Exhibit 10.1

MULTIFAMILY LOAN AND SECURITY AGREEMENT

(NON-RECOURSE)

BY AND BETWEEN

POINTE AT CANYON RIDGE, LLC, A

GEORGIA LIMITED LIABILITY COMPANY

AND

CBRE MULTIFAMILY CAPITAL, INC., A

DELAWARE CORPORATION

DATED AS OF

MAY 31, 2013

 

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TABLE OF CONTENTS

 

ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS

    1     

Section 1.01.

   

Defined Terms

    1     

Section 1.02.

   

Schedules, Exhibits and Attachments Incorporated

    1   

ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS

    2     

Section 2.01.

   

Mortgage Loan Origination and Security

    2     

(a)

  

Making of Mortgage Loan

    2     

(b)

  

Security for Mortgage Loan

    2     

(c)

  

Protective Advances

    2     

Section 2.02.

   

Payments on Mortgage Loan

    2     

(a)

  

Debt Service Payments

    2     

(b)

  

Capitalization of Accrued But Unpaid Interest

    3     

(c)

  

Late Charges

    3     

(d)

  

Default Rate

    4     

(e)

  

Address for Payments

    5     

(f)

  

Application of Payments

    5     

Section 2.03.

   

Lockout/Prepayment

    6     

(a)

  

Prepayment; Prepayment Lockout; Prepayment Premium

    6     

(b)

  

Voluntary Prepayment in Full

    6     

(c)

  

Acceleration of Mortgage Loan

    7     

(d)

  

Application of Collateral

    7     

(e)

  

Casualty and Condemnation

    7     

(f)

  

No Effect on Payment Obligations

    7     

(g)

  

Loss Resulting from Prepayment

    8   

ARTICLE 3 - PERSONAL LIABILITY

    8     

Section 3.01.

   

Non-Recourse Mortgage Loan; Exceptions

    8     

Section 3.02.

   

Personal Liability of Borrower (Exceptions to Non-Recourse Provision)

    8     

(a)

  

Personal Liability Based on Lender’s Loss

    8     

(b)

  

Full Personal Liability for Mortgage Loan

    10     

Section 3.03.

   

Personal Liability for Indemnity Obligations

    10     

Section 3.04.

   

Lender’s Right to Forego Rights Against Mortgaged Property

    10   

ARTICLE 4 - BORROWER STATUS

    11     

Section 4.01.

   

Representations and Warranties

    11     

(a)

  

Due Organization and Qualification

    11     

(b)

  

Location

    11     

(c)

  

Power and Authority

    11     

(d)

  

Due Authorization

    12     

(e)

  

Valid and Binding Obligations

    12     

(f)

  

Effect of Mortgage Loan on Borrower’s Financial Condition

    12     

(g)

  

Economic Sanctions, Anti-Money Laundering and Anti-Corruption

    12     

(h)

  

Borrower Single Asset Status

    13     

(i)

  

No Bankruptcies or Judgments

    14   

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page i Fannie Mae    06-12    © 2012 Fannie Mae

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(j)

  

No Litigation

    15     

(k)

  

Payment of Taxes, Assessments and Other Charges

    15     

(l)

  

Not a Foreign Person

    15     

(m)

  

ERISA

    15     

(n)

  

Default Under Other Obligations

    16     

(o)

  

Prohibited Person

    16     

Section 4.02.

   

Covenants

    16     

(a)

  

Maintenance of Existence; Organizational Documents

    16     

(b)

  

Anti-Money Laundering, Anti-Corruption and Economic Sanctions

    17     

(c)

  

Payment of Taxes, Assessments and Other Charges

    17     

(d)

  

Borrower Single Asset Status

    18     

(e)

  

ERISA

    19     

(f)

  

Notice of Litigation or Insolvency

    19     

(g)

  

Payment of Costs, Fees, and Expenses

    19   

ARTICLE 5 - THE MORTGAGE LOAN

    20     

Section 5.01.

   

Representations and Warranties

    20     

(a)

  

Receipt and Review of Loan Documents

    20     

(b)

  

No Default

    20     

Section 5.02.

   

Covenants

    20     

(a)

  

Ratification of Covenants; Estoppels; Certifications

    20     

(b)

  

Further Assurances

    21     

(c)

  

Sale of Mortgage Loan

    21     

(d)

  

Limitations on Further Acts of Borrower

    22     

(e)

  

Financing Statements; Record Searches

    22   

ARTICLE 6 - PROPERTY USE, PRESERVATION AND MAINTENANCE

    23     

Section 6.01.

   

Representations and Warranties

    23     

(a)

  

Compliance with Law; Permits and Licenses

    23     

(b)

  

Property Characteristics

    23     

(c)

  

Property Ownership

    24     

Section 6.02.

   

Covenants

    24     

(a)

  

Use of Property

    24     

(b)

  

Property Maintenance

    24     

(c)

  

Property Preservation

    26     

(d)

  

Property Inspections

    27     

(e)

  

Compliance with Laws

    27     

Section 6.03.

   

Mortgage Loan Administration Matters Regarding the Property

    28     

(a)

  

Property Management

    28     

(b)

  

Subordination of Fees to Affiliated Property Managers

    28     

(c)

  

Physical Needs Assessment

    28   

ARTICLE 7 - LEASES AND RENTS

    28     

Section 7.01.

   

Representations and Warranties

    28     

(a)

  

Prior Assignment of Rents

    29     

(b)

  

Prepaid Rents

    29   

 

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Page ii Fannie Mae    06-12    © 2012 Fannie Mae

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Section 7.02.

   

Covenants

    29     

(a)

  

Leases

    29     

(b)

  

Commercial Leases

    29     

(c)

  

Payment of Rents

    31     

(d)

  

Assignment of Rents

    31     

(e)

  

Further Assignments of Leases and Rents

    31     

(f)

  

Options to Purchase by Tenants

    31     

Section 7.03.

   

Mortgage Loan Administration Regarding Leases and Rents

    31     

(a)

  

Material Commercial Lease Requirements

    31     

(b)

  

Residential Lease Requirements

    32   

ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING

    32     

Section 8.01.

   

Representations and Warranties

    32     

(a)

  

Financial Information

    32     

(b)

  

No Change in Facts or Circumstances

    32     

Section 8.02.

   

Covenants

    33     

(a)

  

Obligation to Maintain Accurate Books and Records

    33     

(b)

  

Items to Furnish to Lender

    33     

(c)

  

Delivery of Books and Records

    36     

Section 8.03.

   

Mortgage Loan Administration Matters Regarding Books and Records and Financial
Reporting

    36     

(a)

  

Right to Audit Books and Records

    36     

(b)

  

Credit Reports; Credit Score

    36   

ARTICLE 9 - INSURANCE

    37     

Section 9.01.

   

Representations and Warranties

    37     

(a)

  

Compliance with Insurance Requirements

    37     

(b)

  

Property Condition

    37     

Section 9.02.

   

Covenants

    37     

(a)

  

Insurance Requirements

    37     

(b)

  

Delivery of Policies, Renewals, Notices and Proceeds

    38     

Section 9.03.

   

Mortgage Loan Administration Matters Regarding Insurance

    38     

(a)

  

Lender’s Ongoing Insurance Requirements

    38     

(b)

  

Application of Proceeds on Event of Loss

    39     

(c)

  

Payment Obligations Unaffected

    41     

(d)

  

Foreclosure Sale

    42     

(e)

  

Appointment of Lender as Attorney-In-Fact

    42   

ARTICLE 10 - CONDEMNATION

    42     

Section 10.01.

   

Representations and Warranties

    42     

(a)

  

Prior Condemnation Action

    42     

(b)

  

Pending Condemnation Actions

    42     

Section 10.02.

   

Covenants

    42     

(a)

  

Notice of Condemnation

    42     

(b)

  

Condemnation Proceeds

    43     

Section 10.03.

   

Mortgage Loan Administration Matters Regarding Condemnation

    43   

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page iii Fannie Mae    06-12    © 2012 Fannie Mae

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(a)

  

Application of Condemnation Awards

    43     

(b)

  

Payment Obligations Unaffected

    43     

(c)

  

Appointment of Lender as Attorney-In-Fact

    43     

(d)

  

Preservation of Mortgaged Property

    43   

ARTICLE 11 - LIENS, TRANSFERS AND ASSUMPTIONS

    44     

Section 11.01.

   

Representations and Warranties

    44     

(a)

  

No Labor or Materialmen’s Claims

    44     

(b)

  

No Other Interests

    44     

Section 11.02.

   

Covenants

    44     

(a)

  

Liens; Encumbrances

    44     

(b)

  

Transfers

    45     

(c)

  

No Other Indebtedness and Mezzanine Financing

    47     

Section 11.03.

   

Mortgage Loan Administration Matters Regarding Liens, Transfers and Assumptions

    47     

(a)

  

Assumption of Mortgage Loan

    47     

(b)

  

Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates

    49     

(c)

  

Estate Planning

    49     

(d)

  

Termination or Revocation of Trust

    50     

(e)

  

Death of Key Principal or Guarantor; Controlling Interest Transfer Due to Death

    50     

(f)

  

Bankruptcy of Guarantor

    52     

(g)

  

Further Conditions to Transfers and Assumption

    53     

(h)

  

Securities Activities in Publicly-Held Corporation or Publicly-Held Trust

    54   

ARTICLE 12 - IMPOSITIONS

    55     

Section 12.01.

   

Representations and Warranties

    55     

(a)

  

Payment of Taxes, Assessments and Other Charges

    55     

Section 12.02.

   

Covenants

    56     

(a)

  

Imposition Deposits, Taxes, and Other Charges

    56     

Section 12.03.

   

Mortgage Loan Administration Matters Regarding Impositions

    56     

(a)

  

Maintenance of Records by Lender

    56     

(b)

  

Imposition Accounts

    56     

(c)

  

Payment of Impositions; Sufficiency of Imposition Deposits

    57     

(d)

  

Imposition Deposits Upon Event of Default

    57     

(e)

  

Contesting Impositions

    57     

(f)

  

Release to Borrower

    58   

ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS

    58     

Section 13.01.

   

Covenants

    58     

(a)

  

Initial Deposits to Replacement Reserve Account and Repairs Escrow Account

    58     

(b)

  

Monthly Replacement Reserve Deposits

    58     

(c)

  

Payment for Replacements and Repairs

    58     

(d)

  

Assignment of Contracts for Replacements and Repairs

    59     

(e)

  

Indemnification

    59     

(f)

  

Amendments to Loan Documents

    59     

(g)

  

Administrative Fees and Expenses

    59   

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page iv Fannie Mae    06-12    © 2012 Fannie Mae

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Section 13.02.

   

Mortgage Loan Administration Matters Regarding Reserves

    60     

(a)

  

Accounts, Deposits, and Disbursements

    60     

(b)

  

Approvals of Contracts; Assignment of Claims

    67     

(c)

  

Delays and Workmanship

    67     

(d)

  

Appointment of Lender as Attorney-In-Fact

    67     

(e)

  

No Lender Obligation

    68     

(f)

  

No Lender Warranty

    68   

ARTICLE 14 - DEFAULTS/REMEDIES

    68     

Section 14.01.

   

Events of Default

    68     

(a)

  

Automatic Events of Default

    68     

(b)

  

Events of Default Subject to a Specified Cure Period

    70     

(c)

  

Events of Default Subject to Extended Cure Period

    70     

Section 14.02.

   

Remedies

    70     

(a)

  

Acceleration; Foreclosure

    70     

(b)

  

Loss of Right to Receive Replacement Reserve Disbursements and Repairs
Disbursements

    71     

(c)

  

Remedies Cumulative

    71     

Section 14.03.

   

Additional Lender Rights; Forbearance

    72     

(a)

  

No Effect Upon Obligations

    72     

(b)

  

No Waiver of Rights or Remedies

    73     

(c)

  

Appointment of Lender as Attorney-in-Fact

    73     

(d)

  

Borrower Waivers

    74     

Section 14.04.

   

Waiver of Marshaling

    75   

ARTICLE 15 - MISCELLANEOUS

    75     

Section 15.01.

   

Governing Law; Consent to Jurisdiction and Venue

    75     

(a)

  

Governing Law

    75     

(b)

  

Venue

    75     

Section 15.02.

   

Notice

    76     

(a)

  

Process of Serving Notice

    76     

(b)

  

Change of Address

    76     

(c)

  

Default Method of Notice

    76     

(d)

  

Receipt of Notices

    76     

Section 15.03.

   

Successors and Assigns Bound; Sale of Mortgage Loan

    77     

(a)

  

Binding Agreement

    77     

(b)

  

Sale of Mortgage Loan; Change of Servicer

    77     

Section 15.04.

   

Counterparts

    77     

Section 15.05.

   

Joint and Several (or Solidary) Liability

    77     

Section 15.06.

   

Relationship of Parties; No Third Party Beneficiary

    77     

(a)

  

Solely Creditor and Debtor

    77     

(b)

  

No Third Party Beneficiaries

    77     

Section 15.07.

   

Severability; Entire Agreement; Amendments

    78     

Section 15.08.

   

Construction

    78     

Section 15.09.

   

Mortgage Loan Servicing

    79     

Section 15.10.

   

Disclosure of Information

    79   

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page v Fannie Mae    06-12    © 2012 Fannie Mae

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Section 15.11.

   

Waiver; Conflict

    79     

Section 15.12.

   

[Intentionally Deleted.]

    79     

Section 15.13.

   

Subrogation

    79     

Section 15.14.

   

Counting of Days

    80     

Section 15.15.

   

Revival and Reinstatement of Indebtedness

    80     

Section 15.16.

   

Time is of the Essence

    80     

Section 15.17.

   

Final Agreement

    80     

Section 15.18.

   

WAIVER OF TRIAL BY JURY

    81   

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page vi Fannie Mae    06-12    © 2012 Fannie Mae

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SCHEDULES & EXHIBITS

Schedules

 

Schedule 1    Definitions Schedule (required)    Form 6101.FR Schedule 2   
Summary of Loan Terms (required)    Form 6102.FR Schedule 3    Interest Rate
Type Provisions (required)    Form 6103.FR Schedule 4    Prepayment Premium
Schedule (required)    Form 6104.01 Schedule 5    Required Replacement Schedule
(required)    Schedule 6    Required Repair Schedule (required)    Schedule 7   
Exceptions to Representations and Warranties Schedule (required)   

Exhibits - N/A

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page vii Fannie Mae    06-12    © 2012 Fannie Mae

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MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Non-Recourse)

This MULTIFAMILY LOAN AND SECURITY AGREEMENT (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Loan Agreement”) is
made as of the Effective Date (as hereinafter defined) by and between POINTE AT
CANYON RIDGE, LLC, a Georgia limited liability company (“Borrower”), and CBRE
MULTIFAMILY CAPITAL, INC., a Delaware corporation (“Lender”).

RECITALS:

WHEREAS, Borrower desires to obtain the Mortgage Loan (as hereinafter defined)
from Lender to be secured by the Mortgaged Property (as hereinafter defined);
and

WHEREAS, Lender is willing to make the Mortgage Loan on the terms and conditions
contained in this Loan Agreement and in the other Loan Documents (as hereinafter
defined);

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

AGREEMENTS:

ARTICLE 1 - DEFINITIONS; SUMMARY OF MORTGAGE

LOAN TERMS

Section 1.01. Defined Terms.

Capitalized terms not otherwise defined in the body of this Loan Agreement shall
have the meanings set forth in the Definitions Schedule attached as Schedule 1
to this Loan Agreement.

Section 1.02. Schedules, Exhibits and Attachments Incorporated.

The schedules, exhibits and any other addenda or attachments are incorporated
fully into this Loan Agreement by this reference and each constitutes a
substantive part of this Loan Agreement.

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 ARTICLE 1    06-12    © 2012 Fannie Mae

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ARTICLE 2 - GENERAL MORTGAGE LOAN TERMS

Section 2.01. Mortgage Loan Origination and Security.

(a) Making of Mortgage Loan.

On the Effective Date and subject to the terms and conditions of this Loan
Agreement and the other Loan Documents, Lender hereby makes the Mortgage Loan to
Borrower and Borrower hereby accepts the Mortgage Loan from Lender. Borrower
covenants and agrees that it shall:

(1) pay the Indebtedness, including the Prepayment Premium, if any (whether in
connection with any voluntary prepayment or in connection with an acceleration
by Lender of the Indebtedness), in accordance with the terms of this Loan
Agreement and the other Loan Documents; and

(2) perform, observe and comply with this Loan Agreement and all other
provisions of the other Loan Documents.

(b) Security for Mortgage Loan.

The Mortgage Loan is made pursuant to this Loan Agreement, is evidenced by the
Note and is secured by the Security Instrument, this Loan Agreement and the
other Loan Documents that are expressly stated to be security for the Mortgage
Loan.

(c) Protective Advances.

As provided in the Security Instrument, Lender may take such actions or disburse
such funds as Lender reasonably deems necessary to perform the obligations of
Borrower under this Loan Agreement and the other Loan Documents and to protect
Lender’s interest in the Mortgaged Property.

Section 2.02. Payments on Mortgage Loan.

(a) Debt Service Payments.

(1) Short Month Interest.

If the Effective Date is any day other than the first day of the month, interest
for the period beginning on the Effective Date and ending on and including the
last day of the month in which the Effective Date occurs shall be payable by
Borrower on the Effective Date.

(2) Interest Accrual and Computation.

Except as provided in Section 2.02(a)(1), interest shall be paid in arrears.
Interest shall accrue as provided in the Schedule of Interest Rate Type
Provisions and shall be computed in accordance with the Interest Accrual Method.
If the Interest Accrual Method is “Actual/360,” Borrower acknowledges and agrees
that the amount allocated to interest for each month will vary depending on the
actual number of calendar days during such month.

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 ARTICLE 2    06-12    © 2012 Fannie Mae

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(3) Monthly Debt Service Payments.

Consecutive monthly debt service installments (comprised of either interest only
or principal and interest, depending on the Amortization Type), each in the
amount of the applicable Monthly Debt Service Payment, shall be due and payable
on the First Payment Date, and on each Payment Date thereafter until the
Maturity Date at which time all Indebtedness shall be due. Any regularly
scheduled Monthly Debt Service Payment that is received by Lender before the
applicable Payment Date shall be deemed to have been received on such Payment
Date solely for the purpose of calculating interest due.

(4) Payment at Maturity.

The unpaid principal balance of the Mortgage Loan, any Accrued Interest thereon
and all other Indebtedness shall be due and payable on the Maturity Date.

(5) Interest Rate Type.

See the Schedule of Interest Rate Type Provisions for additional provisions, if
any, specific to the Interest Rate Type.

(b) Capitalization of Accrued But Unpaid Interest.

Any accrued and unpaid interest on the Mortgage Loan remaining past due for
thirty (30) days or more may, at Lender’s election, be added to and become part
of the unpaid principal balance of the Mortgage Loan.

(c) Late Charges.

(1) If any Monthly Debt Service Payment due hereunder is not received by Lender
within ten (10) days (or fifteen (15) days for any Mortgaged Property located in
Mississippi or North Carolina to comply with applicable law) after the
applicable Payment Date, or any amount payable under this Loan Agreement (other
than the payment due on the Maturity Date for repayment of the Mortgage Loan in
full) or any other Loan Document is not received by Lender within ten (10) days
(or fifteen (15) days for any Mortgaged Property located in Mississippi or North
Carolina to comply with applicable law) after the date such amount is due,
inclusive of the date on which such amount is due, Borrower shall pay to Lender,
immediately without demand by Lender, the Late Charge.

The Late Charge is payable in addition to, and not in lieu of, any interest
payable at the Default Rate pursuant to Section 2.02(d).

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 3 ARTICLE 2    06-12    © 2012 Fannie Mae

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(2) Borrower acknowledges and agrees that:

(A) its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Mortgage Loan;

(B) it is extremely difficult and impractical to determine those additional
expenses;

(C) Lender is entitled to be compensated for such additional expenses; and

(D) the Late Charge represents a fair and reasonable estimate, taking into
account all circumstances existing on the date hereof, of the additional
expenses Lender will incur by reason of any such late payment.

(d) Default Rate.

(1) Default interest shall be paid as follows:

(A) If any amount due on the Mortgage Loan (other than amounts due on the
Maturity Date) remains past due for thirty (30) days or more, interest on such
unpaid amount(s) shall accrue from the date payment is due at the Default Rate
and shall be payable upon demand by Lender.

(B) If any principal, Accrued Interest or other Indebtedness due on the Mortgage
Loan is not paid in full on the Maturity Date, then interest shall accrue at the
Default Rate on all such unpaid amounts from the Maturity Date until fully paid
and shall be payable upon demand by Lender.

Absent a demand by Lender, any such amounts shall be payable by Borrower in the
same manner as provided for the payment of Monthly Debt Service Payments. To the
extent permitted by applicable law, interest shall also accrue at the Default
Rate on any judgment obtained by Lender against Borrower in connection with the
Mortgage Loan.

(2) Borrower acknowledges and agrees that:

(A) its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Mortgage Loan; and

(B) in connection with any failure to timely pay all amounts due in respect of
the Mortgage Loan on the Maturity Date, or during the time that any Monthly Debt
Service Payment or other payment due on the Mortgage Loan is delinquent for more
than thirty (30) days:

 

  (i) Lender’s risk of nonpayment of the Mortgage Loan will be materially
increased;

 

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Page 4 ARTICLE 2    06-12    © 2012 Fannie Mae

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  (ii) Lender’s ability to meet its other obligations and to take advantage of
other investment opportunities will be adversely impacted;

 

  (iii) Lender will incur additional costs and expenses arising from its loss of
the use of the amounts due;

 

  (iv) it is extremely difficult and impractical to determine such additional
costs and expenses;

 

  (v) Lender is entitled to be compensated for such additional risks, costs and
expenses; and

 

  (vi) the increase from the Interest Rate to the Default Rate represents a fair
and reasonable estimate of the additional risks, costs and expenses Lender will
incur by reason of Borrower’s delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquency on the Mortgage Loan (taking into account all circumstances
existing on the Effective Date).

(e) Address for Payments.

All payments due pursuant to the Loan Documents shall be payable at Lender’s
Payment Address, or such other place and in such manner as may be designated
from time to time by written notice to Borrower by Lender.

(f) Application of Payments.

If at any time Lender receives, from Borrower or otherwise, any amount in
respect of the Indebtedness that is less than all amounts due and payable at
such time, then Lender may apply such payment to amounts then due and payable in
any manner and in any order determined by Lender or hold in suspense and not
apply such amount at Lender’s election. Neither Lender’s acceptance of an amount
that is less than all amounts then due and payable, nor Lender’s application of,
or suspension of the application of, such payment, shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this Loan Agreement and the other
Loan Documents shall remain unchanged.

 

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Section 2.03. Lockout/Prepayment.

(a) Prepayment; Prepayment Lockout; Prepayment Premium.

(1) Borrower shall not make a voluntary full or partial prepayment on the
Mortgage Loan during any Prepayment Lockout Period nor shall Borrower make a
voluntary partial prepayment at any time. Except as expressly provided in this
Loan Agreement (including as provided in the Prepayment Premium Schedule), a
Prepayment Premium calculated in accordance with the Prepayment Premium Schedule
shall be payable in connection with any prepayment of the Mortgage Loan.

(2) If a Prepayment Lockout Period applies to the Mortgage Loan, and during such
Prepayment Lockout Period Lender accelerates the unpaid principal balance of the
Mortgage Loan or otherwise applies collateral held by Lender to the repayment of
any portion of the unpaid principal balance of the Mortgage Loan, the Prepayment
Premium shall be due and payable and equal to the amount obtained by multiplying
the percentage indicated (if at all) in the Prepayment Premium Schedule by the
amount of principal being prepaid at the time of such acceleration or
application.

(b) Voluntary Prepayment in Full.

At any time after the expiration of any Prepayment Lockout Period, Borrower may
voluntarily prepay the Mortgage Loan in full on a Permitted Prepayment Date so
long as:

(1) Borrower delivers to Lender a Prepayment Notice specifying the Intended
Prepayment Date not more than sixty (60) days, but not less than thirty (30)
days (if given via U.S. Postal Service) or twenty (20) days (if given via
facsimile, e-mail or overnight courier) prior to such Intended Prepayment Date;
and

(2) Borrower pays to Lender an amount equal to the sum of:

(A) the entire unpaid principal balance of the Mortgage Loan; plus

(B) all Accrued Interest (calculated through the last day of the month in which
the prepayment occurs); plus

(C) the Prepayment Premium; plus

(D) all other Indebtedness.

In connection with any such voluntary prepayment, Borrower acknowledges and
agrees that interest shall always be calculated and paid through the last day of
the month in which the prepayment occurs (even if the Permitted Prepayment Date
for such month is not the last day of such month, or if Lender approves
prepayment on an Intended Prepayment Date that is not a Permitted Prepayment
Date). Borrower further acknowledges that Lender is not required to

 

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accept a voluntary prepayment of the Mortgage Loan on any day other than a
Permitted Prepayment Date. However, if Lender does approve an Intended
Prepayment Date that is not a Permitted Prepayment Date and accepts a prepayment
on such Intended Prepayment Date, such prepayment shall be deemed to be received
on the immediately following Permitted Prepayment Date. If Borrower fails to
prepay the Mortgage Loan on the Intended Prepayment Date for any reason
(including on any Intended Prepayment Date that is not a Permitted Prepayment
Date but is approved by Lender) and such failure continues for five (5) Business
Days or longer, or into the following month (if sooner), Lender may recalculate
the payoff amount. Borrower shall immediately pay to Lender any additional
amounts required by any such recalculation.

(c) Acceleration of Mortgage Loan.

Upon acceleration of the Mortgage Loan, Borrower shall pay to Lender:

(1) the entire unpaid principal balance of the Mortgage Loan;

(2) all Accrued Interest (calculated through the last day of the month in which
the acceleration occurs);

(3) the Prepayment Premium; and

(4) all other Indebtedness.

(d) Application of Collateral.

Any application by Lender of any collateral or other security to the repayment
of all or any portion of the unpaid principal balance of the Mortgage Loan prior
to the Maturity Date in accordance with the Loan Documents shall be deemed to be
a prepayment by Borrower. Any such prepayment shall require the payment to
Lender by Borrower of the Prepayment Premium calculated on the amount being
prepaid in accordance with this Loan Agreement.

(e) Casualty and Condemnation.

Notwithstanding any provision of this Loan Agreement to the contrary, no
Prepayment Premium shall be payable with respect to any prepayment occurring as
a result of the application of any insurance proceeds or condemnation award in
accordance with this Loan Agreement.

(f) No Effect on Payment Obligations.

Unless otherwise expressly provided in this Loan Agreement, any prepayment
required by any Loan Document of less than the entire unpaid principal balance
of the Mortgage Loan shall not extend or postpone the due date of any subsequent
Monthly Debt Service Payments, Monthly Replacement Reserve Deposit, or other
payment, or change the amount of any such payments or deposits.

 

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(g) Loss Resulting from Prepayment.

Borrower acknowledges and agrees that if a Prepayment Premium is not otherwise
due:

(1) any prepayment of the unpaid principal balance of the Mortgage Loan, whether
voluntary or involuntary, or following the occurrence of an Event of Default by
Borrower, will result in Lender’s incurring loss, including reinvestment loss,
additional risk, expense and frustration or impairment of Lender’s ability to
meet its commitments to third parties;

(2) it is extremely difficult and impractical to ascertain the extent of such
losses, risks and damages;

(3) the formula for calculating the Prepayment Premium represents a reasonable
estimate of the losses, risks and damages Lender will incur as a result of a
prepayment; and

(4) the provisions regarding the Prepayment Premium contained in this Loan
Agreement are a material part of the consideration for the Mortgage Loan, and
that the terms of the Mortgage Loan are in other respects more favorable to
Borrower as a result of Borrower’s voluntary agreement to such prepayment
provisions.

ARTICLE 3 - PERSONAL LIABILITY

Section 3.01. Non-Recourse Mortgage Loan; Exceptions.

Except as otherwise provided in this ARTICLE 3 or in any other Loan Document and
unless such Person is a Guarantor, none of Borrower, or any director, officer,
manager, member, partner, shareholder, trustee, trust beneficiary, or employee
of Borrower, shall have personal liability under this Loan Agreement or any
other Loan Document for the repayment of the Indebtedness or for the performance
of any other obligations of Borrower under the Loan Documents, and Lender’s only
recourse for the satisfaction of such Indebtedness and the performance of such
obligations shall be Lender’s exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower’s liability shall not limit or
impair Lender’s enforcement of its rights against any Guarantor under any Loan
Document.

Section 3.02. Personal Liability of Borrower (Exceptions to Non-Recourse
Provision).

(a) Personal Liability Based on Lender’s Loss.

Borrower shall be personally liable to Lender for the repayment of the portion
of the Indebtedness equal to any loss or damage suffered by Lender as a result
of, subject to any notice and cure period, if any:

(1) failure to pay as directed by Lender upon demand after an Event of Default
(to the extent actually received by Borrower):

(A) all Rents to which Lender is entitled under the Loan Documents; and

(B) the amount of all security deposits then held or thereafter collected by
Borrower from tenants and not properly applied pursuant to the applicable
Leases;

 

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(2) failure to maintain all insurance policies required by the Loan Documents,
except to the extent Lender has the obligation to pay the premiums pursuant to
Section 12.03(c);

(3) failure to apply all insurance proceeds and any condemnation award as
required by the Loan Documents;

(4) failure to comply with any provision of this Loan Agreement or any other
Loan Document relating to the delivery of books and records, statements,
schedules and reports;

(5) except to the extent directed otherwise by Lender pursuant to
Section 3.02(a)(1), failure to apply Rents to the ordinary and necessary
expenses of owning and operating the Mortgaged Property and Debt Service
Amounts, as and when each is due and payable, except that Borrower will not be
personally liable with respect to Rents that are distributed by Borrower in any
calendar year if Borrower has paid all ordinary and necessary expenses of owning
and operating the Mortgaged Property and Debt Service Amounts for such calendar
year;

(6) waste or abandonment of the Mortgaged Property; or

(7) grossly negligent or reckless unintentional material misrepresentation or
omission by Borrower, Guarantor, Key Principal, or any officer, director,
partner, manager, member, shareholder or trustee of Borrower, Guarantor, or Key
Principal in connection with on-going financial or other reporting required by
the Loan Documents, or any request for action or consent by Lender.

Notwithstanding the foregoing, Borrower shall not have personal liability under
clauses (1), (3), or (5) above to the extent that Borrower lacks the legal right
to direct the disbursement of the applicable funds due to an involuntary
Bankruptcy Event that occurs without the consent, encouragement or active
participation of Guarantor, Key Principal or Borrower Affiliate.

 

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(b) Full Personal Liability for Mortgage Loan.

Borrower shall be personally liable to Lender for the repayment of all of the
Indebtedness, and the Mortgage Loan shall be fully recourse to Borrower, upon
the occurrence of any of the following:

(1) failure by Borrower to comply with the single-asset entity requirements of
Section 4.02(d) of this Loan Agreement;

(2) a Transfer (other than a conveyance of the Mortgaged Property at a
Foreclosure Event pursuant to the Security Instrument and this Loan Agreement)
that is not permitted under this Loan Agreement or any other Loan Document;

(3) the occurrence of any Bankruptcy Event (other than an acknowledgement in
writing as described in clause (b) of the definition of “Bankruptcy Event”);
provided, however, in the event of an involuntary Bankruptcy Event, Borrower
shall only be personally liable if such involuntary Bankruptcy Event occurs with
the consent, encouragement or active participation of Borrower, Guarantor, Key
Principal or any Borrower Affiliate;

(4) fraud, written material misrepresentation or material omission by Borrower,
Guarantor, Key Principal, or any officer, director, partner, manager, member,
shareholder or trustee of Borrower, Guarantor, or Key Principal in connection
with any application for or creation of the Indebtedness; or

(5) fraud, written intentional material misrepresentation or intentional
material omission by Borrower, Guarantor, Key Principal, or any officer,
director, partner, manager, member, shareholder or trustee of Borrower,
Guarantor, or Key Principal in connection with on-going financial or other
reporting required by the Loan Documents, or any request for action or consent
by Lender.

Section 3.03. Personal Liability for Indemnity Obligations.

Borrower shall be personally and fully liable to Lender for Borrower’s indemnity
obligations under Section 13.01(e) of this Loan Agreement, the Environmental
Indemnity Agreement and any other express indemnity obligations provided by
Borrower under any Loan Document. Borrower’s liability for such indemnity
obligations shall not be limited by the amount of the Indebtedness, the
repayment of the Indebtedness, or otherwise, provided that Borrower’s liability
for such indemnities shall not include any loss caused by the gross negligence
or willful misconduct of Lender as determined by a court of competent
jurisdiction pursuant to a final non-appealable court order.

Section 3.04. Lender’s Right to Forego Rights Against Mortgaged Property.

To the extent that Borrower has personal liability under this Loan Agreement or
any other Loan Document, Lender may exercise its rights against Borrower
personally to the fullest extent

 

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permitted by applicable law without regard to whether Lender has exercised any
rights against the Mortgaged Property, the UCC Collateral or any other security,
or pursued any rights against any Guarantor, or pursued any other rights
available to Lender under this Loan Agreement, any other Loan Document or
applicable law. For purposes of this Section 3.04 only, the term “Mortgaged
Property” shall not include any funds that have been applied by Borrower as
required or permitted by this Loan Agreement prior to the occurrence of an Event
of Default, or that Borrower was unable to apply as required or permitted by
this Loan Agreement because of a Bankruptcy Event. To the fullest extent
permitted by applicable law, in any action to enforce Borrower’s personal
liability under this Article 3, Borrower waives any right to set off the value
of the Mortgaged Property against such personal liability.

ARTICLE 4 - BORROWER STATUS

Section 4.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 4.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Due Organization and Qualification.

Borrower is validly existing and qualified to transact business and is in good
standing in the state in which it is formed or organized, the Property
Jurisdiction and in each other jurisdiction that qualification or good standing
is required according to applicable law to conduct its business with respect to
the Mortgaged Property and where the failure to be so qualified or in good
standing would adversely affect Borrower’s operation of the Mortgaged Property
or the validity, enforceability or the ability of Borrower to perform its
obligations under this Loan Agreement or any other Loan Document.

(b) Location.

Borrower’s General Business Address is Borrower’s principal place of business
and principal office.

(c) Power and Authority.

Borrower has the requisite power and authority:

(1) to own the Mortgaged Property and to carry on its business as now conducted
and as contemplated to be conducted in connection with the performance of its
obligations under this Loan Agreement and under the other Loan Documents to
which it is a party; and

(2) to execute and deliver this Loan Agreement and the other Loan Documents to
which it is a party, and to carry out the transactions contemplated by this Loan
Agreement and the other Loan Documents to which it is a party.

 

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(d) Due Authorization.

The execution, delivery and performance of this Loan Agreement and the other
Loan Documents to which it is a party have been duly authorized by all necessary
action and proceedings by or on behalf of Borrower, and no further approvals or
filings of any kind, including any approval of or filing with any Governmental
Authority, are required by or on behalf of Borrower as a condition to the valid
execution, delivery and performance by Borrower of this Loan Agreement or any of
the other Loan Documents to which it is a party, except filings required to
perfect and maintain the liens to be granted under the Loan Documents and
routine filings to maintain good standing and its existence.

(e) Valid and Binding Obligations.

This Loan Agreement and the other Loan Documents to which it is a party have
been duly executed and delivered by Borrower and constitute the legal, valid and
binding obligations of Borrower, enforceable against Borrower in accordance with
their respective terms, except as such enforceability may be limited by
applicable Insolvency Laws or by the exercise of discretion by any court.

(f) Effect of Mortgage Loan on Borrower’s Financial Condition.

Borrower is not presently Insolvent and the Mortgage Loan will not render
Borrower Insolvent. Borrower has sufficient working capital, including proceeds
from the Mortgage Loan, cash flow from the Mortgaged Property, or other sources,
not only to adequately maintain the Mortgaged Property, but also to pay all of
Borrower’s outstanding debts as they come due, including all Debt Service
Amounts.

(g) Economic Sanctions, Anti-Money Laundering and Anti-Corruption.

(1) None of Borrower, any Guarantor, or any Key Principal, nor to Borrower’s
knowledge, any Person having a Controlling Interest in any of them is in
violation of:

(A) any applicable anti-money laundering laws, including those contained in the
Bank Secrecy Act; and

(B) any applicable anti-drug trafficking, anti-terrorism, or anti-corruption
laws, civil or criminal.

(2) None of Borrower, any Guarantor, or any Key Principal, nor to Borrower’s
knowledge, any Person having a Controlling Interest in any of them is a Person:

(A) that is charged with, or has received actual notice that he, she or it is
under investigation for, any violation of any such laws;

 

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(B) that has been convicted of any violation of, has been subject to civil
penalties pursuant to, or had any of its property seized or forfeited under, any
such laws; or

(C) with whom any United States Person, any entity organized under the laws of
the United States or its constituent states or territories, or any entity,
regardless of where organized, having its principal place of business within the
United States or any of its territories, is prohibited from transacting business
of the type contemplated by this Loan Agreement and the other Loan Documents
under any other applicable law.

(3) None of Borrower, any Guarantor, or any Key Principal, nor to Borrower’s
knowledge, any Person having a Controlling Interest in any of them is in
violation of any obligation to maintain appropriate internal controls as
required by the governing laws of the jurisdiction of such Person as are
necessary to ensure compliance with the economic sanctions, anti-money
laundering, and anti-corruption laws of the United States and the jurisdiction
where the Person resides, is domiciled or has its principal place of business.

(4) Borrower, Guarantor and Key Principal are in compliance with all applicable
economic sanctions laws administered by OFAC, the United States Department of
State, or the United States Department of Commerce.

(h) Borrower Single Asset Status.

Borrower:

(1) does not own any real property, personal property or assets other than the
Mortgaged Property;

(2) does not own, operate or participate in any business other than the
management and operation of the Mortgaged Property;

(3) has no material financial obligation under or secured by any indenture,
mortgage, deed of trust, deed to secure debt, loan agreement or other agreement
or instrument to which Borrower is a party or by which Borrower or the Mortgaged
Property is otherwise bound, other than:

(A) unsecured obligations incurred in the ordinary course of the operation of
the Mortgaged Property;

(B) if the Security Instrument grants a lien on a leasehold estate, Borrower’s
obligations as lessee under the ground lease creating such leasehold estate; and

(C) obligations under the Loan Documents and obligations secured by the
Mortgaged Property to the extent permitted by the Loan Documents;

 

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(4) has accurately maintained its financial statements, accounting records and
other partnership, real estate investment trust, limited liability company or
corporate documents, as the case may be, separate from those of any other Person
(unless Borrower’s assets have been included in a consolidated financial
statement of a Borrower Affiliate in accordance with generally accepted
accounting principles);

(5) has not commingled its assets or funds with those of any other Person unless
such assets or funds can be segregated and identified in the ordinary course of
business;

(6) has been adequately capitalized in light of its contemplated business
operations;

(7) has not assumed, guaranteed or become obligated for the liabilities of any
other Person (except in connection with the Mortgage Loan or other mortgage
loans that have been paid in full or collaterally assigned to Lender, including
in connection with any Consolidation, Extension and Modification Agreement or
similar instrument) or held out its credit as being available to satisfy the
obligations of any other Person; and

(8) has not entered into, and is not a party to, any transaction with any
Borrower Affiliate, except in the ordinary course of business and on terms which
are no more favorable to any such Borrower Affiliate than would be obtained in a
comparable arm’s length transaction with an unrelated third party.

(i) No Bankruptcies or Judgments.

None of Borrower, any Guarantor, or any Key Principal, nor to Borrower’s
knowledge, any Person having a Controlling Interest in any of them is currently:

(1) the subject of or a party to any completed or pending bankruptcy,
reorganization, including any receivership or other insolvency proceeding;

(2) preparing or intending to be the subject of a Bankruptcy Event; or

(3) the subject of any judgment unsatisfied of record or docketed in any court;
or

(4) Insolvent.

 

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(j) No Litigation.

(1) There are no claims, actions, suits or proceedings at law or in equity
(including any insolvency, bankruptcy or receivership proceedings) by or before
any Governmental Authority now pending or, to Borrower’s knowledge, threatened
against or affecting Borrower or the Mortgaged Property not otherwise covered by
insurance (except for claims, actions, suits or proceedings regarding fair
housing, anti-discrimination, or equal opportunity, which shall always be
disclosed); and

(2) there are no claims, actions, suits or proceedings at law or in equity by or
before any Governmental Authority now pending or, to Borrower’s knowledge,
threatened against or affecting any Guarantor or any Key Principal, which
claims, actions, suits or proceedings, if adversely determined (individually or
in the aggregate) would reasonably be expected to materially adversely affect
the financial condition or business of Borrower, any Guarantor, or any Key
Principal or the condition, operation or ownership of the Mortgaged Property
(except for claims, actions, suits or proceedings regarding fair housing,
anti-discrimination, or equal opportunity, which shall always be deemed
material).

(k) Payment of Taxes, Assessments and Other Charges.

Borrower confirms that:

(1) it has filed all federal, state, county and municipal tax returns and
reports required to have been filed by Borrower;

(2) it has paid, before any fine, penalty, interest, lien, or costs may be added
thereto, all taxes, governmental charges and assessments due and payable with
respect to such returns and reports;

(3) there is no controversy or objection pending, or to the knowledge of
Borrower, threatened in respect of any tax returns of Borrower; and

(4) it has made adequate reserves on its books and records for all taxes that
have accrued but which are not yet due and payable.

(l) Not a Foreign Person.

Borrower is not a “foreign person” within the meaning of Section 1445(f)(3) of
the Internal Revenue Code.

(m) ERISA.

Borrower represents and warrants that:

(1) Borrower is not an Employee Benefit Plan;

 

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(2) none of the assets of Borrower constitute “plan assets” (within the meaning
of Section 3(42) of ERISA and Department of Labor Regulation Section 2510.3-101)
of an Employee Benefit Plan;

(3) none of the assets of Borrower are subject to any state or local law
governing the assets of an Employee Benefit Plan; and

(4) there are no ERISA Plans.

(n) Default Under Other Obligations.

(1) The execution, delivery and performance of the obligations imposed on
Borrower under this Loan Agreement and the Loan Documents to which it is a party
will not cause Borrower to be in default under the provisions of any agreement,
judgment or order to which Borrower is a party or by which such Borrower is
bound.

(2) None of Borrower, any Guarantor, or any Key Principal is in default under
any obligation to Lender.

(o) Prohibited Person.

None of Borrower, any Guarantor, or any Key Principal, nor to Borrower’s
knowledge, any Person having a Controlling Interest in any of them is a
Prohibited Person.

Section 4.02. Covenants.

(a) Maintenance of Existence; Organizational Documents.

Borrower shall maintain its existence, its entity status, franchises, rights and
privileges under the laws of the state of its formation or organization (as
applicable). Borrower shall continue to be duly qualified and in good standing
to transact business in each jurisdiction that qualification or standing is
required according to applicable law to conduct its business with respect to the
Mortgaged Property and where the failure to do so would adversely affect
Borrower’s operation of the Mortgaged Property or the validity, enforceability
or the ability of Borrower to perform its obligations under this Loan Agreement
or any other Loan Document. None of Borrower nor any partner, member, manager,
officer or director of any Borrower shall make or allow any material change to
the organizational documents or organizational structure of such Borrower,
including changes relating to control of, or the ability to oversee
management and day-to-day operations of, such Borrower, or file any action,
complaint, petition, or other claim (1) to divide, partition or otherwise compel
the sale of the Mortgaged Property, or (2) which would affect the control of, or
the ability to oversee management and day-to-day operations of, such Borrower,
without Lender’s prior written consent.

 

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(b) Anti-Money Laundering, Anti-Corruption and Economic Sanctions.

(1) Borrower shall at all times remain, and shall cause any Guarantor, Key
Principal, and any Person having a Controlling Interest in any of them to
remain, in compliance with:

(A) any applicable anti-money laundering laws, including those contained in the
Bank Secrecy Act; and

(B) any applicable anti-drug trafficking, anti-terrorism, or anti-corruption
laws, civil or criminal.

(2) At no time shall Borrower, any Guarantor, Key Principal, or any Person
having a Controlling Interest in any of them, be a Person:

(A) that is charged with, or has received actual notice that he, she or it is
under investigation for, any violation of any such laws;

(B) that has been convicted of any violation of, has been subject to civil
penalties pursuant to, or had any of its property seized or forfeited under, any
such laws; or

(C) with whom any United States Person, any entity organized under the laws of
the United States or its constituent states or territories, or any entity,
regardless of where organized, having its principal place of business within the
United States or any of its territories, is prohibited from transacting business
of the type contemplated by this Loan Agreement and the other Loan Documents
under any other applicable law.

(3) At no time shall Borrower, any Guarantor, Key Principal, or any Person
having a Controlling Interest in any of them, be a Person in violation of any
obligation to maintain appropriate internal controls as required by the
governing laws of the jurisdiction of such Person as are necessary to ensure
compliance with the economic sanctions, anti-money laundering, and
anti-corruption laws of the United States and the jurisdiction where the Person
resides, is domiciled or has its principal place of business.

(4) Borrower shall at all times remain, and shall cause Guarantor and Key
Principal to remain, in compliance with any applicable economic sanctions laws
administered by OFAC, the United States Department of State, or the United
States Department of Commerce.

(c) Payment of Taxes, Assessments and Other Charges.

Borrower shall file all federal, state, county and municipal tax returns and
reports required to be filed by Borrower and shall pay, before any fine,
penalty, interest or cost may be added thereto, all taxes payable with respect
to such returns and reports.

 

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(d) Borrower Single Asset Status.

Until the Indebtedness is fully paid, Borrower:

(1) shall not acquire any real property, personal property or assets other than
the Mortgaged Property;

(2) shall not own, operate or participate in any business other than the
management and operation of the Mortgaged Property;

(3) shall not commingle its assets or funds with those of any other Person
unless such assets or funds can be segregated and identified in the ordinary
course of business;

(4) shall accurately maintain its financial statements, accounting records and
other partnership, real estate investment trust, limited liability company or
corporate documents, as the case may be, separate from those of any other Person
(unless Borrower’s assets are included in a consolidated financial statement of
a Borrower Affiliate in accordance with generally accepted accounting
principles);

(5) shall not assume, guaranty or become obligated for, the liabilities of any
other Person nor hold out its credit as being available to satisfy the
obligations of any other Person;

(6) shall not enter into, or become a party to, any transaction with any
Borrower Affiliate, except in the ordinary course of business and on terms which
are no more favorable to any such Borrower Affiliate than would be obtained in a
comparable arm’s length transaction with an unrelated third party; or

(7) shall not become a party to or incur material financial obligations under or
secured by any indenture, mortgage, deed of trust, deed to secure debt, loan
agreement or other agreement or instrument, other than:

(A) unsecured obligations incurred in the ordinary course of the operation of
the Mortgaged Property;

(B) if the Security Instrument grants a lien on a leasehold estate, Borrower’s
obligations as lessee under the ground lease creating such leasehold estate; and

(C) obligations under the Loan Documents and obligations secured by the
Mortgaged Property to the extent permitted by the Loan Documents.

 

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(e) ERISA.

Borrower covenants that:

(1) none of the assets of Borrower shall constitute “plan assets” (within the
meaning of Section 3(42) of ERISA and Department of Labor Regulation
Section 2510.3-101) of an Employee Benefit Plan;

(2) none of the assets of Borrower shall be subject to any state or local law
governing the assets of an Employee Benefit Plan; and

(3) there shall not be any ERISA Plans.

(f) Notice of Litigation or Insolvency.

Borrower shall give immediate written notice to Lender of any claims, actions,
suits or proceedings at law or in equity (including any insolvency, bankruptcy
or receivership proceeding) by or before any Governmental Authority pending or,
to Borrower’s knowledge, threatened against or affecting Borrower, any
Guarantor, any Key Principal, or the Mortgaged Property, which claims, actions,
suits or proceedings, if adversely determined would reasonably be expected to
materially adversely affect the financial condition or business of Borrower, any
Guarantor, or any Key Principal or the condition, operation, or ownership of the
Mortgaged Property (including any claims, actions, suits or proceedings
regarding fair housing, anti-discrimination, or equal opportunity, which shall
always be deemed material).

(g) Payment of Costs, Fees, and Expenses.

In addition to the payments specified in this Loan Agreement, Borrower shall
pay, on demand, all of Lender’s out-of-pocket fees, costs, charges or expenses
(including the reasonable fees and expenses of attorneys, accountants, and other
experts) incurred by Lender in connection with:

(1) any amendment to, or consent, or waiver required under this Loan Agreement
or any of the Loan Documents (whether or not any such amendments, consents, or
waivers are entered into);

(2) defending or participating in any litigation arising from actions by third
parties and brought against or involving Lender with respect to:

(A) the Mortgaged Property;

(B) any event, act, condition, or circumstance in connection with the Mortgaged
Property; or

(C) the relationship between Lender, Borrower, Key Principal and Guarantor in
connection with this Loan Agreement or any of the transactions contemplated by
this Loan Agreement;

 

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(3) the administration or enforcement of, or preservation of rights or remedies
under, this Loan Agreement or any other Loan Documents including or in
connection with any litigation or appeals, any Foreclosure Event or other
disposition of any collateral granted pursuant to the Loan Documents; and

(4) any Bankruptcy Event or Guarantor Bankruptcy Event.

ARTICLE 5 - THE MORTGAGE LOAN

Section 5.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 5.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Receipt and Review of Loan Documents.

Borrower has received and reviewed this Loan Agreement and all of the other Loan
Documents.

(b) No Default.

No Event of Default exists under any of the Loan Documents and the execution,
delivery and performance of the obligations imposed on Borrower under the Loan
Documents will not cause Borrower to be in default under the provisions of any
agreement, judgment or order to which Borrower is a party or by which Borrower
is bound.

Section 5.02. Covenants.

(a) Ratification of Covenants; Estoppels; Certifications.

Borrower shall:

(1) promptly notify Lender in writing upon any violation of any covenant set
forth in any Loan Document of which Borrower has notice or becomes aware;
provided, however, any such written notice by Borrower shall not relieve
Borrower of, or result in a waiver of, any obligation under this Loan Agreement
or any other Loan Document; and

(2) within ten (10) days after a request from Lender, provide a written
statement, signed and acknowledged by Borrower, certifying to Lender or any
person designated by Lender, as of the date of such statement:

(A) that the Loan Documents are unmodified and in full force and effect (or, if
there have been modifications, that the Loan Documents are in full force and
effect as modified and setting forth such modifications);

 

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(B) the unpaid principal balance of the Mortgage Loan;

(C) the date to which interest on the Mortgage Loan has been paid;

(D) that Borrower is not in default in paying the Indebtedness or in performing
or observing any of the covenants or agreements contained in this Loan Agreement
or any of the other Loan Documents (or, if Borrower is in default, describing
such default in reasonable detail);

(E) whether or not there are then existing any setoffs or defenses known to
Borrower against the enforcement of any right or remedy of Lender under the Loan
Documents; and

(F) any additional facts requested by Lender.

(b) Further Assurances.

(1) Other Documents As Lender May Require.

Within ten (10) days after request by Lender, Borrower shall, subject to
Section 5.02(d) below, execute, acknowledge and deliver, at its cost and
expense, all further acts, deeds, conveyances, assignments, financing
statements, transfers and assurances as Lender may reasonably require from time
to time in order to better assure, grant and convey to Lender the rights
intended to be granted, now or in the future, to Lender under this Loan
Agreement and the other Loan Documents.

(2) Corrective Actions.

Within ten (10) days after request by Lender, Borrower shall provide, or cause
to be provided, to Lender, at Borrower’s cost and expense, such further
documentation or information reasonably deemed necessary or appropriate by
Lender in the exercise of its rights under the related commitment letter between
Borrower and Lender or to correct patent mistakes in the Loan Documents, the
Title Policy or the funding of the Mortgage Loan.

(c) Sale of Mortgage Loan.

Borrower shall, subject to Section 5.02(d) below:

(1) do anything necessary to comply with the reasonable requirements of Lender
or any Investor of the Mortgage Loan or provide, or cause to be provided, to
Lender or any Investor of the Mortgage Loan within ten (10) days of the request,
at Borrower’s cost and expense, such further documentation or information as
Lender or Investor may reasonably require, in order to enable:

(A) Lender to sell the Mortgage Loan to such Investor;

 

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(B) Lender to obtain a refund of any commitment fee from any such Investor; or

(C) any such Investor to further sell or securitize the Mortgage Loan;

(2) ratify and affirm in writing the representations and warranties set forth in
any Loan Document as of such date specified by Lender modified as necessary to
reflect changes that have occurred subsequent to the Effective Date;

(3) confirm that Borrower is not in default in paying the Indebtedness or in
performing or observing any of the covenants or agreements contained in this
Loan Agreement or any of the other Loan Documents (or, if Borrower is in
default, describing such default in reasonable detail); and

(4) execute and deliver to Lender and/or any Investor such other documentation,
including any amendments, corrections, deletions or additions to this Loan
Agreement or other Loan Document(s) as is reasonably required by Lender or such
Investor.

(d) Limitations on Further Acts of Borrower.

Nothing in Section 5.02(b) and Section 5.02(c) shall require Borrower to do any
further act that has the effect of:

(1) changing the economic terms of the Mortgage Loan set forth in the related
commitment letter between Borrower and Lender;

(2) imposing on Borrower or Guarantor greater personal liability under the Loan
Documents than that set forth in the related commitment letter between Borrower
and Lender; or

(3) materially changing the rights and obligations of Borrower or Guarantor
under the commitment letter.

(e) Financing Statements; Record Searches.

(1) Borrower shall pay all filing costs and all costs and expenses associated
with any filing or recording of:

(A) any financing statements, including all continuation statements, termination
statements and amendments or any other filings related to security interests in
or liens on collateral; and

(B) any record searches for financing statements that Lender may require.

 

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(2) Borrower hereby authorizes Lender to file any financing statements,
continuation statements, termination statements and amendments as Lender may
require in order to protect and preserve Lender’s lien priority and security
interest in the Mortgaged Property (and to the extent Lender has filed any such
financing statements, continuation statements or amendments prior to the
Effective Date, such filings by Lender are hereby authorized and ratified by
Borrower).

ARTICLE 6 - PROPERTY USE, PRESERVATION AND MAINTENANCE

Section 6.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 6.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Compliance with Law; Permits and Licenses.

(1) To Borrower’s knowledge, all improvements to the Land and the use of the
Mortgaged Property comply with all applicable laws, ordinances, statutes, rules
and regulations, including all applicable statutes, rules and regulations
pertaining to requirements for equal opportunity, anti-discrimination, fair
housing and environmental protection.

(2) To Borrower’s knowledge, there is no evidence of any illegal activities on
the Mortgaged Property.

(3) To Borrower’s knowledge, no permits or approvals from any Governmental
Authority, other than those previously obtained and furnished to Lender, are
necessary for the commencement and completion of the Repairs or Replacements, as
applicable, other than those permits or approvals which will be timely obtained
in the course of business.

(4) All required permits, licenses and certificates to comply with all zoning
and land use statutes, laws, ordinances, rules and regulations, and all
applicable health, fire, safety and building codes, and for the lawful use and
operation of the Mortgaged Property, including certificates of occupancy,
apartment licenses or the equivalent, have been obtained and are in full force
and effect.

(5) No portion of the Mortgaged Property has been purchased with the proceeds of
any illegal activity.

(b) Property Characteristics.

(1) The Mortgaged Property contains not less than:

(A) the Property Square Footage;

 

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(B) the Total Parking Spaces; and

(C) the Total Residential Units.

(2) No part of the Land is included or assessed under or as part of another tax
lot or parcel, and no part of any other property is included or assessed under
or as part of the tax lot or parcels for the Land.

(c) Property Ownership.

Borrower is sole owner of the Mortgaged Property.

Section 6.02. Covenants

(a) Use of Property.

From and after the Effective Date, Borrower shall not, unless required by
applicable law or Governmental Authority:

(1) allow changes in the use of all or any part of the Mortgaged Property;

(2) convert any individual dwelling units or common areas to commercial use;

(3) initiate or acquiesce in a change in the zoning classification of the Land;

(4) establish any condominium or cooperative regime with respect to the
Mortgaged Property;

(5) subdivide the Land; or

(6) suffer, permit or initiate the joint assessment of any Mortgaged Property
with any other real property constituting a tax lot separate from such Mortgaged
Property which could cause the part of the Land to be included or assessed under
or as part of another tax lot or parcel, or any part of any other property to be
included or assessed under or as part of the tax lot or parcels for the Land.

(b) Property Maintenance.

Borrower shall:

(1) pay the expenses of operating, managing, maintaining and repairing the
Mortgaged Property (including insurance premiums, utilities, Repairs and
Replacements) before the last date upon which each such payment may be made
without any penalty or interest charge being added;

 

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(2) keep the Mortgaged Property in good repair and marketable condition
(ordinary wear and tear excepted) (including the replacement of Personalty and
Fixtures with items of equal or better function and quality) and subject to
Section 9.03(b) restore or repair promptly, in a good and workmanlike manner,
any damaged part of the Mortgaged Property to the equivalent of its original
condition or condition immediately prior to the damage (if improved after the
Effective Date), whether or not insurance proceeds are or any condemnation award
is available to cover any costs of such restoration or repair;

(3) commence all Required Repairs, Additional Lender Repairs and Additional
Lender Replacements as follows:

(A) with respect to any Required Repairs, promptly following the Effective Date
(subject to Force Majeure, if applicable), in accordance with the timelines set
forth on the Required Repair Schedule, or if no timelines are provided, as soon
as practical following the Effective Date;

(B) with respect to Additional Lender Repairs, in the event that Lender
determines that Additional Lender Repairs are necessary from time to time or
pursuant to Section 6.03(c), promptly following Lender’s written notice of such
Additional Lender Repairs (subject to Force Majeure, if applicable), commence
any such Additional Lender Repairs in accordance with Lender’s timelines, or if
no timelines are provided, as soon as practical;

(C) with respect to Additional Lender Replacements, in the event that Lender
determines that Additional Lender Replacements are necessary from time to time
or pursuant to Section 6.03(c), promptly following Lender’s written notice of
such Additional Lender Replacements (subject to Force Majeure, if applicable),
commence any such Additional Lender Replacements in accordance with Lender’s
timelines, or if no timelines are provided, as soon as practical;

(4) make, construct, install, diligently perform and complete all Replacements
and Repairs:

(A) in a good and workmanlike manner as soon as practicable following the
commencement thereof, free and clear of any Liens, including mechanics’ or
materialmen’s liens and encumbrances (except for Permitted Encumbrances);

(B) in accordance with all applicable laws, ordinances, rules and regulations of
any Governmental Authority including applicable building codes, special use
permits and environmental regulations;

 

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(C) in accordance with all applicable insurance requirements; and

(D) within all timeframes required by Lender, and Borrower acknowledges that it
shall be an Event of Default if Borrower abandons or ceases work on any Repair
at any time prior to the completion of the Repairs for a period of longer than
twenty (20) days (except when Force Majeure exists and Borrower is diligently
pursuing the reinstitution of such work, provided however any such abandonment
or cessation shall not in any event allow the Repair to be completed after the
Completion Period, subject to Force Majeure); and

(5) subject to the terms of Section 6.03(a) provide for professional management
of the Mortgaged Property by a residential rental property manager satisfactory
to Lender under a contract approved by Lender in writing;

(6) give written notice to Lender of, and, unless otherwise directed in writing
by Lender, appear in and defend any action or proceeding purporting to affect
the Mortgaged Property, Lender’s security for the Mortgage Loan or Lender’s
rights under this Loan Agreement; and

(7) upon Lender’s request, submit to Lender any contracts or work orders
described in Section 13.02(b).

(c) Property Preservation.

Borrower shall:

(1) not commit waste or abandon or (ordinary wear and tear excepted) permit
impairment or deterioration of the Mortgaged Property;

(2) except as otherwise permitted herein in connection with Repairs and
Replacements, not remove, demolish or alter the Mortgaged Property or any part
of the Mortgaged Property (or permit any tenant or any other person to do the
same) except in connection with the replacement of tangible Personalty or
Fixtures (provided such Personalty and Fixtures are replaced with items of equal
or better function and quality);

(3) not engage in or knowingly permit, and shall take appropriate measures to
prevent and abate or cease and desist, any illegal activities at the Mortgaged
Property that could endanger tenants or visitors, result in damage to the
Mortgaged Property, result in forfeiture of the Land or otherwise materially
impair the lien created by the Security Instrument or Lender’s interest in the
Mortgaged Property;

(4) not permit any condition to exist on the Mortgaged Property that would
invalidate any part of any insurance coverage required by this Loan Agreement;
or

(5) not subject the Mortgaged Property to any voluntary, elective or
non-compulsory tax lien or assessment (or opt in to any voluntary, elective or
non-compulsory special tax district or similar regime).

 

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(d) Property Inspections.

Borrower shall:

(1) permit Lender, its agents, representatives and designees to enter upon and
inspect the Mortgaged Property (including in connection with any Replacement or
Repair, or to conduct any Environmental Inspection pursuant to the Environmental
Indemnity Agreement), and shall cooperate and provide access to all areas of the
Mortgaged Property (subject to the rights of tenants under the Leases):

(A) during normal business hours;

(B) at such other reasonable time upon reasonable notice of not less than
one (1) Business Day;

(C) at any time when exigent circumstances exist; or

(D) at any time after an Event of Default has occurred and is continuing; and

(2) pay for reasonable costs or expenses incurred by Lender or its agents in
connection with any such inspections.

(e) Compliance with Laws.

Borrower shall:

(1) comply with all laws, ordinances, statutes, rules and regulations of any
Governmental Authority and all recorded lawful covenants and agreements relating
to or affecting the Mortgaged Property, including all laws, ordinances,
statutes, rules and regulations and covenants pertaining to construction of
improvements on the Land, fair housing and requirements for equal opportunity,
anti-discrimination, environmental protection and Leases;

(2) maintain all required permits, licenses and certificates necessary to comply
with all zoning and land use statutes, laws, ordinances, rules and regulations,
and all applicable health, fire, safety and building codes and for the lawful
use and operation of the Mortgaged Property, including certificates of
occupancy, apartment licenses or the equivalent;

(3) comply with all applicable laws that pertain to the maintenance and
disposition of tenant security deposits;

 

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(4) at all times maintain records sufficient to demonstrate compliance with the
provisions of this Section 6.02(e); and

(5) promptly after receipt or notification thereof, provide Lender copies of any
building code or zoning violation from any Governmental Authority with respect
to the Mortgaged Property.

Section 6.03. Mortgage Loan Administration Matters Regarding the Property.

(a) Property Management.

From and after the Effective Date, each property manager and each property
management agreement must be approved by Lender. If, in connection with the
making of the Mortgage Loan, or at any later date, Lender waives in writing the
requirement that Borrower enter into a written contract for management of the
Mortgaged Property, and Borrower later elects to enter into a written contract
or change the management of the Mortgaged Property, such new property manager or
the property management agreement must be approved by Lender. As a condition to
any approval by Lender, Lender may require that Borrower and such new property
manager enter into a collateral assignment of the property management agreement
on a form approved by Lender.

(b) Subordination of Fees to Affiliated Property Managers.

Any property manager that is a Borrower Affiliate to whom fees are payable for
the management of the Mortgaged Property must enter into an assignment of
management agreement or other agreement with Lender, in a form approved by
Lender, providing for subordination of those fees and such other provisions as
Lender may require.

(c) Physical Needs Assessment.

If, in connection with any inspection of the Mortgaged Property, Lender
determines that the condition of the Mortgaged Property has deteriorated
(ordinary wear and tear excepted) since the Effective Date, Lender may obtain,
at Borrower’s expense, a physical needs assessment of the Mortgaged Property.
Lender’s right to obtain a physical needs assessment pursuant to this
Section 6.03(c) shall be in addition to any other rights available to Lender
under this Loan Agreement in connection with any such deterioration. Any such
inspection or physical needs assessment may result in Lender requiring
Additional Lender Repairs or Additional Lender Replacements as further described
in Section 13.02(a)(9)(B).

ARTICLE 7 - LEASES AND RENTS

Section 7.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 7.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

 

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(a) Prior Assignment of Rents.

Borrower has not executed any:

(1) prior assignment of Rents (other than an assignment of Rents securing prior
indebtedness that has been paid off and discharged or will be paid off and
discharged with the proceeds of the Mortgage Loan); or

(2) instrument which would prevent Lender from exercising its rights under this
Loan Agreement or the Security Instrument.

(b) Prepaid Rents.

Borrower has not accepted, and does not expect to receive prepayment of, any
Rents for more than two (2) months prior to the due dates of such Rents.

Section 7.02. Covenants.

(a) Leases.

Borrower shall:

(1) comply with and observe Borrower’s obligations under all Leases, including
Borrower’s obligations pertaining to the maintenance and disposition of tenant
security deposits;

(2) surrender possession of the Mortgaged Property, including all Leases and all
security deposits and prepaid Rents, immediately upon appointment of a receiver
or Lender’s entry upon and taking of possession and control of the Mortgaged
Property, as applicable; and

(3) promptly provide Lender a copy of any non-Residential Lease at the time such
Lease is executed (subject to Lender’s consent rights for Material Commercial
Leases in Section 7.02(b)), and, upon Lender’s request, promptly provide Lender
a copy of any Residential Lease then in effect as requested by Lender.

(b) Commercial Leases.

(1) With respect to Material Commercial Leases, Borrower shall not:

(A) enter into any Material Commercial Lease except with the prior written
consent of Lender; or

(B) modify the terms of, extend or terminate any Material Commercial Lease
(including any Material Commercial Lease in existence on the Effective Date)
without the prior written consent of Lender.

 

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(2) With respect to any non-Material Commercial Lease, Borrower shall not:

(A) enter into any non-Material Commercial Lease that materially alters the use
and type of operation of the premises subject to the Lease in effect as of the
Effective Date, reduces the number or size of residential units at the Mortgaged
Property or causes such non-Material Commercial Lease to be deemed a Material
Commercial Lease; or

(B) modify the terms of any non-Material Commercial Lease (including any
non-Material Commercial Lease in existence on the Effective Date) in any way
that materially alters the use and type of operation of the premises subject to
such non-Material Commercial Lease in effect as of the Effective Date, reduces
the number or size of residential units at the Mortgaged Property or causes such
non-Material Commercial Lease to be deemed a Material Commercial Lease.

(3) With respect to any Material Commercial Lease or non-Material Commercial
Lease, Borrower shall cause the applicable tenant to provide within ten (10)
days of the request, a certificate of estoppel, or if not provided by tenant
within such ten (10) day period, Borrower shall provide such certificate of
estoppel, certifying:

(A) that such Material Commercial Lease or non-Material Commercial Lease is
unmodified and in full force and effect (or if there have been modifications,
that such Material Commercial Lease or non-Material Commercial Lease is in full
force and effect as modified and stating the modifications);

(B) the term of the Lease including any extensions thereto;

(C) the dates to which the Rent and any other charges hereunder have been paid
by tenant;

(D) the amount of any security deposit delivered to Borrower as landlord;

(E) whether or not Borrower is in default (or whether any event or condition
exists which, with the passage of time, would constitute an event of default)
under such Lease;

(F) the address to which notices to tenant should be sent; and

(G) any other information as may be reasonably required by Lender.

 

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(c) Payment of Rents.

Borrower shall:

(1) pay to Lender upon demand all Rents after an Event of Default has occurred
and is continuing;

(2) cooperate with Lender’s efforts in connection with the assignment of Rents
set forth in the Security Instrument; and

(3) not accept Rent under any Lease (whether residential or non-residential) for
more than two (2) months in advance.

(d) Assignment of Rents.

Borrower shall not:

(1) perform any acts and shall not execute any instrument that would prevent
Lender from exercising its rights under the assignment of Rents granted in the
Security Instrument or in any other Loan Document; or

(2) interfere with Lender’s collection of such Rents.

(e) Further Assignments of Leases and Rents.

Borrower shall execute and deliver any further assignments of Leases and Rents
as Lender may reasonably require.

(f) Options to Purchase by Tenants.

No Lease (whether a Residential Lease or a non-Residential Lease) shall contain
an option to purchase, right of first refusal or right of first offer, except as
required by applicable law.

Section 7.03. Mortgage Loan Administration Regarding Leases and Rents.

(a) Material Commercial Lease Requirements.

Each Material Commercial Lease, including any renewal or extension of any
Material Commercial Lease in existence as of the Effective Date, shall provide,
directly or pursuant to a subordination, non-disturbance and attornment
agreement approved by Lender, that:

(1) the tenant shall, upon written notice from Lender after the occurrence of an
Event of Default, pay all Rents payable under such Lease to Lender;

(2) such Lease is subordinate to the lien of the Security Instrument;

 

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(3) the tenant shall attorn to Lender and any purchaser at a Foreclosure Event
(such attornment to be self-executing and effective upon acquisition of title to
the Mortgaged Property by any purchaser at a Foreclosure Event or by Lender in
any manner);

(4) the tenant agrees to execute such further evidences of attornment as Lender
or any purchaser at a Foreclosure Event may from time to time request; and

(5) such Lease shall not terminate as a result of a Foreclosure Event unless
Lender or any other purchaser at such Foreclosure Event, but subject to the
terms of the subordination, non-disturbance and attornment agreement,
affirmatively elects to terminate such Lease.

(b) Residential Lease Requirements.

All Residential Leases entered into from and after the Effective Date shall be
on forms approved by Lender. All Residential Leases shall be for initial lease
terms of not less than six (6) months and not more than twenty-four (24) months
(however, if customary in the applicable market for properties comparable to the
Mortgaged Property, Residential Leases with terms of less than six (6) months
(but in no case less than one (1) month) may be permitted with Lender’s prior
written consent).

ARTICLE 8 - BOOKS AND RECORDS; FINANCIAL REPORTING

Section 8.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 8.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Financial Information.

All financial statements and data, including statements of cash flow and income
and operating expenses, that have been delivered to Lender in respect of the
Mortgaged Property:

(1) are true, complete and correct in all material respects; and

(2) accurately represent the financial condition of the Mortgaged Property as of
such date.

(b) No Change in Facts or Circumstances.

All information in the Loan Application and in all financial statements, rent
rolls, reports, certificates and other documents submitted in connection with
the Loan Application are complete and accurate in all material respects. There
has been no material adverse change in any fact or circumstance that would make
any such information incomplete or inaccurate.

 

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Section 8.02. Covenants.

(a) Obligation to Maintain Accurate Books and Records.

Borrower shall keep and maintain at all times at the Mortgaged Property or the
property management agent’s offices or Borrower’s General Business Address and,
upon Lender’s request, shall make available at the Land:

(1) complete and accurate books of account and records (including copies of
supporting bills and invoices) adequate to reflect correctly the operation of
the Mortgaged Property; and

(2) copies of all written contracts, Leases and other instruments that affect
Borrower or the Mortgaged Property.

(b) Items to Furnish to Lender.

Borrower shall furnish to Lender the following, certified as true, complete and
accurate, in all material respects, by an individual having authority to bind
Borrower (or Guarantor, as applicable), in such form and with such detail as
Lender reasonably requires:

(1) within forty-five (45) days after the end of each first, second and third
calendar quarter, a statement of income and expenses for Borrower on a
year-to-date basis as of the end of each calendar quarter;

(2) within one hundred twenty (120) days after the end of each calendar year:

(A) for any Borrower and any Guarantor that is an entity, a statement of income
and expenses and a statement of cash flows for such calendar year;

(B) for any Borrower and any Guarantor that is an individual, or a trust
established for estate-planning purposes, a personal financial statement for
such calendar year;

(C) when requested by Lender, balance sheet(s) showing all assets and
liabilities of Borrower and Guarantor and a statement of all contingent
liabilities as of the end of such calendar year;

(D) a written certification ratifying and affirming that:

 

  (i) Borrower has taken no action in violation of Section 4.02(d) regarding its
single asset status;

 

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  (ii) Borrower has received no notice of any building code violation, or if
Borrower has received such notice, evidence of remediation;

 

  (iii) Borrower has made no application for rezoning nor received any notice
that the Mortgaged Property has been or is being rezoned; and

 

  (iv) Borrower has taken no action and has no knowledge of any action that
would violate the provisions of Section 11.02(b)(1)(F) regarding liens
encumbering the Mortgaged Property;

(E) an accounting of all security deposits held pursuant to all Leases,
including the name of the institution (if any) and the names and identification
numbers of the accounts (if any) in which such security deposits are held and
the name of the person to contact at such financial institution, along with any
authority or release necessary for Lender to access information regarding such
accounts; and

(F) written confirmation of:

 

  (i) any changes occurring since the Effective Date (or that no such changes
have occurred since the Effective Date) in (1) the direct owners of Borrower,
(2) the indirect owners (and any non-member managers) of Borrower that hold a
Controlling Interest in Borrower (excluding any Publicly Held Companies or
Publicly Held Trusts), or (3) the indirect owners of Borrower that hold
twenty-five percent (25%) or more of the ownership interests in Borrower
(excluding any Publicly Held Companies or Publicly Held Trusts), and their
respective interests;

 

  (ii) the names of all officers and directors of (1) any Borrower which is a
corporation, (2) any corporation which is a general partner of any Borrower
which is a partnership, or (3) any corporation which is the managing member or
non-member manager of any Borrower which is a limited liability company; and

 

  (iii) the names of all managers who are not members of (1) any Borrower which
is a limited liability company, (2) any limited liability company which is a
general partner of any Borrower which is a partnership, or (3) any limited
liability company which is the managing member or non-member manager of any
Borrower which is a limited liability company;

 

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(3) within forty-five (45) days after the end of each first, second and third
calendar quarter and within one hundred twenty (120) days after the end of each
calendar year, and at any other time upon Lender’s request, a rent schedule for
the Mortgaged Property showing the name of each tenant and for each tenant, the
space occupied, the lease expiration date, the rent payable for the current
month, the date through which rent has been paid and any related information
requested by Lender; and

(4) upon Lender’s request (but, absent an Event of Default, no more frequently
than once in any six (6) month period):

(A) any item described in Section 8.02(b)(1) or Section 8.02(b)(2) for Borrower,
certified as true, complete and accurate by an individual having authority to
bind Borrower;

(B) a property management or leasing report for the Mortgaged Property, showing
the number of rental applications received from tenants or prospective tenants
and deposits received from tenants or prospective tenants, and any other
information requested by Lender;

(C) a statement of income and expenses for Borrower’s operation of the Mortgaged
Property on a year-to-date basis as of the end of each month for such period as
requested by Lender, which statement shall be delivered within thirty (30) days
after the end of such month requested by Lender;

(D) a statement of real estate owned by Borrower and Guarantor for such period
as requested by Lender, which statement(s) shall be delivered within thirty (30)
days after the end of such month requested by Lender; and

(E) a statement that identifies:

 

  (i) the direct owners of Borrower and their respective interests;

 

  (ii) the indirect owners (and any non-member managers) of Borrower that hold a
Controlling Interest in Borrower (excluding any Publicly Held Companies or
Publically Held Trusts) and their respective interests; and

 

  (iii) the indirect owners of Borrower that hold twenty-five percent (25%) or
more of the ownership interests in Borrower (excluding any Publicly Held
Companies or Publically Held Trusts) and their respective interests.

 

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(c) Delivery of Books and Records.

If an Event of Default has occurred and is continuing, Borrower shall deliver to
Lender, upon written demand, all books and records relating to the Mortgaged
Property or its operation.

Section 8.03. Mortgage Loan Administration Matters Regarding Books and Records
and Financial Reporting.

(a) Right to Audit Books and Records.

Lender may require that Borrower’s or Guarantor’s books and records be audited,
at Borrower’s expense, by an independent certified public accountant selected by
Lender in order to produce or audit any statements, schedules and reports of
Borrower, Guarantor or the Mortgaged Property required by Section 8.02, if:

(1) Borrower fails to provide in a timely manner the statements, schedules and
reports required by Section 8.02 and, thereafter, Borrower or Guarantor fails to
provide such statements, schedules and reports within the cure period provided
in Section 14.01(c); or

(2) the statements, schedules and reports submitted to Lender pursuant to
Section 8.02 are not full, complete and accurate in all material respects as
determined by Lender and, thereafter, Borrower or Guarantor fails to provide
such statements, schedules and reports within the cure period provided in
Section 14.01(c); or

(3) an Event of Default has occurred and is continuing.

Notwithstanding the foregoing, the ability of Lender to require the delivery of
audited financial statements shall be limited to not more than once per
Borrower’s fiscal year so long as no Event of Default has occurred during such
fiscal year (or any event which, with the giving of written notice or the
passage of time, or both, would constitute an Event of Default has occurred and
is continuing). Borrower shall cooperate with Lender in order to satisfy the
provisions of this Section 8.03(a). All related costs and expenses of Lender
shall become immediately due and payable within ten (10) Business Days after
demand therefor.

(b) Credit Reports; Credit Score.

No more often than once in any twelve (12) month period, Lender is authorized to
obtain a credit report (if applicable) on Borrower or any Guarantor or any Key
Principal, the cost of which report shall be paid by Borrower, Guarantor, and
Key Principal. Lender is authorized to obtain a Credit Score (if applicable) for
Borrower, any Guarantor or any Key Principal at any time at Lender’s expense.

 

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ARTICLE 9 - INSURANCE

Section 9.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 9.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Compliance with Insurance Requirements.

Borrower is in compliance with Lender’s insurance requirements (or has obtained
a written waiver from Lender for any non-compliant coverage) and has timely paid
all premiums on all required insurance policies.

(b) Property Condition.

(1) The Mortgaged Property has not been damaged by fire, water, wind or other
cause of loss; or

(2) if previously damaged, any previous damage to the Mortgaged Property has
been repaired and the Mortgaged Property has been fully restored.

Section 9.02. Covenants.

(a) Insurance Requirements.

(1) As required by Lender and applicable law, and as may be modified from time
to time, Borrower shall:

(A) keep the Improvements insured at all times against any hazards, which
insurance shall include coverage against loss by fire and all other perils
insured by the “special causes of loss” coverage form, general boiler and
machinery coverage, business income coverage and flood (if any of the
Improvements are located in an area identified by the Federal Emergency
Management Agency (or any successor) as an area having special flood hazards and
to the extent flood insurance is available in that area), and may include
sinkhole insurance, mine subsidence insurance, earthquake insurance, terrorism
insurance, windstorm insurance and, if the Mortgaged Property does not conform
to applicable building, zoning or land use laws, ordinance and law coverage;

(B) maintain at all times commercial general liability insurance, workmen’s
compensation insurance and such other liability, errors and omissions and
fidelity insurance coverage; and

(C) maintain builder’s risk and public liability insurance, and other insurance
in connection with completing the Repairs or Replacements, as applicable.

 

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(b) Delivery of Policies, Renewals, Notices and Proceeds.

Borrower shall:

(1) cause all insurance policies (including any policies not otherwise required
by Lender) which can be endorsed with standard non-contributing, non-reporting
mortgagee clauses making loss payable to Lender (or Lender’s assigns) to be so
endorsed;

(2) promptly deliver to Lender a copy of all renewal and other notices received
by Borrower with respect to the policies and all receipts for paid premiums;

(3) deliver evidence, in form and content acceptable to Lender, that each
required insurance policy has been renewed not less than fifteen (15) days prior
to the applicable expiration date, and (if such evidence is other than an
original or duplicate original of a renewal policy) deliver the original or
duplicate original of each renewal policy (or such other evidence of insurance
as may be required by or acceptable to Lender) in form and content acceptable to
Lender within ninety (90) days after the applicable expiration date of the
original insurance policy;

(4) provide immediate written notice to the insurance company and to Lender of
any event of loss;

(5) execute such further evidence of assignment of any insurance proceeds as
Lender may require; and

(6) provide immediate written notice to Lender of Borrower’s receipt of any
insurance proceeds under any insurance policy required by
Section 9.02(a)(1)(a)(1)(A) above and, if requested by Lender, deliver to Lender
all of such proceeds received by Borrower to be applied by Lender in accordance
with this ARTICLE 9.

Section 9.03. Mortgage Loan Administration Matters Regarding Insurance.

(a) Lender’s Ongoing Insurance Requirements.

Borrower acknowledges that Lender’s insurance requirements may change from time
to time. All insurance policies and renewals of insurance policies required by
this Loan Agreement shall be:

(1) in the form and with the terms required by Lender;

 

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(2) in such amounts, with such maximum deductibles and for such periods required
by Lender; and

(3) issued by insurance companies satisfactory to Lender.

BORROWER ACKNOWLEDGES THAT ANY FAILURE TO COMPLY WITH INSURANCE PROVISIONS SHALL
PERMIT LENDER TO PURCHASE SUCH INSURANCE AT BORROWER’S COST. SUCH INSURANCE MAY,
BUT NEED NOT, PROTECT BORROWER’S INTERESTS. THE COVERAGE THAT LENDER PURCHASES
MAY NOT PAY ANY CLAIM THAT BORROWER MAKES OR ANY CLAIM THAT IS MADE AGAINST
BORROWER IN CONNECTION WITH THE MORTGAGED PROPERTY. IF LENDER PURCHASES
INSURANCE FOR THE MORTGAGED PROPERTY, BORROWER WILL BE RESPONSIBLE FOR THE COSTS
OF THAT INSURANCE, INCLUDING INTEREST AT THE DEFAULT RATE AND ANY OTHER CHARGES
LENDER MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE UNTIL THE
EFFECTIVE DATE OF THE CANCELLATION OR THE EXPIRATION OF THE INSURANCE. THE COSTS
OF THE INSURANCE SHALL BE ADDED TO BORROWER’S TOTAL OUTSTANDING BALANCE OR
OBLIGATION AND SHALL CONSTITUTE ADDITIONAL INDEBTEDNESS. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE BORROWER MAY BE ABLE TO OBTAIN
ON ITS OWN. BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED BY LENDER, BUT
ONLY AFTER PROVIDING EVIDENCE THAT BORROWER HAS OBTAINED INSURANCE AS REQUIRED
BY THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS.

(b) Application of Proceeds on Event of Loss.

(1) Upon an event of loss, Lender may, at Lender’s option:

(A) hold such proceeds to be applied to reimburse Borrower for the cost of
Restoration (in accordance with Lender’s then-current policies relating to the
restoration of casualty damage on similar multifamily residential properties);
or

(B) apply such proceeds to the payment of the Indebtedness, whether or not then
due; provided, however, Lender shall not apply insurance proceeds to the payment
of the Indebtedness and shall permit Restoration pursuant to Section 9.03(b)(1)
if all of the following conditions are met:

 

  (i) no Event of Default has occurred and is continuing (or any event which,
with the giving of written notice or the passage of time, or both, would
constitute an Event of Default has occurred and is continuing);

 

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  (ii) Lender determines that the combination of insurance proceeds and amounts
provided by Borrower will be sufficient funds to complete the Restoration;

 

  (iii) Lender determines that the net operating income generated by the
Mortgaged Property after completion of the Restoration will be sufficient to
support a debt service coverage ratio not less than the debt service coverage
ratio immediately prior to the event of loss, but in no event less than 1.0x
(the debt service coverage ratio shall be calculated on a thirty (30) year
amortizing basis (if applicable, on a proforma basis approved by Lender) in all
events and shall include all operating costs and other expenses, Imposition
Deposits, deposits to Collateral Accounts and Mortgage Loan repayment
obligations);

 

  (iv) Lender determines that the Restoration will be completed before the
earlier of one (1) year before the stated Maturity Date or one (1) year after
the date of the loss or casualty; and

 

  (v) Borrower provides Lender, upon request, evidence of the availability
during and after the Restoration of the insurance required to be maintained by
Borrower pursuant to this Loan Agreement.

After the completion of Restoration in accordance with the above requirements,
as determined by Lender, the balance, if any, of such proceeds shall be returned
to Borrower.

(2) Notwithstanding the foregoing, if any loss is estimated to be in an amount
equal to or less than $100,000, Lender shall not exercise its rights and
remedies as power-of-attorney herein and shall allow Borrower to make proof of
loss, to adjust and compromise any claims under policies of property damage
insurance, to appear in and prosecute any action arising from such policies of
property damage insurance, and to collect and receive the proceeds of property
damage insurance; provided that each of the following conditions shall be
satisfied:

(A) Borrower shall immediately notify Lender of the casualty giving rise to the
claim;

(B) no Event of Default has occurred and is continuing (or any event which, with
the giving of written notice or the passage of time, or both, would constitute
an Event of Default has occurred and is continuing);

 

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(C) the Restoration will be completed before the earlier of (i) one (1) year
before the stated Maturity Date or (ii) one (1) year after the date of the loss
or casualty;

(D) Lender determines that the combination of insurance proceeds and amounts
provided by Borrower will be sufficient funds to complete the Restoration;

(E) all proceeds of property damage insurance shall be issued in the form of
joint checks to Borrower and Lender;

(F) all proceeds of property damage insurance shall be applied to the
Restoration;

(G) Borrower shall deliver to Lender evidence satisfactory to Lender of
completion of the Restoration and obtainment of all lien releases;

(H) Borrower shall have complied to Lender’s satisfaction with the foregoing
requirements on any prior claims subject to this provision, if any; and

(I) Lender shall have the right to inspect the Mortgaged Property.

(3) If Lender elects to apply insurance proceeds to the Indebtedness in
accordance with the terms of this Loan Agreement, Borrower shall not be
obligated to restore or repair the Mortgaged Property. Rather, Borrower shall
restrict access to the damaged portion of the Mortgaged Property and, at its
expense and regardless of whether such costs are covered by insurance, clean up
any debris resulting from the casualty event, and, if required or otherwise
permitted by Lender, demolish or raze any remaining part of the damaged
Mortgaged Property to the extent necessary to keep and maintain the Mortgaged
Property in a safe, habitable and marketable condition. Nothing in this
Section 9.03(b) shall affect any of Lender’s remedial rights against Borrower in
connection with a breach by Borrower of any of its obligations under this Loan
Agreement or under any Loan Document, including any failure to timely pay
Monthly Debt Service Payments or maintain the insurance coverage(s) required by
this Loan Agreement.

(c) Payment Obligations Unaffected.

The application of any insurance proceeds to the Indebtedness shall not extend
or postpone the Maturity Date or the due date or the full payment of any Monthly
Debt Service Payment, Monthly Replacement Reserve Deposit, any other
installments referred to in this Loan Agreement or in any other Loan Document.
Notwithstanding the foregoing, if Lender applies insurance proceeds to the
Indebtedness in connection with a casualty of less than the entire

 

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Mortgaged Property, and after such application of proceeds the debt service
coverage ratio (as determined by Lender) is less than 1.25x based on the
then-applicable Monthly Debt Service Payment and the anticipated on-going net
operating income of the Mortgaged Property after such casualty event, then
Lender may, at its discretion, permit an adjustment to the Monthly Debt Service
Payments that become due and owing thereafter, based on Lender’s then-current
underwriting requirements. In no event shall the preceding sentence obligate
Lender to make any adjustment to the Monthly Debt Service Payments.

(d) Foreclosure Sale.

If the Mortgaged Property is transferred pursuant to a Foreclosure Event or
Lender otherwise acquires title to the Mortgaged Property, Borrower acknowledges
that Lender shall automatically succeed to all rights of Borrower in and to any
insurance policies and unearned insurance premiums applicable to the Mortgaged
Property and in and to the proceeds resulting from any damage to the Mortgaged
Property prior to such Foreclosure Event or such acquisition.

(e) Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to
Section 14.03(c).

ARTICLE 10 - CONDEMNATION

Section 10.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 10.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Prior Condemnation Action.

No part of the Mortgaged Property has been taken in connection with a
Condemnation Action.

(b) Pending Condemnation Actions.

No Condemnation Action is pending nor, to Borrower’s knowledge, is threatened
for the partial or total condemnation or taking of the Mortgaged Property.

Section 10.02. Covenants.

(a) Notice of Condemnation.

Borrower shall:

(1) promptly notify Lender of any Condemnation Action;

 

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(2) appear in and prosecute or defend, at its own cost and expense, any action
or proceeding relating to any Condemnation Action, including any defense of
Lender’s interest in the Mortgaged Property tendered to Borrower by Lender,
unless otherwise directed by Lender in writing; and

(3) execute such further evidence of assignment of any condemnation award in
connection with a Condemnation Action as Lender may require.

(b) Condemnation Proceeds.

Borrower shall pay to Lender all awards or proceeds of a Condemnation Action
promptly upon receipt.

Section 10.03. Mortgage Loan Administration Matters Regarding Condemnation.

(a) Application of Condemnation Awards.

Lender may apply any awards or proceeds of a Condemnation Action, after the
deduction of Lender’s expenses incurred in the collection of such amounts, to:

(1) the restoration or repair of the Mortgaged Property, if applicable;

(2) the payment of the Indebtedness, with the balance, if any, paid to Borrower;
or

(3) Borrower.

(b) Payment Obligations Unaffected.

The application of any awards or proceeds of a Condemnation Action to the
Indebtedness shall not extend or postpone the due date or the full payment of
any Monthly Debt Service Payment, Monthly Replacement Reserve Deposit, any other
installments referred to in this Loan Agreement or in any other Loan Document,
or the Maturity Date.

(c) Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to
Section 14.03(c).

(d) Preservation of Mortgaged Property.

If a Condemnation Action results in or from damage to the Mortgaged Property and
Lender elects to apply the proceeds or awards from such Condemnation Action to
the Indebtedness in accordance with the terms of this Loan Agreement, Borrower
shall not be obligated to restore or repair the Mortgaged Property. Rather,
Borrower shall restrict access to any portion of the Mortgaged Property which
has been damaged or destroyed in connection with such Condemnation Action and,
at Borrower’s expense and regardless of whether such costs are

 

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covered by insurance, clean up any debris resulting in or from the Condemnation
Action, and, if required by any Governmental Authority or otherwise permitted by
Lender, demolish or raze any remaining part of the damaged Mortgaged Property to
the extent necessary to keep and maintain the Mortgaged Property in a safe,
habitable and marketable condition. Nothing in this Section 10.03(d) shall
affect any of Lender’s remedial rights against Borrower in connection with a
breach by Borrower of any of its obligations under this Loan Agreement or under
any Loan Document, including any failure to timely pay Monthly Debt Service
Payments or maintain the insurance coverage(s) required by this Loan Agreement.

ARTICLE 11 - LIENS, TRANSFERS AND ASSUMPTIONS

Section 11.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 11.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) No Labor or Materialmen’s Claims.

All parties furnishing labor and materials on behalf of Borrower have been paid
in full. There are no mechanics’ or materialmen’s liens (whether filed or
unfiled) outstanding for work, labor or materials (and no claims or work
outstanding that under applicable law could give rise to any such mechanics’ or
materialmen’s liens) affecting the Mortgaged Property, whether prior to, equal
with or subordinate to the lien of the Security Instrument.

(b) No Other Interests.

No Person:

(1) other than Borrower has any possessory ownership or interest in the
Mortgaged Property or right to occupy the same except under and pursuant to the
provisions of existing Leases, the material terms of all such Leases having been
previously disclosed in writing to Lender; nor

(2) has an option, right of first refusal, or right of first offer (except as
required by applicable law) to purchase the Mortgaged Property, or any interest
in the Mortgaged Property.

Section 11.02. Covenants.

(a) Liens; Encumbrances.

Other than Permitted Encumbrances and the lien created by the Loan Documents,
Borrower shall not permit the grant, creation or existence of any Lien, whether
voluntary, involuntary or by operation of law, on all or any portion of the
Mortgaged Property (including any voluntary, elective or non-compulsory tax lien
or assessment pursuant to a voluntary, elective or non-compulsory special tax
district or similar regime).

 

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(b) Transfers.

(1) Mortgaged Property.

Borrower shall not Transfer, or cause or permit a Transfer of, all or any part
of the Mortgaged Property (including any interest in the Mortgaged Property)
other than:

(A) a Transfer to which Lender has consented in writing;

(B) the grant of a Residential Lease for a term of two (2) years or less and not
containing an option to purchase or right of first refusal (except as required
by applicable law);

(C) the grant of a non-Material Commercial Lease provided the use and type of
operation of such space is unchanged from the use and type of operation in
effect as of the Effective Date and the number and size of residential units at
the Mortgaged Property are not reduced;

(D) a Transfer of obsolete or worn out Personalty or Fixtures that are
contemporaneously replaced by items of equal or better function and quality
which are free of Liens (other than those created by the Loan Documents);

(E) the grant of an easement, servitude or restrictive covenant to which Lender
has consented, and Borrower has paid to Lender, upon demand, all costs and
expenses incurred by Lender in connection with reviewing Borrower’s request;

(F) the creation of any tax lien, municipal lien, utility lien, mechanics’ lien,
materialmen’s lien, or judgment lien against the Mortgaged Property if bonded
off, released of record or otherwise remedied to Lender’s satisfaction within
sixty (60) days after the earlier of the date Borrower has actual notice or
constructive notice of the existence of such lien; or

(G) the conveyance of the Mortgaged Property following a Foreclosure Event.

(2) Interests in Borrower and/or Key Principal and/or Guarantor.

Other than a Transfer to which Lender has consented in writing, Borrower shall
not Transfer, or cause or permit to be Transferred:

(A) a direct or indirect Controlling Interest in Borrower, Key Principal or
Guarantor (if applicable);

 

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(B) fifty percent (50%) or more of any Key Principal’s or Guarantor’s direct or
indirect ownership interests in Borrower that existed on the Effective Date
(individually or on an aggregate basis);

(C) the economic benefits or rights to cash flows attributable to any ownership
interests in Borrower, Key Principal or Guarantor (if applicable) separate from
the Transfer of the underlying ownership interests if the Transfer of the
underlying ownership interest is prohibited by this Loan Agreement; or

(D) a Transfer to a new key principal or new guarantor (if such new key
principal or guarantor is an entity) which entity has an organizational
existence termination date that ends before the Maturity Date.

(3) Entity Conversion.

(A) Borrower shall not change its name, change its jurisdiction or organization,
or cause or permit a conversion of Borrower from one type of entity into another
type of entity if such conversion results in either:

 

  (i) a Transfer of a Controlling Interest; or

 

  (ii) a change in any assets, liabilities, legal rights or obligations of
Borrower (or of Key Principal, Guarantor or any general partner, manager (if
non-member managed) or managing member of Borrower, as applicable), by operation
of law or otherwise.

(B) Notwithstanding the foregoing, Borrower may convert from one type of legal
entity into another type of legal entity for tax or other structuring purposes,
provided:

 

  (i) the provisions of Section 11.02(b)(2) are satisfied;

 

  (ii) Borrower provides Lender with at least ten (10) days prior written notice
of such conversion;

 

  (iii) Borrower provides Lender any certificates evidencing such conversion
filed with the appropriate Secretary of State within ten (10) days after filing
such certificates;

 

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  (iv) Borrower provides Lender new certificates of good standing for such
entity at least five (5) days prior to such conversion;

 

  (v) Lender reserves the right to file UCC-3 amendments where necessary
reflecting the conversion;

 

  (vi) if required by Lender, Borrower executes an amendment to this Loan
Agreement documenting the conversion; and

 

  (vii) Borrower shall provide Lender with confirmation from the title company
(via electronic mail or letter) that nothing is needed in the land records (of
the appropriate Property Jurisdiction) at such time to evidence such conversion,
and no endorsements to the Title Policy are necessary to maintain Lender’s
coverage; or if any endorsements are necessary, Borrower shall provide such
endorsements at Borrower’s cost.

(c) No Other Indebtedness and Mezzanine Financing.

Other than the Mortgage Loan, Borrower shall not incur or be obligated at any
time with respect to any loan or other indebtedness in connection with or
secured by the Mortgaged Property. Neither Borrower nor any owner of Borrower
shall (1) incur any “mezzanine debt” or issue any preferred equity that is
secured by a pledge of the ownership interests in Borrower or by a pledge of the
cash flows of Borrower to the extent the Transfer of the underlying ownership
interests is otherwise prohibited by this Loan Agreement, or (2) incur any
similar indebtedness or issue any similar equity with respect to the Mortgaged
Property or ownership interest in Borrower or any owner of Key Principal or
Guarantor that is secured by a pledge of the cash flows of Borrower to the
extent the Transfer of the underlying ownership interests is otherwise
prohibited by this Loan Agreement.

Section 11.03. Mortgage Loan Administration Matters Regarding Liens, Transfers
and Assumptions

(a) Assumption of Mortgage Loan.

Lender shall consent to a Transfer of the Mortgaged Property to and an
assumption of the Mortgage Loan by a new borrower if each of the following
conditions is satisfied prior to the Transfer:

(1) Borrower has submitted to Lender all information required by Lender to make
the determination required by this Section 11.03(a);

 

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(2) no Event of Default has occurred and is continuing, and no event which, with
the giving of written notice or the passage of time, or both, would constitute
an Event of Default has occurred and is continuing;

(3) Lender determines that:

(A) the proposed new borrower, new key principal and any other new guarantor
fully satisfy all of Lender’s then-applicable borrower, key principal or
guarantor eligibility, credit, management and other loan underwriting standards
(including any standards with respect to previous relationships between Lender
and the proposed new borrower, new key principal and new guarantor and the
organization of the new borrower, new key principal and new guarantor (if
applicable));

(B) none of the proposed new borrower, new key principal and any new guarantor,
or any owners of the proposed new borrower, new key principal and any new
guarantor, are a Prohibited Person; and

(C) none of the proposed new borrower, new key principal and any new guarantor
(if any of such are entities) shall have an organizational existence termination
date that ends before the Maturity Date;

(4) Lender determines that the Mortgaged Property satisfies all of Lender’s
then-applicable loan underwriting standards, including physical condition,
occupancy and net operating income;

(5) the proposed new borrower has executed an assumption agreement acceptable to
Lender that, among other things, requires the proposed new borrower to assume
and perform all obligations of Borrower (or any other transferor), and that may
require that the new borrower comply with any provisions of any Loan Document
which previously may have been waived by Lender for Borrower, subject to the
terms of Section 11.03(g);

(6) one or more individuals or entities acceptable to Lender as new guarantors
have executed and delivered to Lender:

(A) an assumption agreement acceptable to Lender that requires the new guarantor
to assume and perform all obligations of Guarantor under any Guaranty given in
connection with the Mortgage Loan; or

(B) a substitute Non-Recourse Guaranty and other substitute guaranty in a form
acceptable to Lender;

(7) Lender has reviewed and approved the Transfer documents; and

(8) Lender has received the fees described in Section 11.03(g).

 

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(b) Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates.

(1) Transfers of direct or indirect ownership interests in Borrower that are not
otherwise permitted by this Loan Agreement but in which Key Principal or
Guarantor, or an entity in which Key Principal or Guarantor, as applicable, has
a Controlling Interest, is the transferee shall be consented to by Lender if
such Transfer satisfies the applicable requirements of Section 11.03(a), other
than Section 11.03(a)(5).

(2) Transfers of direct or indirect interests in Borrower held by a Key
Principal or Guarantor to other Key Principals or Guarantors, as applicable,
shall be consented to by Lender if such Transfer satisfies the following
conditions:

(A) the Transfer does not cause a change in the management and control of
Borrower; and

(B) the transferor Key Principal or Guarantor maintains the same right and
ability to manage and control Borrower as existed prior to the Transfer.

If the conditions set forth in this Section 11.03(b) are satisfied, the Transfer
Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket
costs set forth in Section 11.03(g).

(c) Estate Planning.

Notwithstanding the provisions of Section 11.02(b)(2), so long as (1) the
Transfer does not cause a change in the management and control of Borrower and
(2) the transferor Key Principal or Guarantor, as applicable, maintains the same
right and ability to manage and control Borrower as existed prior to the
Transfer, Lender shall consent to Transfers of direct or indirect ownership
interests in Borrower held by a Key Principal or Guarantor to, and Transfers of
direct or indirect ownership interests, in an entity Key Principal or entity
Guarantor to:

(A) Immediate Family Members of such Key Principal or Guarantor;

(B) United States domiciled trusts established for the benefit of the transferor
Key Principal or transferor Guarantor, or Immediate Family Members of the
transferor Key Principal or the transferor Guarantor; or

(C) partnerships or limited liability companies of which the partners or
members, respectively, are comprised entirely of (i) such Key Principal or
Guarantor and Immediate Family Members of such Key Principal or Guarantor or
(ii) all Immediate Family Members of such Key Principal or Guarantor.

 

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If the conditions set forth in this Section 11.03(c) are satisfied, the Transfer
Fee shall be waived provided Borrower shall pay the Review Fee and out-of-pocket
costs set forth in Section 11.03(g).

(d) Termination or Revocation of Trust.

If any of Borrower, Guarantor or Key Principal is a trust, or if a Controlling
Interest of Borrower, Guarantor or Key Principal would be Transferred due to the
termination or revocation of a trust, the termination or revocation of such
trust is an unpermitted Transfer; provided that the termination or revocation of
the trust due to the death of an individual trustor shall not be considered an
unpermitted Transfer so long as:

(1) Lender is notified within thirty (30) days of the death; and

(2) such Borrower, Guarantor, Key Principal or other Person, as applicable, is
replaced with an individual or entity acceptable to Lender, in accordance with
the provisions of Section 11.03(a) within ninety (90) days of the date of the
death causing the termination or revocation.

If the conditions set forth in this Section 11.03(d) are satisfied, the Transfer
Fee shall be waived; provided Borrower shall pay the Review Fee and
out-of-pocket costs set forth in Section 11.03(g).

(e) Death of Key Principal or Guarantor; Controlling Interest Transfer Due to
Death.

(1) If Key Principal or Guarantor is a natural person, or if a Controlling
Interest in Borrower, Guarantor or Key Principal is Transferred as a result of
the death of a Person (except in the case of trusts which is addressed in
Section 11.03(d)), Borrower must notify Lender in writing within ninety (90)
days in the event of such death. Unless waived in writing by Lender, the
deceased shall be replaced by an individual or entity within one hundred
eighty (180) days, subject to Borrower’s satisfaction of the following
conditions:

(A) Borrower has submitted to Lender all information required by Lender to make
the determination required by this Section 11.03(e);

(B) Lender determines that:

 

  (i)

the proposed new key principal and any other new guarantor (or Person
controlling such key principal or guarantor) fully satisfies all of Lender’s
then-applicable key principal or guarantor eligibility, credit, management and
other loan underwriting standards (including any standards with respect to
previous relationships between Lender and the proposed new key principal and new

 

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  guarantor (or Person controlling such key principal or guarantor) and the
organization of the new key principal and new guarantor (if applicable));

 

  (ii) none of the proposed new key principal or any new guarantor, or any
owners of the proposed new key principal or any new guarantor, is a Prohibited
Person; and

 

  (iii) none of the proposed new key principal or any new guarantor (if any of
such are entities) shall have an organizational existence termination date that
ends before the Maturity Date;

(C) if applicable, one or more individuals or entities acceptable to Lender as
new guarantors have executed and delivered to Lender:

 

  (i) an assumption agreement acceptable to Lender that requires the new
guarantor to assume and perform all obligations of Guarantor under any Guaranty
given in connection with the Mortgage Loan; or

 

  (ii) a substitute Non-Recourse Guaranty and other substitute guaranty in a
form acceptable to Lender.

(2) In the event a replacement Key Principal, Guarantor or other Person is
required by Lender due to the death described in this Section 11.03(e), and such
replacement has not occurred within such period, the period for replacement may
be extended by Lender to a date not more than one (1) year from the date of such
death; however, Lender may require as a condition to any such extension that:

(A) the then-current property manager be replaced with a property manager
reasonably acceptable to Lender (or if a property manager has not been
previously engaged, a property manager reasonably acceptable to Lender be
engaged); or

(B) a lockbox or cash management arrangement (with the property manager)
reasonably acceptable to Lender during such extended replacement period be
instituted.

If the conditions set forth in this Section 11.03(e) are satisfied, the Transfer
Fee shall be waived, provided Borrower shall pay the Review Fee and
out-of-pocket costs set forth in Section 11.03(g).

 

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(f) Bankruptcy of Guarantor.

(1) Upon the occurrence of any Guarantor Bankruptcy Event, unless waived in
writing by Lender, the applicable Guarantor shall be replaced by an individual
or entity within ninety (90) days of such Guarantor Bankruptcy Event, subject to
Borrower’s satisfaction of the following conditions:

(A) Borrower has submitted to Lender all information required by Lender to make
the determination required by this Section 11.03(f);

(B) Lender determines that:

 

  (i) the proposed new guarantor fully satisfies all of Lender’s then-applicable
guarantor eligibility, credit, management and other loan underwriting standards
(including any standards with respect to previous relationships between Lender
and the proposed new guarantor and the organization of the new guarantor (if
applicable));

 

  (ii) no new guarantor is a Prohibited Person; and

 

  (iii) no new guarantor (if any of such are entities) shall have an
organizational existence termination date that ends before the Maturity Date;

(C) one or more individuals or entities acceptable to Lender as new guarantors
have executed and delivered to Lender:

 

  (i) an assumption agreement acceptable to Lender that requires the new
guarantor to assume and perform all obligations of Guarantor under any Guaranty
given in connection with the Mortgage Loan; or

 

  (ii) a substitute Non-Recourse Guaranty and other substitute guaranty in a
form acceptable to Lender.

(2) In the event a replacement Guarantor is required by Lender due to the
Guarantor Bankruptcy Event described in this Section 11.03(f), and such
replacement has not occurred within such period, the period for replacement may
be extended by Lender in its discretion; however, Lender may require as a
condition to any such extension that:

(A) the then-current property manager be replaced with a property manager
reasonably acceptable to Lender (or if a property manager has not been
previously engaged, a property manager reasonably acceptable to Lender be
engaged); or

(B) a lockbox or cash management arrangement (with the property manager)
reasonably acceptable to Lender during such extended replacement period be
instituted.

 

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If the conditions set forth in this Section 11.03(f) are satisfied, the Transfer
Fee shall be waived, provided Borrower shall pay the Review Fee and
out-of-pocket costs set forth in Section 11.03(g).

(g) Further Conditions to Transfers and Assumption.

(1) In connection with any Transfer of the Mortgaged Property, or an ownership
interest in Borrower, Key Principal or Guarantor for which Lender’s approval is
required under this Loan Agreement, Lender may, as a condition to any such
approval, require:

(A) additional collateral, guaranties or other credit support to mitigate any
risks concerning the proposed transferee or the performance or condition of the
Mortgaged Property;

(B) amendment of the Loan Documents to delete or modify any specially negotiated
terms or provisions previously granted for the exclusive benefit of original
Borrower, Key Principal or Guarantor and to restore the original provisions of
the standard Fannie Mae form multifamily loan documents, to the extent such
provisions were previously modified; or

(C) a modification to the amounts required to be deposited into the
Reserve/Escrow Account pursuant to the terms of Section 13.02(a)(3)(B).

(2) In connection with any request by Borrower for consent to a Transfer,
Borrower shall pay to Lender upon demand:

(A) the Transfer Fee (to the extent charged by Lender);

(B) the Review Fee (regardless of whether Lender approves or denies such
request); and

(C) all of Lender’s out-of-pocket costs (including reasonable attorneys’ fees)
incurred in reviewing the Transfer request, to the extent such costs exceed the
Review Fee and regardless of whether Lender approves or denies such request.

(3) Borrower shall provide written notice to Lender of all Transfers whether or
not such Transfers are permitted under this Loan Agreement or approved by Lender
no later than ten (10) days prior to the date of the Transfer, provided that

 

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Borrower shall not be required to provide written notice of Transfers of
Residential Leases or of the replacement of Fixtures or Personalty performed
pursuant to the terms of the Loan Documents.

(h) Securities Activities in Publicly-Held Corporation or Publicly-Held Trust.

Notwithstanding anything in this Loan Agreement to the contrary, except as
provided in this subsection (h), the issuance, sale, conveyance, transfer,
disposition, alienation, hypothecation, pledge or trading of stock, convertible
debt or similar securities (the “Securities Activities”) of (i) Key Principal or
Guarantor, if such Key Principal or Guarantor is a Publicly-Held Corporation or
Publicly-Held Trust, or (ii) any Publicly-Held Corporation or Publicly-Held
Trust that directly or indirectly Controls or owns a Controlling Interest in
Borrower, Key Principal or Guarantor shall be permitted without the consent of
Lender and without payment of a Transfer Fee; provided, however, each of the
following events remain subject to payment of a Transfer Fee and Lender’s prior
written consent:

(1) the deregistration of the stock or beneficial interests of such
Publicly-Held Corporation or Publicly-Held Trust from the applicable exchange,
or any other event that causes or results in such stock or beneficial interests
not to be publicly traded unless in connection with any such deregistration,
(A) no Event of Default then exists, (B) Borrower provides Lender prior written
notice of deregistration, together with supporting documentation demonstrating
to Lender’s satisfaction that no change of Control of such Publicly-Held
Corporation or Publicly-Held Trust will occur as a result of deregistration and
(C) Borrower acknowledges that upon consummation of deregistration, this
subsection (h) will be of no further force or effect;

(2) the replacement of fifty percent (50%) (or such lesser percentage which
constitutes a quorum) or more of the members of the board of directors or
trustees of such Publicly-Held Corporation or Publicly-Held Trust over a one
(1) year period unless (A) such members were replaced solely by reason of
retirement at age sixty-five or older, death or disability or (B) such
replacement was approved by a vote of at least a majority of the board of
directors or trustees then in office who were members of such board of directors
or trustees at the beginning of such one-year period ; and/or

(3) a merger into or with another entity, or the acquisition of or by another
entity, unless (A) no Event of Default then exists and either (B) the
Publicly-Held Corporation or Publicly-Held Trust is the surviving entity after
such merger or acquisition or (C) the Publicly-Held Corporation or Publicly-Held
Trust is not the surviving entity after such acquisition but Borrower provides
Lender with prior written notice of such merger or acquisition, together with
supporting documentation demonstrating to Lender’s satisfaction that (i) no
change of Control of such Publicly-Held Corporation or Publicly-Held Trust will
occur as a result of such merger or acquisition, (ii) if the Guarantor is merged
into or acquired by the surviving entity, the surviving entity is approved by
Lender (in accordance with Section 11.03(a)) and (iii) the surviving entity
assumes, and ratifies and confirms in an assumption agreement approved by
Lender, the obligations of guarantor under the Non-Recourse Guaranty and any
other obligations of Guarantor to Lender.

 

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This subsection (h) is limited to Transfers and Securities Activities of
Publicly-Held Corporations and Publicly-Held Trusts. Nothing in this subsection
(h) shall be interpreted to contravene the other provisions of this Loan
Agreement regarding Transfers of Controlling Interests or Control in any
entities that are not Publicly-Held Corporations and Publicly-Held Trusts at the
time of such Transfer and Securities Activities.

ARTICLE 12 - IMPOSITIONS

Section 12.01. Representations and Warranties.

The representations and warranties made by Borrower to Lender in this
Section 12.01 are made as of the Effective Date, and are true and correct except
as disclosed on the Exceptions to Representations and Warranties Schedule.

(a) Payment of Taxes, Assessments and Other Charges.

Borrower has:

(1) paid (or with the approval of Lender, established an escrow fund sufficient
to pay when due and payable) all amounts and charges relating to the Mortgaged
Property that have become due and payable before any fine, penalty interest,
lien, or costs may be added thereto, including Impositions, leasehold payments
and ground rents;

(2) paid all Taxes for the Mortgaged Property that have become due before any
fine, penalty interest, lien, or costs may be added thereto pursuant to any
notice of assessment received by Borrower and any and all taxes that have become
due against Borrower before any fine, penalty interest, lien or costs may be
added thereto;

(3) no knowledge of any basis for any additional assessments;

(4) no knowledge of any presently pending special assessments against all or any
part of the Mortgaged Property, or any presently pending special assessments
against Borrower; and

(5) not received any written notice of any contemplated special assessment
against the Mortgaged Property, or any contemplated special assessment against
Borrower.

 

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Section 12.02. Covenants.

(a) Imposition Deposits, Taxes, and Other Charges.

Borrower shall:

(1) deposit the Imposition Deposits with Lender on each Payment Date (or on
another day designated in writing by Lender) in amount sufficient, in Lender’s
discretion, to enable Lender to pay each Imposition before the last date upon
which such payment may be made without any penalty or interest charge being
added, plus an amount equal to no more than one-sixth (1/6) (or the amount
permitted by applicable law) of the Impositions for the trailing twelve (12)
months (calculated based on the aggregate annual Imposition costs divided by
twelve (12) and multiplied by two (2));

(2) deposit with Lender, within ten (10) days after written notice from Lender
(subject to applicable law), such additional amounts estimated by Lender to be
reasonably necessary to cure any deficiency in the amount of the Imposition
Deposits held for payment of a specific Imposition;

(3) except as set forth in Section 12.03Section 12.03(c) below, pay, or cause to
be paid, all Impositions, leasehold payments, ground rents and Borrower taxes
when due and before any fine, penalty interest, lien, or costs may be added
thereto;

(4) promptly deliver to Lender a copy of all notices of, and invoices for,
Impositions, and, if Borrower pays any Imposition directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments; and

(5) promptly deliver to Lender a copy of all notices of any special assessments
and contemplated special assessments against the Mortgaged Property or Borrower.

Section 12.03. Mortgage Loan Administration Matters Regarding Impositions.

(a) Maintenance of Records by Lender.

Lender shall maintain records of the monthly and aggregate Imposition Deposits
held by Lender for the purpose of paying Taxes, insurance premiums and each
other obligation of Borrower for which Imposition Deposits are required.

(b) Imposition Accounts.

All Imposition Deposits shall be held in an institution (which may be Lender, if
Lender is such an institution) whose deposits or accounts are insured or
guaranteed by a federal agency and which accounts meet the standards for
custodial accounts as required by Lender from time to time. Lender shall not be
obligated to open additional accounts, or deposit Imposition Deposits

 

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in additional institutions, when the amount of the Imposition Deposits exceeds
the maximum amount of the federal deposit insurance or guaranty. No interest,
earnings or profits on the Imposition Deposits shall be paid to Borrower unless
applicable law so requires. Imposition Deposits shall not be trust funds, nor
shall they operate to reduce the Indebtedness, unless applied by Lender for that
purpose in accordance with this Loan Agreement. For the purposes of 9-104(a)(3)
of the UCC, Lender is the owner of the Imposition Deposits and shall be deemed a
“customer” with sole control of the account holding the Imposition Deposits.

(c) Payment of Impositions; Sufficiency of Imposition Deposits.

Lender may pay an Imposition according to any bill, statement or estimate from
the appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement or estimate or into the validity of the
Imposition. Imposition Deposits shall be required to be used by Lender to pay
Taxes, insurance premiums and any other individual Imposition only if:

(1) no Event of Default exists;

(2) Borrower has timely delivered to Lender all applicable bills or premium
notices that it has received; and

(3) sufficient Imposition Deposits are held by Lender for each Imposition at the
time such Imposition becomes due and payable.

Lender shall have no liability to Borrower for failing to pay any Imposition if
any of the conditions are not satisfied. If at any time the amount of the
Imposition Deposits held for payment of a specific Imposition exceeds the amount
reasonably deemed necessary by Lender to be held in connection with such
Imposition, the excess may be credited against future installments of Imposition
Deposits for such Imposition.

(d) Imposition Deposits Upon Event of Default.

If an Event of Default has occurred and is continuing, Lender may apply any
Imposition Deposits, in such amount and in such order as Lender determines, to
pay any Impositions or as a credit against the Indebtedness.

(e) Contesting Impositions.

Other than insurance premiums, Borrower may contest, at its expense, by
appropriate legal proceedings, the amount or validity of any Imposition if:

(1) Borrower notifies Lender of the commencement or expected commencement of
such proceedings;

(2) Lender determines that the Mortgaged Property is not in danger of being sold
or forfeited;

 

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(3) Borrower deposits with Lender (or the applicable Governmental Authority if
required by applicable law) reserves sufficient to pay the contested Imposition,
if required by Lender (or the applicable Governmental Authority);

(4) Borrower furnishes whatever additional security is required in the
proceedings or is reasonably requested by Lender; and

(5) Borrower commences, and at all times thereafter diligently prosecutes, such
contest in good faith until a final determination is made by the applicable
Governmental Authority.

(f) Release to Borrower.

Upon payment in full of all sums secured by the Security Instrument and this
Loan Agreement and release by Lender of the lien of the Security Instrument,
Lender shall disburse to Borrower the balance of any Imposition Deposits then on
deposit with Lender.

ARTICLE 13 - REPLACEMENT RESERVE AND REPAIRS

Section 13.01. Covenants.

(a) Initial Deposits to Replacement Reserve Account and Repairs Escrow Account.

On the Effective Date, Borrower shall pay to Lender:

(1) the Initial Replacement Reserve Deposit for deposit into the Replacement
Reserve Account; and

(2) the Repairs Escrow Deposit for deposit into the Repairs Escrow Account.

(b) Monthly Replacement Reserve Deposits.

Borrower shall deposit the applicable Monthly Replacement Reserve Deposit into
the Replacement Reserve Account on each Payment Date.

(c) Payment for Replacements and Repairs.

Borrower shall:

(1) pay all invoices for the Replacements and Repairs, regardless of whether
funds on deposit in the Replacement Reserve Account or the Repairs Escrow
Account, as applicable, are sufficient, prior to any request for disbursement
from the Replacement Reserve Account or the Repairs Escrow Account, as
applicable (unless Lender has agreed to issue joint checks in connection with a
particular Replacement or Repair);

 

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(2) pay all applicable fees and charges of any Governmental Authority on account
of the Replacements and Repairs, as applicable; and

(3) provide evidence satisfactory to Lender of completion of the Replacements
and any Required Repairs (within the Completion Period or within such other
period or by such other date set forth in the Required Repair Schedule and any
Borrower Requested Repairs and Additional Lender Repairs (by the date specified
by Lender for any such Borrower Requested Repairs or Additional Lender
Repairs)).

(d) Assignment of Contracts for Replacements and Repairs.

Borrower shall assign to Lender any contract or subcontract for Replacements or
Repairs, upon Lender’s request, on a form of assignment approved by Lender.

(e) Indemnification.

If Lender elects to exercise its rights under Section 14.03 due to Borrower’s
failure to timely commence or complete any Replacements or Repairs, Borrower
shall indemnify and hold Lender harmless from and against any and all actions,
suits, claims, demands, liabilities, losses, damages, obligations and costs or
expenses, including litigation costs and reasonable attorneys’ fees, arising
from or in any way connected with the performance by Lender of the Replacements
or Repairs or investment of the Reserve/Escrow Account Funds; provided that
Borrower shall have no indemnity obligation if such actions, suits, claims,
demands, liabilities, losses, damages, obligations and costs or expenses,
including litigation costs and reasonable attorneys’ fees, arise as a result of
the willful misconduct and gross negligence of Lender, Lender’s agents,
employees or representatives as determined by a court of competent jurisdiction
pursuant to a final non-appealable court order.

(f) Amendments to Loan Documents.

Subject to Section 5.02, Borrower shall execute and/or deliver to Lender, upon
request, an amendment to this Loan Agreement, the Security Instrument, any other
Loan Document and/or the original financing statement necessary or desirable to
perfect Lender’s lien upon any portion of the Mortgaged Property for which
Reserve/Escrow Account Funds were expended.

(g) Administrative Fees and Expenses.

Borrower shall pay to Lender:

(1) by the date specified in the applicable invoice, the Repairs Escrow Account
Administrative Fee and the Replacement Reserve Account Administration Fee for
Lender’s services in administering the Repairs Escrow Account and Replacement
Reserve Account and investing the funds on deposit in the Repairs Escrow Account
and the Replacement Reserve Account, respectively;

 

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(2) upon demand, a reasonable inspection fee, not exceeding the Maximum
Inspection Fee, for each inspection of the Mortgaged Property by Lender in
connection with a Repair or Replacement, plus all other reasonable costs and
out-of-pocket expenses relating to such inspections; and

(3) upon demand, all reasonable fees charged by any engineer, architect,
inspector or other person inspecting the Mortgaged Property on behalf of Lender
for each inspection of the Mortgaged Property in connection with a Repair or
Replacement, plus all other reasonable costs and out-of-pocket expenses relating
to such inspections.

Section 13.02. Mortgage Loan Administration Matters Regarding Reserves.

(a) Accounts, Deposits, and Disbursements.

(1) Custodial Accounts.

(A) The Replacement Reserve Account shall be an interest-bearing account that
meets the standards for custodial accounts as required by Lender from time to
time. Lender shall not be responsible for any losses resulting from the
investment of the Replacement Reserve Deposits or for obtaining any specific
level or percentage of earnings on such investment. All interest earned on the
Replacement Reserve Deposits shall be added to and become part of the
Replacement Reserve Account; provided, however, if applicable law requires, and
so long as no Event of Default exists under any of the Loan Documents, Lender
shall pay to Borrower the interest earned on the Replacement Reserve Account not
less frequently than the Replacement Reserve Account Interest Disbursement
Frequency. In no event shall Lender be obligated to disburse funds from the
Reserve/Escrow Account if an Event of Default exists.

(B) Lender shall not be obligated to deposit the Repairs Escrow Deposits into an
interest-bearing account.

(2) Disbursements by Lender Only.

Only Lender or a designated representative of Lender may make disbursements from
the Replacement Reserve Account and the Repairs Escrow Account. Except as
provided in Section 13.02(a)(8), disbursements shall only be made upon Borrower
request and after satisfaction of all conditions for disbursement.

 

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(3) Adjustment of Deposits.

(A) Mortgage Loan Terms Exceeding Ten (10) Years.

If the Loan Term exceeds ten (10) years, a physical needs assessment shall be
ordered by Lender for the Mortgaged Property at the expense of Borrower (which
expense may be paid out of the Replacement Reserve Account if excess funds are
available). The physical needs assessment shall be performed no earlier than the
sixth (6th) month and no later than the ninth (9th) month of the tenth (10th)
Loan Year (and of the twentieth (20th) Loan Year if the Loan Term exceeds
twenty (20) years). After review of the physical needs assessment, the amount of
the Monthly Replacement Reserve Deposit may be adjusted by Lender for the
remaining Loan Term by written notice to Borrower so that the Monthly
Replacement Reserve Deposits are sufficient to fund the Replacements as and when
required and/or the amount to be held in the Repairs Escrow Account may be
adjusted by Lender so that the Repairs Escrow Deposit is sufficient to fund the
Repairs as and when required.

(B) Transfers.

In connection with any Transfer of the Mortgaged Property, or any Transfer of an
ownership interest in Borrower, Guarantor or Key Principal which requires
Lender’s consent, Lender may review the amounts on deposit, if any, in the
Replacement Reserve Account or the Repairs Escrow Account, the amount of the
Monthly Replacement Reserve Deposit and the likely repairs and replacements
required by the Mortgaged Property, and the related contingencies which may
arise during the remaining Loan Term. Based upon that review, Lender may require
an additional deposit to the Replacement Reserve Account or the Repairs Escrow
Account, or an increase in the amount of the Monthly Replacement Reserve Deposit
as a condition to Lender’s consent to such Transfer. In all events, the
transferee shall be required to assume Borrower’s duties and obligations under
this Loan Agreement.

(4) Insufficient Funds.

Lender may, upon thirty (30) days prior written notice to Borrower, require an
additional deposit(s) to the Replacement Reserve Account or Repairs Escrow
Account, or an increase in the amount of the Monthly Replacement Reserve
Deposit, if Lender determines that the amounts on deposit in either the
Replacement Reserve Account or the Repairs Escrow Account are not sufficient to
cover the costs for Required Repairs or Required Replacements or, pursuant to
the terms of Section 13.02(a)(9), not sufficient to cover the costs for Borrower
Requested Repairs,

 

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Additional Lender Repairs, Borrower Requested Replacements or Additional Lender
Replacements. Borrower’s agreement to complete the Replacements or Repairs as
required by this Loan Agreement shall not be affected by the insufficiency of
any balance in the Replacement Reserve Account or the Repairs Escrow Account, as
applicable.

(5) Disbursements for Replacements and Repairs.

(A) Disbursement requests may only be made after completion of the applicable
Replacements and only to reimburse Borrower for the actual approved costs of the
Replacements. Lender shall not disburse from the Replacement Reserve Account the
costs of routine maintenance to the Mortgaged Property or for costs which are to
be reimbursed from the Repairs Escrow Account or any similar account.
Disbursement from the Replacement Reserve Account shall not be made more
frequently than the Maximum Replacement Reserve Disbursement Interval. Other
than in connection with a final request for disbursement, disbursements from the
Replacement Reserve Account shall not be less than the Minimum Replacement
Reserve Disbursement Amount.

(B) Disbursement requests may only be made after completion of the applicable
Repairs and only to reimburse Borrower for the actual cost of the Repairs, up to
the Maximum Repair Cost. Lender shall not disburse any amounts which would cause
the funds remaining in the Repairs Escrow Account after any disbursement (other
than with respect to the final disbursement) to be less than the Maximum Repair
Cost of the then-current estimated cost of completing all remaining Repairs.
Lender shall not disburse from the Repairs Escrow Account the costs of routine
maintenance to the Mortgaged Property or for costs which are to be reimbursed
from the Replacement Reserve Account or any similar account. Disbursement from
the Repairs Escrow Account shall not be made more frequently than the Maximum
Repair Disbursement Interval. Other than in connection with a final request for
disbursement, disbursements from the Repairs Escrow Account shall not be less
than the Minimum Repairs Disbursement Amount.

(6) Disbursement Requests.

Each request by Borrower for disbursement from the Replacement Reserve Account
or the Repairs Escrow Account must be in writing, must specify the Replacement
or Repair for which reimbursement is requested (provided that for any Borrower
Requested Replacements, Borrower Requested Repairs, Additional Lender
Replacements and Additional Lender Repairs, Lender shall have approved the use
of the Reserve/Escrow Account Funds for such replacements or repairs pursuant to
the terms of Section 13.02(a)(9)), and must:

(A) if applicable, specify the quantity and price of the items or materials
purchased, grouped by type or category;

 

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(B) if applicable, specify the cost of all contracted labor or other services
involved in the Replacement or Repair for which such request for disbursement is
made;

(C) if applicable, include copies of invoices for all items or materials
purchased and all contracted labor or services provided;

(D) include evidence of payment of such Replacement or Repair satisfactory to
Lender (unless Lender has agreed to issue joint checks in connection with a
particular Repair or Replacement as provided in this Loan Agreement); and

(E) contain a certification by Borrower that the Repair or Replacement has been
completed lien free and in a good and workmanlike manner, in accordance with any
plans and specifications previously approved by Lender (if applicable) and in
compliance with all applicable laws, ordinances, rules and regulations of any
Governmental Authority having jurisdiction over the Mortgaged Property, and
otherwise in accordance with the provisions of this Loan Agreement.

(7) Conditions to Disbursement.

Lender may require any or all of the following at the expense of Borrower as a
condition to disbursement of funds from the Replacement Reserve Account or the
Repairs Escrow Account (provided that for any Borrower Requested Replacements,
Borrower Requested Repairs, Additional Lender Replacements and Additional Lender
Repairs, Lender shall have approved the use of the Reserve/Escrow Account Funds
for such replacements or repairs pursuant to the terms of Section 13.02(a)(9)):

(A) an inspection by Lender of the Mortgaged Property and the applicable
Replacement or Repair;

(B) an inspection or certificate of completion by an appropriate independent
qualified professional (such as an architect, engineer or property inspector,
depending on the nature of the Repair or Replacement) selected by Lender;

(C) either:

 

  (i) a search of title to the Mortgaged Property effective to the date of
disbursement; or

 

  (ii) a “date-down” endorsement to Lender’s Title Policy extending the
effective date of such policy to the date of disbursement, and showing no Liens
other than Permitted Encumbrances (or liens which Borrower is diligently
contesting in good faith that have been bonded off to the satisfaction of
Lender); and

 

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(D) an acknowledgement of payment, waiver of claims and release of lien for work
performed and materials supplied from each contractor, subcontractor or
materialman in accordance with the requirements of applicable law and covering
all work performed and materials supplied (including equipment and fixtures) for
the Mortgaged Property by that contractor, subcontractor or materialman through
the date covered by the disbursement request (or, in the event that payment to
such contractor, subcontractor or materialman is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
disbursement).

(8) Joint Checks for Periodic Disbursements.

Lender may issue joint checks, payable to Borrower and the applicable supplier,
materialman, mechanic, contractor, subcontractor or other similar party, if:

(A) the cost of the Replacement or Repair exceeds the Replacement Threshold or
the Repair Threshold, as applicable, and the contractor performing such
Replacement or Repair requires periodic payments pursuant to the terms of the
applicable written contract;

(B) the contract for such Repair or Replacement requires payment upon completion
of the applicable portion of the work;

(C) Borrower makes the disbursement request after completion of the applicable
portion of the work required to be completed under such contract;

(D) the materials for which the request for disbursement has been made are on
site at the Mortgaged Property and are properly secured or installed;

(E) Lender determines that the remaining funds in the Replacement Reserve
Account designated for such Replacement, or in the Repairs Escrow Account
designated for such Repair, as applicable, are sufficient to complete the
Replacement or Repair;

(F) each supplier, materialman, mechanic, contractor, subcontractor or other
similar party receiving payments shall have provided, if requested by Lender, a
waiver of liens with respect to amounts which have been previously paid to them;
and

(G) all other conditions for disbursement have been satisfied.

 

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(9) Replacements and Repairs Other than Required Replacements and/or Required
Repairs.

(A) Borrower Requested Replacements and Borrower Requested Repairs.

In the event Borrower requests a disbursement from the Replacement Reserve
Account or the Repairs Escrow Account to reimburse Borrower for any Borrower
Requested Replacement or Borrower Requested Repair, any related disbursement
request must also contain support for why Lender should allow such disbursement.
Lender may make disbursements for Borrower Requested Replacements or Borrower
Requested Repairs if Lender determines that:

 

  (i) they are of the type intended to be covered by the Replacement Reserve
Account or the Repairs Escrow Account, as applicable;

 

  (ii) the costs are reasonable;

 

  (iii) the amount of funds in the Replacement Reserve Account or Repairs Escrow
Account, as applicable, is sufficient to pay such costs and the then-current
estimated cost of completing all remaining Required Replacements or Required
Repairs (at the Maximum Repair Cost), as applicable, and any other Borrower
Requested Replacements, Borrower Requested Repairs, Additional Lender
Replacements or Additional Lender Repairs that have been previously approved by
Lender; and

 

  (iv) all conditions for disbursement from the Replacement Reserve Account or
Repairs Escrow Account, as applicable, have been satisfied.

Nothing in this Loan Agreement shall limit Lender’s right to require an
additional deposit to the Replacement Reserve Account or an increase to the
Monthly Replacement Reserve Deposit in connection with any such Borrower
Requested Replacements, or an additional deposit to the Repairs Escrow Account
for any such Borrower Requested Repairs.

(B) Additional Lender Replacements and Additional Lender Repairs.

Lender may require, as set forth in Section 6.02(b), Section 6.03(c), or
otherwise from time to time, upon written notice to Borrower, that Borrower make
Additional Lender Replacements or Additional Lender Repairs. Lender may make
disbursements from the Replacement Reserve Account for Additional Lender
Replacements or from the Repairs Escrow Account for Additional Lender Repairs,
as applicable, if Lender determines that:

 

  (i) the costs are reasonable;

 

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  (ii) the amount of funds in the Replacement Reserve Account or the Repairs
Escrow Account, as applicable, is sufficient to pay such costs and the
then-current estimated cost of completing all remaining Required Replacements or
Required Repairs (at the Maximum Repair Cost), as applicable, and any other
Borrower Requested Replacements, Borrower Requested Repairs, Additional Lender
Replacements or Additional Lender Repairs that have been previously approved by
Lender; and

 

  (iii) all conditions for disbursement from the Replacement Reserve Account or
Repairs Escrow Account, as applicable, have been satisfied.

Nothing in this Loan Agreement shall limit Lender’s right to require an
additional deposit to the Replacement Reserve Account or an increase to the
Monthly Replacement Reserve Deposit for any such Additional Lender Replacements
or an additional deposit to the Repairs Escrow Account for any such Additional
Lender Repair.

(10) Excess Costs.

In the event any Replacement or Repair exceeds the approved cost set forth on
the Required Replacement Schedule for Replacements, or the Maximum Repair Cost
for Repairs, Borrower may submit a disbursement request to reimburse Borrower
for such excess cost. The disbursement request must contain support for why
Lender should allow such disbursement. Lender may make disbursements from the
Replacement Reserve Account or the Repairs Escrow Account, as applicable, if:

(A) the excess cost is reasonable;

(B) the amount of funds in the Replacement Reserve Account or the Repairs Escrow
Account, as applicable, is sufficient to pay such excess cost and the
then-current estimated cost of completing all remaining Replacements and Repairs
at the Maximum Repair Cost; and

(C) all conditions for disbursement from the Replacement Reserve Account or the
Repairs Escrow Account have been satisfied.

(11) Final Disbursements.

Upon completion of all Repairs in accordance with this Loan Agreement and so
long as no Event of Default has occurred and is continuing, Lender shall
disburse to Borrower any amounts then remaining in the Repairs Escrow Account.
Upon payment in full of the Indebtedness and release by Lender of the lien of
the Security Instrument, Lender shall disburse to Borrower any and all amounts
then remaining in the Replacement Reserve Account and the Repairs Escrow Account
(if not previously released).

 

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(b) Approvals of Contracts; Assignment of Claims.

Lender retains the right to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the Replacements or Repairs.
Notwithstanding Borrower’s assignment (in the Security Instrument) of its rights
and claims against all persons or entities supplying labor or materials in
connection with the Replacement or Repairs, Lender will not pursue any such
right or claim unless an Event of Default has occurred and is continuing or as
otherwise provided in Section 14.03Section 14.03(c).

(c) Delays and Workmanship.

If Lender determines that any work for any Replacement or Repair has not timely
commenced, has not been timely performed in a workmanlike manner, or has not
been timely completed in a workmanlike manner, Lender may, without notice to
Borrower:

(1) withhold disbursements from the Replacement Reserve Account or Repairs
Escrow Account for such unsatisfactory Replacement or Repair, as applicable;

(2) proceed under existing contracts or contract with third parties to make or
complete such Replacement or Repair;

(3) apply the funds in the Replacement Reserve Account or Repairs Escrow Account
toward the labor and materials necessary to make or complete such Replacement or
Repair, as applicable; or

(4) exercise any and all other remedies available to Lender under this Loan
Agreement or any other Loan Document, including any remedies otherwise available
upon an Event of Default pursuant to the terms of Section 14.02.

To facilitate Lender’s completion or making of such Replacements or Repairs,
Lender shall have the right to enter onto the Mortgaged Property and perform any
and all work and labor necessary to make or complete the Replacements or Repairs
and employ watchmen to protect the Mortgaged Property from damage. All funds so
expended by Lender shall be deemed to have been advanced to Borrower, shall be
part of the Indebtedness and shall be secured by the Security Instrument and
this Loan Agreement.

(d) Appointment of Lender as Attorney-In-Fact.

Borrower hereby authorizes and appoints Lender as attorney-in-fact pursuant to
Section 14.03Section 14.03(c).

 

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(e) No Lender Obligation.

Nothing in this Loan Agreement shall:

(1) make Lender responsible for making or completing the Replacements or
Repairs;

(2) require Lender to expend funds, whether from the Replacement Reserve
Account, the Repairs Escrow Account or otherwise, to make or complete any
Replacement or Repair;

(3) obligate Lender to proceed with the Replacements or Repairs; or

(4) obligate Lender to demand from Borrower additional sums to make or complete
any Replacement or Repair.

(f) No Lender Warranty.

Lender’s approval of any plans for any Replacement or Repair, release of funds
from the Replacement Reserve Account or Repairs Escrow Account, inspection of
the Mortgaged Property by Lender or its agents, representatives or designees, or
other acknowledgment of completion of any Replacement or Repair in a manner
satisfactory to Lender shall not be deemed an acknowledgment or warranty to any
person that the Replacement or Repair has been completed in accordance with
applicable building, zoning or other codes, ordinances, statutes, laws,
regulations or requirements of any governmental agency, such responsibility
being at all times exclusively that of Borrower.

ARTICLE 14 - DEFAULTS/REMEDIES

Section 14.01. Events of Default.

The occurrence of any one or more of the following in this Section 14.01 shall
constitute an Event of Default under this Loan Agreement.

(a) Automatic Events of Default.

The following shall constitute automatic Events of Default:

(1) any failure by Borrower to pay or deposit when due any amount required by
the Note, this Loan Agreement or any other Loan Document;

(2) any failure by Borrower to maintain the insurance coverage required by any
Loan Document;

(3) any failure by Borrower to comply with the provisions of Section 4.02(d)
relating to its single asset status;

 

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(4) any warranty, representation, certificate or statement of Borrower,
Guarantor or Key Principal in this Loan Agreement or any of the other Loan
Documents shall be false, inaccurate or misleading in any material respect when
made;

(5) fraud, gross negligence, willful misconduct or material misrepresentation or
material omission by or on behalf of Borrower, or any of its officers,
directors, trustees, partners, members or managers, or any Guarantor or Key
Principal or any of their officers, directors, trustees, partners, members or
managers in connection with:

(A) the application for, or creation of, the Indebtedness;

(B) any financial statement, rent roll or other report or information provided
to Lender during the term of the Mortgage Loan; or

(C) any request for Lender’s consent to any proposed action, including a request
for disbursement of Reserve/Escrow Account Funds or Collateral Account Funds;

(6) the occurrence of any Transfer not permitted by the Loan Documents;

(7) the occurrence of a Bankruptcy Event;

(8) the commencement of a forfeiture action or proceeding, whether civil or
criminal, which, in Lender’s reasonable judgment, could result in a forfeiture
of the Mortgaged Property or otherwise materially impair the lien created by
this Loan Agreement or the Security Instrument or Lender’s interest in the
Mortgaged Property;

(9) if Borrower, Guarantor or Key Principal is a trust, or if a Controlling
Interest of Borrower, Guarantor or Key Principal is Transferred due to the
termination or revocation of a trust, the termination or revocation of such
trust, except as set forth in Section 11.03(d);

(10) any failure by Borrower to complete any Repair related to fire, life or
safety issues in accordance with the terms of this Loan Agreement within the
Completion Period (or such other date set forth on the Required Repair Schedule
or otherwise required by Lender in writing for such Repair); and

(11) any exercise by the holder of any other debt instrument secured by a
mortgage, deed of trust or deed to secure debt on the Mortgaged Property of a
right to declare all amounts due under that debt instrument immediately due and
payable.

 

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(b) Events of Default Subject to a Specified Cure Period.

The following shall constitute an Event of Default subject to the cure period
set forth in the Loan Documents:

(1) if Key Principal or Guarantor is a natural person, the death of such
individual, unless requirements of Section 11.03(e) are met;

(2) the occurrence of a Guarantor Bankruptcy Event, unless requirements of
Section 11.03(f) are met;

(3) any failure by Borrower, Key Principal or Guarantor to comply with the
provisions of Section 5.02(b) and Section 5.02(c); and

(4) any failure by Borrower to perform any obligation under this Loan Agreement
or any Loan Document that is subject to a specified written notice and cure
period, which failure continues beyond such specified written notice and cure
period as set forth herein or in the applicable Loan Document.

(c) Events of Default Subject to Extended Cure Period.

The following shall constitute an Event of Default if the existence of such
condition or event, or such failure to perform or default in performance
continues for a period of thirty (30) days after written notice by Lender to
Borrower of the existence of such condition or event, or of such failure to
perform or default in performance, provided, however, such period may be
extended for up to an additional thirty (30) days if Borrower, in the discretion
of Lender, is diligently pursuing a cure of such; provided, further, however, no
such written notice, grace period or extension shall apply if, in Lender’s
discretion, immediate exercise by Lender of a right or remedy under this Loan
Agreement or any Loan Document is required to avoid harm to Lender or impairment
of the Mortgage Loan (including the Loan Documents), the Mortgaged Property or
any other security given for the Mortgage Loan:

(1) any failure by Borrower to perform any of its obligations under this Loan
Agreement or any Loan Document (other than those specified in Section 14.01(a)
or Section 14.01(b) above) as and when required.

Section 14.02. Remedies.

(a) Acceleration; Foreclosure.

If an Event of Default has occurred and is continuing, the entire unpaid
principal balance of the Mortgage Loan, any Accrued Interest, interest accruing
at the Default Rate, the Prepayment Premium (if applicable), and all other
Indebtedness shall at once become due and payable, at the option of Lender,
without any prior written notice to Borrower, unless applicable law requires
otherwise (and in such case, after any required written notice has been given).
Lender may exercise this option to accelerate regardless of any prior
forbearance. In addition,

 

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Lender shall have all rights and remedies afforded to it hereunder and under the
other Loan Documents, including, foreclosure on and/or the power of sale of the
Mortgaged Property, as provided in the Security Instrument, and any rights and
remedies available to it at law or in equity (subject to Borrower’s statutory
rights of reinstatement, if any, prior to a Foreclosure Event). Any proceeds of
a foreclosure or other sale under this Loan Agreement or any other Loan Document
may be held and applied by Lender as additional collateral for the Indebtedness
pursuant to this Loan Agreement. Notwithstanding the foregoing, the occurrence
of any Bankruptcy Event shall automatically accelerate the Mortgage Loan and all
obligations and Indebtedness shall be immediately due and payable without
written notice or further action by Lender.

(b) Loss of Right to Receive Replacement Reserve Disbursements and Repairs
Disbursements.

If an Event of Default has occurred and is continuing, Borrower shall
immediately lose all of its rights to receive disbursements from the
Reserve/Escrow Accounts and any Collateral Accounts. During the continuance of
any such Event of Default, Lender may use the Reserve/Escrow Account Funds and
any Collateral Account Funds (or any portion thereof) for any purpose,
including:

(1) repayment of the Indebtedness, including principal prepayments and the
Prepayment Premium applicable to such full or partial prepayment, as applicable
(however, such application of funds shall not cure or be deemed to cure any
Event of Default);

(2) reimbursement of Lender for all losses and expenses (including reasonable
legal fees) suffered or incurred by Lender as a result of such Event of Default;

(3) completion of the Replacement or Repair or for any other replacement or
repair to the Mortgaged Property; and

(4) payment of any amount expended in exercising (and the exercise of) all
rights and remedies available to Lender at law or in equity or under this Loan
Agreement or under any of the other Loan Documents.

Nothing in this Loan Agreement shall obligate Lender to apply all or any portion
of the Reserve/Escrow Account Funds or Collateral Account Funds on account of
any Event of Default by Borrower or to repayment of the Indebtedness or in any
specific order of priority.

(c) Remedies Cumulative.

Each right and remedy provided in this Loan Agreement is distinct from all other
rights or remedies under this Loan Agreement or any other Loan Document or
afforded by applicable law, and each shall be cumulative and may be exercised
concurrently, independently or successively, in any order. Lender shall not be
required to demonstrate any actual impairment of its security or any increased
risk of additional default by Borrower in order to exercise any of its remedies
with respect to an Event of Default.

 

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Section 14.03. Additional Lender Rights; Forbearance.

(a) No Effect Upon Obligations.

Lender may, but shall not be obligated to, agree with Borrower, from time to
time, and without giving notice to, or obtaining the consent of, or having any
effect upon the obligations of, any Guarantor, Key Principal or other third
party obligor, to take any of the following actions:

(1) the time for payment of the principal of or interest on the Indebtedness may
be extended or the Indebtedness may be renewed in whole or in part;

(2) the rate of interest on or period of amortization of the Mortgage Loan or
the amount of the Monthly Debt Service Payments payable under the Loan Documents
may be modified;

(3) the time for Borrower’s performance of or compliance with any covenant or
agreement contained in any Loan Document, whether presently existing or
hereinafter entered into, may be extended or such performance or compliance may
be waived;

(4) the maturity of the Indebtedness may be accelerated as provided in the Loan
Documents;

(5) any or all payments due under this Loan Agreement or any other Loan Document
may be reduced;

(6) any Loan Document may be modified or amended by Lender and Borrower in any
respect, including an increase in the principal amount of the Mortgage Loan;

(7) any amounts under this Loan Agreement or any other Loan Document may be
released;

(8) any security for the Indebtedness may be modified, exchanged, released,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Indebtedness;

(9) the payment of the Indebtedness or any security for the Indebtedness, or
both, may be subordinated to the right to payment or the security, or both, of
any other present or future creditor of Borrower;

(10) any payments made by Borrower to Lender may be applied to the Indebtedness
in such priority as Lender may determine in its discretion; or

(11) any other terms of the Loan Documents may be modified.

 

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(b) No Waiver of Rights or Remedies.

Any waiver of an Event of Default or forbearance by Lender in exercising any
right or remedy under this Loan Agreement or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of any other Event
of Default or preclude the exercise or failure to exercise of any other right or
remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less
than the required payment, shall not be a waiver of Lender’s right to require
prompt payment when due of all other payments on account of the Indebtedness or
to exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Indebtedness shall not constitute an election by
Lender of remedies so as to preclude the exercise or failure to exercise of any
other right available to Lender. Lender’s receipt of any condemnation awards or
insurance proceeds shall not operate to cure or waive any Event of Default.

(c) Appointment of Lender as Attorney-in-Fact.

Borrower hereby irrevocably makes, constitutes and appoints Lender (and any
officer of Lender or any Person designated by Lender for that purpose) as
Borrower’s true and lawful proxy and attorney-in-fact (and agent-in-fact) in
Borrower’s name, place and stead, with full power of substitution, to:

(1) use any of the funds in the Replacement Reserve Account or Repairs Escrow
Account for the purpose of making or completing the Replacements or Repairs;

(2) make such additions, changes and corrections to the Replacements or Repairs
as shall be necessary or desirable to complete the Replacements or Repairs;

(3) employ such contractors, subcontractors, agents, architects and inspectors
as shall be required for such purposes;

(4) pay, settle or compromise all bills and claims for materials and work
performed in connection with the Replacements or Repairs, or as may be necessary
or desirable for the completion of the Replacements or Repairs, or for clearance
of title;

(5) adjust and compromise any claims under any and all policies of insurance
required pursuant to this Loan Agreement and any other Loan Document, subject
only to Borrower’s rights under this Loan Agreement;

(6) appear in and prosecute any action arising from any insurance policies;

 

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(7) collect and receive the proceeds of insurance, and to deduct from such
proceeds Lender’s expenses incurred in the collection of such proceeds;

(8) commence, appear in and prosecute, in Lender’s or Borrower’s name, any
action or proceeding relating to any condemnation;

(9) settle or compromise any claim in connection with any condemnation;

(10) execute all applications and certificates in the name of Borrower which may
be required by any of the contract documents;

(11) prosecute and defend all actions or proceedings in connection with the
Mortgaged Property or the rehabilitation and repair of the Mortgaged Property;

(12) take such actions as are permitted in this Loan Agreement and any other
Loan Documents;

(13) execute such financing statements and other documents and to do such other
acts as Lender may require to perfect and preserve Lender’s security interest
in, and to enforce such interests in, the collateral; and

(14) carry out any remedy provided for in this Loan Agreement and any other Loan
Documents, including endorsing Borrower’s name to checks, drafts, instruments
and other items of payment and proceeds of the collateral, executing change of
address forms with the postmaster of the United States Post Office serving the
address of Borrower, changing the address of Borrower to that of Lender, opening
all envelopes addressed to Borrower and applying any payments contained therein
to the Indebtedness.

Borrower hereby acknowledges that the constitution and appointment of such proxy
and attorney-in-fact are coupled with an interest and are irrevocable and shall
not be affected by the disability or incompetence of Borrower. Borrower
specifically acknowledges and agrees that this power of attorney granted to
Lender may be assigned by Lender to Lender’s successors or assigns as holder of
the Note (and the Mortgage Loan). However, the foregoing shall not require
Lender to incur any expense or take any action. Borrower hereby ratifies and
confirms all that such attorney-in-fact may do or cause to be done by virtue of
any provision of this Loan Agreement and any other Loan Documents.

(d) Borrower Waivers.

If more than one Person signs this Loan Agreement as Borrower, each Borrower,
with respect to any other Borrower, hereby agrees that Lender, in its
discretion, may:

(1) bring suit against Borrower, or any one or more of Borrower, jointly and
severally, or against any one or more of them;

 

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(2) compromise or settle with any one or more of the persons constituting
Borrower, for such consideration as Lender may deem proper;

(3) release one or more of the persons constituting Borrower, from liability; or

(4) otherwise deal with Borrower, or any one or more of them, in any manner, and
no such action shall impair the rights of Lender to collect from any Borrower
the full amount of the Indebtedness.

Section 14.04. Waiver of Marshaling.

Notwithstanding the existence of any other security interests in the Mortgaged
Property held by Lender or by any other party, Lender shall have the right to
determine the order in which any or all of the Mortgaged Property shall be
subjected to the remedies provided in this Loan Agreement, any other Loan
Document or applicable law. Lender shall have the right to determine the order
in which all or any part of the Indebtedness is satisfied from the proceeds
realized upon the exercise of such remedies. Borrower and any party who now or
in the future acquires a security interest in the Mortgaged Property and who has
actual or constructive notice of this Loan Agreement waives any and all right to
require the marshaling of assets or to require that any of the Mortgaged
Property be sold in the inverse order of alienation or that any of the Mortgaged
Property be sold in parcels or as an entirety in connection with the exercise of
any of the remedies permitted by applicable law or provided in this Loan
Agreement or any other Loan Documents.

ARTICLE 15 - MISCELLANEOUS

Section 15.01. Governing Law; Consent to Jurisdiction and Venue.

(a) Governing Law.

This Loan Agreement and any other Loan Document which does not itself expressly
identify the law that is to apply to it, shall be governed by the laws of the
Property Jurisdiction without regard to the application of choice of law
principles.

(b) Venue.

Any controversy arising under or in relation to this Loan Agreement or any other
Loan Document shall be litigated exclusively in the Property Jurisdiction
without regard to conflicts of laws principles. The state and federal courts and
authorities with jurisdiction in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to
this Loan Agreement or any other Loan Document. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.

 

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Section 15.02. Notice.

(a) Process of Serving Notice.

Except as otherwise set forth herein or in any other Loan Document, all notices
under this Loan Agreement and any other Loan Document shall be:

(1) in writing and shall be:

(A) delivered, in person;

(B) mailed, postage prepaid, either by registered or certified delivery, return
receipt requested;

(C) sent by overnight courier; or

(D) sent by electronic mail with originals to follow by overnight courier;

(2) addressed to the intended recipient at Borrower’s Notice Address and
Lender’s Notice Address, as applicable; and

(3) deemed given on the earlier to occur of:

(A) the date when the notice is received by the addressee; or

(B) if the recipient refuses or rejects delivery, the date on which the notice
is so refused or rejected, as conclusively established by the records of the
United States Postal Service or such express courier service.

(b) Change of Address.

Any party to this Loan Agreement may change the address to which notices
intended for it are to be directed by means of notice given to the other parties
identified on the Summary of Loan Terms in accordance with this Section 15.02.

(c) Default Method of Notice.

Any required notice under this Loan Agreement or any other Loan Document which
does not specify how notices are to be given shall be given in accordance with
this Section 15.02.

(d) Receipt of Notices.

Neither Borrower nor Lender shall refuse or reject delivery of any notice given
in accordance with this Loan Agreement. Each party is required to acknowledge,
in writing, the receipt of any notice upon request by the other party.

 

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Section 15.03. Successors and Assigns Bound; Sale of Mortgage Loan.

(a) Binding Agreement.

This Loan Agreement shall bind, and the rights granted by this Loan Agreement
shall inure to, the successors and assigns of Lender and the permitted
successors and assigns of Borrower. However, a Transfer not permitted by this
Loan Agreement shall be an Event of Default and shall be void ab initio.

(b) Sale of Mortgage Loan; Change of Servicer.

Nothing in this Loan Agreement shall limit Lender’s (including its successors
and assigns) right to sell or transfer the Mortgage Loan or any interest in the
Mortgage Loan. The Mortgage Loan or a partial interest in the Mortgage Loan
(together with this Loan Agreement and the other Loan Documents) may be sold
one (1) or more times without prior written notice to Borrower. A sale may
result in a change of the Loan Servicer.

Section 15.04. Counterparts.

This Loan Agreement may be executed in any number of counterparts with the same
effect as if the parties hereto had signed the same document and all such
counterparts shall be construed together and shall constitute one (1)
instrument.

Section 15.05. Joint and Several (or Solidary) Liability.

If more than one Person signs this Loan Agreement as Borrower, the obligations
of such Persons shall be joint and several (solidary instead for purposes of
Louisiana law).

Section 15.06. Relationship of Parties; No Third Party Beneficiary.

(a) Solely Creditor and Debtor.

The relationship between Lender and Borrower shall be solely that of creditor
and debtor, respectively, and nothing contained in this Loan Agreement shall
create any other relationship between Lender and Borrower. Nothing contained in
this Loan Agreement shall constitute Lender as a joint venturer, partner or
agent of Borrower, or render Lender liable for any debts, obligations, acts,
omissions, representations or contracts of Borrower.

(b) No Third Party Beneficiaries.

No creditor of any party to this Loan Agreement and no other person shall be a
third party beneficiary of this Loan Agreement or any other Loan Document or any
account created or contemplated under this Loan Agreement or any other Loan
Document. Nothing contained in this Loan Agreement shall be deemed or construed
to create an obligation on the part of Lender to any third party nor shall any
third party have a right to enforce against Lender any right that Borrower may
have under this Loan Agreement. Without limiting the foregoing:

(1) any Servicing Arrangement between Lender and any Loan Servicer shall
constitute a contractual obligation of such Loan Servicer that is independent of
the obligation of Borrower for the payment of the Indebtedness;

 

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(2) Borrower shall not be a third party beneficiary of any Servicing
Arrangement; and

(3) no payment by the Loan Servicer under any Servicing Arrangement will reduce
the amount of the Indebtedness.

Section 15.07. Severability; Entire Agreement; Amendments.

The invalidity or unenforceability of any provision of this Loan Agreement or
any other Loan Document shall not affect the validity or enforceability of any
other provision of this Loan Agreement or of any other Loan Document, all of
which shall remain in full force and effect, including the Guaranty. This Loan
Agreement contains the complete and entire agreement among the parties as to the
matters covered, rights granted and the obligations assumed in this Loan
Agreement. This Loan Agreement may not be amended or modified except by written
agreement signed by the parties hereto.

Section 15.08. Construction.

(a) The captions and headings of the sections of this Loan Agreement and the
Loan Documents are for convenience only and shall be disregarded in construing
this Loan Agreement and the Loan Documents.

(b) Any reference in this Loan Agreement to an “Exhibit” or “Schedule” or a
“Section” or an “Article” shall, unless otherwise explicitly provided, be
construed as referring, respectively, to an exhibit or schedule attached to this
Loan Agreement or to a Section or Article of this Loan Agreement.

(c) Any reference in this Loan Agreement to a statute or regulation shall be
construed as referring to that statute or regulation as amended from time to
time.

(d) Use of the singular in this Loan Agreement includes the plural and use of
the plural includes the singular.

(e) As used in this Loan Agreement, the term “including” means “including, but
not limited to” or “including, without limitation,” and is for example only and
not a limitation.

(f) Whenever Borrower’s knowledge is implicated in this Loan Agreement or the
phrase “to Borrower’s knowledge” or a similar phrase is used in this Loan
Agreement, Borrower’s knowledge or such phrase(s) shall be interpreted to mean
to the best of Borrower’s knowledge after reasonable and diligent inquiry and
investigation.

 

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(g) Unless otherwise provided in this Loan Agreement, if Lender’s approval,
designation, determination, selection, estimate, action or decision is required,
permitted or contemplated hereunder, such approval, designation, determination,
selection, estimate, action or decision shall be made in Lender’s sole and
absolute discretion.

(h) All references in this Loan Agreement to a separate instrument or agreement
shall include such instrument or agreement as the same may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.

(i) “Lender may” shall mean at Lender’s discretion, but shall not be an
obligation.

Section 15.09. Mortgage Loan Servicing.

All actions regarding the servicing of the Mortgage Loan, including the
collection of payments, the giving and receipt of notice, inspections of the
Mortgaged Property, inspections of books and records, and the granting of
consents and approvals, may be taken by the Loan Servicer unless Borrower
receives notice to the contrary. If Borrower receives conflicting notices
regarding the identity of the Loan Servicer or any other subject, any such
written notice from Lender shall govern. The Loan Servicer may change from time
to time (whether related or unrelated to a sale of the Mortgage Loan). If there
is a change of the Loan Servicer, Borrower will be given written notice of the
change.

Section 15.10. Disclosure of Information.

Lender may furnish information regarding Borrower, Key Principal or Guarantor or
the Mortgaged Property to third parties with an existing or prospective interest
in the servicing, enforcement, evaluation, performance, purchase or
securitization of the Mortgage Loan, including trustees, master servicers,
special servicers, rating agencies and organizations maintaining databases on
the underwriting and performance of multifamily mortgage loans. Borrower
irrevocably waives any and all rights it may have under applicable law to
prohibit such disclosure, including any right of privacy.

Section 15.11. Waiver; Conflict.

No specific waiver of any of the terms of this Loan Agreement shall be
considered as a general waiver. If any provision of this Loan Agreement is in
conflict with any provision of any other Loan Document, the provision contained
in this Loan Agreement shall control.

Section 15.12. [Intentionally Deleted.]

Section 15.13. Subrogation.

If, and to the extent that, the proceeds of the Mortgage Loan are used to pay,
satisfy or discharge any obligation of Borrower for the payment of money that is
secured by a pre-existing mortgage, deed of trust or other lien encumbering the
Mortgaged Property, such Mortgage Loan proceeds shall be deemed to have been
advanced by Lender at Borrower’s request, and Lender

 

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shall automatically, and without further action on its part, be subrogated to
the rights, including lien priority, of the owner or holder of the obligation
secured by such prior lien, whether or not such prior lien is released.

Section 15.14. Counting of Days.

Except where otherwise specifically provided, any reference in this Loan
Agreement to a period of “days” means calendar days, not Business Days. If the
date on which Borrower is required to perform an obligation under this Loan
Agreement is not a Business Day, Borrower shall be required to perform such
obligation by the Business Day immediately preceding such date; provided,
however, in respect of any Payment Date, or if the Maturity Date is other than a
Business Day, Borrower shall be obligated to make such payment by the Business
Day immediately following such date.

Section 15.15. Revival and Reinstatement of Indebtedness.

If the payment of all or any part of the Indebtedness by Borrower, any Guarantor
or any other Person or the transfer to Lender of any collateral or other
property should for any reason subsequently be declared to be void or voidable
under any state or federal law relating to creditors’ rights, including
provisions of the Insolvency Laws relating to a Voidable Transfer, and if Lender
is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the advice of its counsel, then the amount of
such Voidable Transfer or the amount of such Voidable Transfer that Lender is
required or elects to repay or restore, including all reasonable costs, expenses
and attorneys’ fees incurred by Lender in connection therewith, and the
Indebtedness shall automatically shall be revived, reinstated and restored by
such amount and shall exist as though such Voidable Transfer had never been
made.

Section 15.16. Time is of the Essence.

Borrower agrees that, with respect to each and every obligation and covenant
contained in this Loan Agreement and the other Loan Documents, time is of the
essence.

Section 15.17. Final Agreement.

THIS LOAN AGREEMENT ALONG WITH ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All
prior or contemporaneous agreements, understandings, representations and
statements, oral or written, are merged into this Loan Agreement and the other
Loan Documents. This Loan Agreement, the other Loan Documents and any of their
provisions may not be waived, modified, amended, discharged or terminated except
by an agreement in writing signed by the party against which the enforcement of
the waiver, modification, amendment, discharge or termination is sought, and
then only to the extent set forth in that agreement.

 

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Section 15.18. WAIVER OF TRIAL BY JURY.

TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER AND LENDER
(A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING OUT OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR THE
RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER, THAT IS TRIABLE OF
RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH
ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

[Remainder of Page Intentionally Blank]

 

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IN WITNESS WHEREOF, Borrower and Lender have signed and delivered this Loan
Agreement under seal (where applicable) or have caused this Loan Agreement to be
signed and delivered under seal (where applicable) by their duly authorized
representatives. Where applicable law so provides, Borrower and Lender intend
that this Loan Agreement shall be deemed to be signed and delivered as a sealed
instrument.

 

BORROWER: POINTE AT CANYON RIDGE, LLC, a Georgia limited liability company By:  
JLC/BUSF ASSOCIATES, LLC, a   Delaware limited liability company, its Sole
Member   By:   TS MANAGER, LLC, a       Florida limited liability company, its
Manager     By:   /s/ Bert Lopez   (SEAL)     Name:   Bert Lopez       Title:  
COO/CFO  

[SIGNATURE APPEARS ON FOLLOWING PAGE]

 

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LENDER: CBRE MULTIFAMILY CAPITAL, INC., a Delaware corporation By:   /s/ Robert
P. Vestewig   (SEAL) Name:   Robert P. Vestewig   Title:   Sr. Vice President  

 

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SCHEDULE 1 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Definitions Schedule

(Interest Rate Type – Fixed Rate)

Capitalized terms used in the Loan Agreement have the meanings given to such
terms in this Definitions Schedule.

“Accrued Interest” means unpaid interest, if any, on the Mortgage Loan that has
not been added to the unpaid principal balance of the Mortgage Loan pursuant to
Section 2.02(b) (Capitalization of Accrued But Unpaid Interest) of the Loan
Agreement.

“Additional Lender Repairs” means repairs of the type listed on the Required
Repair Schedule but not otherwise identified thereon that are determined
advisable by Lender to keep the Mortgaged Property in good order and repair
(ordinary wear and tear excepted) and in good marketable condition or to prevent
deterioration of the Mortgaged Property.

“Additional Lender Replacements” means replacements of the type listed on the
Required Replacement Schedule but not otherwise identified thereon that are
determined advisable by Lender to keep the Mortgaged Property in good order and
repair (ordinary wear and tear excepted) and in good marketable condition or to
prevent deterioration of the Mortgaged Property.

“Amortization Period” has the meaning set forth in the Summary of Loan Terms.

“Amortization Type” has the meaning set forth in the Summary of Loan Terms.

“Bank Secrecy Act” means the Bank Secrecy Act of 1970, as amended (e.g.,
31 U.S.C. Sections 5311-5330).

“Bankruptcy Event” means any one or more of the following:

(a) the commencement, filing or continuation of a voluntary case or proceeding
under one or more of the Insolvency Laws by Borrower;

(b) the acknowledgment in writing by Borrower (other than to Lender in
connection with a workout) that it is unable to pay its debts generally as they
mature;

(c) the making of a general assignment for the benefit of creditors by Borrower;

(d) the commencement, filing or continuation of an involuntary case or
proceeding under one or more Insolvency Laws against Borrower; or

 

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(e) the appointment of a receiver (other than a receiver appointed at the
direction or request of Lender under the terms of the Loan Documents),
liquidator, custodian, sequestrator, trustee or other similar officer who
exercises control over Borrower or any substantial part of the assets of
Borrower;

provided, however, that any proceeding or case under (d) or (e) above shall not
be a Bankruptcy Event until the ninetieth (90th) day after filing (if not
earlier dismissed) so long as such proceeding or case occurred without the
consent, encouragement or active participation of Borrower, Guarantor, Key
Principal, Principal or any Borrower Affiliate (in which event such case or
proceeding shall be a Bankruptcy Event immediately).

“Borrower” means, individually (and jointly and severally (solidarily instead
for purposes of Louisiana law) if more than one), the entity (or entities)
identified as “Borrower” in the first paragraph of the Loan Agreement.

“Borrower Affiliate” means, as to Borrower, Guarantor or Key Principal:

(a) any entity that directly or indirectly owns, controls or holds with power to
vote, twenty percent (20%) or more of the outstanding voting securities of
Borrower, Guarantor or Key Principal;

(b) any entity in which Borrower, Guarantor or Key Principal directly or
indirectly owns, controls or holds with the power to vote, twenty percent (20%)
or more of the outstanding voting securities of such entity;

(c) any entity controlled by or under common control with, or which controls
Borrower, Guarantor or Key Principal (the term “control” for these purposes
means the ability, whether by the ownership of shares or other equity interests,
by contract or otherwise, to elect a majority of the directors of a corporation,
to make management decisions on behalf of, or independently to select the
managing partner of, a partnership, or otherwise to have the power independently
to remove and then select a majority of those individuals exercising managerial
authority over an entity, and control shall be conclusively presumed in the case
of the ownership of fifty percent (50%) or more of the equity interests);

(d) any partner, manager, member or shareholder of Borrower, Guarantor or Key
Principal; or

(e) any other individual that is related (to the third degree of consanguinity)
by blood or marriage to Borrower, Guarantor or Key Principal.

“Borrower Requested Repairs” means repairs not listed on the Required Repair
Schedule requested by Borrower to be reimbursed from the Repairs Escrow Account.

“Borrower Requested Replacements” means replacements not listed on the Required
Replacement Schedule requested by Borrower to be reimbursed from the Replacement
Reserve Account.

 

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“Borrower’s General Business Address” has the meaning set forth in the Summary
of Loan Terms.

“Borrower’s Notice Address” has the meaning set forth in the Summary of Loan
Terms.

“Business Day” means any day other than Saturday, Sunday or any other day on
which Lender is not open for business.

“Collateral Account Funds” means, collectively, the funds on deposit in any or
all of the Collateral Accounts, including the Reserve/Escrow Account Funds.

“Collateral Accounts” means any account designated as such by Lender pursuant to
a Collateral Agreement or as established pursuant to this Loan Agreement,
including the Reserve/Escrow Account.

“Collateral Agreement” means any separate agreement between Borrower and Lender
for the establishment of any other fund, reserve or account.

“Completion Period” has the meaning set forth in the Summary of Loan Terms.

“Condemnation Action” has the meaning set forth in the Security Instrument.

“Controlling Interest” means:

(a) with respect to any entity, the following:

(1) if such entity is a general partnership or a joint venture, fifty
percent (50%) or more of all general partnership or joint venture interests in
such entity;

(2) if such entity is a limited partnership:

(A) any general partnership interest; or

(B) fifty percent (50%) or more of all limited partnership interests in such
entity;

(3) if such entity is a limited liability company or a limited liability
partnership:

(A) fifty percent (50%) or more of all membership or other ownership interests
in such entity;

(B) the amount of membership or ownership interests sufficient to have the power
to appoint or change any manager; or

(C) the interest of any manager;

 

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(4) if such entity is a corporation (other than a Publicly-Held Corporation)
with only one class of voting stock, fifty percent (50%) or more of voting stock
in such corporation;

(5) if such entity is a corporation (other than a Publicly-Held Corporation)
with more than one class of voting stock, the amount of shares of voting stock
sufficient to have the power to elect the majority of directors of such
corporation;

(6) if such entity is a trust (other than a land trust or a Publicly-Held
Trust), the trustee of such trust or the ability to remove, appoint or
substitute the trustee of such trust (unless the trustee of such trust after
such removal, appointment or substitution is a trustee identified in the trust
agreement approved by Lender); or

(b) the power or right to control or otherwise limit or modify, directly or
indirectly, the management and operations of Borrower, Guarantor or Key
Principal, including the power to:

(1) cause a change in or replacement of the Person that controls the management
and operations of Borrower, Guarantor or Key Principal; or

(2) limit or otherwise modify the extent of such Person’s control over the
management and operations of Borrower, Guarantor or Key Principal.

“Credit Score” means a numerical value or a categorization derived from a
statistical tool or modeling system used to measure credit risk and predict the
likelihood of certain credit behaviors, including default.

“Debt Service Amounts” means the Monthly Debt Service Payments and all other
amounts payable under the Loan Agreement, the Note, the Security Instrument or
any other Loan Document.

“Default Rate” means an interest rate equal to the lesser of:

(a) the sum of the Interest Rate plus four (4) percentage points; or

(b) the maximum interest rate which may be collected from Borrower under
applicable law.

“Definitions Schedule” means this Schedule 1 (Definitions Schedule) to the Loan
Agreement.

“Effective Date” has the meaning set forth in the Summary of Loan Terms.

“Employee Benefit Plan” means a plan described in Section 3(3) of ERISA,
regardless of whether the plan is subject to ERISA.

“Enforcement Costs” has the meaning set forth in the Security Instrument.

 

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“Environmental Indemnity Agreement” means that certain Environmental Indemnity
Agreement dated as of the Effective Date made by Borrower to and for the benefit
of Lender, as the same may be amended, restated, replaced, supplemented, or
otherwise modified from time to time.

“Environmental Inspections” has the meaning set forth in the Environmental
Indemnity Agreement.

“Environmental Laws” has the meaning set forth in the Environmental Indemnity
Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall mean, with respect to Borrower, any entity that,
together with Borrower, would be treated as a single employer under
Section 414(b) or (c) of the Internal Revenue Code, or Section 4001(a)(14) of
ERISA, or the regulations thereunder.

“ERISA Plan” means any employee pension benefit plan within the meaning of
Section 3(2) of ERISA (or related trust) that is subject to the requirements of
Title IV of ERISA, Sections 430 and 431 of the Internal Revenue Code, or
Sections 302, 303, or 304 of ERISA, which is maintained or contributed to by
Borrower or its ERISA Affiliates.

“Event of Default” means the occurrence of any event listed in Section 14.01
(Events of Default) of the Loan Agreement.

“Exceptions to Representations and Warranties Schedule” means that certain
Schedule 7 (Exceptions to Representations and Warranties Schedule) to the Loan
Agreement.

“First Payment Date” has the meaning set forth in the Summary of Loan Terms.

“First Principal and Interest Payment Date” has the meaning set forth in the
Summary of Loan Terms, if applicable.

“Fixed Rate” has the meaning set forth in the Summary of Loan Terms.

“Fixtures” has the meaning set forth in the Security Instrument.

“Force Majeure” shall mean acts of God, acts of war, civil disturbance,
governmental action (including the revocation or refusal to grant licenses or
permits, where such revocation or refusal is not due to the fault of Borrower),
strikes, lockouts, fire, unavoidable casualties or any other causes beyond the
reasonable control of Borrower (other than lack of financing), and of which
Borrower shall have notified Lender in writing within ten (10) days after its
occurrence.

“Foreclosure Event” means:

(a) foreclosure under the Security Instrument;

 

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(b) any other exercise by Lender of rights and remedies (whether under the
Security Instrument or under applicable law, including Insolvency Laws) as
holder of the Mortgage Loan and/or the Security Instrument, as a result of which
Lender (or its designee or nominee) or a third party purchaser becomes owner of
the Mortgaged Property;

(c) delivery by Borrower to Lender (or its designee or nominee) of a deed or
other conveyance of Borrower’s interest in the Mortgaged Property in lieu of any
of the foregoing; or

(d) in Louisiana, any dation en paiement.

“Governmental Authority” means any court, board, commission, department or body
of any municipal, county, state or federal governmental unit, or any subdivision
of any of them, that has or acquires jurisdiction over Borrower or the Mortgaged
Property or the use, operation or improvement of the Mortgaged Property.

“Guarantor” means any guarantor of the Indebtedness or any other obligation of
Borrower under any Loan Document.

“Guarantor Bankruptcy Event” means any one or more of the following:

(a) the commencement, filing or continuation of a voluntary case or proceeding
under one or more of the Insolvency Laws by Guarantor;

(b) the acknowledgment in writing by Guarantor (other than to Lender in
connection with a workout) that it is unable to pay its debts generally as they
mature;

(c) the making of a general assignment for the benefit of creditors by
Guarantor;

(d) the commencement, filing or continuation of an involuntary case or
proceeding under one or more Insolvency Laws against Guarantor; or

(e) the appointment of a receiver, liquidator, custodian, sequestrator, trustee
or other similar officer who exercises control over Guarantor or any substantial
part of the assets of Guarantor, as applicable;

provided, however, that any proceeding or case under (d) or (e) above shall not
be a Guarantor Bankruptcy Event until the ninetieth (90th) day after filing (if
not earlier dismissed) so long as such proceeding or case occurred without the
consent, encouragement or active participation of Borrower, Guarantor, Key
Principal, Principal, or any Borrower Affiliate (in which event such case or
proceeding shall be a Guarantor Bankruptcy Event immediately).

“Guarantor’s General Business Address” has the meaning set forth in the Summary
of Loan Terms.

“Guarantor’s Notice Address” has the meaning set forth in the Summary of Loan
Terms.

“Guaranty” means, individually and collectively, any Payment Guaranty,
Non-Recourse Guaranty or other guaranty executed by Guarantor in connection with
the Mortgage Loan.

 

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“Immediate Family Members” means a child, stepchild, grandchild, spouse,
sibling, or parent, each of whom must have obtained a legal age of majority.

“Imposition Deposits” has the meaning set forth in the Security Instrument.

“Impositions” has the meaning set forth in the Security Instrument.

“Improvements” has the meaning set forth in the Security Instrument.

“Indebtedness” has the meaning set forth in the Security Instrument.

“Initial Replacement Reserve Deposit” has the meaning set forth in the Summary
of Loan Terms.

“Insolvency Laws” means the United States Bankruptcy Code, 11 U.S.C.
Section 101, et seq., together with any other federal or state law affecting
debtor and creditor rights or relating to the bankruptcy, insolvency,
reorganization, arrangement, moratorium, readjustment of debt, dissolution,
liquidation or similar laws, proceedings, or equitable principles affecting the
enforcement of creditors’ rights, as amended from time to time.

“Insolvent” means:

(a) that the sum total of all of a specified Person’s liabilities (whether
secured or unsecured, contingent or fixed, or liquidated or unliquidated) is in
excess of the value of such Person’s non-exempt assets, i.e., all of the assets
of such Person that are available to satisfy claims of creditors; or

(b) such Person’s inability to pay its debts as they become due.

“Intended Prepayment Date” means the date upon which Borrower intends to make a
prepayment on the Mortgage Loan, as set forth in the Prepayment Notice.

“Interest Accrual Method” has the meaning set forth in the Summary of Loan
Terms.

“Interest Only Term” has the meaning set forth in the Summary of Loan Terms.

“Interest Rate” means the Fixed Rate.

“Interest Rate Type” has the meaning set forth in the Summary of Loan Terms.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

“Investor” means any Person to whom Lender intends to sell, transfer, deliver or
assign the Mortgage Loan in the secondary mortgage market.

 

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“Key Principal” means, collectively:

(a) the natural person(s) or entity that controls and manages Borrower that
Lender determines is critical to the successful operation and management of
Borrower and the Mortgaged Property, as identified as such in the Summary of
Loan Terms; or

(b) any natural person or entity who becomes a Key Principal after the date of
the Loan Agreement and is identified as such in an assumption agreement, or
another amendment or supplement to the Loan Agreement.

“Key Principal’s General Business Address” has the meaning set forth in the
Summary of Loan Terms.

“Key Principal’s Notice Address” has the meaning set forth in the Summary of
Loan Terms.

“Land” means the land described in Exhibit A to the Security Instrument.

“Last Interest Only Payment Date” has the meaning set forth in the Summary of
Loan Terms, if applicable.

“Late Charge” means an amount equal to the delinquent amount then due under the
Loan Documents multiplied by five percent (5%).

“Leases” has the meaning set forth in the Security Instrument.

“Lender” means the entity identified as “Lender” in the first paragraph of the
Loan Agreement and its transferees, successors and assigns, or any subsequent
holder of the Note.

“Lender’s General Business Address” has the meaning set forth in the Summary of
Loan Terms.

“Lender’s Notice Address” has the meaning set forth in the Summary of Loan
Terms.

“Lender’s Payment Address” has the meaning set forth in the Summary of Loan
Terms.

“Lien” has the meaning set forth in the Security Instrument.

“Loan Agreement” means the Multifamily Loan and Security Agreement dated as of
the Effective Date executed by and between Borrower and Lender to which this
Definitions Schedule is attached, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

“Loan Amount” has the meaning set forth in the Summary of Loan Terms.

“Loan Application” means the application for the Mortgage Loan submitted by
Borrower to Lender.

 

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“Loan Documents” means the Note, the Loan Agreement, the Security Instrument,
the Environmental Indemnity Agreement, the Guaranty, all guaranties, all
indemnity agreements, all Collateral Agreements, all O&M Programs, and any other
documents now or in the future executed by Borrower, Guarantor, Key Principal,
any guarantor or any other person in connection with the Mortgage Loan, as such
documents may be amended, restated, replaced, supplemented or otherwise modified
from time to time.

“Loan Servicer” means the entity that from time to time is designated by Lender
to collect payments and deposits and receive notices under the Note, the Loan
Agreement, the Security Instrument and any other Loan Document, and otherwise to
service the Mortgage Loan for the benefit of Lender. Unless Borrower receives
notice to the contrary, the Loan Servicer shall be the Lender originally named
on the Summary of Loan Terms.

“Loan Term” has the meaning set forth in the Summary of Loan Terms.

“Loan Year” has the meaning set forth in the Summary of Loan Terms.

“Material Commercial Lease” means any non-Residential Lease, including any
master lease (which term “master lease” shall include any master lease to a
single corporate tenant), other than:

(a) a non-Residential Lease that comprises less than five percent (5%) of total
gross income of the Mortgaged Property on an annualized basis, so long as the
lease is not a cell tower lease or a solar (power) lease;

(b) a cable television lease, so long as the lessee is not a Borrower Affiliate,
Key Principal or Guarantor;

(c) storage units leased pursuant to any Residential Lease; or

(d) a laundry lease, so long as:

 

  (1) the lessee is not a Borrower Affiliate, Key Principal or Guarantor;

 

  (2) the rent payable is not below-market (as determined by Lender); and

 

  (3) such laundry lease is terminable for cause by lessor.

“Maturity Date” has the meaning set forth in the Summary of Loan Terms.

“Maximum Inspection Fee” has the meaning set forth in the Summary of Loan Terms.

“Maximum Repair Cost” shall be the amount(s) set forth in the Required Repair
Schedule, if any.

“Maximum Repair Disbursement Interval” has the meaning set forth in the Summary
of Loan Terms.

 

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“Maximum Replacement Reserve Disbursement Interval” has the meaning set forth in
the Summary of Loan Terms.

“Minimum Repairs Disbursement Amount” has the meaning set forth in the Summary
of Loan Terms.

“Minimum Replacement Reserve Disbursement Amount” has the meaning set forth in
the Summary of Loan Terms.

“Monthly Debt Service Payment” has the meaning set forth in the Summary of Loan
Terms.

“Monthly Replacement Reserve Deposit” has the meaning set forth in the Summary
of Loan Terms.

“Mortgage Loan” means the mortgage loan made by Lender to Borrower in the
principal amount of the Note made pursuant to the Loan Agreement, evidenced by
the Note and secured by the Loan Documents that are expressly stated to be
security for the Mortgage Loan.

“Mortgaged Property” has the meaning set forth in the Security Instrument.

“Multifamily Project” has the meaning set forth in the Summary of Loan Terms.

“Multifamily Project Address” has the meaning set forth in the Summary of Loan
Terms.

“Non-Recourse Guaranty” means, if applicable, that certain Guaranty of
Non-Recourse Obligations of even date herewith executed by Guarantor to and for
the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Note” means that certain Multifamily Note of even date herewith in the original
principal amount of the stated Loan Amount made by Borrower in favor of Lender,
and all schedules, riders, allonges and addenda attached thereto, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

“O&M Program” has the meaning set forth in the Environmental Indemnity
Agreement.

“OFAC” means the United States Treasury Department, Office of Foreign Assets
Control, and any successor thereto.

“Payment Date” means the First Payment Date and the first day of each month
thereafter until the Mortgage Loan is fully paid.

“Payment Guaranty” means, if applicable, that certain Guaranty (Payment) of even
date herewith executed by Guarantor to and for the benefit of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.

“Permitted Encumbrance” has the meaning set forth in the Security Instrument.

 

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“Permitted Prepayment Date” means the last Business Day of a calendar month.

“Person” means an individual, an estate, a trust, a corporation, a partnership,
a limited liability company or any other organization or entity (whether
governmental or private).

“Personalty” has the meaning set forth in the Security Instrument.

“Prepayment Lockout Period” has the meaning set forth in the Summary of Loan
Terms.

“Prepayment Notice” means the written notice that Borrower is required to
provide to Lender in accordance with Section 2.03 (Lockout/Prepayment) of the
Loan Agreement in order to make a prepayment on the Mortgage Loan, which shall
include, at a minimum, the Intended Prepayment Date.

“Prepayment Premium” means the amount payable by Borrower in connection with a
prepayment of the Mortgage Loan, as provided in Section 2.03
(Lockout/Prepayment) of the Loan Agreement and calculated in accordance with the
Prepayment Premium Schedule.

“Prepayment Premium Period End Date” or “Yield Maintenance Period End Date” has
the meaning set forth in the Summary of Loan Terms.

“Prepayment Premium Period Term” or “Yield Maintenance Period Term” has the
meaning set forth in the Summary of Loan Terms.

“Prepayment Premium Schedule” means that certain Schedule 4 (Prepayment Premium
Schedule) to the Loan Agreement.

“Prohibited Person” means:

(a) any Person with whom Lender or Fannie Mae is prohibited from doing business
pursuant to any law, rule, regulation, judicial proceeding or administrative
directive; or

(b) any Person identified on the United States Department of Housing and Urban
Development’s “Limited Denial of Participation, HUD Funding Disqualifications
and Voluntary Abstentions List,” or on the General Services Administration’s
“Excluded Parties List System,” each of which may be amended from time to time,
and any successor or replacement thereof; or

(c) any Person that is determined by Fannie Mae to pose an unacceptable credit
risk due to the aggregate amount of debt of such Person owned or held by Fannie
Mae; or

(d) any Person that has caused any unsatisfactory experience of a material
nature with Fannie Mae or Lender, such as a default, fraud, intentional
misrepresentation, litigation, arbitration or other similar act.

“Property Jurisdiction” has the meaning set forth in the Security Instrument.

“Property Square Footage” has the meaning set forth in the Summary of Loan
Terms.

 

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“Publicly-Held Corporation” means a corporation, the outstanding voting stock of
which is registered under Sections 12(b) or 12(g) of the Securities Exchange Act
of 1934, as amended.

“Publicly-Held Trust” means a real estate investment trust the outstanding
voting shares or beneficial interests of which are registered under
Sections 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended.

“Rents” has the meaning set forth in the Security Instrument.

“Repair Threshold” has the meaning set forth in the Summary of Loan Terms.

“Repairs” means, individually and collectively, the Required Repairs, Borrower
Requested Repairs, and Additional Lender Repairs.

“Repairs Escrow Account” means the account established by Lender into which the
Repairs Escrow Deposit is deposited to fund the Repairs.

“Repairs Escrow Account Administrative Fee” has the meaning set forth in the
Summary of Loan Terms.

“Repairs Escrow Deposit” has the meaning set forth in the Summary of Loan Terms.

“Replacement Reserve Account” means the account established by Lender into which
the Replacement Reserve Deposits are deposited to fund the Replacements.

“Replacement Reserve Account Administration Fee” has the meaning set forth in
the Summary of Loan Terms.

“Replacement Reserve Account Interest Disbursement Frequency” has the meaning
set forth in the Summary of Loan Terms.

“Replacement Reserve Deposits” means the Initial Replacement Reserve Deposit,
Monthly Replacement Reserve Deposits and any other deposits to the Replacement
Reserve Account required by the Loan Agreement.

“Replacement Threshold” has the meaning set forth in the Summary of Loan Terms.

“Replacements” means, individually and collectively, the Required Replacements,
Borrower Requested Replacements and Additional Lender Replacements.

“Required Repair Schedule” means that certain Schedule 6 (Required Repair
Schedule) to the Loan Agreement.

“Required Repairs” means those items listed on the Required Repair Schedule.

“Required Replacement Schedule” means that certain Schedule 5 (Required
Replacement Schedule) to the Loan Agreement.

 

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“Required Replacements” means those items listed on the Required Replacement
Schedule.

“Reserve/Escrow Account Funds” means, collectively, the funds on deposit in the
Reserve/Escrow Accounts.

“Reserve/Escrow Accounts” means, together, the Replacement Reserve Account and
the Repairs Escrow Account.

“Residential Lease” means a leasehold interest in an individual dwelling unit
and shall not include any master lease.

“Restoration” means restoring and repairing the Mortgaged Property to the
equivalent of its physical condition immediately prior to the casualty or to a
condition approved by Lender following a casualty.

“Review Fee” means the non-refundable fee of Three Thousand Dollars ($3,000)
payable to Lender in connection with a Transfer for which Lender’s consent is
required (including any assumption of the Mortgage Loan).

“Schedule of Interest Rate Type Provisions” means that certain Schedule 3
(Schedule of Interest Rate Type Provisions) to the Loan Agreement.

“Security Instrument” means that certain multifamily mortgage, deed to secure
debt or deed of trust executed and delivered by Borrower as security for the
Mortgage Loan and encumbering the Mortgaged Property, including all riders or
schedules attached thereto, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

“Servicing Arrangement” means any arrangement between Lender and the Loan
Servicer for loss sharing or interim advancement of funds.

“Summary of Loan Terms” means that certain Schedule 2 (Summary of Loan Terms) to
the Loan Agreement.

“Taxes” has the meaning set forth in the Security Instrument.

“Title Policy” means the mortgagee’s loan policy of title insurance issued in
connection with the Mortgage Loan and insuring the lien of the Security
Instrument as set forth therein, as approved by Lender.

“Total Parking Spaces” has the meaning set forth in the Summary of Loan Terms.

“Total Residential Units” has the meaning set forth in the Summary of Loan
Terms.

“Transfer” means:

(a) a sale, assignment, transfer or other disposition (whether voluntary,
involuntary, or by operation of law);

 

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(b) a granting, pledging, creating or attachment of a lien, encumbrance or
security interest (whether voluntary, involuntary, or by operation of law);

(c) an issuance or other creation of a direct or indirect ownership interest;

(d) a withdrawal, retirement, removal or involuntary resignation of any owner or
manager of a legal entity; or

(e) a merger, consolidation, dissolution or liquidation of a legal entity.

“Transfer Fee” means a fee equal to one percent (1%) of the unpaid principal
balance of the Mortgage Loan payable to Lender in connection with a Transfer of
the Mortgaged Property or of an ownership interest in Borrower, Guarantor or Key
Principal for which Lender’s consent is required (including in connection with
an assumption of the Mortgage Loan).

“UCC” has the meaning set forth in the Security Instrument.

“UCC Collateral” has the meaning set forth in the Security Instrument.

“Voidable Transfer” means any fraudulent conveyance, preference or other
voidable or recoverable payment of money or transfer of property.

“Yield Maintenance Period End Date” or “Prepayment Premium Period End Date” has
the meaning set forth in the Summary of Loan Terms.

 

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Page 14 Schedule 1    06-12    © 2012 Fannie Mae

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“Yield Maintenance Period Term” or “Prepayment Premium Period Term” has the
meaning set forth in the Summary of Loan Terms.

[INITIALS TO FOLLOW ON NEXT PAGE]

 

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Page 15 Schedule 1    06-12    © 2012 Fannie Mae

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BORROWER’S INITIALS:  

/s/ BL

 

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Page 16 Schedule 1    06-12    © 2012 Fannie Mae

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SCHEDULE 2 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Summary of Loan Terms

 

I. GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION Borrower    POINTE AT
CANYON RIDGE, LLC, a Georgia limited liability company Lender    CBRE
MULTIFAMILY CAPITAL, INC., a Delaware corporation Key Principal   

TRADE STREET OPERATING PARTNERSHIP, LP, a Delaware limited partnership

 

TRADE STREET RESIDENTIAL, INC., a Maryland corporation

Guarantor   

TRADE STREET OPERATING PARTNERSHIP, LP, a Delaware limited partnership

 

TRADE STREET RESIDENTIAL, INC., a Maryland corporation

Multifamily Project    Pointe at Canyon Ridge ADDRESSES Borrower’s General
Business Address   

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

Borrower’s Notice Address   

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

E-Mail: N/A

Multifamily Project Address   

8350 Roswell Road

Sandy Springs, Georgia 30350

Multifamily Project County    Fulton

 

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Key Principal’s General Business Address   

Trade Street Operating Partnership, LP

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

Key Principal’s Notice Address   

Trade Street Operating Partnership, LP

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

E-Mail: N/A

 

Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

E-Mail: N/A

Guarantor’s General Business Address   

Trade Street Operating Partnership, LP

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

Guarantor’s Notice Address   

Trade Street Operating Partnership, LP

c/o Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

E-Mail: N/A

 

Trade Street Residential, Inc.

19950 West Country Club Drive, Suite 800

Aventura, Florida 33180

 

E-Mail: N/A

Lender’s General Business Address   

2800 Post Oak Boulevard, #2100

Houston, Texas 77056

 

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Page 2 Schedule 2    06-12    © 2012 Fannie Mae

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Lender’s Notice Address   

2800 Post Oak Boulevard, #2100

Houston, Texas 77056

 

E-Mail: N/A

 

Lender’s Payment Address   

P.O. Box 297480

Houston, Texas 77297

II. MULTIFAMILY PROJECT INFORMATION Property Square Footage    38.79 Acres Total
Parking Spaces    865 Total Residential Units    494 III. MORTGAGE LOAN
INFORMATION Amortization Period    Three hundred sixty (360) months Amortization
Type   

[Select only one:]

 

¨      Amortizing

 

¨      Full Term Interest Only

 

x      Partial Interest Only

Effective Date    May 31, 2013 First Payment Date    The first day of July,
2013. First Principal and Interest Payment Date    The first day of July, 2015.
Fixed Rate    4.10%

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 3 Schedule 2    06-12    © 2012 Fannie Mae

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Interest Accrual Method   

[Select only one:]

 

¨    30/360 (computed on the basis of a three hundred sixty (360) day year
consisting of twelve (12) thirty (30) day months).

 

or

 

x    Actual/360 (computed on the basis of a three hundred sixty (360) day year
and the actual number of calendar days during the applicable month, calculated
by multiplying the unpaid principal balance of the Mortgage Loan by the Interest
Rate, dividing the product by three hundred sixty (360), and multiplying the
quotient obtained by the actual number of days elapsed in the applicable month).

Interest Only Term    Twenty-four (24) months Interest Rate    The Fixed Rate
Interest Rate Type    Fixed Rate Last Interest Only Payment Date    The first
day of June, 2015. Loan Amount    $25,800,000.00 Loan Term    One hundred
forty-four (144) months Loan Year    The period beginning on the Effective Date
and ending on the last day of May, 2014, and each successive twelve (12) month
period thereafter. Maturity Date    The first day of June, 2025, or any earlier
date on which the unpaid principal balance of the Mortgage Loan becomes due and
payable by acceleration or otherwise.

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 4 Schedule 2    06-12    © 2012 Fannie Mae

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Monthly Debt Service Payment    For Partial Interest Only (Actual/360):    (i)
   $88,150.00 for the First Payment Date;    (ii)    for each Payment Date
thereafter through and including the Last Interest Only Payment Date:       (a)
   $82,273.33 if the prior month was a 28-day month;       (b)    $85,211.67 if
the prior month was a 29-day month;       (c)    $88,150.00 if the prior month
was a 30-day month; and       (d)    $91,088.33 if the prior month was a 31-day
month; and    (iii)    $124,665.18 for the First Principal and Interest Payment
Date and each Payment Date thereafter until the Mortgage Loan is fully paid.
Prepayment Lockout Period    Zero (0) year(s) from the Effective Date IV. YIELD
MAINTENANCE/PREPAYMENT PREMIUM INFORMATION

Yield Maintenance Period End Date

 

or

 

Prepayment Premium Period End Date

   The last day of November, 2024.

Yield Maintenance Period Term

 

or

 

Prepayment Premium Period Term

   One hundred thirty-eight (138) months

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 5 Schedule 2    06-12    © 2012 Fannie Mae

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V. RESERVE INFORMATION Completion Period    Within one (1) month after the
Effective Date or as otherwise shown on the Required Repair Schedule. Initial
Replacement Reserve Deposit    $0.00 Maximum Inspection Fee    $500.00 Maximum
Repair Disbursement Interval    One time per calendar month Maximum Replacement
Reserve Disbursement Interval    One time per calendar month Minimum Repairs
Disbursement Amount    $1,000.00 Minimum Replacement Reserve Disbursement Amount
   $5,000.00 Monthly Replacement Reserve Deposit    $12,433.00 Repair Threshold
   $10,000.00 Repairs Escrow Account Administrative Fee    $500, payable one
time Repairs Escrow Deposit    [$87,144.00] Replacement Reserve Account
Administration Fee    $250, payable annually Replacement Reserve Account
Interest Disbursement Frequency    Quarterly Replacement Threshold    $10,000.00

[INITIALS TO FOLLOW ON NEXT PAGE]

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 6 Schedule 2    06-12    © 2012 Fannie Mae

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BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 7 Schedule 2    06-12    © 2012 Fannie Mae

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SCHEDULE 3 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Schedule of Interest Rate Type Provisions

(Fixed Rate)

 

1. Defined Terms.

Capitalized terms not otherwise defined in this Schedule have the meanings given
to such terms in the Definitions Schedule to the Loan Agreement.

 

2. Interest Accrual.

Except as otherwise provided in the Loan Agreement, interest shall accrue at the
Interest Rate until fully paid.

[INITIALS TO FOLLOW ON NEXT PAGE]

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 Schedule 3    06-12    © 2012 Fannie Mae

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BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 Schedule 3    06-12    © 2012 Fannie Mae

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SCHEDULE 4 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Prepayment Premium Schedule

(Standard Yield Maintenance – Fixed Rate)

 

1. Defined Terms.

All capitalized terms used but not defined in this Prepayment Premium Schedule
shall have the meanings assigned to them in the Loan Agreement.

 

2. Prepayment Premium.

Any Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the
Loan Agreement shall be computed as follows:

(a) If the prepayment is made at any time after the Effective Date and before
the Yield Maintenance Period End Date, the Prepayment Premium shall be the
greater of:

 

  (1) one percent (1%) of the amount of principal being prepaid; or

 

  (2) the product obtained by multiplying:

(i) the amount of principal being prepaid,

by

(ii) the difference obtained by subtracting from the Fixed Rate on the Mortgage
Loan, the Yield Rate (as defined below) on the twenty-fifth (25th) Business Day
preceding (i) the Intended Prepayment Date, or (ii) the date Lender accelerates
the Mortgage Loan or otherwise accepts a prepayment pursuant to Section 2.03(d)
(Application of Collateral) of the Loan Agreement,

by

(iii) the present value factor calculated using the following formula:

 

1 - (1 + r)-n/12             r  

 

[r =    Yield Rate n =    the number of months remaining between (i) either of
the following: (x) in the case of a voluntary prepayment, the last day of the
month in which the prepayment is made, or (y) in any other case, the date on
which Lender accelerates the unpaid principal balance of the Mortgage Loan and
(ii) the Yield Maintenance Period End Date.

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 Schedule 4    06-12    © 2012 Fannie Mae

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   For purposes of this clause (ii), the “Yield Rate” means the yield calculated
by interpolating the yields for the immediately shorter and longer term U.S.
“Treasury constant maturities” (as reported in the Federal Reserve Statistical
Release H.15 Selected Interest Rates (the “Fed Release”) under the heading “U.S.
government securities”) closest to the remaining term of the Yield Maintenance
Period Term, as follows (rounded to three (3) decimal places):   

      LOGO [g548129ex10_1schpg27.jpg]

 

a =    the yield for the longer U.S. Treasury constant maturity b =    the yield
for the shorter U.S. Treasury constant maturity x =    the term of the longer
U.S. Treasury constant maturity y =    the term of the shorter U.S. Treasury
constant maturity z =    “n” (as defined in the present value factor calculation
above) divided by twelve (12).

 

   Notwithstanding any provision to the contrary, if “z” equals a term reported
under the U.S. “Treasury constant maturities” subheading in the Fed Release, the
yield for such term shall be used, and interpolation shall not be necessary. If
publication of the Fed Release is discontinued by the Federal Reserve Board,
Lender shall determine the Yield Rate from another source selected by Lender.
Any determination of the Yield Rate by Lender will be binding absent manifest
error.]

(b) If the prepayment is made on or after the Yield Maintenance Period End Date
but before the last calendar day of the fourth (4th) month prior to the month in
which the Maturity Date occurs, the Prepayment Premium shall be one percent (1%)
of the amount of principal being prepaid.

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 Schedule 4    06-12    © 2012 Fannie Mae

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(c) Notwithstanding the provisions of Section 2.03 (Lockout/Prepayment) of the
Loan Agreement, no Prepayment Premium shall be payable with respect to any
prepayment made on or after the last calendar day of the fourth (4th) month
prior to the month in which the Maturity Date occurs.

[INITIALS TO FOLLOW ON NEXT PAGE]

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 3 Schedule 4    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 4 Schedule 4    06-12    © 2012 Fannie Mae

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SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Required Replacement Schedule

SEE ATTACHED

[INITIALS TO FOLLOW ON NEXT PAGE]

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 Schedule 5    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 Schedule 5    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Required Repair Schedule

 

Repair Description

   Estimated Cost      Maximum Repair
Cost      Completion Date               Estimated Cost x 125%         

Entry Drive: A section of the stone-paved entrance drive was observed to be
damaged and uneven with the surrounding pavement creating a potential trip
hazard. Blackstone recommends that management perform repairs as needed to
provide a level surface.

   $ 1,200.00       $ 1,500.00         June 30, 2013   

Pedestrian Pavement and Breezeways: Trip hazards were observed in the sidewalks
adjacent to Building 8378; in the south-side sidewalk adjacent to Buildings 8380
and 8362 (where a metal landscaping-to-street drainage pipe is elevated above
the sidewalk); and at various buildings where pedestrian concrete steps abut the
slabs at the breezeways. Blackstone recommend that all walkways and breezeways
be inspected for vertical deflection and trip hazards, and repairs (remove and
replace or grind to a smooth transition) as needed, and resetting the drainage
pipe to remove that hazard as an immediate repair need.

   $ 3,440.00       $ 4,300.00         June 30, 2013   

Retaining Walls: The observed retaining walls were in generally fair to good
condition. However, isolated sections of wood tie or concrete retaining wall
damage were observed in the vicinity of Buildings 8362, 8376, 8378, 8383, 8384
and 8386. All retaining walls throughout the property should be assessed and
repaired as needed as an immediate repair need.

   $ 50,490.00       $ 63,113.00         November 30, 2013   

Exterior Stairways: We observed vertical deflection of exterior stair columns,
intermediate landings, guardrails, and/or headers at various buildings (8358,
8360, 8362 and 8378 included). Blackstone recommends that all exterior stairways
with wood columns be inspected for these conditions and repaired as needed.

   $ 4,320.00       $ 5,400.00         November 30, 2013   

Electrical GFCIs: Dwelling unit bathrooms are equipped with ground fault circuit
interrupter (GFCI) protection; however, the kitchens are not. Blackstone
recommends the installation of GFCIs in the kitchens as an immediate repair need
(assumes in-house labor).

   $ 9,880.00       $ 12,350.00         November 30, 2013      

 

 

    

 

 

    

TOTAL:

   $ 69,330.00       $ 86,663.00         

 

 

    

 

 

    

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 Schedule 6    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 Schedule 6    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

Exceptions to Representations and Warranties Schedule

NONE

[INITIALS TO FOLLOW ON NEXT PAGE]

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 1 Schedule 7    06-12    © 2012 Fannie Mae

--------------------------------------------------------------------------------

BORROWER’S INITIALS:  

/s/ BL

 

Multifamily Loan and Security Agreement       (Non-Recourse)    Form 6001.NR   
Page 2 Schedule 7    06-12    © 2012 Fannie Mae