUARANTOR AND THE MORTGAGED
PROPERTY THAT HAS BEEN DELIVERED BY OR ON BEHALF OF BORROWER OR GUARANTOR TO
LENDER IS TRUE, COMPLETE AND CORRECT IN ALL MATERIAL RESPECTS AND, EXCEPT AS
DISCLOSED ON SCHEDULE 4 ATTACHED HERETO, HAS BEEN PREPARED IN ACCORDANCE WITH
GAAP.  SINCE THE DELIVERY OF SUCH DATA, EXCEPT AS OTHERWISE DISCLOSED IN WRITING
TO LENDER, THERE HAS BEEN NO CHANGE IN THE FINANCIAL POSITION OF BORROWER,
GUARANTOR OR THE MORTGAGED PROPERTY, OR IN THE RESULTS OF OPERATIONS OF BORROWER
OR GUARANTOR, WHICH CHANGE RESULTS OR IS REASONABLY LIKELY TO RESULT IN A
MATERIAL ADVERSE EFFECT.  NEITHER BORROWER NOR GUARANTOR HAS INCURRED ANY
OBLIGATION OR LIABILITY, CONTINGENT OR OTHERWISE, NOT REFLECTED IN SUCH
FINANCIAL DATA, WHICH IS LIKELY TO HAVE A MATERIAL ADVERSE EFFECT UPON ITS
BUSINESS OPERATIONS OR THE MORTGAGED PROPERTY.

 

(K)                                  INVESTMENT COMPANY ACT; PUBLIC UTILITY
HOLDING COMPANY ACT.  BORROWER IS NOT (I) AN “INVESTMENT COMPANY” OR A COMPANY
“CONTROLLED” BY AN “INVESTMENT COMPANY,” WITHIN THE MEANING OF THE INVESTMENT
COMPANY ACT OF 1940, AS AMENDED, (II) A “HOLDING COMPANY” OR A “SUBSIDIARY
COMPANY” OF A “HOLDING COMPANY” OR AN “AFFILIATE” OF EITHER A “HOLDING COMPANY”
OR A “SUBSIDIARY COMPANY” WITHIN THE MEANING OF THE PUBLIC UTILITY HOLDING
COMPANY ACT OF 1935, AS AMENDED, OR (III) SUBJECT TO ANY OTHER FEDERAL OR STATE
LAW OR REGULATION WHICH PURPORTS TO RESTRICT OR REGULATE ITS ABILITY TO BORROW
MONEY IN ACCORDANCE WITH THIS AGREEMENT.

 

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(L)                                     COMPLIANCE.  BORROWER IS IN COMPLIANCE
WITH ALL APPLICABLE LEGAL REQUIREMENTS, EXCEPT FOR NONCOMPLIANCE THAT IS NOT
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  BORROWER IS NOT IN DEFAULT
OR VIOLATION OF ANY ORDER, WRIT, INJUNCTION, DECREE OR DEMAND OF ANY
GOVERNMENTAL AUTHORITY EXCEPT FOR DEFAULTS OR VIOLATIONS WHICH ARE NOT
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.

 

(M)                               USE OF PROCEEDS; MARGIN REGULATIONS.  BORROWER
WILL USE THE PROCEEDS OF THE LOAN FOR THE PURPOSES DESCRIBED IN SECTION 2.2.  NO
PART OF THE PROCEEDS OF THE LOAN WILL BE USED FOR THE PURPOSE OF PURCHASING OR
ACQUIRING ANY “MARGIN STOCK” WITHIN THE MEANING OF REGULATION U OF THE BOARD OF
GOVERNORS OF THE FEDERAL RESERVE SYSTEM OR FOR ANY OTHER PURPOSE WHICH WOULD BE
INCONSISTENT WITH SUCH REGULATION U OR ANY OTHER REGULATIONS OF SUCH BOARD OF
GOVERNORS, OR FOR ANY PURPOSES PROHIBITED BY LEGAL REQUIREMENTS.

 

(N)                                 ORGANIZATIONAL CHART.  THE ORGANIZATIONAL
CHART SET FORTH AS SCHEDULE 2 ACCURATELY SETS FORTH THE DIRECT AND INDIRECT
OWNERSHIP STRUCTURE OF BORROWER.

 

(O)                                 NO DEFAULTS.  NO DEFAULT OR EVENT OF DEFAULT
EXISTS UNDER OR WITH RESPECT TO ANY LOAN DOCUMENT.

 

(P)                                 PLANS AND WELFARE PLANS.  THE ASSETS OF
BORROWER ARE NOT TREATED AS “PLAN ASSETS” UNDER REGULATIONS CURRENTLY
PROMULGATED UNDER ERISA.  NEITHER BORROWER NOR ANY ERISA AFFILIATE SPONSORS,
MAINTAINS, CONTRIBUTES TO OR IS REQUIRED TO CONTRIBUTE TO ANY PLAN OR
MULTIEMPLOYER PLAN NOR HAS THE BORROWER OR ANY ERISA AFFILIATE SPONSORED,
MAINTAINED, CONTRIBUTED TO OR BEEN REQUIRED TO CONTRIBUTE TO ANY PLAN OR
MULTIEMPLOYER PLAN WITHIN THE PAST SIX YEARS.  THERE ARE NO PENDING ISSUES OR
CLAIMS BEFORE THE INTERNAL REVENUE SERVICE, THE UNITED STATES DEPARTMENT OF
LABOR OR ANY COURT OF COMPETENT JURISDICTION RELATED TO ANY PLAN OR WELFARE
PLAN.  NO EVENT HAS OCCURRED, AND THERE EXISTS NO CONDITION OR SET OF
CIRCUMSTANCES, IN CONNECTION WITH ANY PLAN OR WELFARE PLAN UNDER WHICH BORROWER
OR, TO THE BEST KNOWLEDGE OF BORROWER, ANY ERISA AFFILIATE, DIRECTLY OR
INDIRECTLY (THROUGH AN INDEMNIFICATION AGREEMENT OR OTHERWISE), IS REASONABLY
LIKELY TO BE SUBJECT TO ANY MATERIAL RISK OF LIABILITY UNDER SECTION 409 OR
502(I) OF ERISA OR SECTION 4975 OF THE CODE.  NO WELFARE PLAN PROVIDES OR WILL
PROVIDE BENEFITS, INCLUDING, WITHOUT LIMITATION, DEATH OR MEDICAL BENEFITS
(WHETHER OR NOT INSURED) WITH RESPECT TO ANY CURRENT OR FORMER EMPLOYEE OF
BORROWER, OR, TO THE BEST KNOWLEDGE OF BORROWER, ANY ERISA AFFILIATE BEYOND HIS
OR HER RETIREMENT OR OTHER TERMINATION OF SERVICE OTHER THAN (I) COVERAGE
MANDATED BY APPLICABLE LAW, (II) DEATH OR DISABILITY BENEFITS THAT HAVE BEEN
FULLY PROVIDED FOR BY FULLY PAID UP INSURANCE OR (III) SEVERANCE BENEFITS.

 

(Q)                                 ADDITIONAL BORROWER UCC INFORMATION. 
BORROWER’S ORGANIZATIONAL IDENTIFICATION NUMBER IS 3723702 AND THE FULL LEGAL
NAME OF BORROWER IS AS SET FORTH ON THE SIGNATURE PAGES HEREOF AND BORROWER HAS
NOT DONE IN THE LAST FIVE (5) YEARS, AND DOES NOT DO, BUSINESS UNDER ANY OTHER
NAME (INCLUDING ANY TRADE-NAME OR FICTITIOUS BUSINESS NAME).

 

(R)                                    NOT FOREIGN PERSON.  BORROWER IS NOT A
“FOREIGN PERSON” WITHIN THE MEANING OF § 1445(F)(3) OF THE CODE.

 

(S)                                  LABOR MATTERS.  BORROWER IS NOT A PARTY TO
ANY COLLECTIVE BARGAINING AGREEMENTS.

 

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(T)                                    PRE-CLOSING DATE ACTIVITIES.  BORROWER
HAS NOT CONDUCTED ANY BUSINESS OR OTHER ACTIVITY ON OR PRIOR TO THE CLOSING
DATE, OTHER THAN IN CONNECTION WITH THE ACQUISITION, MANAGEMENT AND OWNERSHIP OF
THE MORTGAGED PROPERTY.

 

(U)                                 NO BANKRUPTCIES OR CRIMINAL PROCEEDINGS
INVOLVING BORROWER OR RELATED PARTIES.  NO BANKRUPTCY, INSOLVENCY,
REORGANIZATION OR COMPARABLE PROCEEDINGS HAVE EVER BEEN INSTITUTED BY OR AGAINST
BORROWER, ANY AFFILIATE OF BORROWER, ANY GUARANTOR OR ANY INDIVIDUAL OR ENTITY
OWNING, WITH HIS, HER OR ITS FAMILY MEMBERS, 20% OR MORE OF THE DIRECT, OR
INDIRECT BENEFICIAL OWNERSHIP INTERESTS IN BORROWER (EACH SUCH GUARANTOR,
INDIVIDUAL, OR ENTITY BEING HEREIN REFERRED TO AS A “PRINCIPAL”), AND NO SUCH
PROCEEDING IS NOW PENDING OR CONTEMPLATED.  NONE OF BORROWER, ANY PRINCIPAL, OR
TO BORROWER’S KNOWLEDGE, ANY OTHER INDIVIDUAL OR ENTITY DIRECTLY OR INDIRECTLY
OWNING OR CONTROLLING, OR THE FAMILY MEMBERS OF WHICH OWN OR CONTROL, ANY DIRECT
OR INDIRECT BENEFICIAL OWNERSHIP INTEREST IN BORROWER OR IN THE MANAGER OR ASSET
MANAGER FOR THE MORTGAGED PROPERTY, HAVE BEEN CHARGED, INDICTED OR CONVICTED, OR
ARE CURRENTLY UNDER THE THREAT OF CHARGE, INDICTMENT OR CONVICTION, FOR ANY
FELONY OR CRIME PUNISHABLE BY IMPRISONMENT.

 

(V)                                 NO PROHIBITED PERSONS.  NEITHER BORROWER,
MEMBER, GUARANTOR NOR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS,
PARTNERS, MEMBERS OR AFFILIATES (INCLUDING THE INDIRECT HOLDERS OF EQUITY
INTERESTS IN BORROWER) IS OR WILL BE AN ENTITY OR PERSON: (I) THAT IS LISTED IN
THE ANNEX TO, OR IS OTHERWISE SUBJECT TO THE PROVISIONS OF EXECUTIVE ORDER 13224
ISSUED ON SEPTEMBER 24, 2001 (“EO13224”); (II) WHOSE NAME APPEARS ON THE UNITED
STATES TREASURY DEPARTMENT’S OFFICE OF FOREIGN ASSETS CONTROL (“OFAC”) MOST
CURRENT LIST OF “SPECIFICALLY DESIGNATED NATIONAL AND BLOCKED PERSONS” (WHICH
LIST MAY BE PUBLISHED FROM TIME TO TIME IN VARIOUS MEDIUMS INCLUDING, BUT NOT
LIMITED TO, THE OFAC WEBSITE, HTTP:WWW.TREAS.GOV/OFAC/T11SDN.PDF)(THE “OFAC
LIST”); (III) WHO COMMITS, THREATENS TO COMMIT OR SUPPORTS “TERRORISM”, AS THAT
TERM IS DEFINED IN EO 13224; OR (IV) WHO IS OTHERWISE AFFILIATED WITH ANY ENTITY
OR PERSON LISTED ABOVE (ANY AND ALL PARTIES OR PERSONS DESCRIBED IN CLAUSES (I)
THROUGH (IV) ABOVE ARE HEREIN REFERRED TO AS A “PROHIBITED PERSON”).  TO THE
BEST KNOWLEDGE OF THE BORROWER, NO TENANT AT THE PROPERTY CURRENTLY IS
IDENTIFIED ON THE OFAC LIST OR OTHERWISE QUALIFIES AS A PROHIBITED PERSON AND NO
TENANT AT THE PROPERTY IS OWNED BY OR AN AFFILIATE OF A PROHIBITED PERSON. 
BORROWER AND MANAGER HAVE IMPLEMENTED AND WILL CONTINUE TO FOLLOW PROCEDURES TO
ENSURE THAT NO TENANT AT THE PROPERTY IS A PROHIBITED PERSON OR OWNED BY OR AN
AFFILIATE OF A PROHIBITED PERSON.

 

SECTION 4.2.                                   REPRESENTATIONS AND WARRANTIES AS
TO THE MORTGAGED PROPERTY.  BORROWER HEREBY REPRESENTS AND WARRANTS TO LENDER
THAT, AS TO EACH MORTGAGED PROPERTY AND THE MORTGAGES, AS OF THE CLOSING DATE:

 

(A)                                  TITLE TO THE MORTGAGED PROPERTY.  BORROWER
OWNS GOOD, MARKETABLE AND INSURABLE FEE SIMPLE TITLE TO EACH MORTGAGED PROPERTY
(OTHER THAN PERSONALTY), FREE AND CLEAR OF ALL LIENS, OTHER THAN THE PERMITTED
ENCUMBRANCES.  BORROWER OWNS THE PERSONALTY FREE AND CLEAR OF ANY AND ALL LIENS,
OTHER THAN PERMITTED ENCUMBRANCES.  THERE ARE NO OUTSTANDING OPTIONS TO PURCHASE
OR RIGHTS OF FIRST REFUSAL OR RESTRICTIONS ON TRANSFERABILITY AFFECTING ANY
MORTGAGED PROPERTY OR ANY PORTION THEREOF OR INTEREST THEREIN.

 

(B)                                 UTILITIES AND PUBLIC ACCESS.  EXCEPT AS
DISCLOSED ON SCHEDULE 4, (I) EACH MORTGAGED PROPERTY HAS ADEQUATE RIGHTS OF
ACCESS TO PUBLIC WAYS AND IS SERVED BY PUBLIC WATER,

 

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ELECTRIC, SEWER, SANITARY SEWER AND STORM DRAIN FACILITIES; (II) ALL PUBLIC
UTILITIES NECESSARY TO THE CONTINUED USE AND ENJOYMENT OF EACH MORTGAGED
PROPERTY AS PRESENTLY USED AND ENJOYED ARE LOCATED IN THE PUBLIC RIGHT-OF-WAY
ABUTTING THE PREMISES, AND ALL SUCH UTILITIES ARE CONNECTED SO AS TO SERVE EACH
MORTGAGED PROPERTY WITHOUT PASSING OVER OTHER PROPERTY EXCEPT FOR LAND OR
EASEMENT AREAS OF OR AVAILABLE TO THE UTILITY COMPANY PROVIDING SUCH UTILITY
SERVICE; AND (III) ALL ROADS NECESSARY FOR THE FULL UTILIZATION OF EACH
MORTGAGED PROPERTY FOR ITS CURRENT PURPOSE HAVE BEEN COMPLETED AND DEDICATED TO
PUBLIC USE AND ACCEPTED BY ALL GOVERNMENTAL AUTHORITIES OR ARE THE SUBJECT OF
ACCESS EASEMENTS FOR THE BENEFIT OF EACH MORTGAGED PROPERTY.

 

(C)                                  CONDEMNATION.  NO TAKING HAS BEEN COMMENCED
OR, TO THE BEST OF BORROWER’S KNOWLEDGE, IS CONTEMPLATED WITH RESPECT TO ALL OR
ANY PORTION OF ANY MORTGAGED PROPERTY OR FOR THE RELOCATION OF ROADWAYS
PROVIDING ACCESS TO ANY MORTGAGED PROPERTY.

 

(D)                                 COMPLIANCE.  EACH MORTGAGED PROPERTY AND THE
CURRENT USE THEREOF IS IN COMPLIANCE WITH ALL APPLICABLE LEGAL REQUIREMENTS
(INCLUDING, WITHOUT LIMITATION, BUILDING, PARKING, SUBDIVISION, LAND USE,
HEALTH, FIRE, SAFETY AND ZONING ORDINANCES AND CODES) AND ALL APPLICABLE
INSURANCE REQUIREMENTS, EXCEPT FOR NONCOMPLIANCE WHICH CANNOT REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  EACH MORTGAGED PROPERTY IS
ZONED FOR ITS CURRENT USE, WHICH ZONING DESIGNATION IS UNCONDITIONAL, IN FULL
FORCE AND EFFECT, AND IS BEYOND ALL APPLICABLE APPEAL PERIODS.   IN THE EVENT
THAT ALL OR ANY PART OF THE IMPROVEMENTS LOCATED ON ANY MORTGAGED PROPERTY ARE
DESTROYED OR DAMAGED, SAID IMPROVEMENTS CAN BE LEGALLY RECONSTRUCTED TO THEIR
CONDITION PRIOR TO SUCH DAMAGE OR DESTRUCTION, AND THEREAFTER EXIST FOR THE SAME
USE WITHOUT VIOLATING ANY ZONING OR OTHER ORDINANCES APPLICABLE THERETO AND
WITHOUT THE NECESSITY OF OBTAINING ANY VARIANCES OR SPECIAL PERMITS, OTHER THAN
CUSTOMARY DEMOLITION, BUILDING AND OTHER CONSTRUCTION RELATED PERMITS.  NO LEGAL
PROCEEDINGS ARE PENDING OR, TO THE KNOWLEDGE OF BORROWER, THREATENED WITH
RESPECT TO THE ZONING OF THE MORTGAGED PROPERTY.  NEITHER THE ZONING NOR ANY
OTHER RIGHT TO CONSTRUCT, USE OR OPERATE THE MORTGAGED PROPERTY IS IN ANY WAY
DEPENDENT UPON OR RELATED TO ANY REAL ESTATE OTHER THAN THE MORTGAGED PROPERTY. 
NO TRACT MAP, PARCEL MAP, CONDOMINIUM PLAN, CONDOMINIUM DECLARATION, OR PLAT OF
SUBDIVISION WILL BE RECORDED BY BORROWER WITH RESPECT TO THE MORTGAGED PROPERTY
WITHOUT LENDER’S PRIOR WRITTEN CONSENT.

 

(E)                                  ENVIRONMENTAL COMPLIANCE.  EXCEPT FOR
MATTERS SET FORTH IN THE ENVIRONMENTAL REPORTS DELIVERED TO LENDER IN CONNECTION
WITH THE LOAN (TRUE, CORRECT AND COMPLETE COPIES OF WHICH HAVE BEEN PROVIDED TO
LENDER BY BORROWER):

 

(I)                                     BORROWER AND EACH MORTGAGED PROPERTY IS
IN FULL COMPLIANCE WITH ALL APPLICABLE ENVIRONMENTAL LAWS (WHICH COMPLIANCE
INCLUDES, BUT IS NOT LIMITED TO, THE POSSESSION BY BORROWER OR THE MANAGER OF
ALL ENVIRONMENTAL, HEALTH AND SAFETY PERMITS, LICENSES AND OTHER GOVERNMENTAL
AUTHORIZATIONS REQUIRED IN CONNECTION WITH THE OWNERSHIP AND OPERATION OF THE
MORTGAGED PROPERTY UNDER ALL ENVIRONMENTAL LAWS), EXCEPT FOR NONCOMPLIANCE WHICH
CANNOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(II)                                  THERE IS NO MATERIAL ENVIRONMENTAL CLAIM
PENDING OR, TO THE ACTUAL KNOWLEDGE OF BORROWER, THREATENED, AND NO PENALTIES
ARISING UNDER ENVIRONMENTAL LAWS HAVE BEEN ASSESSED AGAINST BORROWER, THE
MANAGER OR ANY MORTGAGED PROPERTY, OR, TO THE ACTUAL KNOWLEDGE OF BORROWER,
AGAINST ANY PERSON WHOSE LIABILITY FOR ANY ENVIRONMENTAL

 

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CLAIM BORROWER OR THE MANAGER HAS OR MAY HAVE RETAINED OR ASSUMED EITHER
CONTRACTUALLY OR BY OPERATION OF LAW, AND NO MATERIAL INVESTIGATION OR REVIEW IS
PENDING OR, TO THE ACTUAL KNOWLEDGE OF BORROWER, THREATENED BY ANY GOVERNMENTAL
AUTHORITY, CITIZENS GROUP, EMPLOYEE OR OTHER PERSON WITH RESPECT TO ANY ALLEGED
FAILURE BY BORROWER OR THE MANAGER OR ANY MORTGAGED PROPERTY TO HAVE ANY
ENVIRONMENTAL, HEALTH OR SAFETY PERMIT, LICENSE OR OTHER AUTHORIZATION REQUIRED
UNDER, OR TO OTHERWISE COMPLY WITH, ANY ENVIRONMENTAL LAW OR WITH RESPECT TO ANY
ALLEGED LIABILITY OF BORROWER OR THE MANAGER FOR ANY USE OR RELEASE OF ANY
HAZARDOUS SUBSTANCES.

 

(III)                               THERE ARE NO PRESENT AND, TO THE BEST
KNOWLEDGE OF THE BORROWER, THERE HAVE BEEN NO PAST MATERIAL RELEASES OF ANY
HAZARDOUS SUBSTANCES THAT ARE REASONABLY LIKELY TO FORM THE BASIS OF ANY
ENVIRONMENTAL CLAIM AGAINST BORROWER, THE MANAGER, ANY MORTGAGED PROPERTY OR
AGAINST ANY PERSON WHOSE LIABILITY FOR ANY ENVIRONMENTAL CLAIM BORROWER OR THE
MANAGER HAS OR MAY HAVE RETAINED OR ASSUMED EITHER CONTRACTUALLY OR BY OPERATION
OF LAW (OTHER THAN HAZARDOUS SUBSTANCES BEING USED IN AMOUNTS THAT ARE CUSTOMARY
FOR PROPERTIES SUCH AS THE MORTGAGED PROPERTY AND FOR PURPOSES THAT ARE TYPICAL
FOR PROPERTIES SUCH AS THE MORTGAGED PROPERTY AND IN ALL CASES ARE UTILIZED IN
COMPLIANCE WITH ENVIRONMENTAL LAW IN ALL MATERIAL RESPECTS).

 

(IV)                              WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, TO THE BEST KNOWLEDGE OF THE BORROWER, THERE IS NOT PRESENT AT, ON,
IN OR UNDER ANY MORTGAGED PROPERTY, ANY HAZARDOUS SUBSTANCES (INCLUDING, WITHOUT
LIMITATION, PCB-CONTAINING EQUIPMENT, ASBESTOS OR ASBESTOS CONTAINING MATERIALS,
UNDERGROUND STORAGE TANKS OR SURFACE IMPOUNDMENTS FOR HAZARDOUS SUBSTANCES, LEAD
IN DRINKING WATER OR LEAD BASED PAINT) (OTHER THAN HAZARDOUS SUBSTANCES BEING
USED IN AMOUNTS THAT ARE CUSTOMARY FOR PROPERTIES SUCH AS THE MORTGAGED PROPERTY
AND FOR PURPOSES THAT ARE TYPICAL FOR PROPERTIES SUCH AS THE MORTGAGED PROPERTY
AND IN ALL CASES ARE UTILIZED IN COMPLIANCE WITH ENVIRONMENTAL LAW IN ALL
MATERIAL RESPECTS) OR ANY FUNGUS, MOLD, MILDEW OR BIOLOGICAL AGENT THE PRESENCE
OF WHICH IS REASONABLY LIKELY TO MATERIALLY ADVERSELY AFFECT THE VALUE OR
UTILITY OF SUCH MORTGAGED PROPERTY.

 

(V)                                 NO LIENS ARE PRESENTLY RECORDED WITH THE
APPROPRIATE LAND RECORDS UNDER OR PURSUANT TO ANY ENVIRONMENTAL LAW WITH RESPECT
TO THE MORTGAGED PROPERTY AND NO GOVERNMENTAL AUTHORITY HAS BEEN TAKING OR, TO
THE ACTUAL KNOWLEDGE OF BORROWER, IS IN THE PROCESS OF TAKING ANY ACTION THAT
COULD SUBJECT THE MORTGAGED PROPERTY TO LIENS UNDER ANY ENVIRONMENTAL LAW.

 

(VI)                              THERE HAVE BEEN NO ENVIRONMENTAL
INVESTIGATIONS, STUDIES, AUDITS, REVIEWS OR OTHER ANALYSES CONDUCTED BY OR THAT
ARE IN THE POSSESSION OF BORROWER IN RELATION TO ANY MORTGAGED PROPERTY WHICH
HAVE NOT BEEN MADE AVAILABLE TO LENDER.

 

(F)                                    MORTGAGE AND OTHER LIENS.  EACH MORTGAGE
CREATES A VALID AND ENFORCEABLE FIRST PRIORITY LIEN ON THE APPLICABLE MORTGAGED
PROPERTY DESCRIBED THEREIN, AS SECURITY FOR THE REPAYMENT OF THE INDEBTEDNESS,
SUBJECT ONLY TO THE PERMITTED ENCUMBRANCES APPLICABLE TO SUCH MORTGAGED
PROPERTY.  THIS AGREEMENT CREATES A VALID AND ENFORCEABLE FIRST PRIORITY LIEN ON
ALL ACCOUNT COLLATERAL.  EACH COLLATERAL SECURITY INSTRUMENT ESTABLISHES AND
CREATES A VALID, SUBSISTING AND ENFORCEABLE LIEN ON AND A SECURITY INTEREST IN,
OR CLAIM TO, THE

 

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RIGHTS AND PROPERTY DESCRIBED THEREIN.  ALL PROPERTY COVERED BY ANY COLLATERAL
SECURITY INSTRUMENT IN WHICH A SECURITY INTEREST CAN BE PERFECTED BY THE FILING
OF A FINANCING STATEMENT IS SUBJECT TO A UCC FINANCING STATEMENT FILED AND/OR
RECORDED, AS APPROPRIATE (OR IRREVOCABLY DELIVERED TO AN AGENT FOR SUCH
RECORDATION OR FILING) IN ALL PLACES NECESSARY TO PERFECT A VALID FIRST PRIORITY
LIEN WITH RESPECT TO THE RIGHTS AND PROPERTY THAT ARE THE SUBJECT OF SUCH
COLLATERAL SECURITY INSTRUMENT TO THE EXTENT GOVERNED BY THE UCC.

 

(G)                                 ASSESSMENTS.  THERE ARE NO PENDING OR, TO
THE BEST KNOWLEDGE OF BORROWER, PROPOSED SPECIAL OR OTHER ASSESSMENTS FOR PUBLIC
IMPROVEMENTS OR OTHERWISE AFFECTING ANY MORTGAGED PROPERTY, NOR ARE THERE ANY
CONTEMPLATED IMPROVEMENTS TO ANY MORTGAGED PROPERTY THAT MAY RESULT IN SUCH
SPECIAL OR OTHER ASSESSMENTS.

 

(H)                                 NO JOINT ASSESSMENT; SEPARATE LOTS. 
BORROWER HAS NOT SUFFERED, PERMITTED OR INITIATED THE JOINT ASSESSMENT OF THE
MORTGAGED PROPERTY (I) WITH ANY OTHER REAL PROPERTY CONSTITUTING A SEPARATE TAX
LOT, AND (II) WITH ANY PORTION OF THE MORTGAGED PROPERTY WHICH MAY BE DEEMED TO
CONSTITUTE PERSONAL PROPERTY, OR ANY OTHER PROCEDURE WHEREBY THE LIEN OF ANY
TAXES WHICH MAY BE LEVIED AGAINST SUCH PERSONAL PROPERTY SHALL BE ASSESSED OR
LEVIED OR CHARGED TO THE MORTGAGED PROPERTY AS A SINGLE LIEN.  THE MORTGAGED
PROPERTY IS COMPRISED OF ONE OR MORE PARCELS, EACH OF WHICH CONSTITUTES A
SEPARATE TAX LOT AND NONE OF WHICH CONSTITUTES A PORTION OF ANY OTHER TAX LOT.

 

(I)                                     NO PRIOR ASSIGNMENT.  LENDER IS THE
COLLATERAL ASSIGNEE OF BORROWER’S INTEREST UNDER THE LEASES.  THERE ARE NO PRIOR
ASSIGNMENTS OF THE LEASES OR ANY PORTION OF THE RENT DUE AND PAYABLE OR TO
BECOME DUE AND PAYABLE WHICH ARE PRESENTLY OUTSTANDING.

 

(J)                                     PERMITS; CERTIFICATE OF OCCUPANCY. 
BORROWER HAS OBTAINED ALL PERMITS NECESSARY TO THE USE AND OPERATION OF EACH
MORTGAGED PROPERTY, EXCEPT FOR NONCOMPLIANCE WHICH CANNOT REASONABLY BE EXPECTED
TO RESULT IN A MATERIAL ADVERSE EFFECT.  THE USE BEING MADE OF EACH MORTGAGED
PROPERTY IS IN CONFORMITY WITH THE CERTIFICATE OF OCCUPANCY AND/OR SUCH PERMITS
FOR SUCH MORTGAGED PROPERTY AND ANY OTHER RESTRICTIONS, COVENANTS OR CONDITIONS
AFFECTING SUCH MORTGAGED PROPERTY, EXCEPT FOR NONCOMPLIANCE WHICH CANNOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(K)                                  FLOOD ZONE.  EXCEPT AS SHOWN ON THE SURVEY,
NO MORTGAGED PROPERTY OR ANY PORTION THEREOF IS LOCATED IN A FLOOD HAZARD AREA
AS DEFINED BY THE FEDERAL INSURANCE ADMINISTRATION.

 

(L)                                     PHYSICAL CONDITION.  EXCEPT AS SET FORTH
IN THE PROPERTY CONDITION ASSESSMENT, TO THE BEST KNOWLEDGE OF BORROWER, EACH
MORTGAGED PROPERTY IS FREE OF STRUCTURAL DEFECTS AND ALL IMPROVEMENTS, INCLUDING
THE BUILDING SYSTEMS CONTAINED THEREIN ARE IN GOOD WORKING ORDER SUBJECT TO
ORDINARY WEAR AND TEAR.

 

(M)                               SECURITY DEPOSITS.  BORROWER AND THE MANAGER
ARE IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL LEGAL REQUIREMENTS RELATING
TO ALL SECURITY DEPOSITS WITH RESPECT TO EACH MORTGAGED PROPERTY.

 

(N)                                 INTELLECTUAL PROPERTY.  ALL MATERIAL
INTELLECTUAL PROPERTY THAT BORROWER OWNS OR HAS PENDING, OR UNDER WHICH IT IS
LICENSED, ARE IN GOOD STANDING AND UNCONTESTED.  THERE

 

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IS NO RIGHT UNDER ANY INTELLECTUAL PROPERTY NECESSARY TO THE BUSINESS OF
BORROWER AS PRESENTLY CONDUCTED OR AS BORROWER CONTEMPLATES CONDUCTING ITS
BUSINESS.  BORROWER HAS NOT INFRINGED, IS NOT INFRINGING, AND HAS NOT RECEIVED
NOTICE OF INFRINGEMENT WITH RESPECT TO ASSERTED INTELLECTUAL PROPERTY OF
OTHERS.  THERE IS NO INFRINGEMENT BY OTHERS OF MATERIAL INTELLECTUAL PROPERTY OF
BORROWER.

 

(O)                                 NO ENCROACHMENTS.  EXCEPT AS SHOWN ON THE
SURVEY, TO THE BEST KNOWLEDGE OF BORROWER, (I) ALL OF THE IMPROVEMENTS WHICH
WERE INCLUDED IN DETERMINING THE APPRAISED VALUE OF EACH MORTGAGED PROPERTY LIE
WHOLLY WITHIN THE BOUNDARIES AND BUILDING RESTRICTION LINES OF EACH MORTGAGED
PROPERTY, (II) NO IMPROVEMENTS ON ADJOINING PROPERTIES ENCROACH UPON ANY
MORTGAGED PROPERTY, (III) NO IMPROVEMENTS ENCROACH UPON ANY EASEMENTS OR OTHER
ENCUMBRANCES AFFECTING THE MORTGAGED PROPERTY, AND (IV) ALL OF THE IMPROVEMENTS
COMPLY WITH ALL MATERIAL REQUIREMENTS OF ANY APPLICABLE ZONING AND SUBDIVISION
LAWS AND ORDINANCES.

 

(P)                                 MANAGEMENT AGREEMENT.  THE MANAGEMENT
AGREEMENT IS IN FULL FORCE AND EFFECT.  THERE IS NO DEFAULT, BREACH OR VIOLATION
EXISTING THEREUNDER BY BORROWER OR, TO THE BEST KNOWLEDGE OF BORROWER, ANY OTHER
PARTY THERETO AND NO EVENT (OTHER THAN PAYMENTS DUE BUT NOT YET DELINQUENT)
WHICH, WITH THE PASSAGE OF TIME OR WITH NOTICE AND THE EXPIRATION OF ANY GRACE
OR CURE PERIOD, WOULD CONSTITUTE A DEFAULT, BREACH OR VIOLATION BY BORROWER OR,
TO THE BEST KNOWLEDGE OF BORROWER, ANY OTHER PARTY THEREUNDER OR ENTITLE
BORROWER OR, TO THE BEST KNOWLEDGE OF BORROWER, ANY OTHER PARTY THERETO TO
TERMINATE ANY SUCH AGREEMENT.

 

(Q)                                 LEASES.  NO MORTGAGED PROPERTY IS SUBJECT TO
ANY LEASES OTHER THAN THE LEASES DESCRIBED IN THE RENT ROLLS DELIVERED TO LENDER
IN CONNECTION WITH THE MAKING OF THE LOAN.  NO PERSON HAS ANY POSSESSORY
INTEREST IN ANY MORTGAGED PROPERTY OR RIGHT TO OCCUPY THE SAME EXCEPT UNDER AND
PURSUANT TO THE PROVISIONS OF THE LEASES.  THE CURRENT LEASES ARE IN FULL FORCE
AND EFFECT AND, EXCEPT AS SET FORTH ON THE RENT ROLLS DELIVERED TO LENDER IN
CONNECTION WITH THE MAKING OF THE LOAN, OR AS DISCLOSED ON SCHEDULE 4, THERE ARE
NO MONETARY OR OTHER MATERIAL DEFAULTS THEREUNDER BY EITHER PARTY AND NO
CONDITIONS WHICH WITH THE PASSAGE OF TIME AND/OR NOTICE WOULD CONSTITUTE
MONETARY OR OTHER MATERIAL DEFAULTS THEREUNDER.  EXCEPT AS DISCLOSED ON SCHEDULE
4, NO PORTION OF THE MORTGAGED PROPERTY IS LEASED TO OR OCCUPIED BY ANY
AFFILIATE OF BORROWER.  EXCEPT AS DISCLOSED ON SCHEDULE 4, ALL LEASES AT EACH
MORTGAGED PROPERTY CONSIST SOLELY OF LEASES OF HOMESITES AND RELATED COMMON
AREAS, AND NOT OF OTHER PORTIONS OF THE MORTGAGED PROPERTY.  EXCEPT AS DISCLOSED
ON SCHEDULE 4, BORROWER DOES NOT OWN ANY MANUFACTURED HOMES OR MOBILE HOMES,
WHETHER OR NOT LOCATED AT THE MORTGAGED PROPERTY.  NO MATERIAL TERMINATION
PAYMENTS OR FEES ARE DUE IN THE EVENT BORROWER CANCELS OR TERMINATES ANY
COMMERCIAL LEASES TO WHICH IT IS A PARTY.

 

SECTION 4.3.                                   SURVIVAL OF REPRESENTATIONS. 
BORROWER AGREES THAT (I) ALL OF THE REPRESENTATIONS AND WARRANTIES OF BORROWER
SET FORTH IN SECTION 4.1 AND 4.2 AND IN THE OTHER LOAN DOCUMENTS DELIVERED ON
THE CLOSING DATE ARE MADE AS OF THE CLOSING DATE, AND (II) ALL REPRESENTATIONS
AND WARRANTIES MADE BY BORROWER SHALL SURVIVE THE DELIVERY OF THE NOTE AND
MAKING OF THE LOAN AND CONTINUE FOR SO LONG AS ANY AMOUNT REMAINS OWING TO
LENDER UNDER THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, HOWEVER, THAT THE REPRESENTATIONS SET FORTH IN SECTION 4.2(E) SHALL
SURVIVE FOR FIVE (5) YEARS FOLLOWING REPAYMENT OF THE INDEBTEDNESS.  ALL
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS MADE IN THIS

 

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AGREEMENT OR IN THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO HAVE BEEN RELIED
UPON BY LENDER NOTWITHSTANDING ANY INVESTIGATION HERETOFORE OR HEREAFTER MADE BY
LENDER OR ON LENDER’S BEHALF.

 

ARTICLE V.
AFFIRMATIVE COVENANTS

 

SECTION 5.1.                                   AFFIRMATIVE COVENANTS.  BORROWER
COVENANTS AND AGREES THAT, FROM THE DATE HEREOF AND UNTIL PAYMENT IN FULL OF THE
INDEBTEDNESS:

 

(A)                                  EXISTENCE; COMPLIANCE WITH LEGAL
REQUIREMENTS: INSURANCE.  BORROWER SHALL DO OR CAUSE TO BE DONE ALL THINGS
NECESSARY TO PRESERVE, RENEW AND KEEP IN FULL FORCE AND EFFECT ITS EXISTENCE AS
A LIMITED LIABILITY COMPANY, AND ANY RIGHTS, LICENSES, PERMITS AND FRANCHISES
NECESSARY FOR THE CONDUCT OF ITS BUSINESS AND WILL COMPLY WITH ALL LEGAL
REQUIREMENTS AND INSURANCE REQUIREMENTS APPLICABLE TO IT AND TO EACH MORTGAGED
PROPERTY IN ALL MATERIAL RESPECTS.  BORROWER SHALL AT ALL TIMES MAINTAIN,
PRESERVE AND PROTECT ALL FRANCHISES AND TRADE NAMES AND PRESERVE ALL THE
REMAINDER OF ITS PROPERTY NECESSARY FOR THE CONTINUED CONDUCT OF ITS BUSINESS
AND KEEP THE MORTGAGED PROPERTY IN GOOD REPAIR, WORKING ORDER AND CONDITION,
EXCEPT FOR REASONABLE WEAR AND USE (AND EXCEPT FOR CASUALTY LOSSES AS TO WHICH
OTHER PROVISIONS HEREOF SHALL GOVERN), AND FROM TIME TO TIME MAKE, OR CAUSE TO
BE MADE, ALL REASONABLY NECESSARY REPAIRS, RENEWALS, REPLACEMENTS, BETTERMENTS
AND IMPROVEMENTS THERETO.

 

(B)                                 BASIC CARRYING COSTS AND OTHER CLAIMS;
CONTEST.

 

(I)                                     SUBJECT TO BORROWER’S CONTEST RIGHTS SET
FORTH IN SECTION 5.1(B)(II) BELOW, BORROWER WILL PAY WHEN DUE (A) ALL BASIC
CARRYING COSTS WITH RESPECT TO BORROWER AND THE MORTGAGED PROPERTY; (B) ALL
CLAIMS (INCLUDING CLAIMS FOR LABOR, SERVICES, MATERIALS AND SUPPLIES) FOR SUMS
THAT HAVE BECOME DUE AND PAYABLE AND THAT BY LAW HAVE OR MAY BECOME A LIEN UPON
ANY OF THE MORTGAGED PROPERTY OR ITS OTHER PROPERTIES OR ASSETS (HEREINAFTER
REFERRED TO AS THE “LIEN CLAIMS”); AND (C) ALL FEDERAL, STATE AND LOCAL INCOME
TAXES, SALES TAXES, EXCISE TAXES AND ALL OTHER TAXES AND ASSESSMENTS OF BORROWER
ON ITS BUSINESS, INCOME OR ASSETS; IN EACH INSTANCE BEFORE ANY PENALTY OR FINE
IS INCURRED WITH RESPECT THERETO.  BORROWER’S OBLIGATION TO PAY BASIC CARRYING
COSTS PURSUANT TO THIS AGREEMENT SHALL INCLUDE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, IMPOSITIONS RESULTING FROM FUTURE CHANGES IN LAW WHICH IMPOSE
UPON LENDER AN OBLIGATION TO PAY ANY PROPERTY TAXES ON THE MORTGAGED PROPERTY OR
OTHER IMPOSITIONS.

 

(II)                                  BORROWER SHALL NOT BE REQUIRED TO PAY,
DISCHARGE OR REMOVE ANY IMPOSITION OR LIEN CLAIM SO LONG AS BORROWER CONTESTS IN
GOOD FAITH SUCH IMPOSITION OR LIEN CLAIM OR THE VALIDITY, APPLICABILITY OR
AMOUNT THEREOF BY AN APPROPRIATE LEGAL PROCEEDING WHICH OPERATES TO PREVENT THE
COLLECTION OF SUCH AMOUNTS AND THE SALE OF THE APPLICABLE MORTGAGED PROPERTY OR
ANY PORTION THEREOF, SO LONG AS:

 

(A)                              THE INDEBTEDNESS SHALL NOT HAVE BEEN
ACCELERATED, IF AN EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING;

 

(B)                                PRIOR TO THE DATE ON WHICH SUCH IMPOSITION OR
LIEN CLAIM WOULD OTHERWISE HAVE BECOME DELINQUENT, BORROWER SHALL HAVE GIVEN
LENDER PRIOR WRITTEN NOTICE OF ITS INTENT TO CONTEST SAID IMPOSITION OR LIEN
CLAIM DEPOSITED WITH

 

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LENDER (OR WITH A COURT OF COMPETENT JURISDICTION OR OTHER APPROPRIATE BODY
APPROVED BY LENDER) SUCH ADDITIONAL AMOUNTS AS ARE NECESSARY TO KEEP ON DEPOSIT
AT ALL TIMES, AN AMOUNT EQUAL TO AT LEAST ONE HUNDRED TWENTY FIVE PERCENT (125%)
(OR SUCH HIGHER AMOUNT AS MAY BE REQUIRED BY APPLICABLE LAW) OF THE TOTAL OF (X)
THE BALANCE OF SUCH IMPOSITION OR LIEN CLAIM THEN REMAINING UNPAID, AND (Y) ALL
INTEREST, PENALTIES, COSTS AND CHARGES ACCRUED OR ACCUMULATED THEREON, TOGETHER
WITH SUCH OTHER SECURITY AS MAY BE REQUIRED IN THE PROCEEDING, OR AS MAY BE
REQUIRED BY LENDER, TO INSURE THE PAYMENT OF ANY SUCH IMPOSITION OR LIEN CLAIM
AND ALL INTEREST AND PENALTIES THEREON; PROVIDED, THAT NOTWITHSTANDING THE
FOREGOING, WITH RESPECT TO IMPOSITIONS OR LIEN CLAIMS IN AN AMOUNT NOT IN EXCESS
OF $100,000, BORROWER SHALL NOT BE REQUIRED TO DEPOSIT SUCH AMOUNTS WITH THE
LENDER, SO LONG AS BORROWER DEMONSTRATES TO THE REASONABLE SATISFACTION OF THE
LENDER THAT BORROWER HAS OTHERWISE RESERVED SUCH FUNDS OR SUCH FUNDS ARE
OTHERWISE AVAILABLE TO THE BORROWER;

 

(C)                                NO RISK OF SALE, FORFEITURE OR LOSS OF ANY
INTEREST IN THE MORTGAGED PROPERTY OR ANY PART THEREOF ARISES, IN LENDER’S
JUDGMENT, DURING THE PENDENCY OF SUCH CONTEST;

 

(D)                               SUCH CONTEST DOES NOT, IN LENDER’S
DETERMINATION, HAVE A MATERIAL ADVERSE EFFECT;

 

(E)                                 SUCH CONTEST IS BASED ON BONA FIDE,
MATERIAL, AND REASONABLE CLAIMS OR DEFENSES;

 

(F)                                 SUCH PROCEEDING SHALL BE PERMITTED UNDER AND
BE CONDUCTED IN ACCORDANCE WITH THE PROVISIONS OF ANY OTHER INSTRUMENT TO WHICH
BORROWER IS SUBJECT AND SHALL NOT CONSTITUTE A DEFAULT THEREUNDER AND SUCH
PROCEEDING SHALL BE CONDUCTED IN ACCORDANCE WITH ALL APPLICABLE STATUTES, LAWS
AND ORDINANCES; AND

 

(G)                                BORROWER SHALL HAVE OBTAINED SUCH
ENDORSEMENTS TO THE TITLE INSURANCE POLICY WITH RESPECT TO SUCH IMPOSITION OR
LIEN CLAIM AS LENDER MAY REQUIRE (OR ESCROWED WITH A TITLE INSURANCE COMPANY
FUNDS SUFFICIENT TO OBTAIN SUCH ENDORSEMENTS PURSUANT TO ESCROW ARRANGEMENTS
REASONABLY SATISFACTORY TO LENDER).

 

Any such contest shall be prosecuted with due diligence, and Borrower shall
promptly pay the amount of such Imposition or Lien Claim as finally determined,
together with all interest and penalties payable in connection therewith. 
Lender shall have full power and authority, but no obligation, to apply any
amount deposited with Lender under this subsection to the payment of any unpaid
Imposition or Lien Claim to prevent the sale or forfeiture of the Mortgaged
Property for non-payment thereof, if Lender reasonably believes that such sale
or forfeiture is threatened.  Any surplus retained by Lender after payment of
the Imposition or Lien Claim for which a deposit was made shall be promptly
repaid to Borrower unless an Event of Default shall have occurred, in which case
said surplus may be retained by Lender to be applied as Lender, in its sole and
absolute discretion, may elect.

 

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(C)                                  LITIGATION.  BORROWER SHALL GIVE PROMPT
WRITTEN NOTICE TO LENDER OF ANY MATERIAL LITIGATION OR GOVERNMENTAL PROCEEDINGS
PENDING OR THREATENED (IN WRITING) AGAINST BORROWER, OR THE MORTGAGED PROPERTY,
OTHER THAN PERSONAL INJURY LITIGATION WHICH IS COVERED BY INSURANCE, EVICTION
MATTERS WITH RESPECT TO TENANTS OR OCCUPANTS (IN WHICH NO COUNTERCLAIMS FOR
MATERIAL DAMAGES OR LIABILITIES ARE MADE AGAINST BORROWER), AND MATTERS RELATED
TO ENFORCEMENT OF BUILDING OR ZONING CODES (AS LONG AS THE MORTGAGED PROPERTY IS
IN MATERIAL COMPLIANCE WITH SUCH BUILDING AND ZONING CODES).

 

(D)                                 ENVIRONMENTAL REMEDIATION.

 

(I)                                     IF ANY INVESTIGATION, SITE MONITORING,
CLEANUP, REMOVAL, RESTORATION OR OTHER REMEDIAL WORK OF ANY KIND OR NATURE IS
REQUIRED PURSUANT TO AN ORDER OR DIRECTIVE OF ANY GOVERNMENTAL AUTHORITY OR
UNDER ANY APPLICABLE ENVIRONMENTAL LAW, BECAUSE OF OR IN CONNECTION WITH THE
CURRENT OR FUTURE PRESENCE, SUSPECTED PRESENCE, RELEASE OR SUSPECTED RELEASE OF
A HAZARDOUS SUBSTANCE ON, UNDER OR FROM ANY MORTGAGED PROPERTY OR ANY PORTION
THEREOF (COLLECTIVELY, THE “REMEDIAL WORK”), BORROWER SHALL PROMPTLY COMMENCE
AND DILIGENTLY PROSECUTE TO COMPLETION ALL SUCH REMEDIAL WORK, AND SHALL CONDUCT
SUCH REMEDIAL WORK IN ACCORDANCE WITH THE NATIONAL CONTINGENCY PLAN PROMULGATED
UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT,
42 U.S.C. § 9601 ET SEQ. (“CERCLA”), IF APPLICABLE, AND IN ACCORDANCE WITH OTHER
APPLICABLE ENVIRONMENTAL LAWS.  IN ALL EVENTS, SUCH REMEDIAL WORK SHALL BE
COMMENCED WITHIN SUCH PERIOD OF TIME AS REQUIRED UNDER ANY APPLICABLE
ENVIRONMENTAL LAW.  IF ANY FUNGUS, MOLD, MILDEW OR OTHER BIOLOGICAL AGENT IS
PRESENT AT ANY MORTGAGED PROPERTY IN A MANNER OR AT A LEVEL THAT IS REASONABLY
LIKELY TO MATERIALLY ADVERSELY AFFECT THE VALUE OR UTILITY OF SUCH MORTGAGED
PROPERTY OR THAT POSES A SIGNIFICANT HEALTH RISK, THE BORROWER SHALL PROMPTLY
COMMENCE AND DILIGENTLY PROSECUTE TO COMPLETION THE REMEDIATION OF SUCH
CONDITION TO THE REASONABLE SATISFACTION OF THE LENDER OR ITS SERVICER.

 

(II)                                  IF REQUESTED BY LENDER, ALL REMEDIAL WORK
UNDER CLAUSE (I) ABOVE SHALL BE PERFORMED BY CONTRACTORS, AND, IF THE WORK IS
REASONABLY ANTICIPATED TO COST IN EXCESS OF $75,000, UNDER THE SUPERVISION OF A
CONSULTING ENGINEER, EACH APPROVED IN ADVANCE BY LENDER WHICH APPROVAL SHALL NOT
BE UNREASONABLY WITHHELD OR DELAYED.  BORROWER SHALL PAY ALL COSTS AND EXPENSES
REASONABLY INCURRED IN CONNECTION WITH SUCH REMEDIAL WORK.  IF BORROWER DOES NOT
TIMELY COMMENCE AND DILIGENTLY PROSECUTE TO COMPLETION THE REMEDIAL WORK, LENDER
MAY (BUT SHALL NOT BE OBLIGATED TO), UPON 10 DAYS PRIOR WRITTEN NOTICE TO
BORROWER OF ITS INTENTION TO DO SO, CAUSE SUCH REMEDIAL WORK TO BE PERFORMED. 
BORROWER SHALL PAY OR REIMBURSE LENDER ON DEMAND FOR ALL EXPENSES (INCLUDING
REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS, BUT EXCLUDING INTERNAL OVERHEAD,
ADMINISTRATIVE AND SIMILAR COSTS OF LENDER) REASONABLY RELATING TO OR INCURRED
BY LENDER IN CONNECTION WITH MONITORING, REVIEWING OR PERFORMING ANY REMEDIAL
WORK IN ACCORDANCE HEREWITH.

 

(III)                               BORROWER SHALL NOT COMMENCE ANY REMEDIAL
WORK UNDER CLAUSE (I) ABOVE, NOR ENTER INTO ANY SETTLEMENT AGREEMENT, CONSENT
DECREE OR OTHER COMPROMISE RELATING TO ANY HAZARDOUS SUBSTANCES OR ENVIRONMENTAL
LAWS WITHOUT PROVIDING NOTICE TO LENDER AS PROVIDED IN SECTION 5.1(F). 
NOTWITHSTANDING THE FOREGOING, IF THE PRESENCE OR THREATENED

 

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PRESENCE OF HAZARDOUS SUBSTANCES ON, UNDER, ABOUT OR EMANATING FROM THE
MORTGAGED PROPERTY POSES AN IMMEDIATE THREAT TO THE HEALTH, SAFETY OR WELFARE OF
ANY PERSON OR THE ENVIRONMENT, OR IS OF SUCH A NATURE THAT AN IMMEDIATE RESPONSE
IS NECESSARY OR REQUIRED UNDER APPLICABLE ENVIRONMENTAL LAW, BORROWER MAY
COMPLETE ALL NECESSARY REMEDIAL WORK.  IN SUCH EVENTS, BORROWER SHALL NOTIFY
LENDER AS SOON AS PRACTICABLE AND, IN ANY EVENT, WITHIN THREE (3) BUSINESS DAYS,
OF ANY ACTION TAKEN.

 

(IV)                              IN THE EVENT THE ENVIRONMENTAL REPORT
RECOMMENDS THE DEVELOPMENT OF AN OPERATION AND MAINTENANCE PROGRAM FOR ANY
RECOGNIZED ENVIRONMENTAL CONDITION AT A MORTGAGED PROPERTY (INCLUDING, WITHOUT
LIMITATION, UNDERGROUND STORAGE TANKS ASBESTOS AND ASBESTOS CONTAINING
MATERIALS, LEAD-BASED PAINTS AND LEAD IN WATER SUPPLIES) (“O & M PROGRAM”),
BORROWER SHALL DEVELOP AN O & M PROGRAM, AS APPROVED BY LENDER, IN LENDER’S SOLE
DISCRETION, AND SHALL, DURING THE TERM OF THE LOAN, COMPLY IN ALL RESPECTS WITH
THE TERMS AND CONDITIONS OF THE O & M PROGRAM.

 

(E)                                  ENVIRONMENTAL MATTERS: INSPECTION.

 

(I)                                     BORROWER SHALL NOT KNOWINGLY PERMIT ANY
HAZARDOUS SUBSTANCES TO BE PRESENT ON OR UNDER OR TO EMANATE FROM THE MORTGAGED
PROPERTY, OR MIGRATE FROM ADJOINING PROPERTY ONTO OR INTO THE MORTGAGED
PROPERTY, EXCEPT UNDER CONDITIONS PERMITTED BY APPLICABLE ENVIRONMENTAL LAWS
AND, IN THE EVENT THAT SUCH HAZARDOUS SUBSTANCES ARE PRESENT ON, UNDER OR
EMANATE FROM THE MORTGAGED PROPERTY, OR MIGRATE ONTO OR INTO THE MORTGAGED
PROPERTY, BORROWER SHALL CAUSE THE REMOVAL OR REMEDIATION OF SUCH HAZARDOUS
SUBSTANCES, IN ACCORDANCE WITH THIS AGREEMENT AND AS REQUIRED BY ENVIRONMENTAL
LAWS (INCLUDING, WHERE APPLICABLE, THE NATIONAL CONTINGENCY PLAN PROMULGATED
PURSUANT TO THE CERCLA), EITHER ON ITS OWN BEHALF OR BY CAUSING A TENANT OR
OTHER PARTY LEGALLY RESPONSIBLE THEREFOR TO PERFORM SUCH REMOVAL AND
REMEDIATION.  BORROWER SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PREVENT, AND
TO SEEK THE REMEDIATION OF, ANY MIGRATION OF HAZARDOUS SUBSTANCES ONTO OR INTO
THE MORTGAGED PROPERTY FROM ANY ADJOINING PROPERTY.

 

(II)                                  UPON REASONABLE PRIOR WRITTEN NOTICE,
LENDER SHALL HAVE THE RIGHT, EXCEPT AS OTHERWISE PROVIDED UNDER LEASES, AT ALL
REASONABLE TIMES DURING NORMAL BUSINESS HOURS TO ENTER UPON AND INSPECT
ENVIRONMENTAL CONDITIONS WITH RESPECT TO ALL OR ANY PORTION OF ANY MORTGAGED
PROPERTY, PROVIDED THAT SUCH INSPECTIONS SHALL NOT UNREASONABLY INTERFERE WITH
THE OPERATION OR THE TENANTS, RESIDENTS OR OCCUPANTS OF ANY MORTGAGED PROPERTY. 
IF LENDER HAS REASONABLE GROUNDS TO SUSPECT THAT REMEDIAL WORK MAY BE REQUIRED,
LENDER SHALL NOTIFY BORROWER AND, THEREAFTER, MAY SELECT A CONSULTING ENGINEER
TO CONDUCT AND PREPARE REPORTS OF SUCH INSPECTIONS (WITH NOTICE TO BORROWER
PRIOR TO THE COMMENCEMENT OF SUCH INSPECTION).  BORROWER SHALL BE GIVEN A
REASONABLE OPPORTUNITY TO REVIEW ANY REPORTS, DATA AND OTHER DOCUMENTS OR
MATERIALS REVIEWED OR PREPARED BY THE ENGINEER, AND TO SUBMIT COMMENTS AND
SUGGESTED REVISIONS OR REBUTTALS TO SAME.  THE INSPECTION RIGHTS GRANTED TO
LENDER IN THIS SECTION 5.1(E) SHALL BE IN ADDITION TO, AND NOT IN LIMITATION OF,
ANY OTHER INSPECTION RIGHTS GRANTED TO LENDER IN THIS AGREEMENT, AND SHALL
EXPRESSLY INCLUDE THE RIGHT (IF LENDER REASONABLY SUSPECTS THAT REMEDIAL WORK
MAY BE REQUIRED) TO CONDUCT SOIL BORINGS, ESTABLISH GROUND WATER MONITORING
WELLS AND CONDUCT OTHER CUSTOMARY ENVIRONMENTAL TESTS, ASSESSMENTS AND AUDITS.

 

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(III)                               BORROWER AGREES TO BEAR AND SHALL PAY OR
REIMBURSE LENDER ON DEMAND FOR ALL SUMS ADVANCED AND REASONABLE EXPENSES
INCURRED (INCLUDING REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS, BUT EXCLUDING
INTERNAL OVERHEAD, ADMINISTRATIVE AND SIMILAR COSTS OF LENDER) REASONABLY
RELATING TO, OR INCURRED BY LENDER IN CONNECTION WITH, THE INSPECTIONS AND
REPORTS DESCRIBED IN THIS SECTION 5.1(E) (TO THE EXTENT SUCH INSPECTIONS AND
REPORTS RELATE TO ANY MORTGAGED PROPERTY) IN THE FOLLOWING SITUATIONS:

 

(x)                                   If Lender has reasonable grounds to
believe, at the time any such inspection is ordered, that there exists an
occurrence or condition that could lead to a material Environmental Claim;

 

(y)                                 If any such inspection reveals an occurrence
or condition that is reasonably likely to lead to a material Environmental Claim
with respect to such Mortgaged Property; or

 

(z)                                   If an Event of Default with respect to
such Mortgaged Property exists at the time any such inspection is ordered, and
such Event of Default relates to any representation, covenant or other
obligation pertaining to Hazardous Substances, Environmental Laws or any other
environmental matter.

 

(F)                                    ENVIRONMENTAL NOTICES.  BORROWER SHALL
PROMPTLY PROVIDE NOTICE TO LENDER OF:

 

(I)                                     A MATERIAL ENVIRONMENTAL CLAIM ASSERTED
BY ANY GOVERNMENTAL AUTHORITY WITH RESPECT TO ANY HAZARDOUS SUBSTANCE ON, IN,
UNDER OR EMANATING FROM ANY MORTGAGED PROPERTY;

 

(II)                                  ANY PROCEEDING, INVESTIGATION OR INQUIRY
COMMENCED OR THREATENED IN WRITING BY ANY GOVERNMENTAL AUTHORITY, AGAINST
BORROWER, ANY AFFILIATE OF BORROWER OR WITH RESPECT TO ANY MORTGAGED PROPERTY
CONCERNING THE PRESENCE, SUSPECTED PRESENCE, RELEASE OR THREATENED RELEASE OF
HAZARDOUS SUBSTANCES FROM OR ONTO, IN OR UNDER ANY PROPERTY NOT OWNED BY
BORROWER (INCLUDING, WITHOUT LIMITATION, PROCEEDINGS UNDER THE CERCLA;

 

(III)                               A MATERIAL ENVIRONMENTAL CLAIMS ASSERTED OR
THREATENED AGAINST BORROWER, AGAINST ANY OTHER PARTY OCCUPYING ANY MORTGAGED
PROPERTY OR ANY PORTION THEREOF WHICH BECOME KNOWN TO BORROWER OR AGAINST ANY
MORTGAGED PROPERTY;

 

(IV)                              THE DISCOVERY BY BORROWER OF A MATERIAL
OCCURRENCE OR CONDITION GIVING RISE TO AN OBLIGATION OF THE BORROWER TO THE
LENDER HEREUNDER ON ANY MORTGAGED PROPERTY OR ON ANY REAL PROPERTY ADJOINING OR
IN THE VICINITY OF ANY MORTGAGED PROPERTY;

 

(V)                                 THE COMMENCEMENT OR COMPLETION OF ANY
REMEDIAL WORK; AND

 

(VI)                              ANY OF THE FOREGOING CLAUSES (I) - (V) AS TO
WHICH A TENANT NOTIFIES BORROWER UNDER A LEASE WITH RESPECT TO SUCH TENANT.

 

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(G)                                 COPIES OF NOTICES.  BORROWER SHALL TRANSMIT
TO LENDER COPIES OF ANY CITATIONS, ORDERS, NOTICES OR OTHER WRITTEN
COMMUNICATIONS RECEIVED FROM ANY PERSON AND ANY NOTICES, REPORTS OR OTHER
WRITTEN COMMUNICATIONS SUBMITTED TO ANY GOVERNMENTAL AUTHORITY WITH RESPECT TO
THE MATTERS DESCRIBED IN SECTION 5.1(F).

 

(H)                                 ENVIRONMENTAL CLAIMS.  LENDER MAY JOIN AND
PARTICIPATE IN, AS A PARTY IF LENDER SO DETERMINES, ANY LEGAL OR ADMINISTRATIVE
PROCEEDING OR ACTION CONCERNING THE MORTGAGED PROPERTY OR ANY PORTION THEREOF
UNDER ANY ENVIRONMENTAL LAW, IF, IN LENDER’S REASONABLE JUDGMENT, THE INTERESTS
OF LENDER SHALL NOT BE ADEQUATELY PROTECTED BY BORROWER; PROVIDED, HOWEVER, THAT
LENDER SHALL NOT PARTICIPATE IN DAY-TO-DAY DECISION MAKING WITH RESPECT TO
ENVIRONMENTAL COMPLIANCE.  BORROWER SHALL PAY OR REIMBURSE LENDER ON DEMAND FOR
ALL REASONABLE SUMS ADVANCED AND REASONABLE EXPENSES INCURRED (INCLUDING
REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS, BUT EXCLUDING INTERNAL OVERHEAD,
ADMINISTRATIVE AND SIMILAR COSTS OF LENDER) BY LENDER IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING.

 

(I)                                     ENVIRONMENTAL INDEMNIFICATION.  BORROWER
SHALL INDEMNIFY, REIMBURSE, DEFEND, AND HOLD HARMLESS LENDER, AND EACH OF ITS
RESPECTIVE PARENTS, SUBSIDIARIES, AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS,
EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, ASSIGNS AND ATTORNEYS
(COLLECTIVELY, THE “INDEMNIFIED PARTIES”) FOR, FROM, AND AGAINST ALL DEMANDS,
CLAIMS, ACTIONS OR CAUSES OF ACTION, ASSESSMENTS, LOSSES, DAMAGES, LIABILITIES,
COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, INTEREST, PENALTIES,
REASONABLE ATTORNEYS’ FEES, DISBURSEMENTS AND EXPENSES, AND REASONABLE
CONSULTANTS’ FEES, DISBURSEMENTS AND EXPENSES (BUT EXCLUDING INTERNAL OVERHEAD,
ADMINISTRATIVE, LOST OPPORTUNITY AND SIMILAR COSTS OF LENDER)), ASSERTED
AGAINST, RESULTING TO, IMPOSED ON, OR INCURRED BY ANY INDEMNIFIED PARTY,
DIRECTLY OR INDIRECTLY, IN CONNECTION WITH ANY OF THE FOLLOWING (EXCEPT TO THE
EXTENT SAME ARE DIRECTLY AND SOLELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PARTY):

 

(I)                                     EVENTS, CIRCUMSTANCES, OR CONDITIONS
WHICH FORM THE REASONABLE BASIS FOR AN ENVIRONMENTAL CLAIM;

 

(II)                                  ANY POLLUTION OR THREAT TO HUMAN HEALTH OR
THE ENVIRONMENT THAT IS RELATED IN ANY WAY TO BORROWER’S OR ANY PREVIOUS OWNER’S
OR OPERATOR’S MANAGEMENT, USE, CONTROL, OWNERSHIP OR OPERATION OF ANY MORTGAGED
PROPERTY (INCLUDING, WITHOUT LIMITATION, ALL ON-SITE AND OFF-SITE ACTIVITIES
INVOLVING HAZARDOUS SUBSTANCES), AND WHETHER OCCURRING, EXISTING OR ARISING
PRIOR TO OR FROM AND AFTER THE DATE HEREOF, AND WHETHER OR NOT THE POLLUTION OR
THREAT TO HUMAN HEALTH OR THE ENVIRONMENT IS DESCRIBED IN THE ENVIRONMENTAL
REPORTS;

 

(III)                               ANY ENVIRONMENTAL CLAIM AGAINST ANY PERSON
WHOSE LIABILITY FOR SUCH ENVIRONMENTAL CLAIM BORROWER HAS OR MAY HAVE ASSUMED OR
RETAINED EITHER CONTRACTUALLY OR BY OPERATION OF LAW; OR

 

(IV)                              THE BREACH OF ANY REPRESENTATION, WARRANTY OR
COVENANT SET FORTH IN SECTION 4.2(E) AND SECTIONS 5.1(D) THROUGH 5.1(I),
INCLUSIVE.

 

The provisions of and undertakings and indemnification set forth in this Section
5.1(i) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.

 

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(J)                                     GENERAL INDEMNITY.

 

(I)                                     BORROWER SHALL, AT ITS SOLE COST AND
EXPENSE, PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS THE INDEMNIFIED
PARTIES FOR, FROM AND AGAINST ANY AND ALL CLAIMS, SUITS, LIABILITIES (INCLUDING,
WITHOUT LIMITATION, STRICT LIABILITIES), ADMINISTRATIVE AND JUDICIAL ACTIONS AND
PROCEEDINGS, OBLIGATIONS, DEBTS, DAMAGES, LOSSES, COSTS, EXPENSES, FINES,
PENALTIES, CHARGES, FEES, EXPENSES, JUDGMENTS, AWARDS, AMOUNTS PAID IN
SETTLEMENT, AND LITIGATION COSTS, OF WHATEVER KIND OR NATURE AND WHETHER OR NOT
INCURRED IN CONNECTION WITH ANY JUDICIAL OR ADMINISTRATIVE PROCEEDINGS
(INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS’ FEES AND OTHER REASONABLE
COSTS OF DEFENSE) (THE “LOSSES”) IMPOSED UPON OR INCURRED BY OR ASSERTED AGAINST
ANY INDEMNIFIED PARTIES (EXCEPT AS TO ANY INDEMNIFIED PARTY TO THE EXTENT SAME
ARE DIRECTLY AND SOLELY CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNIFIED PARTY) AND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY
RELATING TO ANY ONE OR MORE OF THE FOLLOWING:

 

(A)                              OWNERSHIP OF THE NOTE OR ANY OF THE OTHER LOAN
DOCUMENTS OR OTHERWISE RELATED TO THE MORTGAGED PROPERTY OR ANY INTEREST THEREIN
OR RECEIPT OF ANY RENTS OR ACCOUNTS;

 

(B)                                ANY UNTRUE STATEMENT OF ANY MATERIAL FACT
CONTAINED IN ANY INFORMATION CONCERNING BORROWER, THE MORTGAGED PROPERTY OR THE
LOAN OR THE OMISSION TO STATE THEREIN A MATERIAL FACT REQUIRED TO BE STATED IN
SUCH INFORMATION OR NECESSARY IN ORDER TO MAKE THE STATEMENTS IN SUCH
INFORMATION OR IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE NOT
MISLEADING;

 

(C)                                ANY AND ALL LAWFUL ACTION THAT MAY BE TAKEN
AND IS TAKEN BY THE LENDER IN CONNECTION WITH THE ENFORCEMENT OF THE PROVISIONS
OF THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER OR NOT
SUIT IS FILED IN CONNECTION WITH SAME, OR IN CONNECTION WITH BORROWER OR ANY
AFFILIATE OF BORROWER BECOMING A PARTY TO A VOLUNTARY OR INVOLUNTARY FEDERAL OR
STATE BANKRUPTCY, INSOLVENCY OR SIMILAR PROCEEDING;

 

(D)                               ANY ACCIDENT, INJURY TO OR DEATH OF PERSONS OR
LOSS OF OR DAMAGE TO PROPERTY OCCURRING IN, ON OR ABOUT ANY MORTGAGED PROPERTY
OR ANY PART THEREOF OR ON THE ADJOINING SIDEWALKS, CURBS, ADJACENT PROPERTY OR
ADJACENT PARKING AREAS, STREETS OR WAYS;

 

(E)                                 ANY USE, NONUSE OR CONDITION IN, ON OR ABOUT
THE MORTGAGED PROPERTY OR ANY PART THEREOF OR ON THE ADJOINING SIDEWALKS, CURBS,
ADJACENT PROPERTY OR ADJACENT PARKING AREAS, STREETS OR WAYS;

 

(F)                                 ANY FAILURE ON THE PART OF BORROWER TO
PERFORM OR BE IN COMPLIANCE WITH ANY OF THE TERMS OF THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS;

 

(G)                                PERFORMANCE OF ANY LABOR OR SERVICES OR THE
FURNISHING OF ANY MATERIALS OR OTHER PROPERTY IN RESPECT OF THE MORTGAGED
PROPERTY OR ANY PART THEREOF PURSUANT TO PROVISIONS OF THIS AGREEMENT;

 

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(H)                               THE FAILURE OF BORROWER TO FILE TIMELY WITH
THE INTERNAL REVENUE SERVICE AN ACCURATE FORM 1099-B, STATEMENT FOR RECIPIENTS
OF PROCEEDS FROM REAL ESTATE, BROKER AND BARTER EXCHANGE TRANSACTIONS, WHICH MAY
BE REQUIRED IN CONNECTION WITH THIS AGREEMENT;

 

(I)                                    ANY FAILURE OF THE MORTGAGED PROPERTY TO
BE IN COMPLIANCE WITH ANY LEGAL REQUIREMENT;

 

(J)                                   THE ENFORCEMENT BY ANY INDEMNIFIED PARTY
OF THE PROVISIONS OF THIS SECTION 5.1(J); AND

 

(K)                               ANY AND ALL CLAIMS AND DEMANDS WHATSOEVER
WHICH MAY BE ASSERTED AGAINST LENDER BY REASON OF ANY ALLEGED OBLIGATIONS OR
UNDERTAKINGS ON ITS PART TO PERFORM OR DISCHARGE ANY OF THE TERMS, COVENANTS, OR
AGREEMENTS CONTAINED IN ANY LEASE.

 

Any amounts payable to an Indemnified Party by reason of the application of this
Section 5.1(j)(i) shall become due and payable ten (10) days after written
demand and shall bear interest at the Default Rate from the tenth (10th) day
after demand until paid.

 

(II)                                  BORROWER SHALL, AT ITS SOLE COST AND
EXPENSE, PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS THE INDEMNIFIED
PARTIES FROM AND AGAINST ANY AND ALL LOSSES IMPOSED UPON OR INCURRED BY OR
ASSERTED AGAINST ANY OF THE INDEMNIFIED PARTIES AND DIRECTLY OR INDIRECTLY
ARISING OUT OF OR IN ANY WAY RELATING TO ANY TAX ON THE MAKING AND/OR RECORDING
OF THIS AGREEMENT, THE NOTE OR ANY OF THE OTHER LOAN DOCUMENTS.

 

(III)                               BORROWER SHALL, AT ITS SOLE COST AND
EXPENSE, PROTECT, DEFEND, INDEMNIFY, RELEASE AND HOLD HARMLESS THE INDEMNIFIED
PARTIES FROM AND AGAINST ANY AND ALL LOSSES (INCLUDING, WITHOUT LIMITATION,
REASONABLE ATTORNEYS’ FEES AND COSTS) THAT THE INDEMNIFIED PARTIES MAY INCUR,
DIRECTLY OR INDIRECTLY, AS A RESULT OF A DEFAULT UNDER BORROWER’S COVENANTS WITH
RESPECT TO ERISA AND EMPLOYEE BENEFITS PLANS CONTAINED HEREIN, INCLUDING,
WITHOUT LIMITATION, ANY COSTS OR EXPENSES INCURRED IN THE INVESTIGATION,
DEFENSE, AND SETTLEMENT OF LOSSES INCURRED IN CORRECTING ANY PROHIBITED
TRANSACTION OR IN THE SALE OF A PROHIBITED LOAN, AND IN OBTAINING ANY INDIVIDUAL
PROHIBITED TRANSACTION EXEMPTION UNDER ERISA THAT MAY BE REQUIRED, IN THE
LENDER’S REASONABLE DISCRETION).

 

(IV)                              PROMPTLY AFTER RECEIPT BY AN INDEMNIFIED PARTY
UNDER THIS SECTION 5.1(J) OF NOTICE OF THE MAKING OF ANY CLAIM OR THE
COMMENCEMENT OF ANY ACTION, SUCH INDEMNIFIED PARTY SHALL, IF A CLAIM IN RESPECT
THEREOF IS TO BE MADE BY SUCH INDEMNIFIED PARTY AGAINST BORROWER UNDER THIS
SECTION 5.1(J), NOTIFY BORROWER IN WRITING, BUT THE OMISSION SO TO NOTIFY
BORROWER WILL NOT RELIEVE BORROWER FROM ANY LIABILITY WHICH IT MAY HAVE TO ANY
INDEMNIFIED PARTY UNDER THIS SECTION 5.1(J) OR OTHERWISE.  IN CASE ANY SUCH
CLAIM IS MADE OR ACTION IS BROUGHT AGAINST ANY INDEMNIFIED PARTY AND SUCH
INDEMNIFIED PARTY SEEKS OR INTENDS TO SEEK INDEMNITY FROM BORROWER, BORROWER
WILL BE ENTITLED TO PARTICIPATE IN, AND, TO THE EXTENT THAT IT MAY WISH, TO
ASSUME THE DEFENSE THEREOF WITH COUNSEL REASONABLY SATISFACTORY TO THE
INDEMNIFIED PARTY; AND, UPON RECEIPT OF NOTICE FROM BORROWER TO SUCH INDEMNIFIED
PARTY OF ITS ELECTION SO TO ASSUME THE DEFENSE OF SUCH CLAIM OR ACTION AND

 

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ONLY UPON APPROVAL BY THE INDEMNIFIED PARTY OF SUCH COUNSEL (SUCH APPROVAL NOT
TO BE UNREASONABLY WITHHELD OR DELAYED), BORROWER WILL NOT BE LIABLE TO SUCH
INDEMNIFIED PARTY UNDER THIS SECTION 5.1(J) FOR ANY LEGAL OR OTHER EXPENSES
SUBSEQUENTLY INCURRED BY SUCH INDEMNIFIED PARTY IN CONNECTION WITH THE DEFENSE
THEREOF.  NOTWITHSTANDING THE PRECEDING SENTENCE, EACH INDEMNIFIED PARTY WILL BE
ENTITLED TO EMPLOY COUNSEL SEPARATE FROM SUCH COUNSEL FOR BORROWER AND FROM ANY
OTHER PARTY IN SUCH ACTION IF SUCH INDEMNIFIED PARTY REASONABLY DETERMINES THAT
A CONFLICT OF INTEREST EXISTS WHICH MAKES REPRESENTATION BY COUNSEL CHOSEN BY
BORROWER NOT ADVISABLE.  IN SUCH EVENT, BORROWER SHALL PAY THE REASONABLE FEES
AND DISBURSEMENTS OF SUCH SEPARATE COUNSEL.  BORROWER SHALL NOT, WITHOUT THE
PRIOR WRITTEN CONSENT OF AN INDEMNIFIED PARTY, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD OR DELAYED, SETTLE OR COMPROMISE OR CONSENT TO THE ENTRY
OF ANY JUDGMENT WITH RESPECT TO ANY PENDING OR THREATENED CLAIM, ACTION, SUIT OR
PROCEEDING IN RESPECT OF WHICH INDEMNIFICATION MAY BE SOUGHT HEREUNDER (WHETHER
OR NOT SUCH INDEMNIFIED PARTY IS AN ACTUAL OR POTENTIAL PARTY TO SUCH CLAIM OR
ACTION) UNLESS SUCH SETTLEMENT, COMPROMISE OR CONSENT INCLUDES AN UNCONDITIONAL
RELEASE OF EACH INDEMNIFIED PARTY FROM ALL LIABILITY ARISING OUT OF SUCH CLAIM,
ACTION, SUIT OR PROCEEDING.  EACH INDEMNIFIED PARTY SHALL NOT ENTER INTO A
SETTLEMENT OF OR CONSENT TO THE ENTRY OF ANY JUDGMENT WITH RESPECT TO ANY
ACTION, CLAIM, SUIT OR PROCEEDING AS TO WHICH AN INDEMNIFIED PARTY WOULD BE
ENTITLED TO INDEMNIFICATION HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF
BORROWER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.

 

The provisions of and undertakings and indemnification set forth in this Section
5.1(j) shall survive the satisfaction and payment of the Indebtedness and
termination of this Agreement.

 

(K)                                  ACCESS TO MORTGAGED PROPERTY.  BORROWER
SHALL PERMIT AGENTS, REPRESENTATIVES AND EMPLOYEES OF LENDER TO INSPECT EACH
MORTGAGED PROPERTY OR ANY PART THEREOF AT SUCH REASONABLE TIMES AS MAY BE
REQUESTED BY LENDER UPON REASONABLE ADVANCE WRITTEN NOTICE (EXCEPT DURING AN
EVENT OF DEFAULT), SUBJECT, HOWEVER, TO THE RIGHTS OF BORROWER AND OF THE
TENANTS OF THE MORTGAGED PROPERTY.

 

(L)                                     NOTICE OF DEFAULT.  BORROWER SHALL
PROMPTLY ADVISE LENDER IN WRITING OF ANY CHANGE IN BORROWER’S CONDITION,
FINANCIAL OR OTHERWISE, THAT IS REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE
EFFECT, OR OF THE OCCURRENCE OF ANY DEFAULT OR EVENT OF DEFAULT.

 

(M)                               COOPERATE IN LEGAL PROCEEDINGS.  EXCEPT WITH
RESPECT TO ANY CLAIM BY BORROWER, THE MEMBER OR THE GUARANTOR AGAINST LENDER,
BORROWER SHALL REASONABLY COOPERATE WITH LENDER WITH RESPECT TO ANY PROCEEDINGS
BEFORE ANY GOVERNMENTAL AUTHORITY THAT ARE REASONABLY LIKELY TO IN ANY WAY
MATERIALLY AFFECT THE RIGHTS OF LENDER HEREUNDER OR ANY RIGHTS OBTAINED BY
LENDER UNDER ANY OF THE LOAN DOCUMENTS AND, IN CONNECTION THEREWITH, SHALL NOT
PROHIBIT LENDER, AT ITS ELECTION, FROM PARTICIPATING IN ANY SUCH PROCEEDINGS.

 

(N)                                 PERFORM LOAN DOCUMENTS.  BORROWER SHALL
OBSERVE, PERFORM AND SATISFY ALL THE TERMS, PROVISIONS, COVENANTS AND CONDITIONS
REQUIRED TO BE OBSERVED, PERFORMED OR SATISFIED BY IT, AND SHALL PAY WHEN DUE
ALL COSTS, FEES AND EXPENSES REQUIRED TO BE PAID BY IT, UNDER THE LOAN
DOCUMENTS.

 

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(O)                                 INSURANCE BENEFITS.  BORROWER SHALL
REASONABLY COOPERATE WITH LENDER IN OBTAINING FOR LENDER THE BENEFITS OF ANY
INSURANCE PROCEEDS LAWFULLY OR EQUITABLY PAYABLE TO BORROWER OR LENDER IN
CONNECTION WITH ANY MORTGAGED PROPERTY.  LENDER SHALL BE REIMBURSED FOR ANY
EXPENSES REASONABLY INCURRED IN CONNECTION THEREWITH (INCLUDING REASONABLE
ATTORNEYS’ FEES AND DISBURSEMENTS, BUT EXCLUDING INTERNAL OVERHEAD,
ADMINISTRATIVE AND SIMILAR COSTS OF LENDER) OUT OF SUCH INSURANCE PROCEEDS, ALL
AS MORE SPECIFICALLY PROVIDED IN THIS AGREEMENT.

 

(P)                                 FURTHER ASSURANCES.  BORROWER SHALL, AT
BORROWER’S SOLE COST AND EXPENSE:

 

(I)                                     UPON LENDER’S REASONABLE REQUEST
THEREFOR GIVEN FROM TIME TO TIME, PAY FOR (A) REPORTS OF UCC, TAX LIEN, JUDGMENT
AND LITIGATION SEARCHES WITH RESPECT TO BORROWER, AND (B) SEARCHES OF TITLE TO
THE MORTGAGED PROPERTY, EACH SUCH SEARCH TO BE CONDUCTED BY SEARCH FIRMS
DESIGNATED BY LENDER IN EACH OF THE LOCATIONS DESIGNATED BY LENDER;

 

(II)                                  FURNISH TO LENDER ALL INSTRUMENTS,
DOCUMENTS, CERTIFICATES, TITLE AND OTHER INSURANCE REPORTS AND AGREEMENTS, AND
EACH AND EVERY OTHER DOCUMENT, CERTIFICATE, AGREEMENT AND INSTRUMENT REQUIRED TO
BE FURNISHED PURSUANT TO THE TERMS OF THE LOAN DOCUMENTS;

 

(III)                               EXECUTE AND DELIVER TO LENDER SUCH
DOCUMENTS, INSTRUMENTS, CERTIFICATES, ASSIGNMENTS AND OTHER WRITINGS, AND DO
SUCH OTHER ACTS NECESSARY, TO EVIDENCE, PRESERVE AND/OR PROTECT THE COLLATERAL
AT ANY TIME SECURING OR INTENDED TO SECURE THE NOTE, AS LENDER MAY REASONABLY
REQUIRE (INCLUDING, WITHOUT LIMITATION, TENANT ESTOPPEL CERTIFICATES, AN AMENDED
OR REPLACEMENT MORTGAGES, UCC FINANCING STATEMENTS OR COLLATERAL SECURITY
INSTRUMENTS); AND

 

(IV)                              DO AND EXECUTE ALL AND SUCH FURTHER LAWFUL AND
REASONABLE ACTS, CONVEYANCES AND ASSURANCES FOR THE BETTER AND MORE EFFECTIVE
CARRYING OUT OF THE INTENTS AND PURPOSES OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, AS LENDER SHALL REASONABLY REQUIRE FROM TIME TO TIME.

 

(Q)                                 MANAGEMENT OF MORTGAGED PROPERTY.

 

(I)                                     EACH MORTGAGED PROPERTY SHALL BE MANAGED
AT ALL TIMES BY THE CURRENT MANAGER OR ANOTHER MANAGER REASONABLY SATISFACTORY
TO LENDER, PURSUANT TO A MANAGEMENT AGREEMENT.  ANY SUCH MANAGER MAY BE AN
AFFILIATE OF BORROWER, PROVIDED THAT:  (A) THE TERMS AND CONDITIONS OF SUCH
MANAGER’S ENGAGEMENT ARE AT ARM’S LENGTH, REASONABLE, COMPETITIVE AND CUSTOMARY
IN THE APPLICABLE MARKETPLACE; AND (B) LENDER HAS APPROVED SUCH MANAGER AND SUCH
TERMS, WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  THE
MANAGEMENT AGREEMENT, DATED AS OF THE DATE HEREOF, BETWEEN THE BORROWER AND THE
MANAGER IS DEEMED APPROVED BY LENDER IN ALL RESPECTS.  BORROWER SHALL CAUSE THE
MANAGER OF THE MORTGAGED PROPERTY TO AGREE THAT SUCH MANAGER’S MANAGEMENT
AGREEMENT IS SUBJECT AND SUBORDINATE IN ALL RESPECTS TO THE INDEBTEDNESS AND TO
THE LIEN OF THE MORTGAGES.  A MANAGEMENT AGREEMENT MAY BE TERMINATED OR ASSIGNED
BY THE MANAGER (1) BY BORROWER AT ANY TIME IN ACCORDANCE WITH THE PROVISIONS OF
SUCH MANAGEMENT AGREEMENT SO LONG AS A SUCCESSOR OR ASSIGNEE MANAGER AS
SPECIFIED BELOW SHALL HAVE BEEN APPOINTED AND APPROVED AND SUCH SUCCESSOR
MANAGER HAS (I) ENTERED INTO

 

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(OR ASSUMED) A MANAGEMENT AGREEMENT IN FORM AND SUBSTANCE APPROVED BY LENDER,
WHICH APPROVAL SHALL NOT BE UNREASONABLY DENIED, CONDITIONED OR DELAYED, AND
(II) HAS EXECUTED AND DELIVERED A MANAGER’S SUBORDINATION TO LENDER, AND (2) BY
LENDER UPON THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE TO BORROWER AND THE MANAGER
(A) UPON THE OCCURRENCE AND CONTINUATION OF AN EVENT OF DEFAULT OR (B) IF THE
MANAGER COMMITS ANY ACT WHICH WOULD PERMIT TERMINATION UNDER THE MANAGEMENT
AGREEMENT (SUBJECT TO ANY APPLICABLE NOTICE, GRACE AND CURE PERIODS PROVIDED IN
THE MANAGEMENT AGREEMENT) OR (C) IF A CHANGE OF MAJORITY CONTROL OCCURS WITH
RESPECT TO THE MANAGER.  NOTWITHSTANDING THE FOREGOING, ANY SUCCESSOR MANAGER
SELECTED HEREUNDER BY LENDER OR BORROWER TO MANAGE THE MORTGAGED PROPERTY SHALL
BE A REPUTABLE MANAGEMENT COMPANY HAVING SUBSTANTIAL EXPERIENCE IN THE
MANAGEMENT OF REAL PROPERTY OF A SIMILAR TYPE, SIZE AND QUALITY IN THE STATE IN
WHICH THE MORTGAGED PROPERTY IS LOCATED.  BORROWER MAY FROM TIME TO TIME APPOINT
A SUCCESSOR MANAGER TO MANAGE THE MORTGAGED PROPERTY WITH LENDER’S PRIOR WRITTEN
CONSENT, SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD.  BORROWER ACKNOWLEDGES
AND AGREES THAT ANY CONSENT OR APPROVAL REQUESTED OF LENDER UNDER THIS SECTION
MAY BE CONDITIONED BY LENDER, AT LENDER’S DISCRETION, UPON BORROWER FIRST
OBTAINING A RATING CONFIRMATION WITH RESPECT TO SUCH CHANGE IN MANAGEMENT, AND
LENDER SHALL NOT BE DEEMED TO BE ACTING UNREASONABLY IN REQUIRING SUCH A RATING
CONFIRMATION.  BORROWER FURTHER COVENANTS AND AGREES THAT ANY MANAGER OF
MORTGAGED PROPERTY SHALL AT ALL TIMES WHILE ANY INDEBTEDNESS IS OUTSTANDING
MAINTAIN WORKER’S COMPENSATION INSURANCE AS REQUIRED BY GOVERNMENTAL
AUTHORITIES.

 

(II)                                  BORROWER FURTHER COVENANTS AND AGREES THAT
EACH MORTGAGED PROPERTY SHALL BE OPERATED PURSUANT TO THE MANAGEMENT AGREEMENT
AND THAT BORROWER SHALL:  (W) PROMPTLY PERFORM AND/OR OBSERVE ALL OF THE
MATERIAL COVENANTS AND AGREEMENTS REQUIRED TO BE PERFORMED AND OBSERVED BY IT
UNDER THE MANAGEMENT AGREEMENT AND DO ALL THINGS REASONABLY NECESSARY TO
PRESERVE AND TO KEEP UNIMPAIRED ITS MATERIAL RIGHTS THEREUNDER; (X) PROMPTLY
NOTIFY LENDER OF ANY MATERIAL DEFAULT UNDER THE MANAGEMENT AGREEMENT OF WHICH IT
IS AWARE; (Y) PROMPTLY DELIVER TO LENDER A COPY OF EACH FINANCIAL STATEMENT,
BUSINESS PLAN, CAPITAL EXPENDITURES PLAN, NOTICE AND REPORT RECEIVED BY IT UNDER
THE MANAGEMENT AGREEMENT, INCLUDING, BUT NOT LIMITED TO, FINANCIAL STATEMENTS;
AND (Z) PROMPTLY ENFORCE THE PERFORMANCE AND OBSERVANCE OF THE COVENANTS AND
AGREEMENTS REQUIRED TO BE PERFORMED AND/OR OBSERVED BY THE MANAGER UNDER THE
MANAGEMENT AGREEMENT.

 

(R)                                    FINANCIAL REPORTING.

 

(I)                                     BORROWER SHALL KEEP AND MAINTAIN OR
SHALL CAUSE TO BE KEPT AND MAINTAINED ON A FISCAL YEAR BASIS IN ACCORDANCE WITH
GAAP CONSISTENTLY APPLIED, BOOKS, RECORDS AND ACCOUNTS REFLECTING IN REASONABLE
DETAIL ALL OF THE FINANCIAL AFFAIRS OF BORROWER AND ALL ITEMS OF INCOME AND
EXPENSE IN CONNECTION WITH THE OPERATION OF THE MORTGAGED PROPERTY AND OWNERSHIP
OF THE MORTGAGED PROPERTY AND IN CONNECTION WITH ANY SERVICES, EQUIPMENT OR
FURNISHINGS PROVIDED IN CONNECTION WITH THE OPERATION OF THE MORTGAGED PROPERTY,
WHETHER SUCH INCOME OR EXPENSE MAY BE REALIZED BY BORROWER OR BY ANY OTHER
PERSON WHATSOEVER.  LENDER SHALL HAVE THE RIGHT FROM TIME TO TIME AT ALL TIMES
DURING NORMAL BUSINESS HOURS UPON REASONABLE PRIOR WRITTEN NOTICE TO BORROWER TO
EXAMINE SUCH BOOKS, RECORDS AND ACCOUNTS AT THE OFFICE OF BORROWER OR OTHER
PERSON MAINTAINING SUCH

 

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BOOKS, RECORDS AND ACCOUNTS AND TO MAKE SUCH COPIES OR EXTRACTS THEREOF AS
LENDER SHALL DESIRE.  DURING THE CONTINUATION OF AN EVENT OF DEFAULT (INCLUDING,
WITHOUT LIMITATION, AN EVENT OF DEFAULT RESULTING FROM THE FAILURE OF BORROWER
TO DELIVER ANY OF THE FINANCIAL INFORMATION REQUIRED TO BE DELIVERED PURSUANT TO
THIS SECTION 5.1(R)), BORROWER SHALL PAY ANY REASONABLE COSTS AND EXPENSES
INCURRED BY LENDER TO EXAMINE BORROWER’S ACCOUNTING RECORDS, AS LENDER SHALL
REASONABLY DETERMINE TO BE NECESSARY OR APPROPRIATE IN THE PROTECTION OF
LENDER’S INTEREST.

 

(II)                                  BORROWER SHALL FURNISH TO LENDER ANNUALLY,
WITHIN NINETY (90) DAYS FOLLOWING THE END OF EACH FISCAL YEAR, A COMPLETE COPY
OF BORROWER’S AND GUARANTOR’S FINANCIAL STATEMENTS, EACH AUDITED BY A “BIG FOUR”
ACCOUNTING FIRM OR SUCH OTHER INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT ACCEPTABLE
TO LENDER IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED COVERING BORROWER’S AND
GUARANTOR’S RESPECTIVE FINANCIAL POSITION AND RESULTS OF OPERATIONS, FOR SUCH
FISCAL YEAR AND CONTAINING A STATEMENT OF REVENUES AND EXPENSES, A STATEMENT OF
ASSETS AND LIABILITIES AND A STATEMENT OF BORROWER’S OR GUARANTOR’S (AS
APPLICABLE) EQUITY, ALL OF WHICH SHALL BE IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO LENDER.  ANY AUDIT REQUIREMENTS OF THE BORROWER PURSUANT TO THIS
AGREEMENT MAY BE SATISFIED BY DELIVERY OF THE AUDITED CONSOLIDATED FINANCIAL
STATEMENTS OF THE GUARANTOR, PROVIDED THAT SUCH FINANCIAL STATEMENTS OF THE
GUARANTOR CONTAIN (I) A SEPARATE INCOME AND EXPENSE STATEMENT FOR THE BORROWER
AND (II) A SEPARATE BALANCE SHEET, INCLUDING A STATEMENT OF BORROWER’S EQUITY. 
LENDER SHALL HAVE THE RIGHT FROM TIME TO TIME TO REVIEW AND CONSULT WITH RESPECT
TO THE AUDITING PROCEDURES USED IN THE PREPARATION OF SUCH ANNUAL FINANCIAL
STATEMENTS.  TOGETHER WITH BORROWER’S AND GUARANTORS’ ANNUAL FINANCIAL
STATEMENTS, BORROWER SHALL FURNISH, AND CAUSE GUARANTOR TO FURNISH, TO LENDER AN
OFFICER’S CERTIFICATE CERTIFYING AS OF THE DATE THEREOF (X) THAT THE ANNUAL
FINANCIAL STATEMENTS PRESENT FAIRLY IN ALL MATERIAL RESPECTS THE RESULTS OF
OPERATIONS AND FINANCIAL CONDITION OF BORROWER OR GUARANTOR, AS APPLICABLE, ALL
IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED, AND (Y) WHETHER THERE EXISTS AN
EVENT OF DEFAULT OR DEFAULT, AND IF SUCH EVENT OF DEFAULT OR DEFAULT EXISTS, THE
NATURE THEREOF, THE PERIOD OF TIME IT HAS EXISTED AND THE ACTION THEN BEING
TAKEN TO REMEDY SAME.

 

(III)                               BORROWER SHALL FURNISH TO LENDER, WITHIN
FORTY-FIVE (45) DAYS FOLLOWING THE END OF EACH FISCAL YEAR QUARTER TRUE,
COMPLETE AND CORRECT QUARTERLY UNAUDITED FINANCIAL STATEMENTS (INCLUDING
STATEMENTS OF CASH FLOW) PREPARED IN ACCORDANCE WITH GAAP WITH RESPECT TO
BORROWER AND GUARANTOR FOR THE PORTION OF THE FISCAL YEAR THEN ENDED.

 

(IV)                              NO LATER THAN THIRTY (30) DAYS FOLLOWING THE
END OF EACH OF THE MONTHS OF DECEMBER, MARCH, JUNE, AND SEPTEMBER, BEGINNING
WITH THE MONTH ENDING AT MARCH 31, 2004, BORROWER SHALL PREPARE AND DELIVER TO
LENDER AND ITS SERVICER A STATEMENT (EACH A “QUARTERLY STATEMENT”) IN
SUBSTANTIALLY THE FORM OF SCHEDULE 8 HERETO, SETTING FORTH WITH RESPECT TO THE
MORTGAGED PROPERTY,

 

(A)                              A RENT ROLL DATED AS OF THE LAST DAY OF SUCH
QUARTER IDENTIFYING THE NAME OF EACH TENANT AND THE ASSOCIATED HOMESITE,
SECURITY DEPOSIT, AMOUNT DUE AT THE BEGINNING OF THE MONTH, CHARGES IN THE
CURRENT MONTH (INCLUDING HOMESITE RENT, WATER/SEWER, GAS/ELECTRIC, TRASH, MOBILE
HOME RENT, NOTES AMOUNT AND OTHER CHARGES), PAYMENTS MADE DURING THE MONTH,
AMOUNT DUE AT THE END OF THE MONTH,

 

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TOTAL HOMESITES AT THE MORTGAGED PROPERTY AND TOTAL OCCUPIED HOMESITES AT THE
MORTGAGED PROPERTY, WITH THE OCCUPANCY LEVEL EXPRESSED AS A PERCENTAGE;

 

(B)                                QUARTERLY AND YEAR-TO-DATE OPERATING
STATEMENTS, EACH OF WHICH SHALL INCLUDE AN ITEMIZATION OF BUDGETED AND ACTUAL
(NOT PRO FORMA) CAPITAL EXPENDITURES DURING THE APPLICABLE PERIOD, AND WHICH
SHALL BE PREPARED FOR EACH INDIVIDUAL MORTGAGED PROPERTY AND, ON A CONSOLIDATED
BASIS, FOR ALL THE MORTGAGED PROPERTY; AND

 

(C)                                A QUARTERLY AND YEAR-TO-DATE COMPARISON OF
THE BUDGETED INCOME AND EXPENSES WITH THE ACTUAL INCOME AND EXPENSES FOR SUCH
QUARTER AND YEAR TO DATE, TOGETHER WITH IF REQUESTED BY LENDER, A DETAILED
EXPLANATION OF ANY VARIANCES BETWEEN BUDGETED AND ACTUAL AMOUNTS THAT ARE IN
EXCESS OF FIVE PERCENT (5%) FOR EACH LINE ITEM THEREIN.

 

(V)                                 WITHIN THIRTY (30) DAYS AFTER THE END OF
EACH CALENDAR MONTH (AND AS TO RENT ROLLS REQUESTED BY LENDER ON AN INTERIM
BASIS, WITHIN THIRTY (30) DAYS AFTER LENDER’S REQUEST THEREFOR), BORROWER SHALL
PROVIDE TO LENDER AND ITS SERVICER A STATEMENT (EACH A “MONTHLY STATEMENT”) IN
SUBSTANTIALLY THE FORM OF SCHEDULE 9 HERETO, SETTING FORTH WITH RESPECT TO THE
MORTGAGED PROPERTY

 

(A)                              A CERTIFIED RENT ROLL, FOR EACH INDIVIDUAL
MORTGAGED PROPERTY CONTAINING THE INFORMATION REFERRED TO IN SECTION
5.1(R)(IV)(A),

 

(B)                                A CERTIFICATION OF ALL PREPAID RENT THAT HAS
BEEN COLLECTED FOR EACH INDIVIDUAL MORTGAGED PROPERTY MORE THAN ONE (1) MONTH IN
ADVANCE OF ITS DUE DATE,

 

(C)                                MONTHLY OPERATING FINANCIAL STATEMENTS FOR
THE LAST TWELVE (12) MONTHS, INCLUDING A COMPARISON ON A YEAR-TO-DATE BASIS TO
BUDGET AND PRIOR YEAR, FOR EACH INDIVIDUAL MORTGAGED PROPERTY AND, ON A
CONSOLIDATED BASIS, FOR BORROWER, AND

 

(D)                               A MONTHLY OCCUPANCY REPORT WHICH INCLUDES DATA
QUANTIFYING THE TOTAL NUMBER OF HOMESITES, BEGINNING OCCUPANCY, MONTHLY MOVE-IN
AND MOVE-OUT DATA FOR RESIDENTS, RENTALS AND CHANGE OF OCCUPANCY, ENDING MONTHLY
OCCUPANCY, ENDING MONTHLY OCCUPANCY PERCENTAGE, BUDGETED OCCUPANCY PERCENTAGE,
TOTAL RENTALS, RENTALS AS A PERCENTAGE OF HOMESITES, TOTAL OCCUPIED RENTALS,
RENTAL OCCUPANCY PERCENTAGE, TOTAL REPOSSESSIONS AND REPOSSESSIONS AS A
PERCENTAGE OF TOTAL HOMESITES.

 

(VI)                              BORROWER SHALL FURNISH TO LENDER, WITHIN
FIFTEEN (15) BUSINESS DAYS AFTER REQUEST, SUCH FURTHER INFORMATION WITH RESPECT
TO THE OPERATION OF THE MORTGAGED PROPERTY AND THE FINANCIAL AFFAIRS OF BORROWER
AS MAY BE REASONABLY REQUESTED BY LENDER, INCLUDING ALL BUSINESS PLANS PREPARED
FOR BORROWER.

 

(VII)                           BORROWER SHALL FURNISH TO LENDER, WITHIN FIFTEEN
(15) BUSINESS DAYS AFTER REQUEST, SUCH FURTHER INFORMATION REGARDING ANY PLAN OR
MULTIEMPLOYER PLAN AND ANY

 

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REPORTS OR OTHER INFORMATION REQUIRED TO BE FILED UNDER ERISA AS MAY BE
REASONABLY REQUESTED BY LENDER IN WRITING.

 

(VIII)                        AT LEAST THIRTY (30) DAYS PRIOR TO THE END OF EACH
OF BORROWER’S FISCAL YEARS, BORROWER SHALL SUBMIT OR CAUSE TO BE SUBMITTED TO
LENDER FOR ITS APPROVAL, SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD OR
DELAYED, AN OPERATING BUDGET FOR PROPERTY EXPENSES, CAPITAL IMPROVEMENT COSTS,
LEASING COMMISSIONS, AND REPLACEMENT RESERVE COSTS FOR THE NEXT FISCAL YEAR FOR
THE MORTGAGED PROPERTY.  SUCH OPERATING BUDGET MAY ALLOW FOR A TEN PERCENT (10%)
LINE ITEM VARIANCE.  UNTIL SO APPROVED BY LENDER FOR THE SUBSEQUENT FISCAL YEAR
IN ACCORDANCE WITH THE PROCEDURE SET FORTH IN SECTION 5.1(R)(IX) BELOW, THE
OPERATING BUDGET APPROVED BY LENDER FOR THE PRECEDING FISCAL YEAR SHALL REMAIN
IN EFFECT FOR PURPOSES OF SECTION 2.12; PROVIDED, THAT FOR SO LONG AS SUCH PRIOR
OPERATING BUDGET REMAINS IN EFFECT, AMOUNTS SET FORTH IN THE PRIOR OPERATING
BUDGET WITH RESPECT TO PROPERTY EXPENSES SHALL BE DEEMED INCREASED WITH RESPECT
TO ACTUAL INCREASES IN BASIC CARRYING COSTS AND NON-DISCRETIONARY UTILITY
EXPENDITURES AND SHALL BE DEEMED INCREASED BY THREE PERCENT (3%) WITH REGARD TO
DISCRETIONARY ITEMS.  PROMPTLY FOLLOWING THE OCCURRENCE AND DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT, THE BORROWER SHALL SUBMIT OR CAUSE TO BE
SUBMITTED TO LENDER A WORKING CAPITAL BUDGET FOR THE REMAINDER OF THE FISCAL
YEAR DURING WHICH SUCH EVENT OF DEFAULT OCCURS AND BY NOT LATER THAN THE END OF
EACH OF BORROWER’S FISCAL YEARS WITH RESPECT TO THE SUBSEQUENT FISCAL YEAR.

 

(IX)                                BORROWER SHALL SUBMIT ANY PROPOSED OPERATING
BUDGET IN WRITING SENT BY RECOGNIZED OVERNIGHT DELIVERY SERVICE OR BY REGISTERED
OR CERTIFIED MAIL (AND SIMULTANEOUSLY SHALL CONTACT THE LENDER BY TELEPHONE AND
BY ELECTRONIC MAIL) IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT (THE “FIRST
NOTICE”), REQUESTING LENDER’S APPROVAL OF SUCH OPERATING BUDGET.  LENDER SHALL
USE REASONABLE EFFORTS TO DELIVER TO BORROWER ITS WRITTEN APPROVAL OR
DISAPPROVAL OF THE PROPOSED OPERATING BUDGET WITHIN TEN (10) BUSINESS DAYS AFTER
LENDER SHALL HAVE RECEIVED THE FIRST NOTICE.  UNLESS LENDER SHALL HAVE APPROVED
THE OPERATING BUDGET CONTAINED IN THE FIRST NOTICE, LENDER’S APPROVAL SHALL BE
DEEMED TO BE WITHHELD.  IF BORROWER DOES NOT RECEIVE LENDER’S RESPONSE AT THE
END OF SUCH TEN (10) BUSINESS DAYS PERIOD, BORROWER MAY RESUBMIT ITS WRITTEN
REQUEST TO LENDER (THE “SECOND NOTICE”).  THE SECOND NOTICE SHALL MAKE REFERENCE
TO THE FIRST NOTICE AND SHALL BEAR THE FOLLOWING LEGEND IN CAPITAL LETTERS:

 

“LENDER’S FAILURE TO RESPOND TO THIS REQUEST FOR APPROVAL WITHIN TEN (10)
BUSINESS DAYS FOLLOWING RECEIPT SHALL BE DEEMED TO CONSTITUTE LENDER’S CONSENT
TO THE OPERATING BUDGET DESCRIBED HEREIN.”

 

If Lender does not approve or disapprove the proposed Operating Budget within
ten (10) Business Days after Lender shall have received Borrower’s Second
Notice, Lender shall be deemed to have approved the proposed Operating Budget.

 

(X)                                   TOGETHER WITH THE FINANCIAL STATEMENTS,
RENT ROLLS, OPERATING STATEMENTS AND OTHER DOCUMENTS AND INFORMATION PROVIDED TO
LENDER BY OR ON BEHALF OF BORROWER UNDER THIS SECTION, BORROWER ALSO SHALL
DELIVER TO LENDER A CERTIFICATION IN FORM AND SUBSTANCE

 

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REASONABLY SATISFACTORY TO LENDER, EXECUTED ON BEHALF OF BORROWER BY ITS CHIEF
EXECUTIVE OFFICER OR CHIEF FINANCIAL OFFICER (OR BY THE INDIVIDUAL GUARANTOR IF
THE GUARANTOR IS AN INDIVIDUAL) STATING THAT, TO SUCH OFFICER’S OR INDIVIDUAL’S
KNOWLEDGE, SUCH FINANCIAL STATEMENTS, RENT ROLLS, OPERATING STATEMENTS AND OTHER
DOCUMENTS AND INFORMATION ARE TRUE AND COMPLETE IN ALL MATERIAL RESPECTS.

 

(XI)                                FOR PURPOSES OF THIS SECTION 5.1(R), ALL OF
THE FINANCIAL REPORTING REQUIREMENTS MAY BE SATISFIED BY THE BORROWER POSTING
THE REQUIRED DELIVERIES ON A SECURE WEBSITE REASONABLY SATISFACTORY TO THE
LENDER AND SENDING TO THE LENDER AND ITS SERVICER EACH MONTH AN ELECTRONIC MAIL
COMMUNICATION NOTIFYING THE LENDER AND ITS SERVICER OF THE LINKAGE TO SUCH
WEBSITE; PROVIDED THAT NOTWITHSTANDING THE FOREGOING, IN THE EVENT THE LENDER
INCLUDES THE LOAN IN A SECONDARY MARKET TRANSACTION IN WHICH SECURITIES ARE
ISSUED OR OTHERWISE CHANGES THE IDENTITY OF ITS SERVICER TO A PERSON OTHER THAN
THE INITIAL SERVICER IDENTIFIED TO THE BORROWER AS OF THE CLOSING DATE, THEN THE
LENDER MAY REQUIRE THAT SUCH DELIVERIES BE MADE TO LENDER AND ITS SERVICER IN
HARD COPY AND ON DISKETTE OR THROUGH ELECTRONIC MAIL (INCLUDING MICROSOFT EXCEL
FORMAT), IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO LENDER.

 

(S)                                  OPERATION OF MORTGAGED PROPERTY.  BORROWER
SHALL CAUSE THE OPERATION OF EACH MORTGAGED PROPERTY TO BE CONDUCTED AT ALL
TIMES IN A MANNER CONSISTENT WITH AT LEAST THE LEVEL OF OPERATION OF SUCH
MORTGAGED PROPERTY AS OF THE CLOSING DATE, INCLUDING, WITHOUT LIMITATION, THE
FOLLOWING:

 

(I)                                     TO MAINTAIN OR CAUSE TO BE MAINTAINED
THE STANDARD OF EACH MORTGAGED PROPERTY AT ALL TIMES AT A LEVEL NOT LOWER THAN
THAT MAINTAINED BY PRUDENT MANAGERS OF SIMILAR FACILITIES OR LAND IN THE REGION
WHERE THE MORTGAGED PROPERTY IS LOCATED;

 

(II)                                  TO OPERATE OR CAUSE TO BE OPERATED EACH
MORTGAGED PROPERTY IN A PRUDENT MANNER IN COMPLIANCE IN ALL MATERIAL RESPECTS
WITH APPLICABLE LEGAL REQUIREMENTS AND INSURANCE REQUIREMENTS RELATING THERETO
AND MAINTAIN OR CAUSE TO BE MAINTAINED ALL MATERIAL LICENSES, PERMITS AND ANY
OTHER AGREEMENTS NECESSARY FOR THE CONTINUED USE AND OPERATION OF EACH MORTGAGED
PROPERTY; AND

 

(III)                               TO MAINTAIN OR CAUSE TO BE MAINTAINED
SUFFICIENT INVENTORY AND EQUIPMENT OF TYPES AND QUANTITIES AT EACH MORTGAGED
PROPERTY TO ENABLE BORROWER TO OPERATE EACH MORTGAGED PROPERTY AND TO COMPLY IN
ALL MATERIAL RESPECTS WITH ALL LEASES AFFECTING EACH MORTGAGED PROPERTY.

 

(T)                                    MATERIAL AGREEMENTS.  EXCEPT FOR LEASES
AND ANY MANAGEMENT AGREEMENT COMPLYING WITH THE LOAN DOCUMENTS, BORROWER SHALL
NOT ENTER INTO OR BECOME OBLIGATED UNDER ANY MATERIAL AGREEMENT PERTAINING TO
THE MORTGAGED PROPERTY, INCLUDING WITHOUT LIMITATION BROKERAGE AGREEMENTS,
UNLESS THE SAME MAY BE TERMINATED WITHOUT CAUSE AND WITHOUT PAYMENT OF A PENALTY
OR PREMIUM, ON NOT MORE THAN THIRTY (30) DAYS’ PRIOR WRITTEN NOTICE.  BORROWER
WILL (A) COMPLY WITH THE REQUIREMENTS OF ALL PRESENT AND FUTURE APPLICABLE LAWS,
RULES, REGULATIONS AND ORDERS OF ANY GOVERNMENTAL AUTHORITY IN ALL JURISDICTIONS
IN WHICH IT IS NOW DOING BUSINESS OR MAY HEREAFTER BE DOING BUSINESS, (B)
MAINTAIN ALL MATERIAL LICENSES AND PERMITS NOW HELD OR HEREAFTER ACQUIRED BY
BORROWER, AND (C) PERFORM, OBSERVE, COMPLY AND FULFILL ALL OF ITS OBLIGATIONS,

 

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COVENANTS AND CONDITIONS CONTAINED IN ANY MATERIAL AGREEMENT PERTAINING TO THE
MORTGAGED PROPERTY.

 

(U)                                 ERISA.  BORROWER SHALL DELIVER TO LENDER AS
SOON AS POSSIBLE, AND IN ANY EVENT WITHIN TEN DAYS AFTER BORROWER KNOWS OR HAS
REASON TO BELIEVE THAT ANY OF THE EVENTS OR CONDITIONS SPECIFIED BELOW WITH
RESPECT TO ANY PLAN OR MULTIEMPLOYER PLAN HAS OCCURRED OR EXISTS, AN OFFICER’S
CERTIFICATE SETTING FORTH DETAILS RESPECTING SUCH EVENT OR CONDITION AND THE
ACTION, IF ANY, THAT BORROWER OR ITS ERISA AFFILIATE PROPOSES TO TAKE WITH
RESPECT THERETO (AND A COPY OF ANY REPORT OR NOTICE REQUIRED TO BE FILED WITH OR
GIVEN TO PBGC BY BORROWER OR AN ERISA AFFILIATE WITH RESPECT TO SUCH EVENT OR
CONDITION):

 

(I)                                     ANY REPORTABLE EVENT, AS DEFINED IN
SECTION 4043(B) OF ERISA AND THE REGULATIONS ISSUED THEREUNDER, WITH RESPECT TO
A PLAN, AS TO WHICH PBGC HAS NOT BY REGULATION WAIVED THE REQUIREMENT OF SECTION
4043(A) OF ERISA THAT IT BE NOTIFIED WITHIN THIRTY (30) DAYS OF THE OCCURRENCE
OF SUCH EVENT (PROVIDED THAT A FAILURE TO MEET THE MINIMUM FUNDING STANDARD OF
SECTION 412 OF THE CODE OR SECTION 302 OF ERISA, INCLUDING, WITHOUT LIMITATION,
THE FAILURE TO MAKE ON OR BEFORE ITS DUE DATE A REQUIRED INSTALLMENT UNDER
SECTION 412(M) OF THE CODE OR SECTION 302(E) OF ERISA, SHALL BE A REPORTABLE
EVENT REGARDLESS OF THE ISSUANCE OF ANY WAIVERS IN ACCORDANCE WITH SECTION
412(D) OF THE CODE); AND ANY REQUEST FOR A WAIVER UNDER SECTION 412(D) OF THE
CODE FOR ANY PLAN;

 

(II)                                  THE DISTRIBUTION UNDER SECTION 4041(C) OF
ERISA OF A NOTICE OF INTENT TO TERMINATE ANY PLAN OR ANY ACTION TAKEN BY
BORROWER OR AN ERISA AFFILIATE TO TERMINATE ANY PLAN;

 

(III)                               THE INSTITUTION BY PBGC OF PROCEEDINGS UNDER
SECTION 4042 OF ERISA FOR THE TERMINATION OF, OR THE APPOINTMENT OF A TRUSTEE TO
ADMINISTER, ANY PLAN, OR THE RECEIPT BY BORROWER OR ANY ERISA AFFILIATE OF
BORROWER OF A NOTICE FROM A MULTIEMPLOYER PLAN THAT SUCH ACTION HAS BEEN TAKEN
BY PBGC WITH RESPECT TO SUCH MULTIEMPLOYER PLAN;

 

(IV)                              THE COMPLETE OR PARTIAL WITHDRAWAL FROM A
MULTIEMPLOYER PLAN BY BORROWER OR ANY ERISA AFFILIATE OF BORROWER THAT RESULTS
IN MATERIAL LIABILITY UNDER SECTION 4201 OR 4204 OF ERISA (INCLUDING THE
OBLIGATION TO SATISFY SECONDARY LIABILITY AS A RESULT OF A PURCHASER DEFAULT) OR
THE RECEIPT BY BORROWER OR ANY ERISA AFFILIATE OF BORROWER OF NOTICE FROM A
MULTIEMPLOYER PLAN THAT IT IS IN REORGANIZATION OR INSOLVENCY PURSUANT TO
SECTION 4241 OR 4245 OF ERISA OR THAT IT INTENDS TO TERMINATE OR HAS TERMINATED
UNDER SECTION 4041A OF ERISA;

 

(V)                                 THE INSTITUTION OF A PROCEEDING BY A
FIDUCIARY OF ANY MULTIEMPLOYER PLAN AGAINST BORROWER OR ANY ERISA AFFILIATE OF
BORROWER TO ENFORCE SECTION 515 OF ERISA, WHICH PROCEEDING IS NOT DISMISSED
WITHIN THIRTY (30) DAYS;

 

(VI)                              THE ADOPTION OF AN AMENDMENT TO ANY PLAN THAT,
PURSUANT TO SECTION 401(A)(29) OF THE CODE OR SECTION 307 OF ERISA, WOULD RESULT
IN THE LOSS OF TAX-EXEMPT STATUS OF THE TRUST OF WHICH SUCH PLAN IS A PART IF
BORROWER OR AN ERISA AFFILIATE OF

 

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BORROWER FAILS TO TIMELY PROVIDE SECURITY TO THE PLAN IN ACCORDANCE WITH THE
PROVISIONS OF SAID SECTIONS; AND

 

(VII)                           THE IMPOSITION OF A LIEN OR A SECURITY INTEREST
IN CONNECTION WITH A PLAN.

 

(V)                                 INTENTIONALLY OMITTED.

 

(W)                               SECONDARY MARKET TRANSACTION.  BORROWER
ACKNOWLEDGES THAT LENDER AND ITS SUCCESSORS AND ASSIGNS MAY (I) SELL THE LOAN TO
ONE OR MORE INVESTORS AS A WHOLE LOAN, (II) PARTICIPATE THE LOAN TO ONE OR MORE
INVESTORS, (III) DEPOSIT THE LOAN WITH A TRUST, WHICH TRUST MAY SELL
CERTIFICATES TO INVESTORS EVIDENCING AN OWNERSHIP INTEREST IN THE TRUST ASSETS,
OR (IV) OTHERWISE SELL THE LOAN OR INTERESTS THEREIN TO INVESTORS (THE
TRANSACTIONS REFERRED TO IN CLAUSES (I) THROUGH (IV) ABOVE ARE HEREINAFTER EACH
REFERRED TO AS A “SECONDARY MARKET TRANSACTION”).  BORROWER SHALL COOPERATE WITH
LENDER IN ATTEMPTING TO EFFECT OR EFFECTING ANY SUCH SECONDARY MARKET
TRANSACTION AND SHALL COOPERATE IN ATTEMPTING TO IMPLEMENT OR IMPLEMENTING ALL
REQUIREMENTS IMPOSED BY ANY RATING AGENCY INVOLVED IN ANY SECONDARY MARKET
TRANSACTION, INCLUDING BUT NOT LIMITED TO,

 

(I)                                     PROVIDING LENDER AN ESTOPPEL CERTIFICATE
AND SUCH INFORMATION, LEGAL OPINIONS AND DOCUMENTS (INCLUDING UPDATED
NON-CONSOLIDATION OPINIONS) RELATING TO BORROWER, THE GUARANTOR, THE MEMBER, THE
MORTGAGED PROPERTY AND ANY TENANTS OF THE MORTGAGED PROPERTY AS LENDER OR THE
RATING AGENCIES OR OTHER INTERESTED PARTIES (AS DEFINED BELOW), MAY REASONABLY
REQUEST IN CONNECTION WITH SUCH SECONDARY MARKET TRANSACTION, INCLUDING, WITHOUT
LIMITATION, UPDATED FINANCIAL INFORMATION, APPRAISALS, MARKET STUDIES,
ENVIRONMENTAL REVIEWS (PHASE I’S AND, IF APPROPRIATE, PHASE II’S), MORTGAGED
PROPERTY CONDITION REPORTS AND OTHER DUE DILIGENCE INVESTIGATIONS TOGETHER WITH
APPROPRIATE VERIFICATION OF SUCH UPDATED INFORMATION AND REPORTS THROUGH LETTERS
OF AUDITORS AND CONSULTANTS, AS OF THE CLOSING DATE OF THE SECONDARY MARKET
TRANSACTION,

 

(II)                                  AMENDING THE LOAN DOCUMENTS AND
ORGANIZATIONAL AGREEMENT OF BORROWER, UPDATING AND/OR RESTATING OFFICER’S
CERTIFICATES, TITLE INSURANCE AND OTHER CLOSING ITEMS, AND PROVIDING UPDATED
REPRESENTATIONS AND WARRANTIES IN LOAN DOCUMENTS AND SUCH ADDITIONAL
REPRESENTATIONS AND WARRANTIES AS MAY BE REQUIRED BY LENDER OR THE RATING
AGENCIES, PROVIDED SUCH AMENDMENT OR UPDATE (1) SHALL NOT CHANGE ANY OF THE
FINANCIAL TERMS OF THE LOAN OR RESULT IN A MATERIAL INCREASE IN THE BORROWER’S
OBLIGATIONS OR A MATERIAL DECREASE IN THE BORROWER’S RIGHTS AND (2) WITH RESPECT
TO ANY AMENDMENT OF AN ORGANIZATIONAL AGREEMENT, MUST HAVE BEEN REQUIRED BY THE
RATING AGENCIES,

 

(III)                               PARTICIPATING IN BANK, INVESTORS AND RATING
AGENCIES’ MEETINGS IF REQUESTED BY LENDER,

 

(IV)                              UPON LENDER’S REQUEST, AMENDING THE LOAN
DOCUMENTS (AND UPDATING AND/OR RESTATING OFFICER’S CERTIFICATES, TITLE INSURANCE
AND OTHER CLOSING ITEMS IN CONNECTION THEREWITH) TO DIVIDE THE LOAN INTO A FIRST
AND A SECOND MORTGAGE LOAN, OR INTO A ONE OR MORE LOANS SECURED BY MORTGAGES AND
BY OWNERSHIP INTERESTS IN BORROWER IN WHATEVER PROPORTION LENDER DETERMINES, 
WHICH SEPARATED LOANS MAY HAVE DIFFERENT INTEREST RATES AND AMORTIZATION
SCHEDULES (BUT WITH AGGREGATED FINANCIAL TERMS WHICH ARE EQUIVALENT TO

 

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THAT OF THE LOAN PRIOR TO SUCH SEPARATION, INCLUDING, SO LONG AS AN EVENT OF
DEFAULT HAS NOT OCCURRED AND IS NOT CONTINUING, A RATABLE ALLOCATION OF
PREPAYMENTS AMONG THE LOAN COMPONENTS) AND THEREAFTER TO ENGAGE IN SEPARATE
SECONDARY MARKET TRANSACTIONS WITH RESPECT TO ALL OR ANY PART OF THE
INDEBTEDNESS AND LOAN DOCUMENTATION, AND

 

(V)                                 REVIEWING THE OFFERING DOCUMENTS RELATING TO
ANY SECONDARY MARKET TRANSACTION TO ENSURE THAT ALL INFORMATION CONCERNING
BORROWER, THE GUARANTOR, THE MORTGAGED PROPERTY, AND THE LOAN IS CORRECT, AND
CERTIFYING TO THE ACCURACY THEREOF.

 

Lender shall be permitted to share all such information with the investment
banking firms, Rating Agencies, accounting firms, law firms and other
third-party advisory firms and trustees, purchasers, transferees, assignees,
trustees, servicers and actual or potential investors involved with the Loan and
the Loan Documents or the applicable Secondary Market Transaction (collectively,
“Interested Parties”).  Lender and all of the aforesaid Interested Parties shall
be entitled to rely on the information supplied by, or on behalf of, Borrower. 
Lender may publicize the existence of the Loan in connection with its marketing
for a Secondary Market Transaction or otherwise as part of its business
development.  Borrower shall provide such reasonable access to the Mortgaged
Property and personnel of the Manager and of Borrower’s constituent members and
the business and operations of all of the foregoing as Lender or other
Interested Parties may request in connection with any such Secondary Market
Transaction.  Borrower understands that any such information may be incorporated
into any offering circular, prospectus, prospectus supplement, private placement
memorandum or other offering documents for any Secondary Market Transaction. 
Without limiting the foregoing, Borrower and Guarantor shall provide in
connection with each of (i) a preliminary and a final private placement
memorandum or (ii) a preliminary and final prospectus or prospectus supplement,
as applicable (the documents referred to in the foregoing clauses (i) and (ii),
collectively, the “Disclosure Documents”), an agreement certifying that Borrower
and Guarantor have examined such Disclosure Documents specified by Lender and
that each such Disclosure Document, as it relates to Borrower, Guarantor, any
Affiliates, the Mortgaged Property and Manager, does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading (a “Disclosure Certificate”).  Borrower and Guarantor
shall indemnify, defend, protect and hold harmless Lender, its Affiliates,
directors, employees, agents and each Person, if any, who controls Lender or any
such Affiliate within the meaning of Section 15 of the Securities Act of 1933 or
Section 20 of the Securities Exchange Act of 1934, and any other placement agent
or underwriter with respect to any Securitization or Secondary Market
Transaction from and against any losses, claims, damages, liabilities, costs and
expenses (including, without limitation, reasonable attorneys’ fees and
disbursements) that arise out of or are based upon any untrue statement of any
material fact contained in any Disclosure Certificate or other information or
documents furnished by Borrower, Guarantor or their Affiliates or in any
representation or warranty of any Borrower contained herein or in the other Loan
Documents or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated in such information or
necessary in order to make the statements in such information not materially
misleading.  In any Secondary Market Transaction, Lender may transfer its
obligations under this Loan Agreement and under the other Loan Documents (or may
transfer the portion thereof corresponding to the transferred portion of the
Indebtedness), and thereafter Lender shall be relieved of any obligations
hereunder and under the other Loan Documents arising after the date

 

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of said transfer with respect to the transferred interest.  Each transferee
investor shall become a “Lender” hereunder.  The holders from time to time of
the Loan and/or any other interest of the “Lender” under this Loan Agreement and
the other Loan Documents may from time to time enter into one or more co-lender
or similar agreements in their discretion.  Borrower acknowledges and agrees
that such agreements, as the same may from time to time be amended, modified or
restated, may govern the exercise of the powers and discretionary authority of
the Lender hereunder and under the other Loan Documents, but Borrower shall be
entitled to rely upon any actions taken by Lender or the designated servicer(s)
or agent(s) for Lender, whether or not within the scope of its power and
authority under such other agreements.  Lender shall be responsible for the
payment of the expenses incurred by Lender in connection with any Secondary
Market Transaction, and if Lender requires Borrower’s cooperation in connection
with any Secondary Market Transaction, Borrower shall be entitled to obtain
reimbursement from Lender for reasonable out-of-pocket costs and expenses, 
including reasonable legal fees and expenses, incurred by it in responding to
Lender’s requirements for cooperation hereunder.

 

(X)                                   INSURANCE.

 

(I)                                     BORROWER, AT ITS SOLE COST AND EXPENSE,
SHALL KEEP THE IMPROVEMENTS AND EQUIPMENT INSURED (INCLUDING, BUT NOT LIMITED
TO, ANY PERIOD OF RENOVATION, ALTERATION AND/OR CONSTRUCTION) DURING THE TERM OF
THE LOAN WITH THE COVERAGE AND IN THE AMOUNTS REQUIRED UNDER THIS AGREEMENT FOR
THE MUTUAL BENEFIT OF BORROWER AND LENDER AGAINST LOSS OR DAMAGE BY FIRE,
LIGHTNING, WIND AND SUCH OTHER PERILS AS ARE CUSTOMARILY INCLUDED IN A STANDARD
“ALL-RISK” OR “SPECIAL CAUSE OF LOSS” FORM AND AGAINST LOSS OR DAMAGE BY OTHER
RISKS AND HAZARDS COVERED BY A STANDARD EXTENDED COVERAGE INSURANCE POLICY
(INCLUDING, WITHOUT LIMITATION, FIRE, LIGHTNING, HAIL, HURRICANE, WINDSTORM,
TIDAL WAVE, EXPLOSION, ACTS OF TERRORISM CERTIFIED UNDER THE TERRORISM RISK
INSURANCE ACT OF 2002, RIOT AND CIVIL COMMOTION, VANDALISM, MALICIOUS MISCHIEF,
STRIKE, WATER DAMAGE, SPRINKLER LEAKAGE, COLLAPSE, BURGLARY, THEFT, MOLD AND
MICROBIAL MATTER COVERAGE ARISING AS A RESULT OF COVERED PERILS UNDER THE
STANDARD “ALL RISK” POLICY AND SUCH OTHER COVERAGES AS MAY BE REASONABLY
REQUIRED BY LENDER ON THE SPECIAL FORM (FORMERLY KNOWN AS AN ALL RISK FORM)). 
SUCH INSURANCE SHALL BE IN AN AMOUNT (I) EQUAL TO AT LEAST THE GREATER OF THEN
FULL REPLACEMENT COST OF THE IMPROVEMENTS AND EQUIPMENT (EXCLUSIVE OF THE COST
OF FOUNDATIONS AND FOOTINGS), WITHOUT DEDUCTION FOR PHYSICAL DEPRECIATION AND
THE OUTSTANDING PRINCIPAL INDEBTEDNESS, AND (II) SUCH THAT THE INSURER WOULD NOT
DEEM BORROWER A CO-INSURER UNDER SAID POLICIES.  THE POLICIES OF INSURANCE
CARRIED IN ACCORDANCE WITH THIS SECTION 5.1(X) SHALL BE PAID NOT LESS THAN TEN
(10) DAYS IN ADVANCE OF THE DUE DATE THEREOF AND SHALL CONTAIN THE “REPLACEMENT
COST ENDORSEMENT” WITH A WAIVER OF DEPRECIATION.  IF TERRORISM COVERAGE IS
EXCLUDED ON AN “ALL-RISK” BASIS, THEN BORROWER SHALL OBTAIN COVERAGE FOR
TERRORISM AND SIMILAR ACTS IN THE STAND ALONE TERRORISM MARKET.  NOTWITHSTANDING
THE FOREGOING, THE TERRORISM COVERAGE MAY EXCLUDE NON-CERTIFIED TERRORISM RISK
INSURANCE ACT OF 2002 COVERAGE (I.E. THE ACTIONS OF DOMESTIC ACTORS).

 

(II)                                  BORROWER, AT ITS SOLE COST AND EXPENSE,
FOR THE MUTUAL BENEFIT OF BORROWER AND LENDER, SHALL ALSO OBTAIN AND MAINTAIN OR
CAUSE TO BE OBTAINED AND MAINTAINED DURING THE ENTIRE TERM OF THE LOAN THE
FOLLOWING POLICIES OF INSURANCE:

 

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(A)                              FLOOD INSURANCE, IF ANY PART OF THE MORTGAGED
PROPERTY IS LOCATED IN AN AREA IDENTIFIED BY THE FEDERAL EMERGENCY MANAGEMENT
AGENCY AS AN AREA HAVING SPECIAL FLOOD HAZARDS AND IN WHICH FLOOD INSURANCE HAS
BEEN MADE AVAILABLE UNDER THE NATIONAL FLOOD INSURANCE ACT OF 1968, THE FLOOD
DISASTER PROTECTION ACT OF 1973 OR THE NATIONAL FLOOD INSURANCE REFORM ACT OF
1994 (AND ANY AMENDMENT OR SUCCESSOR ACT THERETO) IN AN AMOUNT AT LEAST EQUAL TO
THE MAXIMUM LIMIT OF COVERAGE AVAILABLE WITH RESPECT TO THE IMPROVEMENTS AND
EQUIPMENT UNDER SAID ACT;

 

(B)                                COMPREHENSIVE GENERAL LIABILITY INSURANCE,
INCLUDING A BROAD FORM COMPREHENSIVE GENERAL LIABILITY ENDORSEMENT AND COVERAGE
FOR BROAD FORM PROPERTY DAMAGE, CONTRACTUAL DAMAGES, PERSONAL INJURIES
(INCLUDING DEATH RESULTING THEREFROM) AND A LIQUOR LIABILITY ENDORSEMENT IF
LIQUOR IS SOLD ON THE MORTGAGED PROPERTY, CONTAINING MINIMUM LIMITS OF LIABILITY
OF $1 MILLION FOR BOTH INJURY TO OR DEATH OF A PERSON AND FOR PROPERTY DAMAGE
PER OCCURRENCE AND $3 MILLION IN THE AGGREGATE FOR THE MORTGAGED PROPERTY, AND
SUCH OTHER LIABILITY INSURANCE REASONABLY REQUESTED BY LENDER; IN ADDITION, AT
LEAST $25 MILLION EXCESS AND/OR UMBRELLA LIABILITY INSURANCE SHALL BE OBTAINED
AND MAINTAINED FOR ANY AND ALL CLAIMS, INCLUDING ALL LEGAL LIABILITY IMPOSED
UPON BORROWER AND ALL COURT COSTS AND ATTORNEYS’ FEES INCURRED IN CONNECTION
WITH THE OWNERSHIP, OPERATION AND MAINTENANCE OF THE MORTGAGED PROPERTY;

 

(C)                                BUSINESS INTERRUPTION INSURANCE (INCLUDING
RENTAL VALUE) IN AN ANNUAL AGGREGATE AMOUNT EQUAL TO THE ESTIMATED INCOME FROM
THE LEASES OF EACH MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, THE LOSS
OF ALL RENTS AND ADDITIONAL RENTS PAYABLE BY ALL OF THE LESSEES UNDER THE LEASES
(WHETHER OR NOT SUCH LEASES ARE TERMINABLE IN THE EVENT OF A FIRE OR CASUALTY)),
SUCH INSURANCE TO COVER LOSSES FOR A PERIOD OF TWELVE (12) MONTHS AFTER THE DATE
OF THE FIRE OR CASUALTY IN QUESTION, PLUS AN EXTENDED PERIOD OF INDEMNITY
COMMENCING AT THE TIME REPAIRS ARE COMPLETED FOR A PERIOD OF NOT LESS THAN 30
DAYS AND TO BE INCREASED OR DECREASED, AS APPLICABLE, FROM TIME TO TIME DURING
THE TERM OF THE LOAN IF, AND WHEN, THE GROSS REVENUES FROM THE LEASES OF THE
MORTGAGED PROPERTY MATERIALLY INCREASE OR DECREASE, AS APPLICABLE (INCLUDING,
WITHOUT LIMITATION, INCREASES FROM NEW LEASES AND RENEWAL LEASES ENTERED INTO IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT), TO REFLECT ALL INCREASED RENT AND
INCREASED ADDITIONAL RENT PAYABLE BY ALL OF THE LESSEES UNDER SUCH RENEWAL
LEASES AND ALL RENT AND ADDITIONAL RENT PAYABLE BY ALL OF THE LESSEES UNDER SUCH
NEW LEASES;

 

(D)                               ALL RISK PHYSICAL LOSS AND DAMAGE COVERAGE
WITH RESPECT TO HEATING AND AIR CONDITIONING EQUIPMENT, LOCATED IN, ON, OR ABOUT
THE IMPROVEMENTS, EXCEPT THE COVERAGE REQUIRED UNDER THIS CLAUSE (II)(D) SHALL
NOT BE REQUIRED TO BE MAINTAINED AS A SEPARATE POLICY AND MAY BE INCLUDED AS
PART OF THE COVERAGES PROVIDED UNDER CLAUSE (I);

 

(E)                                 WORKER’S COMPENSATION INSURANCE COVERAGE (IN
AMOUNTS NOT LESS THAN THE STATUTORY MINIMUMS FOR ALL PERSONS EMPLOYED BY
BORROWER OR ITS TENANTS AT THE MORTGAGED PROPERTY AND IN COMPLIANCE WITH ALL
OTHER REQUIREMENTS OF

 

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APPLICABLE LOCAL, STATE AND FEDERAL LAW) AND “EMPLOYERS LIABILITY” INSURANCE IN
AMOUNTS NOT LESS THAN REQUIRED BY STATUTE;

 

(F)                                 DURING ANY PERIOD OF REPAIR OR RESTORATION,
BUILDER’S “ALL RISK” INSURANCE IN AN AMOUNT EQUAL TO NOT LESS THAN THE FULL
INSURABLE VALUE OF THE MORTGAGED PROPERTY AGAINST SUCH RISKS (INCLUDING, WITHOUT
LIMITATION, FIRE AND EXTENDED COVERAGE AND COLLAPSE OF THE IMPROVEMENTS TO
AGREED LIMITS) AS LENDER MAY REQUEST, IN FORM AND SUBSTANCE ACCEPTABLE TO
LENDER;

 

(G)                                IF REASONABLY REQUIRED BY LENDER WITH RESPECT
TO ANY ZONING MATTER THAT IS REASONABLY LIKELY TO MATERIALLY ADVERSELY AFFECT
THE VALUE OF ANY MORTGAGED PROPERTY, ORDINANCE OR LAW COVERAGE TO COMPENSATE FOR
THE COST OF DEMOLITION, INCREASED COST OF CONSTRUCTION, AND LOSS TO ANY
UNDAMAGED PORTIONS OF THE IMPROVEMENTS, IF THE CURRENT USE OF THE MORTGAGED
PROPERTY OR THE IMPROVEMENTS THEMSELVES ARE OR BECOME “NONCONFORMING” PURSUANT
TO THE APPLICABLE ZONING REGULATIONS, UNLESS FULL REBUILDABILITY FOLLOWING
CASUALTY IS OTHERWISE PERMITTED UNDER SUCH ZONING REGULATIONS NOTWITHSTANDING
SUCH NONCONFORMITY;

 

(H)                               IF REQUIRED BY LENDER AS A RESULT OF ANY
MORTGAGED PROPERTY BEING LOCATED IN AN AREA WITH A HIGH DEGREE OF SEISMIC
ACTIVITY, EARTHQUAKE DAMAGE INSURANCE IN AN AMOUNT AND FORM ACCEPTABLE TO
LENDER;

 

(I)                                    SUCH OTHER INSURANCE AS MAY FROM TIME TO
TIME BE REASONABLY REQUIRED BY LENDER IN ORDER TO PROTECT ITS INTERESTS WITH
RESPECT TO THE LOAN AND THE MORTGAGED PROPERTY AND TO CONFORM SUCH REQUIREMENTS
TO THEN CURRENT STANDARDS FOR A SECONDARY MARKET TRANSACTION.

 

(III)                               ALL POLICIES OF INSURANCE (THE “POLICIES”)
REQUIRED PURSUANT TO THIS SECTION 5.1(X):

 

(A)                              SHALL BE ISSUED BY AN INSURER APPROVED BY
LENDER WHICH HAS A CLAIMS PAYING ABILITY RATING OF NOT LESS THAN “AA” (OR THE
EQUIVALENT) BY RATING AGENCIES SATISFACTORY TO LENDER (ONE OF WHICH SHALL BE
S&P) AND A:XIII OR BETTER AS TO CLAIMS PAYING ABILITY BY AM BEST, PROVIDED, THAT
NOTWITHSTANDING THE FOREGOING, (1) IN THE EVENT AMERICAN MODERN INSURANCE SHALL
BE THE INSURER PROVIDING THE STANDARD ALL-RISK INSURANCE POLICY, THEN SUCH
INSURER SHALL NOT BE REQUIRED TO SATISFY SUCH CLAIMS PAYING ABILITY RATING BY
THE RATING AGENCIES (BUT WILL BE REQUIRED TO HAVE AND MAINTAIN A CLAIMS PAYING
ABILITY RATING BY AM BEST OF A+:VIII OR BETTER), SO LONG AS THE BORROWER
DELIVERS TO THE LENDER EVIDENCE REASONABLY SATISFACTORY TO THE LENDER THAT THE
INSURER HAS PURCHASED REINSURANCE WITH RESPECT TO NOT LESS THAN 70% OF SUCH
POLICY FROM A REINSURER WITH A CLAIMS PAYING ABILITY RATING BY THE RATING
AGENCIES OF NOT LESS THAN “A” (OR THE EQUIVALENT) BY RATING AGENCIES
SATISFACTORY TO THE LENDER (ONE OF WHICH SHALL BE S&P) AND (2) THE INSURER
PROVIDING THE WORKER’S COMPENSATION INSURANCE COVERAGE SHALL ONLY BE REQUIRED TO
MAINTAIN A CLAIMS PAYING ABILITY RATING OF NOT LESS THAN “A” (OR THE EQUIVALENT)
BY RATING AGENCIES SATISFACTORY TO THE LENDER (ONE OF WHICH SHALL BE S&P),

 

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(B)                                SHALL NAME LENDER AS AN ADDITIONAL INSURED
AND CONTAIN A STANDARD NONCONTRIBUTORY MORTGAGEE CLAUSE AND A LENDER’S LOSS
PAYABLE ENDORSEMENT, OR THEIR EQUIVALENTS, NAMING LENDER (AND/OR SUCH OTHER
PARTY AS MAY BE DESIGNATED BY LENDER) AS THE PARTY TO WHICH ALL PAYMENTS MADE BY
SUCH INSURANCE COMPANY SHALL BE PAID,

 

(C)                                SHALL BE MAINTAINED THROUGHOUT THE TERM OF
THE LOAN WITHOUT COST TO LENDER,

 

(D)                               SHALL CONTAIN SUCH PROVISIONS AS LENDER DEEMS
REASONABLY NECESSARY OR DESIRABLE TO PROTECT ITS INTEREST (INCLUDING, WITHOUT
LIMITATION, ENDORSEMENTS PROVIDING THAT NEITHER BORROWER, LENDER NOR ANY OTHER
PARTY SHALL BE A CO-INSURER UNDER SAID POLICIES AND THAT LENDER SHALL RECEIVE AT
LEAST THIRTY (30) DAYS PRIOR WRITTEN NOTICE OF ANY MODIFICATION, REDUCTION OR
CANCELLATION),

 

(E)                                 SHALL CONTAIN A WAIVER OF SUBROGATION
AGAINST LENDER,

 

(F)                                 SHALL BE FOR A TERM OF NOT LESS THAN ONE
YEAR,

 

(G)                                SHALL PROVIDE FOR CLAIMS TO BE MADE ON AN
OCCURRENCE BASIS,

 

(H)                               SHALL CONTAIN AN AGREED VALUE CLAUSE UPDATED
ANNUALLY (IF THE AMOUNT OF COVERAGE UNDER SUCH POLICY IS BASED UPON THE
REPLACEMENT COST OF THE MORTGAGED PROPERTY),

 

(I)                                    SHALL DESIGNATE LENDER AS “MORTGAGEE AND
LOSS PAYEE” (EXCEPT GENERAL PUBLIC LIABILITY AND EXCESS LIABILITY, AS TO WHICH
LENDER SHALL BE NAMED AS ADDITIONAL INSURED),

 

(J)                                   SHALL BE ISSUED BY AN INSURER LICENSED IN
THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED,

 

(K)                               SHALL PROVIDE THAT LENDER MAY, BUT SHALL NOT
BE OBLIGATED TO, MAKE PREMIUM PAYMENTS TO PREVENT ANY CANCELLATION, ENDORSEMENT,
ALTERATION OR REISSUANCE, AND SUCH PAYMENTS SHALL BE ACCEPTED BY THE INSURER TO
PREVENT SAME, AND

 

(L)                                 SHALL BE REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO LENDER AND REASONABLY APPROVED BY LENDER AS TO AMOUNTS, FORM, RISK
COVERAGE, DEDUCTIBLES, LOSS PAYEES AND INSUREDS TO THE EXTENT NOT OTHERWISE
SPECIFIED IN THIS SECTION 5.1(X).  ALL PROPERTY DAMAGE INSURANCE POLICIES
(EXCEPT FOR FLOOD AND EARTHQUAKE POLICIES) MUST AUTOMATICALLY REINSTATE AFTER
EACH LOSS.

 

Copies of said Policies, certified as true and correct by Borrower, or insurance
certificates thereof, shall be delivered to Lender.  Not later than ten (10)
days prior to the expiration date of each of the Policies, Borrower shall
deliver to Lender satisfactory evidence of the renewal of each Policy.  The
insurance coverage required under this Section 5.1(x) may be effected under a
blanket policy or policies covering the Mortgaged Property and other

 

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property and assets not constituting a part of the Collateral; provided that any
such blanket policy shall provide at least the same amount and form of
protection as would a separate policy insuring the Mortgaged Property
individually, which amount shall not be less than the amount required pursuant
to this Section 5.1(x) and which shall in any case comply in all other respects
with the requirements of this Section 5.1(x).  Upon demand therefor, Borrower
shall reimburse Lender for all of Lender’s or its designee’s reasonable costs
and expenses incurred in obtaining any or all of the Policies or otherwise
causing the compliance with the terms and provisions of this Section 5.1(x),
including (without limitation) obtaining updated flood hazard certificates and
replacement of any so-called “forced placed” insurance coverages to the extent
Borrower was required to obtain and maintain any such Policy or Policies
hereunder and failed to do so.  Borrower shall pay the premiums for such
Policies (the “Insurance Premiums”) as the same become due and payable and shall
furnish to Lender evidence of the renewal of each of the Policies with receipts
for the payment of the Insurance Premiums or other evidence of such payment
reasonably satisfactory to Lender (provided, however, that Borrower is not
required to furnish such evidence of payment to Lender in the event that such
Insurance Premiums have been paid by Lender).  If Borrower does not furnish such
evidence and receipts at least ten (10) days prior to the expiration of any
expiring Policy, then Lender may procure, but shall not be obligated to procure,
such insurance and pay the Insurance Premiums therefor, and Borrower agrees to
reimburse Lender for the cost of such Insurance Premiums promptly on demand. 
Within thirty (30) days after request by Lender, Borrower shall obtain such
increases in the amounts of coverage required hereunder as may be reasonably
requested by Lender, based on then industry-standard amounts of coverage then
being obtained by prudent owners of properties similar to the Mortgaged Property
in the same applicable market region as the Mortgaged Property.  Borrower shall
give Lender prompt written notice if Borrower receives from any insurer any
written notification or threat of any actions or proceedings regarding the
non-compliance or non-conformity of the Mortgaged Property with any insurance
requirements.

 

(iii)                               If the Mortgaged Property shall be damaged
or destroyed, in whole or in part, by fire or other casualty, Borrower shall
give prompt notice thereof to Lender.

 

(A)                              IN CASE OF LOSS COVERED BY POLICIES, LENDER MAY
EITHER (A) JOINTLY WITH A BORROWER SETTLE AND ADJUST ANY CLAIM AND AGREE WITH
THE INSURANCE COMPANY OR COMPANIES ON THE AMOUNT TO BE PAID ON THE LOSS OR (B)
ALLOW BORROWER TO AGREE WITH THE INSURANCE COMPANY OR COMPANIES ON THE AMOUNT TO
BE PAID UPON THE LOSS; PROVIDED, THAT BORROWER MAY SETTLE AND ADJUST LOSSES
WITHOUT PARTICIPATION BY LENDER AGGREGATING NOT IN EXCESS OF 1% OF THE PRINCIPAL
INDEBTEDNESS, AGREE WITH THE INSURANCE COMPANY OR COMPANIES ON THE AMOUNT TO BE
PAID UPON THE LOSS AND COLLECT AND RECEIPT FOR ANY SUCH INSURANCE PROCEEDS;
PROVIDED, FURTHER, THAT IF (X) AT THE TIME OF THE SETTLEMENT OF SUCH CLAIM AN
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING OR (Y) LENDER AND BORROWER ARE
UNABLE TO AGREE UPON A JOINT SETTLEMENT OR (Z) LENDER DISAPPROVES OF BORROWER’S
PROPOSED SETTLEMENT WITH THE INSURANCE COMPANY, THEN LENDER SHALL SETTLE AND
ADJUST SUCH CLAIM WITHOUT THE CONSENT OF BORROWER, AND FOR SUCH PURPOSE IS
HEREBY IRREVOCABLY APPOINTED AS BORROWER’S ATTORNEY-IN-FACT, COUPLED WITH AN
INTEREST.  IN

 

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ANY SUCH CASE LENDER SHALL AND IS HEREBY AUTHORIZED TO COLLECT AND RECEIPT FOR
ANY SUCH INSURANCE PROCEEDS SUBJECT TO AND TO THE EXTENT PROVIDED FOR IN THIS
AGREEMENT.  THE REASONABLE OUT-OF-POCKET EXPENSES INCURRED BY LENDER IN THE
ADJUSTMENT AND COLLECTION OF INSURANCE PROCEEDS SHALL BECOME PART OF THE
INDEBTEDNESS AND BE SECURED BY THE MORTGAGES AND SHALL BE REIMBURSED BY BORROWER
TO LENDER UPON DEMAND THEREFOR.

 

(B)                                IN THE EVENT OF ANY INSURED DAMAGE TO OR
DESTRUCTION OF THE MORTGAGED PROPERTY OR ANY PART THEREOF (HEREIN CALLED AN
“INSURED CASUALTY”) WHERE (1) THE AGGREGATE AMOUNT OF THE LOSS, AS REASONABLY
DETERMINED BY AN INDEPENDENT INSURANCE ADJUSTER, IS LESS THAN THIRTY PERCENT
(30%) OF THE LENDER’S REASONABLE ESTIMATE OF THE FAIR MARKET VALUE OF THE
INDIVIDUAL MORTGAGED PROPERTY AFFECTED BY THE DAMAGE OR DESTRUCTION, (2) IN THE
REASONABLE JUDGMENT OF LENDER, THE MORTGAGED PROPERTY CAN BE RESTORED, REPLACED
AND/OR REBUILT (COLLECTIVELY, THE “RESTORATION”) BY NOT LATER THAN THE FIRST TO
OCCUR OF (A) TWELVE (12) MONTHS AFTER THE DATE OF CASUALTY AND (B) THE
EXPIRATION OF THE BUSINESS INTERRUPTION INSURANCE AND, IN ANY CASE, NOT LATER
THAN SIX (6) MONTHS PRIOR TO THE MATURITY DATE TO AN ECONOMIC UNIT SUBSTANTIALLY
IN THE CONDITION IT WAS IN IMMEDIATELY PRIOR TO THE INSURED CASUALTY AND IN
COMPLIANCE WITH ALL ZONING, BUILDING AND OTHER APPLICABLE LEGAL REQUIREMENTS
(THE “PRE-EXISTING CONDITION”) NOT LESS MATERIALLY VALUABLE (INCLUDING AN
ASSESSMENT OF THE IMPACT OF THE TERMINATION OF ANY LEASES DUE TO SUCH INSURED
CASUALTY) AND NOT LESS USEFUL THAN THE SAME WAS PRIOR TO THE INSURED CASUALTY,
(3) LENDER REASONABLY DETERMINES THAT THE RENTAL INCOME OF THE MORTGAGED
PROPERTY, AFTER THE RESTORATION THEREOF TO THE PRE-EXISTING CONDITION, WILL BE
SUFFICIENT TO MEET ALL OPERATING EXPENSES, PAYMENTS FOR RESERVES AND PAYMENTS OF
PRINCIPAL AND INTEREST UNDER THE LOAN AND SATISFY THE DEBT SERVICE COVERAGE
TEST, AND (4) TENANT LEASES REQUIRING PAYMENT OF ANNUAL RENT EQUAL TO AT LEAST
SEVENTY-FIVE PERCENT (75%) OF THE GROSS REVENUES FROM THE MORTGAGED PROPERTY
DURING THE TWELVE (12) MONTH PERIOD IMMEDIATELY PRECEDING THE DATE OF SUCH FIRE
OR OTHER CASUALTY REMAIN IN FULL FORCE AND EFFECT DURING AND AFTER THE
RESTORATION OF THE PROPERTY (SUBJECT TO THE RENT ABATEMENT PROVISIONS THEREOF
APPLICABLE AS A RESULT OF THE CASUALTY, SO LONG AS SUCH ABATEMENT WILL END, AND
FULL RENTAL PAYMENTS SHALL RESUME, UPON SUBSTANTIAL COMPLETION OF THE
RESTORATION), OR IF LENDER OTHERWISE ELECTS TO ALLOW A BORROWER TO RESTORE THE
MORTGAGED PROPERTY, THEN, IF NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE
CONTINUING, THE INSURANCE PROCEEDS (AFTER REIMBURSEMENT OF ANY REASONABLE
OUT-OF-POCKET EXPENSES INCURRED BY LENDER IN CONNECTION WITH THE COLLECTION OF
ANY APPLICABLE INSURANCE PROCEEDS) SHALL BE MADE AVAILABLE TO REIMBURSE BORROWER
FOR THE COST OF RESTORING, REPAIRING, REPLACING OR REBUILDING THE MORTGAGED
PROPERTY OR PART THEREOF SUBJECT TO THE INSURED CASUALTY, AS PROVIDED FOR
BELOW.  BORROWER HEREBY COVENANTS AND AGREES TO COMMENCE AND DILIGENTLY TO
PROSECUTE SUCH RESTORATION OF THE AFFECTED MORTGAGED PROPERTY AS NEARLY AS
POSSIBLE TO THE PRE-EXISTING CONDITION.  BORROWER SHALL PAY ALL OUT-OF-POCKET
COSTS (AND IF REQUIRED BY LENDER, BORROWER SHALL DEPOSIT THE TOTAL THEREOF WITH
LENDER IN ADVANCE) OF SUCH RESTORATION IN EXCESS OF THE INSURANCE PROCEEDS MADE
AVAILABLE PURSUANT TO THE TERMS HEREOF.

 

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(C)                                EXCEPT AS PROVIDED ABOVE, THE INSURANCE
PROCEEDS COLLECTED UPON ANY INSURED CASUALTY SHALL, AT THE OPTION OF LENDER IN
ITS SOLE DISCRETION, BE APPLIED TO THE PAYMENT OF THE INDEBTEDNESS OR APPLIED TO
THE COST OF RESTORATION OF THE AFFECTED MORTGAGED PROPERTY OR PART THEREOF
SUBJECT TO THE INSURED CASUALTY, IN THE MANNER SET FORTH BELOW.

 

(D)                               REGARDLESS OF WHETHER INSURANCE PROCEEDS, IF
ANY, ARE SUFFICIENT OR ARE MADE AVAILABLE TO BORROWER FOR THE RESTORATION OF ANY
PORTION OF THE AFFECTED MORTGAGED PROPERTY, BORROWER COVENANTS TO COMPLETE SUCH
RESTORATION OF THE AFFECTED MORTGAGED PROPERTY TO BE OF AT LEAST COMPARABLE
VALUE AS PRIOR TO SUCH DAMAGE OR DESTRUCTION, ALL TO BE EFFECTED IN ACCORDANCE
WITH LEGAL REQUIREMENTS AND PLANS AND SPECIFICATIONS APPROVED IN ADVANCE BY
LENDER, SUCH APPROVAL NOT TO BE UNREASONABLY WITHHELD OR DELAYED.

 

(E)                                 IN THE EVENT BORROWER IS ENTITLED TO
REIMBURSEMENT OUT OF INSURANCE PROCEEDS, SUCH PROCEEDS SHALL BE HELD BY LENDER
IN THE LOSS PROCEEDS ACCOUNT AND DISBURSED FROM TIME TO TIME AS THE RESTORATION
PROGRESSES UPON LENDER BEING FURNISHED WITH (1) EVIDENCE REASONABLY SATISFACTORY
TO IT (WHICH EVIDENCE MAY INCLUDE INSPECTION(S) OF THE WORK PERFORMED) THAT THE
RESTORATION COVERED BY THE DISBURSEMENT HAS BEEN COMPLETED IN ACCORDANCE WITH
PLANS AND SPECIFICATIONS APPROVED BY LENDER, (2) EVIDENCE REASONABLY
SATISFACTORY TO IT OF THE ESTIMATED COST OF COMPLETION OF THE RESTORATION, (3)
FUNDS, OR, AT LENDER’S OPTION, ASSURANCES REASONABLY SATISFACTORY TO LENDER THAT
SUCH FUNDS ARE AVAILABLE AND SUFFICIENT IN ADDITION TO THE INSURANCE PROCEEDS TO
COMPLETE THE PROPOSED RESTORATION, AND (4) SUCH ARCHITECT’S CERTIFICATES,
WAIVERS OF LIEN, CONTRACTOR’S SWORN STATEMENTS, TITLE INSURANCE ENDORSEMENTS,
BONDS AND OTHER EVIDENCES OF COST, PAYMENT AND PERFORMANCE OF THE FOREGOING
RESTORATION AS LENDER MAY REASONABLY REQUIRE AND APPROVE.  LENDER MAY, IN ANY
EVENT, REQUIRE THAT ALL PLANS AND SPECIFICATIONS FOR SUCH RESTORATION BE
SUBMITTED TO AND REASONABLY APPROVED BY LENDER PRIOR TO COMMENCEMENT OF WORK. 
LENDER MAY RETAIN A CONSTRUCTION CONSULTANT TO INSPECT SUCH WORK AND REVIEW
BORROWER’S REQUEST FOR PAYMENTS AND BORROWER SHALL, ON DEMAND BY LENDER,
REIMBURSE LENDER FOR THE REASONABLE FEES AND DISBURSEMENTS OF SUCH CONSULTANT. 
NO PAYMENT MADE PRIOR TO THE FINAL COMPLETION OF THE RESTORATION SHALL EXCEED
NINETY PERCENT (90%) OF THE HARD CONSTRUCTION COSTS VALUE OF THE WORK PERFORMED
FROM TIME TO TIME (EXCEPT FOR RESTORATION WORK ON A TRADE BY TRADE BASIS OR ON
AN HOURLY BASIS FOR PROFESSIONAL SERVICES IN WHICH EVENT, PAYMENT MAY BE MADE IN
FULL UPON THE COMPLETION OF SUCH WORK).  NO FUNDS OTHER THAN INSURANCE PROCEEDS
SHALL BE DISBURSED PRIOR TO DISBURSEMENT OF SUCH PROCEEDS; AND, AT ALL TIMES,
THE UNDISBURSED BALANCE OF SUCH INSURANCE PROCEEDS REMAINING IN THE LOSS
PROCEEDS ACCOUNT, TOGETHER WITH FUNDS DEPOSITED THEREIN TO PAY THE COSTS OF THE
RESTORATION BY OR ON BEHALF OF BORROWER, SHALL BE AT LEAST SUFFICIENT IN THE
REASONABLE JUDGMENT OF LENDER TO PAY FOR THE COST OF COMPLETION OF THE
RESTORATION FREE AND CLEAR OF ALL LIENS OR CLAIMS FOR LIEN, EXCEPT FOR PERMITTED
ENCUMBRANCES.  ANY SURPLUS WHICH MAY REMAIN OUT OF INSURANCE PROCEEDS HELD BY
LENDER AFTER PAYMENT OF SUCH COSTS OF RESTORATION, REPAIR, REPLACEMENT OR
REBUILDING SHALL, AT THE OPTION OF LENDER IN ITS SOLE DISCRETION, BE

 

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APPLIED TO THE PAYMENT OF THE INDEBTEDNESS OR BE PAID TO BORROWER SO LONG AS NO
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

(F)                                 BORROWER SHALL NOT CARRY SEPARATE INSURANCE,
CONCURRENT IN KIND OR FORM OR CONTRIBUTING IN THE EVENT OF LOSS, WITH ANY
INSURANCE REQUIRED UNDER THIS AGREEMENT THAT WOULD BE CONSIDERED “CO-INSURANCE”
OR ADVERSELY AFFECT THE ABILITY TO COLLECT UNDER A POLICY OF INSURANCE REQUIRED
HEREUNDER.

 

(Y)                                 CONDEMNATION.

 

(I)                                     BORROWER SHALL PROMPTLY GIVE LENDER
WRITTEN NOTICE OF THE ACTUAL OR THREATENED COMMENCEMENT OF ANY PROCEEDING FOR A
TAKING AND SHALL DELIVER TO LENDER COPIES OF ANY AND ALL PAPERS SERVED IN
CONNECTION WITH SUCH PROCEEDINGS.  LENDER IS HEREBY IRREVOCABLY APPOINTED AS
BORROWER’S ATTORNEY-IN-FACT, COUPLED WITH AN INTEREST, WITH EXCLUSIVE POWER TO
COLLECT, RECEIVE AND RETAIN ANY CONDEMNATION PROCEEDS FOR SAID TAKING.  WITH
RESPECT TO ANY COMPROMISE OR SETTLEMENT IN CONNECTION WITH SUCH PROCEEDING,
LENDER SHALL JOINTLY WITH BORROWER COMPROMISE AND REACH SETTLEMENT UNLESS AT THE
TIME OF SUCH TAKING AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING AND THE
INDEBTEDNESS HAS BEEN ACCELERATED, IN WHICH EVENT LENDER SHALL COMPROMISE AND
REACH SETTLEMENT WITHOUT THE CONSENT OF BORROWER.  NOTWITHSTANDING THE FOREGOING
PROVISIONS OF THIS SECTION 5.1(Y), BORROWER IS AUTHORIZED TO NEGOTIATE,
COMPROMISE AND SETTLE, WITHOUT PARTICIPATION BY LENDER, CONDEMNATION PROCEEDS OF
UP TO 1% OF THE PRINCIPAL INDEBTEDNESS IN CONNECTION WITH ANY TAKING. 
NOTWITHSTANDING ANY TAKING, BORROWER SHALL CONTINUE TO PAY THE INDEBTEDNESS AT
THE TIME AND IN THE MANNER PROVIDED FOR IN THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS AND THE INDEBTEDNESS SHALL NOT BE REDUCED EXCEPT IN ACCORDANCE
HEREWITH.

 

(II)                                  BORROWER SHALL CAUSE THE CONDEMNATION
PROCEEDS TO BE PAID DIRECTLY TO LENDER.  LENDER MAY, IN ITS SOLE DISCRETION,
APPLY ANY SUCH CONDEMNATION PROCEEDS TO THE REDUCTION OR DISCHARGE OF THE
INDEBTEDNESS (WHETHER OR NOT THEN DUE AND PAYABLE).

 

(III)                               WITH RESPECT TO A TAKING IN PART, WHICH
SHALL MEAN ANY TAKING WHICH DOES NOT RENDER THE AFFECTED MORTGAGED PROPERTY
PHYSICALLY OR ECONOMICALLY UNSUITABLE IN THE REASONABLE JUDGMENT OF LENDER FOR
THE USE TO WHICH IT WAS DEVOTED PRIOR TO THE TAKING, BORROWER SHALL CAUSE THE
CONDEMNATION PROCEEDS TO BE PAID TO LENDER AS DESCRIBED ABOVE, AND IF LENDER
DOES NOT ELECT TO APPLY THE SAME TO THE INDEBTEDNESS AS PROVIDED IN SECTION
5.1(Y)(II) ABOVE, LENDER SHALL DEPOSIT SUCH CONDEMNATION PROCEEDS IN THE LOSS
PROCEEDS ACCOUNT AND THE SAME SHALL BE MADE AVAILABLE FOR APPLICATION TO THE
COST OF RESTORATION OF THE AFFECTED MORTGAGED PROPERTY AND DISBURSED FROM TIME
TO TIME AS THE RESTORATION PROGRESSES UPON LENDER BEING FURNISHED WITH (1)
EVIDENCE REASONABLY SATISFACTORY TO IT (WHICH EVIDENCE MAY INCLUDE INSPECTION(S)
OF THE WORK PERFORMED) THAT THE RESTORATION COVERED BY THE DISBURSEMENT HAS BEEN
COMPLETED IN ACCORDANCE WITH PLANS AND SPECIFICATIONS APPROVED BY LENDER, (2)
EVIDENCE REASONABLY SATISFACTORY TO IT OF THE ESTIMATED COST OF COMPLETION OF
THE RESTORATION, (3) FUNDS, OR, AT LENDER’S OPTION, ASSURANCES SATISFACTORY TO
LENDER THAT SUCH FUNDS ARE AVAILABLE AND SUFFICIENT IN ADDITION TO THE
CONDEMNATION PROCEEDS TO COMPLETE THE PROPOSED RESTORATION, AND (4) SUCH
ARCHITECT’S CERTIFICATES, WAIVERS OF LIEN, CONTRACTOR’S SWORN STATEMENTS, TITLE
INSURANCE

 

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ENDORSEMENTS, BONDS AND OTHER EVIDENCES OF COST, PAYMENT AND PERFORMANCE OF THE
FOREGOING REPAIR, RESTORATION, REPLACEMENT OR REBUILDING AS LENDER MAY
REASONABLY REQUIRE AND APPROVE.

 

(IV)                              REGARDLESS OF WHETHER CONDEMNATION PROCEEDS
ARE MADE AVAILABLE FOR SUCH PURPOSE, BORROWER HEREBY COVENANTS TO COMPLETE THE
RESTORATION OF THE AFFECTED MORTGAGED PROPERTY AS NEARLY AS POSSIBLE TO THE
PRE-EXISTING CONDITION AND TO BE OF AT LEAST COMPARABLE VALUE AND, TO THE EXTENT
COMMERCIALLY PRACTICABLE, OF SUBSTANTIALLY THE SAME CHARACTER AS PRIOR TO THE
TAKING, ALL TO BE EFFECTED IN ACCORDANCE WITH APPLICABLE LAW AND PLANS AND
SPECIFICATIONS REASONABLY APPROVED IN ADVANCE BY LENDER.  BORROWER SHALL PAY ALL
COSTS (AND IF REQUIRED BY LENDER, BORROWER SHALL DEPOSIT THE TOTAL THEREOF WITH
LENDER IN ADVANCE) OF SUCH RESTORATION IN EXCESS OF THE CONDEMNATION PROCEEDS
MADE AVAILABLE PURSUANT TO THE TERMS HEREOF.  LENDER MAY, IN ANY EVENT, REQUIRE
THAT ALL PLANS AND SPECIFICATIONS FOR SUCH RESTORATION BE SUBMITTED TO AND
REASONABLY APPROVED BY LENDER PRIOR TO COMMENCEMENT OF WORK.  LENDER MAY RETAIN
A CONSTRUCTION CONSULTANT TO INSPECT SUCH WORK AND REVIEW ANY REQUEST BY
BORROWER FOR PAYMENTS AND BORROWER SHALL, ON DEMAND BY LENDER, REIMBURSE LENDER
FOR THE REASONABLE FEES AND DISBURSEMENTS OF SUCH CONSULTANT.  NO PAYMENT MADE
PRIOR TO THE FINAL COMPLETION OF THE RESTORATION SHALL EXCEED NINETY PERCENT
(90%) OF THE HARD CONSTRUCTION COSTS VALUE OF THE CONSTRUCTION WORK PERFORMED
FROM TIME TO TIME (EXCEPT FOR RESTORATION WORK ON A TRADE BY TRADE BASIS OR ON
AN HOURLY BASIS FOR PROFESSIONAL SERVICES IN WHICH EVENT, PAYMENT MAY BE MADE IN
FULL UPON THE COMPLETION OF SUCH WORK); FUNDS OTHER THAN CONDEMNATION PROCEEDS
SHALL BE DISBURSED PRIOR TO DISBURSEMENT OF SUCH PROCEEDS; AND AT ALL TIMES, THE
UNDISBURSED BALANCE OF SUCH PROCEEDS REMAINING IN THE HANDS OF LENDER, TOGETHER
WITH FUNDS DEPOSITED FOR THAT PURPOSE OR IRREVOCABLY COMMITTED TO THE REPAYMENT
OF LENDER BY OR ON BEHALF OF BORROWER FOR THAT PURPOSE, SHALL BE AT LEAST
SUFFICIENT IN THE REASONABLE JUDGMENT OF LENDER TO PAY FOR THE COST OF
COMPLETION OF THE RESTORATION, REPAIR, REPLACEMENT OR REBUILDING, FREE AND CLEAR
OF ALL LIENS OR CLAIMS FOR LIEN.  ANY SURPLUS WHICH MAY REMAIN OUT OF
CONDEMNATION PROCEEDS HELD BY LENDER AFTER PAYMENT OF SUCH COSTS OF RESTORATION,
REPAIR, REPLACEMENT OR REBUILDING SHALL, AT THE OPTION OF LENDER IN ITS SOLE
DISCRETION, BE APPLIED TO THE PAYMENT OF THE INDEBTEDNESS OR BE PAID TO BORROWER
SO LONG AS NO EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING.

 

(V)                                 IF THE AFFECTED MORTGAGED PROPERTY IS SOLD,
THROUGH FORECLOSURE OR OTHERWISE, PRIOR TO THE RECEIPT BY LENDER OF ANY SUCH
CONDEMNATION PROCEEDS TO WHICH IT IS ENTITLED HEREUNDER, LENDER SHALL HAVE THE
RIGHT, WHETHER OR NOT A DEFICIENCY JUDGMENT ON THE NOTE SHALL HAVE BEEN SOUGHT,
RECOVERED OR DENIED, TO HAVE RESERVED IN ANY FORECLOSURE DECREE A RIGHT TO
RECEIVE SAID AWARD OR PAYMENT, OR A PORTION THEREOF SUFFICIENT TO PAY THE
INDEBTEDNESS.  IN NO CASE SHALL ANY SUCH APPLICATION REDUCE OR POSTPONE ANY
PAYMENTS OTHERWISE REQUIRED PURSUANT TO THIS AGREEMENT, OTHER THAN THE FINAL
PAYMENT ON THE NOTE.

 

(Z)                                   LEASES AND RENTS.

 

(I)                                     BORROWER ABSOLUTELY AND UNCONDITIONALLY
ASSIGNS TO LENDER, BORROWER’S RIGHT, TITLE AND INTEREST IN ALL CURRENT AND
FUTURE LEASES AND RENTS AS COLLATERAL FOR THE LOAN, IT BEING INTENDED BY
BORROWER THAT THIS ASSIGNMENT CONSTITUTES A PRESENT, ABSOLUTE

 

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ASSIGNMENT AND NOT AN ASSIGNMENT FOR ADDITIONAL SECURITY ONLY.  SUCH ASSIGNMENT
TO LENDER SHALL NOT BE CONSTRUED TO BIND LENDER TO THE PERFORMANCE OF ANY OF THE
COVENANTS, CONDITIONS OR PROVISIONS CONTAINED IN ANY SUCH LEASE OR OTHERWISE
IMPOSE ANY OBLIGATION UPON LENDER.  BORROWER SHALL EXECUTE AND DELIVER TO LENDER
SUCH ADDITIONAL INSTRUMENTS, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
LENDER, AS MAY HEREAFTER BE REASONABLY REQUESTED IN WRITING BY LENDER TO FURTHER
EVIDENCE AND CONFIRM SUCH ASSIGNMENT.  NEVERTHELESS, SUBJECT TO THE TERMS OF
THIS SECTION 5.1(Z), LENDER GRANTS TO BORROWER A LICENSE TO LEASE, MAINTAIN,
OPERATE AND MANAGE THE MORTGAGED PROPERTY AND TO COLLECT, USE AND APPLY THE
RENTS IN ACCORDANCE WITH THE TERMS HEREOF AND OTHERWISE ACT AS THE LANDLORD
UNDER THE LEASES, WHICH LICENSE SHALL BE DEEMED AUTOMATICALLY REVOKED UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT UNDER THIS
AGREEMENT.  ANY PORTION OF THE RENTS HELD BY BORROWER SHALL BE HELD IN TRUST FOR
THE BENEFIT OF LENDER FOR USE IN THE PAYMENT OF THE INDEBTEDNESS.  UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT AND DURING THE CONTINUANCE THEREOF, THE
LICENSE GRANTED TO BORROWER HEREIN SHALL AUTOMATICALLY BE REVOKED, AND LENDER
SHALL IMMEDIATELY BE ENTITLED TO POSSESSION OF ALL RENTS, WHETHER OR NOT LENDER
ENTERS UPON OR TAKES CONTROL OF THE MORTGAGED PROPERTY.  LENDER IS HEREBY
GRANTED AND ASSIGNED BY BORROWER THE RIGHT, AT ITS OPTION, UPON REVOCATION OF
THE LICENSE GRANTED HEREIN, TO ENTER UPON THE MORTGAGED PROPERTY IN PERSON, BY
AGENT OR BY COURT-APPOINTED RECEIVER TO COLLECT THE RENTS.  ANY RENTS COLLECTED
AFTER THE REVOCATION OF THE LICENSE SHALL BE APPLIED TOWARD PAYMENT OF THE
INDEBTEDNESS AS SET FORTH IN SECTION 2.8 HEREOF.

 

(II)                                  ALL LEASES ENTERED INTO BY BORROWER SHALL
PROVIDE FOR RENTAL RATES COMPARABLE TO THEN-EXISTING LOCAL MARKET RATES AND
TERMS AND CONDITIONS COMMERCIALLY REASONABLE AND CONSISTENT WITH THEN-PREVAILING
LOCAL MARKET TERMS AND CONDITIONS FOR SIMILAR TYPE PROPERTIES, AND IN NO EVENT
SHALL BORROWER, ABSENT LENDER’S PRIOR WRITTEN CONSENT, WHICH CONSENT SHALL NOT
BE UNREASONABLY WITHHELD OR DELAYED, ENTER INTO ANY LEASES (A) OTHER THAN LEASES
OF HOMESITES TO OWNERS AND OCCUPANTS OF RESIDENTIAL MANUFACTURED HOMES OR MOBILE
HOMES HAVING LEASE TERMS NOT IN EXCESS OF TWO YEARS, AND (B) WITH ANY AFFILIATES
OF BORROWER, EXCEPT AS INDICATED IN SCHEDULE 7 ATTACHED HERETO.  BORROWER SHALL
FURNISH LENDER WITH (1) DETAILED TERM SHEETS IN ADVANCE IN THE CASE OF ANY
LEASES, MODIFICATIONS, AMENDMENTS OR RENEWALS FOR WHICH LENDER’S CONSENT IS
REQUIRED AND (2) IN THE CASE OF ANY OTHER LEASES, EXECUTED COPIES OF SUCH LEASES
UPON WRITTEN REQUEST.  ALL RENEWALS OR AMENDMENTS OR MODIFICATIONS OF LEASES
THAT DO NOT SATISFY THE REQUIREMENTS OF THE FIRST SENTENCE OF THIS SECTION
5.1(Z)(II) SHALL BE SUBJECT TO THE PRIOR APPROVAL OF LENDER, WHICH APPROVAL
SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  ALL LEASES ENTERED INTO AFTER
THE CLOSING DATE WITH NEW TENANTS (I.E. NOT RENEWALS OF EXISTING TENANTS AS OF
THE CLOSING DATE) SHALL BE WRITTEN ON THE STANDARD LEASE FORM FOR NEW TENANTS
PREVIOUSLY APPROVED BY LENDER WHICH FORM AS OF THE CLOSING DATE IS SET FORTH ON
SCHEDULE 10 ATTACHED HERETO; PROVIDED THAT NOTWITHSTANDING THE FOREGOING, THE
BORROWER MAY MODIFY ANY STANDARD LEASE FORM WITHOUT SUCH APPROVAL TO THE EXTENT
NECESSARY TO CONFORM SUCH FORM TO ANY APPLICABLE LEGAL REQUIREMENTS (AND, UPON
REASONABLE REQUEST OF THE LENDER, THE BORROWER SHALL NOTIFY THE LENDER IN
WRITING WITH RESPECT TO SUCH MODIFICATION).  THE BORROWER SHALL NOT MATERIALLY
CHANGE THE STANDARD LEASE FORM WITHOUT LENDER’S PRIOR WRITTEN CONSENT, WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED, OR EXCEPT AS NECESSARY TO
COMPLY WITH APPLICABLE LEGAL REQUIREMENTS.  BORROWER,

 

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(A)                              SHALL OBSERVE AND PERFORM ALL OF THE MATERIAL
OBLIGATIONS IMPOSED UPON THE LESSOR UNDER THE LEASES AND SHALL NOT DO OR PERMIT
TO BE DONE ANYTHING TO MATERIALLY IMPAIR THE VALUE OF THE LEASES AS SECURITY FOR
THE INDEBTEDNESS;

 

(B)                                SHALL NOT EXECUTE ANY OTHER ASSIGNMENT OF
LESSOR’S INTEREST IN ANY OF THE LEASES OR RENTS;

 

(C)                                SHALL ENFORCE ALL OF THE MATERIAL TERMS,
COVENANTS AND CONDITIONS CONTAINED IN THE LEASES UPON THE PART OF THE LESSEE
THEREUNDER TO BE OBSERVED OR PERFORMED AND SHALL EFFECT A TERMINATION OR
DIMINUTION OF THE OBLIGATIONS OF TENANTS UNDER LEASES, ONLY IN A MANNER THAT A
PRUDENT OWNER OF A SIMILAR PROPERTY TO THE MORTGAGED PROPERTY WOULD ENFORCE SUCH
TERMS COVENANTS AND CONDITIONS OR EFFECT SUCH TERMINATION OR DIMINUTION IN THE
ORDINARY COURSE OF BUSINESS;

 

(D)                               EXCEPT AS OTHERWISE SET FORTH IN THE MONTHLY
STATEMENT SUBMITTED TO LENDER, SHALL NOT COLLECT ANY OF THE RENTS MORE THAN ONE
(1) MONTH IN ADVANCE; AND

 

(E)                                 SHALL NOT CONVEY OR TRANSFER OR SUFFER OR
PERMIT A CONVEYANCE OR TRANSFER OF THE MORTGAGED PROPERTY OR OF ANY INTEREST
THEREIN SO AS TO EFFECT A MERGER OF THE ESTATES AND RIGHTS OF, OR A TERMINATION
OR DIMINUTION OF THE OBLIGATIONS OF, LESSEES THEREUNDER.

 

(III)                               BORROWER SHALL DEPOSIT SECURITY DEPOSITS OF
LESSEES WHICH ARE TURNED OVER TO OR FOR THE BENEFIT OF BORROWER OR OTHERWISE
COLLECTED BY OR ON BEHALF OF BORROWER, INTO THE SECURITY DEPOSIT ACCOUNT AND
SHALL NOT COMMINGLE SUCH FUNDS WITH ANY OTHER FUNDS OF BORROWER.  ANY BOND OR
OTHER INSTRUMENT WHICH BORROWER IS PERMITTED TO HOLD IN LIEU OF CASH SECURITY
DEPOSITS UNDER ANY APPLICABLE LEGAL REQUIREMENTS SHALL BE MAINTAINED IN FULL
FORCE AND EFFECT UNLESS REPLACED BY CASH DEPOSITS AS HEREINABOVE DESCRIBED,
SHALL, IF PERMITTED PURSUANT TO LEGAL REQUIREMENTS, NAME LENDER AS PAYEE OR
MORTGAGEE THEREUNDER (OR AT LENDER’S OPTION, BE FULLY ASSIGNABLE TO LENDER) AND
SHALL, IN ALL RESPECTS, COMPLY WITH ANY APPLICABLE LEGAL REQUIREMENTS AND
OTHERWISE BE REASONABLY SATISFACTORY TO LENDER.  BORROWER SHALL, UPON REQUEST,
PROVIDE LENDER WITH EVIDENCE REASONABLY SATISFACTORY TO LENDER OF BORROWER’S
COMPLIANCE WITH THE FOREGOING.  UPON THE OCCURRENCE AND DURING THE CONTINUANCE
OF ANY EVENT OF DEFAULT, BORROWER SHALL, UPON LENDER’S REQUEST, IF PERMITTED BY
ANY APPLICABLE LEGAL REQUIREMENTS, TURN OVER TO LENDER THE SECURITY DEPOSITS
(AND ANY INTEREST THERETOFORE EARNED THEREON) WITH RESPECT TO ALL OR ANY PORTION
OF THE MORTGAGED PROPERTY, TO BE HELD BY LENDER SUBJECT TO THE TERMS OF THE
LEASES.

 

(AA)                            MAINTENANCE OF MORTGAGED PROPERTY.  BORROWER
SHALL CAUSE THE MORTGAGED PROPERTY TO BE MAINTAINED IN A GOOD AND SAFE CONDITION
AND REPAIR, SUBJECT TO WEAR AND TEAR AND DAMAGE CAUSED BY CASUALTY OR
CONDEMNATION.  THE IMPROVEMENTS AND THE EQUIPMENT SHALL NOT BE REMOVED,
DEMOLISHED OR ALTERED (EXCEPT FOR (1) NORMAL REPLACEMENT OF THE EQUIPMENT, (2)
IMPROVEMENTS CONTEMPLATED IN AN APPROVED OPERATING BUDGET OR PURSUANT TO LEASES
IN EFFECT FROM TIME TO TIME, (3) REMOVALS, DEMOLITION OR ALTERATIONS THAT DO NOT
COST MORE THAN 1% OF THE PRINCIPAL INDEBTEDNESS OR (4) AN EMERGENCY WHICH THE
BORROWER SHALL HAVE NOTIFIED THE LENDER OF

 

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IN WRITING, INCLUDING THE ACTION TAKEN TO REMEDIATE) WITHOUT THE CONSENT OF
LENDER WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  EXCEPT WITH
RESPECT TO AN INSURED CASUALTY WHICH SHALL BE GOVERNED BY THE TERMS AND
CONDITIONS PROVIDED HEREIN, BORROWER SHALL, OR SHALL CAUSE ANY TENANTS OBLIGATED
UNDER THEIR RESPECTIVE LEASES TO, PROMPTLY REPAIR, REPLACE OR REBUILD ANY PART
OF THE MORTGAGED PROPERTY THAT BECOMES DAMAGED, WORN OR DILAPIDATED.  BORROWER
SHALL COMPLETE AND PAY FOR ANY STRUCTURE AT ANY TIME IN THE PROCESS OF
CONSTRUCTION OR REPAIR ON THE LAND.  BORROWER SHALL NOT INITIATE, JOIN IN, OR
CONSENT TO ANY CHANGE IN ANY PRIVATE RESTRICTIVE COVENANT, ZONING LAW OR OTHER
PUBLIC OR PRIVATE RESTRICTION, LIMITING OR DEFINING THE USES WHICH MAY BE MADE
OF ANY MORTGAGED PROPERTY OR ANY PART THEREOF WITHOUT THE WRITTEN CONSENT OF
LENDER, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.  IF UNDER
APPLICABLE ZONING PROVISIONS THE USE OF ALL OR ANY PORTION OF THE MORTGAGED
PROPERTY IS OR SHALL BECOME A NONCONFORMING USE, BORROWER WILL NOT CAUSE OR
PERMIT SUCH NONCONFORMING USE TO BE DISCONTINUED OR ABANDONED IF SUCH
DISCONTINUANCE OF ABANDONMENT WOULD CAUSE SUCH NONCONFORMING USE TO NO LONGER BE
PERMITTED WITHOUT THE EXPRESS WRITTEN CONSENT OF LENDER, WHICH CONSENT SHALL NOT
BE UNREASONABLY WITHHELD OR DELAYED.  BORROWER SHALL NOT (I) CHANGE THE USE OF
ANY OF THE LAND OR IMPROVEMENTS IN ANY MATERIAL RESPECT, (II) PERMIT OR SUFFER
TO OCCUR ANY WASTE ON OR TO ANY MORTGAGED PROPERTY OR TO ANY PORTION THEREOF OR
(III) TAKE ANY STEPS WHATSOEVER TO CONVERT ANY MORTGAGED PROPERTY, OR ANY
PORTION THEREOF, TO A CONDOMINIUM OR COOPERATIVE FORM OF MANAGEMENT.

 

(BB)                          PROHIBITED PERSONS.  BORROWER COVENANTS AND AGREES
TO DELIVER (FROM TIME TO TIME) TO LENDER ANY CERTIFICATION OR OTHER EVIDENCE AS
MAY BE REQUESTED BY LENDER IN ITS SOLE AND ABSOLUTE DISCRETION, CONFIRMING THAT:
(I) NEITHER BORROWER, MEMBER, GENERAL PARTNER, GUARANTOR NOR THEIR RESPECTIVE
OFFICERS, DIRECTORS, PARTNERS, MEMBERS OR MAJORITY-OWNED AFFILIATES IS A
PROHIBITED PERSON; AND (II) NEITHER BORROWER, MEMBER, GENERAL PARTNER, GUARANTOR
NOR THEIR RESPECTIVE OFFICERS, DIRECTORS, PARTNERS, MEMBERS OR MAJORITY-OWNED
AFFILIATES HAS ENGAGED IN ANY BUSINESS, TRANSACTION OR DEALINGS WITH A PERSON
KNOWN TO BORROWER TO BE A PROHIBITED PERSON, INCLUDING, BUT NOT LIMITED TO, THE
MAKING OR RECEIVING OF ANY CONTRIBUTION OF FUNDS, GOODS, OR SERVICES, TO OR FOR
THE BENEFIT OF A PERSON KNOWN TO BORROWER TO BE A PROHIBITED PERSON.

 

ARTICLE VI.
NEGATIVE COVENANTS

 

SECTION 6.1.                                   NEGATIVE COVENANTS.  BORROWER
COVENANTS AND AGREES THAT, UNTIL PAYMENT IN FULL OF THE INDEBTEDNESS, IT WILL
NOT DO, DIRECTLY OR INDIRECTLY, ANY OF THE FOLLOWING UNLESS LENDER CONSENTS
THERETO IN WRITING:

 

(A)                                  LIENS ON THE MORTGAGED PROPERTY.  INCUR,
CREATE, ASSUME, BECOME OR BE LIABLE IN ANY MANNER WITH RESPECT TO, OR PERMIT TO
EXIST, EXCEPT AS PERMITTED BY SECTION 5.1(B) ABOVE, ANY LIEN WITH RESPECT TO ANY
MORTGAGED PROPERTY OR ANY PORTION THEREOF, EXCEPT: (I) LIENS IN FAVOR OF LENDER
AND (II) THE PERMITTED ENCUMBRANCES.

 

(B)                                 OWNERSHIP AND TRANSFER.  EXCEPT AS EXPRESSLY
PERMITTED BY OR PURSUANT TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OWN ANY
PROPERTY OF ANY KIND OTHER THAN THE MORTGAGED PROPERTY, OR TRANSFER ANY
MORTGAGED PROPERTY OR ANY PORTION THEREOF.

 

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(C)                                  OTHER BORROWINGS.  INCUR, CREATE, ASSUME,
BECOME OR BE LIABLE IN ANY MANNER WITH RESPECT TO OTHER BORROWINGS.

 

(D)                                 DISSOLUTION; MERGER OR CONSOLIDATION. 
DISSOLVE, TERMINATE, LIQUIDATE, MERGE WITH OR CONSOLIDATE INTO ANOTHER PERSON.

 

(E)                                  CHANGE IN BUSINESS.  MAKE ANY MATERIAL
CHANGE IN THE SCOPE OR NATURE OF ITS BUSINESS OBJECTIVES, PURPOSES OR
OPERATIONS, OR UNDERTAKE OR PARTICIPATE IN ACTIVITIES OTHER THAN THE CONTINUANCE
OF ITS PRESENT BUSINESS.

 

(F)                                    DEBT CANCELLATION.  CANCEL OR OTHERWISE
FORGIVE OR RELEASE ANY MATERIAL CLAIM OR DEBT OWED TO BORROWER BY ANY PERSON,
EXCEPT FOR ADEQUATE CONSIDERATION OR IN THE ORDINARY COURSE OF BORROWER’S
BUSINESS.

 

(G)                                 AFFILIATE TRANSACTIONS.  EXCEPT FOR FEES
PAYABLE TO MANAGER UNDER THE MANAGEMENT AGREEMENT, (I) PAY ANY MANAGEMENT,
CONSULTING, DIRECTOR OR SIMILAR FEES TO ANY AFFILIATE OF BORROWER OR TO ANY
DIRECTOR OR MANAGER (OTHER THAN ANY CUSTOMARY FEES OF THE INDEPENDENT MANAGER),
OFFICER OR EMPLOYEE OF BORROWER, (II) DIRECTLY OR INDIRECTLY ENTER INTO OR
PERMIT TO EXIST ANY TRANSACTION (INCLUDING THE PURCHASE, SALE, LEASE OR EXCHANGE
OF ANY PROPERTY OR THE RENDERING OF ANY SERVICE) WITH ANY AFFILIATE OF BORROWER
OR WITH ANY DIRECTOR, OFFICER OR EMPLOYEE OF ANY AFFILIATE OF BORROWER, EXCEPT
TRANSACTIONS IN THE ORDINARY COURSE OF AND PURSUANT TO THE REASONABLE
REQUIREMENTS OF THE BUSINESS OF BORROWER AND UPON FAIR AND REASONABLE TERMS
WHICH ARE NO LESS FAVORABLE TO BORROWER THAN WOULD BE OBTAINED IN A COMPARABLE
ARM’S LENGTH TRANSACTION WITH A PERSON THAT IS NOT AN AFFILIATE OF BORROWER, OR
(III) MAKE ANY PAYMENT OR PERMIT ANY PAYMENT TO BE MADE TO ANY AFFILIATE OF
BORROWER WHEN OR AS TO ANY TIME WHEN ANY EVENT OF DEFAULT SHALL EXIST.

 

(H)                                 CREATION OF EASEMENTS.  EXCEPT AS EXPRESSLY
PERMITTED BY OR PURSUANT TO THE MORTGAGES OR THIS AGREEMENT, CREATE, OR PERMIT
ANY MORTGAGED PROPERTY OR ANY PART THEREOF TO BECOME SUBJECT TO, ANY EASEMENT,
LICENSE OR RESTRICTIVE COVENANT, OTHER THAN A PERMITTED ENCUMBRANCE, PROVIDED,
THAT THE CONSENT OF LENDER SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED TO THE
EXTENT THAT ANY SUCH EASEMENT, LICENSE OR RESTRICTIVE COVENANT IS REASONABLY
NECESSARY FOR THE CONTINUED USE, ENJOYMENT, ACCESS TO OR OPERATION OF THE
APPLICABLE MORTGAGED PROPERTY.

 

(I)                                     MISAPPLICATION OF FUNDS.  DISTRIBUTE ANY
RENTS OR MONEYS RECEIVED FROM ACCOUNTS IN VIOLATION OF THE PROVISIONS OF SECTION
2.12, OR FAIL TO PLEDGE ANY SECURITY DEPOSIT TO LENDER, OR MISAPPROPRIATE ANY
SECURITY DEPOSIT OR PORTION THEREOF.

 

(J)                                     CERTAIN RESTRICTIONS.  AMEND, MODIFY OR
WAIVE ANY OF ITS RIGHTS UNDER THE MASTER HOMESITE LEASE DOCUMENTATION, PROVIDED
THAT BORROWER SHALL, NOT LESS FREQUENTLY THAN ONCE EACH SIX MONTHS, ENTER INTO
AMENDMENTS CONTEMPLATED UNDER PARAGRAPH 1 OF THE MASTER HOMESITE LEASE, IN FORM
REASONABLY SATISFACTORY TO LENDER AND PROVIDE THE SAME TO LENDER.  BORROWER
SHALL ENFORCE ITS RIGHTS UNDER THE MASTER HOMESITE LEASE DOCUMENTATION IN A
COMMERCIALLY REASONABLY MANNER, INCLUDING ITS RIGHT TO COLLECT AND RETAIN
ADDITIONAL MASTER LEASE DEPOSITS FROM TIME TO TIME AS PROVIDED IN THE MASTER
LEASE, WHICH BORROWER SHALL PROMPTLY DEPOSIT INTO THE MASTER LEASE DEPOSIT
ACCOUNT.

 

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(K)                                  ASSIGNMENT OF LICENSES AND PERMITS.  ASSIGN
OR TRANSFER ANY OF ITS INTEREST IN ANY PERMITS PERTAINING TO ANY MORTGAGED
PROPERTY, OR ASSIGN, TRANSFER OR REMOVE OR PERMIT ANY OTHER PERSON TO ASSIGN,
TRANSFER OR REMOVE ANY RECORDS PERTAINING TO ANY MORTGAGED PROPERTY.

 

(L)                                     PLACE OF ORGANIZATION.  CHANGE ITS
JURISDICTION OF ORGANIZATION, CREATION OR FORMATION, AS APPLICABLE, WITHOUT
GIVING LENDER AT LEAST FIFTEEN (15) DAYS’ PRIOR WRITTEN NOTICE THEREOF AND
PROMPTLY PROVIDING LENDER SUCH INFORMATION AS LENDER MAY REASONABLY REQUEST IN
CONNECTION THEREWITH.

 

(M)                               LEASES.  ENTER INTO, AMEND OR CANCEL LEASES,
EXCEPT AS PERMITTED BY THIS AGREEMENT.

 

(N)                                 MANAGEMENT AGREEMENT.  EXCEPT IN ACCORDANCE
WITH THIS AGREEMENT, (I) TERMINATE OR CANCEL THE MANAGEMENT AGREEMENT, (II)
CONSENT TO EITHER THE REDUCTION OF THE TERM OF OR THE ASSIGNMENT OF THE
MANAGEMENT AGREEMENT, (III) INCREASE OR CONSENT TO THE INCREASE OF THE AMOUNT OF
ANY CHARGES UNDER THE MANAGEMENT AGREEMENT, OR (IV) OTHERWISE MODIFY, CHANGE,
SUPPLEMENT, ALTER OR AMEND, OR WAIVE OR RELEASE ANY OF ITS RIGHTS AND REMEDIES
UNDER, THE MANAGEMENT AGREEMENT IN ANY MATERIAL RESPECT.

 

(O)                                 PLANS AND WELFARE PLANS.  KNOWINGLY ENGAGE
IN OR PERMIT ANY TRANSACTION IN CONNECTION WITH WHICH BORROWER OR ANY ERISA
AFFILIATE COULD BE SUBJECT TO EITHER A MATERIAL CIVIL PENALTY OR TAX ASSESSED
PURSUANT TO SECTION 502(I) OR 502(1) OF ERISA OR SECTION 4975 OF THE CODE,
PERMIT ANY WELFARE PLAN TO PROVIDE BENEFITS, INCLUDING WITHOUT LIMITATION,
MEDICAL BENEFITS (WHETHER OR NOT INSURED), WITH RESPECT TO ANY CURRENT OR FORMER
EMPLOYEE OF BORROWER BEYOND HIS OR HER RETIREMENT OR OTHER TERMINATION OF
SERVICE OTHER THAN (I) COVERAGE MANDATED BY APPLICABLE LAW, (II) DEATH OR
DISABILITY BENEFITS THAT HAVE BEEN FULLY PROVIDED FOR BY PAID UP INSURANCE OR
OTHERWISE OR (III) SEVERANCE BENEFITS (UNLESS SUCH COVERAGE IS PROVIDED AFTER
NOTIFICATION OF AND WITH THE REASONABLE APPROVAL OF LENDER OR PURSUANT TO AN
EMPLOYMENT OR SEVERANCE AGREEMENT ENTERED INTO IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICE), PERMIT THE ASSETS OF BORROWER TO BECOME
“PLAN ASSETS”, WHETHER BY OPERATION OF LAW OR UNDER REGULATIONS PROMULGATED
UNDER ERISA OR ADOPT, AMEND (EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW) OR
MATERIALLY INCREASE THE AMOUNT OF ANY BENEFIT OR AMOUNT PAYABLE UNDER, OR PERMIT
ANY ERISA AFFILIATE TO ADOPT, AMEND (EXCEPT AS MAY BE REQUIRED BY APPLICABLE
LAW) OR MATERIALLY INCREASE THE AMOUNT OF ANY BENEFIT OR AMOUNT PAYABLE UNDER,
ANY PLAN OR WELFARE PLAN, EXCEPT FOR NORMAL INCREASES IN THE ORDINARY COURSE OF
BUSINESS CONSISTENT WITH PAST PRACTICE THAT, IN THE AGGREGATE, DO NOT RESULT IN
A MATERIAL INCREASE IN BENEFITS EXPENSE TO BORROWER OR ANY ERISA AFFILIATE.

 

(P)                                 TRANSFER OF OWNERSHIP INTERESTS.  PERMIT ANY
TRANSFER OF A DIRECT OR INDIRECT OWNERSHIP INTEREST OR VOTING RIGHT IN BORROWER
(OTHER THAN A PERMITTED TRANSFER).

 

(Q)                                 EQUIPMENT AND INVENTORY.  EXCEPT PURSUANT TO
THE MANAGEMENT AGREEMENT, PERMIT ANY EQUIPMENT OWNED BY BORROWER TO BE REMOVED
AT ANY TIME FROM ANY MORTGAGED PROPERTY UNLESS THE REMOVED ITEM IS CONSUMED OR
SOLD IN THE USUAL AND CUSTOMARY COURSE OF BUSINESS, REMOVED TEMPORARILY FOR
MAINTENANCE AND REPAIR OR, IF REMOVED PERMANENTLY, REPLACED BY AN ARTICLE OF
EQUIVALENT SUITABILITY AND NOT MATERIALLY LESS VALUE, OWNED BY BORROWER FREE AND
CLEAR OF ANY LIEN (OTHER THAN PERMITTED ENCUMBRANCES).

 

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(R)                                    MANAGEMENT FEES.  PAY BORROWER OR ANY
AFFILIATE OF BORROWER ANY MANAGEMENT FEES WITH RESPECT TO THE MORTGAGED PROPERTY
EXCEPT FOR MANAGEMENT FEES PAID TO MANAGER UNDER THE MANAGEMENT AGREEMENT.

 

(S)                                  PROHIBITED PERSONS.  WITH RESPECT TO
BORROWER, MEMBER, GENERAL PARTNER, GUARANTOR AND ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, PARTNERS, MEMBERS OR MAJORITY-OWNED AFFILIATES: (I) CONDUCT
ANY BUSINESS, OR ENGAGE IN ANY TRANSACTION OR DEALING, WITH ANY PERSON KNOWN TO
BORROWER TO BE A PROHIBITED PERSON, INCLUDING, BUT NOT LIMITED TO, THE MAKING OR
RECEIVING OF ANY CONTRIBUTION OF FUNDS, GOODS, OR SERVICES, TO OR FOR THE
BENEFIT OF A PROHIBITED PERSON; OR (II) ENGAGE IN OR CONSPIRE TO ENGAGE IN ANY
TRANSACTION THAT EVADES OR AVOIDS, OR HAS THE PURPOSE OF EVADING OR AVOIDING, OR
ATTEMPTS TO VIOLATE, ANY OF THE PROHIBITIONS SET FORTH IN EO13224.

 

ARTICLE VII.
EVENT OF DEFAULT

 

SECTION 7.1.                                   EVENT OF DEFAULT.  THE OCCURRENCE
OF ONE OR MORE OF THE FOLLOWING EVENTS SHALL BE AN “EVENT OF DEFAULT” HEREUNDER:

 

(A)                                  IF ON ANY PAYMENT DATE BORROWER FAILS TO
PAY ANY MONTHLY DEBT SERVICE PAYMENT DUE AND PAYABLE ON SUCH PAYMENT DATE, OR IF
BORROWER FAILS TO MAKE ANY SCHEDULED DEPOSITS INTO THE RESERVE ACCOUNTS WHEN DUE
AND PAYABLE IN ACCORDANCE WITH THE PROVISIONS HEREOF;

 

(B)                                 IF BORROWER FAILS TO PAY THE OUTSTANDING
INDEBTEDNESS ON THE MATURITY DATE;

 

(C)                                  IF BORROWER FAILS TO PAY OR DEPOSIT ANY
OTHER AMOUNT PAYABLE OR REQUIRED TO BE DEPOSITED PURSUANT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT WHEN DUE AND PAYABLE IN ACCORDANCE WITH THE PROVISIONS
HEREOF OR THEREOF, AS THE CASE MAY BE, AND SUCH FAILURE CONTINUES FOR TEN (10)
DAYS AFTER LENDER DELIVERS WRITTEN NOTICE THEREOF TO BORROWER (OTHER THAN THE
FAILURE OF THE LENDER TO TRANSFER AVAILABLE FUNDS FROM THE COLLECTION ACCOUNT TO
A RESERVE ACCOUNT PURSUANT TO SECTION 2.12(B);

 

(D)                                 IF ANY REPRESENTATION OR WARRANTY MADE
HEREIN OR IN ANY OTHER LOAN DOCUMENT, OR IN ANY REPORT, CERTIFICATE, FINANCIAL
STATEMENT OR OTHER INSTRUMENT, AGREEMENT OR DOCUMENT FURNISHED BY BORROWER,
MEMBER OR GUARANTOR IN CONNECTION WITH THIS AGREEMENT, THE NOTE OR ANY OTHER
LOAN DOCUMENT SHALL BE FALSE OR MATERIALLY MISLEADING AS OF THE DATE SUCH
REPRESENTATION OR WARRANTY WAS MADE (OR IF SUCH REPRESENTATION OR WARRANTY
RELATES TO AN EARLIER DATE, THEN AS OF SUCH EARLIER DATE);

 

(E)                                  IF BORROWER OR THE GUARANTOR MAKES AN
ASSIGNMENT FOR THE BENEFIT OF CREDITORS;

 

(F)                                    IF A RECEIVER, LIQUIDATOR OR TRUSTEE
SHALL BE APPOINTED FOR BORROWER OR THE GUARANTOR OR IF BORROWER OR THE GUARANTOR
SHALL BE ADJUDICATED A BANKRUPT OR INSOLVENT, OR IF ANY PETITION FOR BANKRUPTCY,
REORGANIZATION OR ARRANGEMENT PURSUANT TO FEDERAL BANKRUPTCY LAW, OR ANY SIMILAR
FEDERAL OR STATE LAW, SHALL BE FILED BY OR AGAINST, CONSENTED TO, OR ACQUIESCED
IN BY,

 

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BORROWER OR THE GUARANTOR, OR IF ANY PROCEEDING FOR THE DISSOLUTION OR
LIQUIDATION OF BORROWER OR THE GUARANTOR SHALL BE INSTITUTED; PROVIDED, HOWEVER,
THAT IF SUCH APPOINTMENT, ADJUDICATION, PETITION OR PROCEEDING WAS INVOLUNTARY
AND NOT CONSENTED TO BY BORROWER OR THE GUARANTOR, UPON THE SAME NOT BEING
DISCHARGED, STAYED OR DISMISSED WITHIN NINETY (90) DAYS, OR IF BORROWER OR THE
GUARANTOR SHALL GENERALLY NOT BE PAYING ITS DEBTS AS THEY BECOME DUE;

 

(G)                                 IF BORROWER ATTEMPTS TO DELEGATE ITS
OBLIGATIONS OR ASSIGN ITS RIGHTS UNDER THIS AGREEMENT, ANY OF THE OTHER LOAN
DOCUMENTS OR ANY INTEREST HEREIN OR THEREIN, OR IF ANY TRANSFER OF ANY MORTGAGED
PROPERTY OR ANY INTEREST THEREIN OCCURS, OR ANY DIRECT OR INDIRECT TRANSFER OF
ANY DIRECT OR INDIRECT OWNERSHIP INTEREST IN BORROWER OCCURS, OTHER THAN IN
ACCORDANCE WITH OR AS PERMITTED UNDER THIS AGREEMENT;

 

(H)                                 IF ANY BREACH OR FAILURE TO PERFORM ANY OF
THE COVENANTS IN ARTICLE VI HEREOF SHALL OCCUR, WHICH BREACH OR FAILURE TO
PERFORM, IN THE CASE OF SECTION 6.1(O) OR (Q) ONLY, SHALL REMAIN UNCURED FOR A
PERIOD OF THIRTY (30) DAYS AFTER THE OCCURRENCE OF SUCH BREACH OR FAILURE TO
PERFORM OR IF ANY MATERIAL BREACH OR FAILURE TO PERFORM ANY OF THE COVENANTS IN
ARTICLE VIII HEREOF SHALL OCCUR;

 

(I)                                     IF AN EVENT OF DEFAULT AS DEFINED OR
DESCRIBED IN THE NOTE OR ANY OTHER LOAN DOCUMENT OCCURS, WHETHER AS TO BORROWER
OR THE MORTGAGED PROPERTY OR ANY PORTION THEREOF;

 

(J)                                     IF ANY OF THE ASSUMPTIONS MADE WITH
RESPECT TO BORROWER AND ITS AFFILIATES IN THAT CERTAIN SUBSTANTIVE
NON-CONSOLIDATION OPINION LETTER DATED AS OF FEBRUARY __, 2004 DELIVERED BY
HOLME ROBERTS & OWEN LLP IN CONNECTION WITH THE LOAN IS NOT TRUE AND CORRECT IN
ALL RESPECTS;

 

(K)                                  IF BORROWER FAILS TO MAINTAIN ANY INSURANCE
REQUIRED TO BE MAINTAINED PURSUANT TO SECTION 5.1(X) HEREOF; AND

 

(L)                                     IF BORROWER SHALL FAIL TO PERFORM ANY OF
THE TERMS, COVENANTS OR CONDITIONS OF THIS AGREEMENT, THE NOTE, THE MORTGAGES OR
THE OTHER LOAN DOCUMENTS, OTHER THAN AS SPECIFICALLY OTHERWISE REFERRED TO ABOVE
IN THIS DEFINITION OF “EVENT OF DEFAULT,” FOR TEN (10) DAYS AFTER NOTICE TO
BORROWER FROM LENDER OR ITS SUCCESSORS OR ASSIGNS, IN THE CASE OF ANY DEFAULT
WHICH CAN BE CURED BY THE PAYMENT OF A SUM OF MONEY, OR FOR THIRTY (30) DAYS
AFTER NOTICE FROM LENDER OR ITS SUCCESSORS OR ASSIGNS, IN THE CASE OF ANY OTHER
DEFAULT (UNLESS A LONGER NOTICE PERIOD IS OTHERWISE PROVIDED HEREIN OR IN SUCH
OTHER LOAN DOCUMENT); PROVIDED, HOWEVER, THAT IF SUCH NON-MONETARY DEFAULT IS
SUSCEPTIBLE OF CURE BUT CANNOT REASONABLY BE CURED WITHIN SUCH THIRTY (30) DAY
PERIOD AND SUCH BORROWER SHALL HAVE COMMENCED TO CURE SUCH DEFAULT WITHIN SUCH
THIRTY (30) DAY PERIOD AND THEREAFTER DILIGENTLY AND EXPEDITIOUSLY PROCEEDS TO
CURE THE SAME, SUCH THIRTY (30) DAY PERIOD SHALL BE EXTENDED FOR AN ADDITIONAL
THIRTY (30) DAYS;

 

then, upon the occurrence of any such Event of Default and at any time
thereafter, Lender or its successors or assigns, may, in addition to any other
rights or remedies available to it pursuant to this Agreement and the other Loan
Documents or at law or in equity, take such action, without further notice or
demand, as Lender or its successors or assigns, deems advisable to protect and
enforce its rights against Borrower and in and to all or any portion of the
Collateral, and may

 

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enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and/or the Collateral (including, without limitation,
all rights or remedies available at law or in equity).  In addition to and
without limiting the foregoing, upon the occurrence of any Event of Default
described in any of Sections 7.1(e), (f), or (g), the unpaid principal amount of
and accrued interest and fees on the Loan and all other Indebtedness shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by Borrower. 
Upon and at any time after the occurrence of any other Event of Default, at the
option of Lender, which may be exercised without notice or demand to anyone, all
or any portion of the Loan and other Indebtedness shall immediately become due
and payable.

 

SECTION 7.2.                                   REMEDIES.

 

(A)                                  UPON THE OCCURRENCE OF AN EVENT OF DEFAULT,
ALL OR ANY ONE OR MORE OF THE RIGHTS, POWERS, OTHER REMEDIES AVAILABLE TO LENDER
AGAINST BORROWER UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
EXECUTED BY OR WITH RESPECT TO BORROWER, OR AT LAW OR IN EQUITY MAY BE EXERCISED
BY LENDER AT ANY TIME AND FROM TIME TO TIME, WHETHER OR NOT ALL OR ANY PORTION
OF THE INDEBTEDNESS SHALL BE DECLARED DUE AND PAYABLE, AND WHETHER OR NOT LENDER
SHALL HAVE COMMENCED ANY FORECLOSURE PROCEEDING OR OTHER ACTION FOR THE
ENFORCEMENT OF ITS RIGHTS AND REMEDIES UNDER ANY OF THE LOAN DOCUMENTS WITH
RESPECT TO ALL OR ANY PORTION OF THE COLLATERAL.  ANY SUCH ACTIONS TAKEN BY
LENDER SHALL BE CUMULATIVE AND CONCURRENT AND MAY BE PURSUED INDEPENDENTLY,
SINGLY, SUCCESSIVELY, TOGETHER OR OTHERWISE, AT SUCH TIME AND IN SUCH ORDER AS
LENDER MAY DETERMINE IN ITS SOLE DISCRETION, TO THE FULLEST EXTENT PERMITTED BY
LAW, WITHOUT IMPAIRING OR OTHERWISE AFFECTING THE OTHER RIGHTS AND REMEDIES OF
LENDER PERMITTED BY LAW, EQUITY OR CONTRACT OR AS SET FORTH HEREIN OR IN THE
OTHER LOAN DOCUMENTS.

 

(B)                                 IN THE EVENT OF THE FORECLOSURE OR OTHER
ACTION BY LENDER TO ENFORCE LENDER’S REMEDIES IN CONNECTION WITH ALL OR ANY
PORTION OF THE COLLATERAL, LENDER SHALL APPLY ALL NET PROCEEDS RECEIVED TO REPAY
THE INDEBTEDNESS IN ACCORDANCE WITH SECTION 2.8, THE INDEBTEDNESS SHALL BE
REDUCED TO THE EXTENT OF SUCH NET PROCEEDS AND THE REMAINING PORTION OF THE
INDEBTEDNESS SHALL REMAIN OUTSTANDING AND SECURED BY THE LOAN DOCUMENTS, IT
BEING UNDERSTOOD AND AGREED BY BORROWER THAT BORROWER IS LIABLE FOR THE
REPAYMENT OF ALL THE INDEBTEDNESS; PROVIDED, HOWEVER, THAT THE LOAN SHALL BE
DEEMED TO HAVE BEEN REPAID ONLY TO THE EXTENT OF THE NET PROCEEDS ACTUALLY
RECEIVED BY LENDER WITH RESPECT TO THE COLLATERAL AND APPLIED IN REDUCTION OF
THE INDEBTEDNESS EVIDENCED BY THE NOTE IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT, AFTER PAYMENT BY BORROWER OF ALL TRANSACTION COSTS AND COSTS OF
ENFORCEMENT.

 

(C)                                  UPON AND DURING THE CONTINUATION OF AN
EVENT OF DEFAULT, LENDER SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, WITH
RESPECT TO ANY AND ALL BANKRUPTCY PROCEEDINGS THAT ARE NOW OR HEREAFTER
COMMENCED IN CONNECTION WITH THE MORTGAGED PROPERTY, TO (I) VOTE TO ACCEPT OR
REJECT ANY PLANS OF REORGANIZATION, (II) VOTE IN ANY ELECTION OF A TRUSTEE,
(III) ELECT THE TREATMENT OF SECURED CLAIMS AS SPECIFIED IN SECTION 1111(B) OF
THE BANKRUPTCY CODE, AND (IV) MAKE ANY OTHER DECISIONS REQUESTED OF HOLDERS OF
CLAIMS OR INTERESTS THAT BORROWER WOULD HAVE HAD THE RIGHT TO DO IN SUCH
BANKRUPTCY PROCEEDINGS IN THE ABSENCE OF AN EVENT OF DEFAULT.

 

SECTION 7.3.                                   REMEDIES CUMULATIVE.  THE RIGHTS,
POWERS AND REMEDIES OF LENDER UNDER THIS AGREEMENT SHALL BE CUMULATIVE AND NOT
EXCLUSIVE OF ANY OTHER RIGHT, POWER OR REMEDY

 

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WHICH LENDER MAY HAVE AGAINST BORROWER PURSUANT TO THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS EXECUTED BY OR WITH RESPECT TO BORROWER, OR EXISTING AT LAW OR IN
EQUITY OR OTHERWISE.  LENDER’S RIGHTS, POWERS AND REMEDIES MAY BE PURSUED
SINGLY, CONCURRENTLY OR OTHERWISE, AT SUCH TIME AND IN SUCH ORDER AS LENDER MAY
DETERMINE IN LENDER’S SOLE DISCRETION.  NO DELAY OR OMISSION TO EXERCISE ANY
REMEDY, RIGHT OR POWER ACCRUING UPON AN EVENT OF DEFAULT SHALL IMPAIR ANY SUCH
REMEDY, RIGHT OR POWER OR SHALL BE CONSTRUED AS A WAIVER THEREOF, BUT ANY SUCH
REMEDY, RIGHT OR POWER MAY BE EXERCISED FROM TIME TO TIME AND AS OFTEN AS MAY BE
DEEMED EXPEDIENT.  A WAIVER OF ANY DEFAULT OR EVENT OF DEFAULT SHALL NOT BE
CONSTRUED TO BE A WAIVER OF ANY SUBSEQUENT DEFAULT OR EVENT OF DEFAULT OR TO
IMPAIR ANY REMEDY, RIGHT OR POWER CONSEQUENT THEREON.  NOTWITHSTANDING ANY OTHER
PROVISION OF THIS AGREEMENT, LENDER RESERVES THE RIGHT TO SEEK A DEFICIENCY
JUDGMENT OR PRESERVE A DEFICIENCY CLAIM, IN CONNECTION WITH THE FORECLOSURE OF
ANY MORTGAGE ON THE MORTGAGED PROPERTY, TO THE EXTENT NECESSARY TO FORECLOSE ON
OTHER PARTS OF THE COLLATERAL.

 

SECTION 7.4.                                   INTENTIONALLY OMITTED.

 

SECTION 7.5.                                   CURATIVE ADVANCES.  IF ANY EVENT
OF DEFAULT OCCURS AND IS NOT CURED BY BORROWER AFTER NOTICE FROM LENDER, THEN
LENDER MAY EXPEND SUCH SUMS AS EITHER SHALL REASONABLY DEEM APPROPRIATE TO CURE
OR ATTEMPT TO CURE SUCH EVENT OF DEFAULT.  BORROWER SHALL IMMEDIATELY REPAY ALL
SUCH SUMS SO ADVANCED, WHICH SUMS SHALL IMMEDIATELY BECOME PART OF THE
INDEBTEDNESS, BEAR INTEREST AT THE DEFAULT RATE FROM THE DATE ADVANCED UNTIL THE
DATE REPAID, AND BE SECURED BY ALL COLLATERAL.

 

ARTICLE VIII.
SINGLE-PURPOSE, BANKRUPTCY-REMOTE REPRESENTATIONS,
WARRANTIES AND COVENANTS

 

SECTION 8.1.                                   APPLICABLE TO BORROWER.  BORROWER
HEREBY ACKNOWLEDGES THAT, AS A CONDITION OF LENDER’S AGREEMENTS AND PERFORMANCE
OF ITS OBLIGATIONS HEREUNDER, LENDER IS RELYING ON THE STATUS OF BORROWER AS A
LEGAL ENTITY SEPARATE AND APART FROM ANY AFFILIATE OR OTHER ENTITY AND HAS
REQUIRED THAT BORROWER MAINTAIN SUCH STATUS, AND LENDER HEREBY ACKNOWLEDGES SUCH
RELIANCE AND REQUIREMENT.  ACCORDINGLY, BORROWER HEREBY REPRESENTS, WARRANTS AND
COVENANTS AS OF THE CLOSING DATE AND UNTIL SUCH TIME AS THE LOAN IS PAID IN
FULL, THAT ABSENT EXPRESS ADVANCE WRITTEN WAIVER FROM LENDER, WHICH MAY BE
WITHHELD THE LENDER’S SOLE DISCRETION, BORROWER:

 

(A)                                  WAS AND WILL BE ORGANIZED SOLELY FOR
PURPOSE OF OWNING AND OPERATING THE MORTGAGED PROPERTY;

 

(B)                                 HAS NOT OWNED, DOES NOT OWN AND WILL NOT OWN
ANY ASSETS OTHER THAN THE MORTGAGED PROPERTY (INCLUDING INCIDENTAL PERSONAL
PROPERTY NECESSARY FOR THE OPERATION THEREOF AND PROCEEDS THEREFROM);

 

(C)                                  WAS NOT ENGAGED, IS NOT ENGAGED AND WILL
NOT ENGAGE IN ANY BUSINESS, DIRECTLY OR INDIRECTLY, OTHER THAN THE OWNERSHIP,
MANAGEMENT AND OPERATION OF THE MORTGAGED PROPERTY;

 

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(D)                                 HAS NOT ENTERED INTO AND WILL NOT ENTER INTO
ANY CONTRACT OR AGREEMENT WITH ANY PARTNER, MEMBER, SHAREHOLDER, TRUSTEE,
BENEFICIARY, PRINCIPAL, JOINT VENTURER OR AFFILIATE OF BORROWER EXCEPT IN THE
ORDINARY COURSE OF ITS BUSINESS PURSUANT TO WRITTEN AGREEMENTS UPON TERMS AND
CONDITIONS THAT ARE INTRINSICALLY FAIR AND SUBSTANTIALLY SIMILAR TO THOSE THAT
WOULD BE AVAILABLE ON AN ARMS-LENGTH BASIS WITH THIRD PARTIES OTHER THAN SUCH
AFFILIATE;

 

(E)                                  HAS NOT INCURRED AND WILL NOT INCUR ANY
DEBT, SECURED OR UNSECURED, DIRECT OR CONTINGENT (INCLUDING GUARANTEEING ANY
OBLIGATION), OTHER THAN (I) THE LOAN AND (II) TRADE PAYABLES INCURRED IN THE
ORDINARY COURSE OF BUSINESS WITH TRADE CREDITORS IN CONNECTION WITH OWNING,
OPERATING AND MAINTAINING THE MORTGAGED PROPERTY, IN SUCH AMOUNTS AS ARE NORMAL
AND REASONABLE UNDER THE CIRCUMSTANCES, PROVIDED SUCH DEBT IS NOT EVIDENCED BY A
PROMISSORY NOTE OR OTHER SECURITY INSTRUMENT AND IS NOT AT ANY TIME IN AN
AGGREGATE AMOUNT IN EXCESS OF TWO PERCENT (2%) OF THE PRINCIPAL INDEBTEDNESS,
AND FURTHER PROVIDED THAT ALL SUCH TRADE DEBTS ARE PAID WITHIN SIXTY (60) DAYS
AFTER THE SAME ARE INCURRED (EXCLUDING THEREFROM ANY EQUIPMENT FINANCING PAID
WITHIN SIXTY (60) DAYS AFTER THE SAME ARE INCURRED) AND TRADE PAYABLES BEING
DISPUTED OR CONTESTED IN GOOD FAITH BY THE BORROWER AND IN THE SAME MANNER AND
WITH THE SAME DEPOSITS AS LIEN CLAIMS SET FORTH IN SECTION 5.1(B)(II) OF THIS
AGREEMENT;)

 

(F)                                    HAS NOT MADE AND WILL NOT MAKE ANY LOAN
OR ADVANCES TO ANY PERSON (INCLUDING ANY OF ITS AFFILIATES), OR PLEDGE ITS
ASSETS FOR THE BENEFIT OF ANY OTHER PERSON, OR SEEK OR OBTAIN CREDIT OR INCUR
ANY OBLIGATION TO ANY THIRD PARTY BASED UPON THE ASSETS OF ANY OTHER PERSON, OR
INDUCE ANY THIRD PARTY TO RELY ON THE CREDITWORTHINESS OF ANY OTHER PERSON;

 

(G)                                 HAS REMAINED AND AS OF THE CLOSING DATE
REASONABLY EXPECTS TO REMAIN, SOLVENT, AND HAS MAINTAINED, AND AS OF THE CLOSING
DATE REASONABLY EXPECTS TO MAINTAIN ADEQUATE CAPITAL FOR THE NORMAL OBLIGATIONS
REASONABLY FORESEEABLE IN A BUSINESS OF ITS SIZE AND CHARACTER AND IN LIGHT OF
ITS CONTEMPLATED BUSINESS OPERATIONS;

 

(H)                                 HAS NOT ACQUIRED AND WILL NOT ACQUIRE
OBLIGATIONS OR SECURITIES OF ANY PERSON;

 

(I)                                     HAS NOT FAILED AND WILL NOT FAIL TO
CORRECT ANY KNOWN MISUNDERSTANDING OR MISREPRESENTATION REGARDING ITS SEPARATE
IDENTITY;

 

(J)                                     HAS DONE OR CAUSED TO BE DONE AND WILL
DO ALL THINGS NECESSARY TO PRESERVE ITS EXISTENCE;

 

(K)                                  SHALL CONTINUOUSLY MAINTAIN ITS EXISTENCE
AND GOOD STANDING AND BE QUALIFIED TO DO BUSINESS IN ALL STATES NECESSARY TO
CARRY ON ITS BUSINESS, INCLUDING THE STATE IN WHICH THE MORTGAGED PROPERTY IS
LOCATED;

 

(L)                                     HAS CONDUCTED AND OPERATED AND WILL
CONDUCT AND OPERATE ITS BUSINESS SOLELY IN ITS OWN NAME, WITH ALL ORAL AND
WRITTEN COMMUNICATIONS FROM BORROWER, INCLUDING, WITHOUT LIMITATION,
CORRESPONDENCE, INVOICES, PURCHASE ORDERS, BILLING STATEMENTS, APPLICATIONS AND
BUSINESS FORMS, MADE SOLELY IN THE NAME OF BORROWER;

 

(M)                               HAS ACCURATELY MAINTAINED AND WILL CONTINUE TO
ACCURATELY MAINTAIN BOOKS, RECORDS, BANK ACCOUNTS, ACCOUNTING RECORDS, FINANCIAL
STATEMENTS AND OTHER ENTITY DOCUMENTS

 

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SEPARATE FROM THOSE OF ITS PARTNERS, MEMBERS, SHAREHOLDERS, TRUSTEES,
BENEFICIARIES, PRINCIPALS, AFFILIATES, AND ANY OTHER PERSON, WITH SUCH
ACCOUNTING RECORDS AND FINANCIAL STATEMENTS HAVING BEEN PREPARED AND KEPT IN
ACCORDANCE WITH REASONABLE ACCOUNTING PRACTICES APPLIED ON A CONSISTENT BASIS,
AND SUCH FINANCIAL STATEMENTS OF BORROWER SHALL BE PREPARED IN A MANNER THAT
INDICATES (THROUGH APPROPRIATE FOOTNOTES IF NECESSARY) THE EXISTENCE OF BORROWER
AND ITS ASSETS AND LIABILITIES SEPARATE AND APART FROM ANY OTHER PERSON;
MOREOVER, BORROWER SHALL INDICATE IN ITS FINANCIAL STATEMENTS THAT THE ASSETS OF
BORROWER ARE NOT AVAILABLE TO SATISFY THE CLAIMS OF CREDITORS OF ANY AFFILIATE
OF BORROWER AND THAT THE ASSETS OF ANY AFFILIATE OF BORROWER ARE NOT AVAILABLE
TO SATISFY THE CLAIMS OF CREDITORS OF BORROWER AND, EXCEPT WITH APPROPRIATE
DESIGNATION AS SET FORTH ABOVE, BORROWER SHALL NOT AUTHORIZE ITS ASSETS OR
LIABILITIES TO BE LISTED ON THE FINANCIAL STATEMENT OF ANY OTHER PERSON;

 

(N)                                 HAS BEEN AND WILL BE, AND AT ALL TIMES HAS
HELD AND WILL HOLD ITSELF OUT TO THE PUBLIC AS, A LEGAL ENTITY SEPARATE AND
DISTINCT FROM ANY OTHER PERSON (INCLUDING ANY OF ITS PARTNERS, MEMBERS,
SHAREHOLDERS, TRUSTEES, BENEFICIARIES, PRINCIPALS AND AFFILIATES, AND ANY
AFFILIATES OF ANY OF THE SAME), AND NOT AS A DEPARTMENT OR DIVISION OF ANY
PERSON;

 

(O)                                 HAS AND WILL FILE SUCH TAX RETURNS WITH
RESPECT TO ITSELF AS MAY BE REQUIRED UNDER APPLICABLE LAW AND HAS PREPARED AND
WILL PREPARE SEPARATE TAX RETURNS AND FINANCIAL STATEMENTS, OR IF PART OF A
CONSOLIDATED GROUP, IS SHOWN AS A SEPARATE MEMBER OF SUCH GROUP;

 

(P)                                 HAS PAID AND SHALL PAY ITS OWN LIABILITIES,
INDEBTEDNESS, AND OBLIGATIONS OF ANY KIND, AS THE SAME SHALL BECOME DUE, FROM
ITS OWN SEPARATE ASSETS, RATHER THAN FROM THOSE OF OTHER PERSONS, AND BORROWER
SHALL NOT CONSENT TO ANY PERSON OPERATING THE MORTGAGED PROPERTY TO INCUR
EXPENSES AS AGENT OR ON BEHALF OF BORROWER, UNLESS SUCH PERSON AGREES, PRIOR TO
INCURRING SUCH EXPENSE, TO CLEARLY INDICATE THAT SUCH EXPENSES ARE THE SOLE
RESPONSIBILITY OF, AND ANY PAYMENT WILL COME FROM, BORROWER;

 

(Q)                                 HAS NOT AND WILL NOT ENTER INTO ANY
TRANSACTION OF MERGER OR CONSOLIDATION, OR ACQUIRE BY PURCHASE OR OTHERWISE ALL
OR SUBSTANTIALLY ALL OF THE BUSINESS OR ASSETS OF, OR ANY STOCK OR BENEFICIAL
OWNERSHIP OF, ANY PERSON;

 

(R)                                    HAS NOT COMMINGLED AND WILL NOT COMMINGLE
OR PERMIT TO BE COMMINGLED ITS FUNDS OR OTHER ASSETS WITH THOSE OF ANY OTHER
PERSON; AND HAS HELD AND WILL HOLD TITLE TO ALL OF ITS REAL AND PERSONAL
PROPERTY IN ITS OWN NAME AND NOT IN THE NAME OF ANY OTHER PERSON;

 

(S)                                  HAS MAINTAINED AND WILL MAINTAIN ITS ASSETS
IN SUCH A MANNER THAT IT IS NOT COSTLY OR DIFFICULT TO SEGREGATE, ASCERTAIN OR
IDENTIFY ITS INDIVIDUAL ASSETS FROM THOSE OF ANY OTHER PERSON;

 

(T)                                    HAS NOT, DOES NOT AND WILL NOT HOLD
ITSELF OUT TO BE RESPONSIBLE FOR THE DEBTS OR OBLIGATIONS OF ANY OTHER PERSON
AND, EXCEPT FOR THE LOAN DOCUMENTS TO WHICH OTHER PERSONS ARE PARTY, SHALL NOT
CONSENT TO ANY OTHER PERSON HOLDING ITSELF OUT AS BEING RESPONSIBLE FOR THE
DEBTS OR OBLIGATIONS OF BORROWER;

 

(U)                                 HAS NOT AND WILL NOT ASSUME, GUARANTEE OR
OTHERWISE BECOME LIABLE ON OR IN CONNECTION WITH ANY OBLIGATION OF ANY OTHER
PERSON AND, EXCEPT FOR THE LOAN DOCUMENTS TO WHICH

 

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OTHER PERSONS ARE PARTY, SHALL NOT CONSENT TO ANY OTHER PERSON GUARANTEEING,
ASSUMING OR OTHERWISE BECOMING LIABLE FOR ANY OBLIGATION OF BORROWER;

 

(V)                                 EXCEPT FOR FUNDS DEPOSITED INTO THE LOCAL
COLLECTION ACCOUNT, THE COLLECTION ACCOUNT OR THE RESERVE ACCOUNTS IN ACCORDANCE
WITH THE LOAN DOCUMENTS, HAS NOT AND SHALL NOT HOLD TITLE TO ITS ASSETS OTHER
THAN IN ITS NAME;

 

(W)                               COMPLIES AND SHALL AT ALL TIMES HEREAFTER
COMPLY WITH ALL OF THE ASSUMPTIONS, STATEMENTS, CERTIFICATIONS, REPRESENTATIONS,
WARRANTIES AND COVENANTS REGARDING OR MADE BY IT CONTAINED IN OR APPENDED TO THE
NONCONSOLIDATION OPINION DELIVERED PURSUANT HERETO;

 

(X)                                   HAS PAID AND WILL PAY ITS OWN LIABILITIES
AND EXPENSES, OUT OF ITS OWN FUNDS AND SHALL NOT CONSENT TO ANY OTHER PERSON
PAYING BORROWER’S OBLIGATIONS EXCEPT TO THE EXTENT THAT TIMELY REIMBURSEMENT IS
MADE FOR THE SAME;

 

(Y)                                 HAS HELD AND WILL HOLD REGULAR MEETINGS, AS
APPROPRIATE TO CONDUCT ITS BUSINESS AND HAS OBSERVED AT ALL TIMES AND WILL
OBSERVE ALL LIMITED LIABILITY COMPANY FORMALITIES AND RECORD KEEPING;

 

(Z)                                   HAS ALLOCATED AND WILL ALLOCATE TO
BORROWER REASONABLY AND ON THE BASIS OF FAIR MARKET VALUE DETERMINED ON AN
ARMS-LENGTH BASIS ALL GENERAL OVERHEAD AND ADMINISTRATIVE EXPENSES, INCLUDING
ALL COSTS ASSOCIATED WITH COMMON EMPLOYEES AND SHARED OFFICE SPACE, ANY SUCH
ALLOCATION SHALL BE SPECIFICALLY AND REASONABLY DOCUMENTED AND SUBSTANTIATED,
ANY SUCH ALLOCATION OF EXPENSES TO BORROWER SHALL BE PAID SOLELY BY BORROWER
FROM BORROWER’S OWN FUNDS, AND BORROWER SHALL AT ALL TIMES USE SEPARATE
STATIONARY, LETTERHEAD, INVOICES AND CHECKS;

 

(AA)                            HAS NOT AND WILL NOT IDENTIFY ITS MEMBERS OR
PARTNERS, INDEPENDENT MANAGER (AS DEFINED BELOW) OR ANY OTHER MEMBER OR PARTNER
OF ANY AFFILIATE OF BORROWER, OR ANY OTHER PERSON, AS A DIVISION OR PART OF IT;

 

(BB)                          HAS PAID AND WILL PAY THE SALARIES OF ITS OWN
EMPLOYEES AND HAS MAINTAINED AND WILL MAINTAIN A SUFFICIENT NUMBER OF EMPLOYEES
IN LIGHT OF ITS CONTEMPLATED BUSINESS OPERATIONS;

 

(CC)                            HAS MAINTAINED, CURRENTLY MAINTAINS, AND WILL
CONTINUE TO MAINTAIN, ITS OWN CASH, CASH POSITIONS AND BANK ACCOUNTS SEPARATE
FROM ANY OTHER PERSON;

 

(DD)                          SHALL NOT (I) LIQUIDATE OR DISSOLVE, IN WHOLE OR
IN PART; (II) CONSOLIDATE, MERGE OR ENTER INTO ANY FORM OF CONSOLIDATION WITH OR
INTO ANY OTHER PERSON, NOR CONVEY, TRANSFER OR LEASE ITS ASSETS SUBSTANTIALLY AS
AN ENTIRETY TO ANY PERSON NOR PERMIT ANY PERSON TO CONSOLIDATE, MERGE OR ENTER
INTO ANY FORM OF CONSOLIDATION WITH OR INTO ITSELF, NOR CONVEY, TRANSFER OR
LEASE ITS ASSETS SUBSTANTIALLY AS AN ENTIRETY TO ANY PERSON; (III) ENGAGE IN ANY
BUSINESS OTHER THAN THE OWNERSHIP AND OPERATION OF THE MORTGAGED PROPERTY; OR
(IV) AMEND ANY PROVISIONS OF ITS ORGANIZATIONAL DOCUMENTS CONTAINING PROVISIONS
SIMILAR TO THOSE CONTAINED IN THIS ARTICLE VIII;

 

(EE)                            IS A LIMITED LIABILITY COMPANY DULY FORMED AND
EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE WITH ONE (1) EQUITY MEMBER (THE
“SINGLE MEMBER”) IN ADDITION TO THE INDEPENDENT MANAGER, WHOSE LIMITED LIABILITY
COMPANY AGREEMENT (THE “BORROWER

 

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ORGANIZATIONAL DOCUMENTS”) CONTAINS EACH OF THE REPRESENTATIONS, COVENANTS AND
WARRANTIES SET FORTH IN THIS ARTICLE VIII AND REQUIRES BORROWER TO AT ALL TIMES
CAUSE THERE TO BE AT LEAST ONE (1) DULY APPOINTED INDEPENDENT DIRECTOR OR
INDEPENDENT MANAGER, AS APPLICABLE, WHO IS A NATURAL PERSON AND ALSO A
NON-ECONOMIC MEMBER OF BORROWER (EACH, AN “INDEPENDENT DIRECTOR/MANAGER”) WHOSE
AFFIRMATIVE VOTE WILL BE REQUIRED IN ORDER FOR A VOLUNTARY FILING FOR PROTECTION
UNDER THE BANKRUPTCY CODE OR SIMILAR ACTION BY BORROWER AND WHO IS NOT AT THE
TIME OF SUCH INDIVIDUAL’S INITIAL APPOINTMENT AS INDEPENDENT DIRECTOR/MANAGER,
SHALL NOT BE DURING SUCH INDIVIDUAL’S TENURE AS INDEPENDENT DIRECTOR/MANAGER,
AND MAY NOT HAVE BEEN AT ANY TIME DURING THE PRECEDING FIVE YEARS, (I) A
SHAREHOLDER, MEMBER OR PARTNER OF, OR AN OFFICER, MANAGER, DIRECTOR, EXCEPT IN
HIS OR HER CAPACITY AS INDEPENDENT DIRECTOR/MANAGER OF BORROWER, PAID CONSULTANT
OR EMPLOYEE OF, CUSTOMER OF OR SUPPLIER TO OR A MEMBER OF THE IMMEDIATE FAMILY
OF BORROWER (EXCEPT IN HIS OR HER CAPACITY AS INDEPENDENT DIRECTOR/MANAGER OF
BORROWER) OR ANY OF ITS SHAREHOLDERS, MEMBERS, PARTNERS, SUBSIDIARIES OR
AFFILIATES OR (II) ANY PERSON OR OTHER ENTITY CONTROLLING OR UNDER COMMON
CONTROL WITH ANY SUCH SHAREHOLDER, MEMBER, PARTNER, OFFICER, MANAGER, DIRECTOR,
EMPLOYEE, SUPPLIER OR CUSTOMER OR ANY MEMBER OF THE IMMEDIATE FAMILY OF ANY OF
THEM; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS ON THE USE OF PERSONS
WHO ARE AFFILIATES OF BORROWER AS INDEPENDENT DIRECTOR/MANAGER SHALL NOT APPLY
TO BORROWER’S USE OF NATURAL PERSONS EMPLOYED BY CT CORPORATION OR ANY
REPUTABLE, NATIONAL SERVICE SIMILAR TO CT CORPORATION AND REASONABLY APPROVED BY
LENDER TO FILL THE POSITION OF INDEPENDENT DIRECTOR/ MANAGER REQUIRED HEREUNDER,
NOTWITHSTANDING THAT SUCH PERSONS MAY ALSO ACT AS INDEPENDENT DIRECTORS OF SUCH
AFFILIATES OF BORROWER, SO LONG AS SUCH INDEPENDENT DIRECTOR/MANAGER DOES NOT
DERIVE MORE THAN 5% OF HIS/HER ANNUAL INCOME FROM SERVING AS DIRECTOR/MANAGER OF
AFFILIATES OF BORROWER.  AS USED HEREIN, THE TERM “CONTROL” MEANS THE
POSSESSION, DIRECTLY OR INDIRECTLY, OF THE POWER TO DIRECT OR CAUSE THE
DIRECTION OF THE MANAGEMENT AND POLICIES OF A PERSON OR ENTITY, WHETHER THROUGH
OWNERSHIP OF VOTING SECURITIES, BY CONTRACT OR OTHERWISE;

 

(FF)                                HAS COMPLIED AND WILL COMPLY WITH THE
SEPARATENESS PROVISIONS OF THE ORGANIZATIONAL DOCUMENTS SINCE SUCH
ORGANIZATIONAL DOCUMENTS WERE EXECUTED AND DELIVERED, AND WITH THE LAWS OF THE
STATE OF ITS FORMATION RELATING TO LIMITED LIABILITY COMPANIES;

 

(GG)                          WITH RESPECT TO ANY ENTITY COMPRISING THE BORROWER
THAT IS A LIMITED LIABILITY COMPANY, THE ORGANIZATIONAL DOCUMENTS PROVIDE AND
SHALL AT ALL TIMES CONTINUE TO PROVIDE THAT UPON THE OCCURRENCE OF ANY EVENT
THAT CAUSES THE SINGLE MEMBER TO CEASE TO BE A MEMBER OF BORROWER, THE
INDEPENDENT DIRECTOR/MANAGER SHALL, WITHOUT ACTION OF ANY PERSON AND
SIMULTANEOUSLY WITH THE SINGLE MEMBER CEASING TO BE A MEMBER OF BORROWER,
AUTOMATICALLY CONTINUE AS A MEMBER OF SUCH BORROWER AND SHALL CONTINUE BORROWER
WITHOUT DISSOLUTION;

 

(HH)                          WITH RESPECT TO ANY ENTITY COMPRISING THE BORROWER
THAT IS A LIMITED LIABILITY COMPANY, BORROWER SHALL CAUSE REPUTABLE DELAWARE
COUNSEL ACCEPTABLE TO LENDER (THE “DELAWARE LAW FIRM”) TO DELIVER TO LENDER AN
OPINION LETTER REASONABLY SATISFACTORY TO LENDER, WHEREBY THE DELAWARE LAW FIRM
OPINES (WHICH OPINION MAY BE SUBJECT TO STANDARD ASSUMPTIONS, QUALIFICATIONS,
LIMITATIONS AND EXCEPTIONS ACCEPTABLE TO LENDER), AMONG OTHER REQUIREMENTS OF
LENDER, THAT: (1) THE UNANIMOUS CONSENT OF THE SINGLE MEMBER AND THE INDEPENDENT
MANAGER IS REQUIRED IN ORDER FOR THE APPLICABLE BORROWER TO FILE A VOLUNTARY
BANKRUPTCY PETITION; (2) THE PROVISION IN ORGANIZATIONAL DOCUMENTS THAT REQUIRES
UNANIMOUS CONSENT AS A CONDITION TO FILING A VOLUNTARY BANKRUPTCY PETITION IS
ENFORCEABLE AGAINST THE SINGLE MEMBER; (3) THE BANKRUPTCY, DISSOLUTION,
LIQUIDATION OR DEATH OF THE SINGLE MEMBER WILL NOT CAUSE THE APPLICABLE BORROWER
TO

 

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BE DISSOLVED; (4) NO CREDITOR OF THE SINGLE MEMBER SHALL HAVE THE RIGHT TO
OBTAIN POSSESSION OF, OR OTHERWISE EXERCISE LEGAL OR EQUITABLE REMEDIES WITH
RESPECT TO, THE APPLICABLE BORROWER’S PROPERTY; AND (5) DELAWARE LAW, NOT
FEDERAL LAW, GOVERNS THE DETERMINATION OF WHAT PERSONS OR ENTITIES HAVE THE
AUTHORITY TO FILE A VOLUNTARY BANKRUPTCY PETITION ON BEHALF OF THE APPLICABLE
BORROWER;

 

(II)                                  THE ORGANIZATIONAL DOCUMENTS PROVIDE AND
SHALL AT ALL TIMES CONTINUE TO PROVIDE THAT BORROWER SHALL NOT CAUSE, PERMIT, OR
EMPOWER THE SINGLE MEMBER, MANAGER, OR ANY OTHER PERSON TO CONSOLIDATE OR MERGE
BORROWER INTO ANY OTHER ENTITY, OR, WITHOUT THE AFFIRMATIVE VOTE AND EXPRESS
WRITTEN AUTHORIZATION OF ALL MEMBERS OR PARTNERS OF BORROWER AND THE INDEPENDENT
DIRECTOR/MANAGER, TO INSTITUTE PROCEEDINGS TO HAVE BORROWER ADJUDICATED BANKRUPT
OR INSOLVENT, OR CONSENT TO THE INSTITUTION OF BANKRUPTCY OR INSOLVENCY
PROCEEDINGS AGAINST BORROWER OR FILE A PETITION SEEKING OR CONSENT TO,
REORGANIZATION OR RELIEF WITH RESPECT TO BORROWER UNDER ANY APPLICABLE FEDERAL
OR STATE LAW RELATING TO BANKRUPTCY, OR CONSENT TO THE APPOINTMENT OF A
RECEIVER, LIQUIDATOR, ASSIGNEE, TRUSTEE, SEQUESTRATOR (OR OTHER SIMILAR
OFFICIAL) OF BORROWER OR A SUBSTANTIAL PART OF BORROWER’S PROPERTY, OR MAKE ANY
ASSIGNMENT FOR THE BENEFIT OF CREDITORS OF BORROWER, OR ADMIT IN WRITING
BORROWER’S INABILITY TO PAY ITS DEBTS GENERALLY AS THEY BECOME DUE, OR TAKE
ACTION IN FURTHERANCE OF ANY SUCH ACTION; AND

 

(JJ)                                  THE BORROWER ORGANIZATIONAL DOCUMENTS
PROVIDE AND SHALL AT ALL TIMES CONTINUE TO PROVIDE (I) THAT BORROWER SHALL AT
ALL TIMES MAINTAIN AN ARMS-LENGTH RELATIONSHIP WITH ANY AFFILIATES OF BORROWER,
(II) THAT BORROWER SHALL AT ALL TIMES MAINTAIN INDEPENDENT MANAGEMENT OVER ITS
DAILY BUSINESS AFFAIRS, FREE FROM ANY CONTROL EXERCISED BY ANY AFFILIATE OF
BORROWER, AND (III) THAT TO THE EXTENT THAT CONTROL OF BORROWER IS EXERCISED BY
ANY MANAGER, AND THE SAME INDIVIDUAL ACTS AS MANAGER OR SIMILAR CONTROL PERSON
WITH RESPECT TO ANY AFFILIATE OF BORROWER, SUCH INDIVIDUAL WILL ACT IN
ACCORDANCE WITH THE SEPARATENESS REQUIREMENTS OF THE LOAN DOCUMENTS AND BORROWER
ORGANIZATIONAL DOCUMENTS, INCLUDING, WITHOUT LIMITATION (A) AN EXPRESS
REQUIREMENT UNDER THE BORROWER ORGANIZATIONAL DOCUMENTS THAT THE MANAGER OF
BORROWER MAKE ALL DECISIONS REGARDING THE BUSINESS OF BORROWER INDEPENDENT OF,
AND NOT DICTATED BY, ANY AFFILIATE OF THE BORROWER, AND (B) THE PROVISIONS OF
THE LOAN DOCUMENTS AND THE BORROWER ORGANIZATIONAL DOCUMENTS RELATING TO
TRANSACTIONS WITH AFFILIATES OF BORROWER AND CONFLICTS OF INTEREST.

 

ARTICLE IX.
MISCELLANEOUS

 

SECTION 9.1.                                   SURVIVAL.  THIS AGREEMENT AND ALL
COVENANTS, AGREEMENTS, REPRESENTATIONS AND WARRANTIES MADE HEREIN AND IN THE
CERTIFICATES DELIVERED PURSUANT HERETO SHALL SURVIVE THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE MAKING THE LOAN HEREUNDER AND THE EXECUTION AND DELIVERY
BY BORROWER TO LENDER OF THE LOAN DOCUMENTS, AND SHALL CONTINUE IN FULL FORCE
AND EFFECT SO LONG AS ANY PORTION OF THE INDEBTEDNESS IS OUTSTANDING AND
UNPAID.  WHENEVER IN THIS AGREEMENT ANY OF THE PARTIES HERETO IS REFERRED TO,
SUCH REFERENCE SHALL BE DEEMED TO INCLUDE THE SUCCESSORS AND ASSIGNS OF SUCH
PARTY.  ALL COVENANTS, PROMISES AND AGREEMENTS IN THIS AGREEMENT CONTAINED, BY
OR ON BEHALF OF BORROWER, SHALL INURE TO THE BENEFIT OF THE RESPECTIVE
SUCCESSORS AND ASSIGNS OF LENDER.  NOTHING IN THIS AGREEMENT OR IN ANY OTHER
LOAN DOCUMENT, EXPRESS OR IMPLIED, SHALL GIVE TO ANY PERSON OTHER THAN THE
PARTIES AND THE HOLDER OF THE NOTE AND

 

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THE OTHER LOAN DOCUMENTS, AND THEIR LEGAL REPRESENTATIVES, SUCCESSORS AND
ASSIGNS, ANY BENEFIT OR ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM HEREUNDER.

 

SECTION 9.2.                                   LENDER’S DISCRETION.  WHENEVER
PURSUANT TO THIS AGREEMENT, LENDER EXERCISES ANY RIGHT GIVEN TO IT TO APPROVE OR
DISAPPROVE, OR ANY ARRANGEMENT OR TERM IS TO BE SATISFACTORY TO LENDER, THE
DECISION OF LENDER TO APPROVE OR DISAPPROVE OR TO DECIDE WHETHER ARRANGEMENTS OR
TERMS ARE SATISFACTORY OR NOT SATISFACTORY SHALL (EXCEPT AS IS OTHERWISE
SPECIFICALLY HEREIN PROVIDED) BE IN THE SOLE DISCRETION OF LENDER AND SHALL BE
FINAL AND CONCLUSIVE.

 

SECTION 9.3.                                   GOVERNING LAW.

 

This Agreement was negotiated in New York and made by Lender and accepted by
Borrower in the State of New York, and the proceeds of the Note delivered
pursuant hereto were disbursed from New York, which State the parties agree has
a substantial relationship to the parties and to the underlying transaction
embodied hereby, and in all respects (including, without limitation, matters of
construction, validity, performance, and maximum permissible rates of interest),
this Agreement and the obligations arising hereunder shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts made and performed in such State and any applicable law of the United
States of America, except that at all times the provisions for the creation,
perfection and enforcement of the liens and security interests created pursuant
to each Mortgage and Assignment of Rents and Leases shall be governed by the
laws of each State where the related Mortgaged Property is located, except that
the security interests in Account Collateral shall be governed by the laws of
the State of New York or the State where the Account Collateral is held, at the
option of Lender..

 

(A)                                  BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY FEDERAL COURT OR STATE COURT IN NEW YORK, NEW YORK OR WITHIN
THE COUNTY AND STATE IN WHICH ANY MORTGAGED PROPERTY IS LOCATED AND IRREVOCABLY
AGREES THAT, SUBJECT TO LENDER’S ELECTION, ANY LEGAL SUIT, ACTION OR PROCEEDING
AGAINST LENDER OR BORROWER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS MAY BE INSTITUTED AND LITIGATED IN SUCH COURTS.  BORROWER
HEREBY (I) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, AND (II) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUCH SUIT, ACTION OR PROCEEDING.  BORROWER DOES HEREBY DESIGNATE AND APPOINT
CORPORATION SERVICE COMPANY, AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE
ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK,
AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS (OR AT SUCH
OTHER OFFICE IN NEW YORK, NEW YORK AS MAY BE DESIGNATED BY BORROWER FROM TIME TO
TIME IN ACCORDANCE WITH THE TERMS HEREOF) WITH A COPY TO BORROWER AT ITS
PRINCIPAL EXECUTIVE OFFICES, AND WRITTEN NOTICE OF SAID SERVICE OF BORROWER
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER, IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGE IN ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE SHALL BE DESIGNATED AS
THE ADDRESS FOR SERVICE OF PROCESS), AND (III) SHALL

 

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PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

 

SECTION 9.4.                                   MODIFICATION, WAIVER IN WRITING. 
NO MODIFICATION, AMENDMENT, EXTENSION, DISCHARGE, TERMINATION OR WAIVER OF ANY
PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR CONSENT OR WAIVER
REFERRED TO IN ANY LOAN DOCUMENT OR CONSENT TO ANY DEPARTURE BY BORROWER
THEREFROM, SHALL IN ANY EVENT BE EFFECTIVE UNLESS THE SAME SHALL BE IN A WRITING
SIGNED BY THE PARTY AGAINST WHOM ENFORCEMENT IS SOUGHT, AND THEN SUCH WAIVER OR
CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE, AND FOR THE PURPOSE,
FOR WHICH GIVEN.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NO NOTICE TO OR
DEMAND ON BORROWER SHALL ENTITLE BORROWER TO ANY OTHER OR FUTURE NOTICE OR
DEMAND IN THE SAME, SIMILAR OR OTHER CIRCUMSTANCES.

 

SECTION 9.5.                                   DELAY NOT A WAIVER.  NEITHER ANY
FAILURE NOR ANY DELAY ON THE PART OF LENDER IN INSISTING UPON STRICT PERFORMANCE
OF ANY TERM, CONDITION, COVENANT OR AGREEMENT, OR EXERCISING ANY RIGHT, POWER,
REMEDY OR PRIVILEGE HEREUNDER, OR UNDER ANY OTHER LOAN DOCUMENT, OR ANY OTHER
INSTRUMENT GIVEN AS SECURITY THEREFOR, SHALL OPERATE AS OR CONSTITUTE A WAIVER
THEREOF, NOR SHALL A SINGLE OR PARTIAL EXERCISE THEREOF PRECLUDE ANY OTHER
FUTURE EXERCISE, OR THE EXERCISE OF ANY OTHER RIGHT, POWER, REMEDY OR
PRIVILEGE.  IN PARTICULAR, AND NOT BY WAY OF LIMITATION, BY ACCEPTING PAYMENT
AFTER THE DUE DATE OF ANY AMOUNT PAYABLE UNDER THIS AGREEMENT, THE NOTE OR ANY
OTHER LOAN DOCUMENT, LENDER SHALL NOT BE DEEMED TO HAVE WAIVED ANY RIGHT EITHER
TO REQUIRE PROMPT PAYMENT WHEN DUE OF ALL OTHER AMOUNTS DUE UNDER THIS
AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS, OR TO DECLARE A DEFAULT FOR
FAILURE TO EFFECT PROMPT PAYMENT OF ANY SUCH OTHER AMOUNT.

 

SECTION 9.6.                                   NOTICES.  ALL NOTICES, CONSENTS,
APPROVALS AND REQUESTS REQUIRED OR PERMITTED HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT SHALL BE GIVEN IN WRITING AND SHALL BE EFFECTIVE FOR ALL PURPOSES IF
DELIVERED OR SENT BY: (A) HAND DELIVERY, (B) CERTIFIED OR REGISTERED UNITED
STATES MAIL, POSTAGE PREPAID, (C) NATIONALLY RECOGNIZED OVERNIGHT DELIVERY
SERVICE, (D) BY FACSIMILE TRANSMISSION, ADDRESSED IF TO LENDER OR TO BORROWER AT
ITS APPLICABLE ADDRESS SET FORTH ON SCHEDULE 5 HERETO, OR AT SUCH OTHER ADDRESS
AND PERSON AS SHALL BE DESIGNATED FROM TIME TO TIME BY ANY PARTY HERETO, AS THE
CASE MAY BE, IN A WRITTEN NOTICE TO THE OTHER PARTIES HERETO IN THE MANNER
PROVIDED FOR IN THIS SECTION 8.6, OR (E) OTHER THAN WITH RESPECT TO AN AMENDMENT
OR MODIFICATION, AN ELECTRONIC MEDIUM.  A NOTICE SHALL BE DEEMED TO HAVE BEEN
GIVEN: IN THE CASE OF HAND DELIVERY, AT THE TIME OF DELIVERY; IN THE CASE OF
REGISTERED OR CERTIFIED MAIL, WHEN DELIVERED OR THREE BUSINESS DAYS AFTER
MAILING; IN THE CASE OF OVERNIGHT DELIVERY AND FACSIMILE TRANSMISSION, ON THE
BUSINESS DAY AFTER THE SAME WAS SENT; OR IN THE CASE OF ELECTRONIC MEDIUM, WHEN
CONFIRMED BY E-MAIL.  A PARTY RECEIVING A NOTICE WHICH DOES NOT COMPLY WITH THE
TECHNICAL REQUIREMENTS FOR NOTICE UNDER THIS SECTION 9.6 MAY ELECT TO WAIVE ANY
DEFICIENCIES AND TREAT THE NOTICE AS HAVING BEEN PROPERLY GIVEN.  DELIVERY BY
TELECOPIER OF AN EXECUTED COUNTERPART OF ANY AMENDMENT OR WAIVER OF ANY
PROVISION OF THIS AGREEMENT OR THE NOTES OR OF ANY EXHIBIT HERETO TO BE EXECUTED
AND DELIVERED HEREUNDER SHALL BE EFFECTIVE AS DELIVERY OF AN ORIGINAL EXECUTED
COUNTERPART THEREOF.

 

SECTION 9.7.                                   TRIAL BY JURY.  BORROWER, TO THE
FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY TORT ACTION, BROUGHT

 

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BY ANY PARTY HERETO WITH RESPECT TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN
DOCUMENTS.

 

SECTION 9.8.                                   HEADINGS.  THE ARTICLE AND
SECTION HEADINGS IN THIS AGREEMENT ARE INCLUDED HEREIN FOR CONVENIENCE OF
REFERENCE ONLY AND SHALL NOT CONSTITUTE A PART OF THIS AGREEMENT FOR ANY OTHER
PURPOSE.

 

SECTION 9.9.                                   ASSIGNMENT.

 

(A)                                  BORROWER MAY NOT SELL, ASSIGN OR TRANSFER
ANY INTEREST IN THE LOAN DOCUMENTS, OR ANY PORTION OF THE FOREGOING (INCLUDING,
WITHOUT LIMITATION, BORROWER’S RIGHTS, TITLE, INTERESTS, REMEDIES, POWERS AND
DUTIES HEREUNDER AND THEREUNDER) WITHOUT LENDER’S PRIOR WRITTEN CONSENT.  LENDER
SHALL HAVE THE RIGHT TO ASSIGN OR PARTICIPATE THIS AGREEMENT AND/OR ITS INTEREST
IN ANY OF THE OTHER LOAN DOCUMENTS AND THE OBLIGATIONS HEREUNDER TO ANY PERSON. 
IN THE EVENT OF AN ASSIGNMENT BY LENDER, (A) THE ASSIGNEE SHALL HAVE, TO THE
EXTENT OF SUCH ASSIGNMENT, THE SAME RIGHTS, BENEFITS AND OBLIGATIONS AS IT WOULD
HAVE IF IT WERE AN ORIGINAL “LENDER” HEREUNDER; (B) THE ASSIGNEE SHALL BE DEEMED
FOR ALL PURPOSES TO BE A “LENDER” HEREUNDER; AND (C) UPON ANY SUCH SUBSTITUTION
OF LENDER, A REPLACEMENT OR ADDITION “LENDER SIGNATURE PAGE” SHALL BE EXECUTED
BY THE NEW LENDER AND ATTACHED TO THIS AGREEMENT AND THEREUPON BECOME A PART OF
THIS AGREEMENT.  AFTER THE EFFECTIVENESS OF ANY ASSIGNMENT, THE NEW LENDER SHALL
PROVIDE NOTICE TO BORROWER OF THE IDENTITY, ADDRESS AND OTHER PERTINENT
INFORMATION PERTAINING TO THE NEW LENDER.  NOTWITHSTANDING ANYTHING IN THIS
AGREEMENT TO THE CONTRARY, AFTER AN ASSIGNMENT BY LENDER, THE “LENDER” (PRIOR TO
SUCH ASSIGNMENT) SHALL CONTINUE TO HAVE THE BENEFITS OF ANY RIGHTS OR
INDEMNIFICATIONS AND SHALL CONTINUE TO HAVE THE OBLIGATIONS CONTAINED HEREIN
WHICH LENDER HAD DURING THE PERIOD SUCH PARTY WAS A “LENDER” HEREUNDER. 
BORROWER AGREES THAT EACH PARTICIPANT SHALL BE ENTITLED TO THE BENEFITS OF
SECTION 2.10 WITH RESPECT TO ITS PARTICIPATION IN THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT FROM TIME TO TIME AS IF SUCH PARTICIPANT WERE A LENDER; PROVIDED
THAT, IN THE CASE OF SECTION 2.10, SUCH PARTICIPANT SHALL HAVE COMPLIED WITH THE
REQUIREMENTS OF SAID SECTION, AND PROVIDED, FURTHER, THAT NO PARTICIPANT SHALL
BE ENTITLED TO RECEIVE ANY GREATER AMOUNT PURSUANT TO SECTION 2.10 THAN THE
TRANSFEROR LENDER WOULD HAVE BEEN ENTITLED TO RECEIVE IN RESPECT OF THE AMOUNT
OF THE PARTICIPATION TRANSFERRED BY SUCH TRANSFEROR LENDER TO SUCH PARTICIPANT
HAD NO SUCH TRANSFER OCCURRED.

 

(B)                                 LENDER MAY FROM TIME TO TIME ELECT TO ENTER
INTO A SERVICING AGREEMENT WITH A SERVICER, PURSUANT TO WHICH THE SERVICER SHALL
BE APPOINTED TO SERVICE AND ADMINISTER THE LOAN AND THE ACCOUNT COLLATERAL IN
ACCORDANCE WITH THE TERMS HEREOF AND TO EXERCISE ANY AND ALL OTHER RIGHTS OF
LENDER WITH RESPECT TO THE LOAN AS SET FORTH IN SUCH SERVICING AGREEMENT. 
LENDER SHALL PROMPTLY NOTIFY BORROWER IF LENDER SHALL ELECT TO APPOINT OR CHANGE
THE SERVICER, AND ALL NOTICES AND OTHER COMMUNICATIONS FROM BORROWER TO LENDER
SHALL BE DELIVERED TO THE SERVICER WITH A COPY CONCURRENTLY DELIVERED TO THE
LENDER, AND ANY NOTICE, DIRECTION OR OTHER COMMUNICATION FROM THE SERVICER TO
BORROWER SHALL HAVE THE SAME FORCE AND EFFECT AS A NOTICE, DIRECTION OR
COMMUNICATION FROM LENDER.  THE SERVICER SHALL BE ENTITLED TO BE REIMBURSED FOR
ANY COST, EXPENSE OR LIABILITY WHICH IS INCURRED BY THE SERVICER PURSUANT TO
SUCH SERVICING AND ADMINISTRATIVE DUTIES AND WHICH WOULD OTHERWISE BE
REIMBURSABLE TO LENDER UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN THE
SAME MANNER AND TO THE SAME EXTENT AS IF LENDER INCURRED SUCH COST, EXPENSE OR
LIABILITY IN THE FIRST PLACE.  THE PARTIES HERETO ACKNOWLEDGE AND

 

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AGREE THAT THE SERVICER SHALL BE A THIRD PARTY BENEFICIARY TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.

 

SECTION 9.10.                             SEVERABILITY.  WHEREVER POSSIBLE, EACH
PROVISION OF THIS AGREEMENT SHALL BE INTERPRETED IN SUCH MANNER AS TO BE
EFFECTIVE AND VALID UNDER APPLICABLE LAW, BUT IF ANY PROVISION OF THIS AGREEMENT
SHALL BE PROHIBITED BY OR INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE
INEFFECTIVE TO THE EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT
INVALIDATING THE REMAINDER OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS
AGREEMENT.

 

SECTION 9.11.                             PREFERENCES.  LENDER SHALL HAVE NO
OBLIGATION TO MARSHAL ANY ASSETS IN FAVOR OF BORROWER OR ANY OTHER PARTY OR
AGAINST OR IN PAYMENT OF ANY OR ALL OF THE OBLIGATIONS OF BORROWER PURSUANT TO
THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN DOCUMENT.  LENDER SHALL HAVE THE
CONTINUING AND EXCLUSIVE RIGHT TO APPLY OR REVERSE AND REAPPLY ANY AND ALL
PAYMENTS BY BORROWER TO ANY PORTION OF THE OBLIGATIONS OF BORROWER HEREUNDER,
PROVIDED THAT SUCH APPLICATION OR REAPPLICATION IS PERFORMED BY LENDER IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT OR ANY OTHER APPLICABLE LOAN
DOCUMENT.  TO THE EXTENT BORROWER MAKES A PAYMENT OR PAYMENTS TO LENDER FOR
BORROWER’S BENEFIT, WHICH PAYMENT OR PROCEEDS OR ANY PART THEREOF ARE
SUBSEQUENTLY INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL, SET ASIDE
OR REQUIRED TO BE REPAID TO A TRUSTEE, RECEIVER OR ANY OTHER PARTY UNDER ANY
BANKRUPTCY LAW, STATE OR FEDERAL LAW, COMMON LAW OR EQUITABLE CAUSE, THEN, TO
THE EXTENT OF SUCH PAYMENT OR PROCEEDS RECEIVED, THE OBLIGATIONS HEREUNDER OR
PART THEREOF INTENDED TO BE SATISFIED SHALL BE REVIVED AND CONTINUE IN FULL
FORCE AND EFFECT, AS IF SUCH PAYMENT OR PROCEEDS HAD NOT BEEN RECEIVED BY
LENDER.

 

SECTION 9.12.                             WAIVER OF NOTICE.  BORROWER SHALL NOT
BE ENTITLED TO ANY NOTICES OF ANY NATURE WHATSOEVER FROM LENDER EXCEPT WITH
RESPECT TO MATTERS FOR WHICH THIS AGREEMENT OR ANOTHER LOAN DOCUMENT
SPECIFICALLY AND EXPRESSLY PROVIDES FOR THE GIVING OF NOTICE BY LENDER TO
BORROWER AND EXCEPT WITH RESPECT TO MATTERS FOR WHICH BORROWER IS NOT, PURSUANT
TO APPLICABLE LEGAL REQUIREMENTS, PERMITTED TO WAIVE THE GIVING OF NOTICE. 
BORROWER HEREBY EXPRESSLY WAIVES THE RIGHT TO RECEIVE ANY NOTICE FROM LENDER
WITH RESPECT TO ANY MATTER FOR WHICH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
DOES NOT SPECIFICALLY AND EXPRESSLY PROVIDE FOR THE GIVING OF NOTICE BY LENDER
TO BORROWER.

 

SECTION 9.13.                             FAILURE TO CONSENT.  IF BORROWER SHALL
SEEK THE APPROVAL BY OR CONSENT OF LENDER HEREUNDER OR UNDER THE NOTE, OR ANY OF
THE OTHER LOAN DOCUMENTS, AND LENDER SHALL FAIL OR REFUSE TO GIVE SUCH CONSENT
OR APPROVAL, THEN BORROWER SHALL NOT BE ENTITLED TO ANY DAMAGES FOR ANY
WITHHOLDING OR DELAY OF SUCH APPROVAL OR CONSENT BY LENDER, IT BEING INTENDED
THAT BORROWER’S SOLE REMEDY SHALL BE TO BRING AN ACTION FOR AN INJUNCTION OR
SPECIFIC PERFORMANCE.

 

SECTION 9.14.                             SCHEDULES INCORPORATED.  THE
INFORMATION SET FORTH ON THE COVER, HEADING AND RECITALS HEREOF, AND THE
SCHEDULES ATTACHED HERETO, ARE HEREBY INCORPORATED HEREIN AS A PART OF THIS
AGREEMENT WITH THE SAME EFFECT AS IF SET FORTH IN THE BODY HEREOF.

 

SECTION 9.15.                             OFFSETS, COUNTERCLAIMS AND DEFENSES. 
ANY ASSIGNEE OF ANY OF LENDER’S INTEREST IN AND TO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS SHALL TAKE THE SAME FREE AND CLEAR OF ALL OFFSETS, COUNTERCLAIMS
OR DEFENSES WHICH ARE UNRELATED TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
WHICH BORROWER MAY OTHERWISE HAVE AGAINST ANY ASSIGNOR OR THIS

 

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AGREEMENT AND THE OTHER LOAN DOCUMENTS.  NO SUCH UNRELATED COUNTERCLAIM OR
DEFENSE SHALL BE INTERPOSED OR ASSERTED BY BORROWER IN ANY ACTION OR PROCEEDING
BROUGHT BY ANY SUCH ASSIGNEE UPON THIS AGREEMENT OR UPON ANY OTHER LOAN
DOCUMENT.  ANY SUCH RIGHT TO INTERPOSE OR ASSERT ANY SUCH UNRELATED OFFSET,
COUNTERCLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING IS HEREBY EXPRESSLY
WAIVED BY BORROWER.

 

SECTION 9.16.                             NO JOINT VENTURE OR PARTNERSHIP. 
BORROWER AND LENDER INTEND THAT THE RELATIONSHIP CREATED HEREUNDER BE SOLELY
THAT OF BORROWER AND LENDER.  NOTHING HEREIN IS INTENDED TO CREATE A JOINT
VENTURE, PARTNERSHIP, TENANCY-IN-COMMON, OR JOINT TENANCY RELATIONSHIP BETWEEN
BORROWER AND LENDER NOR TO GRANT LENDER ANY INTEREST IN THE COLLATERAL OTHER
THAN THAT OF SECURED PARTY, MORTGAGEE OR LENDER.

 

SECTION 9.17.                             WAIVER OF MARSHALLING OF ASSETS
DEFENSE.  TO THE FULLEST EXTENT BORROWER MAY LEGALLY DO SO, BORROWER WAIVES ALL
RIGHTS TO A MARSHALLING OF THE ASSETS OF BORROWER, AND OTHERS WITH INTERESTS IN
BORROWER, AND OF THE COLLATERAL, OR TO A SALE IN INVERSE ORDER OF ALIENATION IN
THE EVENT OF FORECLOSURE OF THE INTERESTS HEREBY CREATED, AND AGREES NOT TO
ASSERT ANY RIGHT UNDER ANY LAWS PERTAINING TO THE MARSHALLING OF ASSETS, THE
SALE IN INVERSE ORDER OF ALIENATION, HOMESTEAD EXEMPTION, THE ADMINISTRATION OF
ESTATES OF DECEDENTS, OR ANY OTHER MATTERS WHATSOEVER TO DEFEAT, REDUCE OR
AFFECT THE RIGHT OF LENDER UNDER THE LOAN DOCUMENTS TO A SALE OF ANY COLLATERAL
FOR THE COLLECTION OF THE INDEBTEDNESS WITHOUT ANY PRIOR OR DIFFERENT RESORT FOR
COLLECTION, OR THE RIGHT OF LENDER TO THE PAYMENT OF THE INDEBTEDNESS OUT OF THE
NET PROCEEDS OF THE COLLATERAL IN PREFERENCE TO EVERY OTHER CLAIMANT WHATSOEVER.

 

SECTION 9.18.                             WAIVER OF COUNTERCLAIM.  TO THE EXTENT
PERMITTED BY APPLICABLE LAW, BORROWER HEREBY WAIVES THE RIGHT TO ASSERT A
COUNTERCLAIM, OTHER THAN COMPULSORY COUNTERCLAIM, IN ANY ACTION OR PROCEEDING
BROUGHT AGAINST IT BY LENDER OR ITS AGENTS.

 

SECTION 9.19.                             CONFLICT; CONSTRUCTION OF DOCUMENTS. 
IN THE EVENT OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE
PROVISIONS OF ANY OF THE OTHER LOAN DOCUMENTS, THE PROVISIONS OF THIS AGREEMENT
SHALL PREVAIL.  THE PARTIES HERETO ACKNOWLEDGE THAT THEY WERE REPRESENTED BY
COUNSEL IN CONNECTION WITH THE NEGOTIATION AND DRAFTING OF THE LOAN DOCUMENTS
AND THAT THE LOAN DOCUMENTS SHALL NOT BE SUBJECT TO THE PRINCIPLE OF CONSTRUING
THEIR MEANING AGAINST THE PARTY THAT DRAFTED SAME.

 

SECTION 9.20.                             BROKERS AND FINANCIAL ADVISORS. 
BORROWER HEREBY REPRESENTS THAT IT HAS DEALT WITH NO FINANCIAL ADVISORS,
BROKERS, UNDERWRITERS, PLACEMENT AGENTS, AGENTS OR FINDERS IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  BORROWER HEREBY AGREES TO
INDEMNIFY AND HOLD LENDER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
LIABILITIES, COSTS AND EXPENSES OF ANY KIND IN ANY WAY RELATING TO OR ARISING
FROM A CLAIM BY ANY PERSON THAT SUCH PERSON ACTED ON BEHALF OF BORROWER IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREIN.  THE PROVISIONS OF THIS
SECTION 9.20 SHALL SURVIVE THE EXPIRATION AND TERMINATION OF THIS AGREEMENT AND
THE REPAYMENT OF THE INDEBTEDNESS.

 

SECTION 9.21.                             COUNTERPARTS.  THIS AGREEMENT MAY BE
EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED AND
DELIVERED SHALL BE AN ORIGINAL, BUT ALL OF WHICH SHALL TOGETHER CONSTITUTE ONE
AND THE SAME INSTRUMENT.

 

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SECTION 9.22.                             ESTOPPEL CERTIFICATES.  BORROWER AND
LENDER HEREBY AGREE AT ANY TIME AND FROM TIME TO TIME UPON NOT LESS THAN FIFTEEN
(15) DAYS PRIOR WRITTEN NOTICE BY BORROWER OR LENDER TO EXECUTE, ACKNOWLEDGE AND
DELIVER TO THE PARTY SPECIFIED IN SUCH NOTICE, A STATEMENT, IN WRITING,
CERTIFYING THAT THIS AGREEMENT IS UNMODIFIED AND IN FULL FORCE AND EFFECT (OR IF
THERE HAVE BEEN MODIFICATIONS, THAT THE SAME, AS MODIFIED, IS IN FULL FORCE AND
EFFECT AND STATING THE MODIFICATIONS HERETO), AND STATING WHETHER OR NOT, TO THE
KNOWLEDGE OF SUCH CERTIFYING PARTY, ANY DEFAULT OR EVENT OF DEFAULT HAS OCCURRED
AND IS THEN CONTINUING, AND, IF SO, SPECIFYING EACH SUCH DEFAULT OR EVENT OF
DEFAULT; PROVIDED, HOWEVER, THAT IT SHALL BE A CONDITION PRECEDENT TO LENDER’S
OBLIGATION TO DELIVER THE STATEMENT PURSUANT TO THIS SECTION 8.22, THAT LENDER
SHALL HAVE RECEIVED, TOGETHER WITH BORROWER’S REQUEST FOR SUCH STATEMENT, AN
OFFICER’S CERTIFICATE STATING THAT, TO THE KNOWLEDGE OF BORROWER, NO DEFAULT OR
EVENT OF DEFAULT EXISTS AS OF THE DATE OF SUCH CERTIFICATE (OR SPECIFYING SUCH
DEFAULT OR EVENT OF DEFAULT).

 

SECTION 9.23.                             PAYMENT OF EXPENSES.  BORROWER SHALL
PAY ALL TRANSACTION COSTS, (EXCLUDING ANY TAX LIABILITIES WHICH ARE NOT PAYABLE
BY THE BORROWER PURSUANT TO SECTION 2.10), WHICH SHALL INCLUDE, WITHOUT
LIMITATION, (A) REASONABLE OUT-OF-POCKET COSTS AND EXPENSES OF LENDER IN
CONNECTION WITH (I) THE NEGOTIATION, PREPARATION, EXECUTION AND DELIVERY OF THE
LOAN DOCUMENTS AND THE DOCUMENTS AND INSTRUMENTS REFERRED TO THEREIN; (II) THE
CREATION, PERFECTION OR PROTECTION OF LENDER’S LIENS IN THE COLLATERAL
(INCLUDING, WITHOUT LIMITATION, FEES AND EXPENSES FOR TITLE AND LIEN SEARCHES OR
AMENDED OR REPLACEMENT MORTGAGES, UCC FINANCING STATEMENTS OR COLLATERAL
SECURITY INSTRUMENTS, TITLE INSURANCE PREMIUMS AND FILING AND RECORDING FEES,
THIRD PARTY DUE DILIGENCE EXPENSES FOR THE MORTGAGED PROPERTY PLUS TRAVEL
EXPENSES, ACCOUNTING FIRM FEES, COSTS OF THE APPRAISALS, ENVIRONMENTAL REPORTS
(AND AN ENVIRONMENTAL CONSULTANT), AND THE PROPERTY CONDITION ASSESSMENTS AND
COSTS AND FEES INCURRED IN CONNECTION WITH ARRANGING, SETTING UP, SERVICING AND
MAINTAINING THE ACCOUNT COLLATERAL); (III) THE ADMINISTRATION OF THE LOAN
DOCUMENTS AND THE LOAN AND RESPONSE TO ANY REQUESTS FOR LENDER CONSENT OR
APPROVAL OF ANY MATTER; (IV) THE NEGOTIATION, PREPARATION, EXECUTION AND
DELIVERY OF ANY AMENDMENT, WAIVER, RESTRUCTURING OR CONSENT RELATING TO ANY OF
THE LOAN DOCUMENTS, AND (V) THE PRESERVATION OF RIGHTS UNDER AND ENFORCEMENT OF
THE LOAN DOCUMENTS AND THE DOCUMENTS AND INSTRUMENTS REFERRED TO THEREIN,
INCLUDING ANY COMMUNICATIONS OR DISCUSSIONS RELATING TO ANY ACTION THAT BORROWER
SHALL FROM TIME TO TIME REQUEST LENDER TO TAKE, AS WELL AS ANY RESTRUCTURING OR
RESCHEDULING OF THE INDEBTEDNESS, (B) THE REASONABLE FEES, EXPENSES AND OTHER
CHARGES OF COUNSEL TO LENDER OR ITS SERVICER IN CONNECTION WITH ALL OF THE
FOREGOING, AND (C) LENDER’S REASONABLE OUT-OF-POCKET TRAVEL EXPENSES IN
CONNECTION WITH SITE VISITS TO THE MORTGAGED PROPERTY; PROVIDED, THAT SO LONG AS
AN EVENT OF DEFAULT HAS NOT OCCURRED AND IS NOT CONTINUING, THE BORROWER SHALL
NOT BE OBLIGATED TO PAY FOR LENDER’S TRAVEL EXPENSES IN CONNECTION WITH MORE
THAN ONE SITE VISIT TO EACH INDIVIDUAL MORTGAGED PROPERTY DURING ANY TWELVE
CONSECUTIVE MONTH PERIOD AND LENDER SHALL USE REASONABLE EFFORTS TO MINIMIZE THE
TRANSACTION COSTS PAID BY BORROWER IN CONNECTION WITH SUCH SITE VISITS.

 

SECTION 9.24.                             NON-RECOURSE.  ANYTHING CONTAINED
HEREIN, IN THE NOTE OR IN ANY OTHER LOAN DOCUMENT TO THE CONTRARY
NOTWITHSTANDING, BUT SUBJECT IN ALL RESPECT TO PROVISOS (A) THROUGH (E) BELOW,
NO RECOURSE SHALL BE HAD FOR THE PAYMENT OF THE PRINCIPAL OR INTEREST ON THE
LOAN OR FOR ANY OTHER INDEBTEDNESS, OBLIGATION OR LIABILITY HEREUNDER OR UNDER
ANY OTHER LOAN DOCUMENT OR FOR ANY CLAIM BASED HEREON OR THEREON OR OTHERWISE IN
RESPECT HEREOF OR THEREOF AGAINST (I) ANY AFFILIATE OF BORROWER (OTHER THAN
BORROWER), (II) ANY PERSON OWNING, DIRECTLY OR INDIRECTLY, ANY LEGAL OR
BENEFICIAL INTEREST IN BORROWER OR ANY AFFILIATE OF BORROWER

 

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(OTHER THAN BORROWER) OR (III) ANY PARTNER, MEMBER, PRINCIPAL, OFFICER,
CONTROLLING PERSON, BENEFICIARY, TRUSTEE, ADVISOR, SHAREHOLDER, EMPLOYEE, AGENT,
AFFILIATE OR DIRECTOR OF ANY PERSONS DESCRIBED IN CLAUSES (I) THROUGH (II) ABOVE
(OTHER THAN BORROWER), AND IT IS UNDERSTOOD THAT NEITHER THE NOTE NOR ANY OTHER
INDEBTEDNESS, OBLIGATION OR LIABILITY UNDER OR WITH RESPECT TO THIS AGREEMENT
AND ANY OTHER LOAN DOCUMENT MAY BE ENFORCED AGAINST ANY PERSON DESCRIBED IN
CLAUSES (I) THROUGH (III) ABOVE (OTHER THAN BORROWER); PROVIDED, HOWEVER, THAT
THE FOREGOING PROVISIONS OF THIS PARAGRAPH SHALL NOT:

 

(A)                              PREVENT RECOURSE TO BORROWER, THE ASSETS OF
BORROWER, THE MORTGAGED PROPERTY OR ANY OTHER INSTRUMENT OR DOCUMENT WHICH IS
PLEDGED BY BORROWER TO LENDER PURSUANT TO THE LOAN DOCUMENTS, INCLUDING ALL
COLLATERAL;

 

(B)                                HAVE ANY APPLICABILITY WHATSOEVER TO OR LIMIT
THE LIABILITY OF THE PARTIES UNDER THE GUARANTY OF NON-RECOURSE OBLIGATIONS; OR

 

(C)                                CONSTITUTE A WAIVER, RELEASE OR DISCHARGE OF
ANY INDEBTEDNESS OR OBLIGATION EVIDENCED BY THE NOTE OR SECURED BY THE LOAN
DOCUMENTS, AND THE SAME SHALL CONTINUE UNTIL PAID OR DISCHARGED IN FULL;

 

(D)                               PREVENT RECOURSE TO BORROWER AND GUARANTOR,
JOINTLY AND SEVERALLY, AND THEIR RESPECTIVE ASSETS FOR REPAYMENT OF THE
INDEBTEDNESS, AND THE INDEBTEDNESS SHALL BE FULLY RECOURSE NOT ONLY TO BORROWER
BUT ALSO TO GUARANTOR, IN THE EVENT:

 

(1)                                  Borrower or any Affiliate contests or in
any way interferes with, directly or indirectly (collectively, a “Contest”), any
foreclosure action or sale commenced by Lender or with any other enforcement of
Lender’s rights, powers or remedies under any of the Loan Documents or under any
document evidencing, securing or otherwise relating to any of the Collateral
(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 (1) shall not apply if Borrower or such Affiliate
successfully asserts a Contest and obtains a favorable court order for the
Borrower as to same);

 

(2)                                  any Mortgaged Property becomes an asset in
a voluntary bankruptcy or insolvency proceeding or any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed (x) by Borrower or (y) against Borrower
with the consent or acquiescence of Borrower or the Guarantor or their
respective Affiliates;

 

(3)                                  of any Transfer in violation of the terms
of the Loan Documents;

 

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(4)                                  Borrower or the Guarantor makes an
assignment for the benefit of creditors or admits, in writing or in any legal
proceeding, its insolvency or inability to pay its debts as they become due; or

 

(5)                                  of any breach by Borrower or Guarantor
under the Side Agreement; or

 

(E)                                 PREVENT RECOURSE TO BORROWER AND GUARANTOR,
JOINTLY AND SEVERALLY, AND THEIR RESPECTIVE ASSETS, AND BORROWER AND GUARANTOR
SHALL BE FULLY AND PERSONALLY LIABLE, FOR ANY LOSS, COSTS, LIABILITY, DAMAGE OR
EXPENSE (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND DISBURSEMENTS)
SUFFERED OR INCURRED BY LENDER OR ANY INDEMNIFIED PARTY RELATED TO OR ARISING
FROM ANY OF THE FOLLOWING ACTS COMMITTED BY OR ON BEHALF OF BORROWER, GUARANTOR
OR ANY OF THEIR RESPECTIVE AFFILIATES:

 

(1)                                  any fraud, misappropriation or
misapplication of funds (including Loss Proceeds or Rents) in contravention of
the Loan Documents, or intentional misrepresentation contained in any Loan
Documents or report furnished pursuant to any Loan Document;

 

(2)                                  additional financing obtained by Borrower
(whether secured or unsecured) in violation of the terms of the Loan Documents;

 

(3)                                  actual material physical waste to the
Mortgaged Property or material damage to the Mortgaged Property resulting from
gross negligence or willful misconduct;

 

(4)                                  of any breach of Article VIII hereof;

 

(5)                                  of any breach of any representation,
warranty or covenant in this Agreement or the Environmental Indemnity Agreement,
concerning Environmental Laws and Hazardous Substances;

 

(6)                                  any security deposits received by Borrower
or Manager from tenants not being properly applied, returned to tenants when due
or delivered to Lender, a receiver or a purchaser of the Mortgaged Property in
the event of a foreclosure sale upon such Person taking possession of the
Mortgaged Property;

 

(7)                                  any Legal Requirement mandating the
forfeiture by Borrower of the Collateral or any portion thereof because of the
conduct or purported conduct of criminal activity by Borrower or any Affiliate
in connection therewith;

 

(8)                                  all costs and expenses, including
reasonable attorneys’ fees and expenses, incurred in enforcing any obligation or
liability or in collecting any amount due under this Section 9.24(D) or this
Section 9.24(E), the Environmental Indemnity and the Guaranty of

 

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Non-Recourse Obligations, which, as to Borrower, is a recourse obligation of
Borrower as described in this Section 9.24(D) or this Section 9.24(E), the
Environmental Indemnity and the Guaranty of Non-Recourse Obligations, or, as to
Guarantor, is a recourse obligation of Guarantor under the Guaranty of
Non-Recourse Obligations or the Environmental Indemnity;

 

(9)                                  the failure to pay Impositions assessed
against the Mortgaged Property to the extent there was sufficient funds
available to pay and Lender allows Borrower to apply the same, or the failure to
maintain insurance as required under the Loan Documents, or the failure to pay
any deductible amount in respect of any insurance maintained in respect of the
Mortgaged Property, or the failure to pay and discharge any mechanic’s or
materialman’s Liens against the Mortgaged Property to the extent there was
sufficient funds available to pay and discharge and Lender allows Borrower to
apply the same; or

 

(10)                            any Rents or Proceeds received or collected by
Borrower, any Affiliate of Borrower or Manager and not deposited into the Local
Collection Account or the Collection Account in accordance with Section 2.12.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

 

LENDER:

 

 

 

CITIGROUP GLOBAL MARKETS REALTY CORP., a New York corporation

 

 

 

 

 

By:

/s/ David Vadon

 

 

 

Name:  David Vadon

 

 

Title:Authorized Agent

 

 

 

 

 

BORROWER:

 

 

 

ARC COMMUNITIES 11 LLC, a Delaware limited liability company

 

 

 

 

By:

/s/ Scott L. Gesell

 

 

 

Name:  Scott L. Gesell

 

 

Title:Vice President

 

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