Exhibit 10.29

 

 

 

LOAN AGREEMENT

 

Dated as of December 24, 2013

 

Between

 

BR-NPT SPRINGING ENTITY, LLC,

as Borrower

 

and

 

ARBOR COMMERCIAL MORTGAGE, LLC,

as Lender

 

PROPERTY:North Park Towers

16500 North Park Drive, Southfield, Michigan

 

 

 

 

 

 LOAN AGREEMENT

 

THIS LOAN AGREEMENT, dated as of December 24, 2013 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, this
''Agreement"), between ARBOR COMMERCIAL MORTGAGE, LLC, a New York limited
liability company, having an address at 333 Earle Ovington Boulevard, Uniondale,
New York 11553 (together with its successors and assigns, collectively,
"Lender"), and BR-NPT SPRINGING ENTITY, LLC, a Delaware limited liability
company, having an address at c/o Bluerock Real Estate, L.L.C., 712 Fifth
Avenue, 9th Floor, New York, New York 10019 (together with its permitted
successors and assigns, collectively, "Borrower").

 

All capitalized terms used herein shall have the respective meanings set forth
in Article 1

hereof.

 

WITNESSETH:

 

WHEREAS, Borrower desires to obtain the Loan from Lender; and

 

WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms and conditions of this Agreement and the other Loan
Documents.

 

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree, represent and warrant
as follows:

 

ARTICLE 1

 

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1        Specific Definitions.

 

For all purposes of this Agreement, except as otherwise expressly provided:

 

"Affiliate" shall mean, as to any Person, any other Person that (i) owns
directly or indirectly ten percent (10%) or more of all equity interests in such
Person, and/or (ii) is in Control of, is Controlled by or is under common
ownership or Control with such Person, and/oris a director or officer of such
Person or of an Affiliate of such Person, and/or (iv) is the spouse, issue or
parent of such Person or of an Affiliate of such Person.

 

''ALTA" shall mean American Land Title Association, or any successor thereto.

 

"Alteration Threshold" shall mean $230,000.

 

"Amortization Commencement Date" shall mean February 6, 2016.

 

"Annual Budget" shall mean the operating and capital budget for the Property
setting forth, on a month-by-month basis, in reasonable detail, each line item
of Borrower's good faith estimate of anticipated Operating Income, Operating
Expenses and Capital Expenditures for the applicable Fiscal Year.

 

 

 

 

"Approved Capital Expenditures" shall mean Capital Expenditures incurred by
Borrower and either (i) included in the Approved Annual Budget or (ii) approved
by Lender, which approval shall not be unreasonably withheld or delayed,
including any common charges and assessments required by the Condominium
Declaration or the Condominium Rules.

 

"Approved Replacement Guarantor" shall mean a Person that satisfies the
conditions set forth in clauses (x) and (y) of the definition of "Qualified
Transferee" and whose identity, experience, financial condition and
creditworthiness, including net worth and liquidity, is acceptable to Lender in
Lender's sole discretion, and for which Lender has received a Rating Agency
Confirmation from each applicable Rating Agency and who either Controls Borrower
(or Transferee Borrower, as applicable) or owns a direct or indirect interest in
Borrower (or Transferee Borrower, as applicable).

 

"Assignment of Agreements" shall mean that certain Assignment of Agreements,
Licenses, Permits and Contracts, dated as of the date hereof, from Borrower, as
assignor, to Lender, as assignee.

 

"Assignment of Leases" shall mean that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee.

 

"Assignment of Management Agreement" shall mean that certain Assignment of
Management Agreement and Subordination of Management Fees dated as of the date
hereof among Borrower, Manager and Lender.

 

"Award'' shall mean any compensation paid by any Governmental Authority m
connection with a Condemnation in respect to all or any part of the Property.

 

"Bankruptcy Code" shall mean Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors'
rights.

 

"Board of Directors" shall have the meaning set forth in the Condominium
Documents.

 

"Business Day" shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in the State
of New York.

 

"Calculation Date" shall mean the last day of each calendar quarter during the
Term.

 

"Capital Expenditures" for any period shall mean amounts expended for
replacements and alterations to the Property (excluding tenant improvements) and
required to be capitalized according to GAAP.

 

"Cash Management Agreement" shall mean that certain Deposit Account Agreement of
even date herewith among Lender, Borrower, Manager and KeyBank, National
Association, a national banking association.

 

"Clearing Account Agreement" shall mean that certain Lockbox-Deposit Account
Control Agreement dated the date hereof by and among Borrower, Lender and
KeyBank, National Association, a national banking association.

 

2

 

 

"Closing Date" shall mean the date of the funding of the Loan.

 

"Code" shall mean 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.

 

"Common Charges" shall mean all common charges, assessments and any other
amounts payable by the owner of a Condominium Unit to the Condominium
Association pursuant to the terms of the Condominium Documents, if any.

 

"Common Elements" shall have the meaning given such term in the Condominium
Documents.

 

"Condemnation" shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.

 

"Condominium Association" shall mean North Park Towers Condominium Association,
a Michigan nonprofit corporation.

 

"Condominium Declaration" shall have the meaning set forth in the Mortgage.

 

"Condominium Documents" shall mean the Condominium Declaration, by-laws, rules
and regulations, management agreement (if applicable), all budgets, and all
other reports, disclosure statements and documents relating to the creation of a
valid condominium regime, as required by the Michigan Condominium Act and the
regulation and administration thereof, and all exhibits, amendments or
supplements thereto from time to time, to the extent that the foregoing are in
existence and applicable to the "North Park Towers Condominium." If applicable,
the Condominium Documents shall also include, without limitation, any documents
necessary to establish and operate a condominium association to administer the
''North Park Towers Condominium."

 

"Condominium Regime" shall have the meaning set forth in Section 4.33 hereof.

 

"Condominium Rights" shall mean all right, title and interest of Borrower in, to
and under the Condominium Documents, including, without limitation, any and all
voting rights and all of the other special rights, benefits and privileges under
the Condominium Documents granted, assigned or reserved to Borrower as the owner
of the Condominium Units.

 

"Condominium Rules" shall have the meaning set forth in Section 4.33 hereof.

 

"Condominium Units" shall mean, collectively, all of the units of the
Condominium Regime.

 

"Control" shall mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership of voting securities, by contract
or otherwise, and the terms Controlled, Controlling and Common Control shall
have correlative meanings.

  

3

 

 

"Debt" shall mean the Outstanding Principal Balance together with all interest
accrued and unpaid thereon and all other sums (including any applicable
Prepayment Fee and/or Liquidated Damages Amount, if applicable) due to Lender
from time to time in respect of the Loan under the Note, this Agreement, the
Mortgage, the Environmental Indemnity or any other Loan Document.

 

"Debt Service" shall mean, with respect to any particular period, the scheduled
principal (if applicable) and interest payments due under the Note and, if
applicable, the note(s) evidencing any New Mezzanine Loan in such period (but
assuming, only for the purpose of calculating the Debt Service Coverage Ratio,
that the Amortization Commencement Date has already occurred and an amortization
term of thirty (30) years).

 

"Debt Service Coverage Ratio" shall mean, a ratio, as reasonably determined by
Lender in

 

which:

 

(a)the numerator is the Underwritten Net Cash Flow; and

 

(b)the denominator is the annual Debt Service.

 

"Default" shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would constitute an Event of Default.

 

"Default Rate" shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the
Interest Rate.

 

"Deposit Account" shall mean an Eligible Account at the Deposit Bank.

 

"Deposit Bank" shall mean the bank or banks selected by Lender to maintain the
Deposit Account. Lender may in its sole discretion change the Deposit Bank from
time to time.

 

"Discount Rate" shall mean the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi annually.

 

"Eligible Account" shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (i) an account or accounts
(or subaccounts thereof) maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts (or subaccounts
thereof) maintained with the corporate trust department of a federal depository
institution or state chartered depository institution subject to regulations
regarding fiduciary funds on deposit similar to Title 12 of the Code of Federal
Regulations §9.lO(b), having in either case corporate trust powers, acting in
its fiduciary capacity, and a combined capital and surplus of at least
$50,000,000, subject to supervision or examination by federal and state
authorities and having a long-term unsecured debt rating of "BBB-" or higher by
S&P and "Baa3" or higher by Moody's. An Eligible Account will not be evidenced
by a certificate of deposit, passbook or other instrument.

 

4

 

  

"Eligible Institution" shall mean a depository institution or trust company
insured by the Federal Deposit Insurance Corporation the short term unsecured
debt obligations or commercial paper of which are rated at least A-1 by S&P, P-1
by Moody's, and F-1+ by Fitch in the case of accounts in which funds are held
for thirty (30) days or less or, in the case of Letters of Credit or accounts in
which funds are held for more than thirty (30) days, the long term unsecured
debt obligations of which are rated at least (i) "AA" by S&P, (ii) "AA" and/or
"F1+" (for securities) and/or "AAAmmf" (for money market funds), by Fitch and
(iii) "Aa2" by Moody's; provided, however, for purposes of the Deposit Bank, the
definition of Eligible Institution shall have the meaning set forth in the Cash
Management Agreement.

 

"Environmental Indemnity" shall mean that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrower and Guarantor in
connection with the Loan for the benefit of Lender.

 

"ERISA Affiliate " shall mean any trade or business (whether or not
incorporated) which is a member of the same controlled group of corporations or
group of trades or businesses under common control with Borrower or the
Guarantor, or is treated as a single employer together with Borrower or the
Guarantor under Section 414 of the Code or Title IV of ERISA.

 

"Fiscal Year" shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during each year of the Term.

 

"Fitch" shall mean Fitch, Inc.

 

"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

 

"Governmental Authority" shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
commonwealth, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

 

"Gross Revenue" shall mean all revenue derived from the ownership and operation
of the Property from whatever source, including Rents and any Insurance Proceeds
(whether or not Lender elects to treat any such Insurance Proceeds as business
or rental interruption Insurance Proceeds pursuant to Section 5.4(f) hereof).

 

"Guarantor" shall mean R. Ramin Kamfar, a natural person, or any other Person
that now or hereafter guarantees any of Borrower's obligations under any Loan
Document.

 

"Guarantor Financial Covenants" shall mean those covenants set forth in Section
5.2 of the Guaranty.

 

"Guaranty" shall mean that certain Guaranty of Recourse Obligations of even date
herewith from Guarantor for the benefit of Lender.

 

5

 

 

"Indebtedness" shall mean, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
indebtedness guaranteed by such Person, directly or indirectly, (v) all
obligations under leases that constitute capital leases for which such Person is
liable, (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case for which such
Person is liable or its assets are liable, whether such Person (or its assets)
is liable contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person otherwise assures a creditor against
loss and (vii) any other contractual obligation for the payment of money which
are not settled within sixty (60) days.

 

"Independent" shall mean, when used with respect to any Person, a Person who:
(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,
promoter, underwriter, trustee, partner, member, manager, creditor, director,
supplier, customer or person performing similar functions and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii) above.

 

"Independent Accountant" shall mean (i) a firm of nationally recognized,
certified public accountants which is Independent and which is selected by
Borrower and reasonably acceptable to Lender or (ii) such other certified public
accountant(s) selected by Borrower, which is Independent and reasonably
acceptable to Lender.

 

"Interest Rate" shall mean a rate of five and sixty-five one-hundredths percent
(5.65%) per annum (or, when applicable pursuant to this Agreement or any other
Loan Document, the Default Rate).

 

"Lease" shall mean any lease, sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy, all or any portion of any space in the
Property, and every modification, amendment or other agreement relating to such
lease, sublease, sub-sublease or other agreement entered into in connection with
such lease, sublease, sub-sublease or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

 

"Legal Requirements " shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting the Loan, any
Secondary Market Transaction with respect to the Loan, Borrower or the 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, including,
without limitation, the Securities Act, the Exchange Act, Regulation AB, the
rules and regulations promulgated pursuant to the Dodd-Frank Wall Street Reform
and Consumer Protection Act, zoning and land use laws, the Americans with
Disabilities Act of 1990, and all permits, licenses and authorizations and
regulations relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or known to
Borrower, at any time in force affecting the Property or any part thereof,
including any which may (i) require repairs, modifications or alterations in or
to the Property or any part thereof, or (ii) in any way limit the use and
enjoyment thereof.

 

6

 

  

"Letter of Credit" shall mean an irrevocable, unconditional, transferable
(without payment of any transfer fee), clean sight draft letter of credit
acceptable to Lender and the Rating Agencies (either an evergreen letter of
credit or one which does not expire until at least thirty (30) Business Days
after the Stated Maturity Date) in favor of Lender and entitling Lender to draw
thereon in New York, New York, issued by a domestic Eligible Institution or the
U.S. agency or branch of a foreign Eligible Institution. If at any time the bank
issuing any such Letter of Credit shall cease to be an Eligible Institution,
Lender shall have the right immediately to draw down the same in full and hold
the proceeds of such draw in accordance with the applicable provisions hereof.

 

"Lien" shall mean any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, easement, restrictive covenant, preference, assignment,
security interest, or any other encumbrance, charge or transfer of, or any
agreement to enter into or create any of the foregoing, on or affecting all or
any portion of the Property or any interest therein, or any direct or indirect
ownership interest in Borrower or any SPC Party, including any conditional sale
or other title retention agreement, any financing lease having substantially the
same economic effect as any of the foregoing, the filing of any financing
statement, and mechanic's, materialmen's and other similar liens and
encumbrances.

 

"Loan" shall mean the loan in the original principal amount of Eleven Million
Five Hundred Thousand and No/100 Dollars ($11,500,000.00) made by Lender to
Borrower pursuant to this Agreement.

 

"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing
Account Agreement, the Assignment of Agreements, the Environmental Indemnity,
the Assignment of Management Agreement and the Guaranty and any other documents,
agreements and instruments now or hereafter evidencing, securing or delivered to
Lender in connection with the Loan, as the same may be (and each of the
foregoing defined terms shall refer to such documents as they may be) amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

"Loan to Value Ratio" shall mean the ratio, as of a particular date, in which
the numerator is equal to the Outstanding Principal Balance and the denominator
is equal to the appraised value of the Property based on an appraisal prepared
by a qualified MAI appraiser reasonably acceptable to Lender, as determined by
Lender in its reasonable discretion.

 

"Low Debt Service Period'' shall commence if, as of any Calculation Date, the
Debt Service Coverage Ratio is less than 1.10:1.00 and shall end if the Property
has achieved a Debt Service Coverage Ratio of at least 1.10:1.00 for two
consecutive Calculation Dates, as determined by Lender.

 

"Major Contract" shall mean (i) any management, brokerage or leasing agreement,
or (ii) any cleaning, maintenance, service or other contract or agreement of any
kind (other than Leases) of a material nature (materiality for these purposes to
mean contracts which (x) extend beyond one year (unless cancelable on thirty
(30) days or less notice without requiring the payment of termination fees or
payments of any kind) or (y) require Borrower to pay in excess of $50,000 per
annum), in either case relating to the ownership, leasing, management, use,
operation, maintenance, repair or restoration of the Property, whether written
or oral.

 

7

 

  

"Major Lease" shall mean any Lease which, either individually, or when taken
together with any other Lease with the same Tenant or its Affiliates, and
assuming the exercise of all expansion rights and all preferential rights to
lease additional space contained in such Lease, (i) either individually, or when
taken together with any other Lease with the same Tenant or its Affiliates,
covers more than 10,000 rentable square feet, (ii) contains an option or other
preferential right to purchase all or any portion of the Property, (iii) is with
an Affiliate of Borrower as Tenant, (iv) is entered into during the continuance
of an Event of Default, or (v) either individually, or when taken together with
any other Lease with the same Tenant or its Affiliates, covers more than four
(4) individual residential units at the Property.

 

"Management Agreement" shall mean the management agreement entered into by and
between Borrower and Manager or any replacement management agreement entered
into by and between Borrower and any replacement Manager in accordance with the
terms of the Loan Documents, in each case, pursuant to which the Manager is to
provide management and other services with respect to the Property.

 

"Manager" shall mean Bluerock Property Management, LLC, a Michigan limited
liability company, or any other manager engaged in accordance with the terms and
conditions of the Loan Documents.

 

"Material Alteration" shall mean any alteration affecting structural elements of
the Property the cost of which exceeds the Alteration Threshold; provided,
however, that in no event shall (i) any Required Repairs, (ii) any tenant
improvement work performed pursuant to any Lease existing on the date hereof or
entered into hereafter in accordance with the provisions of this Agreement, or
(iii) alterations performed as part of a Restoration, constitute a Material
Alteration.

 

"Maturity Date" shall mean the date on which the final payment of principal of
the Note becomes due and payable as herein and therein provided, whether at the
Stated Maturity Date, by declaration of acceleration, extension or otherwise.

 

"Maximum Legal Rate" shall mean the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such Governmental
Authority whose laws are held by any court of competent jurisdiction to govern
the interest rate provisions of the Loan.

 

"Mezzanine Trigger Period” shall commence and continue for so long as any New
Mezzanine Loan is outstanding.

 

"Monthly Debt Service Payment Amount" shall mean a constant monthly payment of
$66,382.12.

 

"Monthly Operating Expense Budgeted Amount" shall mean the monthly amount set
forth in the Approved Annual Budget for Operating Expenses for the calendar
month in which such Monthly Payment Date occurs.

 

8

 

 

"Monthly Payment Date" shall mean the sixth (6th) day of every calendar month
occurring during the Term. The first Monthly Payment Date shall be February 6,
2014.

 

"Moody's" shall mean Moody's Investors Service, Inc.

 

"Mortgage" shall mean that certain first priority Mortgage, dated the date
hereof, executed and delivered by Borrower as security for the Loan and
encumbering the Property, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

"NRSRO" shall mean any credit rating agency that has elected to be treated as a
nationally recognized statistical rating organization for purposes of Section
15E of the Exchange Act, without regard to whether or not such credit rating
agency has been engaged by Lender or its designees in connection with, or in
anticipation of, a Securitization.

 

"Obligations" shall mean, collectively, Borrower's obligations for the payment
of the Debt and the performance of the Other Obligations.

 

"Officer's Certificate" shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized senior officer of Borrower or its manager.

 

"Open Prepayment Date" shall mean October 6, 2023.

 

"Operating Expenses" shall mean, for any period, without duplication, all
expenses actually paid or payable by Borrower during such period in connection
with the operation, ownership, management, maintenance, repair and use of the
Property, determined on an accrual basis, and, except to the extent otherwise
provided in this definition, in accordance with GAAP. Operating Expenses
specifically shall include (i) all expenses incurred in the immediately
preceding twelve (12) month period based on quarterly financial statements
delivered to Lender in accordance with Section 4.9.2 hereof, (ii) all payments
required to be made pursuant to any Operations Agreements or Major Contracts,
(iii) property management fees in an amount equal to the greater of four percent
(4%) of Gross Revenue (which definition of Gross Revenue shall, solely for
purposes of calculating property management fees, include Insurance Proceeds but
only to the extent Lender elects to treat such Insurance Proceeds as business or
rental interruption Insurance Proceeds pursuant to Section 5.4(f) hereof) and
the management fees actually paid under the Management Agreement, (iv)
administrative, payroll, security and general expenses for the Property, (v) the
cost of utilities, inventories and fixed asset supplies consumed in the
operation of the Property, (vi) a reasonable reserve for uncollectible accounts,
(vii) costs and fees of Independent professionals (including, without
limitation, legal, accounting, consultants and other professional expenses),
technical consultants, operational experts (including quality assurance
inspectors) or other third parties retained to perform services required or
permitted hereunder, (viii) cost of attendance by employees at training and
manpower development programs, (ix) association dues, (x) computer processing
charges, (xi) operational equipment and other lease payments as reasonably
approved by Lender, (xii) Taxes and Other Charges (other than income taxes or
Other Charges in the nature of income taxes) and Insurance Premiums and (xiii)
all underwritten reserves required by Lender hereunder (without duplication).
Notwithstanding the foregoing, Operating Expenses shall not include depreciation
or amortization, (2) income taxes or Other Charges in the nature of income
taxes, (3) any expenses (including legal, accounting and other professional
fees, expenses and disbursements) incurred in connection with the making of the
Loan or the sale, exchange, transfer, financing or refinancing of all or any
portion of the Property or in connection with the recovery of Insurance Proceeds
or Awards which are applied to prepay the Note, (4) Capital Expenditures, (5)
Debt Service, and (6) any item of expense which would otherwise be considered
within Operating Expenses pursuant to the provisions above but is paid directly
by any Tenant.

 

9

 

  

"Operating Income" shall mean, for any period, all income of Borrower during
such period from the use, ownership or operation of the Property, including:

 

(a)      all amounts payable to Borrower by any Person as Rent and other amounts
under Leases or other agreements relating to the Property;

 

(b)      business interruption insurance proceeds allocable to the applicable
reporting period; and

 

(c)      all other amounts which in accordance with GAAP, are included in
Borrower's annual financial statements as operating income attributable to the
Property.

 

Notwithstanding the foregoing, Operating Income shall not include (a) any Award
or Insurance Proceeds (other than business interruption and/or rental loss
insurance proceeds and only to the extent allocable to the applicable reporting
period), (b) any proceeds resulting from the Transfer of all or any portion of
the Property, (c) any Rent attributable to a Lease prior to the date in which
the Tenant thereunder has taken occupancy or in which the actual payment of rent
is required to commence thereunder, (d) any item of income otherwise included in
Operating Income but paid directly by any Tenant to a Person other than Borrower
as an offset or deduction against Rent payable by such Tenant, provided such
item of income is for payment of an item of expense (such as payments for
utilities paid directly to a utility company) and such expense is otherwise
excluded from the definition of Operating Expenses pursuant to clause "(6)" of
the definition thereof and (e) security deposits, utility deposits and other
deposits received from Tenants until forfeited or applied. Operating Income
shall be calculated on the accrual basis of accounting and, except to the extent
otherwise provided in this definition, in accordance with GAAP.

 

"Operations Agreements " shall mean any covenants, restrictions, easements,
declarations or agreements of record relating to the construction, operation or
use of the Property, together with all amendments, modifications or supplements
thereto.

 

"Other Charges" shall mean all ground rents, maintenance charges, impositions
other than Taxes and any other charges, including vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Property, now or
hereafter levied or assessed or imposed against the Property or any part
thereof.

 

"Other Obligations" shall mean (a) the performance of all obligations of
Borrower contained herein; (b) the performance of each obligation of Borrower
contained in any other Loan Document; and (c) the performance of each obligation
of Borrower contained in any renewal, extension, amendment, modification,
consolidation, change of, or substitution or replacement for, all or any part of
this Agreement, the Note or any other Loan Document.

  

10

 

 

"Outstanding Principal Balance" shall mean, as of any date, the outstanding
principal balance of the Loan.

 

"Patriot Act" shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
ACT) of 2001, as the same may be amended from time to time, and corresponding
provisions of future laws.

 

"Permitted Encumbrances " shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, (ii) all encumbrances and other matters
disclosed in the Title Insurance Policy, (iii) Liens, if any, for Taxes or Other
Charges imposed by any Governmental Authority not yet due or delinquent, (iv)
any workers', mechanics' or other similar Liens on the Property provided that
any such Lien is bonded or discharged within thirty (30) days after Borrower
first receives written notice of such Lien or which is being contested in good
faith in accordance with the requirements of Section 4.3 and (v) such other
title and survey exceptions as Lender has approved or may approve in writing in
Lender's reasonable discretion including the Condominium Declaration.

 

"Person" shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
entity, any Governmental Authority and any fiduciary acting in such capacity on
behalf of any of the foregoing.

 

"Physical Conditions Report" shall mean that certain Property Condition Report,
prepared by EBI Consulting and dated as of October 31, 2013.

 

"Prepayment Fee" shall mean an amount equal to the greater of (i) the Yield
Maintenance Amount, or (ii) four percent (4%) of the unpaid Outstanding
Principal Balance as of the Repayment Date.

 

"Prepayment Notice" shall mean a prior written notice to Lender specifying the
proposed Business Day on which a prepayment of the Debt is to be made pursuant
to Section 2.4 hereof, which date shall be no earlier than thirty (30) days
after the date of such Prepayment Notice and no later than sixty (60) days after
the date of such Prepayment Notice.

 

"Property" shall mean the parcel of real property described on Exhibit A
attached hereto and made a part hereof, the Condominium Units, the Common
Elements and the Improvements now or hereafter erected or installed thereon and
all personal property owned by Borrower and encumbered by the Mortgage, together
with all rights pertaining to such property, the Condominium Units and
Improvements, all as more particularly described in the Granting Clauses of the
Mortgage.

 

"Qualified Manager" shall mean (i) the Manager as of the Closing Date, (ii) so
long as Borrower is Controlled by Guarantor, a property management company owned
and/or Controlled by Guarantor or (iii) an Unaffiliated Qualified Manager.

 

"Qualified Transferee" shall mean a transferee for whom, prior to the Transfer,
Lender shall have received: (x) evidence that the proposed transferee (1) has
never been indicted or convicted of, or plead guilty or no contest to, a felony,
(2) has never been indicted or convicted of, or plead guilty or no contest to, a
Patriot Act Offense and is not on any Government List, (3) has never been the
subject of a voluntary or involuntary (to the extent the same has not been
discharged) bankruptcy proceeding and (4) has no material outstanding judgments
against such proposed transferee and (y) if the proposed transferee will obtain
Control of or obtain a direct or indirect ownership interest of 10% or more in
Borrower as a result of such proposed transfer, a credit check against such
proposed transferee that is reasonably acceptable to Lender.

 

11

 

 

  

"Rating Agencies" shall mean any nationally-recognized statistical rating
organization (e.g. S&P, Moody's, Fitch, DBRS, Inc. or any successor thereto)
that has been or will be engaged by Lender or its designees in connection with,
or in anticipation of, a Securitization.

 

"Rating Agency Confirmation" shall mean a written affirmation from each of the
Rating Agencies that rated the Securities that the credit rating of the
Securities by such Rating Agency immediately prior to the occurrence of the
event with respect to which such Rating Agency Confirmation is sought will not
be qualified, downgraded or withdrawn as a result of the occurrence of such
event, which affirmation may be granted or withheld in such Rating Agency's sole
and absolute discretion.

 

"Regulation AB" shall mean Regulation AB under the Securities Act and the
Exchange Act, as such Regulation AB may be amended from time to time.

 

"Related Loan" shall mean a loan to an Affiliate of Borrower or Guarantor or
secured by a Related Property, that is included in a Securitization with the
Loan, and any other loan that is cross-collateralized with the Loan.

 

"Related Property" shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is "related"
within the meaning of the definition of Significant Obligor, to the Property.

 

"REMIC Trust" shall mean a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code that holds the Note.

 

"Rents" shall mean all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a bankruptcy
proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower, Manager or any of their respective
agents or employees from any and all sources arising from or attributable to the
Property and the Improvements, including all receivables, customer obligations,
installment payment obligations 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 the Property or rendering
of services by Borrower, Manager or any of their respective agents or employees,
and Insurance Proceeds, if any, from business interruption or other loss of
income insurance, but only to the extent such Insurance Proceeds are treated as
business or rental interruption Insurance Proceeds pursuant to Section 5.4(f)
hereof.

 

"Repayment Date" shall mean the date of a defeasance or prepayment (as
applicable) of the Loan pursuant to the provisions of Section 2.4 hereof.

  

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"Reserve Funds" shall mean, collectively, all funds deposited by Borrower with
Lender or Deposit Bank pursuant to Article 6 of this Agreement, including, but
not limited to, the Capital Expenditure Funds, the Insurance Funds, the Tax
Funds, the Required Repairs Funds, the Casualty and Condemnation Funds and the
Cash Collateral Funds.

 

"Restoration" shall mean the repair and restoration of the Property after a
Casualty or Condemnation as nearly as possible to the condition the Property was
in immediately prior to such Casualty or Condemnation, with such alterations as
may be reasonably approved by Lender.

 

"Restoration DSCR" shall mean, as of any date of determination, the ratio of (a)
the Underwritten Net Cash Flow of the Property, based on Rents in place
(annualized and including rental loss insurance proceeds) and expenses on a pro
forma basis, to (b) an amount equal to twelve (12) times the Monthly Debt
Service Payment Amount.

 

"S&P" shall mean Standard & Poor' s Ratings Group, a division of the McGraw-Hill
Companies.

 

"Significant Obligor" shall have the meaning set forth in Item 1101(k) of
Regulation AB under the Securities Act.

 

"State" shall mean Michigan.

 

"Stated Maturity Date" shall mean January 6, 2024.

 

"Survey" shall mean a survey of the Property prepared by a surveyor licensed in
the State and satisfactory to Lender and the company or companies issuing the
Title Insurance Policy, and containing a certification of such surveyor
satisfactory to Lender.

 

"Taxes" shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against the Property or part thereof, together with all interest and penalties
thereon.

 

"Tenant" shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now
or hereafter affecting all or any part of the Property.

 

"Term" shall mean the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents.

 

"Title Insurance Policy" shall mean an ALTA mortgagee title insurance policy in
the form acceptable to Lender issued with respect to the Property and insuring
the Lien of the Mortgage.

 

"Treasury Rate" shall mean the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15 Selected
Interest Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Repayment Date, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Maturity Date. (In the event Release H.15 is no longer
published, Lender shall select a comparable publication to determine the
Treasury Rate.)

 

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"TRIPRA" shall mean the Terrorism Risk Insurance Program Reauthorization Act of
2002 or any extension, renewal or replacement thereof.

 

"Trigger Period'' shall commence upon the occurrence of (i) an Event of Default,
(ii) the commencement of a Low Debt Service Period or (iii) the commencement of
a Mezzanine Trigger Period; and shall end if, (A) with respect to a Trigger
Period continuing pursuant to clause (i), the Event of Default commencing the
Trigger Period has been cured and such cure has been accepted by Lender (and no
other Event of Default is then continuing) or (B) with respect to a Trigger
Period continuing due to clause (ii), the Low Debt Service Period has ended
pursuant to the terms hereof or (C) with respect to a Trigger Period continuing
due to clause (iii), the Mezzanine Trigger Period has ended pursuant to the
terms hereof.

 

"Trustee" shall mean any trustee holding the Loan in a Securitization.

 

"UCC' or "Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State (with respect to fixtures), the State of New York or the
state in which any of the Cash Management Accounts are located, as the case may
be.

 

"Unaffiliated Qualified Manager" shall mean an unaffiliated property manager of
the Property that (A) is a reputable, nationally or regionally recognized
management company having at least five (5) years' experience in the management
of similar type properties, (B) at the time of its engagement as property
manager manages not less than five hundred (500) apartment units of similar
quality to the Property ("Comparable Units") in the State and an aggregate of
not less than five thousand (5,000) Comparable Units and (C) is not the subject
of a bankruptcy or similar insolvency proceeding.

 

"Underwritten Net Cash Flow" shall mean, as of the end of any calendar quarter
for which Underwritten Net Cash Flow is determined (or ending at such other date
for which Underwritten Net Cash Flow is determined), the excess of: (a) the sum
of: (i) actual in place base rents under bona fide Leases at the Property during
the preceding six (6) month period, as annualized, and adjusted (if necessary)
to reflect a minimum 5% vacancy factor plus (ii) actual net cash flow receipts
received by Borrower from sources other than rents at the Property, to the
extent such receipts are recurring in nature and properly included as Operating
Income for the twelve (12) month period preceding the month in which such
Underwritten Net Cash Flow is calculated; over (b) for such twelve month
calculation period, Operating Expenses over such twelve months, in each case
adjusted to reflect (i) exclusion of amounts received from Tenants under
month-to-month Leases, to the extent such amounts exceed five percent (5%) of
the aggregate Operating Income received by Borrower for the applicable
annualized period, (ii) exclusion of amounts received from Tenants affiliated
with Borrower or Guarantor, (iii) subtraction of an imputed capital improvement
requirement amount equal to $385.00 per residential unit at the Property per
annum, (iv) exclusion of (X) amounts representing non- recurring items and (Y)
amounts received from non-residential Tenants not currently in occupancy and
paying full, unabated rent, from non-residential Tenants affiliated with
Borrower or Guarantor, from non-residential Tenants in default or in bankruptcy
and from non-residential Tenants under month-to-month Leases or Leases where the
term is about to expire, and (v) such other adjustments deemed necessary by
Lender based upon Lender's reasonable determination of Rating Agency
underwriting and evaluation criteria for securitized Loans of similar size and
property type, but specifically excluding any adjustments for market rent and/or
market vacancy. Lender's calculation of Underwritten Net Cash Flow shall be
final absent manifest error.

 

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"U.S. Obligations" shall mean securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner (i) that are (a) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged and/or (b) other "government securities" within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended,
and otherwise in compliance with all requirements of all Rating Agencies, and
(ii) that are not subject to prepayment, call or early redemption.

 

"Yield Maintenance Amount" shall mean the present value, as of the Repayment
Date, of the remaining scheduled payments of principal and interest from the
Repayment Date through the Stated Maturity Date (including any balloon payment)
determined by discounting such payments at the Discount Rate, less the amount of
principal being prepaid on the Repayment Date.

 

Section 1. Index of Other Definitions. The following terms are defined in the
sections or Loan Documents as indicated below:

 

"Acceptable Blanket Policy" - 5.1.1(c)

"Accounts" - 6.1

"Act" - Schedule V

"Agreement" - Introductory Paragraph

"Applicable Taxes" - 10.24 "Approved

Annual Budget" - 4.9.5

"Approved Extraordinary Operating Expense" - 4.9.6
"Available Cash" - 6.12.1

"Borrower" - Introductory Paragraph

"Borrower's Recourse Liabilities" - 10.1

"Broker" - 10.19

"Capital Expenditure Account" - 6.5.1

"Capital Expenditure Funds" 6.5.1

"Cash Collateral Account" - 6.11

"Cash Collateral Funds" - 6.11

"Cash Management Accounts" - 6.13

"Casualty" - 5 .2

"Casualty and Condemnation Account" - 6.10

"Casualty and Condemnation Funds" - 6.10

"Casualty Consultant" - 5.4(b)(iii)

"Casualty Retainage" - 5.4(b)(iv)

"Clearing Account" - 6.1

"Clearing Bank” - 6.1

"Comparable Units" - Definition of Unaffiliated Qualified Manager

"Condemnation Proceeds" - 5.4(b)

"Debt Service Account" - Cash Management Agreement

"Defeasance Collateral" - 2.4.2(a)(iii)

"Defeasance Lockout Expiration Date" - 2.4.2(a)

"Defeasance Security Agreement" - 2.4.2(a)(iii)

 

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"Disclosure Document" - 9.2(a)

"Easements" - 3.1.11 "Embargoed

Person" - 4.32(c) "Endorsement" -

7.1 "Equipment" - Mortgage

"ERISA" - 4.31

"Event of Default" - 8.1 "Exchange

Act" - 9.2(a) "Exchange Act Filing" -

9.1(d)

"Extraordinary Operating Expense" - 4.9.6

"Government Lists" - 4.32(b) "Improvements" -

Mortgage

"Indemnified Liabilities" - 4.30

"Initial Interest Period' - 2.3.1

"Insurance Account" - 6.4.1

"Insurance Funds" - 6.4.1

"Insurance Premiums" - 5.1.1(b)

"Insurance Proceeds" - 5.4(b)

"Intellectual Property" - 3.1.33

"Interest Period' - 2.3.2

"Lender" - Introductory Paragraph

"Lender Group" - 9.2(b)

"Liabilities" - 9.2(b)

"Licenses" - 3.1.9

"Liquidated Damages Amount" - 2.4.5(b)

"Monthly Interest Payment Amount" - 2.3.1

"Net Proceeds" - 5.4(b)

"Net Proceeds Deficiency" - 5.4(b)(vi)

"New Mezzanine Loan" - 9.3.2

"New Mezzanine Loan Borrower" - 9.3.2

"Note" - 2.1.3

"Notice" - 10.6

"OFAC' - 4.32(b)

"Patriot Act Offense" - 4.32(b)

"Permitted Indebtedness" - 4.21

"Permitted Investments" - Cash Management Agreement

"Permitted Transfer" - 7.2

"PML" - 5.1.l (a)

"Policies" - 5.1.1(b)

"Qualified Carrier" - 5.1.l(i)

"Release Date" - 2.4.2(a)(i)

"Required Records" - 4.9.7

"Required Repairs Account" - 6.2.1 "Required

Repairs Funds" - 6.2.1 "Required Repairs" -

6.2.1

"Review Waiver" - 10.3(b)

"Secondary Market Transaction" - 9. l(a)

"Securities" - 9.1(a)

 

16

 

  

"Securities Act - 9.2(a)

"Securitization" - 9.l(a) "Servicer" -

10.21

"Servicing Agreement" - 10.21

"Sole Member" - Schedule V "SPC

Party" - Schedule V "Special

Member" - Schedule V

"Special Purpose Bankruptcy Remote Entity" - Schedule V

"Springing Recourse Event" - 10.1

"Successor Borrower" - 2.4.2(b) "Tax

Account" - 6.3.1

"Tax Funds" - 6.3.1

"Transfer" - 4.2

"Transfer and Assumption" - 7.1

"Transferee Borrower" - 7.1

"Underwriter Group" - 9.2(b) "Updated

Information" - 9.1(b)(i) 

 

Section 1.3     Principles of Construction. All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified. Unless otherwise specified, the words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement or any other
Loan Document shall refer to this Agreement or such other Loan Document as a
whole and not to any particular provision hereof or thereof. When used in this
Agreement or any other Loan Document, the word "including" shall mean "including
but not limited to". Unless otherwise specified, all meanings attributed to
defined terms herein shall be equally applicable to both the singular and plural
forms of the terms so defined.

 

ARTICLE 2

 

THE LOAN

 

Section 2.1       The Loan.

 

2.1.1   Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrower and Borrower
shall accept the Loan from Lender on the Closing Date.

 

2.1.2   Single Disbursement to Borrower. Borrower shall receive only one
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.

 

2.1.3   The Note. The Loan shall be evidenced by that certain Promissory Note of
even date herewith, in the stated principal amount of Eleven Million Five
Hundred Thousand and No/100 Dollars ($11,500,000.00) executed by Borrower and
payable to the order of Lender in evidence of the Loan (as the same may
hereafter be amended, supplemented, restated, increased, extended or
consolidated from time to time, the "Note") and shall be repaid in accordance
with the terms of this Agreement, the Note and the other Loan Documents.

  

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2.1.4   Use of Proceeds. Borrower shall use proceeds of the Loan to (i) pay and
discharge any existing loans relating to the Property, (ii) pay all past-due
Taxes, Insurance Premiums and Other Charges, if any, in respect of the Property,
(iii) make initial deposits of the Reserve Funds, (iv) pay costs and expenses
incurred in connection with the closing of the Loan, and (v) to the extent any
proceeds remain after satisfying clauses (i) through (iv) above, for such lawful
purpose as Borrower shall designate.

 

Section 2.2        Interest Rate.

 

2.2.1   Interest Rate. Interest on the Outstanding Principal Balance shall
accrue throughout the Term at the Interest Rate.

 

2.2.2   Default Rate. In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the Outstanding Principal Balance
and, to the extent not prohibited by applicable law, all other portions of the
Debt, shall accrue interest at the Default Rate, calculated from the date such
payment was due or such Default shall have occurred without regard to any grace
or cure periods contained herein. Interest at the Default Rate shall be paid
immediately upon demand, which demand may be made as frequently as Lender shall
elect, to the extent not prohibited by applicable law.

 

2.2.3   Interest Calculation. Interest on the Outstanding Principal Balance
shall be calculated by multiplying (A) the actual number of days elapsed in the
period for which the calculation is being made by (B) a daily rate based on a
three hundred sixty (360) day year (that is, the Interest Rate expressed as an
annual rate divided by 360) by (C) the Outstanding Principal Balance. The
accrual period for calculating interest due on each Monthly Payment Date shall
be the Interest Period immediately prior to such Monthly Payment Date.

 

2.2.4   Usury Savings. This Agreement and the other Loan Documents are subject
to the express condition that at no time shall Borrower be required to pay
interest on the Outstanding Principal Balance at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
Outstanding Principal Balance at a rate in excess of the Maximum Legal Rate, the
Interest Rate shall be deemed to be immediately reduced to the Maximum Legal
Rate and all previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on account of the
interest due hereunder. All sums paid or agreed to be paid to Lender for the
use, forbearance, or detention of the sums due under the Loan, shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate from time to time in effect and applicable to the Loan for so long as
the Loan is outstanding.

 

Section 2.3       Loan Payments.

 

2.3.1   Payments. On the date hereof, Borrower shall pay interest on the unpaid
Outstanding Principal Balance from the Closing Date through and including
January 5, 2014 (the "Initial Interest Period''). On February 6, 2014 and each
Monthly Payment Date thereafter through and including the Monthly Payment Date
immediately preceding the Amortization Commencement Date, Borrower shall make a
payment of interest on the Outstanding Principal Balance accrued at the Interest
Rate during the Interest Period immediately preceding such Monthly Payment Date
(the "Monthly Interest Payment Amount "). On the Amortization Commencement Date
and each Monthly Payment Date thereafter during the Tem1, Borrower shall make a
payment of principal and interest equal to the Monthly Debt Service Payment
Amount. The Monthly Debt Service Payment Amount shall be applied first to
accrued and unpaid interest and the balance to the Outstanding Principal
Balance. Borrower shall also pay to Lender all amounts required in respect of
Reserve Funds as set forth in Article 6 hereof.

 

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2.3.2   Payments Generally. After the Initial Interest Period, each interest
accrual period thereafter (each, an "Interest Period") shall commence on the
sixth (6th) day of each calendar month during the Term and shall end on and
include the fifth (5th) day of the next occurring calendar month. For purposes
of making payments hereunder, but not for purposes of calculating interest
accrual periods, if the day on which such payment is due is not a Business Day,
then amounts due on such date shall be due on the immediately preceding Business
Day. Lender shall have the right from time to time, in its sole discretion, upon
not less than fifteen (15) days prior written notice to Borrower, to change the
Monthly Payment Date to a different calendar day and, if requested by Lender,
Borrower shall promptly execute an amendment to this Agreement to evidence such
change; provided, however, that if Lender shall have elected to change the
Monthly Payment Date as aforesaid, Lender shall have the option, but not the
obligation, to adjust the Interest Period accordingly. With respect to payments
of principal due on the Maturity Date, interest shall be payable at the Interest
Rate, through and including the day immediately preceding such Maturity Date.
All amounts due pursuant to this Agreement and the other Loan Documents shall be
payable without setoff, counterclaim, defense or any other deduction whatsoever.

 

2.3.3   Payment on Maturity Date. Borrower shall pay to Lender on the Maturity
Date the Outstanding Principal Balance, all accrued and unpaid interest and all
other amounts due hereunder and under the Note, the Mortgage and the other Loan
Documents.

 

2.3.4   Late Payment Charge. If any principal, interest or any other sum due
under the Loan Documents (other than the Outstanding Principal Balance due and
payable on the Maturity Date) is not paid by Borrower on the date on which it is
due, Borrower shall pay to Lender upon demand an amount equal to the lesser of
five percent (5%) of such unpaid sum or the maximum amount permitted by
applicable law in order to defray the expense incurred by Lender in handling and
processing such delinquent payment and to compensate Lender for the loss of the
use of such delinquent payment. Any such amount shall be secured by the Mortgage
and the other Loan Documents to the extent permitted by applicable law.

 

2.3.5   Method and Place of Payment.

 

(a)   Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 2:00 p.m., New York City time, on the date when due and shall be made in
lawful money of the United States of America in immediately available funds at
Lender's office or at such other place as Lender shall from time to time
designate by notice, and 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.

 

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(b)   Whenever any payment to be made hereunder or under any other Loan Document
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be the immediately preceding Business Day.

 

(c)   All payments required to be made by Borrower hereunder or under the Note
or the other Loan Documents shall be made irrespective of, and without deduction
for, any setoff, claim or counterclaim and shall be made irrespective of any
defense thereto.

 

Section 2.4        Prepayments.

 

2.4.1    Prepayments. Except as otherwise provided herein, Borrower shall not
have the right to prepay the Loan in whole or in part prior to the Stated
Maturity Date.

 

2.4.2    Defeasance.

 

(a)    Conditions to Defeasance. Provided no Event of Default has occurred and
is continuing, at any time after the date which is the earlier of (A) two (2)
years after the "startup day," within the meaning of Section 8600(a)(9) of the
Code, of the final "real estate mortgage investment conduit," established within
the meaning of Section 860D of the Code, that holds any note that evidences all
or any portion of the Loan or (B) three (3) years after the date hereof (the
"Defeasance Lockout Expiration Date"), Borrower may cause the release of the
Property (in whole but not in part) from the Lien of the Mortgage and the other
Loan Documents upon the satisfaction of the following conditions:

 

(i)               not less than sixty (60) days prior written notice shall be
given to Lender specifying a date (the "Release Date") on which the Defeasance
Collateral is to be delivered;

 

(ii)              all accrued and unpaid interest and all other sums due and
payable under the Note and under the other Loan Documents up to the Release Date
(together with, in the event such Release Date is not on a Monthly Payment Date,
all interest that would have accrued on the Outstanding Principal Balance up to
the next Monthly Payment Date), including, without limitation, all costs and
expenses incurred by Lender or its agents in connection with such release
(including, without limitation, the fees and expenses incurred by attorneys and
accountants in connection with the review of the proposed Defeasance Collateral
and the preparation of the Defeasance Security Agreement and related
documentation), shall be paid in full on or prior to the Release Date; and

 

(iii)             Borrower shall deliver to Lender on or prior to the Release
Date:

 

(A)an amount equal to that which is sufficient to purchase U.S. Obligations that
provide for payments (1) on or prior to, but as close as possible to and
including, all successive scheduled Monthly Payment Dates after the Release Date
through the Open Prepayment Date, and (2) in amounts equal to or greater than
the Monthly Debt Service Payment Amount through and including the Open
Prepayment Date together with payment in full of the Outstanding Principal
Balance as of the Open Prepayment Date (the "Defeasance Collateral” ), each of
which shall be duly endorsed by the holder thereof as directed by Lender or
accompanied by a written instrument of transfer in form and substance wholly
satisfactory to Lender (including, without limitation, such instruments as may
be required by the depository institution holding such securities to effectuate
book-entry transfers and pledges through the book-entry facilities of such
institution) in order to create a first priority security interest therein in
favor of the Lender in conformity with all applicable state and federal laws
governing granting of such security interests;

 

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(B)a pledge and security agreement, in form and substance satisfactory to Lender
in its sole discretion, creating a first priority security interest in favor of
Lender in the Defeasance Collateral (the "Defeasance Security Agreement"), which
shall provide, among other things, that any payments generated by the Defeasance
Collateral shall be paid directly to Lender and applied by Lender in
satisfaction of all amounts then due and payable hereunder and any excess
received by Lender from the Defeasance Collateral over the amounts payable by
Borrower hereunder or under the Note shall be refunded to Borrower promptly
after each Monthly Payment Date;

 

(C)a certificate of Borrower certifying that all of the requirements set forth
in this Section 2.4.2 have been satisfied;

 

(D)an opinion of counsel for Borrower in form and substance and delivered by
counsel reasonably satisfactory to Lender in its sole discretion stating, among
other things, that (1) Lender has a perfected first priority security interest
in the Defeasance Collateral and that the Defeasance Security Agreement is
enforceable against Borrower (and Successor Borrower, as applicable) in
accordance with its terms; and (2) that any REMIC Trust formed pursuant to a
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 such defeasance;

 

(E)at Lender's request, a Rating Agency Confirmation from each applicable Rating
Agency or each such Rating Agency as is required by Lender;

 

(F)a certificate from a firm of independent public accountants acceptable to
Lender certifying that the Defeasance Collateral is sufficient to satisfy the
provisions of Section 2.4.2(a)(iii)(A) above;

 

(G)such other certificates, documents or instruments as Lender may reasonably
require; and

 

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(H)in connection with the conditions set forth above in this Section
2.4.2(a)(iii), Borrower hereby appoints Lender as its agent and attorney in fact
for the purpose of using the amounts delivered pursuant to Section
2.4.2(a)(iii)(A) above to purchase the Defeasance Collateral.

 

(b)       Successor Borrower. Upon the defeasance of the Loan under this Section
2.4.2, Borrower may, or at option of Lender shall, assign all of its
Obligations, together with the pledged Defeasance Collateral, to a successor
entity designated by Lender in its sole discretion or, at the option of Lender,
designated by Borrower and approved by Lender (in each case, the "Successor
Borrower"). Lender shall have the right to establish or designate the Successor
Borrower and to purchase, or cause to be purchased, the Defeasance Collateral,
which rights may be exercised in Lender's sole discretion and shall be retained
by the Lender named herein notwithstanding the transfer or securitization of the
Loan. Such successor entity shall execute an assumption agreement in form and
substance satisfactory to Lender in its sole discretion pursuant to which it
shall assume Borrower's Obligations and the Defeasance Security Agreement. As
conditions to such assignment and assumption, Borrower shall (i) deliver to
Lender an opinion of counsel in form and substance and delivered by counsel
reasonably satisfactory to Lender in its sole discretion stating, among other
things, that such assumption agreement is enforceable against Borrower and such
successor entity in accordance with its terms and that the Note, the Defeasance
Security Agreement and the other Loan Documents, as so assumed, are enforceable
against such successor entity in accordance with their respective terms, and
(ii) pay all reasonable out-of-pocket costs and expenses incurred by Lender or
its agents in connection with such assignment and assumption (including, without
limitation, the review of the proposed transferee and the preparation of the
assumption agreement and related documentation). Additionally, Borrower shall
pay all costs and expenses incurred by Successor Borrower, including reasonable
attorneys' fees and expenses, incurred in connection therewith. Upon such
assumption, Borrower shall be relieved of its Obligations hereunder, under the
other Loan Documents and under the Defeasance Security Agreement other than
those Obligations which are specifically intended to survive the termination,
satisfaction or assignment of this Agreement or the exercise of Lender's rights
and remedies hereunder.

 

(c)       Appointment as Attorney in Fact. Upon the defeasance of the Loan in
accordance with clauses (a) and (hl. of this Section 2.4.2, Borrower shall have
no further right to prepay the Note pursuant to the other provisions of this
Section 2.4.2 or otherwise. In connection with the conditions set forth in this
Section 2.4.2, Borrower hereby appoints Lender as its agent and attorney-in-fact
for the purpose of purchasing the Defeasance Collateral with funds provided by
Borrower. Borrower shall pay any and all expenses incurred in the purchase of
the Defeasance Collateral and any revenue, documentary stamp or intangible taxes
or any other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Section 2.4.2.

 

 

2.4.3       Open Prepayment. Notwithstanding anything to the contrary contained
herein, and provided that Borrower shall deliver to Lender a Prepayment Notice,
Borrower may prepay the entire Outstanding Principal Balance and any other
amounts outstanding under the Note, this Agreement, or any of the other Loan
Documents, without payment of the Prepayment Fee or any other prepayment
premium, penalty or fee, on any Business Day on or after the Open Prepayment
Date. If such prepayment is not made on a Monthly Payment Date, Borrower shall
also pay interest that would have accrued on the Outstanding Principal Balance
to, but not including, the next Monthly Payment Date.

 

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2.4.4       Mandatory Prepayments. If Lender is not obligated to make Net
Proceeds available to Borrower for Restoration, on the next occurring Monthly
Payment Date following the date on which (a) Lender actually receives any Net
Proceeds, and (b) Lender has determined that such Net Proceeds shall be applied
against the Debt, Borrower shall prepay, or authorize Lender to apply Net
Proceeds as a prepayment of, the Debt in an amount equal to one hundred percent
(100%) of such Net Proceeds. Except during an Event of Default, such Net
Proceeds shall be applied by Lender as follows in the following order of
priority: First, to all amounts (other than principal and interest) then due and
payable under the Loan Documents, including any reasonable out-of-pocket costs
and expenses of Lender in connection with such prepayment); Second; accrued and
unpaid interest at the Interest Rate; and Third, to principal. Notwithstanding
anything herein to the contrary, so long as no Event of Default is continuing,
no Prepayment Fee or any other prepayment premium, penalty or fee shall be due
in connection with any prepayment made pursuant to this Section 2.4.4. Any
partial principal prepayment under this Section 2.4.4 shall be applied to the
last payments of principal due under the Loan.

 

2.4.5       Prepayments After Default.

 

(a)       If, during the continuance of an Event of Default, payment of all or
any part of the Debt is tendered by Borrower and accepted by Lender or is
otherwise recovered by Lender (including through application of any Reserve
Funds), such tender or recovery shall be deemed to be a voluntary prepayment by
Borrower in violation of the prohibition against prepayment set forth in Section
2.4.1 hereof, and Borrower shall pay, as part of the Debt, all of:

(i) all accrued interest at the Interest Rate and, if such tender and acceptance
is not made on a Monthly Payment Date, interest that would have accrued on the
Debt to, but not including, the next Monthly Payment Date, (ii) an amount equal
to the Prepayment Fee, and (iii) in the event the payment occurs on or prior to
the Defeasance Lockout Expiration Date, the Liquidated Damages Amount.

 

(b)       IF DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, ALL OR ANY PART OF
THE LOAN IS REPAID ON OR PRIOR TO THE DEFEASANCE LOCKOUT EXPIRATION DATE, THEN
BORROWER SHALL PAY TO LENDER, AS LIQUIDATED DAMAGES AND NOT AS A PENALTY, AND IN
ADDITION TO ANY AND ALL OTHER SUMS AND FEES PAYABLE UNDER THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AN AMOUNT EQUAL TO FIVE PERCENT (5%) OF THE OUTSTANDING
PRINCIPAL BALANCE BEING REPAID (THE "LIQUIDATED DAMAGES AMOUNT' ).

  

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Section 2.5           Release of Property.

 

2.5.1       Release Upon Defeasance. If Borrower has elected to defease the Note
and the requirements of Section 2.4.2 have been satisfied, the Property shall be
released from the Lien of the Mortgage and the other Loan Documents, and the
Defeasance Collateral pledged pursuant to the Defeasance Security Agreement
shall constitute the only collateral which shall secure the Note and all other
Obligations. In connection with the release of the Lien, Borrower shall submit
to Lender, not less than twenty (20) days prior to the Release Date (or such
shorter time as is acceptable to 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 Property is located and
contain standard provisions protecting the rights of the releasing lender. In
addition, Borrower shall provide all other documentation Lender reasonably
requires to be delivered by Borrower in connection with such release, together
with an Officer's Certificate certifying that such documentation (i) is in
compliance with all Legal Requirements, and (ii) will effect such release in
accordance with the terms of this Agreement. Borrower shall pay all costs, taxes
and expenses associated with the release of the Lien of the Mortgage and the
other Loan Documents, including Lender's reasonable attorneys' fees. Borrower,
pursuant to the Defeasance Security Agreement, shall authorize and direct that
the payments received from Defeasance Collateral be made directly to Lender and
applied to satisfy the Obligations, including payment in full of the Outstanding
Principal Balance as of the Open Prepayment Date.

 

2.5.2       Release on Payment in Full. Lender shall, upon the written request
and at the expense of Borrower, upon payment in full of the Debt in accordance
with the terms and provisions of the Loan Documents, release the Lien of the
Mortgage and the other Loan Documents. In connection with the release of the
Lien, Borrower shall submit to Lender, not less than twenty (20) days prior to
the Repayment Date (or such shorter time as is acceptable to 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 Property is located and contain standard provisions protecting the rights of
the releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by Borrower in
connection with such release, together with an Officer's Certificate certifying
that such documentation (i) is in compliance with all Legal Requirements, and
(ii) will effect such release in accordance with the terms of this Agreement.
Borrower shall pay all costs, taxes and expenses associated with the release of
the Lien of the Mortgage and the other Loan Documents, including Lender's
reasonable attorneys' fees.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1           Borrower Representations. Borrower represents and warrants
that, except to the extent (if any) disclosed on Schedule IV hereto with
reference to a specific subsection of this Section 3.1:

 

3.1.1       Organization; Special Purpose. Borrower and each SPC Party is duly
organized, validly existing and in good standing with full power and authority
to own its assets and conduct its business, and is duly qualified and in good
standing in the jurisdiction in which the Property is located and in all
jurisdictions in which the ownership or lease of its property or the conduct of
its business requires such qualification, and Borrower has taken all necessary
action to authorize the execution, delivery and performance of this Agreement
and the other Loan Documents by it, and has the power and authority to execute,
deliver and perform under this Agreement, the other Loan Documents and all the
transactions contemplated hereby. Borrower and each SPC Party is a Special
Purpose Bankruptcy Remote Entity.

 

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3.1.2      Proceedings; Enforceability. This Agreement and the other Loan
Documents have been duly authorized, executed and delivered by Borrower and
constitute a legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights generally,
and by general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law). The Loan Documents are not
subject to any right of rescission, set-off, counterclaim or defense by
Borrower, any SPC Party or Guarantor including the defense of usury, nor would
the operation of any of the terms of the Loan Documents, or the exercise of any
right thereunder, render the Loan Documents unenforceable, and none of Borrower,
any SPC Party or Guarantor have asserted any right of rescission, set-off,
counterclaim or defense with respect thereto.

 

3.1.3       No Conflicts. The execution and delivery of this Agreement and the
other Loan Documents by Borrower and the performance of its Obligations
hereunder and thereunder will not conflict with any provision of any law or
regulation to which Borrower is subject, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any of Borrower's organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree
applicable to Borrower, or result in the creation or imposition of any Lien on
any of Borrower's assets or property (other than pursuant to the Loan
Documents).

 

3.1.4       Litigation. There is no action, suit, proceeding or investigation
pending or, to the best of Borrower's knowledge, threatened against Borrower,
any SPC Party, Guarantor, the Manager or the Property in any court or by or
before any other Governmental Authority which, if adversely determined, might
materially and adversely affect the condition (financial or otherwise) or
business of Borrower (including the ability of Borrower to carry out the
transactions contemplated by this Agreement), such SPC Party, Guarantor, Manager
or the condition or ownership of the Property.

 

3.1.5       Agreements. Borrower is not a party to any agreement or instrument
or subject to any restriction which might materially and adversely affect
Borrower or the Property, or Borrower's business, properties or assets,
operations or condition, financial or otherwise. Borrower is not in default with
respect to any order or decree of any court or any order, regulation or demand
of any Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of Borrower or its properties or might have consequences that would adversely
affect its performance hereunder. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Property is
bound.

 

3.1.6       Consents. No consent, approval, authorization or order of any court
or Governmental Authority is required for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, this Agreement or
the other Loan Documents or the consummation of the transactions contemplated
hereby, other than those which have been obtained by Borrower.

 

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3.1.7       Property; Title.

  

(a)        Borrower has good, marketable and insurable fee simple title to the
real property comprising part of the Property, including, without limitation,
the Condominium Units, and good title to the balance of the Property owned by
it, free and clear of all Liens whatsoever except the Permitted Encumbrances.
The Mortgage, when properly recorded in the appropriate records, together with
any Uniform Commercial Code financing statements required to be filed in
connection therewith, will create (i) a valid, first priority, perfected Lien on
Borrower's interest in the Property, subject only to Permitted Encumbrances, and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty (including the Leases), all in accordance with
the terms thereof, in each case subject only to the Permitted Encumbrances.
There are no mechanics', materialman's or other similar Liens or claims which
have been filed for work, labor or materials affecting the Property which are or
may be Liens prior to, or equal or coordinate with, the Lien of the Mortgage.
None of the Permitted Encumbrances, individually or in the aggregate, (a)
materially interfere with the benefits of the security intended to be provided
by the Mortgage and this Agreement, (b) materially and adversely affect the
value of the Property, (c) impair the use or operations of the Property (as
currently used), or (d) impair Borrower's ability to pay its Obligations in a
timely manner.

 

(b)       All transfer taxes, deed stamps, intangible taxes or other amounts in
the nature of transfer taxes required to be paid under applicable Legal
Requirements in connection with the transfer of the Property to Borrower have
been paid or are being paid simultaneously herewith. All mortgage, mortgage
recording, stamp, intangible or other similar tax required to be paid under
applicable Legal Requirements in connection with the execution, delivery,
recordation, filing, registration, perfection or enforcement of any of the Loan
Documents, including the Mortgage, have been paid or are being paid
simultaneously herewith. All taxes and governmental assessments due and owing in
respect of the Property have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been established hereunder or are insured
against by the Title Insurance Policy.

 

(c)        The Property is comprised of one (1) or more parcels which constitute
separate tax lots and do not constitute a portion of any other tax lot not a
part of the Property.

 

(d)        No Condemnation or other proceeding has been commenced or, to
Borrower's best knowledge, is contemplated with respect to all or any portion of
the Property or for the relocation of roadways providing access to the Property.

 

(e)       There are no pending or, to Borrower's best knowledge, proposed
special or other assessments for public improvements or otherwise affecting the
Property, nor are there, to Borrower's best knowledge, any contemplated
improvements to the Property that may result in such special or other
assessments.

 

3.1.8       ERISA; No Plan Assets. As of the date hereof and throughout the Term
(i) Borrower, Guarantor and the ERISA Affiliates do not sponsor, are not
obligated to contribute to, and are not themselves an "employee benefit plan,"
as defined in Section 3(3) of ERISA or Section 4975 of the Code, (ii) none of
the assets of Borrower or Guarantor constitutes or will constitute "plan assets"
of one or more such plans within the meaning of 29 C.F.R. Section 2510.3-101 as
modified in operation by Section 3(42) of ERISA, (iii) Borrower and Guarantor
are not and will not be a "governmental plan" within the meaning of Section
3(32) of ERISA, and (iv) transactions by or with Borrower or Guarantor are not
and will not be subject to state statutes regulating investment of, and
fiduciary obligations with respect to, governmental plans. As of the date
hereof, neither Borrower, nor any ERISA Affiliate maintains, sponsors or
contributes to or has any obligations with respect to a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA) or a "multiemployer pension plan"
(within the meaning of Section 3(37)(A) of ERISA). Borrower has not engaged in
any transaction in connection with which it could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.

 

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3.1.9       Compliance. Borrower and the Property (including, but not limited to
the Improvements) and the use thereof and the Condominium Regime comply in all
material respects with all applicable Legal Requirements, including parking,
building and zoning and land use laws, ordinances, regulations and codes, except
as may be otherwise expressly disclosed in that certain zoning and site
requirements survey prepared by The Planning and Zoning Resource Corporation and
dated December 9, 2013, delivered to Lender in connection with the closing of
the Loan, and the Condominium Declaration. Borrower is not in default in any
material respect or violation of any order, writ, injunction, decree or demand
of any Governmental Authority, the violation of which might materially adversely
affect the condition (financial or otherwise) or business of Borrower. Borrower
has not committed any act which may give any Governmental Authority the right to
cause Borrower to forfeit the Property or any part thereof or any monies paid in
performance of Borrower's Obligations under any of the Loan Documents. The
Property is used exclusively as a multi-family apartment complex with ancillary
commercial uses and other appurtenant and related uses. In the event that all or
any part of the Improvements are destroyed or damaged, said Improvements can, to
Borrower's knowledge, 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. No legal proceedings are pending or,
to the knowledge of Borrower, threatened with respect to the zoning of the
Property. Neither the zoning nor any other right to construct, use or operate
the Property is in any way dependent upon or related to any property other than
the Property. All certifications, permits, licenses and approvals, including
without limitation, certificates of completion and occupancy permits required of
Borrower for the legal use, occupancy and operation of the Property for its
current use (collectively, the "Licenses"), have been obtained and are in full
force and effect. The use being made of the Property is in conformity with the
certificate of occupancy issued for the Property and all other restrictions,
covenants and conditions affecting the Property.

  

3.1.10     Financial Information. All financial data, including the statements
of cash flow and income and operating expense, that have been delivered to
Lender in connection with the Loan (i) are true, complete and correct in all
material respects, (ii) accurately represent the financial condition of the
Property as of the date of such reports, and (iii) have been prepared in
accordance with GAAP (or such other accounting method, consistently applied,
reasonably acceptable to Lender) throughout the periods covered, except as
disclosed therein. Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a materially adverse effect on the Property or the
operation thereof, except as referred to or reflected in said financial
statements. Since the date of the financial statements, there has been no
material adverse change in the financial condition, operations or business of
Borrower or the Property from that set forth in said financial statements.

  

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3.1.11     Easements; Utilities and Public Access. All easements, cross
easements, licenses, air rights and rights-of-way or other similar property
interests (collectively, "Easements"), if any, necessary for the full
utilization of the Improvements for their intended purposes have been obtained,
are described in the Title Insurance Policy and are in full force and effect
without default thereunder. The Property has rights of access to public ways and
is served by water, sewer, sanitary sewer and storm drain facilities adequate to
service the Property for its intended uses. All public utilities necessary or
convenient to the full use and enjoyment of the Property are located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property absent a valid
irrevocable easement. All roads necessary for the use of the Property for its
current purpose have been completed and dedicated to public use and accepted by
all Governmental Authorities.

 

3.1.12     Assignment of Leases. The Assignment of Leases creates a valid
assignment of, or a valid security interest in, certain rights under the Leases,
subject only to a license granted to Borrower to exercise certain rights and to
perform certain obligations of the lessor under the Leases, including the right
to operate the Property. No Person other than Lender has any interest in or
assignment of the Leases or any portion of the Rents due and payable or to
become due and payable thereunder.

 

3.1.13     Insurance. Borrower has obtained and has delivered to Lender original
or certified copies of all of the Policies, with all premiums prepaid
thereunder, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement. No claims have been made under any of the Policies,
and no Person, including Borrower, has done, by act or omission, anything which
would materially impair the coverage of any of the Policies.

 

3.1.14     Flood Zone. None of the Improvements on the Property are located in
an area identified by the Federal Emergency Management Agency as a special flood
hazard area, or, if so located the flood insurance required pursuant to Section
5.1.l(a) hereof is in full force and effect with respect to the Property.

 

3.1.15     Physical Condition. Except as may be expressly set forth in the
Physical Conditions Report, the Property, including all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defects or damages in the Property,
whether latent or otherwise, and Borrower has not received notice from any
insurance company or bonding company of any defects or inadequacies in the
Property, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
any termination or threatened termination of any policy of insurance or bond.

 

3.1.16     Boundaries. All of the Improvements which were included in
determining the appraised value of the Property lie wholly within the boundaries
and building restriction lines of the Property, and no improvements on adjoining
properties encroach upon the Property, and no easements or other encumbrances
affecting the Property encroach upon any of the Improvements, so as to affect
the value or marketability of the Property, except those which are set forth on
the Survey and insured against by the Title Insurance Policy.

 

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3.1.17     Leases. The rent roll attached hereto as Schedule I is true, complete
and correct and the Property is not subject to any Leases other than the Leases
described in Schedule I. Borrower is the owner and lessor of landlord's interest
in the Leases. No Person has any possessory interest in the Property or right to
occupy the same except under and pursuant to the provisions of the Leases. The
Leases identified on Schedule I are in full force and effect and there are no
defaults thereunder by Borrower or, to Borrower's knowledge, any Tenant beyond
any applicable notice or cure period, and there are no conditions that, with the
passage of time or the giving of notice, or both, would constitute defaults
thereunder. The copies of the Leases delivered to Lender are true and complete,
and there are no oral agreements with respect thereto. No Rent (including
security deposits) has been paid more than one (1) month in advance of its due
date. All work to be performed by Borrower under each Lease has been performed
as required and has been accepted by the applicable Tenant. Any payments, free
rent, partial rent, rebate of rent or other payments, credits, allowances or
abatements required to be given by Borrower to any Tenant has already been
received by such Tenant. The Tenants under the Leases have accepted possession
of and are in occupancy of all of their respective demised premises and have
commenced the payment of full, unabated rent under the Leases. Borrower has
delivered to Lender a true, correct and complete list of all security deposits
made by Tenants at the Property which have not been applied (including accrued
interest thereon), all of which are held by Borrower in accordance with the
terms of the applicable Lease and applicable Legal Requirements. Each Tenant
under a Major Lease is, to Borrower's knowledge, free from bankruptcy or
reorganization proceedings. No Tenant under any Lease (or any sublease) is an
Affiliate of Borrower. The Tenants under any commercial Leases are open for
business, and the Tenants under the Leases are paying full, unabated rent. There
are no brokerage fees or commissions due and payable in connection with the
leasing of space at the Property, except as has been previously disclosed to
Lender in writing, and no such fees or commissions will become due and payable
in the future in connection with the Leases, including by reason of any
extension of such Lease or expansion of the space leased thereunder, except as
has previously been disclosed to Lender in writing. There has been no prior
sale, transfer or assignment, hypothecation or pledge of any Lease or of the
Rents received therein which is still in effect. At the closing of the Loan, no
Tenant listed on Schedule I has, to Borrower's knowledge, assigned its Lease or
sublet all or any portion of the premises demised thereby, to Borrower's
knowledge, no such Tenant holds its leased premises under assignment or
sublease, nor does anyone except such Tenant and its employees occupy such
leased premises. No Tenant under any Lease has a right or option pursuant to
such Lease or otherwise to purchase all or any part of the leased premises or
the building of which the leased premises are a part. No Tenant under any Lease
has any right or option for additional space in the Improvements.

 

3.1.18     Tax Filings. To the extent required, Borrower has filed (or has
obtained effective extensions for filing) all federal, state, commonwealth,
district and local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state, commonwealth, district
and local taxes, charges and assessments payable by Borrower. Borrower's tax
returns (if any) properly reflect the income and taxes of Borrower for the
periods covered thereby, subject only to reasonable adjustments required by the
Internal Revenue Service or other applicable tax authority upon audit.

 

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3.1.19     No Fraudulent Transfer. Borrower (i) has not entered into the Loan
transaction or any Loan Document with the actual intent to hinder, delay, or
defraud any creditor, and (ii) received reasonably equivalent value in exchange
for its Obligations under the Loan Documents. Giving effect to the Loan, the
fair saleable value of Borrower's assets exceeds and will, immediately following
the making of the Loan, exceed Borrower's total liabilities, including
subordinated, unliquidated, disputed and contingent liabilities. The fair
saleable value of Borrower's assets is, and immediately following the making of
the Loan, will 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 Indebtedness and liabilities
(including contingent liabilities and other commitments) beyond its ability to
pay such Indebtedness and liabilities as they mature (taking into account the
timing and amounts of cash to be received by Borrower and the amounts to be
payable on or in respect of the obligations of Borrower). No petition in
bankruptcy has been filed against Borrower, SPC Party, Guarantor, Manager or, to
Borrower's knowledge, any constituent Person of Borrower, SPC Party, Guarantor
or Manager, and neither Borrower, SPC Party, Guarantor, Manager nor, to
Borrower's knowledge, any constituent Person of Borrower, SPC Party, Guarantor
or Manager has ever made an assignment for the benefit of creditors or taken
advantage of any insolvency act for the benefit of debtors. Neither Borrower,
SPC Party, Guarantor, Manager nor, to Borrower's knowledge, any of their
respective constituent Persons are 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 major portion of Borrower's, SPC Party's, Guarantor's or
Manager's, as applicable, assets or properties, and Borrower has no knowledge of
any Person contemplating the filing of any such petition against it or such
constituent Persons.

 

3.1.20     Federal Reserve Regulations. 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 or by the terms and conditions of this Agreement or the
other Loan Documents.

 

3.1.21     Organizational Chart. The organizational chart attached as Schedule
III, relating to Borrower and certain Affiliates and other parties, is true,
complete and correct on and as of the date hereof. No Person other than those
Persons shown on Schedule III have any ownership interest in, or right of
control, directly or indirectly, in Borrower.

 

3.1.22     Organizational Status. Borrower's exact legal name is: BR-NPT
Springing Entity, LLC. Borrower is of the following organizational type (e.g.,
corporation, limited liability company): limited liability company, and the
jurisdiction in which Borrower is organized is: Delaware. Borrower's Tax I.D.
number is 46-2491430 and Borrower's Delaware Organizational I.D. number is
5316842.

 

3.1.23     Bank Holding Company. Borrower is not a "bank holding company" or a
direct or indirect subsidiary of a "bank holding company" as defined in the Bank
Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

 

3.1.24     No Casualty. The Improvements have suffered no material casualty or
damage which has not been fully repaired and the cost thereof fully paid.

 

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3.1.25     Purchase Options. Neither the Property nor any part thereof are
subject to any purchase options, rights of first refusal, rights of first offer
or other similar rights in favor of third parties.

 

3.1.26     FIRPTA. Borrower is not a "foreign person" within the meaning of
Sections 1445 or 7701 of the Code.

 

3.1.27     Investment 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, or (ii) subject to any other United
States federal or state law or regulation which purports to restrict or regulate
its ability to borrow money.

 

3.1.28     Fiscal Year. Each fiscal year of Borrower commences on January 1.

 

3.1.29    Other Debt. There is no indebtedness with respect to the Property or
any excess cash flow or any residual interest therein, whether secured or
unsecured, other than Permitted Encumbrances and Permitted Indebtedness.

 

3.1.30     Contracts.

 

(a)        Borrower has not entered into, and is not bound by, any Major
Contract which continues in existence, except those previously disclosed in
writing to Lender.

 

(b)       Each of the Major Contracts is in full force and effect, there are no
monetary or other material defaults by Borrower thereunder and, to the best
knowledge of Borrower, there are no monetary or other material defaults
thereunder by any other party thereto. None of Borrower, Manager or any other
Person acting on Borrower's behalf has given or received any notice of default
under any of the Maim Contracts that remains uncured or in dispute as of the
date hereof.

 

(c)       Borrower has delivered true, correct and complete copies of the Major
Contracts (including all amendments and supplements thereto) to Lender.

 

(d)       Except for the Manager under the Management Agreement, no Major
Contract has as a party an Affiliate of Borrower. All fees and other
compensation for services previously performed under the Management Agreement
have been paid in full.

 

3.1.31     Full and Accurate Disclosure. No statement of fact made by Borrower
in this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading. There is no material
fact presently known to Borrower which has not been disclosed to Lender which
adversely affects, nor as far as Borrower can reasonably foresee, might
adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.

 

3.1.32     Other Obligations and Liabilities. Borrower has no liabilities or
other obligations that arose or accrued prior to the date hereof that, either
individually or in the aggregate, could have a material adverse effect on
Borrower, the Property and/or Borrower's ability to pay the Debt. Borrower has
no known contingent liabilities.

  

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3.1.33     Intellectual Property/Websites. Other than as set forth on Schedule
VI, neither Borrower nor any Affiliate (i) has or holds any tradenames,
trademarks, servicemarks, logos, copyrights, patents or other intellectual
property (collectively, "Intellectual Property") with respect to the Property or
the use or operations thereof or is (ii) is the registered holder of any website
with respect to the Property (other than Tenant websites).

 

3.1.34    Operations Agreements. Each Operations Agreement is in full force and
effect and neither Borrower nor, to Borrower's knowledge, any other party to any
Operations Agreement, is in default in any material respect thereunder, and to
the best of Borrower's knowledge, there are no conditions which, with the
passage of time or the giving of notice, or both, would constitute a default in
any material respect thereunder.

 

3.1.35    Condominium.

 

(a)           Borrower owns one hundred percent (100%) of the Condominium Units
comprising the Property.

 

(b)          All of the Condominium Documents are m full force and effect,
unmodified by any writing or otherwise.

 

(c)           Borrower has not sent or received a notice of default under any of
the Condominium Documents.

 

(d)          All conditions of the Condominium Documents which were required to
be satisfied, and all approvals which were required to be given, as of the date
hereof, have been satisfied, given or waived.

 

(e)          No party is in default under any of the terms or prov1s10ns of the
Condominium Documents and no event has occurred which with the passage of time
or the giving of notice or both would constitute an event of default by Borrower
under any of the Condominium Documents.

 

(f)           Borrower has delivered to Lender a true and correct copy of each
of the Condominium Documents, certified by Borrower, together with true and
correct copies of all amendments and modifications thereof.

 

(g)          No Common Charges or other charges, fees, assessments or reserves
have been or will be collected by the Condominium Association under the
Condominium Documents.

 

(h)          Borrower currently maintains the property insurance coverage that
is required under Article IV of the condominium by-laws. Lender will be named as
mortgagee on all such property insurance policies.

 

(i)           All of the directors and officers of the Board of Directors are
listed on Schedule VII attached hereto. All of the directors and officers of the
Board of Directors have been appointed by Borrower.

 

G)           Borrower has made and will, pursuant to the terms hereof, continue
to make all payments of Taxes and Other Charges.

 

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(k)          The Condominium Association has not been nor will it be active or
operational, and the Property has been and will continue to be operated as a
multi-family rental apartment complex without regard to any condominium
formalities.

 

3.1.36     Intentionally Omitted.

 

3.1.37     Illegal Activity. No portion of the Property has been or will be
purchased with proceeds of any illegal activity.

 

Section 3.2           Survival of Representations. The representations and
warranties set forth in Section 3.1 and elsewhere in this Agreement and the
other Loan Documents shall (i) survive until the Obligations have been paid and
performed in full and (ii) be deemed to have been relied upon by Lender
notwithstanding any investigation heretofore or hereafter made by Lender or on
its behalf.

 

ARTICLE 4

 

BORROWER COVENANTS

 

Until the end of the Term, Borrower hereby covenants and agrees with Lender
that:

 

Section 4.1            Payment and Performance of Obligations. Borrower shall
pay and otherwise perform the Obligations in accordance with the terms of this
Agreement and the other Loan Documents.

 

Section 4.2           Due on Sale and Encumbrance; Transfers of Interests.
Borrower acknowledges that Lender has examined and relied on the experience of
Borrower and its stockholders, general partners and members, as applicable, and
principals of Borrower in owning and operating properties such as the Property
in agreeing to make the Loan, and will continue to rely on Borrower's ownership
of the Property as a means of maintaining the value of the Property as security
for repayment of the Debt and the performance of the Other Obligations. Borrower
acknowledges that Lender has a valid interest in maintaining the value of the
Property so as to ensure that, should Borrower default in the repayment of the
Debt or the performance of the Other Obligations, Lender can recover the Debt by
a sale of the Property. Therefore, without the prior written consent of Lender,
but, in each instance, subject to the provisions of Article 7, neither Borrower
nor SPC Party nor any other Person having a direct or indirect ownership or
beneficial interest in Borrower or SPC Party shall sell, convey, mortgage,
grant, bargain, encumber, pledge, assign or transfer the Property or any part
thereof, or any interest, direct or indirect, in Borrower or any SPC Party,
whether voluntarily or involuntarily (a "Transfer"). A Transfer within the
meaning of this Section 4.2 shall be deemed to include (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for a
price to be paid in installments; (ii) an agreement by Borrower for the leasing
of all or a substantial part of the Property for any purpose other than the
actual occupancy by a space Tenant thereunder 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 Rents; (iii) if Borrower, Guarantor or any
general partner, managing member or controlling shareholder of Borrower or
Guarantor is a corporation, the voluntary or involuntary sale, conveyance or
transfer of such corporation's stock (or the stock of any corporation directly
or indirectly controlling such corporation by operation of law or otherwise) or
the creation or issuance of new stock; (iv) if Borrower, SPC Party, Guarantor or
any general partner, managing member or controlling shareholder of Borrower, SPC
Party, or Guarantor is a limited or general partnership, joint venture or
limited liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or member or
the transfer of the partnership interest of any general partner, managing
partner or limited partner or the transfer of the interest of any joint venturer
or member; (v) any pledge, hypothecation, assignment, transfer or other
encumbrance of any direct or indirect ownership interest in Borrower or any SPC
Party; and (vi) the sale or pledge of any Condominium Unit.

 

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Section 4.3           Liens. Borrower shall not create, incur, assume or permit
to exist any Lien on any direct or indirect ownership interest in Borrower or
any SPC Party or any portion of the Property, except for the Permitted
Encumbrances. After prior notice to Lender, Borrower, at its own expense, may
contest by appropriate legal proceeding, conducted in good faith and with due
diligence, the amount or validity of any Liens, provided that (i) no Event of
Default has occurred and remains uncured; (ii) such proceeding shall be
permitted under and be conducted in accordance with all applicable Legal
Requirements; (iii) neither the Property nor any part thereof or interest
therein will be in danger of being sold, forfeited, terminated, canceled or
lost; (iv) Borrower shall promptly upon final determination thereof pay the
amount of any such Liens, together with all costs, interest and penalties which
may be payable in connection therewith; (v) to insure the payment of such Liens,
Borrower shall deliver to Lender either (A) cash, or other security as may be
approved by Lender, in an amount equal to one hundred twenty-five percent (125%)
of the contested amount or (B) a payment and performance bond in an amount equal
to one hundred percent (100%) of the contested amount from a surety acceptable
to Lender in its reasonable discretion, (vi) failure to pay such Liens will not
subject Lender to any civil or criminal liability, (vii) such contest shall not
affect the ownership, use or occupancy of the Property, and (viii) Borrower
shall, upon request by Lender, give Lender prompt notice of the status of such
proceedings and/or confirmation of the continuing satisfaction of the conditions
set forth in clauses (i) through (vii) of this Section 4.3. Lender may pay over
any such cash or other security held by Lender under this Section 4.3 to the
claimant entitled thereto at any time when, in the reasonable judgment of
Lender, the entitlement of such claimant is established or the Property (or any
part thereof or interest therein) shall be in danger of being sold, forfeited,
terminated, cancelled or lost or there shall be any danger of the Lien of the
Mortgage being primed by any related Lien.

 

Section 4.4           Special Purpose. Without in any way limiting the
provisions of this Article 4, each of Borrower and each SPC Party shall at all
times be a Special Purpose Bankruptcy Remote Entity. Neither Borrower nor any
SPC Party shall directly or indirectly make any change, amendment or
modification to its or such SPC Party's organizational documents, or otherwise
take any action which could result in Borrower or any SPC Party not being a
Special Purpose Bankruptcy Remote Entity.

 

Section 4.5           Existence; Compliance with Legal Requirements. Each of
Borrower and each SPC Party shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence and all rights,
licenses, permits, franchises and all applicable governmental authorizations
necessary for the operation of the Property and comply with all Legal
Requirements applicable to it and the Property.

 

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Section 4.6           Taxes and Other Charges. Borrower shall pay all Taxes and
Other Charges now or hereafter levied, assessed or imposed as the same become
due and payable, and shall furnish to Lender receipts for the payment of the
Taxes and the Other Charges prior to the date the same shall become delinquent
(provided, however, that Borrower need not pay Taxes directly nor furnish such
receipts for payment of Taxes to the extent that funds to pay for such Taxes
have been deposited into the Tax Account pursuant to Section 6.3). Borrower
shall not permit or suffer, and shall promptly discharge, any Lien or charge
against the Property with respect to Taxes and Other Charges, and shall promptly
pay (or cause to be paid) for all utility services provided to the Property.
After prior notice to Lender, Borrower, at its own expense, may contest by
appropriate legal proceeding, conducted in good faith and with due diligence,
the amount or validity of any Taxes or Other Charges, provided that (i) no
Default or Event of Default has occurred and remains uncured; (ii) such
proceeding shall be permitted under and be conducted in accordance with all
applicable Legal Requirements; (iii) neither the Property nor any part thereof
or interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost; (iv) Borrower shall promptly upon final determination thereof
pay the amount of any such Taxes or Other Charges, together with all costs,
interest and penalties which may be payable in connection therewith; (v) such
proceeding shall suspend the collection of Taxes or Other Charges from the
Property; (vi) Borrower shall deposit with Lender cash, or other security as may
be approved by Lender, in an amount equal to one hundred twenty-five percent
(125%) of the contested amount, to insure the payment of any such Taxes or Other
Charges, together with all interest and penalties thereon, (vii) failure to pay
such Taxes or Other Charges will not subject Lender to any civil or criminal
liability, (viii) such contest shall not affect the ownership, use or occupancy
of the Property, and (ix) Borrower shall, upon request by Lender, give Lender
prompt notice of the status of such proceedings and/or confirmation of the
continuing satisfaction of the conditions set forth in clauses (i) through
(viii) of this Section 4.6. Lender may pay over any such cash or other security
held by Lender under this Section 4.6 to the claimant entitled thereto at any
time when, in the reasonable judgment of Lender, the entitlement of such
claimant is established or the Property (or any part thereof or interest
therein) shall be in danger of being sold, forfeited, terminated cancelled or
lost or there shall be any dariger of the Lien of the Mortgage being primed by
any related Lien.

 

Section 4.7 Litigation. Borrower shall give prompt notice to Lender of any
litigation or governmental proceedings pending or threatened against the
Property, Borrower, Manager, any SPC Party or Guarantor which might materially
adversely affect the Property or Borrower's, Manager's, such SPC Party's or
Guarantor's condition (financial or otherwise) or business (including Borrower's
ability to perform its Obligations hereunder or under the other Loan Documents).

 

Section 4.8  Title to the Property. Borrower shall warrant and defend (a) its
title to the Property and every part thereof, subject only to Permitted
Encumbrances and (b) the validity and priority of the Liens of the Mortgage, the
Assignment of Leases and this Agreement on the Property, subject only to
Permitted Encumbrances, in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys' fees and court costs) incurred by
Lender if an interest in the Property, other than as permitted hereunder, is
claimed by another Person.

 

35

 

 

Section 4.9            Financial Reporting.

 

4.9.1       Generally. Borrower shall keep and maintain or will cause to be kept
and maintained proper and accurate books and records, in accordance with GAAP
(or such other accounting method, consistently applied, reasonably acceptable to
Lender), and, to the extent required under Section 9.1 hereof, the requirements
of Regulation AB, reflecting the financial affairs of Borrower and all items of
income and expense in connection with the operation of the Property. Lender
shall have the right from time to time during normal business hours upon
reasonable notice (which may be given verbally) to Borrower to examine such
books and records at the office of Borrower or other Person maintaining such
books and rec_ords and to make such copies or extracts thereof as Lender shall
desire. During the continuance of an Event of Default, Borrower shall pay any
costs incurred by Lender to examine such books, records and accounts, as Lender
shall determine to be necessary or appropriate in the protection of Lender's
interest.

 

4.9.2       Quarterly Reports. Not later than forty-five (45) days following the
end of each fiscal quarter, Borrower shall deliver to Lender:

 

(i)              unaudited financial statements, internally prepared on an
accrual basis including a balance sheet and profit and loss statement as of the
end of such quarter and for the corresponding quarter of the previous year, and
a statement of revenues and expenses for such quarter and the year to date, and
a comparison of the year to date results with (i) the results for the same
period of the previous year, (ii) the results that had been projected by
Borrower for such period and (iii) the Annual Budget for such period and the
Fiscal Year. Such statements for each quarter shall be accompanied by an
Officer's Certificate certifying to the best of the signer's knowledge, (A) that
such statements fairly represent the financial condition and results of
operations of Borrower, (B) that as of the date of such Officer's Certificate,
no Event of Default exists under this Agreement, the Note or any other Loan
Document or, if so, specifying the nature and status of each such Event of
Default and the action then being taken by Borrower or proposed to be taken to
remedy such Event of Default, (C) that as of the date of each Officer's
Certificate, no litigation exists involving Borrower or the Property in which
the amount involved is $500,000 (in the aggregate) or more or in which all or
substantially all of the potential liability is not covered by insurance, or, if
so, specifying such litigation and the actions being taking in relation thereto
and (D) the amount by which actual Operating Expenses were greater than or less
than the Operating Expenses anticipated in the applicable Annual Budget. Such
financial statements shall contain such other information as shall be reasonably
requested by Lender for purposes of calculations to be made by Lender pursuant
to the terms hereof.

 

(ii)             a true, correct and complete rent roll for the Property, dated
as of the last month of such fiscal quarter, showing the percentage of gross
leasable area of the Property, if any, leased as of the last day of the
preceding calendar quarter, the current annual rent for the Property, the
expiration date of each Lease, whether to Borrower's knowledge any portion of
the Property has been sublet, and if it has, the name of the subtenant, and such
rent roll shall be accompanied by an Officer's Certificate certifying that, to
the best of the signor's knowledge, such rent roll is true, correct and complete
in all material respects as of its date and stating whether Borrower, within the
past three (3) months, has issued a notice of default with respect to any Lease
which has not been cured and the nature of such default.

 

36

 

 

4.9.3       Annual Reports. Borrower shall deliver to Lender:

 

(i)        Not later than seventy-five (75) days after the end of each Fiscal
Year of Borrower's operations, unaudited financial statements, internally
prepared on an accrual basis, covering the Property, including a balance sheet
as of the end of such year, a statement of revenues and expenses for such year
and the fourth quarter thereof, and stating in comparative form the figures for
the previous Fiscal Year and the Annual Budget for such Fiscal Year, as well as
the supplemental schedule of net income or loss presenting the net income or
loss for the Property and occupancy statistics for the Property, and copies of
all federal income tax returns to be filed. Such annual financial statements
shall be accompanied by an Officer's Certificate in the form required pursuant
to Section 4.9.2(i) above;

 

(ii)        Not later than ninety (90) days after the end of each Fiscal Year of
Borrower's operations, compiled financial statements certified by an Independent
Accountant in accordance with GAAP, and, to the extent required under Section
9.1 hereof, the requirements of Regulation AB, covering the Property, including
a balance sheet as of the end of such year, a statement of revenues and expenses
for such year and the fourth quarter thereof, and stating in comparative form
the figures for the previous Fiscal Year and the Annual Budget for such Fiscal
Year, as well as the supplemental schedule of net income or loss presenting the
net income or loss for the Property and occupancy statistics for the Property.
Such annual financial statements shall be accompanied by an Officer's
Certificate in the form required pursuant to Section 4.9.2(i) above; and

 

(iii)       Not later than ninety (90) days after the end of each Fiscal Year of
Borrower's operations, an annual summary of any and all Capital Expenditures
made at the Property during the prior twelve (12) month period.

 

4.9.4       Other Reports.

 

(a)       Borrower shall deliver to Lender, within ten (10) Business Days of the
receipt thereof by Borrower, a copy of all reports prepared by Manager pursuant
to the Management Agreement, including, without limitation, the Annual Budget
and any inspection reports.

 

(b)       Borrower shall, within ten (10) Business Days after request by Lender
or, if all or part of the Loan is being or has been included in a
Securitization, by the Rating Agencies, furnish or cause to be furnished to
Lender and, if applicable, the Rating Agencies, in such manner and in such
detail as may be reasonably requested by Lender or the Rating Agencies, such
reasonable additional information as may be reasonably requested with respect to
the Property.

 

(c)        Borrower shall submit to Lender the financial data and financial
statements required, and within the time periods required, under clauses (f) and
(g) of Section 2.J., if and when available.

 

4.9.5       Annual Budget. Borrower shall submit to Lender by December 1 of each
year the Annual Budget for the succeeding Fiscal Year. Lender shall have the
right to approve each Annual Budget (which approval shall not be unreasonably
withheld so long as no Event of Default is continuing). Annual Budgets approved
by Lender shall hereinafter be referred to as an "Approved Annual Budget". Until
such time that any Annual Budget has been approved by Lender, the prior Approved
Annual Budget shall apply for all purposes hereunder (with such adjustments as
reasonably determined by Lender to reflect actual increases in Debt Service,
Taxes, Other Charges, Insurance Premiums and utilities expenses). Neither
Borrower nor Manager shall change or modify the Approved Annual Budget without
the prior written consent of Lender not to be unreasonably withheld so long as
no Event of Default is continuing. During the continuance of a Trigger Period,
Lender may require Borrower, on a quarterly basis, to furnish to Lender for
approval (which approval shall not be unreasonably withheld provided no Event of
Default exists) an updated Annual Budget. Lender hereby approves the Annual
Budgets submitted to Lender for Fiscal Years 2013 and 2014, copies of which have
previously been delivered by Borrower to Lender and are attached hereto as
Exhibit C.

 

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4.9.6       Extraordinary Operating Expenses. During the continuance of a
Trigger Period, in the event that Borrower incurs an extraordinary operating
expense not set forth in the Approved Annual Budget (each an "Extraordinary
Operating Expense"), then Borrower shall promptly deliver to Lender a reasonably
detailed explanation of such proposed Extraordinary Operating Expense for
Lender's approval. Any Extraordinary Operating Expense approved by Lender (such
approval not to be unreasonably withheld so long as no Event of Default is
continuing) is referred to herein as an ("Approved Extraordinary Operating
Expense"). Any funds distributed to Borrower for the payment of Approved
Extraordinary Operating Expenses pursuant to Section 6.12.1 shall be used by
Borrower only to pay for such Approved Extraordinary Operating Expenses or
reimburse Borrower for such Approved Extraordinary Operating Expenses, as
applicable.

 

4.9.7       Breach. If Borrower fails to provide to Lender or its designee any
of the financial statements, certificates, reports or information (the "Required
Records ") required by this Section 4.9 within thirty (30) days after the date
upon which such Required Record is due, Borrower shall pay to Lender, at
Lender's option and in its discretion, an amount equal to $2,500 for each
Required Record that is not delivered; provided Lender has given Borrower at
least fifteen (15) days prior notice of such failure. In addition, thirty (30)
days after Borrower's failure to deliver any Required Records, Lender shall have
the option, upon fifteen (15) days' notice to Borrower, to gain access to
Borrower's books and records and prepare or have prepared, at Borrower's
expense, any Required Records not delivered by Borrower.

 

Section 4.10        Access to Property. Borrower shall permit agents,
representatives, consultants and employees of Lender to inspect the Property or
any part thereof at reasonable hours upon reasonable advance notice (which may
be given verbally), subject to the rights of Tenants under Leases. Lender or its
agents, representatives, consultants and employees as part of any inspection may
take soil, air, water, building material and other samples from the Property,
subject to the rights of Tenants under Leases.

 

Section 4.11         Leases.

 

4.11.1     Generally. Upon request, Borrower shall furnish Lender with executed
copies of all Leases then in effect and not previously furnished to Lender. All
renewals of Leases and all proposed leases shall provide for rental rates and
terms comparable to existing local market rates and shall be arm's length
transactions with bona fide, independent third-party Tenants (provided, however,
that Borrower may lease up to eight (8) residential units at the Property in the
ordinary course of business to employees of Borrower or Manager on non-market
terms). Upon request, Borrower shall deliver to Lender copies of any Leases or
renewals, amendments or modifications of any Lease entered into after the
Closing Date, together with Borrower's certification that such Lease (or such
renewal, amendment or modification) was entered into in accordance with the
terms of this Agreement.

 

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4.11.2     Approvals.

 

(a)        Subject to Section 4.11.2(b) below, Borrower shall not enter into a
proposed Major Lease or a proposed renewal, extension or modification of an
existing Major Lease (excluding extensions pursuant to stated extension rights
granted to Tenants in its Major Lease) without the prior written consent of
Lender not to be unreasonably withheld.

 

(b)       Provided that no Event of Default is continuing, renewals, amendments
and modifications of existing Leases and proposed leases shall not be subject to
the approval of Lender provided (i) the proposed lease would not be a Major
Lease or the existing Lease as amended or modified or the renewal Lease would
not be a Major Lease and (ii) the Lease as amended or modified or the renewal
Lease or series of leases or proposed lease or series of leases: (A) shall
provide for net effective rental rates comparable to existing local market
rates, (B) with respect to non-residential Leases (or proposed non-residential
Leases), shall provide for automatic self-operative subordination to the
Mortgage, (C) shall not contain any option to purchase, any right of first
refusal to purchase, any right to terminate (except in the event of the
destruction or condemnation of substantially all of the Property), any
requirement for a non- disturbance or recognition agreement, or any other
provision which might adversely affect the rights of Lender under the Loan
Documents in any material respect, (D) shall be written substantially in
accordance with the standard form of lease which shall have been approved by
Lender, and (E) with respect to residential Leases, shall have a term (together
with all extension and renewal options) of not less than six (6) months nor more
than two (2) years. Upon Lender's request, Borrower shall deliver to Lender
copies of all Leases which are entered into pursuant to the preceding sentence
together with Borrower's certification that it has satisfied all of the
conditions of the preceding sentence within ten (10) days after Lender's request
for a copy of such Lease.

 

(c)       Borrower shall not permit or consent to any assignment or sublease of
any Major Lease without Lender's prior written approval (other than assignments
or subleases expressly permitted under any Major Lease pursuant to a unilateral
right of the Tenant thereunder not requiring the consent of Borrower). Lender,
at Borrower's sole cost and expense, shall execute and deliver its standard form
of subordination, non-disturbance and attornment agreement to Tenants under any
future Major Lease approved by Lender upon request, with such commercially
reasonable changes as may be requested by such Tenants and which are acceptable
to Lender.

 

(d)      Borrower shall have the right, without the consent or approval of
Lender, to terminate or accept a surrender of any Lease that is not a Major
Lease so long as such termination or surrender is (i) by reason of a tenant
default and (ii) in a commercially reasonable manner to preserve and protect the
Property.

 

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4.11.3    Covenants. Borrower (i) shall observe and perform the obligations
imposed upon the lessor under the Leases in a commercially reasonable manner;
(ii) shall enforce the terms, covenants and conditions contained in the Leases
upon the part of the Tenants thereunder to be observed or performed in a
commercially reasonable manner, provided, however, Borrower shall not terminate
or accept a surrender of a Major Lease without Lender's prior approval; (iii)
shall not collect any of the Rents more than one (1) month in advance (other
than security deposits); (iv) shall not execute any assignment oflessor's
interest in the Leases or the Rents (except as contemplated by the Loan
Documents); and (v) shall not alter, modify or change any Lease so as to change
the amount of or payment date for rent, change the expiration date, grant any
option for additional space or term, materially reduce the obligations of the
Tenant or increase the obligations of the lessor. Upon request, Borrower shall
furnish Lender with executed copies of all Leases. Borrower shall promptly send
copies to Lender of all written notices of material default which Borrower shall
receive under the Leases from Tenants.

 

4.11.4     Security Deposits. All security deposits of Tenants, whether held in
cash or any other form, shall be held in compliance with all Legal Requirements
and shall not be commingled with any other funds of Borrower. During the
continuance of an Event of Default, Borrower shall, upon Lender's request, if
permitted by applicable Legal Requirements, cause all such security deposits
(and any interest theretofore earned thereon) to be transferred into the Deposit
Account (which shall then be held by Deposit Bank in a separate Account), which
shall be held by Deposit Bank subject to the terms of the Leases. Any bond or
other instrument which Borrower is permitted to hold in lieu of cash security
deposits under any applicable Legal Requirements (i) shall be maintained in full
force and effect in the full amount of such deposits unless replaced by cash
deposits as herein above described, (ii) shall be issued by an institution
reasonably satisfactory to Lender, (iii) shall, if permitted pursuant to any
Legal Requirements, name Lender as payee or mortgagee thereunder (or at Lender's
option, be fully assignable to Lender), and (iv) shall in all respects comply
with any applicable Legal Requirements and otherwise be satisfactory to Lender.
Borrower shall, upon request, provide Lender with evidence satisfactory to
Lender of Borrower's compliance with the foregoing.

 

Section 4.12         Repairs; Maintenance and Compliance; Alterations.

 

4.12.1     Repairs; Maintenance and Compliance. Borrower shall at all times
maintain, preserve and protect any franchises and trade names, and Borrower
shall cause the Property to be maintained in a good and safe condition and
repair and shall not remove, demolish or alter the Improvements or Equipment
(except for alterations performed in accordance with Section 4.12.2 below and
normal replacement of Equipment with Equipment of equivalent value and
functionality). Borrower shall promptly comply with all Legal Requirements and
immediately cure properly any known, material violation of a Legal Requirement.
Borrower shall notify Lender in writing within three (3) Business Days after
Borrower first receives notice of any such non-compliance. Borrower shall
promptly repair, replace or rebuild any part of the Property that becomes
damaged (subject to the terms contained in Article V), worn or dilapidated and
shall complete and pay for any Improvements at any time in the process of
construction or repair.

 

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4.12.2     Alterations. Borrower may, without Lender's consent, perform
alterations to the Improvements and Equipment which (i) do not constitute a
Material Alteration, (ii) do not adversely affect Borrower's financial condition
or the value or net operating income of the Property and (iii) are in the
ordinary course of Borrower's business. Borrower shall not perform any Material
Alteration without Lender's prior written consent. Lender may, as a condition to
giving its consent to a Material Alteration, require that Borrower deliver to
Lender security for payment of the cost of such Material Alteration and as
additional security for Borrower's Obligations under the Loan Documents, which
security may be any of the following: (i) cash, (ii) a Letter of Credit, (iii)
U.S. Obligations, (iv) other securities acceptable to Lender, provided that
Lender shall have received a Rating Agency Confirmation as to the form and
issuer of same, or (v) a completion bond. Such security shall be in an amount
equal to the excess of the total unpaid amounts incurred and to be incurred with
respect to such Material Alterations to the Improvements (other than such
amounts to be paid or reimbursed by Tenants under the Leases) over the
Alteration Threshold, and Lender may apply such security from time to time at
the option of Lender to pay for such Material Alterations. Upon substantial
completion of any Material Alteration, Borrower shall provide evidence
reasonably satisfactory to Lender that (i) the Material Alteration was
constructed in accordance with applicable Legal Requirements, (ii) all
contractors, subcontractors, materialmen and professionals who provided work,
materials or services in connection with the Material Alteration have been paid
in full and have delivered unconditional releases of liens, and (iii) all
material licenses and permits necessary for the use, operation and occupancy of
the Material Alteration (other than those which depend on the performance of
tenant improvement work) have been issued. If Borrower has provided cash
security, as provided above, such cash shall be released by Lender to fund such
Material Alterations, and if Borrower has provided non-cash security, as
provided above, except to the extent applied by Lender to fund such Material
Alterations, Lender shall release and return such security upon Borrower's
satisfaction of the requirements of the preceding sentence.

 

Section 4.13         Approval of Major Contracts. Borrower shall be required to
obtain Lender's prior written approval of any and all Major Contracts affecting
the Property, which approval may be granted or withheld in Lender's sole
discretion.

 

Section 4.14          Property Management.

 

4.14.1     Management Agreement. Borrower shall (i) cause Manager to manage the
Property in accordance with the Management Agreement, (ii) diligently perform
and observe all of the terms, covenants and conditions of the Management
Agreement on the part of Borrower to be performed and observed, (iii) promptly
notify Lender of any default under the Management Agreement of which it is
aware, (iv) promptly deliver to Lender a copy of each financial statement,
business plan, capital expenditures plan, report and estimate received by it
under the Management Agreement, and (v) promptly enforce the performance and
observance of all of the covenants required to be performed and observed by
Manager under the Management Agreement. If Borrower shall default in the
performance or observance of any material term, covenant or condition of the
Management Agreement on the part of Borrower to be performed or observed beyond
any applicable notice and cure period, then, without limiting Lender's other
rights or remedies under this Agreement or the other Loan Documents, and without
waiving or releasing Borrower from any of its Obligations hereunder or under the
Management Agreement, Lender shall have the right, but shall be under no
obligation, to pay any sums and to perform any act as may be appropriate to
cause all the material terms, covenants and conditions of the Management
Agreement on the part of Borrower to be performed or observed.

 

4.14.2     Prohibition Against Termination or Modification. Borrower shall not
(i) surrender, terminate, cancel, modify, renew or extend the Management
Agreement, (ii) enter into any other agreement relating to the management or
operation of the Property with Manager or any other Person, (iii) consent to the
assignment by the Manager of its interest under the Management Agreement, or
(iv) waive or release any of its rights and remedies under the Management
Agreement, in each case without the express consent of Lender, which consent
shall not be unreasonably withheld; provided, however, with respect to a new
property manager such consent may be conditioned upon Borrower delivering a
Rating Agency Confirmation from each applicable Rating Agency as to such new
property manager and management agreement. Notwithstanding the foregoing,
however, provided no Event of Default is continuing, the approval of Lender and
the Rating Agencies shall not be required with respect to the appointment of a
Qualified Manager. Ifat any time Lender consents to the appointment of a new
property manager or a Qualified Manager is appointed, such new property manager
(including a Qualified Manager) and Borrower shall, as a condition of Lender's
consent where same is required hereunder, execute (i) a management agreement in
form and substance reasonably acceptable to Lender, and (ii) a subordination of
management agreement in a form reasonably acceptable to Lender.

 

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4.14.3    Replacement of Manager. Lender shall have the right to require
Borrower to replace the Manager with (x) an Unaffiliated Qualified Manager
selected by Borrower or (y) another property manager chosen by Borrower and
approved by Lender (provided, that such approval may be conditioned upon
Borrower delivering a Rating Agency Confirmation as to such new property manager
and management agreement) upon the occurrence of any one or more of the
following events: (i) at any time following the occurrence of an Event of
Default, (ii) if at any time the Debt Service Coverage Ratio falls below
1.05:1.00, as determined by Lender, (iii) if Manager shall be in default under
the Management Agreement beyond any applicable notice and cure period, (iv) if
Manager shall become insolvent or a debtor in any bankruptcy or insolvency
proceeding, or (v) if at any time the Manager has engaged in gross negligence,
fraud, willful misconduct or misappropriation of funds.

 

Section 4.15         Performance by Borrower; Compliance with Agreements.

 

(a)       Borrower shall in a timely manner observe, perform and fulfill each
and every covenant, term and provision of each Loan Document executed and
delivered by, or applicable to, Borrower, and shall not enter into or otherwise
suffer or permit any amendment, waiver, supplement, termination or other
modification of any Loan Document executed and delivered by, or applicable to,
Borrower without the prior consent of Lender.

 

(b)       Borrower shall at all times comply in all material respects with all
Operations Agreements. Borrower agrees that without the prior written consent of
Lender, Borrower will not amend or modify in any material respect or terminate
any of the Operations Agreements.

 

Section 4.16         Licenses; Intellectual Property; Website.

 

4.16.1     Licenses. Borrower shall keep and maintain all Licenses necessary for
the operation of the Property as a multi-family apartment complex. Borrower
shall not transfer any Licenses required for the operation of the Property.

 

4.16.2     Intellectual Property. Borrower shall keep and maintain all
Intellectual Property relating to the use or operation of the Property and all
Intellectual Property shall be held by and (if applicable) registered in the
name of Borrower or Manager. Borrower shall not Transfer or let lapse any
Intellectual Property without Lender's prior consent.

 

4.16.3     Website. Any website with respect to the Property (other than Tenant
websites) shall be maintained by or on behalf of Borrower and any such website
shall be registered in the name of Borrower. Borrower shall not Transfer any
such website without Lender's prior consent.

 

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Section 4.17          Further Assurances. Borrower shall, at Borrower's sole
cost and expense:

 

(a)        furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or which are reasonably
requested by Lender in connection therewith;

 

(b)        cure any defects in the execution and delivery of the Loan Documents
and execute and deliver, or cause to be executed and delivered, to Lender such
documents, instruments, certificates, assignments and other writings, and do
such other acts necessary or desirable, to correct any omissions in the Loan
Documents and/or to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the Obligations, as Lender may reasonably
require; and

 

(c)        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
may reasonably require from time to time.

 

Section 4.18         Estoppel Statement.

 

(a)       After request by Lender, Borrower shall within seven (7) Business Days
furnish Lender with a statement, duly acknowledged and certified, stating (i)
the Outstanding Principal Balance of the Note, (ii) the Interest Rate, (iii) the
date installments of interest and/or principal were last paid, (iv) any offsets
or defenses to the payment and performance of the Obligations, if any, and (v)
that this Agreement and the other Loan Documents have not been modified or if
modified, giving particulars of such modification.

 

(b)       Borrower shall deliver to Lender, upon request, an estoppel
certificate from the Condominium Association in form and substance reasonably
satisfactory to Lender.

 

Section 4.19         Notice of Default. Borrower shall promptly advise Lender of
the occurrence of any Default or Event of Default of which Borrower has
knowledge.

 

Section 4.20        Cooperate in Legal Proceedings. Borrower shall cooperate
fully with Lender with respect to any proceedings before any court, board or
other Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.

 

Section 4.21         Indebtedness. Borrower shall not directly or indirectly
create, incur or assume any indebtedness other than (i) the Debt and (ii)
unsecured trade payables incurred in the ordinary course of business relating to
the ownership and operation of the Property, which in the case of such unsecured
trade payables (A) are not evidenced by a note, (B) do not exceed, at any time,
a maximum aggregate amount of two percent (2%) of the original amount of the
Outstanding Principal Balance and (C) are paid within sixty (60) days of the
date incurred (collectively, "Permitted Indebtedness ").

 

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Section 4.22        Business and Operations. Borrower will continue to engage in
the businesses presently conducted by it as and to the extent the same are
necessary for the ownership, maintenance, management and operation of the
Property. Borrower will qualify to do business and will remain in good standing
under the laws of each jurisdiction as and to the extent the same are required
for the ownership, maintenance, management and operation of the Property.

 

Section 4.23        Dissolution. Borrower shall not (i) engage in any
dissolution, liquidation or consolidation or merger with or into any other
business entity, (ii) engage in any business activity not related to the
ownership and operation of the Property, (iii) transfer, lease or sell, in one
transaction or any combination of transactions, all or substantially all of the
property or assets of Borrower except to the extent expressly permitted by the
Loan Documents, or (iv) cause, permit or suffer Borrower or any SPC Party to (A)
dissolve, wind up or liquidate or take any action, or omit to take any action,
as a result of which Borrower or such SPC Party would be dissolved, wound up or
liquidated in whole or in part, or (B) amend, modify, waive or terminate the
certificate of formation or operating agreement of Borrower or such SPC Party,
in each case without obtaining the prior consent of Lender.

 

Section 4.24       Debt Cancellation. Borrower shall not cancel or otherwise
forgive or release any claim or debt (other than the termination of Leases in
accordance herewith) owed to Borrower by any Person, except for adequate
consideration and in the ordinary course of Borrower's business.

 

Section 4.25        Affiliate Transactions. Borrower shall not enter into, or be
a party to, any transaction with an Affiliate of Borrower or any of the
partners, members or shareholders, as applicable, of Borrower except in the
ordinary course of business and on terms which are no less favorable to Borrower
or such Affiliate than would be obtained in a comparable arm's-length
transaction with an unrelated third party.

 

Section 4.26        No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any portion of
the 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 Property.

 

Section 4.27        Principal Place of Business. Borrower shall not change its
principal place of business from the address set forth on the first page of this
Agreement without first giving Lender thirty (30) days prior written notice.

 

Section 4.28        Change of Name, Identity or Structure. Borrower shall not
change Borrower's name, identity (including its trade name or names) or convert
from a limited liability company structure without notifying Lender of such
change in writing at least thirty (30) days prior to the effective date of such
change and without first obtaining the prior written consent of Lender. Borrower
shall deliver to Lender, prior to or contemporaneously with the effective date
of any such change, any financing statement or financing statement change
required by Lender to establish or maintain the validity, perfection and
priority of the security interest granted herein. At the request of Lender,
Borrower shall execute a certificate in form satisfactory to Lender listing the
trade names under which Borrower intends to operate the Property, and
representing and warranting that Borrower does business under no other trade
name with respect to the Property.

 

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Section 4.29         Costs and Expenses.

 

(a)            Except as otherwise expressed herein or in any of the other Loan
Documents, Borrower shall pay or, if Borrower fails to pay, reimburse Lender
upon receipt of notice from Lender, for all reasonable costs and expenses
(including reasonable attorneys' fees and disbursements) incurred by Lender in
connection with (i) Borrower's ongoing performance of and compliance with
Borrower's agreements and covenants contained in this Agreement and the other
Loan Documents on its part to be performed or complied with after the Closing
Date, including confirming compliance with environmental and insurance
requirements (except to the extent expressly set forth in Section 10.21(a)
hereof); (ii) Lender's ongoing performance of and compliance with all agreements
and covenants contained in this Agreement and the other Loan Documents on its
part to be performed or complied with after the Closing Date (except to the
extent expressly set forth in Section 10.21(a) hereof); (iii) the negotiation,
preparation, execution and delivery of any consents, amendments, waivers or
other modifications to this Agreement and the other Loan Documents and any other
documents or matters requested by Borrower; (iv) filing and recording of any
Loan Documents; (v) title insurance, surveys, inspections and appraisals; (vi)
the creation, perfection or protection of Lender's Liens in the Property and the
Accounts (including fees and expenses for title and lien searches, intangibles
taxes, personal property taxes, mortgage recording taxes, due diligence
expenses, travel expenses, accounting firm fees, costs of appraisals,
environmental reports and Lender's Consultant, surveys and engineering reports);
(vii) enforcing or preserving any rights in response to third party claims or
the prosecuting or defending of any action or proceeding or other litigation, in
each case against, under or affecting Borrower, the Loan Documents, the
Property, or any other security given for the Loan; (viii) fees charged by
Servicer (except to the extent expressly set forth in Section 10.21) or, if a
Securitization has occurred, the Rating Agencies (other than the initial review
of the Loan by the Rating Agencies in connection with a Securitization) in
connection with the Loan or any modification thereof; and (ix) enforcing any
Obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Property or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any insolvency
or bankruptcy proceedings; provided, however, that Borrower shall not be liable
for the payment of any such costs and expenses to the extent the same arise by
reason of the gross negligence, illegal acts, fraud or willful misconduct of
Lender.

 

(b)           In addition, in connection with any Rating Agency Confirmation,
Review Waiver or other Rating Agency consent, approval or review requested or
required hereunder (other than the initial review of the Loan by the Rating
Agencies in connection with a Securitization), Borrower shall pay all of the
costs and expenses of Lender, Servicer and each Rating Agency in connection
therewith, and, if applicable, shall pay any fees imposed by any Rating Agency
in connection therewith.

  

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(c)            Any costs and expenses due and payable by Borrower hereunder
which are not paid by Borrower within ten (10) days after demand may be paid
from any amounts in the Deposit Account, with notice thereof to Borrower. The
obligations and liabilities of Borrower under this Section 4.29 shall (i) become
part of the Obligations, (ii) be secured by the Loan Documents and (iii) survive
the Term and the exercise by Lender of any of its rights or remedies under the
Loan Documents, including the acquisition of the Property by foreclosure or a
conveyance in lieu of foreclosure.

 

Section 4.30         Indemnity. Borrower shall indemnify, defend and hold
harmless Lender from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the reasonable fees
and disbursements of counsel for Lender in connection with any investigative,
administrative or judicial proceeding commenced or threatened, whether or not
Lender shall be designated a party thereto), that may be imposed on, incurred
by, or asserted against Lender in any manner relating to or arising out of (i)
any breach by Borrower of its Obligations under, or any material
misrepresentation by Borrower contained in, this Agreement or the other Loan
Documents; (ii) the use or intended use of the proceeds of the Loan; (iii) any
information provided by or on behalf of Borrower, or contained in any
documentation approved by Borrower; (iv) ownership of the Mortgage, the Property
or any interest therein, or receipt of any Rents; (v) any accident, injury to or
death of persons or loss of or damage to property occurring in, on or about the
Property or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (vi) any use, nonuse or condition in, on or
about the Property or on adjoining sidewalks, curbs, adjacent property or
adjacent parking areas, streets or ways; (vii) performance of any labor or
services or the furnishing of any materials or other property in respect of the
Property; (viii) any failure of the Property to comply with any Legal
Requirement; (ix) any claim by brokers, finders or similar persons claiming to
be entitled to a commission in connection with any Lease or other transaction
involving the Property or any part thereof, or any liability asserted against
Lender with respect thereto; and (x) the claims of any lessee of any portion of
the Property or any Person acting through or under any lessee or otherwise
arising under or as a consequence of any Lease (collectively, the "Indemnified
Liabilities"); provided, however, that Borrower shall not have any obligation to
Lender hereunder to the extent that such Indemnified Liabilities arise from (x)
the gross negligence, illegal acts, fraud or willful misconduct of Lender or (y)
matters first arising from and after the date Lender takes title to the Property
by foreclosure or deed in lieu thereof. To the extent that the undertaking to
indemnify, defend and hold harmless set forth in the preceding sentence may be
unenforceable because it violates any law or public policy, Borrower shall pay
the maximum portion that it is permitted to pay and satisfy under applicable law
to the payment and satisfaction of all Indemnified Liabilities incurred by
Lender.

 

Section 4.31         ERISA.

 

(a)           Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
or any assignee of any of its rights under the Note, this Agreement or the other
Loan Documents) to be a non- exempt (under a statutory or administrative class
exemption) prohibited transaction under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or Section 4975 of the Code.

 

(b)           Borrower's covenant in clause (a) above is based on the assumption
that no portion of the assets used by Lender in connection with the transactions
contemplated under this Agreement and the other Loan Documents constitutes
assets of a "benefit plan investor" as defined in Section 3(42) of ERISA and
with respect to which Borrower is a party in interest (as defined in Section
3(14) of ERISA) or a disqualified person (as defined in Section 4975 of the
Code), unless the conditions of an available prohibited transaction exemption
are satisfied.

 

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(c)           Borrower shall not maintain, sponsor, contribute to or become
obligated to contribute to, or suffer or permit any ERISA Affiliate of Borrower
to, maintain, sponsor, contribute to or become obligated to contribute to, any
"Plan" or any "Welfare Plan" or permit the assets of Borrower to become "plan
assets," within the meaning of 29 C.F.R. 2510.3-101, as modified in application
by Section 3(42) of ERISA.

 

(d)           Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the Term, as requested by Lender in its
sole discretion, that (A) Borrower and Guarantor are not and do not maintain an
"employee benefit plan" as defined in Section 3(32) of ERISA, which is subject
to Title I of ERISA, or a "governmental plan" within the meaning of Section
3(32) of ERISA; (B) Borrower and Guarantor are not subject to state statutes
regulating investments and fiduciary obligations with respect to governmental
plans; and (C) the assets of Borrower and Guarantor do not constitute "plan
assets" within the meaning of 29 C.F.R §2510.3-101 as modified in application by
Section 3(42) of ERISA of any "benefit plan investor" as defined in Section
3(42) of ERISA.

 

Section 4.32         Patriot Act Compliance.

 

(a)           Borrower will use its good faith and commercially reasonable
efforts to comply with the Patriot Act and all applicable requirements of
Governmental Authorities having jurisdiction over Borrower and/or the Property,
including those relating to money laundering and terrorism. Lender shall have
the right to audit Borrower's compliance with the Patriot Act and all applicable
requirements of Governmental Authorities having jurisdiction over Borrower
and/or the Property, including those relating to money laundering and terrorism.
In the event that Borrower fails to comply with the Patriot Act or any such
requirements of Governmental Authorities, then Lender may, at its option, cause
Borrower to comply therewith and any and all costs and expenses incurred by
Lender in connection therewith shall be secured by the Mortgage and the other
Loan Documents and shall be immediately due and payable.

 

(b)           Neither Borrower nor, to Borrower's best knowledge, any owner of a
direct or indirect interest in Borrower (i) is listed on any Government Lists,
(ii) is a person who has been determined by competent authority to be subject to
the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23,
2001) or any other similar prohibitions contained in the rules and regulations
of OFAC or in any enabling legislation or other Presidential Executive Orders in
respect thereof, (iii) has been previously indicted for or convicted of any
felony involving a crime or crimes of moral turpitude or for any Patriot Act
Offense, or (iv) is currently under investigation by any Governmental Authority
for alleged criminal activity. For purposes hereof, the term "Patriot Act
Offense" means any violation of the criminal laws of the United States of
America or of any of the several states, or that would be a criminal violation
if committed within the jurisdiction of the United States of America or any of
the several states, relating to terrorism or the laundering of monetary
instruments, including any offense under (A) the criminal laws against
terrorism; (B) the criminal laws against money laundering, (C) the Bank Secrecy
Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or
(E) the Patriot Act. "Patriot Act Offense" also includes the crimes of
conspiracy to commit, or aiding and abetting another to commit, a Patriot Act
Offense. For purposes hereof, the term "Government Lists" means (1) the
Specially Designated Nationals and Blocked Persons Lists maintained by the
Office of Foreign Assets Control ("OFAC” ), (2) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Lender notified Borrower in writing is
now or hereafter included in "Government Lists” or (3) any similar lists
maintained by the United States Department of State, the United States
Department of Commerce or any other Governmental Authority or pursuant to any
Executive Order of the President of the United States of America that Lender
notified Borrower in writing is now or hereafter included in "Government Lists".

 

47

 

 

(c)           At all times throughout the term of the Loan, including after
giving effect to any Transfers permitted pursuant to the Loan Documents, (a)
none of the funds or other assets of Borrower or Guarantor shall constitute
property of, or shall be beneficially owned, directly or indirectly, by any
Person subject to trade restrictions under United States law, including, but not
limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701
et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any
Executive Orders or regulations promulgated thereunder, with the result that the
investment in Borrower or Guarantor, as applicable (whether directly or
indirectly), would be prohibited by applicable law (each, an "Embargoed
Person"), or the Loan made by Lender would be in violation of applicable law,
(b) no Embargoed Person shall have any interest of any nature whatsoever in
Borrower or Guarantor, as applicable, with the result that the investment in
Borrower or Guarantor, as applicable (whether directly or indirectly), would be
prohibited by law or the Loan would be in violation of law, and (c) none of the
funds of Borrower or Guarantor, as applicable, shall be derived from any
unlawful activity with the result that the investment in Borrower or Guarantor,
as applicable (whether directly or indirectly), would be prohibited by
applicable law or the Loan would be in violation of applicable law.

 

Section 4.33         Condominium Regime.

 

(a)           Borrower shall comply with all terms, conditions and covenants of
the Condominium Declaration and all by-laws, rules and regulations promulgated
or otherwise existing (collectively, the "Condominium Rules") with respect to
the "North Park Towers", a condominium (the "Condominium Regime ") established
pursuant to the Condominium Declaration, as those are in force and effect.

 

(b)           Borrower shall not, without Lender's prior written consent (not to
be unreasonably withheld), modify, amend, supplement or in any other manner
change the terms, conditions and covenants of the Condominium Declaration or the
Condominium Rules in any material respect.

  

(c)           Borrower shall promptly deliver to Lender a true and full copy of
each and every written notice of default or notice requiring the performance of
any act by Borrower received by Borrower with respect to any obligation of
Borrower under the provisions of the Condominium Declaration or the Condominium
Rules.

 

48

 

 

(d)           Borrower shall not, except with the prior written consent of
Lender, (i) institute any action or proceeding for partition of the Condominium
Regime; (ii) vote for or consent to any modification of, amendment to or
relaxation in the enforcement of any provision of the Condominium Declaration or
the Condominium Rules; (iii) in the event of damage to or destruction of the
Improvements, vote in opposition to a motion to repair, restore, or rebuild;
(iv) notwithstanding anything contained in the Condominium Declaration or the
Condominium Rules to the contrary, subdivide any of the Condominium Units or (v)
sell or transfer title to any of the Condominium Units.

 

(e)           In each and every case in which, under the prov1s1ons of the
Condominium Declaration or the Condominium Rules, the consent or the vote of the
owners of Condominium Units is required, Borrower shall not vote or give such
consent so as to impair the lien of the Mortgage or the security therefor
without, in each and every case, the prior written consent of Lender.

 

(f)            Intentionally omitted.

 

(g)           In the event of the failure of Borrower to perform any of its
obligations relating to the Property under the Condominium Declaration or
Condominium Rules within a period of five (5) Business Days (unless the Board of
Directors requires sooner performance) after notice from the Board of Directors
or from Lender, or in the case of any such default which cannot with due
diligence be cured or remedied within such period, if Borrower fails to proceed
promptly after such notice to cure or remedy the same with due diligence, then
in any such case, Lender may from time to time at its option, but without any
obligation so to do, cure or remedy any such default of Borrower (Borrower
hereby authorizing Lender to enter upon the Property as may be necessary for
such purposes), and all sums expended by Lender for such purposes, including
reasonable counsel fees, shall be added to the Debt, shall become due and
payable and shall bear interest until repaid at the Default Rate and shall be
added to the Debt; provided, however, that the failure of Borrower to cure such
default within such five (5) Business Day Period, or, in the case in which such
default cannot be cured within such five (5) Business Day period, provided
Borrower has commenced to cure such default and is diligently pursuing same to
completion, such additional time as is needed to so complete, shall not
constitute an Event of Default unless same would be a default allowing the
exercise of remedies by the Board of Directors under the Condominium Rules.

 

(h)           At any time during the continuance of an Event of Default, Lender
shall have the right, in addition to all other rights and remedies available to
Lender under the other Loan Documents and without further notice or demand, to
take control of and exercise all of the Condominium Rights, and shall have all
of the rights and remedies of a secured party under the Uniform Commercial Code
as then in effect in the State (it being expressly acknowledged that prior to
the occurrence of an Event of Default, Borrower shall have all right to
exercise, take and perform all actions required of Borrower under the
Condominium Documents without Lender's consent). Furthermore, at any time during
the continuance of an Event of Default, Lender may, but shall not be obligated
to, assume all of the obligations of Borrower under the Condominium Documents.
Such assumption, however, shall not relieve Borrower of its obligations under
the Condominium Documents and Borrower shall remain liable for all reasonable
costs and expenses incurred in connection with the performance of its
obligations under the Condominium Documents and, in this regard, all such costs
and expenses incurred by Lender shall be immediately due and payable by Borrower
to Lender on demand and, if not so paid, shall be added to the Outstanding
Principal Balance (even if such addition results in the Outstanding Principal
Balance being in excess of the face amount of the Note), shall bear interest at
the Default Rate from the date paid by Lender until repaid by Borrower and shall
be secured by the Mortgage and by all of the other Loan Documents securing all
or any part of the Debt. Borrower acknowledges that the Condominium Association
and any other condominium or owners association created under the Condominium
Documents, all owners of real property subject to the Condominium Documents and
all other persons shall be entitled to rely upon Lender's written notice,
recorded as hereinafter provided, that Lender has assumed all of the rights,
benefits and privileges and/or all of the obligations of Borrower under the
Condominium Documents without any inquiry into whether any Event of Default has
occurred; and Borrower does hereby specifically authorize, instruct and direct
the Condominium Association and any other condominium or owners associations,
owners and other persons to recognize said assumption by Lender of all of the
rights, benefits and privileges and/or all of the obligations of Borrower under
the Condominium Documents following the occurrence of an Event of Default.

 

49

 

 

(i)       Lender shall have the right at any time, but shall have no obligation,
to take in its name or in the name of Borrower, or otherwise, such action as
Lender may at any time or from time to time determine to be necessary to cure
any default under the Condominium Documents by a Person other than Borrower or
to protect the rights of Borrower or Lender thereunder. In furtherance of the
foregoing, Borrower hereby irrevocably constitutes and appoints Lender its true
and lawful attorney-in-fact in Borrower's name or in Lender's name, or
otherwise, to enforce all of the rights, benefits and privileges of said
Borrower under the Condominium Documents. It is hereby recognized that the power
of attorney herein granted is coupled with an interest and shall not be
revocable. Lender shall incur no liability to Borrower if any action taken by
Lender or on Lender's behalf in good faith pursuant to this assignment shall
prove to be in whole or in part inadequate or invalid. Any and all costs and
expenses incurred by Lender to cure any default under the Condominium Documents
by a Person other than Borrower or to protect the rights of Borrower or Lender
thereunder shall be immediately due and payable by Borrower to Lender on demand
and, if not so paid, shall be added to the Outstanding Principal Balance (even
if such addition results in the Outstanding Principal Balance being in excess of
the face amount of the Note), shall bear interest at the Default Rate from the
date paid by Lender until repaid by Borrower and shall be secured by the
Mortgage and by all of the other Loan Documents securing all or any part of the
Debt. Borrower agrees to protect, defend, indemnify and hold Lender free and
harmless from and against any and all loss, cost, liability or expense
(including, but not limited to, reasonable attorneys' fees and accountants'
fees) to which Lender may be exposed, or that Lender may incur, in exercising
any of its rights under this Section 4.33.

 

(j)       Subject to all Legal Requirements, from and after the occurrence and
during the continuance of an Event of Default, Lender shall have the right to
require that any members (or representatives) of the Board of Directors or any
other condominium or owners association created under the Condominium Documents
and any officers thereof, that are in each case elected (or appointed) by
Borrower tender their written resignation and Lender shall have the right to
replace such member or representative with a person elected or appointed by
Lender. Lender has required that all of the current members of the Board of
Directors appointed by Borrower and all officers of the Condominium Association
who are Affiliates, employees or agents of Borrower tender written resignations
from each of them as of the date hereof. Lender may submit such written
resignations to the Condominium Association at any time after the occurrence and
during the continuance of an Event of Default, and Borrower shall cooperate with
Lender in all respects to replace said directors and officers affiliated with
Borrower with directors and officers of Lender's choosing. In addition, from and
after the occurrence and during the continuance of an Event of Default, Lender
shall have the right to exercise all of the rights and privileges provided to
Lender by this Loan Agreement and the other Loan Documents with respect to an
Event of Default including, without limiting the generality of the foregoing,
the right to exercise all voting rights accruing to a Condominium Unit owner and
all other rights accruing to a Condominium Unit owner. While any such Event of
Default continues, Borrower hereby nominates and appoints Lender irrevocably as
Borrower's proxy and attorney in fact to vote and, as Borrower's agent, to act
with respect to all such rights. Written notice of any such Event of Default
from Lender to the Board of Directors shall be deemed conclusive as to such
right of Lender to vote and to exercise all such rights.

 

50

 

  

(k)      Notwithstanding anything contained herein or in any of the Condominium
Documents to the contrary, Borrower, which Controls the Condominium Association,
shall not permit the Condominium Association to collect any Common Charges or
other charges, fees, assessments or reserves under the Condominium Documents at
any time during the term of the Loan, nor shall Borrower permit the Condominium
Association to be active or operational during the term of the Loan, it being
acknowledged by Borrower that the Property shall be operated as a multi-family
rental apartment complex without regard to any condominium formalities during
the term of the Loan.

 

Section 4.34        Lift Repairs. In connection with that certain in-ground
hydraulic lift located on the Property (the "Lift") as more particularly
described in the Environmental Report (as defined in the Environmental
Indemnity), Borrower hereby covenants and agrees, at Borrower's sole cost and
expense, (i) to cause to be serviced the Lift and to be delivered to Lender
evidence in form and substance reasonably satisfactory to Lender that the Lift
is not leaking or, in the event that it is determined that the Lift is leaking,
to cause to be remediated such leak(s), if any, and (ii) to deliver or cause to
be delivered to Lender evidence in form and substance reasonably satisfactory to
Lender that the Lift has been serviced and that the Lift is not leaking or that
such leak(s), if any, have been remediated (the foregoing items (i) and (ii),
collectively, the "Lift Repairs" ). On the Closing Date, Borrower shall deposit
with or on behalf of Lender $25,000 as set forth on Schedule II consisting of a
portion of the Required Repairs Funds as the estimated cost to complete the Lift
Repairs. Borrower agrees to provide Lender upon Lender's request with periodic
updates regarding the status of the Lift Repairs until such time as the Lift
Repairs have been completed, and Borrower further agrees that Lender and any
other Person designated by Lender shall have the right, but not the obligation,
to enter upon the Property at all reasonable times to assess any and all aspects
of the Lift Repairs, and Borrower shall cooperate with and provide Lender and
any such Person designated by Lender with access to the Property.

 

51

 

 

ARTICLE S

 

INSURANCE, CASUALTY AND CONDEMNATION

 

Section 5.1           Insurance.

 

5.1.1      Insurance Policies.

   

(a)      Borrower, at its sole cost and expense, shall obtain and maintain
during the entire Term, or cause to be obtained and maintained, insurance
policies for Borrower and the Property (including, without limitation, the
Improvements that are subject to the Condominium Regime) providing at least the
following coverages:

 

(i)             Casualty insurance against loss or damage by fire, lightning and
such other perils as are included in a standard "special form" policy (formerly
known as an "all-risk" endorsement policy), and against loss or damage by all
other risks and hazards covered by a standard extended coverage insurance
policy, with no exclusion for damage or destruction caused by the acts of
"Terrorists" (as defined by TRIPRA) (or, subject to Section 5.1. l (i) below,
standalone coverage with respect thereto) riot and civil commotion, vandalism,
malicious mischief, burglary and theft (A) in an amount equal to one hundred
percent (100%) of the "Full Replacement Cost" of the Property (including,
without limitation, the Improvements that are subject to the Condominium
Regime), which for purposes of this Agreement shall mean actual replacement
value (exclusive of costs of excavations, foundations, underground utilities and
footings) with a waiver of depreciation; (B) containing an agreed amount
endorsement with respect to the Improvements and personal property at the
Property waiving all co-insurance provisions; and (C) containing an "Ordinance
or Law Coverage" or "Enforcement” endorsement if any of the Improvements or the
use of the Property shall at any time constitute legal non-conforming structures
or uses, and compensating for loss of value or property resulting from operation
of law and the cost of demolition and the increased cost of construction in
amounts as reasonably required by Lender. In addition, Borrower shall obtain:
(y) if any portion of the Improvements is currently or at any time in the future
located in a federally designated "special flood hazard area'', flood hazard
insurance in an amount equal to the lesser of (1) the Outstanding Principal
Balance or (2) the maximum amount of such insurance 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, as each may be amended, or such
greater amount as Lender shall reasonably require; and (z) earthquake insurance
in amounts and in form and substance satisfactory to Lender (provided that
Lender shall not require earthquake insurance unless the Property is located in
an area with a high degree of seismic activity and a Probable Maximum Loss
("PML") of greater than 20%), provided that the insurance pursuant to clauses
(y) and (z) hereof shall be on terms consistent with the comprehensive all risk
insurance policy required under this subsection (i);

 

(ii)            commercial general liability insurance, including a broad form
comprehensive general liability endorsement and coverages against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Property, such insurance (A) to be on the so-called "occurrence" form
and containing minimum limits per occurrence of One Million and No/100 Dollars
($1,000,000.00), with a combined limit per policy year, excluding umbrella
coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00); (B)
to continue at not less than the aforesaid limit until required to be changed by
Lender after notice by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards: (1)
Property and operations; (2) products and completed operations on an "if any"
basis; (3) independent contractors; and (4) contractual liability for all legal
contracts to the extent the same is available;

 

52

 

 

(iii)          rental loss and/or business income interruption insurance (A)
with dual party endorsement; (B) covering all risks required to be covered by
the insurance provided for in subsection (i) above and Section 5.1.l (h) below;
(C) covering a period of restoration of twelve (12) months and containing an
extended period of indemnity endorsement which provides that after the physical
loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of six (6) months from the
date that the Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period; and (D) in an amount equal to one hundred percent (100%)
of the projected Gross Revenue from the Property for a period of twelve (12)
months from the date that the Property is repaired or replaced and operations
are resumed. The amount of such business income insurance shall be determined
prior to the date hereof and at least once each year thereafter based on
Borrower's reasonable estimate of the Gross Revenue from the Property for the
succeeding twelve (12) month period. All proceeds payable to Lender pursuant to
this subsection shall be held by Lender and shall be applied to the Obligations
secured by the Loan Documents from time to time due and payable hereunder and
under the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its Obligations to pay the Debt on the respective dates
of payment provided for in the Note and the other Loan Documents except to the
extent such amounts are actually paid out of the proceeds of such business
income insurance;

 

(iv)          at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements or the existing
Improvements that are subject to the Condominium Regime, as applicable, and only
if the Property coverage form does not otherwise apply, (A) owner's contingent
or protective liability insurance covering claims not covered by or under the
terms or provisions of the above- mentioned commercial general liability
insurance policy; and (B) the insurance provided for in subsection (i) above
written in a so-called builder's risk completed value form (1) on a
non-reporting basis, (2) against all risks insured against pursuant to
subsection (i) above, (3) including permission to occupy the Property, and (4)
with an agreed amount endorsement waiving co-insurance provisions;

 

(v)           workers' compensation, subject to the statutory limits of the
state in which the Property is located, and employer's liability insurance with
limits which are reasonably required from time to time by Lender in respect of
any work or operations on or about the Property, or in connection with the
Property or its operation (if applicable);

 

(vi)          comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with the
commercial property insurance policy required under subsection (i) above;

 

(vii)         umbrella liability insurance in addition to primary coverage in an
amount not less than $15,000,000 per occurrence on terms consistent with the
commercial general liability insurance policy required .under subsection (ii)
above and subsection (viii) below;

 

(viii)        motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, with limits which are reasonably
required from time to time by Lender;

 

53

 

  

(ix)           windstorm insurance in an amount equal to the Outstanding
Principal Balance or such lesser amount as agreed to by Lender in writing;

 

(x)            directors and officers liability insurance and insurance against
employee dishonesty in an amount not less than one (1) month of Gross Revenue
from the Property and with a deductible not greater than Twenty Five Thousand
and No/100 Dollars ($25,000.00); and

 

(xi)           upon sixty (60) days' notice, such other reasonable insurance and
in such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for properties similar to the Property located in or around the region
in which the Property is located.

 

(b)      All insurance provided for in Section 5.1.l(a) shall be obtained under
valid and enforceable policies (collectively, the "Policies" or in the singular,
the "Policy") and shall be subject to the approval of Lender as to form and
substance, including insurance companies, amounts, deductibles, loss payees and
insureds. Not less than ten (10) days prior to the scheduled expiration dates of
the Policies theretofore furnished to Lender, evidence reasonably satisfactory
to Lender of payment of the premiums then due thereunder (the "Insurance
Premiums "), and, not later than the scheduled expiration dates of the Policies
theretofore furnished to Lender, certificates of insurance evidencing the
Policies, shall be delivered by Borrower to Lender.

 

(c)      Any blanket insurance Policy shall otherwise provide the same
protection as would a separate Policy insuring only the Property in compliance
with the provisions of Section 5.1.l(a) (any such blanket policy, an "Acceptable
Blanket Policy ").

 

(d)      All Policies of insurance provided for or contemplated by Section
5.1.l(a), except for the Policy referenced in Section 5.1.l(a)(v), shall name
Borrower as the insured and Lender and its successors and/or assigns as
mortgagee and loss payee, as its interests may appear, and in the case of
property damage, boiler and machinery, terrorism, windstorm, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender unless below the threshold for Borrower to
handle such claim without Lender intervention as provided in Section 5.2 below.
Additionally, if Borrower obtains property insurance coverage in addition to or
in excess of that required by Section 5.1.l (a)(i), then such insurance policies
shall also contain a so-called New York standard non-contributing mortgagee
clause in favor of Lender providing that the loss thereunder shall be payable to
Lender.

 

(e)       All Policies of insurance provided for in Section 5.1.l (a), except
for the Policies referenced in Section 5.1.l (a)(v) and (a)(viii), shall contain
clauses or endorsements to the effect that:

 

(i)             no act or negligence of Borrower, or anyone acting for Borrower,
or of any Tenant or other occupant, or failure to comply with the provisions of
any Policy, which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;

 

54

 

  

(ii)           the Policy shall not be canceled without at least thirty (30)
days' written notice to Lender and any other party named therein as an
additional insured (other than in the case of non-payment in which case only ten
(10) days prior notice, or the shortest time allowed by applicable Legal
Requirement (whichever is longer), will be required) and shall not be materially
changed (other than to increase the coverage provided thereby) without such a
thirty (30) day notice;

 

 

(iii)           Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder; and

 

(iv)           the issuers thereof shall give notice to Lender if the Policies
have not been renewed ten (10) days prior to its scheduled expiration; and

 

(f)       If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate and all
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect shall be paid by Borrower to Lender upon
demand and until paid shall be secured by the Mortgage and shall bear interest
at the Default Rate.

 

(g)      In the event of foreclosure of the Mortgage or other transfer of title
to the Property in extinguishment in whole or in part of the Obligations, all
right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.

 

(h)      The property insurance, public liability insurance and rental loss
and/or business interruption insurance required under Sections 5.1.l(a)(i), (ii)
and (iii) above shall cover perils of terrorism and acts of terrorism (or at
least not specifically exclude same) and Borrower shall maintain property
insurance, public liability insurance and rental loss and/or business
interruption insurance for loss resulting from perils and acts of terrorism on
terms (including amounts) consistent with those required under Sections 5.1.l
(a)(i), (ii), and (iii) above (or at least not specifically excluding same) at
all times during the term of the Loan.

 

55

 

 

(i)     Notwithstanding anything in subsection (a)(i) or (h) above to the
contrary, Borrower shall be required to obtain and maintain coverage in its
property insurance Policy (or by a separate Policy) against loss or damage by
terrorist acts in an amount equal to 100% of the "Full Replacement Cost" of the
Property; provided that such coverage is available. In the event that such
coverage with respect to terrorist acts is not included as part of the "all
risk" property policy required by subsection (a)(i) above, Borrower shall,
nevertheless be required to obtain coverage for terrorism (as standalone
coverage) in an amount equal to 100% of the "Full Replacement Cost" of the
Property plus the rental loss and/or business interruption coverage under clause
(a)(iii) above; provided that such coverage is available. Borrower shall obtain
the coverage required under this clause (i) from a carrier which otherwise
satisfies the rating criteria specified in Section 5.1.2 below (a "Qualified
Carrier") or in the event that such coverage is not available from a Qualified
Carrier, Borrower shall obtain such coverage from the highest rated insurance
company providing such coverage.

 

(j)       Any insurance policy or policies required under the Condominium
Declaration shall, unless prohibited by applicable laws, permit the waiver of
subrogation and shall provide that the insurance company or companies will not
look to the Board of Directors or Condominium Association, or any owner of the
Condominium Units, for the recovery of any loss under said policy or policies.
Such policy or policies shall not be cancelable except after 30 days written
notice to Lender (10 days for nonpayment) and the original or a duplicate of
such policy or policies shall be deposited with Lender with evidence of the
timely payment of premiums and with renewal policies to be deposited with Lender
prior to the expiration of existing policies. Notwithstanding anything herein to
the contrary, in the event Borrower fails or refuses to provide insurance
coverage as provided in this clause (j), Lender at its election may obtain such
insurance for its benefit as mortgagee and may add the premium therefor to the
unpaid balance of the Debt.

 

5.1.2       Insurance Company. All Policies required pursuant to Section 5.1.1
 (i) shall be issued by companies licensed to do business in the state where the
Property is located, with a financial strength and claims paying ability rating
of "A" or better 'by S&P (and the equivalent by all other Rating Agencies), or a
rating of A:X or better in the current Best's Insurance Reports; (ii) shall,
with respect to all property insurance policies, name Lender and its successors
and/or assigns as their interest may appear as the lender and mortgagee; (iii)
shall, with respect to all property insurance policies and rental loss and/or
business interruption insurance policies, contain a Standard Mortgagee Clause
and a Lender's Loss Payable Endorsement, or their equivalents, naming Lender as
the person to whom all payments made by such insurance company shall be paid;
(iv) shall, with respect to all liability policies, name Lender and its
successors and/or assigns as an additional insured; (v) shall contain a waiver
of subrogation against Lender; (vi) shall contain such provisions as Lender
deems reasonably necessary or desirable to protect its interest including
endorsements providing (A) that neither Borrower, Lender nor any other party
shall be a co-insurer under said Policies, (B) that Lender shall receive at
least thirty (30) days prior written notice of any modification, reduction or
cancellation, and (C) for a deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of properties with a standard
of operation and maintenance comparable to and in the general vicinity of the
Property, but in no event in excess of an amount reasonably acceptable to
Lender; and (vii) shall be satisfactory in form and substance to Lender and
shall be approved by Lender as to amounts, form, risk coverage, deductibles,
loss payees and insureds. No insurance policy required hereunder shall include
any so called "terrorist exclusion" or similar exclusion or exception to
insurance coverage relating to the acts of terrorist groups or individuals;
provided that, for so long TRIPRA is in effect, Lender shall accept terrorism
insurance with coverage against acts which are "certified" within the meaning of
TRIPRA. In addition to the insurance coverages described in Section 5.1.1 above,
Borrower shall obtain such other insurance as may from time to time be
reasonably required by Lender in order to protect its interests. Certified
copies of the Policies shall be delivered to Lender at the address below (or to
such other address or Person as Lender shall designate from time to time by
notice to Borrower) on the date hereof with respect to the current Policies and
within thirty (30) days after the effective date thereof with respect to all
renewal Policies:

 

56

 

 

Arbor Commercial Mortgage LLC 333

Earle Ovington Boulevard Uniondale,

New York 11553

Attn: John J. Bishar, Jr.

 

Borrower shall pay the Insurance Premiums annually in advance 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 shall not be required to pay such Insurance Premiums nor furnish
such evidence of payment to Lender in the event that the amounts required to pay
such Insurance Premiums have been deposited into the Insurance Account pursuant
to Section 6.4 hereof). 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, taking into consideration
changes in the value of money over time, changes in liability laws or changes in
prudent customs and practices.

 

Section 5.2          Casualty. If the Property shall be damaged or destroyed, in
whole or in part, by fire or other casualty (a "Casualty"), Borrower shall give
prompt notice thereof to Lender. Following the occurrence of a Casualty,
B01Tower, regardless of whether Insurance Proceeds are available, shall promptly
proceed to restore, repair, replace or rebuild the Property in accordance with
Legal Requirements to be of at least equal value and of substantially the same
character as prior to such damage or destruction, with such alterations as may
be reasonably approved by Lender. Lender may, but shall not be obligated to make
proof of loss if not made promptly by Borrower. In addition, Lender may
participate in any settlement discussions with any insurance companies (and
shall approve any final settlement) (i) if an Event of Default is continuing or
(ii) with respect to any Casualty in which the Net Proceeds or the costs of
completing the Restoration are equal to or greater than One Million and No/100
Dollars ($1,000,000) and Borrower shall deliver to Lender all instruments
required by Lender to permit such participation. Except as set forth in the
foregoing sentence, any Insurance Proceeds in connection with any Casualty
(whether or not Lender elects to settle and adjust the claim or Borrower settles
such claim) shall be due and payable solely to Lender and held by Lender in
accordance with the terms of this Agreement. In the event Borrower or any party
other than Lender is a payee on any check representing Insurance Proceeds with
respect to any Casualty, Borrower shall immediately endorse, and cause all such
third parties to endorse, such check payable to the order of Lender. Borrower
hereby irrevocably appoints Lender as its attorney-in- fact, coupled with an
interest, to endorse any such check payable to the order of Lender. Borrower
hereby releases Lender from any and all liability with respect to the settlement
and adjustment by Lender of any claims in respect of any Casualty.

 

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Section 5.3         Condemnation. Borrower shall promptly give Lender notice of
the actual or threatened commencement of any proceeding for the Condemnation of
all or any portion of the Property and shall deliver to Lender copies of any and
all papers served in connection with such proceedings. Lender may participate in
any such proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of reasonable out-of-pocket expenses of
collection, to the reduction or discharge of the Debt. Lender shall not be
limited to the interest paid on the Award by the condemning authority but shall
be entitled to receive out of the Award interest at the rate or rates provided
herein or in the Note. If the Property or any portion thereof is taken by a
condemning authority, Borrower shall promptly commence and diligently prosecute
the Restoration of the Property and otherwise comply with the provisions of
Section 5.4, whether or not an Award is available to pay the costs of such
Restoration. If the Property is sold, through foreclosure or otherwise, prior to
the receipt by Lender of the Award, Lender shall have the right, whether or not
a deficiency judgment on the Note shall have been sought, recovered or denied,
to receive the Award, or a portion thereof sufficient to pay the Debt.

   

Section 5.4          Restoration. The following provisions shall apply in
connection with the Restoration:

 

(a)      If the Net Proceeds shall be less than Two Hundred Fifty Thousand and
No/100 Dollars ($250,000) and provided no Event of Default is continuing, the
Net Proceeds will be disbursed by Lender to Borrower upon receipt, provided that
all of the conditions set forth in Section 5.4(b)(i) are met and Borrower
delivers to Lender a written undertaking to expeditiously commence and to
satisfactorily complete with due diligence the Restoration in accordance with
the terms of this Agreement.

 

(b)      If the Net Proceeds are equal to or greater than Two Hundred Fifty
Thousand and No/100 Dollars ($250,000), the Net Proceeds will be held by Lender
and Lender shall make the Net Proceeds available for the Restoration in
accordance with the provisions of this Section 5.4. The term "Net Proceeds"
shall mean: (i) the net amount of all insurance proceeds received by Lender
pursuant to Section 5.1.l (a)(i), (iv), and (vi) and Section 5.1.l (h) as a
result of such damage or destruction, after deduction of its reasonable
out-of-pocket costs and expenses (including, but not limited to, reasonable
counsel fees), if any, in collecting same ("Insurance Proceeds"), or (ii) the
net amount of the Award, after deduction of its reasonable out-of-pocket costs
and expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting same ("Condemnation Proceeds "), whichever the case may be.

 

(i)             The Net Proceeds shall be made available to Borrower for
Restoration upon the determination of Lender, in its sole discretion, that the
following conditions are met:

 

(A) no Event of Default shall have occurred and be continuing;       (B) (1) in
the event the Net Proceeds are Insurance Proceeds, less than twenty-five percent
(25%) of the total floor area of the Improvements on the Property has been
damaged, destroyed or rendered unusable as a result of such Casualty or (2) in
the event the Net Proceeds are Condemnation Proceeds, less than ten percent
(10%) of the land constituting the Property is taken, and such land is located
along the perimeter or periphery of the Property, and no portion of the
Improvements is located on such land;

 

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(C)

Leases demising in the aggregate a percentage amount equal to or greater than
seventy-five percent (75%) of the total rentable space in the Property which has
been demised under executed and delivered Leases in effect as of the date of the
occurrence of such Casualty or Condemnation, whichever the case may be, shall
remain in full force and effect during and after the completion of the
Restoration without abatement of rent beyond the time required for Restoration,
notwithstanding the occurrence of any such Casualty or Condemnation, whichever
the case may be, and will make all necessary repairs and restorations thereto
that are not being made by Borrower as part of the Restoration at their sole
cost and expense;

 

(D)

Borrower shall commence the Restoration as soon as reasonably practicable (but
in no event later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently pursue the same to
satisfactory completion;

 

(E)

Lender shall be satisfied that any operating deficits, including all scheduled
payments of principal and interest under the Note, which will be incurred with
respect to the Property as a result of the occurrence of any such Casualty or
Condemnation, whichever the case may be, will be covered out of (1) the Net
Proceeds, (2) the insurance coverage referred to in Section 5.1. l (a)(iii), if
applicable, or (3) by other funds of Borrower;

 

(F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) the date six (6) months prior to the Stated
Maturity Date, (2) the earliest date required for such completion under the
terms of any Major Lease, (3) such time as may be required under applicable
Legal Requirements or (4) six (6) months prior to the expiration of the
insurance coverage referred to in  Section 5.1.l (a)(iii);       (G) the
Property and the use thereof after the Restoration will be in compliance with
and permitted under all applicable Legal Requirements;       (H) the Restoration
shall be done and completed by Borrower in an expeditious and diligent fashion
and in compliance with all applicable Legal Requirements;       (I)

such Casualty or Condemnation, as applicable, does not result in the loss of
access to the Property or the related Improvements;

 

(J)

the Restoration DSCR, after giving effect to the Restoration, shall be equal to
or greater than 1.43:1.00; 

 

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(K) the Loan to Value Ratio after giving effect to the Restoration, shall be
equal to or less than seventy-four percent (74%);       (L) Borrower shall
deliver, or cause to be delivered, to Lender a signed detailed budget approved
in writing by Borrower's architect or engineer stating the entire cost of
completing the Restoration, which budget shall be acceptable to Lender;      
(M) the Net Proceeds together with any cash or cash equivalent deposited by
Borrower with Lender are sufficient in Lender's discretion to cover the cost of
the Restoration; and       (N) the Condominium Association has elected to
proceed with the Restoration.

 

(ii)            The Net Proceeds shall be held by Lender in the Casualty and
Condemnation Account and, until disbursed in accordance with the provisions of
this Section 5.4(b), shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower from time to time during the course of
the Restoration, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection with the
related item of Restoration have been paid for in full, and (B) there exist no
notices of pendency, stop orders, mechanic's or materialman's liens or notices
of intention to file same, or any other liens or encumbrances of any nature
whatsoever on the Property which have not either been fully bonded to the
satisfaction of Lender and discharged of record or in the alternative fully
insured to the satisfaction of Lender by the title company issuing the Title
Insurance Policy.

 

(iii)          All plans and specifications required in connection with the
Restoration shall be subject to the prior reasonable approval of Lender and an
independent consulting engineer selected by Lender (the "Casualty Consultant").
Lender shall have the use of the plans and specifications and all permits,
licenses and approvals required or obtained in connection with the Restoration.
The identity of the contractors, subcontractors and materialmen engaged in the
Restoration, as well as the contracts under which they have been engaged, shall
be subject to the reasonable approval of Lender and the Casualty Consultant. All
costs and expenses incurred by Lender in connection with recovering, holding and
advancing the Net Proceeds for the Restoration including, without limitation,
reasonable attorneys' fees and disbursements and the Casualty Consultant's fees
and disbursements, shall be paid by Borrower.

 

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(iv)          In no event shall Lender be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term "Casualty Retainage"
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 5.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 5.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities, and Lender receives evidence satisfactory to Lender
that the costs of the Restoration have been paid in full or will be paid in full
out of the Casualty Retainage; provided, however, that Lender will release the
portion of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which (i) the Casualty Consultant certifies to Lender that such contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of such contractor's,
subcontractor's or materialman's contract, (ii) the contractor, subcontractor or
materialman delivers the lien waivers and evidence of payment in full of all
sums due to the contractor, subcontractor or materialman as may be reasonably
requested by Lender or by the title company issuing the Title Insurance Policy,
and (iii) Lender receives an endorsement to the Title Insurance Policy insuring
the continued priority of the Lien of the Mortgage and evidence of payment of
any premium payable for such endorsement. If required by Lender, the release of
any such portion of the Casualty Retainage shall be approved by the surety
company, if any, which has issued a payment or performance bond with respect to
the contractor, subcontractor or materialman.

 

(v)           Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.

 

(vi)          If at any time the Net Proceeds or the undisbursed balance thereof
shall not, in the reasonable opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the "Net
Proceeds Deficiency") with Lender (for deposit into the Casualty and
Condemnation Account) before any further disbursement of the Net Proceeds shall
be made. The Net Proceeds Deficiency deposited with Lender shall be deposited by
Lender into the Casualty and Condemnation Account and shall be disbursed for
costs actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.4(b) shall constitute additional security
for the Obligations.

 

(vii)         The excess, if any, of the Net Proceeds and the remaining balance,
if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 5.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing.

 

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(c)      Notwithstanding anything to the contrary set forth in this Agreement,
including the provisions of this Section 5.4, if the Loan is included in a REMIC
Trust and, immediately following a release of any portion of the Lien of the
Mortgage following a Casualty or Condemnation (but taking into account any
proposed Restoration of the remaining Property), the ratio of the Outstanding
Principal Balance to the value of the remaining Property is greater than 125%
(such value to be determined, in Lender's sole discretion, by any commercially
reasonable method permitted to a REMIC Trust; and which shall exclude the value
of personal property or going concern value, if any), the Outstanding Principal
Balance must be paid down by an amount equal to the least of the following
amounts: (i) the net Award (after payment of Lender's reasonable out-of-pocket
costs and expenses and any other reasonable fees and expenses that have been
approved by Lender) or the net Insurance Proceeds (after payment of Lender's
reasonable out-of-pocket costs and expenses and any other reasonable fees and
expenses that have been approved by Lender), as the case may be, or (ii) a
"qualified amount" as that term is defined in the IRS Revenue Procedure 2010-30,
as the same may be amended, replaced, supplemented or modified from time to
time, unless Lender receives an opinion of counsel that if such amount is not
paid, the applicable Securitization will not fail to maintain its status as a
REMIC Trust as a result of the related release of such portion of the Lien of
the Mortgage. If and to the extent the preceding sentence applies, only such
amount of the net Award or net Insurance Proceeds (as applicable), if any, in
excess of the amount required to pay down the Outstanding Principal Balance of
the Loan may be released for purposes of Restoration or released to Borrower as
otherwise expressly provided in this Section 5.4.

 

(d)     All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 5.4(b)(vii) may be retained and applied by Lender in accordance with
Section 2.4.4 hereof toward the payment of the Debt whether or not then due and
payable in such order, priority and proportions as Lender in its sole discretion
shall deem proper, or, at the discretion of Lender, the same may be paid, either
in whole or in part, to Borrower for such purposes as Lender shall approve, in
its discretion. Additionally, throughout the term of the Loan if an Event of
Default is continuing, then Borrower shall pay to Lender, with respect to any
payment of the Debt pursuant to this Section 5.4(d), an additional amount equal
to the Prepayment Fee arid any applicable Liquidated Damages Amount; provided,
however, that if an Event of Default is not continuing, then no Prepayment Fee
or Liquidated Damages Amount shall be payable.

  

(e)      In the event of foreclosure of the Mortgage, or other transfer of title
to the Property in extinguishment in whole or in part of the Debt all right,
title and interest of Borrower in and to the Policies that are not blanket
Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.

 

(f)      Notwithstanding anything to the contrary contained herein, if in
connection with a Casualty any insurance company makes a payment under a
property insurance Policy that Borrower proposes be treated as business or
rental interruption insurance, then, notwithstanding any designation (or lack of
designation) by the insurance company as to the purpose of such payment, as
between Lender and Borrower, such payment shall not be treated as business or
rental interruption Insurance Proceeds unless Borrower has demonstrated to
Lender's satisfaction that the remaining Net Proceeds that have been received
from the property insurance companies are sufficient to pay 100% of the cost of
the Restoration or, if such Net Proceeds are to be applied to repay the
Obligations in accordance with the terms hereof, that such remaining Net
Proceeds will be sufficient to satisfy the Obligations in full.

 

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(g)     Notwithstanding anything to the contrary contained herein, in the event
of any conflict between the provisions of this Agreement (including, without
limitation, this Article 5) and the Condominium Documents, the provisions of
this Agreement shall govern and control.

 

ARTICLE 6

 

CASH MANAGEMENT AND RESERVE FUNDS

 

Section 6.1          Cash Management Arrangements. Borrower shall cause all
Rents to be transmitted directly by non-residential Tenants of the Property into
a trust account (the "Clearing Account") established and maintained by Borrower
at a local bank selected by Borrower and reasonably approved by Lender (the
"Clearing Bank" ) as more fully described in the Clearing Account Agreement.
Without in any way limiting the foregoing, if Borrower or Manager receive any
Gross Revenue from the Property, then (i) such amounts shall be deemed to be
collateral for the Obligations and shall be held in trust for the benefit, and
as the property, of Lender, (ii) such amounts shall not be commingled with any
other funds or property of Borrower or Manager, and

(iii) Borrower or Manager shall deposit such amounts in the Clearing Account
within one (1) Business Day of receipt. Funds deposited into the Clearing
Account shall be swept by the Clearing Bank on a daily basis into the Deposit
Account and applied and disbursed in accordance with this Agreement. Funds in
the Deposit Account shall be invested in Permitted Investments, as more
particularly set forth in the Cash Management Agreement. Lender may also
establish subaccounts of the Deposit Account which shall at all times be
Eligible Accounts (and may be ledger or book entry accounts and not actual
accounts) (such subaccounts are referred to herein as "Accounts"). The Deposit
Account and all other Accounts will be under the sole control and dominion of
Lender, and Borrower shall have no right of withdrawal therefrom. Borrower shall
pay for all expenses of opening and maintaining all of the above accounts.

 

Section 6.2           Required Repairs Funds.

 

6.2.1      Deposit of Required Repairs Funds. Borrower shall perform the repairs
and other work at the Property (including, without limitation, the Lift Repairs)
as set forth on Schedule II (such repairs and other work hereinafter referred to
as "Required Repairs") and shall complete each of the Required Repairs on or
before one hundred eighty (180) days from the Closing Date. On the Closing Date,
Borrower shall deposit with or on behalf of Lender the amount set forth on such
Schedule II as the estimated cost to complete the Required Repairs (the
"Required Repairs Funds"), which Required Repairs Funds shall be transferred by
Deposit Bank into an Account (the "Required Repairs Account").

 

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6.2.2      Release of Required Repairs Funds. Provided no Event of Default is
continuing, Lender shall direct Servicer to disburse Required Repairs Funds to
Borrower out of the Required Repairs Account, within ten (10) days after the
delivery by Borrower to Lender of a request therefor (but not more often than
once per month), in increments of at least $10,000 (or a lesser amount if the
total amount in the Required Repairs Account is less than $10,000, in which case
only one disbursement of the amount remaining in the account shall be made),
accompanied by the following items (which items shall be in form and substance
reasonably satisfactory to Lender): (i) an Officer's Certificate (A) stating
that the Required Repairs (or relevant portion thereof) to be funded by the
requested disbursement have been completed in a good and workmanlike manner and
in accordance with all applicable Legal Requirements, (B) identifying each
Person that supplied materials or labor in connection with the Required Repairs
to be funded by the requested disbursement, (C) stating that each such Person
has been paid in full or will be paid in full upon such disbursement, or if such
payment is a progress payment, that such payment represents full payment to such
Person, less any applicable retention amount, for work completed through the
date of the relevant invoice from such Person, (D) stating that the Required
Repairs (or relevant portion thereof) to be funded have not been the subject of
a previous disbursement, (E) stating that all previous disbursements of Required
Repair Funds have been used to pay the previously identified Required Repairs,
and (F) stating that all outstanding trade payables (other than those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full other than any applicable retention amount, (ii) as to
any completed Required Repair a copy of any license, permit or other approval ·
by any Governmental Authority required, if any, in connection with the Required
Repairs and not previously delivered to Lender, (iii) copies of appropriate lien
waivers (or conditional lien waivers) or other evidence of payment satisfactory
to Lender, (iv) at Lender's option, a title search for the Property indicating
that the Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, and (v) such other evidence as Lender shall
reasonably request to demonstrate that the Required Repairs to be funded by the
requested disbursement have been completed (or completed to the extent of the
requested payment) and are paid for or will be paid upon such disbursement to
Borrower. Upon Borrower's completion of all Required Repairs in accordance with
this Section 6.2, Lender shall direct Servicer to release any remaining Required
Repairs Funds, if any, in the Required Repairs Account to Borrower.

 

Section 6.3           Tax Funds.

 

6.3.1      Deposits of Tax Funds. Borrower shall deposit with Lender (i) on the
Closing Date, an amount equal to $146,138.39 and (ii) on each Monthly Payment
Date, an amount equal to one-twelfth of the Taxes that Lender estimates will be
payable during the next ensuing twelve (12) months (initially, $27,355.11), in
order to accumulate sufficient funds to pay all such Taxes at least thirty (30)
days prior to their respective due dates, which amounts shall be transferred
into an Account (the "Tax Account "). Amounts deposited from time to time into
the Tax Account pursuant to this Section 6.3.1 are referred to herein as the
"Tax Funds". If at any time Lender reasonably determines that the Tax Funds will
not be sufficient to pay the Taxes, Lender shall notify Borrower of such
determination and the monthly deposits for Taxes shall be increased by the
amount that Lender estimates is sufficient to make up the deficiency at least
ten (10) days prior to the respective due dates for the Taxes; provided, that if
Borrower receives notice of any deficiency after the date that is ten (10) days
prior to the date that Taxes are due, Borrower will deposit with or on behalf of
Lender such amount within one (1) Business Day after its receipt of such notice.

 

6.3.2      Release of Tax Funds. Provided no Event of Default shall exist and
remain uncured, Lender shall direct Servicer to apply Tax Funds in the Tax
Account to payments of Taxes. In making any payment relating to Taxes, Lender
may do so according to any bill, statement or estimate procured from the
appropriate public office (with respect to Taxes) without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax,
assessment, sale, forfeiture, tax lien or title or claim thereof. If the amount
of the Tax Funds shall exceed the amounts due for Taxes, Lender shall, in its
sole discretion, return any excess to Borrower or credit such excess against
future payments to be made to the Tax Funds. Any Tax Funds remaining in the Tax
Account after the Obligations have been paid in full shall be returned to
Borrower.

 

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Section 6.4           Insurance Funds.

 

6.4.1      Deposits of Insurance Funds. Borrower shall deposit with or on behalf
of Lender on each Monthly Payment Date, an amount equal to one-twelfth of the
Insurance Premiums that Lender estimates will be payable for the renewal of the
coverages afforded by the Policies upon the expiration thereof, in order to
accumulate sufficient funds to pay all such Insurance Premiums at least thirty
(30) days prior to the expiration of the Policies, which amounts shall be
transferred into an Account established at Deposit Bank to hold such funds (the
"Insurance Account "). Amounts deposited from time to time into the Insurance
Account pursuant to this Section 6.4.1 are referred to herein as the "Insurance
Funds". If at any time Lender reasonably determines that the Insurance Funds
will not be sufficient to pay the Insurance Premiums, Lender shall notify
Borrower of such determination and the monthly deposits for Insurance Premiums
shall be increased by the amount that Lender estimates is sufficient to make up
the deficiency at least thirty (30) days prior to expiration of the Policies.

 

6.4.2      Release of Insurance Funds. Provided no Event of Default shall exist
and remain uncured, Lender shall direct Servicer to apply Insurance Funds in the
Insurance Account to the timely payment of Insurance Premiums, provided Borrower
shall furnish Lender with all bills, invoices and statements for the Insurance
Premiums for which such funds are required at least thirty (30) days prior to
the date on which such Insurance Premiums first become payable. In making any
payment relating to Insurance Premiums, Lender may do so according to any bill,
statement or estimate procured from the insurer or its agent, without inquiry
into the accuracy of such bill, statement or estimate. If the amount of the
Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender
shall, in its sole discretion, return any excess to Borrower or credit such
excess against future payments to be made to the Insurance Funds. Any Insurance
Funds remaining in the Insurance Account after the Obligations have been paid in
full shall be returned to Borrower.

 

6.4.3     Acceptable Blanket Policy. Notwithstanding anything to the contrary
contained in Section 6.4.1, in the event that an Acceptable Blanket Policy is in
effect with respect to the Policies required pursuant to Section 5.1, deposits
into the Insurance Account required for Insurance Premiums pursuant to Section
6.4.1 above shall be suspended to the extent that Insurance Premiums relate to
such Acceptable Blanket Policy. As of the date hereof, an Acceptable Blanket
Policy is in effect with respect to the Policies required as of the Closing Date
pursuant to Section 5.1.

Section 6.5          Capital Expenditure Funds.

 

6.5.1     Deposits of Capital Expenditure Funds. Borrower shall deposit with or
on behalf of Lender on each Monthly Payment Date, the amount of $10,042.08, for
annual Capital Expenditures, which amounts shall be transferred into an Account
(the "Capital Expenditure Account "). Amounts deposited from time to time into
the Capital Expenditure Account pursuant to this Section 6.5.1 are referred to
herein as the "Capital Expenditure Funds". Lender may reassess its estimate of
the amount necessary for Capital Expenditures from time to time and may require
Borrower to increase the monthly deposits required pursuant to this Section
6.5.1 upon thirty (30) days' notice to Borrower if Lender determines in its
reasonable discretion that an increase is necessary to maintain proper operation
of the Property.

 

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6.5.2      Release of Capital Expenditure Funds. Provided no Event of Default is
continuing, Lender shall direct Servicer to disburse Capital Expenditure Funds
to Borrower out of the Capital Expenditure Account, within ten (10) days after
the delivery by Borrower to Lender of a request therefor (but not more often
than once per month), in increments of at least $10,000 (or a lesser amount if
the total amount in the Capital Expenditure Account is less than $10,000, in
which case only one disbursement of the amount remaining in the account shall be
made) provided that: (i) such disbursement is for an Approved Capital
Expenditure; (ii) the request for disbursement is accompanied by (A) an
Officer's Certificate from Borrower (1) stating that the items to be funded by
the requested disbursement are Approved Capital Expenditures, and a description
thereof, (2) stating that all Approved Capital Expenditures to be funded by the
requested disbursement have been completed (or completed to the extent of the
requested disbursement) in a good and workmanlike manner and in accordance with
all applicable Legal Requirements, (3) stating that the Approved Capital
Expenditures (or the relevant portions thereof) to be funded from the
disbursement in question have not been the subject of a previous disbursement,
(4) stating that all previous disbursements of Capital Expenditure Funds have
been used to pay the previously identified Approved Capital Expenditures, and
(5) stating that all outstanding trade payables (other than those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full, (B) a copy of any license, permit or other approval
required by any Governmental Authority in connection with the Approved Capital
Expenditures and not previously delivered to Lender, (C) copies of appropriate
lien waivers, conditional lien waivers, or other evidence of payment
satisfactory to Lender, (D) at Lender's option, a title search for the Property
indicating that the Property is free from all Liens, claims and other
encumbrances not previously approved by Lender, and

 

(E) such other evidence as Lender shall reasonably request to demonstrate that
the Approved Capital Expenditures to be funded by the requested disbursement
have been completed and are paid for or will be paid upon such disbursement to
Borrower (or the portion thereof as to which such request for disbursement has
been submitted has been completed and is paid for (other than any retention
amount which is not a part of such disbursement request) or will be paid upon
such disbursement to Borrower) and (iii) if such disbursement request is for
$20,000 or more, Lender shall have (if it desires) verified (by an inspection
conducted at Borrower's expense) performance of the work associated with such
Approved Capital Expenditure.

 

Section 6.6           Intentionally Omitted.

 

Section 6.7           Intentionally Omitted.

 

Section 6.8           Intentionally Omitted.

 

Section 6.9           Intentionally Omitted.

 

Section 6.10       Casualty and Condemnation Account. Borrower shall pay, or
cause to be paid, to Lender all Insurance Proceeds or Awards due to any Casualty
or Condemnation in accordance with the provisions of Sections 5.2 and 5.3, which
amounts shall be transferred into an Account (the "Casualty and Condemnation
Account "). Amounts deposited from time to time into the Casualty and
Condemnation Account pursuant to this Section 6.10 are referred to herein as the
"Casualty and Condemnation Funds". All Casualty and Condemnation Funds shall be
held, disbursed and/or applied in accordance with the provisions of Section 5.4
hereof.

 

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Section 6.11        Cash Collateral Funds. If a Trigger Period shall be
continuing (other than a Trigger Period continuing solely because of the
continuance of a Mezzanine Trigger Period), all Available Cash shall be paid to
Lender, which amounts shall be transferred by Lender into an Account (the "Cash
Collateral Account ") to be held by Lender as cash collateral for the Debt.
Amounts on deposit from time to time in the Cash Collateral Account pursuant to
this Section 6.11 are referred to as the "Cash Collateral Funds". Any Cash
Collateral Funds on deposit in the Cash Collateral Account not previously
disbursed or applied shall, upon the termination of such Trigger Period, be
added to the Rents disbursed on the next Monthly Payment Date pursuant to
Section 6.12.1. Notwithstanding the foregoing, Lender shall have the right, but
not the obligation, at any time during the continuance of an Event of Default,
in its sole and absolute discretion to apply any and all Cash Collateral Funds
then on deposit in the Cash Collateral Account to the Debt or Obligations, in
such order and in such manner as Lender shall elect in its sole and absolute
discretion, including to make a prepayment of principal (together with the
applicable Prepayment Fee and/or Liquidated Damages Amount, if any, applicable
thereto) or any other amounts due hereunder.

 

Section 6.12         Property Cash Flow Allocation.

 

6.12.1    Order of Priority of Funds in Deposit Account. On each Monthly Payment
Date during the Term, except during the continuance of an Event of Default, all
funds deposited into the Deposit Account during the immediately preceding
Interest Period (including, with respect to the first Monthly Payment Date, any
funds deposited into the Deposit Account during the Initial Interest Period)
shall be applied on such Monthly Payment Date in the following order of
priority:

 

(i)             First, to the Tax Account, to make the required payments of Tax
Funds as required under Section 6.3;

 

(ii)            Second, to the Insurance Account, to make any required payments
of Insurance Funds as required under Section 6.4;

 

(iii)           Third, to Lender, funds sufficient to pay the Monthly Interest
Payment Amount or Monthly Debt Service Payment Amount (as applicable), applied
first to the payment of interest computed at the Interest Rate with the
remainder (from and after the Amortization Commencement Date) applied to the
reduction of the Outstanding Principal Balance;

 

(iv)           Fourth, to the Capital Expenditure Account, to make the required
payments of Capital Expenditure Funds as required under Section 6.5;

 

(v)            Fifth, to Lender, of any other amounts then due and payable under
the Loan Documents;

 

(vi)          Sixth, during any Trigger Period, to Borrower, funds in an amount
equal to the Monthly Operating Expense Budgeted Amount;

 

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(vii)          Seventh, during any Trigger Period, to Borrower, payments for
Approved Extraordinary Operating Expenses, if any;

 

(viii)         Eighth, if a New Mezzanine Loan (or any portion thereof) is
outstanding and a Trigger Period is continuing (other than a Trigger Period
continuing solely because a Mezzanine Trigger Period is continuing), to make
payments in the amount of the monthly debt service payment payable under the
terms of the New Mezzanine Loan, to the lender under the New Mezzanine Loan; and

 

(ix)           Lastly all amounts remaining after payment of the amounts set
forth in clauses (i) through (viii) above (the "Available Cash"):

 

(A)during a Trigger Period (other than a Trigger Period continuing solely
because a Mezzanine Trigger Period is continuing), to the Cash Collateral
Account to be held or disbursed in accordance with Section 6.11; or

 

(B)during a Trigger Period continuing solely because a Mezzanine Trigger Period
is continuing, to the lender under the New Mezzanine Loan, to be applied in
accordance with the New Mezzanine Loan Documents, to pay any amount due and
payable to the lender under the New Mezzanine Loan, before any remainder is
disbursed to the applicable mezzanine loan borrower; or

 

(C)provided no Trigger Period is continuing, disbursed to Borrower.

 

6.12.2   Failure to Make Payments. The failure of Borrower to make all of the
payments required under clauses (i) through (v) of Section 6.12.1 in full on
each Monthly Payment Date shall constitute an Event of Default under this
Agreement; provided, however, if adequate funds are available in the Deposit
Account for such payments, and Borrower is not otherwise in Default hereunder,
(i) the failure by the Deposit Bank to allocate such funds into the appropriate
Accounts, or (ii) the failure by Lender or Servicer to make any payments from
the appropriate Accounts once such funds have been allocated into such Accounts,
shall not constitute an Event of Default.

 

6.12.3   Application After Event of Default. Notwithstanding anything to the
contrary contained in this Article 6, upon the occurrence and during the
continuance of an Event of Default, Lender, at its option, may apply any Gross
Revenue then in the possession of Lender, Servicer or Deposit Bank (including
any Reserve Funds on deposit in any Cash Management Account) to the payment of
the Debt in such order, proportion and priority as Lender may determine in its
sole and absolute discretion. Lender's right to withdraw and apply any of the
foregoing funds shall be in addition to all other rights and remedies provided
to Lender under the Loan Documents.

 

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Section 6.13       Security Interest in Reserve Funds. As security for payment
of the Debt and the performance by Borrower of all other terms, conditions and
provisions of the Loan Documents, Borrower hereby pledges and assigns to Lender,
and grants to Lender a security interest in, all Borrower's right, title and
interest in and to all Gross Revenue and in and to all payments to or monies
held in the Clearing Account, the Deposit Account and Accounts created pursuant
to this Agreement (collectively, the "Cash Management Accounts "). Borrower
hereby grants to Lender a continuing security interest in, and agrees to hold in
trust for the benefit of Lender, all Rents in its possession prior to the (i)
payment of such Gross Revenue to Lender or (ii) deposit of such Gross Revenue
into the Deposit Account. Borrower shall not, without obtaining the prior
written consent of Lender, further pledge, assign or grant any security interest
in any Cash Management Account, or permit any Lien to attach thereto, or any
levy to be made thereon, or any UCC Financing Statements, except those naming
Lender as the secured party, to be filed with respect thereto. This Agreement
is, among other things, intended by the parties to be a security agreement for
purposes of the UCC. Upon the occurrence and during the continuance of an Event
of Default, Lender may apply any sums in any Cash Management Account in any
order and in any manner as Lender shall elect in Lender's discretion without
seeking the appointment of a receiver and without adversely affecting the rights
of Lender to foreclose the Lien of the Mortgage or exercise its other rights
under the Loan Documents. Cash Management Accounts shall not constitute trust
funds and may be commingled with other monies held by Lender. Provided no Event
of Default exists, all interest which accrues on the funds in any Account (other
than the Tax Account and the Insurance Account) shall accrue for the benefit of
Borrower and shall be taxable to Borrower and shall be added to and disbursed in
the same manner and under the same conditions as the principal sum on which said
interest accrued. Upon repayment in full of the Debt, all remaining funds in the
Accounts, if any, shall be promptly disbursed to Borrower.

 

ARTICLE 7

 

PERMITTED TRANSFERS

 

Section 7.1           Permitted Transfer of the Entire Property.

 

(a)           Notwithstanding the provisions of Section 4.2, Borrower shall
have, following a Securitization of the Loan (or, but only so long as Borrower
has confirmed with Lender that Lender has not commenced the process of a
Securitization, including, without limitation, the preparation of any
preliminary marketing materials or any disclosure documentation in connection
therewith, prior to a Securitization), the right to convey the entire Property
(but not the transfer of any individual Condominium Unit) to a new borrower (the
"Transferee Borrower") and have Transferee Borrower assume all of Borrower's
obligations under the Loan Documents, and have replacement guarantors and
indemnitors replace the guarantors and indemnitors with respect to all of the
obligations of the indemnitors and guarantors of the Loan Documents from and
after the date of such transfer (collectively, a "Transfer and Assumption"),
subject to the terms and full satisfaction of all of the conditions precedent
set forth in Section 7.l(b).

 

(b)          Transfer and Assumption shall be subject to the following
conditions:

 

(i)          Borrower has provided Lender with not less than forty-five (45)
days prior written notice, which notice shall contain sufficient detail to
enable Lender to determine that the Transferee Borrower complies with the
requirements set forth herein;

 

(ii)         no Event of Default has occurred and is continuing;

 

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(iii)         Transferee Borrower shall be a Special Purpose Bankruptcy Remote
Entity in accordance with Section 4.4 and Schedule V;

 

(iv)         Transferee Borrower shall be Controlled by a Person who (x) is a
Qualified Transferee with a minimum ownership interest in the Transferee
Borrower reasonably acceptable to Lender and (y) whose identity, experience,
financial condition and creditworthiness, including net worth and liquidity, is
reasonably acceptable to Lender;

 

(v)          the Property shall be managed by Manager, an Unaffiliated Qualified
Manager or by another property manager reasonably acceptable to Lender;

 

(vi)         Transferee Borrower shall have executed and delivered to Lender an
assumption agreement in form and substance acceptable to Lender;

 

(vii)        each replacement guarantor and indemnitor 1s an Approved
Replacement Guarantor;

 

(viii)       each Approved Replacement Guarantor shall deliver to Lender a
guaranty of recourse obligations (in the same form as the Guaranty delivered to
Lender by Guarantor on the date hereof) and an environmental indemnity agreement
(in the same form as the Environmental Indemnity delivered to Lender by
Guarantor on the date hereof), pursuant to which, in each case, the Approved
Replacement Guarantor(s) agree(s) to be liable under each such guaranty of
recourse obligations and environmental indemnity agreement from and after the
date of Transfer and Assumption (whereupon the previous guarantor shall be
released from any further liability under the Guaranty and Environmental
Indemnity for acts that arise from and after the date of such Transfer and
Assumption and such Approved Replacement Guarantor(s) shall thereafter be the
"Guarantor" for all purposes set forth in this Agreement);

 

(ix)         Transferee Borrower shall submit to Lender true, correct and
complete copies of all documents reasonably requested by Lender concerning the
organization and existence of Transferee Borrower and each Approved Replacement
Guarantor;

 

(x)          satisfactory Patriot Act, OFAC and similar searches shall have been
received by Lender with respect to (A) each Approved Replacement Guarantor, (B)
Transferee Borrower, (C) any Person that Controls Transferee Borrower or owns an
equity interest in Transferee Borrower which equals or exceeds ten percent (10%)
and (D) any other Person reasonably required by Lender in order for Lender to
fulfill its then-current Patriot Act compliance guidelines;

 

(xi)         Lender shall have received a Rating Agency Confirmation from each
of the applicable Rating Agencies (if required (including by the Servicer in its
sole discretion) pursuant to a pooling and servicing agreement entered into in
connection with a Securitization of the Loan that has occurred prior to the date
of such Transfer and Assumption);

 

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(xii)        counsel to Transferee Borrower and each Approved Replacement
Guarantor(s) shall deliver to Lender opinions in form and substance reasonably
satisfactory to Lender as to such matters as Lender shall require, which may
include opinions as to substantially the same matters as were required in
connection with the origination of the Loan;

 

(xiii)        Borrower shall cause to be delivered to Lender, an endorsement
(relating to the change in the identity of the vestee and execution and delivery
of the Transfer and Assumption documents) to the Title Insurance Policy in form
and substance acceptable to Lender, in Lender's reasonable discretion (the
"Endorsement");

 

(xiv)       Transferee Borrower and/or Borrower, as the case may be, shall
deliver to Lender, upon such conveyance, a transfer fee equal to 1.00% of the
Outstanding Principal Balance (the "Transfer Fee "); provided, however, that
solely in connection with a Transfer and Assumption to a Transferee Borrower
that is one hundred percent (100%) directly or indirectly owned by Bluerock
Residential Holdings LP, a Delaware limited partnership ("BRHLP'), which
Transferee Borrower is under common sponsorship with Borrower, Lender shall not
be entitled to receive the Transfer Fee unless a Permitted Transfer under
Section 7.2(g) below has previously occurred, in which case Lender shall be
entitled to receive the Transfer Fee;

 

(xv)        if a New Mezzanine Loan is outstanding at the time of the Transfer
and Assumption, the proposed Transfer and Assumption shall not constitute or
cause a default under the New Mezzanine Loan;

 

(xvi)       Borrower shall pay all of Lender's reasonable out-of-pocket costs
and expenses in connection with the Transfer and Assumption. Lender may, as a
condition to evaluating any requested consent to a Transfer and Assumption,
require that Borrower post a cash deposit with Lender in an amount equal to
Lender's anticipated costs and expenses in evaluating any such request for
consent; and

 

(xvii)      Borrower shall have otherwise received Lender's written consent to
such Transfer and Assumption (which consent shall not be unreasonably withheld
so long as all of the other conditions set forth in this Section 7.1(b) are
satisfied, including receipt of a Rating Agency Confirmation from each of the
applicable Rating Agencies (if required (including by the Servicer in its sole
discretion) pursuant to a pooling and servicing agreement entered into in
connection with a Securitization of the Loan that has occurred prior to the date
of such Transfer and Assumption)).

 

Section 7.2       Permitted Transfers. Notwithstanding anything to the contrary
contained in Section 4.2, the following Transfers (herein, the "Permitted
Transfers") shall be permitted hereunder:

 

(a)a Lease entered into in accordance with the Loan Documents;

 

(b)a Transfer and Assumption in accordance with Section 7.1;

 

(c)a Permitted Encumbrance;

 

(d)the transfer of publicly traded shares m any indirect equity owner of
Borrower;

 

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(e)     provided that no Event of Default shall then exist, a Transfer of a
direct or indirect ownership interest in Borrower (other than a Transfer of SPC
Party's interest in Borrower) shall be permitted without Lender's consent
provided that:

 

(i)            such Transfer shall not (x) cause the transferee (other than
Guarantor), together with its Affiliates, to increase its direct or indirect
ownership interest in Borrower to an amount which equals or exceeds forty-nine
percent (49%) or (y) result in a change in Control of Borrower or any SPC Party;

 

(ii)           each of Borrower and SPC Party shall continue to be a Special
Purpose Bankruptcy Remote Entity;

 

(iii)          if such Transfer would cause the transferee, together with its
Affiliates, to increase its direct or indirect ownership interest in Borrower to
an amount which equals or exceeds ten percent (10%), (x) such transferee is a
Qualified Transferee and (y) Borrower shall provide to Lender twenty (20) days
prior written notice thereof;

 

(iv)         after giving effect to such Transfer, Guarantor shall continue to
control the day to day operations of Borrower and each SPC Party and shall
continue to own at least fifty one percent (51%) of all equity interests (direct
or indirect) of Borrower; and

 

(v)          the Property shall continue to be managed by a Qualified Manager or
by a property manager reasonably acceptable to Lender and acceptable to the
applicable Rating Agencies;

 

(f)     provided that no Event of Default shall then exist, any other Transfer
of a direct or indirect ownership interest in Borrower (other than a Transfer of
SPC Party's interest in Borrower) provided:

 

(i)            either (x) prior to a Securitization, such transferee is first
approved by Lender in its reasonable, good faith discretion or (y) from and
after a Securitization, Lender shall have received a Rating Agency Confirmation
from each applicable Rating Agency with respect to such Transfer (if required
(including by the Servicer in its sole discretion) pursuant to a pooling and
servicing agreement entered into in connection with a Securitization of the Loan
that has occurred prior to the date of such Transfer);

 

(ii)           each of Borrower and SPC Party shall continue to be a Special
Purpose Bankruptcy Remote Entity;

 

(iii)          Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer, if such Transfer would (x)
cause the transferee (other than Guarantor), together with its Affiliates, to
increase its direct or indirect ownership interest in Borrower to an amount
which equals or exceeds ten percent (10%) or (y) result in a change in Control
of Borrower or any SPC Party, not less than ten (30) days prior to the date of
such Transfer;

 

(iv)         if such Transfer would cause the transferee, together with its
Affiliates, to increase its direct or indirect ownership interest in Borrower to
an amount which equals or exceeds ten percent (10%), such transferee is a
Qualified Transferee;

 

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(v)          if such Transfer shall (x) cause the transferee (other than
Guarantor), together with its Affiliates, to increase its direct or indirect
ownership interest in Borrower to an amount which equals or exceeds forty-nine
percent (49%) or (y) result in a change in Control of Borrower or any SPC Party,
Borrower shall deliver (or caused to be delivered) to Lender:

 

(A)a Rating Agency Confirmation from each applicable Rating Agency (if required
(including by the Servicer in its sole discretion) pursuant to a pooling and
servicing agreement entered into in connection with a Securitization of the Loan
that has occurred prior to the date of such Transfer); and

 

(B)the Transfer Fee; and

 

(vi)            the Property shall continue to be managed by a Qualified Manager
or by a property manager reasonably acceptable to Lender and acceptable to the
applicable Rating Agencies;

 

(g)     provided that no Event of Default shall then exist, a Transfer of up to
one hundred percent (100%) of the direct and indirect ownership interests in
Borrower to a Person that is directly or indirectly wholly-owned by Bluerock
Residential Growth REIT, Inc., a Maryland corporation, which Person is under
common sponsorship with Borrower, provided:

 

(i)           either (x) prior to a Securitization, such transferee is first
approved by Lender in its reasonable, good faith discretion or (y) from and
after a Securitization, Lender shall have received a Rating Agency Confirmation
from each applicable Rating Agency with respect to such Transfer (if required
(including by the Servicer in its sole discretion) pursuant to a pooling and
servicing agreement entered into in connection with a Securitization of the Loan
that has occurred prior to the date of such Transfer);

 

(ii)          each of Borrower and SPC Party shall continue to be a Special
Purpose Bankruptcy Remote Entity;

 

(iii)         Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than twenty (20) days
prior to the date of such Transfer;

 

(iv)         such transferee is a Qualified Transferee;

 

(v)          in the event a Transfer and Assumption to a Transferee Borrower
that is one hundred percent (100%) directly or indirectly owned by BRHLP under
Section 7.1 above has previously occurred, Lender receives the Transfer Fee
(otherwise, if such Transfer and Assumption to a Transferee Borrower that is one
hundred percent (100%) directly or indirectly owned by BRHLP has not previously
occurred, no Transfer Fee shall be due and owing under this clause (v));

 

(vi)         satisfactory Patriot Act, OFAC and similar searches shall have been
received by Lender with respect to (A) transferee, (B) any Person that Controls
transferee or owns an equity interest in transferee which equals or exceeds ten
percent (10%) (unless such Person owned a ten percent (10%) or greater equity
interest in Borrower as of the Closing Date) and (C) any other Person reasonably
required by Lender in order for Lender to fulfill its then-current Patriot Act
compliance guidelines; and

 

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(vii)        the Property shall continue to be managed by Manager, a Qualified
Manager or by a property manager reasonably acceptable to Lender and acceptable
to the applicable Rating Agencies; and/or

 

(h)     provided no Event of Default shall then exist, a Transfer of any direct
or indirect ownership interest in Borrower (other than a Transfer of SPC Party's
interest in Borrower) related to or in connection with the estate planning of
such transferor to (1) an immediate family member of such interest holder (or to
partnerships or limited liability companies Controlled solely by one or more of
such family members) or (2) a trust established for the benefit of such
immediate family member, provided that:

 

(i)            Borrower shall provide to Lender thirty (30) days prior written
notice thereof;

 

(ii)           such Transfer shall not otherwise result in a change of Control
of Borrower or change of the day to day management and operations of the
Property;

 

(iii)          each of Borrower and SPC Party shall continue to be a Special
Purpose Bankruptcy Remote Entity; and

 

(iv)         if such Transfer would cause the transferee, together with its
Affiliates, to increase its direct or indirect ownership interest in Borrower to
an amount which equals or exceeds ten percent (10%), such transferee shall be a
Qualified Transferee.

 

Notwithstanding anything to the contrary contained in this Section 7.2, if, as a
result of any Permitted Transfer, Guarantor no longer either Controls or owns
any direct or indirect ownership interest in Borrower, it shall also be a
condition hereunder that one or more Approved Replacement Guarantors shall
execute and deliver a guaranty of recourse obligations (in the same form as the
Guaranty delivered to Lender by Guarantor on the date hereof) and an
environmental indemnity agreement (in the same form as the Environmental
Indemnity delivered to Lender by Guarantor on the date hereof) on or prior to
the date of such Permitted Transfer, pursuant to which, in each case, the
Approved Replacement Guarantor(s) agree(s) to be liable under each such guaranty
of recourse obligations and environmental indemnity agreement from and after the
date of such Permitted Transfer (whereupon the previous guarantor shall be
released from any further liability under the guaranty of recourse obligations
from acts that arise from and after the date of such Permitted Transfer and such
Approved Replacement Guarantor(s) shall thereafter be the "Guarantor" for all
purposes set forth in this Agreement).

 

Section 7.3      Cost and Expenses; Searches; Copies.

 

(a)     Borrower shall pay all reasonable out-of-pocket costs and expenses of
Lender in connection with any Transfer, whether or not such Transfer is deemed
to be a Permitted Transfer, including, without limitation, all reasonable fees
and expenses of Lender's counsel, whether internal or outside, and the cost of
any required counsel opinions related to REMIC or other securitization or tax
issues and any Rating Agency fees.

 

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(b)     Borrower shall provide Lender with copies of all organizational
documents (if any) relating to any Permitted Transfer.

 

(c)     In connection with any Permitted Transfer, to the extent a transferee
shall own ten percent (10%) or more of the direct or indirect ownership
interests in Borrower immediately following such transfer (provided such
transferee owned less than ten percent (10%) of the direct or indirect ownership
interests in Borrower as of the Closing Date), Borrower shall deliver (and
Borrower shall be responsible for any reasonable out of pocket costs and
expenses in connection therewith), customary searches reasonably requested by
Lender in writing (including credit, judgment, lien, litigation, bankruptcy,
criminal and watch list) reasonably acceptable to Lender with respect to such
transferee.

 

ARTICLE S

 

DEFAULTS

 

Section 8.1      Events of Default. Each of the following events shall
constitute an event of default hereunder (an "Event of Default "):

 

(i)           if (A) the Obligations are not paid in full on the Maturity Date,
(B) any regularly scheduled monthly payment of interest, and, if applicable,
principal due under the Note is not paid in full on the applicable Monthly
Payment Date, (C) any prepayment of principal due under this Agreement or the
Note is not paid when due, (D) the Prepayment Fee is not paid when due, (E) the
Liquidated Damages Amount is not paid when due, or (F) any deposit to the
Reserve Funds is not made on the required deposit date therefor;

 

(ii)          if any other amount payable pursuant to this Agreement, the Note
or any other Loan Document (other than as set forth in the foregoing clause (i)
is not paid in full when due and payable in accordance with the provisions of
the applicable Loan Document, with such failure continuing for ten (10) Business
Days after Lender delivers written notice thereof to Borrower;

 

(iii)         if any of the Taxes or Other Charges are not paid when due
(provided that it shall not be an Event of Default if there are sufficient funds
in the Tax Account to pay such amounts when due, no other Event of Default is
then continuing and Lender fails to make such payment in violation of this
Agreement);

 

(iv)         if the Policies are not (A) delivered to Lender within seven (7)
days of Lender's written request and (B) kept in full force and effect, each in
accordance with the terms and conditions hereof;

 

(v)          a Transfer other than a Permitted Transfer occurs;

 

(vi)         if any certification, representation or warranty made by Borrower
or Guarantor herein or in any other Loan Document, or in any report,
certificate, financial statement or other instrument, agreement or document
furnished to Lender in connection with the Loan shall have been false or
misleading in any material respect as of the date such representation or
warranty was made;

 

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(vii)        if Borrower, any SPC Party or Guarantor shall make an assignment
for the benefit of creditors;

 

(viii)       if a receiver, liquidator or trustee shall be appointed for
Borrower, any SPC Party or Guarantor or if Borrower, any SPC Party or Guarantor
shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to the Bankruptcy Code, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower, any SPC Party or Guarantor, or if any proceeding for the
dissolution or liquidation of Borrower, any SPC Party or Guarantor shall be
instituted, or if Borrower is substantively consolidated with any other Person;
provided, however, if such appointment, adjudication, petition, proceeding or
consolidation was involuntary and not consented to by Borrower, such SPC Party
or Guarantor, upon the same not being discharged, stayed or dismissed within
sixty (60) days following its filing;

 

(ix)          if Borrower attempts to assign its rights under this Agreement or
any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;

 

(x)           intentionally omitted;

 

(xi)          a breach of the covenants set forth in Sections 4.4, 4.23 or 4.31
hereof;

 

(xii)         if Borrower shall be in default beyond any applicable notice and
cure period under any mortgage or security agreement covering any part of the
Property whether it be superior, pari passu or junior in Lien to the Mortgage;

 

(xiii)        subject to Borrower's right to contest set forth in Sections 4.3
and 4.6 of this Agreement, if the Property becomes subject to any mechanic's,
materialman's or other Lien except (a) a Permitted Encumbrance or a Lien for
Taxes not then due and payable and (b) if there are sufficient funds in the Tax
Account to pay for Taxes when due, no other Event of Default is then continuing
and Lender fails to make such payment in violation of this Agreement;

 

(xiv)        the alteration, improvement, demolition or removal of any of the
Improvements without the prior consent of Lender, other than in accordance with
this Agreement and the Leases at the Property entered into in accordance with
the Loan Documents;

 

(xv)         if, without Lender's prior written consent, (i) the Management
Agreement is terminated, (ii) the ownership, management or control of Manager is
transferred, (iii) there is a material change in the Management Agreement, or
(iv) if there shall be a material default by Borrower under the Management
Agreement beyond any applicable notice or grace period;

 

(xvi)        if Borrower or any Person owning a direct or indirect ownership
interest in Borrower shall be convicted of a Patriot Act Offense by a court of
competent jurisdiction;

 

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(xvii)      a breach of any representation, warranty or covenant contained
Section 3 .1.18 hereof;

 

(xviii)     if Borrower breaches any covenant contained in Section 4.9 hereof;

 

(xix)        if there shall be a default under any of the other Loan Documents
beyond any applicable cure periods contained in such Loan Documents, whether as
to Borrower, Guarantor or the Property, or if any other such event shall occur
or condition shall exist, if the effect of such event or condition is to
accelerate the maturity of any portion of the Obligations or to permit Lender to
accelerate the maturity of all or any portion of the Obligations;

 

(xx)         Guarantor breaches any of the Guarantor Financial Covenants;

 

(xxi)        if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement or any other Loan Document not
specified in subsections (i) to (xx) above or (xxii) below, and such Default
shall continue for ten (10) days after notice to Borrower from Lender, in the
case of any such Default which can be cured by the payment of a sum of money, or
for thirty (30) days after notice to Borrower from Lender in the case of any
other such Default; provided, however, that if such non- monetary Default is
susceptible of cure but cannot reasonably be cured within such 30-day period,
and provided further that Borrower shall have commenced to cure such Default
within such 30-day period shall and thereafter diligently and expeditiously
proceed to cure the same, such 30-day period shall be extended for such time as
is reasonably necessary for Borrower in the exercise of due diligence to cure
such Default, such additional period not to exceed sixty (60) days; or

 

(xxii)       if Borrower shall fail to perform in any material respect any of
its obligations with respect to the Board of Directors, the Condominium
Declaration, the Condominium Rules or Condominium Regime as set forth in Section
4.33 hereof beyond any applicable notice or cure period or if for any reason the
Improvements or the Land subject to the Condominium Declaration is withdrawn
from condominium ownership pursuant to and in accordance with the Condominium
Declaration without Lender's prior written consent; or if by reason of damage or
destruction of all or any portion of the Improvements the Board of Directors or
the owners of the Condominium Units do not duly and promptly resolve to proceed
with the repair or restoration of the Improvements; or if by reason of the
failure of Borrower to perform any act, as for example notification to the Board
of Directors under the Condominium Declaration or the Condominium Rules, Lender
shall not be entitled to the protective provisions under the Condominium
Declaration or the Condominium Rules.

 

Section 8.2      Remedies.

 

8.2.1    Acceleration. Upon the occurrence and during the continuance of an
Event of Default (other than an Event of Default described in clauses (vii),
(viii) or (ix) of Section 8.1 above) and at any time thereafter, Lender 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 notice or demand (and Borrower hereby expressly waives any such notice
or demand), that Lender deems advisable to protect and enforce its rights
against Borrower and in and to the Property, including declaring the Obligations
to be immediately due and payable, and Lender may enforce or avail itself of any
or all rights or remedies provided in the Loan Documents against Borrower and
the Property, including all rights or remedies available at law or in equity;
and upon any Event of Default described in clauses (vii), (viii) or (ix) of
Section 8.1 above, the Obligations of Borrower hereunder and under the other
Loan Documents shall immediately and automatically become due and payable in
full, without notice or demand, and Borrower hereby expressly waives any such
notice or demand, anything contained herein or in any other Loan Document to the
contrary notwithstanding.

 

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8.2.2    Remedies Cumulative. During the continuance of an Event of Default, all
or any one or more of the rights, powers, privileges and other remedies
available to Lender against Borrower under this Agreement or any of the other
Loan Documents executed and delivered by, or applicable 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 of the Obligations 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 the Property. The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise. Lender's rights, powers and remedies 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
applicable law, without impairing or otherwise affecting the other rights and
remedies of Lender permitted by applicable law or contract or as set forth
herein or in the other Loan Documents or by equity. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) Lender
shall not be subject to any "one action" or "election of remedies" law or rule,
and (ii) all Liens and other rights, remedies or privileges provided to Lender
shall remain in full force and effect until Lender has exhausted all of its
remedies against the Property and the Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Obligations or the Obligations
have been paid in full. 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 one Default or Event of Default with respect to Borrower
shall not be construed to be a waiver of any subsequent Default or Event of
Default by Borrower or to impair any remedy, right or power consequent thereon.

 

8.2.3    Severance.

 

(a)      During the continuance of an Event of Default, Lender shall have the
right from time to time to partially foreclose the Mortgage in any manner and
for any amounts secured by the Mortgage then due and payable as determined by
Lender in its sole discretion, including the following circumstances: (i) in the
event Borrower defaults beyond any applicable grace period in the payment of one
or more scheduled payments of principal and interest, Lender may foreclose the
Mortgage to recover such delinquent payments, or (ii) in the event Lender elects
to accelerate less than the entire Outstanding Principal Balance, Lender may
foreclose the Mortgage to recover so much of the principal balance of the Loan
as Lender may accelerate and such other sums secured by the Mortgage as Lender
may elect. Notwithstanding one or more partial foreclosures, the Property shall
remain subject to the Mortgage to secure payment of the sums secured by the
Mortgage and not previously recovered.

 

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(b)     During the continuance of an Event of Default, Lender shall have the
right from time to time to sever the Note and the other Loan Documents into one
or more separate notes, mortgages and other security documents in such
denominations as Lender shall determine in its sole discretion for purposes of
evidencing and enforcing its rights and remedies provided hereunder. Borrower
shall execute and deliver to Lender from time to time, promptly after the
request of Lender, a severance agreement and such other documents as Lender
shall request in order to effect the severance described in the preceding
sentence, all in form and substance reasonably satisfactory to Lender. Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect the aforesaid severance, Borrower
ratifying all that its said attorney shall do by virtue thereof; provided,
however, Lender shall not make or execute any such documents under such power
until three (3) days after notice has been given to Borrower by Lender of
Lender's intent to exercise its rights under such power and Borrower has failed
to execute and deliver to Lender such documents.

 

(c)     During the continuance of an Event of Default, any amounts recovered
from the Property or any other collateral for the Loan after an Event of Default
may be applied by Lender toward the payment of any interest and/or principal of
the Loan and/or any other amounts due under the Loan Documents, in such order,
priority and proportions as Lender in its sole discretion shall determine.

 

8.2.4     Lender's Right to Perform. If Borrower fails to perform any covenant
or obligation contained herein and such failure shall continue for a period of
five (5) Business Days after Borrower's receipt of written notice thereof from
Lender, without in any way limiting Lender's right to exercise any of its
rights, powers or remedies as provided hereunder, or under any of the other Loan
Documents, Lender may, but shall have no obligation to, perform, or cause the
performance of, such covenant or obligation, and all reasonable costs, expenses,
liabilities, penalties and fines of Lender incurred or paid in connection
therewith shall be payable by Borrower to Lender upon demand and if not paid
shall be added to the Obligations (and to the extent permitted under applicable
laws, secured by the Mortgage and the other Loan Documents) and shall bear
interest thereafter at the Default Rate. Notwithstanding the foregoing, Lender
shall have no obligation to send notice to Borrower of any such failure.

 

ARTICLE 9

 

SALE AND SECURITIZATION OF MORTGAGE

 

Section 9.1        Sale of Mortgage and Securitization.

 

(a)     Lender shall have the right (i) to sell or otherwise transfer the Loan
or any portion thereof as a whole loan, (ii) to sell participation interests in
the Loan, or (iii) to securitize the Loan or any portion thereof in a single
asset securitization or a pooled loan securitization. (The transactions referred
to in clauses (i), (ii) and (iii) are each hereinafter referred to as a
"Secondary Market Transaction" and the transactions referred to in clause (iii)
shall hereinafter be referred to as a "Securitization". Any certificates, notes
or other securities issued in connection with a Secondary Market Transaction are
hereinafter referred to as "Securities"). At Lender's election, each note and/or
component comprising the Loan may be subject to one or more Secondary Market
Transactions.

 

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(b)    If requested by Lender, Borrower shall assist Lender in satisfying the
market standards to which Lender customarily adheres or which may be reasonably
required in the marketplace, by prospective investors, the Rating Agencies,
applicable Legal Requirements and/or otherwise in the marketplace in connection
with any Secondary Market Transactions, including to:

 

(i)           (A) provide updated financial and other information with respect
to the Property, the business operated at the Property, Borrower and the
Manager, including, without limitation, the information set forth on Exhibit B
attached hereto, (B) provide updated budgets and rent rolls (including itemized
percentage of floor area occupied and percentage of aggregate base rent for each
Tenant) relating to the Property, and (C) provide updated appraisals, market
studies, environmental reviews and reports (Phase I's and, if appropriate, Phase
II's), property condition reports and other due diligence investigations of the
Property (the "Updated Information "), together, if customary, with appropriate
verification of the Updated Information through letters of auditors or opinions
of counsel acceptable to Lender and the Rating Agencies;

 

(ii)          provide opinions of counsel, which may be .relied upon by Lender,
trustee in any Securitization, underwriters, NRSROs and their respective
counsel, agents and representatives, as to fraudulent conveyance and true sale
or any other opinion customary in Secondary Market Transactions or required by
the Rating Agencies with respect to the Property, the Loan Documents, and
Borrower and its Affiliates, which counsel and opinions shall be satisfactory to
Lender and the Rating Agencies;

 

(iii)         provide updated, as of the closing date of any Secondary Market
Transaction, representations and warranties made in the Loan Documents and such
additional representations and warranties as the Rating Agencies may require;
and

 

(iv)         (A) review any Disclosure Document or any interim draft thereof
furnished by Lender to Borrower with respect to information contained therein
that was furnished to Lender by or on behalf of Borrower in connection with the
preparation of such Disclosure Document or in connection with the underwriting
or closing of the Loan, including financial statements of Borrower and
Guarantor, operating statements and rent rolls with respect to the Property, and
(B) within five (5) Business Days following Borrower's receipt thereof, provide
to Lender in writing any revisions to such Disclosure Document or interim draft
thereof necessary or advisable to insure that such reviewed information does not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make statements contained therein not misleading.

 

(c)     If, at the time a Disclosure Document is being prepared for a
Securitization, Lender expects that Borrower alone or Borrower and one or more
Affiliates of Borrower (including any guarantor or other Person that is directly
or indirectly committed by contract or otherwise to make payments on all or a
part of the Loan) collectively, or the Property alone or the Property and
Related Properties collectively, will be a Significant Obligor, Borrower shall
furnish to Lender upon request the following financial information:

 

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(i)            if Lender expects that the principal amount of the Loan together
with any Related Loans, as of the cut-off date for such Securitization, may
equal or exceed ten percent (10%) (but less than twenty percent (20%)) of the
aggregate principal amount of all mortgage loans included or expected to be
included in the Securitization, net operating income for the Property and the
Related Properties for the most recent Fiscal Year and interim period as
required under Item 1112(b)(1) of Regulation AB (or, if the Loan is not treated
as a non-recourse loan under Instruction 3 for Item l lOl(k) of Regulation AB,
selected financial data meeting the requirements and covering the time periods
specified in Item 301 of Regulation S-K and Item 1112(b)(l) of Regulation AB),
or

 

(ii)           if Lender expects that the principal amount of the Loan together
with any Related Loans, as of the cut-off date for such Securitization, may
equal or exceed twenty percent (20%) of the aggregate principal amount of all
mortgage loans included or expected to be included in the Securitization, the
financial statements required under Item 1l12(b)(2) of Regulation AB (which
includes, but may not be limited to, a balance sheet with respect to the entity
that Lender determines to be a Significant Obligor for the two most recent
Fiscal Years and applicable interim periods, meeting the requirements of Rule
3-01 of Regulation S-X, and statements of income and statements of cash flows
with respect to the Property for the three most recent Fiscal Years and
applicable interim periods, meeting the requirements of Rule 3-02 of Regulation
S-X (or if Lender determines that the Property is the Significant Obligor and
the Property (other than properties that are hotels, nursing homes, or other
properties that would be deemed to constitute a business and not real estate
under Regulation S-X or other legal requirements) was acquired from an
unaffiliated third party and the other conditions set forth in Rule 3-14 of
Regulation S-X have been met, the financial statements required by Rule 3-14 of
Regulation S-X)).

 

(d)   Further, if requested by Lender, Borrower shall, promptly upon Lender's
request, furnish to Lender financial data or financial statements meeting the
requirements of Item 1112(b)(l) or (2) of Regulation AB, as specified by Lender,
for any Tenant of the Property if, in connection with a Securitization, Lender
expects there to be, as of the cutoff date for such Securitization, a
concentration with respect to such Tenant or group of Affiliated Tenants within
all of the mortgage loans included or expected to be included in the
Securitization such that such Tenant or group of Affiliated Tenants would
constitute a Significant Obligor. Borrower shall furnish to Lender, in
connection with the preparation of the Disclosure Documents and on an ongoing
basis, financial data and/or financial statements with respect to such Tenants
meeting the requirements of Item 1112(b)(1) or (2) of Regulation AB, as
specified by Lender, but only for so long as such entity or entities are a
Significant Obligor and either (x) filings pursuant to the Exchange Act in
connection with or relating to the Securitization (an "Exchange Act Filing") are
required to be made under applicable Legal Requirements or (y) comparable
information is required to otherwise be "available" to holders of the Securities
under Regulation AB or applicable Legal Requirements.

 

(e)   If Lender determines that Borrower alone or Borrower and one or more
Affiliates of Borrower collectively, or the Property alone or the Property and
Related Properties collectively, are a Significant Obligor, then Borrower shall
furnish to Lender, on an ongoing basis, selected financial data or financial
statements meeting the requirements of Item 1112(b)(1) or (2) of Regulation AB,
as specified by Lender, but only for so long as such entity or entities are a
Significant Obligor and either (x) Exchange Act Filings are required to be made
under applicable Legal Requirements or (y) comparable information is required to
otherwise be "available" to holders of the Securities under Regulation AB or
applicable Legal Requirements.

 

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(f)     Any financial data or financial statements provided pursuant to this
Section 9.1 shall be furnished to Lender within the following time periods:

 

(i)            with respect to information requested in connection with the
preparation of Disclosure Documents for a Securitization, within ten (10)
Business Days after notice from Lender; and

 

(ii)           with respect to ongoing information required under Section 9.1(d)
and (e) above, (1) not later than thirty (30) days after the end of each fiscal
quarter of Borrower and (2) not later than seventy-Jive (75) days after the end
of each Fiscal Year of Borrower.

 

(g)    If requested by Lender, Borrower shall provide Lender, promptly, and in
any event within three (3) Business Days following Lender's request therefor,
with any other or additional financial statements, or financial, statistical or
operating information, as Lender shall reasonably determine to be required
pursuant to Regulation S-K or Regulation S-X, as applicable, Regulation AB, or
any amendment, modification or replacement thereto or other Legal Requirements
relating to a Securitization or as shall otherwise be reasonably requested by
the Lender.

 

(h)    If requested by Lender, whether in connection with a Securitization or at
any time thereafter during which the Loan and any Related Loans are included in
a Securitization, Borrower shall provide Lender, promptly upon request, a list
of Tenants (including all affiliates of such Tenants) that in the aggregate (1)
occupy 10% or more (but less than 20%) of the total floor area of the
improvements or represent 10% or more (but less than 20%) of aggregate base
rent, and (2) occupy 20% or more of the total floor area of the improvements or
represent 20% or more of aggregate base.

 

(i)      All financial statements provided by Borrower pursuant to this Section
9.1(c), (d), (e) or (f) shall be prepared in accordance with GAAP (or such other
accounting method, consistently applied, reasonably acceptable to Lender), and
shall meet the requirements of Regulation S-K or Regulation S-X, as applicable,
Regulation AB, and other applicable Legal Requirements. All financial statements
relating to a Fiscal Year shall be audited by Independent Accountants in
accordance with generally accepted auditing standards, Regulation S-X or
Regulation S-K, as applicable, Regulation AB, and all other applicable Legal
Requirements, shall be accompanied by the manually executed report of the
Independent Accountants thereon, which report shall meet the requirements of
Regulation S-K or Regulation S-X, as applicable, Regulation AB, and all other
applicable Legal Requirements, and shall be further accompanied by a manually
executed written consent of the Independent Accountants, in form and substance
acceptable to Lender, to the inclusion of such financial statements in any
Disclosure Document and any Exchange Act Filing and to the use of the name of
such Independent Accountants and the reference to such Independent Accountants
as "experts" in any Disclosure Document and Exchange Act Filing (or comparable
information is required to otherwise be available to holders of the Securities
under Regulation AB or applicable Legal Requirements), all of which shall be
provided at the same time as the related financial statements are required to be
provided. All other financial statements shall be certified by Borrower, which
certification shall state that such financial statements meet the requirements
set forth in the first sentence of this paragraph.

 

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Section 9.2       Securitization Indemnification.

 

(a)     Borrower understands that information provided to Lender by Borrower and
its agents, counsel and representatives may be included in preliminary and final
disclosure documents in connection with any Secondary Market Transaction,
including a Securitization, including an offering circular, a prospectus,
prospectus supplement, private placement memorandum or other offering document
(each, a "Disclosure Document ") and may also be included in filings with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities and Exchange Act of 1934, as
amended (the "Exchange Act "), and may be made available to investors or
prospective investors in the Securities, investment banking firms, NRSROs,
accounting firms, law firms and other third-party advisory and service providers
relating to any Secondary Market Transaction, including a Securitization.
Borrower also understands that the findings and conclusions of any third-party
due diligence report obtained by the Lender, the Issuer or the Securitization
placement agent or underwriter may be made publicly available if required, and
in the manner prescribed, by Section 15E(s)(4)(A) of the Exchange Act and any
rules promulgated thereunder.

 

(b)     Borrower hereby agrees to indemnify Lender (and for purposes of this
Section 9.2, Lender shall include the initial lender, its successors and
assigns, and their respective officers and directors) and each Person who
controls the Lender within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, the "Lender Group"), the issuer of
the Securities (the "Issuer" and for purposes of this Section 9.2, Issuer shall
include its officers, director and each Person who controls the Issuer within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), and any placement agent or underwriter with respect to the Securitization,
each . of their respective officers and directors and each Person who controls
the placement agent or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "Underwriter
Group") for any losses, claims, damages or liabilities (collectively, the
"Liabilities") to which Lender, the Lender Group, the Issuer or the Underwriter
Group may become subject insofar as the Liabilities arise out of, or are based
upon, (A) any untrue statement or alleged untrue statement of any material fact
contained in the information provided to Lender by Borrower and its agents,
counsel and representatives, (B) 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, in light of the
circumstances under which they were made, not misleading, or (C) a breach of the
representations and warranties made by Borrower in Section 3.1.31 of this
Agreement (Full and Accurate Disclosure). Borrower also agrees to reimburse
Lender, the Lender Group, the Issuer and/or the Underwriter Group for any legal
or other expenses reasonably incurred by Lender, the Lender Group, the Issuer
and/or the Underwriter Group in connection with investigating or defending the
Liabilities. Borrower's liability under this paragraph will be limited to
Liability that arises out of, or is based upon, an untrue statement or omission
made in reliance upon, and in conformity with, information furnished to Lender
by or on behalf of Borrower in connection with the preparation of the Disclosure
Document or in connection with the underwriting or closing of the Loan,
including financial statements of Borrower, operating statements and rent rolls
with respect to the Property. This indemnification provision will be in addition
to any liability which Borrower may otherwise have. Borrower acknowledges and
agrees that any Person that is included in the Lender Group, the Issuer and/or
the Underwriter Group that is not a direct party to this Agreement shall be
deemed to be a third-party beneficiary to this Agreement with respect to this
Section 9.2(b). Within five (5) Business Days after Lender's written request,
Borrower and Guarantor shall execute and deliver to Lender a separate
indemnification and reimbursement agreement in favor of the Lender Group, the
Issuer and the Underwriter Group in form and substance consistent with the
indemnification and reimbursement obligations of Borrower under this Section
9.2(b).

 

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(c)     In connection with any Exchange Act Filing or other reports containing
comparable information that is required to be made "available" to holders of the
Securities under Regulation AB or applicable Legal Requirements, Borrower agrees
to (i) indemnify Lender, the Lender Group, the Issuer and the Underwriter Group
for Liabilities to which Lender, the Lender Group, the Issuer and/or the
Underwriter Group may become subject insofar as the Liabilities arise out of, or
are based upon, an alleged untrue statement or alleged omission or an untrue
statement or omission made in reliance upon, and in conformity with, information
furnished to Lender by or on behalf of Borrower in connection with the
preparation of the Disclosure Document or in connection with the underwriting or
closing of the Loan, including financial statements of Borrower, operating
statements and rent rolls with respect to the Property, and (ii) reimburse
Lender, the Lender Group, the Issuer and/or the Underwriter Group for any legal
or other expenses reasonably incurred by Lender, the Lender Group, the Issuer
and/or the Underwriter Group in connection with defending or investigating the
Liabilities.

 

(d)     Promptly after receipt by an indemnified party under this Section 9.2 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9.2, notify the indemnifying party in writing of the commencement
thereof, but the omission to so notify the indemnifying party will not relieve
the indemnifying party from any liability which the indemnifying party may have
to any indemnified party hereunder except to the extent that failure to notify
causes prejudice to the indemnifying party. In the event that any action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled, jointly with
any other indemnifying party, to participate therein and, to the extent that it
(or they) may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel satisfactory to such indemnified party.
After notice from the indemnifying party to such indemnified party pursuant to
the immediately preceding sentence of this Section 9.2(d), such indemnifying
party shall pay for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there are any legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party at the cost of the indemnifying party. The
indemnifying party shall not be liable for the expenses of more than one
separate counsel unless an indemnified party shall have reasonably concluded
that there may be legal defenses available to it that are different from or
additional to those available to the indemnifying party. Without the prior
written consent of Lender (which consent shall not be unreasonably withheld or
delayed), no indemnifying party shall settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not any indemnified party is an actual or potential party to such claim,
action, suit or proceeding) unless the indemnifying party shall have given
Lender reasonable prior written notice thereof and shall have obtained an
unconditional release of each indemnified party hereunder from all liability
arising out of such claim, action, suit or proceedings, and such settlement
requires no statement as to, or an admission of, fault, culpability or a failure
to act, by or on behalf of the indemnified party.

 

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(e)     In order to provide for just and equitable contribution in circumstances
in which the indemnity agreement provided for in Section 9.2(b) or (c) is for
any reason held to be unenforceable as to an indemnified party in respect of any
Liabilities (or action in respect thereof) referred to therein which would
otherwise be indemnifiable under Section 9.2(b) or (c),the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such Liabilities (or action in respect thereof); provided, however,
that no Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation. In determining
the amount of contribution to which the respective parties are entitled, the
following factors shall be considered: (i) the Issuer's and Borrower's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted; (ii) the opportunity to correct and prevent any
statement or omission; and (iii) any other equitable considerations appropriate
in the circumstances. Lender and Borrower hereby agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation.

 

(f)      The liabilities and obligations of both Borrower and Lender under this
Section 9.2 shall survive the termination of this Agreement and the satisfaction
and discharge of the Debt.

 

Section 9.3       Severance.

 

9.3.1    Severance Documentation. Lender, without in any way limiting Lender's
other rights hereunder, in its sole and absolute discretion, shall have the
right, at any time (whether prior to or after any sale, participation or
Securitization of all or any portion of the Loan), to require Borrower (at no
material cost to Borrower) to execute and deliver "component" notes and/or
modify the Loan in order to create one or more senior and subordinate notes
(i.e., an A/B or A/B/C structure) and/or one or more additional components of
the Note or Notes (including the implementation of one or more New Mezzanine
Loans (in accordance with Section 9.3.2 below)), reduce the number of components
of the Note or Notes, revise the interest rate for each component, reallocate
the principal balances of the Notes and/or the components, increase or decrease
the monthly debt service payments for each component or eliminate the component
structure and/or the multiple note structure of the Loan (including the
elimination of the related allocations of principal and interest payments),
provided that the Outstanding Principal Balance of all components immediately
after the effective date of such modification equals the Outstanding Principal
Balance immediately prior to such modification and the weighted average of the
interest rates for all components immediately after the effective date of such
modification equals the interest rate of the original Note immediately prior to
such modification. At Lender's election, each note comprising the Loan may be
subject to one or more Securitizations. Lender shall have the right to modify
the Note and/or Notes and any components in accordance with this Section 9.3
and, provided that such modification shall comply with the terms of this Section
9.3, it shall become immediately effective.

 

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9.3.2      New Mezzanine Loan Option. Lender, without in any way limiting
Lender's other rights hereunder, in its sole and absolute discretion, shall have
the right, at any time (whether prior to or after any Secondary Market
Transaction), to create one or more mezzanine loans (each, a "New Mezzanine
Loan" ), to establish different interest rates and to reallocate the Outstanding
Principal Balance and Monthly Interest Payment Amount or Monthly Debt Service
Payment, as applicable, of the Loan to the Loan and such New Mezzanine Loan(s)
and to require the payment of the Loan and any New Mezzanine Loan(s) in such
order of priority as may be designated by Lender; provided, that the outstanding
aggregate principal balance of the Loan and such New Mezzanine Loan(s)
immediately after the effective date of the creation of such New Mezzanine
Loan(s) equals the Outstanding Principal Balance immediately prior to such
modification and the weighted average of the interest rates for the Loan and
such New Mezzanine Loan(s) immediately after the effective date of the creation
of such New Mezzanine Loan(s) equals the interest rate of the original Note
immediately prior to such modification. Borrower shall cause the formation of
one or more special purpose, bankruptcy remote entities as required by Lender in
order to serve as the borrower under any New Mezzanine Loan (each, a "New
Mezzanine Loan Borrower" ) and the applicable organizational documents of
Borrower shall be amended and modified as necessary or required in the formation
of any New Mezzanine Loan Borrower.

 

9.3.3      Cooperation; Execution; Delivery. Borrower shall reasonably cooperate
with all reasonable requests of Lender in connection with this Section 9.3. If
requested by Lender, Borrower shall promptly execute and deliver such documents
as shall be required by Lender and any Rating Agency in connection with any
modification or New Mezzanine Loan pursuant to this Section 9.3, all in form and
substance satisfactory to Lender and satisfactory to any applicable Rating
Agency, including the severance of security documents if requested and/or, in
connection with the creation of any New Mezzanine Loan: (i) execution and
delivery of a promissory note and loan documents necessary to evidence such New
Mezzanine Loan, (ii) execution and delivery of such amendments to the Loan
Documents as are necessary in connection with the creation of such New Mezzanine
Loan and (iii) delivery of opinions oflegal counsel with respect to due
execution, authority and enforceability of any modification documents or
documents evidencing or securing any New Mezzanine Loan, as applicable, each as
reasonably acceptable to Lender, prospective investors and/or the Rating
Agencies. In the event Borrower fails to execute and deliver such documents to
Lender within five (5) Business Days following such request by Lender, Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect such transactions, Borrower
hereby ratifying all that such attorney shall do by virtue thereof. It shall be
an Event of Default under this Agreement, the Note, the Mortgage and the other
Loan Documents if Borrower fails to comply with any of the terms, covenants or
conditions of this Section 9.3 after expiration of ten (10) Business Days after
notice thereof.

 

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ARTICLE 10

 

MISCELLANEOUS

 

Section 10.1    Exculpation. Subject to the qualifications below, Lender shall
not enforce the liability and obligation of Borrower to perform and observe the
Obligations contained in the Note, this Agreement, the Mortgage or the other
Loan Documents by any action or proceeding wherein a money judgment or
deficiency judgment shall be sought against Borrower or any principal, director,
officer, employee, beneficiary, shareholder, partner, member, trustee, agent or
Affiliate of Borrower or any legal representatives, successors or assigns of any
of the foregoing, except that Lender may bring a foreclosure action, an action
for specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgage and the other Loan Documents, or in the Property, the Gross
Revenues or any other collateral given to Lender pursuant to the Loan Documents;
provided, however, that, except as specifically provided herein, any judgment in
any such action or proceeding shall be enforceable against Borrower only to the
extent of Borrower's interest in the Property, in the Gross Revenues and in any
other collateral given to Lender, and Lender, by accepting the Note, this
Agreement, the Mortgage and the other Loan Documents, shall not sue for, seek or
demand any money judgment or deficiency judgment against Borrower or any
principal, director, officer, employee, beneficiary, shareholder, partner,
member, trustee, agent or Affiliate of Borrower or any legal representatives,
successors or assigns of any of the foregoing in any such action or proceeding
under or by reason of or under or in connection with the Note, this Agreement,
the Mortgage or the other Loan Documents. The provisions of this Section 10.1
shall not, however, (a) constitute a waiver, release or impairment of any
obligation evidenced or secured by any of the Loan Documents; (b) impair the
right of Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (c) affect the validity or
enforceability of any of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases; (f) impair the enforcement of the
Environmental Indemnity; (g) constitute a prohibition against Lender to seek a
deficiency judgment against Borrower in order to fully realize the security
granted by the Mortgage or to commence any other appropriate action or
proceeding in order for Lender to exercise its remedies against the Property; or
(h) constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including attorneys' fees and costs reasonably incurred) arising out of
or in connection with the following (all such liability and obligation of
Borrower for any or all of the following being referred to herein as "Borrower's
Recourse Liabilities "):

 

(i)            fraud, willful misconduct, misrepresentation or failure to
disclose a material fact by Borrower, Guarantor, any Affiliate of Borrower or
Guarantor, or any of their respective agents or representatives in connection
with the Loan, including by reason of any claim under the Racketeer Influenced
and Corrupt Organizations Act (RICO);

 

(ii)           the breach in any material respect of any representation,
warranty, covenant or indemnification provision in the Environmental Indemnity
or in any other Loan Document concerning environmental laws, hazardous
substances and/or asbestos and any indemnification of Lender with respect
thereto in either document;

 

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(iii)          wrongful removal or destruction of any portion of the Property or
damage to the Property caused by willful misconduct or gross negligence of
Borrower, Guarantor, any Affiliate of Borrower or Guarantor, or any of the.ir
respective agents or representatives in connection with the Loan;

 

(iv)          any intentional physical waste of the Property by Borrower,
Guarantor, any Affiliate of Borrower or Guarantor, or any of their respective
agents or representatives in connection with the Loan;

 

(v)          the forfeiture by Borrower of the Property, or any portion thereof,
because of the conduct or purported conduct of criminal activity by Borrower or
Guarantor or any of their respective agents or representatives in connection
therewith;

 

(vi)          the misappropriation, misapplication or conversion by Borrower,
Guarantor, any Affiliate of Borrower or Guarantor, or any of their respective
agents or representatives in connection with the Loan of (A) any Insurance
Proceeds paid by reason of any loss, damage or destruction to the Property, (B)
any Awards or other amounts received in connection with the Condemnation of all
or a portion of the Property, or (C) any Gross Revenues (including Rents,
Insurance Proceeds, security deposits, advance deposits or any other deposits
and Lease Termination Payments) or (D) any other funds due under the Loan
Documents, including, in connection with any of the foregoing, by reason of
failure to comply with Section 6.1 hereof or breach of the Clearing Account
Agreement or the Cash Management Agreement;

 

(vii)        failure to pay charges for labor or materials or other charges that
can create Liens on any portion of the Property, provided that no liability
shall arise under this clause if such charges were not incurred in violation of
the Loan Documents and there is insufficient cash flow from the Property to pay
all of Borrower's current and/or past due liabilities (including such charges);

 

(viii)       any unapplied security deposits, advance deposits or any other
deposits collected with respect to the Property which are not delivered to
Lender in accordance with the provisions of the Loan Documents during the
continuance of an Event of Default;

 

(ix)          the failure to pay Taxes or transfer taxes, provided Borrower
shall not be liable for the failure to pay Taxes to the extent funds to pay such
amounts are available in the Tax Account and Lender failed to pay same or there
is insufficient cash flow from the Property to pay for such Taxes or transfer
taxes (so long as Borrower has not misappropriated Rents in violation of the
Loan Documents);

 

(x)           failure to obtain and maintain the fully paid for Policies in
accordance with Section 5.1.1 hereof, provided Borrower shall not be liable to
the extent funds to pay such amounts are available in the Insurance Account and
Lender failed to pay same or there is insufficient cash flow from the Property
to pay for such Policies (so long as Borrower has not misappropriated Rents in
violation of the Loan Documents);

 

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(xi)          Borrower's indemnification of Lender set forth m Section 9.2
hereof;

 

(xii)         any cost or expense incurred by Lender in connection with the
enforcement of its rights and remedies hereunder or under any other Loan
Document; and/or

 

(xiii)        any misrepresentation or failure to disclose a material fact in
that certain estoppel certificate delivered by the Condominium Association to
Lender on the Closing Date.

 

Notwithstanding anything to the contrary in this Agreement or any of the other
Loan Documents, (A) Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code to file a claim for the full amount of the Obligations or to
require that all collateral shall continue to secure all of the Obligations
owing to Lender in accordance with the Loan Documents, and (B) the Obligations
shall be fully recourse to Borrower in the event that any of the following occur
(each, a "Springing Recourse Event" ): (i) a breach of the covenants set forth
in Section 4.4 hereof or a breach of any of the representations set forth in the
"Recycled SPE Certificate" delivered to Lender in connection with the Loan; (ii)
Borrower fails to obtain Lender's prior consent to any subordinate financing
secured by the Property or other voluntary Lien encumbering the Property; (iii)
Borrower fails to obtain Lender's prior consent to any Transfer of the Property
or any interest therein or any Transfer of any direct or indirect ownership
interest in Borrower, in either case as required by the Mortgage or this
Agreement other than a Permitted Transfer; (iv) Borrower or any SPC Party files
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (v) Borrower is substantively consolidated with
any other Person; unless such consolidation was initiated by Lender or was
involuntary and not consented to by Borrower, such SPC Party or Guarantor and is
discharged, stayed or dismissed within sixty (60) days following the occurrence
of such consolidation; (vi) the filing of an involuntary petition against
Borrower and/or any SPC Party under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law by any other Person (excluding Lender) in
which Borrower and/or any SPC Party colludes with or otherwise assists such
Person, and/or Borrower and/or any SPC Party solicits or causes to be solicited
petitioning creditors for any involuntary petition against Borrower and/or any
SPC Party by any Person; (vii) Borrower and/or any SPC Party files an answer
consenting to, or otherwise acquiescing in, or joining in, any involuntary
petition filed against it by any other Person (excluding Lender) under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(viii) Borrower or any Affiliate, officer, director or representative which
controls Borrower consents to, or acquiesces in, or joins in, an application for
the appointment of a custodian, receiver, trustee or examiner for Borrower or
any portion of the Property; (ix) Borrower or any SPC Party 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 (x) if
Guarantor (or any Person comprising Guarantor), Borrower or any Affiliate of any
of the foregoing, in connection with any enforcement action or exercise or
assertion of any right or remedy by or on behalf of Lender under or in
connection with the Guaranty, the Note, the Mortgage or any other Loan Document,
seeks a defense, judicial intervention or injunctive or other equitable relief
of any kind, or asserts in a pleading filed in connection with a judicial
proceeding any defense against Lender or any right in connection with any
security for the Loan other than defenses raised or sought in good faith in
connection with such enforcement action or exercise or assertion of rights or
remedies by or on behalf of Lender.

 

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Section 10.2     Survival; Successors and Assigns. This Agreement and all
covenants, agreements, representations and warranties made herein and in the
certificates delivered pursuant hereto shall survive the making by Lender of the
Loan and the execution and delivery to Lender of the Note, and shall continue in
full force and effect so long as all or any of the Obligations are outstanding
and unpaid unless a longer period is expressly set forth herein or in the other
Loan Documents. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the legal representatives,
successors and assigns of such party. All covenants, promises and agreements in
this Agreement, by or on behalf of Borrower, shall inure to the benefit of the
legal representatives, successors and assigns of Lender.

 

Section 10.3      Lender's Discretion; Rating Agency Review Waiver.

 

(a)     Whenever pursuant to this Agreement Lender exercises any right given to
it to approve or disapprove any matter, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove such
matter 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. Prior to a
Securitization, whenever pursuant to this Agreement the Rating Agencies are
given any right to approve or disapprove any matter, or any arrangement or term
is to be satisfactory to the Rating Agencies, the decision of Lender to approve
or disapprove such matter or to decide whether arrangements or terms are
satisfactory or not satisfactory, based upon Lender's determination of Rating
Agency criteria, shall be substituted therefor.

 

(b)    Whenever, pursuant to this Agreement or any other Loan Documents, a
Rating Agency Confirmation is required from each applicable Rating Agency that
has rated the Securities, in the event that any applicable Rating Agency
"declines review", "waives review" or otherwise indicates in writing or
otherwise to Lender's or Servicer's satisfaction that no Rating Agency
Confirmation will or needs to be issued with respect to the matter in question
(each, a "Review Waiver"), then the Rating Agency Confirmation requirement shall
be deemed to be satisfied with respect to such matter. It is expressly agreed
and understood, however, that receipt of a Review Waiver (i) from any one Rating
Agency shall not be binding or apply with respect to any other Rating Agency and
(ii) with respect to one matter shall not apply or be deemed to apply to any
subsequent matter for which a Rating Agency Confirmation is required hereunder.

 

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Section 10.4       Governing Law.

 

(a)  THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF 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 THE STATE OF 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
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, 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 (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS) 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 LIEN AND SECURITY INTEREST CREATED PURSUANT HERETO AND
PURSUANT TO THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED
ACCORDING TO, THE LAW OF THE STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, IN
WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST EXTENT
PERMITTED BY THE LAW OF SUCH STATE, COMMONWEALTH OR DISTRICT, AS APPLICABLE, THE
LAW OF.THE STATE OF NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING
HEREUNDER OR THEREUNDER. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY
OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THE NOTE, AND THIS AGREEMENT AND
THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.

 

(b)  ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT MAY AT LENDER'S OPTION BE INSTITUTED IN ANY
FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW YORK, PURSUANT TO
SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, AND BORROWER WAIVES ANY
OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR FORUM NON
CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. BORROWER DOES HEREBY DESIGNATE AND APPOINT:

 

MICHAEL L. KONIG, ESQ.

C/O BLUEROCK REAL ESTATE, L.L.C. 712

FIFTH AVENUE, 9TH FLOOR

NEW YORK, NEW YORK 10019

 

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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 BORROWER AGREES THAT
SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID
SERVICE 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 CHANGED 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 SUBSTITUTE AGENT
AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL 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. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER IN ANY OTHER JURISDICTION.

 

Section 10.5      Modification, Waiver in Writing. No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement
or of any other Loan Document, nor 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 or parties 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. 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, 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 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
or the other Loan Documents, or to declare a default for failure to effect
prompt payment of any such other amount. Lender shall have the right to waive or
reduce any time periods that Lender is entitled to under the Loan Documents in
its sole and absolute discretion.

 

Section 10.6     Notices. All notices, demands, requests, consents, approvals or
other communications (any of the foregoing, a "Notice") required, permitted or
desired to be given hereunder shall be in writing and shall be sent by facsimile
(with answer back acknowledged) or by registered or certified mail, postage
prepaid, return receipt requested, or delivered by hand or by reputable
overnight courier, addressed to the party to be so notified at its address
hereinafter set forth, or to such other address as such party may hereafter
specify in accordance with the provisions of this Section 10.6. Any Notice shall
be deemed to have been received: (a) three (3) days after the date such Notice
is mailed, (b) on the date of sending by facsimile if sent during business hours
on a Business Day (otherwise on the next Business Day), (c) on the date of
delivery by hand if delivered during business hours on a Business Day (otherwise
on the next Business Day), and (d) on the next Business Day if sent by an
overnight commercial courier, in each case addressed to the parties as follows:

 

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If to Lender: Arbor Commercial Mortgage, LLC   333 Earle Ovington Boulevard  
Uniondale, New York 11553   Attention: John J. Bishar, Jr. Facsimile   No. (516)
832-6590       Arbor Commercial Mortgage, LLC 375   Park Avenue   Suite 3401  
New York, New York 10152   Attention: Todd Hirsch Facsimile   No. (516) 832-6462
    with a copy to: Winston & Strawn LLP 200   Park Avenue   New York, New York
10166 Attention:   Corey Tessler, Esq.   Facsimile No. (212) 294-4700     with a
copy to: KeyBank, National Association c/o   KeyBank Real Estate Capital 11501  
Outlook, Suite 300   Overland Park, Kansas 66211   Attention: Marsha G. Hess  
Facsimile No. (877) 379-1625     Ifto Borrower: BR-NPT Springing Entity, LLC  
c/o Bluerock Real Estate, L.L.C.   712 Fifth Avenue, 9th Floor   New York, New
York 10019   Attention: Jordan Ruddy and Michael L. Konig, Esq. Facsimile   No.
(212) 278-4220     with a copy to: Hirschler Fleischer PC   2100 East Cary
Street   Richmond, Virginia 23223   Attention: S. Edward Flanagan, Esq.  
Facsimile No. (804) 644-0957

 

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 10.6. Notices shall be deemed to
have been given on the date as set forth above, even if there is an inability to
actually deliver any such Notice because of a changed address of which no Notice
was given, or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer and Lender hereby
acknowledges and agrees that Borrower shall be entitled to rely on any Notice
given by Servicer as if it had been sent by Lender.

 

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Section 10.7     Waiver of Trial by Jury. BORROWER AND LENDER EACH HEREBY AGREES
NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES
ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS OR ANY CLAIM, COUNTERCLAIM OR
OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIYER OF RIGHT TO TRIAL BY
JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER AND LENDER AND IS INTENDED
TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO
A TRIAL BY JURY WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE
A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS
WAIVER.

 

Section 10.8     Headings, Schedules and Exhibits. The Article and/or Section
headings and the Table of Contents in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose. The Schedules and Exhibits annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.

 

Section 10.9    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 10.10   Preferences. 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. To the extent Borrower makes a
payment or payments to Lender, 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 10.11   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 the other Loan Documents specifically and expressly provide
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 do not specifically and expressly
provide for the giving of notice by Lender to Borrower.

 

Section 10.12   Remedies of Borrower. In the event that a claim or adjudication
is made that Lender or its agents have acted unreasonably or unreasonably
delayed acting in any case where, by applicable law or under this Agreement or
the other Loan Documents, Lender or such agent, as the case may be, has an
obligation to act reasonably or promptly, neither Lender nor its agents shall be
liable for any monetary damages and Borrower's sole remedy shall be limited to
commencing an action seeking injunctive relief or declaratory judgment. Any
action or proceeding to determine whether Lender has acted reasonably shall be
determined by an action seeking declaratory judgment.

 

94

 

 

Section 10.13   Offsets, Counterclaims and Defenses. Any assignee 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 such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and 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 10.14     No Joint Venture or Partnership; No Third Party Beneficiaries.

 

(a)     Borrower and Lender intend that the relationships created hereunder and
under the other Loan Documents be solely that of borrower and lender. Nothing
herein or therein 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 Property other than that of mortgagee,
beneficiary or lender.

 

(b)     The Loan Documents are solely for the benefit of Lender and Borrower
(and the Lender Group, the Issuer and the Underwriter Group with respect to
Section 9.2(b)) and nothing contained in any Loan Document shall be deemed to
confer upon anyone other than the Lender and Borrower any right to insist upon
or to enforce the performance or observance of any of the obligations contained
therein.

 

Section 10.15   Publicity. All news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, the Affiliate of Lender that acts as the issuer with
respect to a Securitization or any of their other Affiliates (x) shall be
prohibited prior to the final Securitization of the Loan and (y) after the final
Securitization of the Loan, shall be subject to the prior written approval of
Lender not to be unreasonably withheld. Lender shall have the right to issue any
of the foregoing without Borrower's approval and Borrower authorizes Lender to
issue press releases, advertisements and other promotional materials in
connection with Lender's own promotional and marketing activities, including in
connection with a Secondary Market Transaction, and such materials may describe
the Loan in general terms or in detail and Lender's participation therein and in
the Loan.

 

Section 10.16   Waiver of Marshalling of Assets. To the fullest extent permitted
by applicable law, Borrower, for itself and its successors and assigns, waives
all rights to a marshalling of the assets of Borrower, Borrower's members or
partners, as applicable, and others with interests in Borrower, and of the
Property, and shall not 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 the Property for the collection of the Obligations
without any prior or different resort for collection, or of the right of Lender
to the payment of the Obligations out of the net proceeds of the Property in
preference to every other claimant whatsoever.

 

95

 

 

Section 10.17  Certain Waivers. Borrower hereby waives the right to assert a
counterclaim, other than a compulsory counterclaim, in any action or proceeding
brought against it by Lender or its agents or otherwise to offset any
obligations to make the payments required by the Loan Documents. No failure by
Lender to perform any of its obligations hereunder shall be a valid defense to,
or result in any offset against, any payments which Borrower is obligated to
make under any of the Loan Documents. Without limiting any of the other
provisions contained herein, Borrower hereby unconditionally and irrevocably
waives, to the maximum extent not prohibited by applicable law, any rights it
may have to claim or recover against Lender in any legal action or proceeding
any special, exemplary, punitive or consequential damages.

 

Section 10.18   Conflict; Construction of Documents; Reliance. In the event of
any conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control. The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same. Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan, without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
affiliate of Lender. Lender shall not be subject to any limitation whatsoever in
the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender's exercise of any such rights or
remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

Section 10.19  Brokers and Financial Advisors. Borrower hereby represents that,
except for Simon Capital Management, LLC ("Broker"), it has dealt with no
financial advisors, brokers, underwriters, placement agents, agents or finders
in connection with the transactions contemplated by this Agreement. Borrower
will pay Broker a commission pursuant to a separate agreement. Borrower shall
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, losses, costs and expenses of any kind (including Lender's
reasonable attorneys' fees and expenses) in any way relating to or arising out
of a claim by any Person (including Broker) that such Person acted on behalf of
Borrower or Lender in connection with the transactions contemplated herein. The
provisions of this Section 10.19 shall survive the expiration and termination of
this Agreement and the payment of the Obligations.

 

Section 10.20   Prior Agreements. This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto and their
respective affiliates in respect of the transactions contemplated hereby and
thereby, and all prior agreements among or between such parties, including any
confidentiality agreements or any similar agreements between or among any such
parties, whether oral or written, are superseded by the terms of this Agreement
and the other Loan Documents.

 

96

 

 

Section 10.21    Servicer.

 

(a)     At the option of Lender, the Loan may be serviced by a servicer or
special servicer (the "Servicer") selected by Lender and Lender may delegate all
or any portion of its responsibilities under this Agreement and the other Loan
Documents to the Servicer pursuant to a servicing agreement (the "Servicing
Agreement") between Lender and Servicer. Borrower shall not be responsible for
any set-up fees or any other initial costs relating to or arising under the
Servicing Agreement. Borrower shall not be responsible for payment of any
ongoing master servicing fee due to the Servicer under the Servicing Agreement.

 

(b)     Other than as provided in Section 10.21(a) above, Borrower shall pay all
of the fees and expenses of the Servicer and any reasonable third-party fees and
expenses in connection with the Loan, including any prepayments, releases of the
Property, approvals under the Loan Documents requested by Borrower, other
requests under the Loan, defeasance, assumption of Borrower's obligations or
modification of the Loan, as well as any fees and expenses in connection with
the special servicing or work-out of the Loan or enforcement of the Loan
Documents, including, special servicing fees, operating or trust advisor fees
(if the Loan is a specially serviced loan or in connection with a workout),
work-out fees, liquidation fees, reasonable attorneys' fees and expenses and
other fees and expenses in connection with the modification or restructuring of
the Loan.

 

Section 10.22   Joint and Several Liability. If more than one Person has
executed this Agreement as "Borrower," the representations, covenants,
warranties and obligations of all such Persons hereunder shall be joint and
several.

 

Section 10.23   Creation of Security Interest. Notwithstanding any other
provision set forth in this Agreement, the Note, the Mortgage or any of the
other Loan Documents, Lender may at any time create a security interest in all
or any portion of its rights under this Agreement, the Note, the Mortgage and
any other Loan Document (including the advances owing to it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.

 

Section 10.24   Taxes. Any and all payments by Borrower hereunder and under the
other Loan Documents shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions; charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on Lender's income, and franchise or other similar taxes imposed on Lender by
the law or regulation of any Governmental Authority (all such non- excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to in this Section 10.24 as "Applicable Taxes"). If
Borrower shall be required by law to deduct any Applicable Taxes from or in
respect of any sum payable hereunder to Lender, the following shall apply: (i)
the sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 10.24), Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Borrower shall make such
deductions and (iii) Borrower shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
Payments pursuant to this Section 10.24 shall be made within ten (10) days after
the date Lender makes written demand therefor.

 

97

 

 

Section 10.25   Assignments and Participations. In addition to any other rights
of Lender hereunder, the Loan, the Note, the Loan Documents and/or Lender's
rights, title, obligations and interests therein may be sold, assigned,
participated or otherwise transferred by Lender and any of its successors and
assigns to any Person at any time in its sole and absolute discretion, in whole
or in part, whether by operation of law (pursuant to a merger or other successor
in interest) or otherwise without notice to or consent from Borrower or any
other Person. Upon such assignment, all references to Lender in this Agreement
and in any Loan Document shall be deemed to refer to such assignee or successor
in interest and such assignee or successor in interest shall thereafter stand in
the place of Lender in all respects. Except as expressly permitted herein,
Borrower may not assign its rights, title, interests or obligations under this
Agreement or under any of the Loan Documents.

 

Section 10.26   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.

 

Section 10.27   Set-Off. In addition to any rights and remedies of Lender
provided by this Agreement and by law, Lender shall have the right in its sole
discretion, without prior notice to Borrower, any such notice being expressly
waived by Borrower to the extent permitted by applicable law, upon any amount
becoming due and payable by Borrower hereunder (whether at the stated maturity,
by acceleration or otherwise), to set-off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by Lender or any Affiliate
thereof to or for the credit or the account of Borrower; provided however,
Lender may only exercise such right during the continuance of an Event of
Default. Lender agrees promptly to notify Borrower after any such set-off and
application made by Lender; provided that the failure to give such notice shall
not affect the validity of such set-off and application.

 

[NO FURTHER TEXT ON THIS PAGE]

 

98

 

 

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:       ARBOR COMMERCIAL MORTGAGE, LLC,   a New York limited liability
company       By: [ex10-30_sig.jpg]     Name:     Title:

 

[signatures continue on following page]

 

Signature page to Loan Agreement - North Park Towers

 

 

 

 

  BORROWER:       BR-NPT SPRINGING ENTITY, LLC,   a Delaware limited liability
company       By: BR-North Park Towers, LLC,     a Delaware limited liability
company, its     manager

 

  By: /s/ Jordan Ruddy     Name: Jordan Ruddy     Title: Authorized Signatory

 

Signature page to Loan Agreement - North Park Towers

 

 

 

 

SCHEDULE I

 

RENT ROLL

 

(Attached)

  

Sch. 1-1

 

 

Bluerock Real EstatePAGE: 1

 

RENT ROLL REPORT

FOR BR Property Management NPT

 

[REDACTED]

 

Residential Units TOTALS :

 

   Actual Rent   Market Rent            Total Occupied Rents   300,376.00  
 372,557.00  Total Vacant Rents   20,080.00    20,080.00  Total Gross Rents 
 320,456.00    392,637.00  Total Square Footage   455,002       Average Rent/Sq.
Ft./Yr.   8.45    10.36  Average Rent/Sq. Ft./Mth   0.70    0.86  Total Security
Deposits   95,755.75      

 

 

— Percentage of Occupied Units Total Occupied Units   298  Total Vacant Units 
 15  Total Units   313  Percentage Occupied   95%

 

— Percentage of Occupied Sq. Feet Total Occupied Sq. Feet   431,088  Total
Vacant Sq. Feet   23,914  Total Square Footage   455,002  Percentage Occupied 
 95%

 

Commercial U nits TOTALS :

 

   Actual Rent   Market Rent            Total Occupied Rents   3,615.00  
 3,790.00  Total Vacant Rents   1,590.00    1,590.00  Total Gross Rents 
 5,205.00    5,380.00  Total Square Footage   13,893       Average Rent/Sq.
Ft.Nr.   4.50    4.65  Average Rent/Sq. Ft./Mth   0.37    0.39  Total Security
Deposits   1,350.00      

 

— Percentage of Occupied Units Total Occupied Units   9  Total Vacant Units   4 
Total Units   13  Percentage Occupied   69%

 

— Percentage of Occupied Sq. Feet Total Occupied Sq. Feet   11,738  Total Vacant
Sq. Feet   2,155  Total Square Footage   13,893  Percentage Occupied   84%

 

 

 

 

GRAND TOTALS :

 

   Actual Rent   Market Rent            Total Occupied Rents   303,991.00  
 376,347.00  Total Vacant Rents   21,670.00    21,670 00  Total Gross Rents 
 325,661:00    398,017.00  Total Square Footage   468,895       Average Rent/Sq.
Ft./Yr.   8.33    10.19  Average Rent/Sq. Ft./Mth   0.69    0.85  Total Security
Deposits   97,105.75      

 

Percentage of Occupied Units Total Occupied Units   307  Total Vacant Units 
 19  Total Units   326  Percentage Occupied   94%

 

Percentage of Occupied Sq.Feet — Total Occupied Sq. Feet   442,826  Total Vacant
Sq. Feet   26,069  Total Square Footage   468,895  Percentage Occupied   94%

 

 

 

 

SCHEDULE II

 

REQUIRED REPAIRS

 

   Reserve Deposit  Required Repair Item  Amount  1.     Full depth asphalt
repairs and overlay  $6,000         2.     Repair curbs  $360        
3.     Patch and repair concrete  $2,400         4.     Repair leaks in parking
garage  $10,000         5.     Repair trip hazards  $750         6.     Repair
damaged column  $5,000         7.     Repair loose stone aggregate panel  $500 
       8.     Complete ADA compliance upgrades  $2,150         9.     Replace
apartment breaker panels  $29,250         10.   Replace transformer  $56,000    
    11.   Perform Lift Repairs  $25,000         Total Reserved:            
$151,513 (inflated) 

 

Sch. II-1

 

 

SCHEDULE III

 

ORGANIZATIONAL CHART

 

(Attached)

 

Sch. III-1

 

 

[tex10-29_chart.jpg]

 

 

 

 

SCHEDULE IV

 

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

 

None

 

Sch. IV-1

 

 

SCHEDULE V

 

DEFINITION OF SPECIAL PURPOSE BANKRUPTCY REMOTE ENTITY

 

Borrower hereby represents and warrants to, and covenants with, Lender that
since the date of its formation and at all times on and after the date hereof
and until such time as the Obligations shall be paid and performed in full:

 

(a)    Borrower (i) has been, is, and will be organized solely for the purpose
of acquiring, developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Property, entering into this Agreement
with the Lender, refinancing the Property in connection with a permitted
repayment of the Loan, and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing, and (ii) has not owned,
does not own, and will not own any asset or property other than (A) the
Property, and (B) incidental personal property necessary for the ownership or
operation of the Property.

 

(b)    Borrower has not engaged and will not engage in any business other than
the ownership, management and operation of the Property and Borrower will
conduct and operate its business as presently conducted and operated.

 

(c)    Borrower has not and will not enter into any contract or agreement with
any Affiliate of Borrower except upon terms and conditions that are
intrinsically fair, commercially reasonable, and no less favorable to it than
would be available on an arms-length basis with third parties other than any
such party.

 

(d)    Borrower has not incurred any Indebtedness which remains outstanding and
will not incur any Indebtedness other than Permitted Indebtedness. No
Indebtedness other than the Debt may be secured (senior, subordinate or pari
passu ) by the Property.

 

(e)    Borrower has not made and will not make any loans or advances to any
third party (including any Affiliate or constituent party), and has not and
shall not acquire obligations or securities of its Affiliates.

 

(f)     Borrower has been, is, and intends to remain solvent and Borrower has
paid and intends to pay its debts and liabilities (including, as applicable,
shared personnel and overhead expenses) from its assets; provided that the
foregoing shall not require any direct or indirect member, partner, shareholder
or other equity owner of Borrower to make any additional capital contributions
to Borrower.

 

(g)    Borrower has done or caused to be done, and will do, all things necessary
to observe organizational formalities and preserve its existence, and Borrower
has not, will not, nor will Borrower permit any SPC Party to, (i) terminate or
fail to comply with the provisions of its organizational documents, or (ii)
unless (1) (A) Lender has consented and (B) following a Securitization of the
Loan, the applicable Rating Agencies have issued a Rating Agency Confirmation in
connection therewith, or (2) solely in connection with and in order to reflect
the occurrence of a Permitted Transfer made pursuant to and in accordance with
the terms of this Agreement, amend, modify or otherwise change its partnership
certificate, partnership agreement, articles of incorporation and bylaws,
operating agreement, trust or other organizational documents.

 

Sch. V-1

 

 

(h)     Borrower has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates and
any other Person. Borrower's assets will not be listed as assets on the
financial statement of any other Person, provided, however, that Borrower's
assets may be included in a consolidated financial statement of its Affiliates
provided that (i) appropriate notation shall be made on such consolidated
financial statements to indicate the separateness of Borrower and such
Affiliates and to indicate that Borrower's assets and credit are not available
to satisfy the debts and other obligations of such Affiliates or any other
Person, and (ii) such assets shall be listed on Borrower's own separate balance
sheet. Borrower will file its own tax returns (to the extent Borrower is
required to file any such tax returns) and will not file a consolidated federal
income tax return with any other Person. Borrower has maintained and shall
maintain its books, records, resolutions and agreements in accordance with this
Agreement.

 

(i)      Borrower has been, 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
entity (including any Affiliate of Borrower or any constituent party of
Borrower), shall correct any known misunderstanding regarding its status as a
separate entity, shall conduct business in its own name, shall not identify
itself or any of its Affiliates as a division or department or part of the other
and shall maintain and utilize separate stationery, invoices and checks bearing
its own name.

 

G)     Borrower has maintained and intends 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; provided that
the foregoing shall not require any direct or indirect member, partner,
shareholder or other equity owner of Borrower to make any additional capital
contributions to Borrower.

 

(k)    Neither Borrower nor any constituent party of Borrower has sought or will
seek or effect the liquidation, dissolution, winding up, consolidation or
merger, in whole or in part, of Borrower.

 

(1)    Borrower has not and will not commingle the funds and other assets of
Borrower with those of any Affiliate or constituent party or any other Person,
and has held and will hold all of its assets ii\ its own name.

 

(m)   Borrower has and will maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any Affiliate or constituent party or any other Person.

 

(n)    Borrower has not and will not assume or guarantee or become obligated for
the debts of any other Person and does not and will not hold itself out to be
responsible for or have its credit available to satisfy the debts or obligations
of any other Person.

 

Sch. V-2

 

 

(o)    Borrower's manager ("SPC Party") shall be a Delaware limited liability
company or a corporation formed under the laws of any jurisdiction of the United
States whose sole asset is its interest in Borrower and each such SPC Party (i)
will cause Borrower to be a Special Purpose Bankruptcy Remote Entity; (ii) will
at all times comply with each of the representations, warranties and covenants
contained on this Schedule V (other than clauses (a), (b), (d) and (y)) as if
such representation, warranty or covenant was made directly by such SPC Party;
(iii) will not engage in any business or activity other than owning an interest
in Borrower; (iv) will not acquire or own any assets other than its partnership
or membership interest in Borrower; and (v) will not incur any debt, secured or
unsecured, direct or contingent (including guaranteeing any obligation) other
than unsecured trade payables incurred in the ordinary course of business
related to the ownership of an interest in Borrower that (A) do not exceed at
any one time $25,000.00, and (B) are paid within sixty (60) days after the date
incurred. Upon the withdrawal or the disassociation of an SPC Party from
Borrower, Borrower shall immediately appoint a new SPC Party whose articles or
certificate of formation or incorporation are substantially similar to those of
such SPC Party.

 

(p)    Intentionally omitted.

 

(q)    The organizational documents of Borrower and each SPC Party shall also
provide an express acknowledgment that Lender is an intended third-party
beneficiary of the "special purpose" provisions of such organizational
documents.

 

(r)     Intentionally omitted.

 

(s)    Notwithstanding anything herein to the contrary, the SPC Party may be a
Delaware single-member limited liability company provided that:

 

(i)           the organizational documents of such SPC Party shall provide that,
as long as any portion of the Obligations remains outstanding, upon the
occurrence of any event that causes the sole member of such SPC Party ("Sole
Member") to cease to be a member of such SPC Party (other than (i) upon an
assignment by Sole Member of all of its limited liability company interest in
SPC Party and the admission of the transferee, if permitted pursuant to the
organizational documents of SPC Party and the Loan Documents, or (ii) the
resignation of Sole Member and the admission of an additional member of SPC
Party, if permitted pursuant to the organizational documents of SPC Party and
the Loan Documents), each of the persons acting as a springing member of SPC
Party shall, without any action of any Person and simultaneously with Sole
Member ceasing to be a member of SPC Party, automatically be admitted as members
of SPC Party (in each case, individually, a "Special Member" and collectively,
the "Special Members ") and shall preserve and continue the existence of SPC
Party without dissolution. The organizational documents of SPC Party shall
further provide that for so long as any portion of the Obligations is
outstanding, no Special Member may resign or transfer its rights as Special
Member unless a successor Special Member has been admitted to SPC Party as a
Special Member;

 

(ii)           the organizational documents of SPC Party shall provide that, as
long as any portion of the Obligations remains outstanding, except as expressly
permitted pursuant to the terms of this Agreement, (i) Sole Member may not
resign, and (ii) no additional member shall be admitted to SPC Party; and

 

Sch. V-3

 

 

(iii)          the organizational documents of SPC Party shall provide that, as
long as any portion of the Obligations remains outstanding: (i) SPC Party shall
be dissolved, and its affairs shall be wound up, only upon the first to occur of
the following: (A) the termination of the legal existence of the last remaining
member of SPC Party or the occurrence of any other event which terminates the
continued membership of the last remaining member of SPC Party in SPC Party
unless the business of SPC Party is continued in a manner permitted by its
operating agreement or the Delaware Limited Liability Company Act (the "Act"),
or (B) the entry of a decree of judicial dissolution under Section 18-802 of the
Act; (ii) upon the occurrence of any event that causes the last remaining member
of SPC Party to cease to be a member of SPC Party or that causes Sole Member to
cease to be a member of SPC Party (other than (A) upon an assignment by Sole
Member of all of its limited liability company interest in SPC Party and the
admission of the transferee, if permitted pursuant to the organizational
documents of SPC Party and the Loan Documents, or (B) the resignation of Sole
Member and the admission of an additional member of SPC Party, if permitted
pursuant to the organizational documents of SPC Party and the Loan Documents),
to the fullest extent permitted by law, the personal representative of such last
remaining member shall be authorized to, and shall, within ninety (90) days
after the occurrence of the event that terminated the continued membership of
such member in SPC Party, agree in writing (I) to continue the existence of SPC
Party, and (II) to the admission of the personal representative or its nominee
or designee, as the case may be, as a substitute member of SPC Party, effective
as of the occurrence of the event that terminated the continued membership of
such member in SPC Party; (iii) the bankruptcy of Sole Member or a Special
Member shall not cause such Sole Member or Special Member, respectively, to
cease to be a member of SPC Party and upon the occurrence of such an event, the
business of SPC Party shall continue without dissolution; (iv) in the event of
the dissolution of SPC Party, SPC Party shall conduct only such activities as
are necessary to wind up its affairs (including the sale of the assets of SPC
Party in an orderly manner), and the assets of SPC Party shall be applied in the
manner, and in the order of priority, set forth in Section 18-804 of the Act;
and (v) to the fullest extent permitted by law, each of Sole Member and the
Special Members shall irrevocably waive any right or power that they might have
to cause SPC Party or any of its assets to be partitioned, to cause the
appointment of a receiver for all or any portion of the assets of SPC Party, to
compel any sale of all or any portion of the assets of SPC Party pursuant to any
applicable law or to file a complaint or to institute any proceeding at law or
in equity to cause the dissolution, liquidation, winding up or termination of
SPC Party.

 

(t)      Borrower hereby covenants and agrees that it will comply with or cause
the compliance with, (i) all of the representations, warranties and covenants in
this Schedule V, and (ii) all of the organizational documents of Borrower and
any SPC Party.

 

(u)     Borrower has not permitted and will not permit any Affiliate or
constituent party independent access to its bank accounts other than Manager
solely in its capacity as property manager and SPC Party solely in its capacity
as manager of Borrower.

 

(v)     Borrower has paid and intends to pay its own liabilities and expenses,
including the salaries of its own employees (if any) from its own funds, and has
maintained and shall maintain a sufficient number of employees (if any) in light
of its contemplated business operations; provided that the foregoing shall not
require any direct or indirect member, partner, shareholder or other equity
owner of Borrower to make any additional capital contributions to Borrower.

 

Sch. V-4

 

 

(w)    Borrower has compensated and shall compensate each of its consultants and
agents from its funds for services provided to it and pay from its own assets
all obligations of any kind incurred; provided that the foregoing shall not
require any direct or indirect member, partner, shareholder or other equity
owner of Borrower to make any additional capital contributions to Borrower.

 

(x)     Borrower has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including shared office
space.

 

(y)    Except in connection with the Loan, Borrower has not pledged and will not
pledge its assets for the benefit of any other Person that will remain
outstanding after the Closing Date.

 

(z)    Borrower has and will have no obligation to indemnify its officers,
directors, members or partners, as the case may be, or has such an obligation
that is fully subordinated to the Debt and will not constitute a claim against
it if cash flow in excess of the amount required to pay the Debt is insufficient
to pay such obligation.

 

(aa) if such Borrower is (i) a limited liability company, has articles of
organization, a certificate of formation and/or an operating agreement, as
applicable, (ii) a limited partnership, has a limited partnership agreement, or
(iii) a corporation, has a certificate of incorporation or articles that, in
each case, provide that such entity will not: (A) dissolve, merge, liquidate,
consolidate; (B) sell, transfer, dispose, or encumber (except with respect to
the Loan Documents) all or substantially all of its assets or acquire all or
substantially all of the assets of any Person; or (C) engage in any. other
business activity, or amend its organizational documents with respect to the
matters set forth on this Schedule V without the consent of the Lender.

 

(bb) Borrower has not, does not, and will not have any of its obligations
guaranteed by any Affiliate (other than from the Guarantor with respect to the
Loan) that will remain outstanding after the Closing Date.

 

Sch. V-5

 

 

SCHEDULE VI

 

INTELLECTUAL PROPERTY/WEBSITES

 

None

 

Sch. VI-1

 

 

SCHEDULE VII

 

LIST OF OFFICERS AND DIRECTORS OF THE CONDOMINIUM ASSOCIATION

 

Officers:

 

R. Ramin Kamfar -President

Jordan Ruddy Secretary and Treasurer

 

Directors:

 

R. Ramin Kamfar

Jordan Ruddy

Patricia Anderson

 

Sch. VI-2

 

 

EXHIBIT A

 

Legal Description

 

The land referred to in this Policy is described as follows:

 

All that certain lot, piece or parcel of land, with the buildings and
improvements thereon erected, situate, lying and being in the City of
Southfield, County of Oakland, State of Michigan.

 

Units 1 through 331, both inclusive, being all of the Units of North Park Towers
Condominium, according to the Master Deed recorded in Liber 7794 on Pages 337
through 412, inclusive, Oakland County Records, and designated as Oakland County
Condominium Subdivision Plan No. 305, together with rights in General Common
Elements, and Limited Common Elements as set forth in the above Master Deed and
as described in Act 229 of the Public Acts of 1963, and Act 59 of the Public
Acts of 1978, as amended.

 

NOTE: Being Parcel No. 24-36-128-001 thru 24-36-128-331, of the City of
Southfield, County of Oakland.

 

 

 

 

EXHIBIT B

 

Secondary Market Transaction Information

 

(A)Any proposed program for the renovation, improvement or development of the
Property, or any part thereof, including the estimated cost thereof and the
method of financing to be used.

 

(B)The general competitive conditions to which the Property is or may be
subject.

 

(C)Management of the Property.

 

(D)Occupancy rate expressed as a percentage for each of the last five years.

 

(E)Principal business, occupations and professions carried on in, or from the
Property.

 

(F)Number of Tenants occupying 10% or more of the total rentable square footage
of the Property and principal nature of business of such Tenant, and the
principal provisions of the leases with those Tenants including, but not limited
to: rental per annum, expiration date, and renewal options.

 

(G)The average effective annual rental per square foot or unit for each of the
last three years prior to the date of filing.

 

(H)Schedule of the lease expirations for each of the ten years starting with the
year in which the registration statement is filed (or the year in which the
prospectus supplement is dated, as applicable), stating:

 

(1)The number of Tenants whose leases will expire. The

 

(2)total area in square feet covered by such leases. The

 

(3)annual rental represented by such leases.

 

(4)The percentage of gross annual rental represented by such leases.

 

Ex. B-1

 

 

EXHIBIT C

 

2013 & 2014 Annual Budgets

 

(Attached)

 

Ex. B-2

 

 

Property North Park North Park Towers   City, State Towers 2013 Operating
Business Plan and Budget   Units: Southfield, Financial Summary   Sq. R. Ml    
  313       455,002    

 

   January   February   March   April   May   June   July   August   September  
October   November   December   Total  Occupancy  94%   93%   93%   94%   94%  
93%   93%   94%   93%   94%   93%   94%   93%  Rental %                     
                                            Income                          
                                       ::!J).Q§. Gross potential rent 
 392,632    392,632    392,632    392,632    392,632    392,632    392,632  
 392,632    392,632    392,632    392,632    392,632    4,711,584  401O loss to
lease   (77,978)   (77,192)   (76,519)   (75,873)   (75,253)   (74,340) 
 (73,481)   (72,994)   (72,055)   (71,782)   (70,656)   (70,223)   (888,345) —
Total property revenue   314,654    315,440    316,113    316,759    317,379  
 318,292    319,151    319,638    320,577    320,850    321,976    322,409  
 3,823,238                                                                    
Reductions in rent                                                             
    4025 Vacancy rent   (23,320)   (27,226)   (25,577)   (25,372)   (25,168) 
 (27,418)   (27,009)   (24,145)   (27,623)   (22,508)   (29,055)   (23,736) 
 (308,157) 4030 Model unit   (895)   (895)   (895)   (895)   (B95)            
 (895)   (8<)!0)   (895)   (895)   (895)   (10,740) — Total rent reductions 
 (24,215)   (28,121)   (26,472)   (26,267)   (26,063)   (28,313)   (27,904) 
 (25,040)   (28,518)   (23,403)   (29,950)   (24,631)   (318,897)             
                                                      Collection loss           
                                                      4050 Allowances and
concessions   (300)   (300)   (300)   (300)   (300)   (300)   (300)   (300) 
 (300)   (300)   (300)   (300)   (3,600) 4058 Bad Debt rent   (7,866)   (7,886) 
 (7,903)   (7,919)   (7,934)   (7,'l!OZL        fl,991)    (8,)   (8,021) 
 (S,049)    (8,060)   (95,581) Total concessions   (8,166)   (8,186)   (8,203) 
 (8,219)   (8,234)   (8,257)   (8,279)   (8,291)   (8,314)   (8,321)   (8,349) 
 (8,360)   (99,181)                                                          
         Net rental income   282,272    279,133    281,438    282,273  
 283,082    281,721    282,968    286,307    283,745    289,126    283,677  
 289,418    3,405,161                                                           
         Other income                                                        
         \l.\l.Q NSF fees   150    225    150    75    150    225    150    75  
 225    150    75    150    1,800  4085 Corporate rents   200         175       
 200         525              200    400    525    2,225  4086 Retail rents 
 2,865    3,665    3,665    3,665    3,665    3,665    3,665    3,665    3,665  
 3,665    3,665    3,665    43,180  4090 Water reimbursements   16,345  
 16,345    16,345    16,345    16,345    16,345    16,345    16,345    16,345  
 16,345    16,345    16,345    196,137  LQ§:§. Energy use reimbursements   128  
 128    128    128    128    128    128    128    128    128    128    128  
 1,530  4100 other reimbursements   100    100    100    100    100    100  
 100    100    100    100    100    100    1,200  4105 Late fees ·   3,735  
 1,995    2,430    2,240    2,470    3,195    2,895    1,835    2,685    2,609  
 2,609    2,609    31,307  1JJQ Laundry commissions   2,547    3,427    2,747  
 2,626    3,384    2,735    5,354    538    2,527    3,114    2,740    2,740  
 34,479  4120 Pet fees        150         150         150         150       
 150         150    900  4125 Pet Rent   500    500    500    500    500  
 500    500    500    500    500    500    500    6,000  4140 Month to
month/short term fees   150    150    150    150    150    150    150    150  
 150    150    150    150    1,800  4.:1. 1.. Parking charges   6,975    6,975  
 6,975    7,200    7,425    7,650    7,650    7,650    7,650    7,650    7,650  
 7,650    89,100  4150 Application fees   150    300    250    225    225       
 300    175    325    125    375    175    2,625  Administration fees -MORE FOR
PG                                                                  :1.1.!i!>
Legal fees   1,488    1,488    1,488    1,488    1,488    1,488    1,488  
 1,488    1,488    1,488    1,488    1,488    17,856  4160 Storage fees   500  
 500    500    500    500    500    500    500    500    500    500    500  
 6,000  4165 Clubhouse fees   175         175    175    350    525    350  
 350    175    525    175    700    3,675  4170 Cleaning/Damage fees           
 500              500              500              500    2,000  4175
Termination fees             1,100              1,100              1,100       
      1,100    4,400  4'1"·16 cancellation fees   100              100       
           100              100         400  4180 Bad Debt recovery   550  
 550    550    550    550    550    550    550    550    550    550    550  
 6,600  :.tl.fa§ cable TV income        1,400              1,400            
 1,400              1,400         5,600  4190 Interest on Bank Accounts   50  
 54    64    69    74    67    77    69    36    30    40    40    670  Total
other income   36,707    37,952    37,991    36,285    39,104    39,572  
 40,725    35,767    38,649    37,979    38,989    39,764    459,484         
                                                           Total income from
operations   318,979    317,085    319,429    318,557    322,185    321,294  
      322,074    322,393    327,104    322,666    329,183    3,864,644 

 

 

 

  

Property North Park Towers North Park Towers   City, State Southfield, Ml 2013
Operating Business Plan and Budget   Units: 313 Financial Summary   Sq. Ft.
455,002    

 

   January   February   March   April   May   June   July   August   September  
October   November   December   Total  EXPENSES                               
                                  Administrative                               
                                  §J!.i:.Q. Communications   3,134    3,134  
 3,134    3,134    3,134    3,134    3,134    3,134    3,134    3,134    3,134  
 3,134    37,608  6040 Dues & subscriptions   580                        500  
                               1,080  6045 Mileage and trave   35    35    35  
 35    35    35    35    35    35    35    35    35    420  6050 Supplies 
 365    365    415    365    433    365    415    365    365    365    415  
 365    4,598  §Q§ Postage   65    65    143    65    65    143    65    65  
 143    255    65    143    1,282  6065 Legal & professional   2,275    2,275  
 2,275    2,275    2,275    2,600    2,275    2,925    2,925    2,275    2,275  
 2,275    28,925  6066 Furniture and equipment rental   397    397    397  
 397    397    397    397    397    397    397    397    397    4,764  §Q§
Corporate unit expense                                                        
         609"! Training and education       580    65    600         65       
      665    266         65    2,306  6100 Other management and office   1215  
 1270    1260    1215    1215    1260    1215    1215    1260    1270    1215  
 1260    14 870  Total adminisrative   8,066    8,121    7,724    8,086  
 7,554    8,499    7,536    8,136    8,924    7,997    7,536    7,674    95,853 
                                                                   Property
Management Fees                                                                 
7034 Management Fee   12,759    12,683    12,777    12,742    12,887    12,852  
 12,948    12,883    12,896    13,084    12,907    13,167    154,586         
                                                           Payroll and benefits 
                                                                6215
Maintenance   14,232    14,232    14,232    14,232    21,348    14,232  
 14,232    14,232    14,232    21,348    14,232    14,232    185,020  §6.?.Q
Administrative   4,578    4,578    4,578    4,578    6,867    4,578    4,578  
 4,578    4,578    6,867    4,578    4,578    59,516  6225 Leasing   6,242  
 6,620    6,460    6,441    9,363    6,639    6,599    6,322    6,658    9,106  
 6,797    6,282    83,529  6260 Garage and door staff   6,760    6,760  
 6,760    6,760    10,141    6,760    6,760    6,760    6,760    10,141  
 6,760    6,760    87,885  Admin Temp Payroll                               
                                  .9.f.66 Employee housing   3,475    3,475  
 3,475    3,475    3,475    3,475    3,475    3,475    3,475    3,475    3,475  
 3,475    41,700  6269 Payroll taxes   6,538    6,532    5,963    5,546  
 6,728    3,503    3,083    2,851    2,673    3,937    2,685    2,642    52,682 
6270 Payroll benefits   4 853    4 853    4 853    4 853    4 853    4 853    4
853    4853    4 853    4 853    4 853    4 853    58 240  Total payroll and
benefits   46,679    47,051    46,322    45,886    62,776    44,041    43,582  
 43,072    43,231    59,727    43,381    42,824    568,572                   
                                                 Grounds expenses           
                                                      6305 Landscaping      
      1,750    4,750    6,700    4,000    4,000    4,000    6,600    4,200  
 1,100         37,100  1.Q. Exterior                            600    500  
           600              1,700  sprinklers 6320 Trash   1,470    1,470  
 1,470    1,470    1,470    1,470    1,470    1,470    1,470    1,470    1,470  
 1,470    17,640  removal 6325 Snow   8,000    8,900    3,375    1,590       
                     900         1,590    24,355  removal   100            
 300    4,380    400    200         781                   6,161  Pool Supplies 
                                                                Parking
Lighting                                                                  Total
grounds expenses   9,570    10,370    6,595    8,110    12,550    6,470  
 6,170    5,470    8,851    7,170    2,570    3,060    86,956                   
                                                 Marketing                     
                                            6405 Advertising   2,445    2,445  
 1,255    1,255    1,630    1,255    1,255    1,255    1,255    1,255    1,255  
 1,255    17,815  St tQ.§ Site mateirals   1,040    540    140    40    40  
 40    40    40    140    540    40    40    2,680  640"? Promotion   950  
 1,825    1,300    925    950    975    1,650    925    1,100    925    950  
 2,775    15,250  6408 Credit bureau fees   112    230    180    174    167  
 236    223    137    242    87    285    124    2,195  6420 Referral fees -
Locator Seivices                                                             
    §.2:.1 Referral fees - Residents   446    919    719    695    670    942  
 893    546    967    348    1140    497    8 780  Total marketing   4,993  
 5,958    3,594    3,088    3,457    3,448    4,061    2,903    3,703    3,155  
 3,670    4,691    46,720                                                      
              Common Area Maintenance                                         
                        6432 CAM - carpet cleaning and repair   575    575  
 575    575    575    575    575    575    575    575    575    575    6,900 
6434 CAM - Electrical   100    25    25    25    25    100    25    25    25  
 100    25    25    525  6436 CAM - Elevator repairs and inspetio   1,050  
 10,123    1,050    1,050    10,577    1,050    1,050    10,577    1,050  
 1,050    10,577    1,050    50,253  6438 CAM - Extermination   1,053    1,053  
 1,053    1,053    1,053    1,053    1,053    1,053    1,053    1,053    1,053  
 1,053    12,636  6440 CAM - HVAC   6,399    3,899    3,899    6,399    3,899  
 3,899    6,399    3,899    3,965    6,465    3,965    3,965    57,052  6442 CAM
- Interior plant maintenace   158    158    158    158    158    158    158  
 158    158    158    158    158    1,896 

 

 

 

  

Property North Park Towers North Park Towers   City, State Southfield, Ml 2013
Operating Business Plan and Budget   Units: 313 Financial Summary   Sq. Ft.
455,002    

 

   January   February   March   April   May   June   July   August   September  
October   November   December   Total  6444 CAM - Janitorial   1,942    1,942  
      1,942    1,942    1,942    1,942    1,942    1,942    1,942    1,972  
 1,942    23,336  6446 CAM - Locks and keys             600    500            
      350    500                   1,950  .\l.'0. §. CAM - Lighting supplies 
           1,993              1,000         820    1,000              1,000  
 5,813  6450 CAM - Other building services   2,711    612    870    112    612  
 870    112    612    870    112    612    870    8,975  6452 CAM - Painting &
Decorating        700    700    700                        700         700  
      3,500  6454 CAM - Parking lot and garage repair             700    300  
           700              300    700         2,700  645fJ O\M - Plumbing 
 567    867    1,666    567    867    1,666    567    867    1,666    567  
 867    1,666    12,400  6458 O\M - Window cleaning                          
                                       6460 O\M - Windows and doors   1,()Q() 
                          800              1,100              2,900  Total
Common Area   15,555    19,954    15,231    13,381    19,708    12,313  
 13,381    20,878    13,504    13,422    21,204    12,304    190,836         
                                                           Maintenance
Maintenance expenses                                                        
         6620 Appliance repairs   45    45    45    45    45    45    45    45  
 45    45    45    45    540  6530 Cleaning supplies   75    75    75    75  
 75    75    75    75    75    75    75    75    900  6605 Drapery and blind
repairs                                                                  6545
Electrical   125    125    125    125    125    125    125    125    125  
 125    125    125    1,500  §;?.§Q Plumbing   420    420    420    420    420  
 420    420    420    420    420    420    420    5,040  6555 HVAC   300  
 100    300    450    300    100    300    100    650    100    300    100  
 3,100  6525 Lighting supplies             150              150            
 150              150    600  §§.Z.Q Locks & Keys   100    250    100    175  
 100    250    100    100    175    250    100    100    1,800  6585 Other
maintenance                  25                   25              25    500  
 575  6580 Small tools and equipment   100              100              100  
           100              400  6540 Turnover expenses   3,888    4,163  
 4,998    3,315    4,733    4,340    5,375    2,920    5,823    2,160    6,300  
 2,855    50,868  §;?_4.1Non Tum - Carpet cleaning & repair   1,500    1,500  
 1,500    1,500    1,500    1,500    1,500    1,500    1,500    1,500    1,500  
 1,500    18,000  6542 Non Turnover - Paint & Drywall   100    100    100  
 100    100    100    100    100    100    100    100    100    1,200  Contract
Cleaning                                                                  §§:1.Q
Uniforms   572                        72              500         1,100       
 2,244  6565 Windows & Doors        775    750    500    1525            
 1525    500    350    775    750    7 450  Total maintenance expense   7,225  
 7,553    8,563    6,830    8,923    7,177    8,140    6,935    10,063  
 5,225    10,865    6,720    94,217                                            
                        Security                                              
                   Monitoring and building access   500              500       
      o              500              oo  Security and alarm services 
 1,§!5!l_    _l,§_41    .-1,650    1,541    2,400     1,§fill    1 696  
 1,641    1,541    1,696    2,300    1,596    21,002  Total security   2,150  
 1,641    1,650    2,041    2,400    1,650    2,196    1,641    1,541    2,196  
 2,300    1,596    23,002                                                      
              Utilities                                                        
         6805 Electricity   23,080    21,480    23,080    21,480    23,080  
 26,480    32,580    36,980    35,580    24,980    21,580    19,980    310,360 
§J.1.0. Vacant electric   916    1,388    1,189    1,164    1,139    1,412  
 1,362    1,016    1,436    818    1,610    966    14,414  6805 Current
Occupants   m    m    m    m    m    m    m    m    m    m    m    m       685
Gas   47,070    46,846    37,686    37,686    13,366    5,996    3,706  
 3,706    3,706    5,580    14,492    18,614    238,454  6820 Water/sewage 
 15,414_    14,80    14,472    14,204    14,793    17,491    23,522    26,267  
 22,124    24,843    15,248    29,028    231,988  — Total utilities   86,630  
 84,445    76,577    74,684    52,528    51,529    61,320    68,119    62,996  
 56,371    53,080    68,738    797,016                                       
                             6905 Insurance   10,545    10,545    10,545  
 10,545    10,545    10,545    10,545    10,592    10,565    10,845    10,845  
 10,845    127,507  §Q.11 Property taxes   26,zQQ_    :1§200    .,700  
 26,700    26,700    26,7.Q.0   26,700    26,700    26,700    26,700    26,700  
 26,700    320,400  Total fixed expenses   37,245    37,245    37,245  
 37,245    37,245    37,245    37,245    37,292    37,265    37,545    37,545  
 37,545    447,907  Total operating expenses   230,871    235,022    216,278  
 212,094    220,028    185,223    196,578    207,329    202,974    205,892  
 195,057    198,318    2,505,664                                            
                        Net Operating Income   88,109    82,063    103,151    

106,463

    102,157     136,071    127,116    114,745    119,419    121,212    127,609  
 130,864    1,358,980 

 

 

 

  

Property North Park Towers North Park Towers   City, State Southfield, Ml 2014
Operating Business Plan and Budget   Units: 313 Financial Summary   Sq. Ft.
455,002    

 

   January   February   March   April   May   June   July   August   September  
October   November   December   Total  Occupancy %  94%   93%   93%   94%  
95%   94%   94%   95%   95%   93%   94%   93%   94%                            
                           Rental ncome                                         
                        4005 Gross potential rent   392,637    392,637  
 392,637    392,637    392,637    392,637    392,637    392,637    392,637  
 392,637    392,637    392,637    4,711,644  4010 Loss to lease   (74,849) 
 (73,653)   (72,211)   (71,028)   (70,279)   (68,880)   (67,697)   (66,818) 
 (65,852)   (64,539)   (63,747)   (62,174)   (821,726) Total property revenue 
 317,788    318,984    320,426    321,609    322,358    323,757    324,940  
 325,819    326,785    328,098    328,890    330,463    3,889,918              
                                                      Reductions in rent       
                                                           4025 Vacancy rent 
 (23,730)   (26,817)   (27,214)   (22,060)   (20,014)   (23,083)   (22,060) 
 (20,628)   (21,037)   (26,600)   (24,145)   (27,828)   (285,215) A030 Model
unit   (895)   (895)   (895)   (895)   (895)   (895)   (895)   (895)   (895) 
 (895)   (895)   (895)   (10,740) Total rent reductions   (24,625)   (27,712) 
 (28,109)   (22,955)   (20,909)   (23,978)   (22,955)   (21,523)   (21,932) 
 (27,495)   (25,040)   (28,723)   (295,955)                                 
                                  Collection loss                               
                                  4050 Allowances and concessions   (400) 
 (400)   (400)   (400)   (400)   (400)   (400)   (400)   (400)   (400)   (400) 
 (400)   (4,800) 4058 Bad Debt rent   (6,356)   (6,380)   (6,409)   (6,432) 
 (6,447)   (6,475)   (6,499)   (6,516)   (6,536)   (6,562)   (6,578)   (6,609) 
 (77,798) Total concessions   (6,756)   (6,780)   (6,809)   (6,832)   (6,847) 
 (6,875)   (6,899)   (6,916)   (6,936)   (6,962)   (6,978)   (7,009)   (82,598)
                                                                   Net rental
income   286,408    284,492    285,509    291,822    294,602    292,904  
 295,086    297,380    297,917    293,641    296,873    294,731    3,511,364    
                                                                Other income 
                                                                4080 NSF fees 
 150    225    150    75    150    225    150    75    225    150    75    150  
 1,800  4085 Corporate rents                                                   
              4086 Retail rents   3,615    3,615    3,615    3,615    3,615  
 3,615    3,615    3,615    3,615    3,615    3,615    3,615    43,380  4090
Water reimbursements   14,824    17,326    12,994    20,144    15,595  
 19,376    19,063    23,947    19,393    22,411    14,735    15,608    215,416 
4095 Energy use reimbursements                                              
                   4·100 Other reimbursements   75    75    75    75    75  
 75    75    75    75    75    75    75    900  4105 Late fees   3,735  
 1,985    3,620    3,570    3,775    4,605    2,900    4,000    2,080    2,609  
 2,609    2,609    38,097  4110 Laundry commissions   2,547    2,622    2,696  
 3,290    2,662    2,838    3,535    2,788    2,788    2,942    2,740    2,740  
 34,188  4120 Pet fees   150    150    150    150    150    150    150    150  
 150    150    150    150    1,800  4125 Pet Rent   550    550    550    550  
 550    550    550    550    550    550    550    550    6,600  4140 Month to
month/short term fees   250    250    250    250    250    250    250    250  
 250    250    250    250    3,000  4145 Parking charges   7,875    7,875  
 7,875    7,875    7,875    7,875    7,875    7,875    7,875    7,875    7,875  
 7,875    94,500  4150 Application fees   175    300    300    250    175  
 300    250    200    225    275    175    325    2,950  Administration fees
-MORE FOR PG                                                                 
4155 Legal fees   1,735    1,735    1,735    1,735    1,735    1,735    1,735  
 1,735    1,735    1,735    1,735    1,735    20,820  4160 Storage fees   575  
 575    575    575    575    575    575    575    575    575    575    575  
 6,900  4165 Clubhouse fees   175    175    175    175    175    525    350  
 350    175    350    350    350    3,325  4170 Cleaning/Damage fees   80  
 80    80    80    80    80    80    80    80    80    80    80    960  4175
Termination fees                            1,100              1,100            
      2,200  4176 cancellation fees   100              100                 
 100              100         400  4·1ao Bad Debt recovery   350    350    350  
 350    350    350    350    350    350    350    350    350    4,200  4186
cable 1V income        1,400              1,400              1,400            
 1,400         5,600  419 0 nterest on Bank Accounts                          
                                       Total other income   36,961    39,288  
 35,190    42,859    39,187    44,224    41,503    48,115    41,241    43,992  
 37,439    37,037    487,036                                                 
                   Total income from operations   323,369    323,780  
 320,699    334,681    333,789    337,128    336,589    345,495    339,159  
 337,633    334,312    331,768    3,998,400  EXPENS ES                          
                                       Administrative                          
                                       6020 Communications   2,841    2,841  
 2,841    2,841    2,841    2,841    2,841    2,841    2,841    2,841    2,841  
 2,841    34,092  5040 Dues & subscriptions                            600  
           700                   1,300  6045 Mileage and trave   20    20  
 20    20    20    20    20    20    20    20    20    20    240  6050 Supplies 
 255    255    305    255    323    255    305    255    255    255    305  
 255    3,278  5055 Postage   270    255    348    255    270    255    270  
 255    348    455    270    255    3,506  6065 Legal & professional   4,550  
 4,550    4,550    4,550    4,550    4,550    4,550    4,550    4,550    4,550  
 4,550    4,550    54,600 

 

 

 

  

Property North Park Towers North Park Towers   City, State Southfield, Ml 2014
Operating Business Plan and Budget   Units: 313 Financial Summary   Sq. Ft
455,002    

 

   January  February  March  April  May  June  July  August  September  October 
November  December  Total  Furniture and equipment rental   862   862   862 
 862   862   862   862   862   862   862   862   862   10,344  Corporate unit
expense                                                      Training and
education       1,000   200   300   1,500   100           200   186       100 
 3,586  610G Other management and office   1,650   1,650   1,695   1,650 
 1,650   1,695   1650   1,650   1,695   1,650   1,650   1,695   19,980  Total
adminisrative   10,448   11,433   10,821   10,733   12,016   11,178   10,498 
 10,433   11,471   10,819   10,498   10,578   130,926                        
                                Property Management Fees                     
                                7034 Management Fee   12,935   12,951   12,828 
 13,387   13,352   13,485   13,464   13,820   13,566   13,505   13,372   13,271 
 159,936                                                         Payroll and
benefits                                                      Maintena nee 
 12,969   12,969   12,969   12,969   19,453   12,969   12,969   12,969   12,969 
 19,453   12,969   15,269   170,897  Administrative   7,985   7,985   7,985 
 7,985   11,977   7,985   7,985   7,985   7,985   11,977   7,985   10,985 
 106,800  Leasing   3,720   4,121   4,427   4,107   4,902   4,374   4,107 
 3,734   3,841   5,595   3,628   5,087   51,642  Garage and door staff   5,331 
 5,331   5,331   5,331   7,997   5,331   5,331   5,331   5,331   7,997   5,331 
 5,331   69,307  Admin Temp Payroll                                             
        5266 Employee housing   4,425   4,425   4,425   4,425   4,425   4,425 
 4,425   4,425   4,425   4,425   4,425   4,425   53,100  Payroll taxes   6,166 
 6,170   5,717   5,265   6,250   3,334   2,913   2,684   2,499   3,735   2,481 
 3,042   50,256  Payroll benefits   4,853   4,853   4,853   4,853   4,853 
 4,853   4,853   4,853   4,853   4,853   4,853   4,853   58,240  Total payroll
and benefits   45,449   45,854   45,707   44,936   59,858   43,271   42,584 
 41,981   41,903   58,035   41,672   48,992   560,242                        
                                Grounds expenses                             
                        6305 Landscaping           1,800   8,675   9,350 
 3,875   2,600   3,875   9,350   4,900   1,100       45,525  6310 Exterior
sprinklers               700       800   200           800           2,500 
Trash removal   1,600   1,600   1,600   1,600   1,600   1,600   1,655   1,655 
 1,655   1,655   1,655   1,655   19,530  Snow removal   6,000   7,000   3,375 
 1,590                       1,000   1,590   1,590   22,145  Pools and
fountains   150           350   2,300   400   600       800               4,600 
Pool Supplies                                                      Parking
Lighting                                                      Total grounds
expenses   7,750   8,600   6,775   12,915   13,250   6,675   5,055   5,530 
 11,805   8,355   4,345   3,245   94,300                                        
                Marketing                                                     
6405 Advertising   1,559   1,559   1,559   1,559   1,559   1,559   1,559 
 1,590   1,590   1,590   1,590   1,590   18,863  8406 Site mateirals   40   790 
 140   540   540   40   40   290   140   40   40   540   3,180  6407 Promotion 
 1,225   1,950   1,275   1,200   1,425   1,250   1,925   1,200   1,375   1,400 
 1,225   3,250   18,700  6408 Credit bureau fees   112   196   206   173   117 
 201   173   134   145   190   123   223   1,992  6420 Referral fees - Locator
Services                                                      6421 Referral fees
- Residents   1,000   1,000   1,000   1,000   1,000   1,000   1,000   1,000 
 1,000   1,000   1,000   1,000   12,000  Total marketing   3,936   5,495 
 4,180   4,472   4,641   4,050   4,697   4,214   4,250   4,220   3,978   6,603 
 54,735                                                         Common Area
Maintenance                                                      CAM - carpet
cleaning and repair   600   600   600   600   600   1,100   600   1,100   600 
 600   600   600   8,200  CAM - Electrical   100   25   625   25   25   100 
 25   25   625   100   25   25   1,725  6436 CAM - Elevator repairs and
inspectic    2,036   11,362   2,036   2,036   11,828   2,036   2,036   11,828 
 2,036   2,036   11,828   2,036   63,134  6438 CAM – Extermination   1,053 
 803   1,053   803   1,053   803   1,053   803   1,053   803   1,053   803 
 11,136  6440 CAM – HVAC   6,444   3,944   3,944   6,444   3,944   3,944 
 6,444   3,944   4,011   6,511   4,011   4,011   57,596  5442 CAM - Interior
plant maintenance   170   170   170   170   170   170   170   170   170   170 
 170   170   2,040  6444 CAM – Janitorial   1,642   2,142   1,642   2,142 
 1,642   2,142   1,642   2,142   1,642   2,142   1,972   2,142   23,036  6446
CAM - Locks and keys           600   500               350   500             
 1,950  5448 CAM - Lighting supplies           1,600           1,600         
 1,600       300   1,600   6,700  6450 CAM - Other building services   2,327 
 1,052   727   127   627   427   127   627   727   552   627   727   8,674  6452
CAM - Painting & Decorating       500   700   500                   500     
 500       2,700  545,1 CAM - Parking lot and garage repair           200     
         200               200       600  6456 CAM - Plumbing   1,584   984 
 2,134   984   984   2,134   984   984   2,684   984   984   2,084   17,508 

 

 

 

  

Property North Park Towers North Park Towers   City, State Southfield, Ml 2014
Operating Business Plan and Budget   Units: 313 Financial Summary   Sq. Ft.
455,002    

 

   January  February  March  April  May  June  July  August  September  October 
November  December  Total  6458 CAM - Window cleaning           7,000         
                 785           7,785  5460 CAM - Windows and doors   1,000     
 550           550   1,000           1,000   550       4,650  Total Common Area
Maintenance   16,956   21,582   23,581   14,331   20,873   15,006   14,281 
 21,973   16,148   15,683   22,820   14,198   217,433                        
                                Maintenance expenses                         
                            6620 Appliance repairs   50   50   50   50   so 
 50   50   50   50   50   50   so   600  6530 Cleaning supplies   40   40   40 
 40   40   40   40   40   40   40   40   40   480  5605 Drapery and blind
repairs                                                      6545 Electrical 
 125   12S  12S  12S  12S  12S  12S  12S  125   12S  125   12S  1,SOO 6550
Plumbing   670   670   670   1,420   670   670   670   670   670   1,420   670 
 670   9,S40 5555 HVAC   300   100   300   450   300   100   300   100   650 
 100   300   100   3,100  6525 Lighting supplies           150           150 
         150           150   600  6570 Locks & Keys       350       400     
 350           400   150       200   1,850  6585 Other maintenance             
 25               25           25   500   575  6580 Small tools and equipment 
 100           100           100           100           400  6540 Turnover
expenses   3,5S7  4,829   4,930   3,014   3,637   4,902   4,414   2,470   4,025 
 3,247   3,714   5,213   47,9S3 6541 Non Turn - carpet cleaning & repair   2,SOO
 1,500   2,000   2,000   1,SOO  3,000   2,300   2,300   2,300   1,500  2,000 
 2,000   24,900  6542 Non Turnover - Paint & Drywall   50   50   50   50   50 
 50   50   so   50   50   50   50   600   Contract Cleaning                     
                                5610 Uniforms   572                   72     
     500       1,100       2,244  6565 Windows & Doors       77S  750   500 
 1,S2S          1,S2S  SQQ   3SO  775   7SO  7,4SO  Total maintenance expense 
 7,964   8,489   9,065   8,174   7,897   9,S09  8,049   7,3SS  9,460   7,132 
 8,849   9,848   101,792                                                        
Security                                                      5704 Monitoring
and building access                                                      §1.Q§
Security and alarm services   3,523   3,515   3,523   3,415   3,623   3,415 
 3,648   3,SlS  3,S23  3,SlS  3,S23  3,523   42,262  Total security   3,523 
 3,515   3,523   3,415   3,623   3,41S  3,648   3,S15  3,523   3,515   3,S23
 3,S23  42,262                                                        
Utilities                                                      §.?..Q§
Electricity   22,030   20,430   22,030   20,430   22,030   25,430   28,030 
 34,430   3S,030  25,430   22,030   20,430   297,760  68 · Vacant electric 
 644   893   925   763   598   845   763   647   680   875   677   974   9,283 
6805 Current Occupants   60   60   60   60   60   60   60   60   60   60   60 
 60   720  6815 Gas   51,362   49,612   37,686   30,816   18,646   2,580 
 5,580   5,580   6,280   17,264   25,110   29,016   279,532  6820 Water/sewage 
 15,414   18,S41  13,127   22,064   16 378   21,104   20,657   26,763   21,071 
 24,843   15,248   16,339   231,548  Total utilities   89,509   89,536   73,828 
 74,133   57,712   50,019   55,090   67,480   63,121   68,472   63,125   66,819 
 818,844                                                         6805 Insurance 
 10,545   10,545   10,545   10,545   10,54S  10,545   10,S45  10,592   10,S65
 10,845   10,845   10,84S  127,507  691G Property taxes   32,100   32,100 
 32,100   32,100   32 100   32,100   32,100   32,100   32,100   32,100   32,100 
 32,100   385,200  Total fixed expenses   42,64S  42,64S  42,64S  42,64S  42,64S
 42,64S  42,64S  42,692   42,665   42,94S  42,94S  42,945   512,707  Total
operating expenses   241,115   250,100   232 954   229,141   235,867   199,254 
 200,010   218 993   217,913   232,681   215,128   220,022   2,693,177        
                                                Net Operating Income   82,254 
 73,680   87,745   105,540   97,922   137,874   136,578   126,502   121,246 
 104,952   119,184   111,745   1,305,223 

 

 

 

 

2014 Budget   North Park Towers (16500 North Park Drive)     Back to Summary

 

Account Number                                         Account Name  Exterior
Capital Improvements                                                          
                     Vendor/contractor  Description  February  March  April 
May  June  July  August  September  October  November  December  Total    
January                                                   Pool Upgrades         
 1,500   2,000                               3,500     Misc concrete and catch
basin repairs               10,000                       2,500       12,500    
Parking. lighting upgrades 27 out of the 44                                     
               poles remaining. Bulbs have a 3 year   1,640   1,640   1,640 
 1,640       1,640                       8,200     life Garage repairs         
     25,000                               25,000     Waterproofing I building 
             20,000                               20,000     repairs Hand rail 
                                                   replacements                 
     13,000                       13,000     Asphalt seal coat             
 29,000                               29,000     West Tower loading dock ramp 
         100,000                                   100,000     replacement 1/2
Balcony Painting &                                                     Columns 
                                                                             
                               1,640   1,640   103,140   87,640       14,640 
             2,500       211,200                                               
           Bank Required Repairs (PCNA)                                         
           Asphalt Repair               6,000                             
 6,000     Exterior Concrete - Columns (2 of 38)               5,000         
                     5,000     Concrete repairs               3,500             
                 3,500     Garage leak repair               10,000             
                 10,000     Panel repairs               5,500                 
             5,500     ADA compliance               2,150                     
         2,150    Total Bank Required                                         
     32,150 

 

 

 

 

2014 Budget   North Park Towers (16500 North Park Drive)    

 

Account Number                                              Account Name 
Recurring Interior Capital Improvements                                        
                                                 Vendor/contractor  Description 
January  February:  March  April  May  June  July  August  September  October 
November  December  Total  SO  vacant carpet -   1,907   2,581   3,476   2,605 
 1,683   3,366   2,805   2,020   2,244   3,142   1,795   3,815     31,640 20% of
turnover carpet replaced avg $1700 SO  vinyl replacement   1,000   2,000 
 2,000   1,500   1,000   2,000   1,500   1,000   1,500   1,500   1,000   2,000 
    18,.000 30% of vinyl replace avg. $500 Signature Design  blind replacement 
 2,000           2,000           2,000           2,000              8,000 GE 
appliance .replacement       5,500       5,500       5,500       5,500     
 5,500       5,500      33,000 Grainger  Delta shower valves ($110)             
 1,670           1,870           1,870       1,870      71480 Estlmate4 lines
17valves per line    Shower tile from valve replacement               500     
     500           500       500      2,000 Grainger  convector motors($120 per
motor)   2,400       2,400           2,400   2,400           2,400       2,400 
    14,400 Tech Mechanical  retail HVAC repair                   1,500         
 1,500                      3,000 Tech Mechanical  Line freezes I boiler&
chiller repairs       4,500               2,500           15,000         
 2,500      24,500 Tech Mechanical  Boilers - misc repairs           5,000     
                     15,000              20,000 Mechanical failure of components
Tech Mechanical  Domestic Water Boilers               5,000                     
                5,000 Mechanical f:ailure of components Tech Mechanical 
Chillers - misc. repairs               10,000   15,000       10,000             
            35,000 Mechanical failure of components    Lobby Furniture/ chairs 
                             20,000                      20,000 Mail) lobby and
3 smaller lobbies    New office computers   -6,400                             
                    6,400 Four new computer stations @ $1600    Fitness room
improvements       3500                                              3,500 New
flat screen ·equipment replacement    Hallway carpet replacement             
     27,200   27,200   13,600                          6B,OOO 10 hallways at
$6800 per hallway, 4 year plan (36 totnl)    Arcade level floor       7400     
                                                                               
                                 13,707   25,481   12,878   29,175   46,363 
 42,966   34,675   30,020   18,744   31,912   2,795   18,585      307,320    
                                            av. per mo.     25,610