Exhibit 10.44

 

MULTIFAMILY LOAN AND SECURITY AGREEMENT (NON-RECOURSE)

 

BY AND BETWEEN

 

BELL BR WATERFORD CROSSING JV, LLC, a Delaware limited liability company

 

AND

 

CWCAPITAL LLC, a Massachusetts limited liability company

 

DATED AS OF

 

April 4, 2012

 

FannieMae.

 

 

 

 

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 9 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 11 (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 G) No Litigation 14 (k) Payment of Taxes,
Assessments and Other Charges 14

 

i

 

 

(l) Not a Foreign Person 15 (m) BRISA 15 (n) Default Under Other Obligations 15
(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 16 (c) Payment of Taxes, Assessments and Other Charges 17 (d)
Borrower Single Asset Status 17 (e) ERISA 18 (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 26 (e) Compliance with Laws 27 SECTION
6.03 MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING THE PROPERTY 27 (a) Property
Management 27 (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 28
(b) Prepaid Rents 28 SECTION 7.02 COVENANTS 29 (a) Leases 29 (b) Commercial
Leases 29 (c) Payment of Rents 30 (d) Assignment of Rents 31

 

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(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 35 SECTION 8.03 MORTGAGE LOAN
ADMINISTRATION MATTERS REGARDING BOOKS AND RECORDS AND FINANCIAL REPORTING 35
(a) Right to Audit Books and Records 35 (b) Credit Reports; Credit Score 35    
  ARTICLE 9 - INSURANCE 35         SECTION 9.01 REPRESENTATIONS AND WARRANTIES
35 (a) Compliance with Insurance Requirements 36 (b) Property Condition 36
SECTION 9.02 COVENANTS 36 (a) Insurance Requirements 36 (b) Delivery of
Policies, Renewals, Notices and Proceeds 36 SECTION 9.03 MORTGAGE LOAN
ADMINISTRATION MATTERS REGARDING INSURANCE 37 (a) Lender's Ongoing Insurance
Requirements 37 (b) Application of Proceeds on Event of Loss 38 (c) Payment
Obligations Unaffected 40 (d) Foreclosure Sale 40 (e) Appointment of Lender as
Attorney-In-Fact 40       ARTICLE 10 - CONDEMNATION 41         SECTION 10.01
REPRESENTATIONS AND WARRANTIES 41 (a) Prior Condemnation Action 41 (b) Pending
Condemnation Actions 41 SECTION 10.02 COVENANTS 41 (a) Notice of Condemnation 41
(b) Condemnation Proceeds 41 SECTION 10.03 MORTGAGE LOAN ADMINISTRATION MATTERS
REGARDING CONDEMNATION 41 (a) Application of Condemnation Awards 41 (b) Payment
Obligations Unaffected 42 (c) Appointment of Lender as Attorney-In-Fact 42 (d)
Preservation of Mortgaged Property 42       ARTICLE 11- LIENS, TRANSFERS AND
ASSUMPTIONS 42         SECTION 11.01 REPRESENTATIONS AND WARRANTIES 42 (a) No
Labor or Materialmen's Claims 42

 

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(b) No Other Interests 43 SECTION 11.02 COVENANTS 43 (a) Liens; Encumbrances 43
(b) Transfers 43 SECTION 11.03 MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING
LIENS, TRANSFERS AND ASSUMPTIONS 46 (a) Assumption of Mortgage Loan 46 (b)
Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates 47 (c)
Estate Planning 47 (d) Termination or Revocation of Trust 48 (e) Death of Key
Principal or Guarantor 48 (f) Bankruptcy of Guarantor 50 (g) Further Conditions
to Transfers and Assumption 51 (h) Transfers 52       ARTICLE 12 - IMPOSITIONS
55         SECTION 12.01 REPRESENTATIONS AND WARRANTIES 55 (a) Payment of Taxes,
Assessments and Other Charges. , 55 SECTION 12.02 COVENANTS 55 (a) Imposition
Deposits, Taxes, and Other Charges 55 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
SECTION 13.02 MORTGAGE LOAN ADMINISTRATION MATTERS REGARDING RESERVES 60 (a)
Accounts, Deposits, and Disbursements 60 (b) Approvals of Contracts; Assignment
of Claims 66 (c) Delays and Workmanship 66 (d) Appointment of Lender as
Attorney-In-Fact 67 (e) No Lender Obligation 67 (f) No Lender Warranty 67      
ARTICLE 14 - DEFAULTS/REMEDIBS 68         SECTION 14.01 EVENTS OF DEFAULT 68 (a)
Automatic Events of Default. 68 (b) Events of Default Subject to a Specified
Cure Period 69

 

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(c) Events of Default Subject to Extended Cure Period 69 SECTION 14.02 REMEDIES
70 (a) Acceleration; Foreclosure 70 (b) Loss of Right to Receive Replacement
Reserve Disbursements and Repairs Disbursements. 70 (c) Remedies Cumulative 71
SECTION 14.03 ADDITIONAL LENDER RIGHTS; FORBEARANCE 71 (a) No Effect Upon
Obligations 71 (b) No Waiver of Rights or Remedies 72 (c) Appointment of Lender
as Attorney-in-Fact 72 SECTION 14.04 WAIYER OF MARSHALING 74         ARTICLE 15
- MISCELLANEOUS 74         SECTION 15.0l GOVERNING LAW; CONSENT TO JURISDICTION
AND VENUE 74 (a) Governing Law 74 (b) Venue 75 SECTION 15.02 NOTICE 75 (a)
Process of Serving Notice 75 (b) Change of Address 75 (c) Default Method of
Notice 76 (d) Receipt of Notices 76 SECTION 15.03 SUCCESSORS AND ASSIGNS BOUND;
SALE OF MORTGAGE LOAN 76 (a) Binding Agreement. 76 (b) Sale of Mortgage Loan;
Change of Servicer 76 SECTION 15.04 COUNTERPARTS 76 SECTION 15.05 JOINT AND
SEVERAL (OR SOLIDARY) LIABILITY 76 SECTION 15.06 RELATIONSHIP OF PARTIES; NO
THIRD PARTY BENEFICIARY 76 (a) Solely Creditor and Debtor 76 (b) No Third Party
Beneficiaries 77 SECTION 15.07 SEVERABILITY; ENTIRE AGREEMENT; AMENDMENTS 77
SECTION 15.08 CONSTRUCTION 77 SECTION 15.09 MORTGAGE LOAN SERVICING 78 SECTION
15.10 DISCLOSURE OF INFORMATION 78 SECTION 15.11 WAIVER; CONFLICT 79 SECTION
15.12 [INTENTIONALLY DELETED.] 79 SECTION 15.13 SUBROGATION 79 SECTION 15.14
COUNTING OF DAYS 79 SECTION 15.15 REVIVAL AND REINSTATEMENT OF INDEBTEDNESS 79
SECTION 15.16 TIME IS OF THE ESSENCE 79 SECTION 15.17 FINAL AGREEMENT 80 SECTION
15.18 WAIVER OF TRIAL BY JURY 80

 

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SCHEDULES & EXHIBITS

 

Schedules         Schedule 1   Definitions Schedule (required) Summary   Form
6101.FR Schedule 2   of Loan Terms (required)   Form 6102.FR     Schedule 2
Addendum -Replacement Reserve Waived   Form 6102.04 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)   Form 6001.NR Schedule 6   Required Repair Schedule (required)  
Form 6001.NR Schedule 7   Exceptions to Representations and Warranties Schedule
(required)   Form 6001.NR           Exhibits         Exhibit 1   Modifications
to Loan Agreement (Replacement Reserve-Deposits Partially or Fully Waived)  
Form 6220 Exhibit 2   Modifications to Loan Agreement -Waiver of Imposition
Deposits   Form 6228

 

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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 BELL BR
WATERFORD CROSSING JV, LLC, a Delaware limited liability company ("Borrower"),
and CWCAPITAL LLC, a Massachusetts limited liability company ("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.

 

1

 

 

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.

 

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(2)         Interest Accrual and Computation.

 

Except as provided in Section 2.02(a)(l), 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.

 

(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.

 

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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).

 

(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; and

 

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

 

(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

 

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(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;

 

(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.

 

5

 

 

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.

 

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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 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:

 

(I)         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:

 

(1)         any prepayment of the unpaid principal balance of the Mortgage Loan,
whether voluntary or involuntary, or resulting from a 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,
none of Borrower, or any director, officer 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:

 

(1)         failure to pay to Lender upon demand after an Event of Default, all
Rents to which Lender is entitled under the Loan Documents and the amount of all
security deposits collected by Borrower from tenants;

 

8

 

 

(2)         failure to maintain all insurance policies required by the Loan
Documents;

 

(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, provided, that such failure to comply has continued for a
period of ten (10) days after written notice of such failure by Lender to
Borrower or Guarantor;

 

(5)         failure to apply Rents to the ordinary and necessary expenses of
owning and operating the Mortgaged Property (other than property management fees
that are not currently payable pursuant to the terms of any collateral
assignment of property management agreement required by Lender), and to Debt
Service Amounts, except that Borrower will not be personally liable with respect
to Rents that are distributed 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 the calendar year that such Rents are attributable;
or

 

(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, member, or shareholder of Borrower, Guarantor, or
Key Principal in connection with on-going financial or other reporting, or any
request for action or consent by Lender.

 

provided, however, 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.

 

(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) 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;

 

9

 

 

(3)         the occurrence of any Bankruptcy Event (other than an
acknowledgement in writing as described in clause (b) of the definition of
"Bankruptcy Event" or the appointment of a receiver, liquidator, custodian,
sequestrator, trustee, or similar officer made at the request of Lender);
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 om1ss1on by
Borrower, Guarantor, Key Principal, or any officer, director, partner, member,
or shareholder 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, member, or shareholder of Borrower, Guarantor, or Key
Principal in connection with on-going financial or other reporting, 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), the Environmental Indemnity Agreement and
any other indemnity provided by Borrower under any other 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.
Subject to any liability under Article 3 of the Guaranty or any other Loan
Documents executed by any such party, Lender agrees that the satisfaction for
such indemnity obligations shall be limited to the assets of Borrower, and
Lender shall not seek to recover any deficiency from any entities or natural
persons who are (1) general partners, managers or members of Borrower, or (2)
general or limited partners, managers, members, officers, directors or
shareholders of an entity that directly or indirectly owns any interests in
Borrower.

 

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 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.

 

10

 

 

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 as of the
Effective Date 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.

 

(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.

 

11

 

 

(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 day-to-day debts as they are incurred in the ordinary course of
business, such as trade payables.

 

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

 

(1)         None of Borrower, any Guarantor or any Key Principal, or any
Principal, nor to Borrower's knowledge, its general partners, managing members,
managers (if non-member managed), or any Person owning 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, any Key Principal, or any
Principal, nor to Borrower's knowledge, its general partners, managing members,
managers (if non- member managed), or any Person owning a Controlling Interest
in any of them is a Person:

 

(A)         that is charged with, or has reason to believe 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;

 

(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; or

 

12

 

 

(D)         [Intentionally Deleted].

 

(3)         None of Borrower, any Guarantor, any Key Principal, nor to
Borrower's knowledge, its general partners, managing members, managers (if
non-member managed), or any Person owning 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 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 unsecured obligations incurred in the
ordinary course of the operation of the Mortgaged Property and obligations under
the Loan Documents, obligations secured by the Mortgaged Property to the extent
permitted by the Loan Documents, and any ground lease approved in writing by
Lender;

 

(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;

 

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

 

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

 

13

 

 

(7)         has not assumed, guaranteed or become obligated for the liabilities
of any other Person (except in connection with the Mortgage Loan or the
endorsement of negotiable instruments in the ordinary course of business) or
held out its credit as being available to satisfy the obligations of any other
Person; and

 

(8)         has not entered into, and was 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, any Key Principal, or any Principal, nor to
Borrower's knowledge, its general partners, managing members, managers (if
non-member managed), or any Person owning 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.

 

(j)          No Litigation.

 

There are no 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 Borrower, any Guarantor, any Key Principal, any Principal
or the Mortgaged Property.

 

(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 all taxes, governmental charges and assessments due and
payable with respect to the returns and reports described in Section 4.0l(k)(l)
above (or it has obtained permitted extensions for payment of the same and is in
compliance with such extensions);

 

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

 

14

 

 

(4)         it has made, to the extent required by applicable law or generally
accepted accounting principles, adequate reserves on its books and records for
all taxes payable by Borrower 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 acknowledges that:

 

(1)         it has no Employee Benefit Plan and does not maintain or sponsor an
Employee Benefit Plan intended to meet the requirements of a "qualified plan"
under Section 401(a) of the Internal Revenue Code;

 

(2)         it does not maintain, sponsor or contribute to any Employee Benefit
Plan that is subject to Title IV of ERISA or Section 412 of the Internal Revenue
Code;

 

(3)         it has not engaged in a non-exempt ''prohibited transaction"
described in Section 406 of BRISA or Section 4975 of the Internal Revenue Code
that could result in an assessment of a civil penalty under Section 502(i) of
BRISA or excise tax under Section 4975 of the Internal Revenue Code and none of
the assets of Borrower constitute "plan assets" (within the meaning of
Department of Labor Regulation Section 2510.3-101) of any Employee Benefit Plan
subject to Title I of ERISA;

 

(4)         it has not incurred any "withdrawal liability'' and no "reportable
event" has occurred (as such terms are described in Title IV of BRISA) with
respect to any such Employee Benefit Plan, unless approved by the appropriate
Governmental Authority;

 

(5)         none of Borrower, any general partner, manager (if non-member
managed), or managing member of Borrower, or any Guarantor, Principal, or Key
Principal, or any person under common control with Borrower, is or ever has been
obligated to contribute to any ''multiemployer plan" (as defined in Section
3(37) of BRISA; and

 

(6)         it has no unpaid obligations or liabilities that have not been
discharged arising under BRISA of a character which if unpaid or unperformed
might result in the imposition of a Lien against any of its properties or
assets, including satisfaction of any plan funding requirements.

 

(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.

 

15

 

 

(2)         None of Borrower, any general partner, manager (if non-member
managed) or managing member of Borrower, or any Guarantor, Principal or Key
Principal is in default under any obligation to Lender.

 

(o)          Prohibited Person.

 

None of Borrower, any Guarantor, or any Key Principal or any Principal, nor to
Borrower's knowledge, its general partners, managing members, managers (if
non-member managed) or any Person owning 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. Borrower shall not make any material change to its
organizational documents, including changes relating to control of, or the
ability to oversee management and day-to-day operations of, Borrower, without
Lender's prior written consent.

 

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

 

(1)         Borrower shall at all times remain, and shall cause its general
partners, managing members and managers (if non-member managed), and any
Guarantor, Key Principal, Principal, and any Person owning 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, or its general partners, managing
members, managers (if non-member managed), any Guarantor, Key Principal,
Principal, or any Person owning a Controlling Interest in any of them, be a
Person:

 

16

 

 

(A)         that is charged with, or has reason to believe 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;

 

(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; or

 

(D)         [Intentionally Deleted].

 

(3)         At no time shall Borrower, its general partners, managing members,
managers, non-member managers, any Guarantor, Key Principal, Principal and any
Person owning 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.

 

(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;

 

17

 

 

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

 

(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;

 

(5)         shall not assume, guaranty or become obligated for, the liabilities
of any other Person (except in connection with the Mortgage Loan or the
endorsement of negotiable instruments in the ordinary course of business) or
hold out its credit as being available to satisfy the obligations of any other
Person; or

 

(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.

 

(e)          ERISA.

 

Borrower acknowledges that:

 

(1)         it shall not maintain or sponsor an Employee Benefit Plan or fail to
comply with the requirements of a "qualified plan" under Section 401(a) of the
Internal Revenue Code;

 

(2)         it shall not maintain, sponsor or contribute to any Employee Benefit
Plan that is subject to Title IV of BRISA or Section 412 of the Internal Revenue
Code;

 

(3)         it shall not engage in a non-exempt "prohibited transaction"
described in Section 406 of BRISA or Section 4975 of the Internal Revenue Code
that could result in an assessment of a civil penalty under Section 502(i) of
BRISA or excise tax under Section 4975 of the Internal Revenue Code, and none of
the assets of Borrower shall constitute "plan assets" (within the meaning of
Department of Labor Regulation Section 2510.3-101) of any Employee Benefit Plan
subject to Title I of BRISA;

 

(4)         it shall not incur any ''withdrawal liability" or trigger a
"reportable event" (as such terms are described in Title IV of BRISA) with
respect to any such Employee Benefit Plan, unless approved by the appropriate
Governmental Authority;

 

(5)         none of Borrower, any general partner, manager, managing member or
Principal of Borrower, or any Guarantor or Key Principal, or any person under
common control with Borrower, shall withdraw from any Employee Benefit Plan that
is a "multiemployer plan" (as defined in Section 3(37) of BRISA); and

 

18

 

 

(6)         it shall not incur any liabilities under BRISA that if unpaid or
unperformed might result in the imposition of a Lien against any of its
properties or assets, including satisfaction of any plan funding requirements.

 

(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, any 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, any Key Principal or any Principal or the condition
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;

 

(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;

 

(4)         any Bankruptcy Event or Guarantor Bankruptcy Event;

 

19

 

 

(5)         any disclosure documents, including fees payable to any rating
agencies, including the reasonable fees and expenses of Lender's attorneys and
accountants.

 

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 as of the
Effective Date 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.

 

Borrower has no knowledge that an Event of Default exists under any of the Loan
Documents. 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; provided, however, any such 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);

 

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

 

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

 

20

 

 

(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.

 

Borrower shall execute, acknowledge and deliver within ten (10) days of the
request, 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.

 

Borrower shall provide, or cause to be provided, to Lender within ten (10) days
of the request, at Borrower's cost and expense, such further documentation or
information 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:

 

(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 reasonably required by Lender or Investor, in order to enable:

 

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

 

(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;

 

21

 

 

(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, to its knowledge, 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)(2) or 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; or

 

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

 

(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
reasonably require.

 

(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).

 

22

 

 

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 as of the
Effective Date 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.

 

(4)         To Borrower's knowledge, 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;

 

(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.

 

23

 

 

(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; or

 

(5)         subdivide 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;

 

(2)         keep the Mortgaged Property in good repair and marketable condition
(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, with reasonable wear and tear
excepted, 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) or such other condition as Lender may approve in
writing, 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 weather conditions or Force Majeure Delays, 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;

 

24

 

 

(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 notice of such
Additional Lender Repairs (subject to weather conditions or Force Majeure
Delays, 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 notice of such
Additional Lender Replacements (subject to weather conditions or Force Majeure
Delays, 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 (subject to weather conditions or Force Majeure Delays,
if applicable), 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;

 

(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 such cessation results from causes beyond the
control of Borrower 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); 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;

 

25

 

 

(6)         give 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 permit impairment or deterioration
(reasonable wear and tear excepted) of the Mortgaged Property;

 

(2)         subject to the provisions of Article 9, and 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).

 

(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, repair or environmental inspections}, and shall cooperate and
provide access to all areas of the Mortgaged Property (subject to the rights of
tenants under the Leases and applicable laws) during normal business hours or at
such other reasonable time upon reasonable notice, and at any time during the
continuance of an Event of Default or when exigent circumstances exist; and

 

26

 

 

(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;

 

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

 

(5)         promptly after receipt of written 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.

 

27

 

 

(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 a collateral 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
(reasonable 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 as of the
Effective Date except as disclosed on the Exceptions to Representations and
Warranties Schedule.

 

(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 (except
for collection of security deposits and other customary prepaid fees collected
under the Leases).

 

28

 

 

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.

 

(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 and Lender's written approval of such Material
Commercial Lease, provided that Lender's consent shall not be unreasonably
withheld, conditioned, or delayed for any Material Commercial Lease, or for any
amendments or modifications thereto, for ancillary retail within the
Improvements not exceeding 10% of the Mortgaged Property's effective gross
income or total rentable square footage (whichever is lower), so long as such
lease does not reduce the number or size of residential units at the Mortgaged
Property and such lease otherwise complies with all other requirements of this
Article 7; 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.

 

(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

 

29

 

 

(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)         to the certificate of estoppel provider's knowledge (if provided by
tenant, to the tenant's actual knowledge), 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.

 

(c)          Payment of Rents.

 

Borrower shall:

 

(1)         pay to Lender upon demand all Rents after the occurrence of an Event
of Default and during the continuance thereof;

 

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

 

30

 

 

(3)         not accept Rent under any Lease (whether residential or
non-residential) for more than two (2) months in advance (except for collection
of security deposits and other customary prepaid fees collected under the
Leases).

 

(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 require; provided, however, that Borrower shall not be required to
do anything that has the effect of (i) changing the essential economic terms of
the Mortgage Loan set forth in the commitment letter or (b) imposing on Borrower
greater personal liability under the Loan Documents than set forth in the
commitment letter.

 

(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 and during the continuance thereof, pay all
Rents payable under such Lease to Lender;

 

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

 

(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);

 

31

 

 

(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 shall be:

 

(1)         on forms approved by Lender; and

 

(2)         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,
Residential Leases with terms of less than six (6) months 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 as of the
Effective Date 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.

 

32

 

 

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 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)         a statement of income and expenses for Borrower and Guarantor for
such calendar year;

 

(B)         a statement of cash flows of Borrower and Guarantor for such
calendar year;

 

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

 

(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;

 

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

 

33

 

 

(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 1l.02(b)(l)(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) a statement that identifies all owners of any interest in Borrower and the
interest held by each, and if Borrower is a corporation, the names of all
officers and directors of Borrower, and if Borrower is a limited liability
company, the names of all managers who are not members.

 

(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)(l) 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; and

 

(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.

 

34

 

 

(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.

 

In the event (i) Borrower fails to provide in a timely manner the statements,
schedules and reports required by Section 8.02 and, thereafter, fails to provide
such statements, schedules and reports within ten (10) days after receipt from
Lender of written notice of its intent to cause an audit to be made of
Borrower's books and records in order to obtain such statements, schedules and
reports or (ii) statements, schedules and reports submitted to Lender by
Borrower are not full, complete and accurate in all material respects as
determined by Lender, Lender may require that any or all of the statements,
schedules and reports of Borrower or the Mortgaged Property be audited, at
Borrower's expense, by independent certified public accountants acceptable to
Lender; provided that such requirement shall be limited to not more than once
per Borrower's fiscal year so long as no Event of Default has occurred (or any
event which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default has occurred and is continuing). If Borrower
fails, in a timely manner, to provide any such required audited materials,
Lender shall have the right, at Borrower's expense, to have such materials
audited by independent certified public accountants selected by Lender. 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.

 

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 as of the
Effective Date except as disclosed on the Exceptions to Representations and
Warranties Schedule.

 

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(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 allied perils,
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 (to the extent the same can be obtained at commercially
reasonable rates as determined by Lender) 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 workmen's compensation insurance, builder's risk and public
liability insurance, and other insurance in connection with completing the
Repairs or Replacements, as applicable.

 

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

 

Borrower shall:

 

36

 

 

(1)         cause all insurance policies 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 existing insurance policy has been renewed not less than thirty (30) days
(or ten (10) days in the event the provisions of Section 12.02(b) are in effect)
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 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 under any insurance policy required in accordance with this Article 9;
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)(l
)(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;

 

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

 

(3)         issued by insurance companies satisfactory to Lender.

 

37

 

 

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)(l) 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 notice or the passage of time, or both, would
constitute an Event of Default has occurred and is continuing);

 

(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 in all events and shall include all operating costs and other
expenses, Imposition Deposits, deposits to Collateral Accounts and Mortgage Loan
repayment obligations);

 

38

 

 

(iv)        Lender determines that the Restoration will be completed before the
earlier of (x) one (1) year before the stated Maturity Date or (y) 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 (or any event which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default has occurred and is continuing);

 

(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)         there 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

 

39

 

 

(I)         Lender shall have the right to inspect the Mortgaged Property
(subject to the rights of tenants under the Leases and applicable law).

 

(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 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).

 

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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 as of the
Effective Date 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;

 

(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; or

 

41

 

 

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

 

(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 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 as of the
Effective Date except as disclosed on the Exceptions to Representations and
Warranties Schedule.

 

(a)          No Labor or Materialmen's Claims.

 

All parties furnishing labor and materials have been paid in full (or will be
paid when due in the ordinary course of business) and there are no mechanics' or
materialmen's liens or claims outstanding for work, labor or materials affecting
the Mortgaged Property, whether prior to, equal with or subordinate to the lien
of the Security Instrument.

 

42

 

 

(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 to Lender;

 

(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, except as may be disclosed to and
approved in writing by Lender.

 

Section 11.02      Covenants.

 

(a)          Liens; Encumbrances.

 

Other than Permitted Encumbrances and the lien of the Security Instrument and
this Loan Agreement, 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).

 

(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);

 

Multifamily Loan and Security Agreement Form 6001.NR   (Non-Recourse) (Modified
-Bell]  

 

43

 

 

(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;
provided that Borrower shall be permitted to grant a utility easement serving
the Mortgaged Property to a publicly operated utility where (i) such easement is
between Borrower and the utility, (ii) the granting of such easement does not
materially affect Borrower's access to the Mortgaged Property or the use of any
easements or amenities which benefit the Mortgaged Property, (iii) the granting
of such easement does not result in the loss of the use of any units, and (iv)
the consideration paid to Borrower (which consideration may be retained by
Borrower as provided in the following sentence) is less than $50,000, provided
that Borrower shall provide Lender with copies of the utility easement and
evidence satisfactory to Lender that subsections (i) through (iv) have been met.
So long as no Event of Default exists, Borrower may retain any compensation
received from the easement holder for its own account (provided such
consideration is less than $50,000) so long as Borrower promptly repairs any
damage covered by such easement; or

 

(F)         notwithstanding Section 11.02(a), 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.

 

(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);

 

(B)         more than forty-nine percent (49%) 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.

 

44

 

 

(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;

 

(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.

 

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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);

 

(2)         no Event of Default then exists;

 

(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)         if a guaranty was executed in connection with the Mortgage Loan, one
or more individuals or entities acceptable to Lender as new guarantors have
executed and delivered to Lender:

 

46

 

 

(A)         an assumption agreement acceptable to Lender that requires the new
guarantor to assume and perform all obligations of Guarantor wider 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 l 1.03(g).

 

(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, owns
a Controlling Interest, is the transferee shall be consented to by Lender if
such Transfer satisfies the applicable requirements of Section l 1.03(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 1l.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;

 

47

 

 

(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 all Immediate Family Members of such Key Principal or
Guarantor.

 

If the conditions set forth in this Section 1l.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 1l.03(g).

 

(d)          Termination or Revocation of Trust.

 

If any of Borrower, Guarantor or Key Principal is a trust, or if a Controlling
Interest 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 l l.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.

 

(1)         If Key Principal or Guarantor is a natural person, or if a
Controlling Interest would be Transferred due to the termination or revocation
of a trust, 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:

 

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(i)          the proposed new key principal and any other new guarantor (or
Person controlling such new key principal or new 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 guarantor (or Person controlling such new key principal or new
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
Key Principal's or Guarantor's 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

 

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(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(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 1l.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 l 3.02(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);

 

(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

 

(3)         Borrower shall provide Lender written notice 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 Borrower shall not be required to provide notice of
Transfers of Residential Leases, of the replacement of Fixtures or Personalty
performed pursuant to the terms of the Loan Documents or Transfers that are not
otherwise expressly subject to advance written notice from Borrower to Lender
under this Article 11.

 

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(h)          Transfers.

 

Notwithstanding anything in Section 11.02(b) of the Loan Agreement to the
contrary and in addition to, and without limiting, any Transfer that would
otherwise be permitted under Section 11.02(b) of the Loan Agreement, the
occurrence of the following shall not constitute an Event of Default under the
Loan Agreement and shall be permitted without payment of the Transfer Fee:

 

(1)         Pursuant to the terms of Borrower's Limited Liability Company I
Joint Venture Agreement dated as of March 29, 2012, a Transfer ("Buy Sell
Transfer") of the interests in Borrower between (i) BR Waterford JV Member LLC
("Bluerock Member") and (ii) Bell HNW Nashville Portfolio, LLC and/or Bell
Partners Inc. (together, the "Bell Member) (by purchase of the ownership
interest and replacement of a manager of Borrower), provided that:

 

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

 

(B)         No Event of Default has occurred, and no event which, with the
giving of notice or the passage of time, or both, would constitute an Event of
Default has occurred and is continuing; provided, however, if the Buy Sell
Transfer would cure the Event of Default, the Buy Sell Transfer must occur
within 60 days after all conditions in this Section have been met to Lender's
satisfaction;

 

(C)         In the event that Bluerock Member is the transferee, (1) Bluerock
Special Opportunity + Income Fund, LLC and Bluerock Special Opportunity + Income
Fund II, LLC (together, the "Bluerock Guarantors") and Bluerock Real Estate, LLC
(the "Bluerock Key Principal") shall each reaffirm their respective status as a
Key Principal or Guarantor, as applicable, and Lender will release Bell
Partners, Inc. and Bell HNW Nashville Portfolio, LLC (together, the "Bell
Guarantors") from all of their obligations under the Guaranty, provided,
however, that Bell Guarantors are not released from any liability pursuant to
the provisions of the Guaranty relating to the Environmental Indemnity Agreement
for any liability that relates to the period prior to the date of the Buy Sell
Transfer, regardless of when such environmental hazard is discovered, (2) Lender
determines that the Bluerock Guarantors and the Bluerock Key Principal satisfy
all of Lender's then-applicable key principal or guarantor eligibility, credit
management and other loan underwriting standards and (3) Lender determines that
the Mortgaged Property satisfies all of the Lender's then applicable loan
underwriting standards, including physical condition, occupancy and net
operating income;

 

52

 

 

(D)         In the event that Bell Member is the transferee, Bell Guarantors and
Steven D. Bell (the "Bell Key Principal") shall each reaffirm their respective
status as a Key Principal or Guarantor, as applicable, and Lender will release
Bluerock Guarantors from all of their obligations under the Guaranty, provided,
however, that Bluerock Guarantors are not released from any liability pursuant
to the provisions of the Guaranty relating to the Environmental Indemnity
Agreement for any liability that relates to the period prior to the date of the
Buy Sell Transfer, regardless of when such environmental hazard is discovered;

 

(E)         No transferee is a Prohibited Person;

 

(F)         Lender has reviewed and approved the Buy Sell Transfer documents and
received organizational charts reflecting the structure of Borrower prior to and
after the Buy Sell Transfer and copies of the then-current organizational
documents of Borrower, including any amendments;

 

(G)         Borrower provides Lender with at least 10 days prior written notice
of the proposed Buy Sell Transfer and pays the Review Fee in conjunction with
the delivery of such prior written notice;

 

(H)         Borrower pays or reimburses Lender, upon demand, for all of Lender's
out-of-pocket costs (including reasonable attorneys' fees) incurred in reviewing
the Buy Sell Transfer request, to the extent such costs exceed the Review Fee;
and

 

(I)         Lender receives confirmation acceptable to Lender that Section
4.02(d) continues to be satisfied;

 

(2)         a Transfer of any direct or indirect interest in Borrower held by an
entity owned or controlled by any Guarantor or Key Principal to one or more of
such Guarantor's or Key Principal's Affiliates ("Affiliate Transfer") provided
that:

 

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

 

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

 

(C)         Lender determines, in Lender's Discretion, that the Affiliate meets
Lender's eligibility, credit, management and other standards;

 

(D)         Following the Affiliate Transfer, control and management of the
day-to-day operations of Borrower continue to be held by Bluerock Real Estate,
LLC and/or Bell Partners Inc;

 

53

 

 

(E)         Borrower delivers to Lender for each transferee with an interest of
25% or more a certification that (a) he/she has not been convicted of fraud or a
crime involving moral turpitude (or if an entity, then no principal of such
entity has been convicted of fraud or a crime involving moral turpitude), and
(b) he/she/it has not been involved in a bankruptcy or reorganization within the
ten years preceding the Notice to Lender;

 

(F)         Each transferee with an interest of 25% or more meets all of the
requirements for a Principal set forth in this Loan Agreement;

 

(G)         No transferee is a Prohibited Person;

 

(H)         Lender has reviewed and approved the Affiliate Transfer documents
and received organizational charts reflecting the structure of Borrower prior to
and after the Affiliate Transfer and copies of the then-current organizational
documents of Borrower, including any amendments;

 

(I) Borrower provides Lender with at least 10 days prior written notice of the
proposed Affiliate Transfer and pays the Review Fee in conjunction with the
delivery of such prior written notice;

 

(J)         Borrower pays or reimburses Lender, upon demand, for all of Lender's
out-of-pocket costs (including reasonable attorneys' fees) incurred in reviewing
the Affiliate Transfer request, to the extent such costs exceed the Review Fee;
and

 

(K)         Lender receives confirmation acceptable to Lender that Section
4.02(d) continues to be satisfied;

 

As used in this Section 11.03(h)(2) only "Affiliate" means, as to each Guarantor
or Key Principal respectively:

 

(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 the Guarantor or Key Principal;

 

(B)         any entity in which the 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 the entity; or

 

(C)         any entity controlled by or under common control with, or which
controls the 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).

 

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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 as of the
Effective Date 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, including Impositions,
leasehold payments and ground rents;

 

(2)         paid all Taxes for the Mortgaged Property that have become due
pursuant to any notice of assessment received by Borrower and any and all taxes
that have become due against Borrower;

 

(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.

 

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));

 

55

 

 

(2)         deposit with Lender, within ten (10) days after 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)         unless otherwise paid by Lender in accordance with Section 12.03(c),
pay, or cause to be paid, all Impositions, leasehold payments, ground rents and
Borrower taxes when due and before the addition of any interest, fine, penalty
or cost for nonpayment;

 

(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 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.

 

56

 

 

 

(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;

 

(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.

 

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(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);

 

(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)).

 

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(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.

 

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 of the Replacements or
Repairs or investment of the Reserve/Escrow Account Funds.

 

(f)          Amendments to Loan Documents.

 

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;

 

(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.

 

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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.

 

(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.

 

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(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, 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 and the
Repairs Escrow 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.

 

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(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;

 

(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.

 

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(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 (subject to the rights of tenants under the Leases and
applicable law);

 

(B)         an inspection (subject to the rights of tenants under the Leases and
applicable law) 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

 

(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;

 

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(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.

 

(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;

 

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(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)(3), Section 6.03(c), or
otherwise from time to time as permitted by the Loan Documents, 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;

 

(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.

 

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(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).

 

(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 14.03(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:

 

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(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 14.03(c).

 

(e)          No Lender Obligation.

 

Nothing in this Loan Agreement shall:

 

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

 

(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

 

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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;

 

(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 Borrower, or any of its officers,
directors, trustees, partners, members or managers, or any Guarantor, Key
Principal or Principal or any of their employees, 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;

 

(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;

 

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(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 would be 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.

 

(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 notice and cure
period, which failure continues beyond such specified 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 subject to the cure period
set forth below:

 

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(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 14.0l(a)
or Section 14.0l(b) above) as and when required, which failure continues for a
period of thirty (30) days after notice of such failure by Lender to Borrower,
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 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.

 

Section 14.02       Remedies.

 

(a)          Acceleration; Foreclosure.

 

Upon the occurrence and during the continuance of an Event of Default, 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 notice to Borrower, unless applicable law requires
otherwise (and in such case, after any required notice has been given). Lender
may exercise this option to accelerate regardless of any prior forbearance. In
addition, 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 notice or further action by Lender.

 

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

 

Upon the occurrence and during the continuance of an Event of Default under this
Loan Agreement, 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);

 

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(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 default in order to exercise any of its remedies with respect to an
Event of Default.

 

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;

 

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(5)         any or all payments due under the 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.

 

(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 c9ndemnation 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:

 

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(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;

 

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

 

(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.

 

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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.

 

Notwithstanding the foregoing provisions, Lender shall not (except to the extent
otherwise expressly provided in this Agreement) exercise its rights as set forth
in this Section 14.03(c) unless: (w) an Event of Default has occurred and is
continuing, (x) an event which, with the giving of notice or the passage of
time, or both, would constitute an Event of Default has occurred and is
continuing, or (y) Lender determines, in its discretion, that exigent
circumstances exist or that such exercise is necessary or prudent in order to
protect and preserve the Mortgaged Property, or Lender's lien priority and
security interest in the Mortgaged Property.

 

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.

 

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(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.

 

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.

 

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(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.

 

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 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.

 

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(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;

 

(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.

 

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(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.

 

(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
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 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.

 

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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 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, Key Principal
or any Guarantor 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.

 

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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.

 

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.

 

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.

 

[Remainder of Page Intentionally Blank]

 

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  BORROWER:           BELL BR WATERFORD CROSSING JV, LLC,     a Delaware limited
liability company           By:  Bell Partners Inc., a North Carolina
corporation,     its Co-Manager           By:  /s/ Steven D. Bell       Name:
Steven D. Bell       Title:  CEO

 

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  LENDER:       CWCAPITAL LLC, a Massachusetts limited liability company        
By: /s/ Paul A. Sherrington     Paul A. Sherrington     Managing Director

 

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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 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 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 wider one or more Insolvency Laws against Borrower; or

 

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(e)          the appointment of a receiver, 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.

 

"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.

 

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"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-one percent (51%) 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-one percent (51%) of all limited partnership interests in such
entity;

 

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

 

(A)         fifty-one percent (51%) 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;

 

(4)         if such entity is a corporation (other than a Publicly-Held
Corporation) with only one class of voting stock, fifty-one percent (51%) of
voting stock in such corporation;

 

85

 

 

(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 in any agreement (including provisions contained
in the organizational and/or governing documents of Borrower, Guarantor or Key
Principal) 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" has the meaning as defined in Section 3(3) of ERISA.

 

"Enforcement Costs" has the meaning set forth in the Security Instrument.

 

"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.

 

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"Environmental Laws" has the meaning set forth in the Environmental Indemnity
Agreement.

 

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

 

"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" means the exceptions to
Borrower's representations and warranties set forth on 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 Delays" means acts of God (natural disasters), acts of war, labor
disturbance (including strikes or lockouts), 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), unavoidable casualties or any
other substantially similar causes beyond the control of Borrower, and of which
Borrower shall have notified Lender in writing within ten (10) days after
occurrence.

 

"Foreclosure Event" means:

 

(a)          foreclosure under the Security Instrument;

 

(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.

 

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"Governmental Authority" means any board, commission, department or body of any
municipal, county, state or federal governmental unit, or any subdivision of any
of them, that has or acquires jurisdiction over 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.

 

"Immediate Family Members" means a child, 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.

 

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"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.

 

"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.

 

89

 

 

"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.

 

"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.

 

90

 

 

"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)          garage spaces or 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.

 

"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.

 

91

 

 

"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.

 

"Notice" means any notices, requests, demands or other communications.

 

"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.

 

"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.

 

92

 

 

"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)
to the Loan Agreement.

 

"Principal'' means any Person owning at least a twenty-five percent (25%)
interest (direct or indirect) in Borrower, Guarantor or Key Principal.

 

"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.

 

"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.

 

93

 

 

"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 Repairs) to
the Loan Agreement.

 

"Required Repairs" means those items listed on the Required Repair Schedule.

 

"Required Replacement Schedule" means that certain Schedule 5 (Required
Replacements) to the Loan Agreement.

 

"Required Replacements" means those items listed on the Required Replacement
Schedule.

 

94

 

 

"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 original economic and physical condition 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); ·

 

95

 

 

(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.

 

"Yield Maintenance Period Term" or "Prepayment Premium Period Term" has the
meaning set forth in the Summary of Loan Terms.

 

96

 

 

    /s/ SDB     Borrower Initials

 

97

 

 

SCBEDULE 2

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Summary of Loan Terms

(Interest Rate Type - Fixed Rate)

 

I.           General Party and Multifamily Project information

 

Borrower  

BELL BR WATERFORD CROSSING JV, LLC, a

Delaware limited liability company

      Lender   CWCAPITAL LLC, a Massachusetts limited liability company      
Key Principal  

Bell Partners Inc.

Bell HNW Nashville Portfolio, LLC

Blue Rock Special Opportunity + Income Fund, LLC

Blue Rock Special Opportunity + Income Fund II, LLC

Steven D. Bell

Bluerock Real Estate, LLC

      Guarantor  

Bell Partners Inc.

Bell HNW Nashville Portfolio, LLC

Blue Rock Special Opportunity + Income Fund, LLC

Blue Rock Special Opportunity + Income Fund II, LLC

      Multifamily Project   Grove at Waterford Crossing           ADDRESSES    
  Borrower's General Business Address  

c/o Bell Partners Inc.

300 North Green Street, Suite 1000

Greensboro, NC 27401

      Borrower's Notice Address  

c/o Bell Partners Inc.

300 North Green Street, Suite 1000

Greensboro, NC 27401

 

with a copy to:

 

c/o Bluerock Real Estate L.L.C.

70 East Fifth Street, 9th Floor

New York, New York 10022

Attention : Jordan Ruddy

      Multifamily Project Address  

101 Spadeleaf Boulevard

Hendersonville, TN 37075

      Multifamily Project County   Sumner County

 

98

 

 

Key Principal' s General Business Address  

300 North Green Street, Suite 1000

Greensboro, NC 27401

      Key Principal' s Notice Address  

300 North Green Street, Suite 1000

Greensboro, NC 27401

      Guarantor' s General Business Address  

300 North Green Street, Suite 1000

Greensboro, NC 27401

      Guarantor's Notice Address  

300 North Green Street, Suite 1000

Greensboro, NC 27401

      Lender's General Business Address  

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

      Lender's Notice Address  

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

      Lender 's Payment Address  

One Charles River Place

63 Kendrick Street

Needham, Massachusetts 02494

 

II.          Multifamily Project Information

 

Property Square Footage   13.29 acres       Total Parking Spaces   450      
Total Residential Units   252

 

III.         Mortgage Loan Information

 

Amortization Period   360 months       Amortization Type  

¨         Amortizing

¨         Full Term Interest Only

x        Partial Interest Only

      Effective Date   As of April 4, 2012

 

99

 

 

First Payment Date   June 1, 2012       First Principal and Interest Payment
Date   The first day of June, 2015.       Fixed Rate   3.59%       Interest
Accrual Method  

¨ 30/360 (computed on the basis of a three hundred sixty (360) ay 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   36 months       Interest Rate   The Fixed Rate      
Interest Rate Type   Fixed Rate       Last Interest Only Payment Date   The
first day of May, 2015.       Loan Amount   $20,100,000.00       Loan Term   84
months       Loan Year   The period beginning on the Effective Date and ending
on the last clay of April, 2013, and each successive twelve (12) month period
thereafter.

 

100

 

 

Maturity Date   May 1, 2019, or any earlier date on which the unpaid principal
balance of the Mortgage Loan becomes due and payable by acceleration or
otherwise.       Monthly Debt Service Payment  

For Partial Interest Only (Actual/360):

 

(i)           $62,136.92 for the First Payment Date;

 

(ii)          for each Payment Date thereafter through and including the Last
Interest Only Payment Date:

 

(a)          $56,123.67 if the prior month was a 28- day month;

 

(b)          $58,128.09 if the prior month was a 29- day month;

 

(c)          $60,132.50 if the prior month was a 30- day month; and

 

(d)          $62,136.92 if the prior month was a 31- day month; and

 

(iii)          $91,270.81 for the First Principal and Interest Payment Date and
each Payment Date thereafter until the Mortgage Loan is fully paid.

      Prepayment Lockout Period   0 years 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 October, 2018.

 

101

 

 

Yield Maintenance Period Term

 

or

 

Prepayment Premium Period Term

78 months

 

V. Preserve Information

 

Completion Period   Within N/A after the Effective Date or as otherwise shown on
the Required Repair Schedule.       Initial Replacement Reserve Deposit   $0    
  Maximum Inspection Fee   $1,500.00       Maximum Repair Disbursement Interval
  One time per calendar month       Maximum Replacement Reserve Disbursement
Interval   One time per calendar quarter       Minimum Repairs Disbursement
Amount   $1,500.00       Minimum Replacement Reserve Disbursement Amount  
$1,500.00       Monthly Replacement Reserve Deposit   $4,200.00       Repair
Threshold   $25,000.00       Repairs Escrow Account Administrative Fee  
$250.00, payable one time       Repairs Escrow Deposit   $N/A       Replacement
Reserve Account Administration Fee   $250.00, payable annually       Replacement
Reserve Account Interest Disbursement Frequency   Quarterly       Replacement
Threshold   $25,000.00

 

102

 

 

    /s/ SDB     Borrower Initials

 

103

 

 

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

ADDENDA TO SCHEDULE 2 -SCHEDULE OF LOAN TERMS

(Replacement Reserve Deposits -Deposits Partially or Fully Waived)

 

Reduced Monthly Replacement

Reserve Deposit

$ 0

 

104

 

 

    /s/ SDB     Borrower Initials

 

105

 

 

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.

 

106

 

 

    /s/ SDB     Borrower Initials

 

107

 

 

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:

 

(A)         the amount of principal being prepaid,

 

by

 

(B)         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

 

(C)         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.

 

108

 

 

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):

 

[tex10-45_pg117.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.

 

(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.

 

109

 

 

    /s/ SDB     Borrower Initials

 

110

 

 

SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Replacement Schedule

 

(Grove at Waterford Crossing Apartments)

 

•Structural Repairs

•Siding Repairs

•Roofing

•HVAC Systems

•Parking Lot Resurfacing/Sealing

•Exterior Painting

•All other repair/replacement items (other than normal maintenance items)
approved in writing by Lender (in accordance with Section 13.02(a)(9)(A) of this
Agreement) which are capital in nature and similar to those items specified
above (including items necessary in order to keep the Property in good order and
repair and in a good marketable condition or to prevent deterioration).

 

111

 

 

    /s/ SDB     Borrower Initials

 

112

 

 

SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Required Repair Schedule

 

NONE

 

113

 

 

    /s/ SDB     Borrower Initials

 

114

 

 

SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT

 

Exceptions to Representations and Warranties Schedule

 

NONE

 

115

 

 

    /s/ SDB     Borrower Initials

 

116

 

 

EXHIBIT 1

 

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Replacement Reserve -Deposits Partially or Fully Waived)

 

The foregoing Loan Agreement is hereby modified as follows:

 

1.          Capitalized terms used and not specifically defined herein have the
meanings given to such terms in the Loan Agreement.

 

2.          The Definitions Schedule is hereby amended by adding the following
new definition in the appropriate alphabetical order:

 

"Reduced Monthly Replacement Reserve Deposit" has the meaning set forth in the
Summary of Loan Terms.

 

3.          Section 13.01(b) (Covenants - Monthly Replacement Reserve Deposits)
of the Loan Agreement is hereby amended by adding the following provisions to
the end thereof:

 

(1)         Deposit. Partial or Full Waiver of Monthly Replacement Reserve

 

Notwithstanding the foregoing or anything in this Loan Agreement to the
contrary, on the Effective Date, Lender has agreed to partially reduce, defer or
fully waive Borrower's obligation to make full Monthly Replacement Reserve
Deposits. Subject to the provisions of Section 13.01(b)(2) (Reinstatement of
Monthly Replacement Reserve Deposit), Borrower shall deposit the applicable
Reduced Monthly Replacement Reserve Deposit into the Replacement Reserve Account
on each Payment Date.

 

(2)         Reinstatement of Monthly Replacement Reserve Deposit.

 

In the event that (A) at any time during the Loan Term, Lender determines that
the Mortgaged Property is not being maintained in accordance with the
requirements set forth in the Loan Documents, or (B) a default or Event of
Default otherwise occurs under any of the Loan Documents, then, upon the earlier
of the (i) the date specified by Lender in written notice given to Borrower by
Lender, or (ii) the first day of the first calendar month after a default or
Event of Default under the Loan Documents, Borrower shall commence paying the
full Monthly Replacement Reserve Deposits throughout the remaining Loan Term.

 

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EXHIBIT 2

 

MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Waiver of Imposition Deposits)

 

The foregoing Loan Agreement is hereby modified as follows:

 

1.Capitalized terms used and not specifically defined herein have the meanings
given to such terms in the Loan Agreement.

 

2.The Definitions Schedule is hereby amended by adding the following new
definition in the appropriate alphabetical order:

 

"Insurance Impositions" means the premiums for maintaining all Required
Insurance Coverage.

 

"Required Insurance Coverage" means the insurance coverage required pursuant to
Article 9 (Insurance) of the Loan Agreement and under any other Loan Document.

 

3.Section 12.02 (Imposition Deposits, Truces, and Other Charges -Covenants) of
the Loan Agreement is hereby amended by adding the following provisions to the
end thereof:

 

(b)          Conditional Waiver of Collection of Imposition Deposits.

 

(1)         Notwithstanding anything contained in this Section 12.02 (Imposition
Deposits, Truces, and Other Charges - Covenants) to the contrary, Lender hereby
agrees to waive the collection of Imposition Deposits for Insurance Impositions,
provided, that:

 

(A)         Borrower pays such Insurance Impositions directly to the carrier or
agent ten (10) days prior to expiration or as necessary to prevent the Required
Insurance Coverage from lapsing due to non-payment of premiums;

 

(B)         Borrower provides Lender with proof of payment acceptable to Lender
of all Insurance Impositions within five (5) days of the date such Insurance
Impositions are paid, and

 

(C)         Borrower causes its insurance agent to provide the Lender such
certifications regarding the Required Insurance Coverage as Lender may request
from time to time evidencing that the Insurance Impositions have been paid in a
timely manner and that all of the Required Insurance Coverage is in full force
and effect.

 

(2)         Lender reserves the right to require Borrower to deposit the
Imposition Deposits with Lender on each Payment Date for Insurance Impositions
in accordance with this Section 12.02 (Imposition Deposits, Truces, and Other
Charges - Covenants) upon:

 

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(A)         Borrower's failure to pay Insurance Impositions or to provide Lender
with proof of payment of Insurance Impositions as required in this Section
12.02(b) (Conditional Waiver of Collection of Imposition Deposits);

 

(B)         Borrower's failure to maintain insurance coverage in accordance with
the requirements of Article 9 (Insurance);

 

(C)         the occurrence of any Transfer which is not permitted by the Loan
Documents, or any Transfer which requires Lender's consent; or

 

(D)         the occurrence of a default under any of the other terms, conditions
and covenants set forth in this Loan Agreement or any of the other Loan
Documents.

 

(4)         Except as specifically provided in this Section 12.02(b)
(Conditional Waiver of Collection of Imposition Deposits), the provisions of
Article 9 (Insurance) shall remain in full force and effect.

 

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