Exhibit 10.1

 

EXECUTION VERSION

 

CONSTRUCTION LOAN AGREEMENT

 

by and between

 

FMF MOREHEAD LLC, a Delaware limited liability company

 

and

 

PNC BANK, NATIONAL ASSOCIATION, a national banking association

 

 

Closing Date:  October 16, 2015

 

 

Kenilworth Avenue and East Morehead Street
Charlotte, Mecklenburg County, North Carolina

 

The Dillon Apartments

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

DEFINITIONS

1

 

1.1

Definitions

1

 

1.2

Interpretation

20

 

1.3

Accounting Principles

21

2.

AGREEMENT TO BORROW AND LEND

21

 

2.1

Agreement to Borrow and Lend

21

 

2.2

The Note

21

 

2.3

Term

22

 

2.4

Closing Fee

22

 

2.5

Extension Options

22

3.

LOAN INTEREST RATES, PAYMENTS AND FEES

22

 

3.1

Interest Rate Options

22

 

3.2

Loan Requests/Interest Periods

23

 

3.3

Default Interest and Late Payment Charge

23

 

3.4

LIBOR Unascertainable

24

 

3.5

Selection of Interest Rate Options

24

 

3.6

Payments

25

 

3.7

Interest Payment Dates

25

 

3.8

Voluntary Prepayments

25

 

3.9

Mandatory Principal Payments

25

 

3.10

Application Among Interest Rate Options

26

 

3.11

Additional Compensation in Certain Circumstances

26

4.

AFFIRMATIVE COVENANTS

27

 

4.1

Preservation of Existence, Etc.

27

 

4.2

Payment of Liabilities, Including Impositions

27

 

4.3

Compliance With Laws

28

 

4.4

Keeping of Records and Books of Account

28

 

4.5

Visitation Rights

28

 

4.6

Maintenance of Insurance

28

 

4.7

Notice

32

 

4.8

Equity Contribution

32

 

4.9

Performance of Obligations

32

 

4.10

Payment of Costs

32

 

4.11

Compliance With Construction and Development Documents and Other Agreements

32

 

4.12

Interest Rate Hedge

32

 

4.13

Title to Land and Improvements

32

 

4.14

Further Assurances

32

 

4.15

Estoppel Certificates

32

 

4.16

Construction and Completion of Improvements

33

 

4.17

Preparation of Plans

33

 

4.18

Changes in Construction and Development Documents

33

 

4.19

Reliance on Inspecting Architect

34

 

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4.20

Subcontractors

34

 

4.21

Purchase of Materials and Conditional Sales Contracts

34

 

4.22

Personal Property

34

 

4.23

Repairs

35

 

4.24

Inspection and Right to Stop Work

35

 

4.25

Protection Against Lien Claims

35

 

4.26

Plans and Benefit Arrangements

36

 

4.27

Security Deposits

36

 

4.28

Conditions Precedent

36

 

4.29

Compliance With Project Documents

36

 

4.30

Maintenance of Properties

36

 

4.31

Maintenance of Patents, Trademarks, Etc.

36

 

4.32

Use of Proceeds

36

 

4.33

Single Purpose Entity

36

 

4.34

Subguard Policy

37

 

4.35

Development and Management of the Project

37

 

4.36

Keepwell

37

 

4.37

Project Account and Permanent Financing Services; Tenant Lockbox

38

 

4.38

Anti-Money Laundering/International Trade Law Compliance

38

5.

NEGATIVE COVENANTS

38

 

5.1

Changes in Organizational Documents

38

 

5.2

Transfer of Land and Improvements

39

 

5.3

Change in Ownership

39

 

5.4

Liquidations, Mergers, Consolidations, Acquisitions

39

 

5.5

Breach of Construction and Development Documents

39

 

5.6

Judgments

39

 

5.7

Leasing of Premises

39

 

5.8

Changes in Construction Documents

39

 

5.9

Reserved

40

 

5.10

Continuation of or Change in Business

40

 

5.11

Liens

40

 

5.12

Value of Collateral

40

 

5.13

Transfer of Personalty on Land or Improvements

40

 

5.14

Disposition of Rents

40

 

5.15

Indebtedness

40

 

5.16

Dividends and Related Distributions

40

 

5.17

Materials and Fixtures

41

 

5.18

Pension Plans and Benefit Arrangements

41

 

5.19

Financial Covenants

42

6.

CLOSING AND DISBURSEMENT MATTERS

42

 

6.1

Procedures

42

 

6.2

Disbursement Amounts

44

 

6.3

Cost Information

46

 

6.4

Closing Conditions

46

 

6.5

First and Subsequent Disbursements

47

 

6.6

Retainage Disbursements

48

 

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6.7

Deposit of Funds by Borrower

50

 

6.8

Additional Security

50

7.

REPORTING REQUIREMENTS

50

 

7.1

Appraisals, Title Reports and Environmental Reports

50

 

7.2

Financial Reports

51

8.

REPRESENTATIONS AND WARRANTIES

51

 

8.1

Due Formation; Capacity

51

 

8.2

Power and Authority

52

 

8.3

Validity and Binding Effect

52

 

8.4

No Conflict

52

 

8.5

Material Contracts

52

 

8.6

No Potential Default or Event of Default; Compliance with Instruments

52

 

8.7

No Litigation or Investigations

53

 

8.8

Financial Statements and Other Information

53

 

8.9

Title Aspects

53

 

8.10

Zoning and Governmental Approvals

54

 

8.11

Plans

54

 

8.12

Utilities

54

 

8.13

Security Interests

54

 

8.14

Deed of Trust Liens

54

 

8.15

Compliance with Laws

55

 

8.16

Construction and Development Documents

55

 

8.17

Development Budget

55

 

8.18

Solvency

55

 

8.19

Pension Plans and Benefit Arrangements

55

 

8.20

Investment Companies; Regulated Entities

56

 

8.21

Use of Proceeds; Margin Stock

57

 

8.22

Full Disclosure

57

 

8.23

Impositions

57

 

8.24

Consents and Approvals

57

 

8.25

Anti-Money Laundering/International Trade Law Compliance

57

9.

DEFAULTS AND REMEDIES

58

 

9.1

Events of Default

58

 

9.2

Remedies

61

 

9.3

Notice of Sale

63

10.

MISCELLANEOUS

63

 

10.1

Modifications; No Implied Waivers; Cumulative Remedies; Writing Required

63

 

10.2

Reimbursement and Indemnification of Lender by Borrower; Impositions

64

 

10.3

Holidays

64

 

10.4

Funding by Branch, Subsidiary or Affiliate

65

 

10.5

Notices

65

 

10.6

Severability

66

 

10.7

Governing Law

66

 

10.8

Prior Understanding

66

 

10.9

Duration; Survival

66

 

10.10

Successors and Assigns

66

 

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10.11

Confidentiality

67

 

10.12

Counterparts

68

 

10.13

Lender’s Consent

68

 

10.14

Exceptions

68

 

10.15

Consent to Forum

68

 

10.16

No Third Parties Benefited

68

 

10.17

Authority to File Notices

68

 

10.18

Signs; Publicity

69

 

10.19

Interpretation

69

 

10.20

Status of Parties

69

 

10.21

Brokerage Fee

69

 

10.22

Dispute Resolution

69

 

10.23

Time of Essence

70

 

10.24

USA Patriot Act Notice

70

 

LIST OF SCHEDULES

 

Schedule 1.1(B)

Names, Addresses, Telephone Numbers, Facsimile Numbers and E-Mail Addresses of
Loan Parties and Lender

 

 

Schedule 4.20

List of Major Subcontracts

 

 

Schedule 6.1

Form of Construction Endorsement

 

LIST OF EXHIBITS

 

Exhibit 1.1(C)

Certificate of Debt Service Coverage Ratio

 

 

Exhibit 1.1(D)

Development Budget

 

 

Exhibit 2.5

Extension Notice

 

 

Exhibit 3.2

Interest Rate Request

 

 

Exhibit 4.28

Items to be Delivered

 

 

Exhibit 6.1

Form of Request for Disbursement

 

 

Exhibit 6.2

Off-Site Stored Materials Requirements

 

 

Exhibit 6.4(A)

Form of General Contractor’s Consent

 

 

Exhibit 6.4(B)

Form of Certificate of Architect and Engineer

 

 

Exhibit 6.4(C)

Form of Architect’s and Engineer’s Consent

 

 

Exhibit 7.2

Financial Reporting Requirements

 

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CONSTRUCTION LOAN AGREEMENT

 

THIS CONSTRUCTION LOAN AGREEMENT (together with the Exhibits, as the foregoing
may be from time to time amended, modified, extended, renewed, refinanced and/or
supplemented, referred to as this “Agreement”) is made as of October 16, 2015 by
and between FMF MOREHEAD LLC, a Delaware limited liability company (“Borrower”),
and PNC BANK, NATIONAL ASSOCIATION, a national banking association (“Lender”).

 

WITNESSETH:

 

WHEREAS, Borrower has requested that Lender provide a construction loan to
Borrower in a principal amount not to exceed $52,000,000 (each initially
capitalized term used in these recitals having the meaning ascribed to it in
Article 1 [Definitions] of this Agreement);

 

WHEREAS, the Loan shall be used to finance the costs of acquiring the Land and
constructing and equipping the Improvements; and

 

WHEREAS, Lender is willing to provide the Loan upon the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants
and agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:

 

1.             DEFINITIONS

 

1.1          Definitions.

 

In addition to words and terms defined elsewhere in this Agreement, the
following terms shall have the following meanings, respectively, unless the
context hereof clearly requires otherwise:

 

“Affiliate” as to any Person shall mean any other Person (i) which directly or
indirectly controls, is controlled by or is under common control with such
Person, (ii) which beneficially owns or holds 10% or more of any class of the
voting stock (or in the case of a Person which is not a corporation, more than
10% of the equity interest) of such Person, or (iii) 10% or more of the voting
stock (or in the case of a Person which is not a corporation, 10% or more of the
equity interest) of which is beneficially owned or held, directly or indirectly,
by such Person.  Control, as used in this definition, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, including the power to elect a majority of
the directors or trustees of a corporation or trust, as the case may be.

 

“Agreement” shall have the meaning assigned and ascribed to such term as set
forth in the preamble of this Agreement.

 

“Annual Statements” shall have the meaning assigned to that term in Section 8.8
[Financial Statements and Other Information] hereof.

 

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“Anti-Terrorism Laws” shall mean any Laws relating to terrorism, trade sanctions
programs and embargoes, import/export licensing, money laundering or bribery,
and any regulation, order, or directive promulgated, issued or enforced pursuant
to such Laws, all as amended, supplemented or replaced from time to time.

 

“Appraisal” shall mean a written appraisal prepared by an independent appraiser
engaged by Lender at Borrower’s sole cost and expense prepared in compliance
with all applicable regulatory requirements, being also subject to Lender’s
customary independent appraisal requirements.

 

“Appraised Value As-Is” shall mean the “As Is” dollar value of the Project, as
determined by an Appraisal of the Project.

 

“Appraised Value-As-Stabilized” shall mean, as of any date of determination, the
“As Stabilized” dollar value of the Project, as determined by an Appraisal of
the Project.

 

“Architect” shall mean DAS Architecture Inc., or such other architect as may be
expressly consented to or approved by Lender in writing prior to Borrower’s
engagement of such other architect.

 

“Architect’s Agreement” shall mean that certain AIA Document B101 2007 Standard
Form of Agreement Between Owner and Architect dated April 30, 2014 between
Borrower and Architect, as amended from time to time in writing by the parties
thereto with the written consent of Lender in accordance with the provisions of
this Agreement.

 

“Assignment of Construction and Development Documents” shall mean that certain
Assignment of Construction and Development Documents of even date herewith from
Borrower to Lender, as the same may be amended, replaced or supplemented from
time to time in writing by Borrower and Lender.

 

“Assignment of Leases and Rents” shall mean that certain Assignment of Leases
and Rents of even date herewith from Borrower to Lender, as the same may be
amended, replaced or supplemented from time to time in writing by Borrower and
Lender.

 

“Assignment of Management Agreement” shall mean an Assignment and Subordination
of Property Management Agreement to be entered into after the date hereof from
Borrower and Property Manager to Lender in form acceptable to Lender, as the
same may be amended, replaced or supplemented from time to time in writing by
Borrower and Lender.

 

“Authorized Officer” shall mean those Persons, designated by written notice to
Lender from Borrower, authorized to execute notices, reports and other documents
for the benefit of Borrower.  Borrower may amend such list of Persons from time
to time by giving written notice of such amendment to Lender.

 

“Base Rate” shall mean for any day a fluctuating per annum rate of interest
equal to the greatest of (i) the interest rate per annum announced from time to
time by Lender at its Principal Office as its then prime rate, which rate may
not be the lowest rate then being charged commercial borrowers by Lender,
(ii) the Federal Funds Open Rate plus 0.5% per annum, or

 

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(iii) the Daily LIBOR Rate plus 1.0%, so long as a Daily LIBOR Rate is offered,
ascertainable and not unlawful.  Any change in the Base Rate (or any component
thereof) will take effect as of the opening of the business on the day such
change occurs.

 

“Base Rate Option” shall have the meaning assigned to that term in
Section 3.1(a) [Base Rate Option] hereof.

 

“Base Rate Spread” shall mean one and one-half percent (1.50%).

 

“Benefit Arrangement” shall mean at any time an “employee benefit plan,” within
the meaning of Section 3(3) of ERISA, which is neither a Pension Plan nor a
Multiemployer Plan and which is maintained, sponsored or otherwise contributed
to by any member of the ERISA Group.

 

“Borrower” shall have the meaning assigned to such term as set forth in the
preamble of this Agreement.

 

“Borrowing Date” shall mean the date of the making of an advance of the Loan or
the renewal or conversion thereof at or to the same or a different Interest Rate
Option, which shall be a Business Day.

 

“Borrowing Tranche” shall mean specified portions of the Loan outstanding as
follows:  (i) any portion of the Loan to which a LIBOR Rate Option applies which
becomes subject to the same Interest Rate Option by reason of the selection,
conversion to or renewal thereof by Borrower and which have the same Interest
Period shall constitute one Borrowing Tranche; and (ii) all portions of the Loan
to which the Base Rate Option applies shall constitute one Borrowing Tranche.

 

“Business Day” shall mean any day other than a Saturday or Sunday or a legal
holiday on which commercial lenders are authorized or required to be closed for
business in Pittsburgh, Pennsylvania and, if the applicable Business Day relates
to any Borrowing Tranche to which the LIBOR Rate Option applies, such day must
also be a day on which dealings are carried on in the London interbank market.

 

“Category” shall have the meaning assigned to that term in Section 4.18 [Changes
in Construction and Development Documents] hereof.

 

“CEA” shall mean the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended
from time to time, and any successor statute.

 

“Certificate of Debt Service Coverage Ratio” shall mean the Certificate of Debt
Service Coverage Ratio in the form of Exhibit 1.1(C) hereto.

 

“Certificate of Occupancy” shall mean an unconditional (or conditional with
conditions acceptable to Lender) certificate of occupancy, together with any and
all other Governmental Approvals required for use and occupancy of all
Improvements.

 

“CFTC” shall mean the Commodity Futures Trading Commission.

 

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“Change In Law” shall mean the occurrence, after the date of this Agreement, of
any of the following: (a) the adoption or taking effect of any Law, (b) any
change in any Law or in the administration, interpretation or application
thereof by any Official Body or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of Law) by any Official
Body; provided however, for purposes of this Agreement, the Dodd-Frank Wall
Street Reform and Consumer Protection Act and all requests, guidelines and
directives in connection therewith are deemed to have gone into effect and
adopted after the date of this Agreement, and provided further, all requests,
rules, guidelines or directives promulgated by the Bank of International
Settlements, the Basel Committee on Banking Supervision (or any successor or
similar authority) or the United States financial regulatory authorities with
respect to capital adequacy shall be deemed to be a Change In Law regardless of
the date adopted, issued, promulgated or implemented.

 

“Closing Date” shall mean October 16, 2015, the date which is the effective date
of this Agreement.

 

“Closing Fee” shall mean a fee equal to $312,000 (equal to 0.60% of the maximum
principal amount of the Loan) and payable to Lender on the Closing Date.

 

“Collateral” shall mean the real estate encumbered by the Deed of Trust and all
other security pledged pursuant to this Agreement and the Collateral Documents
including, without limitation, any personal or real property.

 

“Collateral Documents” shall mean the Deed of Trust, the Assignment of Leases
and Rents, the Assignment of Development Agreement, the Assignment of Management
Agreement, the Financing Statements and any other documents securing the Loan,
as the same may from time to time be amended, renewed, extended or replaced.

 

“Completion Date” shall mean the date on which Completion of Construction
occurs, which date shall in no event be later than the Required Completion Date.

 

“Completion Guaranty” shall mean that certain Agreement of Guaranty and
Suretyship (Completion), of even date herewith, given by Guarantor to Lender, as
the same may be amended, replaced or supplemented from time to time in writing
by Guarantor with the prior written consent of Lender.

 

“Completion of Construction” shall mean that the conditions of paragraph (c) of
Section 6.6 [Retainage Disbursements] hereof are satisfied.

 

“Conditions for Extension” shall mean the provision by Borrower to Lender of
evidence satisfactory to Lender of Borrower’s compliance with the following:

 

(i)          no Event of Default shall have occurred and be continuing on the
date of the exercise of the Extension Option and on the first day of the
Extension Period, as evidenced by a certificate from Borrower to Lender
certifying the foregoing;

 

(ii)         Completion of Construction shall have been achieved prior to the
exercise of the first Extension Option, as evidenced by Certificates of
Occupancy for the

 

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Improvements and the entire Project shall be free of Liens and encumbrances
(except for Permitted Encumbrances);

 

(iii)        the Debt Service Coverage Ratio for the Project (a) as measured on
the last day of the calendar month preceding the date of exercise of the first
Extension Option for the three (3) calendar months then ended shall not be less
than 1.20 to 1.00 (“First Extension DSCR Test”) or (b) as measured on the last
day of the calendar month preceding the date of exercise of the second Extension
Option for the three (3) calendar months then ended shall not be less than 1.25
to 1.00 (“Second Extension DSCR Test”, and together with the First Extension
DSCR Test, as applicable, “Extension DSCR Test”), as evidenced by Borrower’s
delivery of the Certificate of Debt Service Coverage Ratio in the form of
Exhibit 1.1(C) attached hereto, together with delivery of its notice of election
to exercise the applicable Extension Option; provided, however, in the event
that Borrower shall fail to achieve the applicable Extension DSCR Test, Borrower
may make a permanent principal payment to Lender in an amount necessary to
reduce the outstanding principal balance of the Loan to the point where the
applicable Extension DSCR Test is satisfied, so long as the other Conditions for
Extension are met;

 

(iv)        prior to the exercise of the first Extension Option only, the
outstanding principal balance of the Loan shall not exceed  sixty-five percent
(65%) of the Appraised Value As-Is of the Project, as determined by an updated
Appraisal of the Project which shall be engaged by Lender at Borrower’s expense
and which shall be performed and dated no earlier than ninety (90) days prior to
the initial Expiration Date (“Extension LTV Test”); provided, however, in the
event that Borrower shall fail to achieve the Extension LTV Test, Borrower may
make a permanent principal payment to Lender in an amount necessary to reduce
the outstanding principal balance of the Loan to the point where the Extension
LTV Test is satisfied, so long as the other Conditions for Extension are met;

 

(v)         Guarantor shall be in compliance with the Guarantor Financial
Covenants as of the end of the most recent calendar quarter ending at least
forty-five (45) days prior to the commencement of the applicable Extension
Period, as evidenced by a certificate signed by an Authorized Officer on behalf
of Guarantor, in the form of Exhibit C to the Payment Guaranty, containing
calculations in sufficient detail to demonstrate compliance with all Guarantor
Financial Covenants; and

 

(vi)        together with its notice to exercise the applicable Extension
Option, Borrower shall pay, in the case of each applicable Extension Option, the
Extension Fee.

 

“Construction and Development Documents” shall mean the Construction Contracts,
the Architect’s Agreement, the Engineer’s Agreement, the Plans, the Governmental
Approvals and all other instruments, documents and rights relating to the
design, construction and development of the Improvements, together with all
exhibits and attachments thereto, as the same may be amended from time to time
in writing by the parties thereto with the written consent of Lender in
accordance with the provisions of this Agreement.

 

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“Construction Contracts” shall mean the General Construction Contract, together
with all exhibits and attachments thereto, as the same may be amended from time
to time in writing by the parties thereto with the written consent of Lender in
accordance with the provisions of this Agreement.

 

“Construction Loan Endorsement” shall mean a date down endorsement to the Title
Insurance Policy issued to Lender which extends the date of the Title Insurance
Policy or other evidence acceptable to Lender in its sole discretion (in
substantially the form attached hereto as Schedule 6.1 and made a part hereof)
evidencing that nothing has intervened to affect the validity or priority of the
Deed of Trust and insuring the Deed of Trust as a first lien on Borrower’s fee
simple interest in the property listed on Exhibit A to the Deed of Trust.

 

“Contractor” shall mean Cambridge Swinerton Builders, Inc. or such other
substitute, replacement or additional contractor as may be approved by Lender in
writing prior to Borrower’s engagement of such other substitute, replacement or
additional contractor.

 

“Covered Entity” shall mean (a) Borrower, each of Borrower’s subsidiaries, all
Guarantors and all pledgors of Collateral and (b) each Person that, directly or
indirectly, is in control of a Person described in clause (a) above.  For
purposes of this definition, control of a Person shall mean the direct or
indirect (x) ownership of, or power to vote, 25% or more of the issued and
outstanding equity interests having ordinary voting power for the election of
directors of such Person or other Persons performing similar functions for such
Person, or (y) power to direct or cause the direction of the management and
policies of such Person whether by ownership of equity interests, contract or
otherwise.

 

“Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by
Lender by dividing (x) the Published Rate by (y) a number equal to 1.00 minus
the LIBOR Reserve Percentage.  Notwithstanding the foregoing, if the Daily LIBOR
Rate as determined above would be less than zero (0.00), such rate shall be
deemed to be zero (0.00) for purposes of this Agreement.

 

“Debt Service” shall mean, for any period, as determined on an annualized basis,
the highest of (i) the actual interest expense and required principal payments
to be paid by Borrower during such period, or (ii) the sum of all principal and
interest payments that would be payable over a twelve (12)-month period with
respect to a loan in the amount outstanding from time to time during such period
based upon a thirty (30) year mortgage-style amortization schedule at a rate
equal to the higher of: (a) five and three-quarter percent (5.75%) or (b) two
percent (2.0%) above the Treasury Rate.

 

“Debt Service Coverage Ratio” shall mean, as of any date of determination, the
ratio of Net Operating Income (for the three (3) months prior to the date of
determination, annualized), to Debt Service for the same period, also
annualized.

 

“Deed of Trust” shall mean that certain Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing of even date herewith from
Borrower as grantor to the trustee set forth therein for the benefit of Lender
for the purpose of securing the Obligations

 

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evidenced by the Note, as the same may be amended, replaced or supplemented from
time to time in writing with the prior written consent of Lender.

 

“Default Rate” shall mean interest at a rate per annum that is three percent
(3.0%) (based upon a year of 360 days and actual days elapsed) in excess of the
rate or rates otherwise in effect under this Agreement.

 

“Development Budget” shall mean the Development Budget attached to this
Agreement as Exhibit 1.1(D), as the same may be amended from time to time in
writing by Borrower and approved by Lender in accordance with Section 6.3 [Cost
Information] hereof.

 

“Disbursement Request” shall mean any request for proceeds of the Loan in
accordance with Article 6 [Closing and Disbursement Matters] hereof.

 

“Dollar,” “Dollars,” “U.S. Dollar” and the symbol “$” shall mean lawful money of
the United States of America.

 

“Effective Date” shall mean the date indicated in a document or agreement to be
the date on which such document or agreement becomes effective, or, if there is
no such indication, the date of execution of such document or agreement.

 

“Eligibility Date” shall mean, with respect to each Borrower and Guarantor and
each Swap, the date on which this Agreement or any Loan Document becomes
effective with respect to such Swap (for the avoidance of doubt, the Eligibility
Date shall be the Effective Date of such Swap if this Agreement or any Loan
Document is then in effect with respect to such Borrower or Guarantor, and
otherwise it shall be the Effective Date of this Agreement and/or such Loan
Document(s) to which such Borrower or Guarantor is a party).

 

“Eligible Contract Participant” shall mean an “eligible contract participant” as
defined in the CEA and regulations thereunder.

 

“Engineer” shall mean Land Design, Inc., or such other engineer as may be
expressly consented to or approved by Lender in writing prior to Borrower’s
engagement of such other engineer.

 

“Engineer’s Agreement” shall mean that certain Professional Services Contract
dated May 8, 2013 between Forestar (USA) Real Estate Group Inc. and Engineer and
assigned by Forestar (USA) Real Estate Group Inc. to Borrower, as the same may
be amended from time to time in writing by the parties thereto with the written
consent of Lender in accordance with the provisions of this Agreement.

 

“Environmental Indemnity Agreement” shall mean that certain Environmental
Indemnity Agreement of even date herewith from the Loan Parties, on a joint and
several basis to Lender, as the same may be amended, replaced or supplemented
from time to time in writing by the parties thereto with the prior written
consent of Lender.

 

“Environmental Laws” shall have the meaning assigned to such term in the
Environmental Indemnity Agreement.

 

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“Environmental Reports” shall mean that certain Phase I Environmental Site
Assessment Report dated September 04, 2015, prepared by ECS Carolinas, LLP, ECS
Project No. 08-11135, or any other written report of the review and inspection
of the Project prepared by an environmental consultant acceptable to Lender and
engaged by Borrower (or by Lender pursuant to Section 7.1(c) [Environmental
Reports] hereof) at Borrower’s sole cost and expense, together with a reliance
letter for each Environmental Report satisfactory to Lender stating that Lender
may rely on such report in making the Loan, in all cases together with all
annexes, schedules, exhibits and attachments thereto.

 

“Equity Contribution” shall mean Borrower’s contribution of no less than
Twenty-Nine Million Five Hundred Seventy-Three Thousand and 00/100 Dollars
($29,573,000) in the aggregate (which amount includes land equity value in the
amount of $11,628,116 plus certain other costs and expenses previously incurred
by Borrower relating to pre-construction work) toward the total costs of the
Project based on information set forth on the Development Budget.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.

 

“ERISA Group” shall mean, at any time, Borrower and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control and all other entities which, together with Borrower, are
treated as a single employer under Section 414 of the Internal Revenue Code.

 

“Event of Default” or “Events of Default” shall have the meaning assigned to
those terms in Section 9.1 [Events of Default] hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Excluded Hedge Liability or Liabilities” shall mean, with respect to each
Borrower and Guarantor, each of its Swap Obligations if, and only to the extent
that, all or any portion of this Agreement or any Loan Document that relates to
such Swap Obligation is or becomes illegal under the CEA, or any rule,
regulation or order of the CFTC, solely by virtue of such Borrower’s and/or
Guarantor’s failure to qualify as an Eligible Contract Participant on the
Eligibility Date for such Swap. Notwithstanding anything to the contrary
contained in the foregoing or in any other provision of this Agreement or any
Loan Document, the foregoing is subject to the following provisos: (a) if a Swap
Obligation arises under a master agreement governing more than one Swap, this
definition shall apply only to the portion of such Swap Obligation that is
attributable to Swaps for which such guaranty or security interest is or becomes
illegal under the CEA, or any rule, regulations or order of the CFTC, solely as
a result of the failure by such Borrower or Guarantor for any reason to qualify
as an Eligible Contract Participant on the Eligibility Date for such Swap;
(b) if a guarantee of a Swap Obligation would cause such obligation to be an
Excluded Hedge Liability but the grant of a security interest would not cause
such obligation to be an Excluded Hedge Liability, such Swap Obligation shall
constitute an Excluded Hedge Liability for purposes of the guaranty but not for
purposes of the grant of the security interest; and (c) if there is more than
one Borrower or Guarantor executing this Agreement or the Loan Documents and a
Swap Obligation would be an Excluded Hedge Liability with respect to one or

 

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more of such Persons, but not all of them, this definition of Excluded Hedge
Liability or Liabilities with respect to each such Person shall only be deemed
applicable to (i) the particular Swap Obligations that constitute Excluded Hedge
Liabilities with respect to such Person, and (ii) the particular Person with
respect to which such Swap Obligations constitute Excluded Hedge Liabilities.

 

“Exhibits” shall mean any one or more of those schedules and exhibits attached
hereto and made a part hereof.

 

“Expiration Date” shall mean the earlier of: (1) October 16, 2019, as the same
may be extended pursuant to Section 2.5 [Extension Options], or (2) the date
upon which the Loan is accelerated pursuant to this Agreement.

 

“Extension Fee” shall mean a fee equal to 0.15% of the outstanding principal
amount of the Loan on the date on which an Extension Option is exercised by
Borrower, which fee shall be paid on the Extension Option Exercise Date and
shall be refunded in full to Borrower if Lender determines that the Conditions
for Extension were not met.

 

“Extension Option” shall have the meaning set forth in Section 2.5 [Extension
Options] hereof.

 

“Extension Option Exercise Date” shall mean the date on which Borrower exercises
the applicable Extension Option by providing Lender with written notice of its
election to extend the Expiration Date in accordance with Section 2.5 [Extension
Options] hereof.

 

“Extension Period” shall mean each one (1) year period commencing on the
applicable Expiration Date, as set forth in Section 2.5 [Extension Options].

 

“Federal Funds Open Rate” shall mean, for any day, the rate per annum (based on
a year of 360 days and actual days elapsed) which is the daily federal funds
open rate as quoted by ICAP North America, Inc. (or any successor) as set forth
on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on
such other substitute Bloomberg Screen that displays such rate), or as set forth
on such other recognized electronic source used for the purpose of displaying
such rate as selected by Lender (an “Alternate Source”) or if such rate for such
day does not appear on the Bloomberg Screen BTMM (or any substitute screen) or
on any Alternate Source, or if there shall at any time, for any reason, no
longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate
Source, a comparable replacement rate determined by Lender at such time (which
determination shall be conclusive absent manifest error); provided however, that
if such day is not a Business Day, the Federal Funds Open Rate for such day
shall be the “open” rate on the immediately preceding Business Day.  The rate of
interest charged shall be adjusted as of each Business Day based on changes in
the Federal Funds Open Rate without notice to Borrower.

 

“Financing Statements” shall mean the financing statements which Lender may from
time to time require in order to perfect the security interest granted to Lender
in and to the Collateral described in the Deed of Trust, the other Collateral
Documents and this Agreement pursuant to the applicable Uniform Commercial Code.

 

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“First Disbursement” shall mean the first disbursement of Loan proceeds, to be
made upon the fulfillment of the conditions set forth in Section 6.4 [First
Disbursement] hereof.

 

“GAAP” shall mean generally accepted accounting principles as are in effect from
time to time, subject to the provisions of Section 1.3 [Accounting Principles]
hereof, and applied on a consistent basis both as to classification of items and
amounts.

 

“General Construction Contract” shall mean that certain AIA Document A 102 2007
Standard Form of Agreement Between Owner and Contractor Where the Basis of
Payment is the Cost of Work Plus a Fee with a Guaranteed Maximum Price, dated
June 5, 2015, between Borrower and the Contractor, together with all exhibits
and attachments thereto, as the same may be amended from time to time in writing
by the parties thereto with the written consent of Lender in accordance with the
provisions of this Agreement.

 

“Governmental Approvals” shall mean all consents, licenses, permits and all
other authorizations or approvals required by Official Bodies, including,
without limitation, all agreements entered into with any Official Body, with
respect to the development, construction, completion, use and occupancy of the
Land and Improvements.

 

“Guaranties” shall mean a collective reference to one or more of (i) the
Completion Guaranty and (ii) the Payment Guaranty.

 

“Guarantor” shall mean the Forestar Group Inc., a Delaware corporation.

 

“Guarantor Financial Covenants” shall mean the financial covenants set forth in
Section 9 of the Payment Guaranty.

 

“Guaranty” of any Person shall mean any obligation of such Person guaranteeing
or in effect guaranteeing any liability or obligation of any other Person in any
manner, whether directly or indirectly, including any agreement to indemnify or
hold harmless any other Person, any performance bond or other suretyship
arrangement and any other form of assurance against loss, except endorsement of
negotiable or other instruments for deposit or collection in the ordinary course
of business.

 

“Historical Statements” shall have the meaning assigned to that term in
Section 8.8 [Financial Statements and Other Information] hereof.

 

“Impositions” shall mean all (i) real estate and personal property taxes and
other taxes and assessments, water and sewer rates and charges and all other
governmental charges and any interest or costs or penalties with respect thereto
and charges for any easement or agreement maintained for the benefit of the Land
and Improvements, general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever which at any time may be assessed,
levied or imposed upon the Land or the Improvements, or the rent or income
received therefrom, or any use or occupancy thereof, and (ii) other taxes,
assessments, fees and governmental charges levied, imposed or assessed upon or
against Borrower  or any of its properties.

 

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“Improvements” shall mean the construction and equipping of a 379-unit apartment
complex in Charlotte, Mecklenburg County, North Carolina, to be made in
accordance with the Plans as provided in this Agreement, and all site, highway,
access, parking, utility, drainage and other improvements required in accordance
with the Governmental Approvals.

 

“Indebtedness” shall mean, as to any Person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such Person for or in respect of:  (i) borrowed money,
(ii) amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations (contingent or
otherwise) under any letter of credit, currency swap agreement, interest rate
swap, cap, collar or floor agreement or other interest rate management device,
(iv) any other transaction (including without limitation forward sale or
purchase agreements, capitalized leases and conditional sales agreements) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements (but not including trade payables
and accrued expenses incurred in the ordinary course of business which are not
represented by a promissory note or other evidence of indebtedness and which are
not more than thirty (30) days past due), or (v) any Guaranty.

 

“Initial Expiration Date” shall mean October 16, 2019.

 

“Insolvency Proceeding” shall mean, with respect to any Person, (i) a case, an
action or proceeding with respect to such Person (x) before any court or any
other Official Body under any bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, or (y) for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator-conservator (or
similar official) of any such Person or otherwise relating to the liquidation,
dissolution, winding-up or relief of such Person, or (ii) any general assignment
for the benefit of creditors, composition, marshaling of assets of creditors, or
other similar arrangement in respect of such Person’s creditors generally or any
substantial portion of its creditors undertaken under any Law.

 

“Inspecting Architect” shall mean EMG, Inc., or such other Person or entity as
Lender may designate from time to time (i) to inspect the construction of the
Improvements, (ii) to review the Plans, drawings, sketches, specifications,
reports, modifications, change orders and the like, (iii) to certify that the
construction of the Improvements has been completed in accordance with the
Plans, and (iv) to perform other related services with respect thereto for the
benefit of Lender.

 

“Interest Payment Date” shall mean each date specified for the payment of
interest in Section 3.7 [Interest Payment Dates] hereof.

 

“Interest Period” shall mean the period of time selected by the Borrower in
connection with (and to apply to) any election permitted hereunder by the
Borrower to have any portion of the Loan bear interest under the LIBOR Rate
Option.  Subject to the last sentence of this definition, such period shall be
one, two, or three Months (or such other period as Lender in its discretion may
allow).  Such Interest Period shall commence on the effective date of such
Interest Rate Option, which shall be (i) the Borrowing Date if the Borrower is
requesting a new advance of the Loan, or (ii) the date of renewal of or
conversion to the LIBOR Rate Option if the

 

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Borrower is renewing or converting to the LIBOR Rate Option applicable to any
outstanding advance of the Loan.  Notwithstanding the second sentence hereof:
(A) any Interest Period which would otherwise end on a date which is not a
Business Day shall be extended to the next succeeding Business Day unless such
Business Day falls in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, and (B) the Borrower shall
not select, convert to or renew an Interest Period for any portion of the Loan
that would end after the Expiration Date.

 

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered
into by the Loan Parties (together with any schedules, confirmations and other
documents exchanged between the parties relating thereto) in order to provide
protection to, or minimize the impact upon, Borrower and/or any Guarantor of
increasing floating rates of interest applicable to Indebtedness.

 

“Interest Rate Option” shall mean the LIBOR Rate Option or the Base Rate Option.

 

“Interest Rate Request” shall have the meaning assigned to such term in
Section 3.2 [Loan Requests/Interest Periods] hereof.

 

“Interim Statements” shall have the meaning assigned and ascribed to such term
as set forth in Section 8.8 [Financial Statements and Other Information] hereof.

 

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as the
same may be amended or supplemented from time to time, and any successor statute
of similar import, and the rules and regulations thereunder, as from time to
time in effect.

 

“IRS” shall mean the Internal Revenue Service.

 

“Land” shall mean the real property upon which the Project is to be constructed
and which is owned in fee simple by Borrower consisting of approximately 2.5
acres and identified in Exhibit A to the Deed of Trust, together with all
rights, title and interests of Borrower in and to all easements, rights and
privileges benefiting the Land.

 

“Law” shall mean any law(s) (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling,
order, executive order, injunction, writ, decree, bond, judgment, authorization
or approval, lien or award of or any settlement arrangement, by agreement,
consent or otherwise, with any Official Body, foreign or domestic.

 

“Leases” shall have the meaning assigned to such term in the Deed of Trust.

 

“LIBOR Rate” shall mean, with respect to any portion of the Loan comprising any
Borrowing Tranche to which the LIBOR Rate Option applies for any Interest
Period, the interest rate per annum determined by Lender by dividing (the
resulting quotient rounded upwards, if necessary, to the nearest 1/100th of 1%
per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which US dollar deposits
are offered by leading banks in the London interbank deposit market), or the
rate which is quoted by another source selected by Lender as an authorized
information vendor for the

 

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purpose of displaying rates at which US dollar deposits are offered by leading
banks in the London interbank deposit market (for purposes of this definition,
an “Alternate Source”), at approximately 11:00 a.m., London time, two
(2) Business Days prior to the commencement of such Interest Period as the
London interbank offered rate for U.S. Dollars for an amount comparable to such
Borrowing Tranche and having a borrowing date and a maturity comparable to such
Interest Period (or if there shall at any time, for any reason, no longer exist
a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a
comparable replacement rate determined by Lender at such time (which
determination shall be conclusive absent manifest error)), by (ii) a number
equal to 1.00 minus the LIBOR Reserve Percentage.  Notwithstanding the
foregoing, if the LIBOR Rate as determined under any method above would be less
than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of
this Agreement.

 

The LIBOR Rate shall be adjusted with respect to any Loan to which the LIBOR
Rate Option applies that is outstanding on the effective date of any change in
the LIBOR Reserve Percentage as of such effective date.  Lender shall give
prompt notice to the Borrower of the LIBOR Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.

 

“LIBOR Rate Option” shall have the meaning assigned to that term in
Section 3.1(b) [LIBOR Rate Option] hereof.

 

“LIBOR Reserve Percentage” shall mean as of any day the maximum percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including, without limitation, supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”).

 

“LIBOR Spread” shall mean two and one-fifth percent (2.20%).

 

“Lien” or “Liens” shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any
conditional sale or title retention arrangement, and any assignment, deposit
arrangement or lease intended as, or having the effect of, security and any
filed financing statement or other notice of any of the foregoing (whether or
not a lien or other encumbrance is created or exists at the time of the filing).

 

“Loan” shall mean the loan to be made by Lender pursuant to this Agreement in
the maximum principal amount, not to exceed $52,000,000, as said Loan may from
time to time be amended, modified, extended, renewed, refinanced or supplemented
in accordance herewith.

 

“Loan Document” and “Loan Documents” shall mean one or more of the following: 
this Agreement, the Note, the Guaranties, the Collateral Documents, any
PNC-Provided Interest Rate Hedge, the Environmental Indemnity Agreement, and all
other documents, instruments, certificates and agreements executed in connection
with the Loan and any PNC-Provided Interest Rate Hedge, as the same may be
amended, replaced or supplemented from time to time in accordance herewith or
therewith.

 

“Loan Parties” shall mean Borrower and Guarantor.

 

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“Major Subcontractors” shall mean all subcontractors under Major Subcontracts.

 

“Major Subcontracts” shall mean each subcontract under the Construction
Contracts which provides for aggregate payments in excess of $1,500,000.

 

“Management Agreement” shall mean that certain Management Agreement, to be
entered into between Borrower and Property Manager relating to the furnishing of
property management services by Property Manager with respect to the Project,
and all exhibits and attachments thereto, as the same may be amended from time
to time in writing by the parties thereto with the consent of Lender, such
consent not to be unreasonably withheld or delayed, in accordance with the
provisions of this Agreement.

 

“Mandatory Principal Payments” shall mean any principal payment required
pursuant to Section 3.9 [Mandatory Principal Payments] hereof.

 

“Material Adverse Change” shall mean any set of circumstances or events which
(i) has or could reasonably be expected to have any material adverse effect
whatsoever upon the validity or enforceability of this Agreement or any other
Loan Document, (ii) is or could reasonably be expected to be material and
adverse to the Project or to the business, properties, assets, financial
condition, results of operations of any Loan Party (iii) impairs materially or
could reasonably be expected to impair materially the ability of any Loan Party
to duly and punctually pay its Indebtedness and/or perform its other
obligations, or (iv) impairs materially or could reasonably be expected to
impair materially the ability of Lender, to the extent permitted, to enforce its
legal and/or contractual rights and remedies pursuant to this Agreement or any
other Loan Document.

 

“Minor Change Orders” shall mean changes in the Improvements, the Plans or the
other Construction and Development Documents which do not modify the scope or
overall quality of the Project or involve extensions of time of the Required
Completion Date under the General Construction Contract and the performance of
which costs less than $300,000 each and less than $1,500,000 in the aggregate.

 

“Month” shall mean, with respect to an Interest Period, the interval between the
days in consecutive calendar months numerically corresponding to the first (1st)
day of such an Interest Period.  If any Interest Period begins on a day of a
calendar month for which there is no numerically corresponding day in the month
in which such an Interest Period is to end, the final day of such an Interest
Period shall be deemed to end on the last Business Day of the final month
thereof.

 

“Moody’s” shall mean Moody’s Investors Service, Inc. (or successor thereto).

 

“Multiemployer Plan” shall mean any employee benefit plan which is a
“multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to
which the Loan Parties or any member of the ERISA Group is then making or
accruing an obligation to make contributions or, within the preceding five
(5) Pension Plan years, has made or had an obligation to make such
contributions.

 

“Multiple Employer Plan” shall mean a Pension Plan which has two (2) or more
contributing sponsors (including the Loan Parties or any member of the ERISA
Group) at least

 

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two (2) of whom are not under common control, as such a plan is described in
Sections 4063 and 4064 of ERISA.

 

“Net Operating Income” or “NOI” shall be calculated on an annualized basis and,
except as otherwise set forth below, based on the operating history for the
three (3) month period immediately prior to the date of determination and shall
mean, the sum of (A) (i) actual annualized rental income from tenants that are
paying rent under Leases which are not in default for more than thirty (30)
days; (ii) annualized rental income from tenants in occupancy under Leases whose
actual rent payments are scheduled to commence within thirty (30) days after the
date of determination and which are not in default; and (iii) actual other
income based on the prior three (3) months’ annualized operating history of the
Project, not to exceed the “other income” utilized in the Appraisal, less
(B) (i) the greatest of (x) Pro Forma Operating Expenses, (y) annualized
operating expenses (after pro ration of real estate taxes and insurance
expenses) based on the three (3) month period prior to the date of
determination, or (z) actual operating expenses for the twelve (12) month period
prior to the date of determination; (ii) an assumed capital expenditure reserve
of $200.00 per residential apartment unit per annum and $0.25 per square foot
for any retail space per annum; (iii) the greater of the actual management fees
or a fee calculated at three percent (3%) of effective gross income; (iv) the
greater of actual vacancy or five percent (5%) of gross potential rental income;
(v) the amount of any rental concessions; and (vi) other items as deemed
reasonably appropriate by Lender.

 

“Non-Qualifying Party” shall mean any Borrower or any Guarantor that on the
applicable Eligibility Date fails for any reason to qualify as an Eligible
Contract Participant.

 

“Note” shall mean that certain Deed of Trust Note of even date herewith, given
by Borrower to Lender in the principal face amount of the Loan, together with
all amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.

 

“Notice” shall have the meaning assigned to that term in Section 10.5 [Notices]
hereof.

 

“Obligation” shall mean any obligation, indebtedness or liability of any of the
Loan Parties to Lender, howsoever created, arising or evidenced, whether direct
or indirect, absolute or contingent, secured or unsecured, whether as guarantor
or surety, and now or hereafter existing, or due or to become due, under or in
connection with this Agreement, the Note or any other Loan Document, including
without limitation any post-petition interest and/or advances.  Obligations
shall include the liabilities to Lender with respect to any Swap Obligation in
connection with the Loan, however, notwithstanding anything to the contrary
contained herein, the Obligations shall not include any Excluded Hedge
Liabilities.

 

“Official Body” shall mean any nation or government, any state or other
political subdivision thereof or any entity, authority, agency, division or
department exercising the executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to a government
(including any supra-national bodies such as the European Union or the European
Central Bank) and any group or body charged with setting financial accounting or
regulatory capital rules or standards (including, without limitation, the
Financial Accounting Standards Board, the Bank for International Settlements or
the Basel Committee on Banking Supervision or any successor or similar authority
to any of the foregoing).

 

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“Organizational Documents” shall mean a Loan Party’s respective limited
liability company agreement, partnership agreement, partnership certificate,
articles of incorporation, bylaws, certificate of incorporation, articles of
organization, operating agreement and the other formation documents of a Loan
Party and all amendments thereto.

 

“Payment Guaranty” shall mean that certain Agreement of Guaranty and Suretyship
(Payment), of even date herewith, given by Guarantor on a joint and several
basis to Lender, as the same may be amended, replaced or supplemented from time
to time in writing by Guarantor with the prior written consent of Lender.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA or any successor.

 

“Pension Plan” shall mean at any time an employee pension benefit plan
(including a Multiple Employer Plan but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject to the minimum funding standards
under Section 412 of the Internal Revenue Code and either (i) is maintained by
any member of the ERISA Group for employees of any member of the ERISA Group, or
(ii) has at any time within the preceding five (5) years been maintained by any
entity which was at such time a member of the ERISA Group for employees of any
entity which was at such time a member of the ERISA Group.

 

“Permitted Encumbrances” shall mean:

 

(i)            the Liens, assignments and security interests in favor of Lender
pursuant hereto and to the Collateral Documents;

 

(ii)           easements, restrictions, encumbrances and other matters described
in and permitted to exist under the terms of the Deed of Trust or any Lien
described in the second sentence of Section 4.25 [Protection Against Lien
Claims] of this Agreement which is discharged, by bond or otherwise, within
fifteen (15) Business Days of the date of filing;

 

(iii)          such other matters as may be expressly consented to in writing by
Lender; and

 

(iv)          real estate taxes on the Land and Improvements not yet due and
payable.

 

“Person” shall mean any individual, corporation, partnership (whether general or
limited), limited liability company, limited liability partnership, association,
joint-stock company, trust, unincorporated organization, joint venture,
government or political subdivision or agency thereof, or any other entity.

 

“Plans” shall mean the final plans and specifications for the construction and
equipping of the Improvements, including all schematic and working drawings and
designations of all manufacturers and model numbers of all equipment, and any
Improvements to be constructed off of the Land, as approved by all necessary
parties in accordance with this Agreement and as the same may be amended from
time to time with the written consent of Lender if required in accordance with
this Agreement.

 

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“PNC-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by Lender to Borrower and which meets the following requirements: such
PNC-Provided Interest Rate Hedge (i) is documented in a standard International
Swap Dealer Association Agreement, (ii) provides for the method of calculating
the reimbursable amount of the provider’s credit exposure in a reasonable and
customary manner, and (iii) is entered into for hedging (rather than
speculative) purposes.  If Borrower elects to obtain a PNC-Provided Interest
Rate Hedge, the liabilities of Borrower to Lender thereunder, (“Hedge
Liabilities”) shall be “Obligations” hereunder, guaranteed Obligations under the
Payment Guaranty and secured obligations under the Deed of Trust and other
Collateral Documents and otherwise treated as Obligations for purposes of each
of the other Loan Documents.  The Liens securing the Hedge Liabilities shall be
pari passu with the Liens securing all other Obligations under this Agreement
and the other Loan Documents.

 

“Potential Default” shall mean an event or condition which, with the passage of
time, the giving of notice, or a determination by Lender as set forth in the
Loan Documents, or any combination of the foregoing, would constitute an Event
of Default.

 

“Pre-Closing Debt Service Coverage Requirement” shall mean the ratio of Pro
Forma Net Operating Income to Pro Forma Debt Service of at least 1.20 to 1.00.

 

“Principal Office” shall mean the main banking office of Lender in Pittsburgh,
Pennsylvania, or such other office designated by Lender.

 

“Prior Security Interest” shall mean a valid and enforceable perfected
first-priority security interest under the Uniform Commercial Code in the
Collateral which is subject only to Liens for taxes not yet due and payable to
the extent such prospective tax payments are given priority by statute.

 

“Pro Forma Debt Service” shall mean the sum of all principal and interest
payments that would be payable over a twelve (12)-month period with respect to a
loan in the maximum principal amount of the Loan based upon a thirty (30) year
mortgage-style amortization schedule at a rate equal to five and three-quarter
percent (5.75%).

 

“Pro Forma Net Operating Income” shall mean the annualized pro forma, stabilized
net operating income as determined by Lender prior to the Closing Date.

 

“Pro Forma Operating Expenses” shall mean the respective annual stabilized
operating expenses for the Project as determined by Lender prior to the Closing
Date or as otherwise set forth in the annual budget for the Project prepared by
Borrower and approved by Lender, which approval shall not be unreasonably
withheld.

 

“Prohibited Transaction” shall mean any prohibited transaction as defined in
Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which
neither an individual nor a class exemption has been issued by the United States
Department of Labor.

 

“Project” shall mean the Land and Improvements.

 

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“Project Account” shall mean the account of Borrower maintained with Lender or
another financial institution for the purpose of disbursement of funds with
respect to the Loan.

 

“Property Manager” shall mean Greystar and/or its affiliates or such other
property manager as may be reasonably approved by Lender prior to Borrower’s
engagement of such other property manager.

 

“Published Rate” shall mean the rate of interest published each Business Day in
The Wall Street Journal “Money Rates” listing under the caption “London
Interbank Offered Rates” for a one month period (or, if no such rate is
published therein for any reason, then the Published Rate shall be the
eurodollar rate for a one month period as published in another publication
selected by Lender).

 

“Qualified ECP Loan Party” shall mean each Borrower or Guarantor that on the
Eligibility Date is (a) a corporation, partnership, proprietorship,
organization, trust, or other entity other than a “commodity pool” as defined in
Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets
exceeding $10,000,000 or (b) an Eligible Contract Participant that can cause
another person to qualify as an Eligible Contract Participant on the Eligibility
Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise
providing a “letter of credit or keepwell, support, or other agreement” for
purposes of Section 1a(18)(A)(v)(II) of the CEA.

 

“Regulated Substances” shall have the meaning assigned to such term in the
Environmental Indemnity Agreement.

 

“Regulation U” shall mean Regulation U, T or X as promulgated by the Board of
Governors of the Federal Reserve System, as amended from time to time.

 

“Reportable Compliance Event” shall mean that any Covered Entity becomes a
Sanctioned Person, or is charged by indictment, criminal complaint or similar
charging instrument, arraigned, or custodially detained in connection with any
Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has
knowledge of facts or circumstances to the effect that it is reasonably likely
that any aspect of its operations is in actual or probable violation of any Anti
Terrorism Law.

 

“Reportable Event” shall mean a reportable event described in Section 4043 of
ERISA and regulations thereunder with respect to a Pension Plan or Multiemployer
Plan.

 

“Required Completion Date” shall mean October 16, 2018.

 

“Retainage” shall mean the retainage with respect to certain construction costs
of the Improvements as provided in Section 6.6 [Retainage Disbursements] hereof.

 

“Sanctioned Country” shall mean a country subject to a sanctions program
maintained under any Anti Terrorism Law.

 

“Sanctioned Person” shall mean any individual person, group, regime, entity or
thing listed or otherwise recognized as a specially designated, prohibited,
sanctioned or debarred

 

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person, group, regime, entity or thing, or subject to any limitations or
prohibitions (including but not limited to the blocking of property or rejection
of transactions), under any Anti Terrorism Law.

 

“Solvent” shall mean, with respect to any Person on a particular date, that on
such date (i) the fair value of the property of such Person is greater than the
total amount of liabilities, including, without limitation, contingent
liabilities, of such Person, (ii) the present fair market value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent liabilities and other commitments as they
mature or as they otherwise are due and payable in the normal course of
business, and (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay such debts
and liabilities as they mature.

 

“Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a division of
the McGraw-Hill Companies, Inc. (or successor thereto).

 

“Standard Lease Form” shall mean the standard form of lease to be used for
residential tenants of the Project submitted to and approved by Lender in
writing.

 

“Subguard Policy” shall mean the subcontractor default insurance policy
reasonably approved by Lender to be maintained by the Contractor at all times
prior to the Completion Date.

 

“Subsequent Disbursement” shall have the meaning assigned to such term in
Section 6.5 [Subsequent Disbursements] hereof.

 

“Swap” shall mean any “swap” as defined in Section 1a(47) of the CEA and
regulations thereunder, other than (a) a swap entered into on, or subject to the
rules of, a board of trade designated as a contract market under Section 5 of
the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation
32.3(a).

 

“Swap Obligation” means any obligation to pay or perform under any agreement,
contract or transaction that constitutes a Swap.

 

“Title Insurance Policy” shall mean an ALTA lender’s policy of title insurance
(ALTA Loan Title Insurance Policy 6/17/06), or such other form to be designated
by Lender, issued by a title insurance company approved by Lender, insuring the
first priority of the Lien of the Deed of Trust in the principal sum secured
thereby, and such portion thereof as shall be advanced from time to time, as a
first lien upon Borrower’s fee simple interest in the Land and Improvements, and
all appurtenances thereto (including such easements and appurtenances as may be
required by Lender) and which shall provide coverage against mechanics’ lien
claims for all disbursements of the Loan up to and through the latest
disbursement, subject only to such exceptions as may be approved in writing by
Lender, with endorsements thereto as to such matters as Lender may designate,
including, without limitation, an ALTA Form 9 endorsement, or other
comprehensive endorsement, and endorsements with respect to contiguity, access,
encroachments (if applicable), lack of reversionary interests, compliance with
subdivision ordinances and subordinate matters and other special endorsements
and affirmative coverages as

 

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Lender may reasonably require; an endorsement insuring contiguity of the Land
with all easements and public roads, and together with such reinsurance and
direct access agreements as Lender, in its discretion, shall reasonably require;
if the Title Insurance Policy is subject to any so called “pending disbursement
endorsement,” the amount of the disbursements referred to in said endorsement
shall be not less than the amount of Loan proceeds actually disbursed (and upon
each disbursement of Loan proceeds Lender shall receive the Construction Loan
Endorsement), all in form and substance satisfactory to Lender.

 

“Treasury Rate” shall mean the “weekly average yield” on United States Treasury
Securities adjusted to a constant maturity of ten (10) years, as published in
the Federal Reserve Statistical Release (“Release”) seven (7) Business Days
prior to the date of determination, provided that, if the Release is no longer
published, a reasonable equivalent substitute therefor as may be selected by
Lender in its discretion shall be utilized, and further provided that if the
Release is not published seven (7) Business Days prior to the date of
determination, then the Release as published on the most recent date prior
thereto shall be utilized.

 

“Uniform Commercial Code” shall mean the Uniform Commercial Code as in effect in
each applicable jurisdiction.

 

1.2          Interpretation.  Unless the context of this Agreement otherwise
clearly requires, the following rules of construction shall apply to this
Agreement and each of the other Loan Documents:

 

(a)           Number; Inclusion.  References to the plural include the singular,
the plural, the part and the whole; “or” has the inclusive meaning represented
by the phrase “and/or”; and “including” has the meaning represented by the
phrase “including, without limitation,”;

 

(b)           Determination.  References to “determination” of or by Lender
shall be deemed to include good-faith estimates by Lender (in the case of
quantitative determinations), and good-faith beliefs by Lender (in the case of
qualitative determinations), and such determination shall be conclusive absent
manifest error;

 

(c)           Lender’s Discretion and Consent.  Whenever Lender is granted the
right herein to act in its sole discretion or to grant or withhold consent, such
right shall be exercised in good faith utilizing generally accepted commercial
practices for projects in scope, character and location similar to the Project;

 

(d)           Documents Taken as a Whole.  The words “hereof,” “herein,”
“hereunder,” “hereto” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document as a whole and not
to any particular provision of this Agreement or such other Loan Document;

 

(e)           Headings.  The section and other headings contained in this
Agreement or such other Loan Document and the table of contents (if any)
preceding this Agreement or such other Loan Document are for reference purposes
only and shall not control or affect the construction of this Agreement or such
other Loan Document or the interpretation thereof in any respect;

 

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(f)                                   Implied References to This Agreement. 
Article, section, subsection, clause, schedule and exhibit references are to
this Agreement or other Loan Document, as the case may be, unless otherwise
specified;

 

(g)                                  Persons.  Reference to any Person includes
such Person’s successors and assigns but, if applicable, only if such successors
and assigns are permitted by this Agreement or such other Loan Document, as the
case may be, and reference to a Person in a particular capacity excludes such
Person in any other capacity;

 

(h)                                 Modifications to Documents.  Reference to
any agreement (including this Agreement and any other Loan Document together
with the schedules and exhibits hereto or thereto), document or instrument means
such agreement, document or instrument as amended, modified, replaced,
substituted for, superseded or restated;

 

(i)                                     From, To and Through.  Relative to the
determination of any period of time, “from” means “from and including,” “to”
means “to but excluding,” and “through” means “through and including”; and

 

(j)                                    Shall; Will.  References to “shall” and
“will” are intended to have the same meaning.

 

1.3                               Accounting Principles.  Except as otherwise
provided in this Agreement, all computations and determinations as to accounting
or financial matters and all financial statements to be delivered pursuant to
this Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), and all accounting or financial
terms shall have the meanings ascribed to such terms by GAAP, provided, however,
that all accounting terms used in Section 5.19 [Financial Covenants] (and all
defined terms used in the definition of any accounting term used in Section 5.19
[Financial Covenants]) shall have the meaning given to such terms (and defined
terms) under GAAP as in effect on the date hereof applied on a basis consistent
with those used in preparing the financial statements delivered to Lender on or
prior to the date of this Agreement.  In the event of any change after the date
hereof in GAAP, and if such change would result in the inability to determine
compliance with the financial covenants set forth in Section 5.19 [Financial
Covenants] hereof based upon Borrower’s regularly prepared financial statements
by reason of the preceding sentence, then the parties hereto agree to endeavor,
in good faith, to agree upon an amendment to this Agreement that would adjust
such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with Borrower’s financial statements at that time.

 

2.                                      AGREEMENT TO BORROW AND LEND

 

2.1                               Agreement to Borrow and Lend.  Subject to the
terms, provisions and conditions contained in this Agreement and in reliance
upon the representations and warranties set forth herein, Lender agrees to lend
to Borrower the Loan.

 

2.2                               The Note.  The Loan is and shall be evidenced
by the Note, and the Loan shall bear interest calculated and payable as provided
in Article 3 [Loan Interest Rates, Payments and Fees] of this Agreement. 
Borrower shall pay the outstanding principal balance of the Loan and

 

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all unpaid interest accrued on the Loan and all other sums then owing under the
Loan Documents in full on or before the Expiration Date.  The unpaid amounts of
the Loan as set forth on the books and records of Lender or other holder of the
Note maintained in the ordinary course of business shall be presumptive evidence
of the principal amount thereof owing and unpaid, absent manifest error, but the
failure to record any such amount on the books and records shall not limit or
affect the obligations of Borrower hereunder or under the Note to make payments
of principal and interest on the Loan when due.

 

2.3                               Term.  The term of the Loan shall commence on
the Closing Date and shall terminate on the Expiration Date.

 

2.4                               Closing Fee.  Borrower agrees to pay the
Closing Fee to Lender as consideration for the Loan.  The Closing Fee shall be
paid on or before the Closing Date.  The parties acknowledge that Borrower’s
deposit in the amount of $50,000 with Lender shall be credited toward the
Closing Fee on the Closing Date.

 

2.5                               Extension Options.  Borrower shall have two
(2) successive options to extend the then applicable Expiration Date for twelve
(12) months each (each an “Extension Option”) in accordance with the terms of
this Section 2.5.  If the Conditions for Extension are satisfied on the date of
exercise by Borrower of each respective Extension Option and remain satisfied
immediately prior to the commencement of each applicable Extension Period,
Borrower shall have the right to extend the then applicable Expiration Date to
the last day of the first or second, as applicable, Extension Period.  Borrower
shall provide Lender with written notice of its election to extend the then
applicable Expiration Date in the form attached hereto as Exhibit 2.5, together
with payment of the Extension Fee in good funds, not later sixty (60) days and
not sooner than one hundred twenty (120) days prior to the then applicable
Expiration Date.

 

3.                                      LOAN INTEREST RATES, PAYMENTS AND FEES

 

3.1                               Interest Rate Options.  Borrower shall pay
interest in respect of the outstanding unpaid principal amount of the Loan as
selected by it from the Base Rate Option or LIBOR Rate Option set forth below,
it being understood that, subject to the provisions of this Agreement, Borrower
may select different Interest Rate Options and different Interest Periods to
apply simultaneously to the Loan comprising different Borrowing Tranches and may
convert to or renew one (1) or more Interest Rate Options with respect to all or
any portion of the Loan comprising any Borrowing Tranche provided that there
shall not be at any one time outstanding more than two (2) Borrowing Tranches in
the aggregate inclusive of any Base Rate Borrowing Tranche unless approved by
Lender in its reasonable discretion.  Lender’s determination of a rate of
interest and any change therein will in the absence of a manifest error be
conclusive and binding upon all parties hereto.  If at any time the designated
rate applicable to any portion of the Loan made by Lender exceeds Lender’s
highest lawful rate, the rate of interest on the Loan shall be limited to
Lender’s highest lawful rate.

 

Borrower shall have the right to select from the following Interest Rate
Options:

 

(a)                                 Base Rate Option: A fluctuating rate per
annum (computed on the basis of a year of three hundred sixty (360) days, as the
case may be, and actual days elapsed) equal to the sum

 

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of the Base Rate plus the Base Rate Spread, such interest rate to change
automatically without notice to Borrower from time to time effective as of the
effective date of each change in the Base Rate (or any component thereof) (“Base
Rate Option”); or

 

(b)                                 LIBOR Rate Option: A rate per annum fixed
for the applicable Interest Period (computed on the basis of a year of three
hundred sixty (360) days and actual days elapsed) equal to the LIBOR plus the
LIBOR Spread (“LIBOR Rate Option”).

 

3.2                               Loan Requests/Interest Periods.  Subject to
any other applicable provisions of this Agreement, including without limitation,
Lender’s right to determine that all conditions precedent to Section 6 [Closing
and Disbursement Matters] have been met, Borrower may, on any Borrowing Date,
request Lender to make advances of the Loan, or renew or convert any Interest
Rate Option applicable to existing advances of the Loan, by the delivery to
Lender, not later than 1:00 p.m., Pittsburgh, Pennsylvania time, (i) three
(3) Business Days prior to the proposed Borrowing Date with respect to the
advances of a portion of the Loan to which the LIBOR Rate Option shall apply or
the conversion to or the renewal of the LIBOR Rate Option for any advance of the
Loan; and (ii) one (1) Business Day prior to either the proposed Borrowing Date
with respect to the advance of a portion of the Loan to which the Base Rate
Option shall apply or the last day of the preceding Interest Period with respect
to the conversion to the Base Rate Option for any advance of the Loan of a duly
completed request therefor substantially in the form of Exhibit 3.2 attached
hereto and made a part hereof (each, an “Interest Rate Request”).  Each Interest
Rate Request shall be irrevocable and shall specify (a) the proposed Borrowing
Date; (b) the aggregate amount of the proposed advances of the Loan comprising
the Borrowing Tranche; (c) whether the LIBOR Rate Option or Base Rate Option
shall apply to the proposed advance of the Loan comprising the Borrowing
Tranche; and (d) in the case of any advance of the Loan to which the LIBOR Rate
Option applies, an appropriate Interest Period for the proposed advance of the
Loan comprising the Borrowing Tranche, provided that in the case of the renewal
of a LIBOR Rate Option at the end of an Interest Period, the first day of the
Interest Period shall be the last day of the preceding Interest Period, without
duplication in payment of interest for such day.

 

3.3                               Default Interest and Late Payment Charge.  To
the extent permitted by Law, upon the occurrence and during the continuation of
any Event of Default, and upon written demand from Lender, Borrower shall pay
interest on the entire principal amount then outstanding and all other sums due
under the Loan, regardless of the Interest Rate Option otherwise applicable, at
a rate per annum equal to the Default Rate.  The Default Rate shall accrue
before and after any judgment has been entered.  In addition, Borrower shall pay
upon demand by Lender a late payment charge equal to five percent (5%) of the
amount of any payment due under the Loan which is not received by Lender within
ten (10) days (i) after the date such payment is due with respect to regularly
scheduled payments and (ii) after Borrower’s receipt of notice from Lender for
any other payments; provided, however, that such late payment fee shall not
apply to any payment due on the Expiration Date.  Borrower acknowledges that the
increased interest rate and the late payment charge provided for herein reflect,
among other things, the fact that the Loan has become a substantially greater
credit risk given its default status and that Lender is entitled to additional
compensation for such risk, and all such interest shall be payable by Borrower
upon demand by Lender.  Borrower also agrees and acknowledges that the Default
Rate is a reasonable forecast of such additional compensation for anticipated
and actual harm incurred by

 

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Lender and that such harm cannot be estimated with certainty or without
difficulty.  The Default Rate is imposed as liquidated damages for the purpose
of defraying Lender’s expenses incident to the handling of delinquent payments,
but is in addition to and not in lieu of, the exercise by Lender of any rights
and remedies hereunder, under the Loan Documents or under applicable Law and any
fees and expenses of any attorney Lender may employ.

 

3.4                               LIBOR Unascertainable.  If, on any date on
which the LIBOR Rate would otherwise be determined, Lender shall have determined
(which determination shall be conclusive absent manifest error) that:

 

(a)                                 adequate and reasonable means do not exist
for ascertaining the LIBOR Rate, or

 

(b)                                 a contingency has occurred which materially
and adversely affects the London interbank eurodollar market relating to the
LIBOR Rate,

 

(c)                                  the making, maintenance or funding of any
portion of the Loan to which a LIBOR Rate Option applies has been made
impracticable or unlawful by compliance by Lender in good faith with any Law or
any interpretation or application thereof by any Official Body or with any
request or directive of any such Official Body (whether or not having the force
of Law), or

 

(d)                                 such LIBOR Rate Option will not adequately
and fairly reflect the cost to Lender of the establishment or maintenance of
such portion of the Loan, or

 

(e)                                  after making all reasonable efforts,
deposits of the relevant amount in Dollars for the relevant Interest Period for
any portion of the Loan to which a LIBOR Rate Option applies are not available
to Lender with respect to such portion of the Loan, or to lenders generally, in
the London interbank eurodollar market,

 

then, in the case of any event specified in subsections (a) through (e) above,
Lender shall promptly so notify Borrower thereof. Upon such date as shall be
specified in any such notice (which shall not be earlier than the date such
notice is given), the obligation of Lender to allow Borrower to select,
continue, convert to or renew a LIBOR Rate Option shall be suspended until
Lender shall have later notified Borrower, of Lender’s determination (which
determination shall be conclusive absent manifest error) that the circumstances
giving rise to such previous determination no longer exist.  If, at any time,
Lender makes a determination under subsection (a) or (b) above, and Borrower has
previously notified Lender of its selection of, conversion to or renewal of a
LIBOR Rate Option and such Interest Rate Option has not yet gone into effect,
such notification shall be deemed to provide for selection of, conversion to or
renewal of the Base Rate Option otherwise available with respect to such portion
of the Loan.

 

3.5                               Selection of Interest Rate Options.If Borrower
fails to select a new Interest Period to apply to any Borrowing Tranche under
the LIBOR Rate Option at the expiration of an existing Interest Period in
accordance with the provisions of Section 3.2 [Loan Requests/Interest Periods]
hereof, Borrower shall be deemed to have converted such Borrowing Tranche to the
one month LIBOR Rate Option commencing upon the last day of the existing
Interest Period.  If an Event of Default shall have occurred and be continuing,
Lender may in its discretion prohibit Borrower from then selecting the LIBOR
Rate Option.

 

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3.6                               Payments.  All payments and prepayments to be
made in respect of principal, interest, the Extension Fee, other fees or other
amounts due from Borrower to Lender shall be payable prior to 1:00 p.m.,
Pittsburgh, Pennsylvania time, on the date when due without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived by
Borrower, and without setoff, counterclaim or other deduction of any nature. 
Such payments shall be made to Lender at its Principal Office in U.S. Dollars
and in immediately available funds.  Lender’s statement of account, ledger or
other relevant record shall, in the absence of manifest error, be conclusive as
the statement of the amount of principal of and interest on the Loan and other
amounts owing under this Agreement and shall be deemed an “account stated”.

 

3.7                               Interest Payment Dates.  Interest on the Loan
shall be due and payable in arrears on the first day of each month after the
date hereof, including throughout the Extension Period, if applicable, and on
the Expiration Date or upon acceleration of the Note.

 

3.8                               Voluntary Prepayments.  Borrower shall have
the right at its option from time to time to prepay the Loan in whole or part on
the dates set forth below without premium or penalty (except as provided below
or in Section 3.11 [Additional Compensation in Certain Circumstances] hereof).

 

Whenever Borrower desires to prepay all or any portion of the Loan, it shall
provide a prepayment notice to Lender by 1:00 p.m., Pittsburgh, Pennsylvania
time, at least one (1) Business Day prior to the date of prepayment setting
forth the date, which shall be a Business Day, on which the proposed prepayment
is to be made, a statement indicating the application of the prepayment between
the portions of the Loan to which the Base Rate Option applies and to which the
LIBOR Rate Option applies, including, with respect to the LIBOR Rate Option, the
applicable Borrowing Tranche to which such prepayment applies, and the total
principal amount of such prepayment, which shall not be less than $100,000.  All
prepayment notices shall be irrevocable.  The principal amount of the portion of
the Loan for which a prepayment notice is given, together with interest on such
principal amount, shall be due and payable on the date specified in such
prepayment notice as the date on which the proposed prepayment is to be made. 
Any prepayment hereunder shall be subject to Borrower’s obligation to indemnify
Lender under Section 3.11(b) [Indemnity] hereof and shall not be subject to
reborrowing.

 

3.9                               Mandatory Principal Payments.

 

(a)                                 Beginning on the first (1st) day of the
first (1st) full calendar month during the first Extension Period, if
applicable, and on the first day of each calendar month thereafter for the
remainder of the first and second (if applicable) Extension Periods, Borrower
shall make monthly payments of the outstanding principal balance of the Loan
based upon the principal amounts payable pursuant to a thirty (30) year mortgage
style amortization of the principal amount of the Loan outstanding at the
beginning of the applicable Extension Period, assuming an interest rate equal to
five and three-quarter percent (5.75%).

 

(b)                                 If not sooner paid, all amounts due and
owing under this Agreement, the Note and any other Loan Document shall be due
and payable in full on the Expiration Date.

 

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3.10                        Application Among Interest Rate Options.All payments
permitted or required pursuant to Section 3.9 [Mandatory Principal Payments]
hereof shall be applied to the principal amount of the Loan among the Borrowing
Tranches as are designated by Borrower.  In accordance with
Section 3.11(b) [Indemnity] hereof, Borrower shall indemnify Lender for any loss
or expense, including loss of margin, incurred with respect to any such
prepayments applied against any portion of the Loan subject to a LIBOR Rate
Option on any day other than the last day of the applicable Interest Period.

 

3.11                        Additional Compensation in Certain Circumstances.

 

(a)                                 Increased Costs Generally.  If any Change In
Law:

 

(i)                               subjects Lender to any tax or changes the
basis of taxation with respect to this Agreement, the Note, the Loan or payments
by Borrower of principal, interest, fees or other amounts due from Borrower
hereunder or under the Note (except for taxes on the overall net income of
Lender),

 

(ii)                            imposes, modifies or deems applicable any
reserve, special deposit or similar requirement against credits or commitments
to extend credit extended by, or assets (funded or contingent) of, deposits with
or for the account of or other acquisition of funds by, Lender, or

 

(iii)                         imposes, modifies or deems applicable any capital
adequacy or similar requirement (A) against assets (funded or contingent) of, or
credits or commitments to extend credit extended by, Lender or (B) otherwise
applicable to the obligations of Lender under this Agreement,

 

and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by or impose any expense (including loss of margin) upon
Lender with respect to this Agreement, the Note or the making, maintenance or
funding of any part of the Loan (or, in the case of any capital adequacy or
similar requirement, to have the effect of reducing the rate of return on any
Lender’s capital, taking into consideration Lender’s customary policies with
respect to capital adequacy) by an amount which Lender in its sole discretion
deems to be material, Lender may from time to time notify Borrower of the amount
determined in good faith (using any averaging and attribution methods employed
in good faith) by Lender (which determination shall be conclusive absent
manifest error) to be necessary to compensate Lender for such increase in cost,
reduction of income, additional expense or reduced rate of return.  Such notice
shall set forth in reasonable detail the basis for such determination.  Such
amount shall be due and payable by Borrower to Lender within thirty (30)
Business Days after such notice is given.

 

(b)                                 Indemnity.  In addition to the compensation
required by subsection (a) of this Section 3.11, Borrower shall indemnify Lender
against all liabilities, losses or expenses (including loss of margin, any loss
or expense incurred in liquidating or employing deposits from third parties and
any loss or expense incurred in connection with funds acquired by Lender to fund
or maintain a portion of the Loan subject to the LIBOR Rate Option) which Lender
sustains or incurs as a consequence of any:

 

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(i)                               payment, prepayment, conversion or renewal of
any portion of the Loan to which the LIBOR Rate Option applies on a day other
than the last day of the corresponding Interest Period (whether or not such
payment or prepayment is mandatory, voluntary or automatic and whether or not
such payment or prepayment is then due); or

 

(ii)                            attempt by Borrower to revoke (expressly, by
later inconsistent notices or otherwise) in whole or part any notice relating to
the selection of the LIBOR Rate Option under Section 3.2 [Loan Requests/Interest
Periods] hereof or prepayments under Section 3.8 [Voluntary Prepayments] hereof;
or

 

(iii)                         default by Borrower in the performance or
observance of any covenant or condition contained in this Agreement or any other
Loan Document, including any failure of Borrower to pay when due (by
acceleration or otherwise) any principal, interest, fees or any other amounts
due hereunder.

 

If Lender sustains or incurs any such loss or expense, it shall from time to
time notify Borrower of the amount determined in good faith by Lender (which
determination shall be conclusive absent manifest error and may include such
assumptions, allocations of costs and expenses and averaging or attribution
methods as Lender shall deem reasonable) to be necessary to indemnify Lender for
such loss or expense.  Such notice shall set forth in reasonable detail the
basis for such determination.  Such amount shall be due and payable by Borrower
to Lender within thirty (30) Business Days after such notice is given.  If
Lender is ever reimbursed or otherwise recovers from a third party for any
amount paid by Borrower under this Section 3.11, the reimbursed or recovered
amount shall be refunded to Borrower.

 

4.                                      AFFIRMATIVE COVENANTS

 

The Loan Parties hereby covenant and agree that, from the date hereof and until
the Obligations have been indefeasibly paid in full and all other obligations
hereunder shall have been performed and discharged, they shall comply at all
times with the following affirmative covenants:

 

4.1                               Preservation of Existence, Etc.  Borrower
shall maintain its legal existence (and no change shall be permitted thereto) as
a limited liability company and its licenses or qualifications and good
standings in the jurisdiction of its formation and where the Project is
located.  Guarantor shall maintain its legal existence (and no change shall be
permitted thereto) as a corporation and its licenses or qualifications and good
standings in the jurisdiction of its formation and in each other jurisdiction
where its business or operations require it to be qualified.

 

4.2                               Payment of Liabilities, Including
Impositions.  Borrower shall duly pay and discharge all liabilities to which it
is subject (including, without limitation, the Obligations) or which are
asserted against it, promptly as and when the same shall become due and payable,
prior to the date when any fine, late charge or other penalty for late payment
may be imposed, including all Impositions, except to the extent that if such
liabilities, including Impositions, are being contested in good faith and by
appropriate and lawful proceedings diligently conducted,

 

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and such failure to pay and discharge any such liabilities, including
Impositions, (a) could not result in fines, penalties, other similar liabilities
or injunctive relief, (b) would not reasonably be expected to result in a
Material Adverse Change, (c) would not reasonably be expected to result in a
Lien or otherwise affect the Collateral or the validity of the Loan, and (d) for
which such reserve or other appropriate provisions, if any, as shall be required
by GAAP shall have been made; provided, that Borrower will pay all such
liabilities and Impositions forthwith upon the commencement of proceedings to
foreclose any Lien which may have attached as security therefor.

 

4.3                               Compliance With Laws.  Borrower shall comply
with all applicable Laws in all respects, including without limitation, all
Environmental Laws.

 

4.4                               Keeping of Records and Books of Account.  The
Loan Parties shall maintain and keep proper books of record and account which
enable the Loan Parties to issue financial statements and reports in accordance
with GAAP, Section 7.2 [Financial Reports] hereof and as otherwise required by
applicable laws of any Official Body having jurisdiction over such Loan Party,
and in which full, true and correct entries shall be made in all material
respects of all its dealings and business and financial affairs.

 

4.5                               Visitation Rights.  Borrower shall permit any
of the officers or authorized employees or representatives of Lender to visit
and inspect the Project and to examine and make excerpts from the books and
records of Borrower and discuss the business affairs, finances and accounts with
its officers, all in such detail and at such times and as often as Lender may
reasonably request, provided, that prior to an Event of Default, Lender shall
provide Borrower with reasonable notice prior to any visit or inspection and a
reasonable opportunity to participate in such visit or inspection. Borrower
shall furnish Lender with convenient facilities for such visitations,
inspections and audits.

 

4.6                               Maintenance of Insurance.

 

(a)                                 Borrower shall obtain and maintain at all
times hereunder, the following insurance coverages and any additional insurance
coverages which may be required from time to time by Lender and shall cause the
Contractor to obtain the insurance coverages specified in
subsections (iii) [Public Liability Insurance] and (iv) [Workers’ Compensation
Insurance] of this Section 4.6(a) below, together with any additional coverages
which may be required from time to time by Lender.

 

(i)                               All Risk Coverage Insurance.  Borrower shall
obtain and maintain until all amounts due and payable under the Loan are
indefeasibly paid in full (unless another date is specified herein) all risk
coverage insurance insuring the Improvements and all materials (installed and
uninstalled), supplies and other personal property on the Land against loss or
damage by fire, collapse, vandalism, burglary, theft, riot, earth movement,
earthquake, tsunami, wind and other hazards insured against by extended coverage
insurance and such other insurance (including, but not limited to, business
interruption insurance covering loss of net earnings on an actual loss sustained
basis, including rental income for twelve (12) months, coverage for soft costs
relating to the Improvements, and all hard and soft costs associated with the
period of project

 

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restoration including, without limitation, demolition and increased cost of
construction, ordinance of law coverage, losses with respect to materials,
equipment and the like, whether on- or off-site, together with malicious
mischief insurance and flood insurance if in a federal flood-prone area), as
well as coverage for boilers, machinery and terrorism and such other coverage
reasonably required by Lender, all as may be specified by Lender from time to
time, in amounts, form and substance acceptable to Lender and to be evidenced by
the applicable ACORD Form 28 (or such other equivalent form as may be acceptable
to Lender) or a copy of the policy, as required above.  Borrower shall, to the
extent applicable, cause each insurance policy issued in connection herewith to
contain coverage for so-called full completed value risk insurance, in
non-reporting form, against all risks of physical loss, and, after completion of
all construction contemplated hereunder, cause such policy to convert to contain
coverage for so-called “All Risk” coverage on a “special form” with the
coverages described above, and such other coverage as required by Lender, all in
form and substance satisfactory to Lender, and at all times, Borrower shall
cause the insurer to name Lender as mortgagee and lender loss payee.

 

(ii)                            Boiler and Machinery.  Borrower shall obtain and
maintain until all amounts due and payable under the Loan are indefeasibly paid
in full (unless another date is specified herein) boiler and machinery coverage,
with a $10,000,000 minimum limit or such lesser amount acceptable to Lender for
all mechanical and electrical equipment with exclusions for testing removed. 
Such coverage shall include, without limitation, all tenant improvements and
betterments that Borrower is required to insure and include, without limitation,
coverage for rental interruption.  Coverage may be included within the
applicable all risk or builder’s risk insurance policy required under clause
(i) above.

 

(iii)                         Public Liability Insurance.  Borrower shall obtain
and maintain until all amounts due and payable under the Loan are indefeasibly
paid in full (unless another date is specified herein) commercial public
liability and property damage insurance in connection with the Land and
Improvements and, during construction, contractor’s protective liability
insurance (including explosion and collapse coverage), and contractual liability
and completed operations coverage, and automobile liability insurance covering
all motor vehicles (whether or not owned) used in connection with the Land and
Improvements, together with such other coverages required by Lender from time to
time, all in amounts, form and with insurers acceptable to Lender.  Borrower
shall cause the insurer to name Lender as an additional insured under such
coverage.

 

(iv)                        Workers’ Compensation Insurance.  Borrower shall
obtain and maintain until all amounts due and payable under the Loan are
indefeasibly paid in full (unless another date is specified herein) workers’
compensation and employer’s liability insurance covering all liability in
connection with employee injury to the extent required under applicable Laws
with respect to Borrower, its employees, agents, representatives and the like
and all Contractors.

 

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(v)                           Contractors and Subcontractors.  Borrower shall
require that all Contractors maintain, and all Contractors shall require that
all subcontractors to such Contractors maintain, liability insurance coverage
consistent with that required of Borrower hereunder in amounts customarily
maintained by prudent contractors and subcontractors.  All parties engaged in
work on the Improvements shall maintain statutory workers’ compensation and, if
required by law, disability insurance in force for all workers on the job.

 

(vi)                        Engineer and Architect.  Borrower shall cause the
Architect (and the Engineer, if applicable) to obtain and maintain Architect’s
or Engineer’s, as the case may be, professional liability insurance during the
period commencing on the date of the Architect’s Agreement and/or the Engineer’s
Agreement, respectively, and expiring no earlier than three (3) years after
occupancy of the Project.  Such insurance shall be in an amount not less than
$1,000,000 per claim and $2,000,000 in the aggregate.

 

(vii)                     Terrorism Insurance.  Borrower shall obtain and
maintain until all amounts due and payable under the Loan are indefeasibly paid
in full (unless another date is specified herein), terrorism insurance covering
the Project as required by Lender in form and substance satisfactory to Lender
in amounts equal to those required under the all-risk coverage and general
liability policies, respectively.  Such insurance should cover liability and
property loss with respect to the Project.

 

(viii)                  Flood Insurance.  Borrower shall obtain and maintain in
full force and effect until all amounts due and owing under the Loan are
indefeasibly paid in full, flood insurance covering the Project, to the extent
required by law or as otherwise required by Lender if the Project is in a
federal flood-prone area, in form, substance and amount satisfactory to Lender.

 

The insurer(s) issuing any such policy and/or policies shall certify to Lender
that (1) losses will be adjusted only with the approval of Lender, (2) loss
payments will be payable to Lender, such payments to be applied in the manner
set forth in the Deed of Trust either to the restoration, repair or replacement
of the Improvements or to the payment of the Obligations, (3) the interests of
Lender shall be insured regardless of any breach or violation by Borrower  of
any warranties, covenants, representations, declarations or conditions contained
in such policy, and (4) if such insurance is canceled or materially changed, or
if any reinsurance is canceled for any reason whatsoever, such insurer will
promptly notify Lender and such cancellation or change shall not be effective as
to Lender for thirty (30) days after receipt by Lender of such notice. 
Furthermore, in the event any insurance policy (except for general public and
other liability and workers’ compensation insurance) shall contain breach of
warranty provisions, such policy shall provide that with respect to the interest
of Lender, such insurance policy shall not be invalidated by and shall insure
Lender regardless of (A) any act, failure to act or negligence of or violation
of warranties, declarations or conditions contained in such policy by any named
insured, (B) the occupancy or use of the Property for purposes more hazardous
than permitted by the terms thereof, or (C) any foreclosure or other action or
proceeding taken by Lender pursuant to any provision of this Agreement or any of
the other Loan Documents.

 

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Each insurance policy issued in connection herewith shall contain a provision
whereby the insurer:  (A) waives any right to claim any premiums and commissions
against Lender, provided that the policy need not waive the requirement that the
premium be paid in order for a claim to be paid to the insured and (B) provides
that Lender is permitted to make payments to effect the continuation of such
policy upon notice of cancellation due to non-payment of premiums.

 

Borrower shall deliver to Lender ACORD Form 28 Evidence of Commercial Property
Insurance and an ACORD Form 25-S Certificate of Insurance (provided that such
form must provide legally binding evidence of the required coverage, together
with an agreement to provide not less than thirty (30) days prior written notice
to Lender of any cancellation or material change relating to such coverage and
provided further that such form contains no qualifying language concerning the
status of Lender as additional insured), as applicable, with respect to such
policies on or before the Closing Date, or, at the request of Lender, a copy of
the applicable policy or policies including all applicable
endorsement(s) (provided, however, that Lender shall not be deemed by reason of
its custody of such policy to have notice of the contents thereof), in all cases
naming Lender as mortgagee and lender loss payee and agreeing to provide not
less than thirty (30) days prior written notice to Lender of any cancellation or
material change relating to such policy, and evidence of each new or renewal
policy in a form acceptable to Lender not less than thirty (30) days prior to
the expiration of the original policy or preceding renewal policy (as the case
may be); and to deliver to Lender, upon Lender’s request, receipts or other
evidence that the premiums thereon have been paid in accordance with the policy.

 

The insurer for all such policies shall be rated A-IX or better by A.M. Best
Company, Inc., or shall have such other rating reasonably acceptable to Lender. 
The form, amount, deductible, content, types of coverage and evidence of all
insurance policies required under this Agreement and the Deed of Trust as well
as the identity of the insurers shall be satisfactory to Lender.  All insurance
policies shall maintain coverage for tenant improvements and betterments that
Borrower is required to insure.  All property insurance policies also shall
include a co-insurance waiver and Agreed Amount Endorsement.  The amount of any
deductible under any insurance policy must be acceptable to Lender.  Without
Lender’s prior written consent in its sole discretion, Borrower shall not name
any person other than Lender as mortgagee and/or loss payee with respect to the
Property, nor shall Borrower carry separate or additional insurance coverage
covering the Improvements concurrent in form or contributing in the event of
loss with that required by this Agreement; provided that, if blanket policies
are obtained, this sentence shall not apply to property covered by such blanket
policies other than the Improvements and such tenant improvements and
betterments that Borrower is required to insure pursuant to this Loan.

 

(b)                                 Borrower shall pay, within ten (10) Business
Days after demand therefor, the reasonable cost and expense of any insurance
consultants retained by Lender with respect to the insurance coverages to be
maintained by Borrower with respect to the Project and Borrower’s obligations
under this Agreement; provided Borrower shall not be required to pay for the
costs and expenses of any insurance consultant pursuant to this clause more than
once in any calendar year so long as no Event of Default exists.

 

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4.7                               Notice.  Borrower shall give prompt written
notice to Lender of (a) any action or proceeding instituted by or against it, or
as to which it shall have received written notice or of which it has actual
knowledge, which constitutes a Potential Default or an Event of Default under
this Agreement, or (b) a default (following any applicable period of grace or
notice and opportunity to cure) by Borrower under any of the Construction and
Development Documents or the Management Agreement, or (c) a default by Borrower
under any other material contract, instrument or agreement to which it is a
party or by which it or any of its properties or assets may be bound or to which
it or any of its properties or assets may be subject, which default could be
reasonably expected to result in a Material Adverse Change.

 

4.8                               Equity Contribution.  Borrower shall fund the
Equity Contribution on or before the date of the First Disbursement and shall
deliver written evidence satisfactory to Lender of the application of the Equity
Contribution.

 

4.9                               Performance of Obligations.  The Loan Parties
shall duly pay, perform and discharge all of their respective obligations
hereunder and under the other Loan Documents to which they are a party or by
which they are bound.

 

4.10                        Payment of Costs.  Borrower shall pay promptly, or
cause to be paid promptly, all costs incurred in connection with constructing
the Improvements as and when the same become due and payable, paying for the
same with the proceeds of the Loan advanced from time to time and Borrower’s own
funds as provided in this Agreement.

 

4.11                        Compliance With Construction and Development
Documents and Other Agreements.  Borrower shall comply with the Construction and
Development Documents to which it is a party and in all material respects with
all other obligations under other contracts, instruments and agreements to which
it is a party or to which any of its properties or assets may be subject.

 

4.12                        Interest Rate Hedge.  Borrower may enter into an
Interest Rate Hedge on terms and conditions acceptable to Lender.

 

4.13                        Title to Land and Improvements.  Borrower shall
retain its fee simple interest in the Land and Improvements.

 

4.14                        Further Assurances.  Borrower shall, from time to
time, at its expense, faithfully preserve and protect Lender’s lien on and
security interest in the Collateral as a continuing first-priority perfected
lien, subject only to Permitted Encumbrances, and shall take such other action
as Lender in its sole discretion may deem necessary or advisable from time to
time in order to preserve, perfect and protect the liens granted under the
Collateral Documents, to exercise and enforce Lender’s rights and remedies
thereunder and with respect to the Collateral and to carry out the terms of this
Agreement and the other Loan Documents.

 

4.15                        Estoppel Certificates.  At any time or times, within
ten (10) Business Days after written demand  by Lender, Borrower shall deliver
to Lender a certificate, duly executed and in form satisfactory to Lender,
stating and acknowledging, to the best of Borrower ‘s knowledge: (i) the then
unpaid principal balance of, and interest due and unpaid, under the Loan, the
fact that there are no defenses, off sets, counterclaims or recoupments thereto
(or, if such should not be

 

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the fact, then the facts and circumstances relating to such defenses, off sets,
counterclaims or recoupments); (ii) that each Loan Party has kept, observed,
complied with, fulfilled and performed in all material respects every term,
covenant and condition in this Agreement and the other Loan Documents on its
part to be kept and performed; (iii) that no Potential Default or Event of
Default exists; (iv) that no event has occurred or is threatened which if
continued would permit the holder of any recourse indebtedness of such Loan
Party or to which its property is subject to accelerate the maturity thereof or
enforce any lien securing the same; and (v) that no litigation or administrative
proceeding has been instituted by or against such Loan Party which if adversely
determined would constitute a Material Adverse Change (or, if such should not be
the fact, then the facts and circumstances relating to such event or litigation
in detail) and covering such other matters relating to such Loan Party, the Loan
or the Collateral as Lender may reasonably require.

 

4.16                        Construction and Completion of Improvements. 
Borrower shall diligently and continuously prosecute to completion construction
of the Project in accordance with the Plans which shall have been approved in
the manner and by the parties specified below, and in accordance with applicable
zoning ordinances, building and use restrictions applicable to the Land and
Improvements and all other Laws, restrictive covenants or requirements of
governmental authorities, including, without limitation, the Governmental
Approvals and those of the appropriate board of fire underwriters or its
equivalent.  Borrower shall cause (a) Completion of Construction to occur on or
before the Required Completion Date, (b) the Improvements to be constructed in
such a manner and on such a schedule so that at all times during the pendency of
the Loan, the Inspecting Architect shall be of the opinion that the Completion
of Construction will occur on or prior to the Required Completion Date, and
(c) the Improvements to be constructed in compliance with all agreements
relating to the Project in all material respects.

 

4.17                        Preparation of Plans.  Borrower shall cause the
Plans and all changes in the Plans to be prepared by the Architect, and the
Plans and all changes in the Plans shall be reviewed and determined to be
satisfactory by the Inspecting Architect, have all Governmental Approvals and
the approval of all other entities and Persons with a right to approve any
aspect of the work.  Lender acknowledges that all existing Plans as of the
Closing Date have been approved by Lender and the Inspecting Architect.

 

4.18                        Changes in Construction and Development Documents. 
Except for Minor Change Orders, no changes in the Plans or the other
Construction and Development Documents (including change orders) shall be
effective, unless approved in writing in advance by Lender, as hereinafter
described.  Lender’s approval shall be required for changes in the Plans or the
other Construction and Development Documents which are not Minor Change Orders.

 

Borrower shall obtain, at its sole cost and expense, all approvals or consents
from other Persons of any changes in the Plans or other Construction and
Development Documents (including change orders) that are required by Law or
under any other agreement with respect to the Land or Improvements (including,
without limitation, the Governmental Approvals).  Borrower shall deliver to
Lender and the Inspecting Architect documentation as required by Lender
pertaining to any change referred to in this Section 4.18.  Lender shall respond
promptly but no later than ten (10) Business Days after receipt by Lender and
the Inspecting Architect of

 

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all such documentation within which to evaluate any requested change, and Lender
will not be required to consider approving any changes unless all other
approvals which, in Lender’s reasonable judgment, are required from other
parties have been obtained.  If Lender, in its judgment exercised in good faith,
determines that any change may increase the cost of completion of the
Improvements in excess of the amount of any category as shown on the Development
Budget (“Category”), Lender may demand that Borrower deposit additional funds
sufficient to cover the increased costs as a condition to giving its approval,
such funds to be held by Lender and disbursed in accordance with Article 6
[Closing and Disbursement Matters] hereof.

 

4.19                        Reliance on Inspecting Architect.  At any time that
Lender’s consent or approval is required with respect to the Plans, any of the
other Construction and Development Documents, construction of the Improvements
and the cost thereof or changes to any of the foregoing, Lender may, but shall
not be required to, rely conclusively on the opinion of the Inspecting
Architect.

 

4.20                        Subcontractors.  Borrower shall furnish to Lender
(a) on a monthly basis, a true and correct written schedule of all subcontracts
related to the Project which are in effect as of the date such schedule is
delivered to Lender, which schedule shall include, without limitation, the
names, addresses, telephone numbers and primary contracts of all subcontractors
under said subcontracts, the aggregate dollar amounts of the work covered or to
be covered by said subcontracts, a breakdown of the work covered or to be
covered under each of said subcontracts, and any additional information that
Lender may reasonably request from time to time in connection therewith, and
(b) upon request by Lender, true and correct copies of all executed Major
Subcontracts.  The work to be performed under any contract shall include no work
other than that for the Improvements.  All Major Subcontracts in effect on the
Closing Date are set forth on Schedule 4.20 and are approved by Lender.  Any
Major Subcontracts shall be consistent with the Development Budget, the General
Construction Contract and the Loan Agreement.  Lender or the Inspecting
Architect may contact the Contractor or any subcontractor to verify any facts
disclosed in the subcontracts.

 

4.21                        Purchase of Materials and Conditional Sales
Contracts.  No materials, equipment, fixtures or articles of personal property
placed in or on the Land or Improvements shall be purchased by or installed
under any security agreement, financing lease or other agreement whereby the
seller reserves or purports to reserve title, a Lien, a security interest, the
right of removal or repossession or the right to consider such items personal
property after their incorporation into the Improvements, unless previously
authorized by Lender in writing.

 

4.22                        Personal Property.  Borrower shall furnish to Lender
from time to time as reasonably required by Lender evidence that all fixtures
and equipment necessary for the operation of the Improvements have been or will
be obtained and in place on the Completion Date with respect to all of the
Improvements.  Upon Completion of Construction, Borrower shall furnish Lender
with a detailed inventory, certified by an authorized officer of Borrower,
showing make, model, valuation and location of all material fixtures and
equipment (except fixtures and equipment of tenants) used in the management or
maintenance of any part of the Improvements.

 

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4.23                        Repairs.  Borrower shall maintain and keep the Land
and the Improvements and all properties and assets of Borrower in good working
order and condition and make all necessary and proper repairs and replacements
thereto.

 

4.24                        Inspection and Right to Stop Work.

 

(a)                                 The officers or authorized employees and
agents of Lender and the Inspecting Architect shall have the right at any
reasonable time to enter the Land and Improvements and inspect the construction
work and all materials, plans, specifications and other matters relating to
construction of the Improvements.  Officers or authorized employees of Lender
and the Inspecting Architect shall also have the right to examine, copy and
audit the books, records, accounting data and other documents of the Contractor
relating to the construction of the Improvements and costs associated therewith.

 

(b)                                 If Lender, in good faith, determines that
any work or materials do not conform in any material respect to the Plans or
sound building practice or otherwise depart in any material respect from any of
the requirements of this Agreement, Lender may require the work to be stopped
and may withhold disbursements until the matter is corrected.  Borrower shall
promptly correct any such nonconforming work or materials.  No such action by
Lender will affect Borrower’s obligations to complete the Improvements on or
before the Required Completion Date.

 

(c)                                  Lender shall be under no duty to examine,
supervise or inspect the Plans or the construction of the Improvements or to
examine any books and records.  Any inspection or examination by Lender or the
Inspecting Architect is for the sole purpose of protecting Lender’s security
interests and preserving its rights under this Agreement.  No default or breach
of Borrower will be waived by any inspection by Lender or the Inspecting
Architect, nor shall any such inspection constitute a representation that there
has been or will be compliance with the Plans or that the construction is free
from defective materials or workmanship.  Neither approval of the Plans nor any
inspections or approvals of the construction of the Improvements or any other
inspection shall constitute a warranty or representation by Lender as to the
adequacy or safety of construction or any physical condition or feature of the
Project.

 

(d)                                 Lender shall have the right to require the
work be stopped upon the occurrence of an Event of Default.

 

4.25                        Protection Against Lien Claims.  Borrower shall
promptly notify Lender in writing of any dispute involving a claim in excess of
$100,000 with the Architect, Engineer, the Contractor, or any subcontractor or
any supplier of labor or materials and any proceeding against Borrower,
including, but not limited to, proceedings to assert or enforce mechanic’s,
materialman’s or other involuntary Liens.  Any Lien claimed or filed against any
part of the Land or the Improvements for labor done or materials or services
furnished in connection with the construction of the Improvements shall be
discharged, by bond or otherwise, within fifteen (15) Business Days after the
date of the filing thereof, and Lender reserves the right to withhold further
disbursement of Loan proceeds until such Lien or claim shall have been so
discharged, by bond or otherwise.

 

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4.26                        Plans and Benefit Arrangements.  Borrower shall
comply with, and shall cause each other member of the ERISA Group to comply
with, ERISA, the Internal Revenue Code and other Laws applicable to Pension
Plans and Benefit Arrangements except where such failure, alone or in
conjunction with any other failure, would not result in a Material Adverse
Change.  Without limiting the generality of the foregoing, Borrower shall cause
its Pension Plans and all Pension Plans maintained by any member of the ERISA
Group to be funded in accordance with the minimum funding requirements of ERISA
and shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Pension Plans, Benefit Arrangements and
Multiemployer Plans.

 

4.27                        Security Deposits.  All security deposits delivered
to Borrower under the Leases shall be maintained by Borrower in accordance with
applicable law.

 

4.28                        Conditions Precedent.  As a condition precedent to
Lender’s obligation to close the Loan and make the First Disbursement, Borrower
shall have complied with all the requirements and shall have fulfilled all the
conditions set forth in this Agreement and shall, at least five (5) days prior
to the Closing Date (unless otherwise set forth herein or waived in writing by
Lender), furnish to Lender at Borrower’s sole cost and expense, the items set
forth on Exhibit 4.28 attached hereto and made a part hereof which are required
to be delivered prior to the Closing Date, all of which shall be in form and
content satisfactory to Lender and its counsel.

 

4.29                        Compliance With Project Documents.  Borrower shall
cause the Improvements to be constructed in compliance in all material respects
with all agreements relating to the Project and the Leases and shall perform all
of its obligations under all such agreements.

 

4.30                        Maintenance of Properties.  Borrower  shall maintain
in good repair, working order and condition (ordinary wear and tear excepted) in
accordance with the general practice of other businesses of similar character
and size, all of those properties useful or necessary to its business, and from
time to time, Borrower will make or cause to be made all appropriate repairs,
renewals or replacements thereof.

 

4.31                        Maintenance of Patents, Trademarks, Etc.  Borrower
shall maintain in full force and effect all patents, trademarks, service marks,
trade names, copyrights, licenses, franchises, permits and other authorizations
necessary for the ownership and operation of its properties and business if the
failure so to maintain the same would constitute a Material Adverse Change.

 

4.32                        Use of Proceeds.  Borrower shall use the proceeds of
the Loan only for the development and construction of the Improvements. 
Borrower shall not use the proceeds of the Loan for any purposes which
contravene any applicable Law or any provision hereof.

 

4.33                        Single Purpose Entity.  Until the Obligations have
been indefeasibly paid in full to Lender, Borrower’s Organizational Documents
will provide that Borrower’s sole business purpose shall be the acquisition,
financing, development, ownership and operation of the real estate encumbered by
the Deed of Trust.  Borrower shall at all times during the term of the Loan
conduct its business affairs in compliance with such Organizational Documents.
In addition, Borrower hereby represents and warrants to, and covenants and
agrees with Lender, that Borrower has not and shall not, without the prior
express written consent of Lender, which

 

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consent may be granted or denied in Lender’s sole and absolute discretion: 
(a) engage in any business or activity other than the ownership, operation and
maintenance of the real property which is the subject of the Deed of Trust, and
activities incidental thereto; (b) acquire or own any material assets other than
(i) the real property which is the subject of the Deed of Trust, and (ii) such
incidental personal property as may be necessary for the operation of the real
property which is the subject of the Deed of Trust.

 

4.34                        Subguard Policy.Prior to the Closing Date, Borrower
shall cause Contractor to obtain a Subguard Policy.  The Subguard Policy shall
be issued or reissued by an insurance company approved by Lender rated A+ by
A.M. Best Company, Inc. and AA or higher by Standard & Poor’s Corporation or
Moody’s Investors Services.  In addition to the Subguard Policy, Borrower shall
deliver or cause Contractor to deliver, to Lender information regarding the
number and value of current contracts, an executed Additional Financial Interest
Endorsement and an Enrollment Endorsement.  Lender shall be named in the
Additional Financial Interest endorsement delivered in connection with the
Subguard Policy.

 

4.35                        Development and Management of the Project.  Borrower
shall develop and manage the Project, including, without limitation, all
marketing, leasing, collections, maintenance and servicing duties, in a
competent and professional manner.  Borrower shall not enter into, modify,
amend, terminate or cancel any agreements with any Property Manager or any other
agents or brokers regarding the management or leasing of the Project, without
the prior written approval of Lender, such consent not to be unreasonably
withheld or delayed.  Upon the occurrence of an Event of Default and if
requested by Lender, Borrower shall cooperate with Lender in replacing the then
current Property Manager with another third party manager for the Project.  The
parties further acknowledge that as a condition to consenting to the Management
Agreement, Borrower and Property Manager shall enter into the Assignment of
Management Agreement in favor of Lender.

 

4.36                        Keepwell.  Each Loan Party, if it is a Qualified ECP
Loan Party, jointly and severally, hereby absolutely unconditionally and
irrevocably (a) guarantees the prompt payment and performance of all Swap
Obligations owing by each Non-Qualifying Party (it being understood and agreed
that this guarantee is a guaranty of payment and not of collection), and
(b) undertakes to provide such funds or other support as may be needed from time
to time by any Non-Qualifying Party to honor all of such Non Qualifying Party’s
obligations under this Agreement or any Loan Document in respect of Swap
Obligations (provided, however, that each Qualified ECP Loan Party shall only be
liable under this Section 4.36 for the maximum amount of such liability that can
be hereby incurred without rendering its obligations under this Section 4.36, or
otherwise under this Agreement or any Loan Document, voidable under applicable
law, including applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount).  The obligations of each Qualified
ECP Loan Party under this Section 4.36 shall remain in full force and effect
until payment in full of the Obligations and termination of this Agreement and
the Loan Documents.  Each Qualified ECP Loan Party intends that this
Section 4.36 constitute, and this Section 4.36 shall be deemed to constitute, a
guarantee of the obligations of, and a “keepwell, support, or other agreement”
for the benefit of each other Borrower and Guarantor for all purposes of
Section 1a(18)(A)(v)(II) of the CEA.

 

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4.37                        Project Account and Permanent Financing Services;
Tenant Lockbox.

 

(a)                                 Borrower shall establish and maintain with
Lender the Project Account for the purpose of disbursement of funds with respect
to the Loan (but not with respect to rental deposits or other amounts due under
Leases the account(s) for which may be maintained at another financial
institution in accordance with the Management Agreement).  As additional
consideration for Lender’s making of the Loan, Borrower hereby agrees that it
shall give Lender the first opportunity to provide any and all permanent
financing for the Project requested by Borrower.  If after giving Lender the
first opportunity to provide such permanent financing to Borrower, Borrower
wishes to obtain permanent financing from a financial institution other than
Lender, Borrower shall also give Lender the last opportunity to provide such
permanent financing services upon terms substantially the same as the other
lender has offered to Borrower.  Lender shall have fifteen (15) days after
receipt of written notice from Borrower of its intention to obtain permanent
financing from a financial institution other than Lender within which to
exercise its right of last opportunity to provide such services, provided
Borrower shall not be obligated to obtain permanent financing from Lender.

 

(b)                                 Borrower shall, or shall cause all tenants
under Leases with Borrower to, deposit rent and any other amounts due under such
Leases directly into the Project Account over which, until an Event of Default
has occurred, Borrower shall have complete and exclusive control.

 

4.38                        Anti-Money Laundering/International Trade Law
Compliance.  No Covered Entity will become a Sanctioned Person.  No Covered
Entity, either in its own right or through any third party, will (a) have any of
its assets in a Sanctioned Country or in the possession, custody or control of a
Sanctioned Person in violation of any Anti-Terrorism Law; (b) do business in or
with, or derive any of its income from investments in or transactions with, any
Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law;
(c) engage in any dealings or transactions prohibited by any Anti-Terrorism Law
or (d) use the Advances to fund any operations in, finance any investments or
activities in, or, make any payments to, a Sanctioned Country or Sanctioned
Person in violation of any Anti-Terrorism Law.  The funds used to repay the
Obligations will not be derived from any unlawful activity.  Each Covered Entity
shall comply with all Anti-Terrorism Laws.  Borrower shall promptly notify
Lender in writing upon the occurrence of a Reportable Compliance Event.

 

5.                                      NEGATIVE COVENANTS

 

The Loan Parties hereby covenant and agree that, from the date hereof and until
the Obligations have been indefeasibly paid in full and all other obligations
hereunder shall have been performed and discharged, they shall comply at all
times with the following negative covenants:

 

5.1                               Changes in Organizational Documents.  Borrower
shall not amend or modify, or permit the amendment or modification of, in any
material respect, any provision of the Organizational Documents of Borrower,
without providing prior written notice to Lender and obtaining the prior written
consent of Lender.

 

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5.2                               Transfer of Land and Improvements.  Borrower
shall not voluntarily or by operation of law, directly or indirectly, sell,
convey, transfer, assign, pledge, encumber, or permit to be sold, conveyed,
transferred, assigned, pledged or encumbered any interest, whether nominal,
beneficial or otherwise in or any part of the Land or the Improvements without
the prior written consent of Lender having been obtained. Borrower shall not
grant easements, rights-of-way or similar entitlements without the prior written
consent of Lender.  Any transaction which is prohibited under this Section 5.2
shall be null and void to the extent permitted by applicable Law.  Lender shall
not be under any obligation to allege or show any impairment of the Collateral,
and Lender may pursue any legal or equitable remedies for default without such
allegation or showing, notwithstanding the foregoing.

 

5.3                               Change in Ownership.  Borrower shall not cause
or permit sales, pledges, encumbrances, conveyances, transfers or assignments of
interests in Borrower (whether owned directly or through other entities) without
the prior written consent of Lender.  Notwithstanding any provision to the
contrary, any rights to receive distributions (including cash or other property)
payable or distributable to the member(s) of Borrower may be pledged or assigned
by the member(s) of Borrower to one or more creditors (or agents or trustees on
behalf of such creditors) in connection with any financing provided to the
member(s) of Borrower or any Affiliate(s) thereof.

 

5.4                               Liquidations, Mergers, Consolidations,
Acquisitions.  Borrower shall not dissolve, liquidate or wind up its affairs, or
become a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other
Person.

 

5.5                               Breach of Construction and Development
Documents.  Borrower shall not commit any act, or permit any act to occur, which
would, in any manner, give rise to a breach of any term, covenant or condition
on Borrower’s part to be performed under the Construction and Development
Documents or any other contract to which Borrower is a party or by which it is
bound.

 

5.6                               Judgments.  Borrower shall not permit any
final judgment obtained against it to remain unpaid for a period of thirty (30)
days following the entry thereof without obtaining a stay of execution or
bonding or causing such judgment to be bonded.  Guarantor shall not permit any
final judgment obtained against it to remain unpaid for a period of thirty (30)
days following the entry thereof without obtaining a stay of execution or
bonding or causing such judgment to be bonded, to the extent the aggregate
amount of all such judgments exceeds $10,000,000.

 

5.7                               Leasing of Premises.  Borrower shall not,
without the prior written approval of Lender, such approval not to be
unreasonably withheld, conditioned or delayed, enter into or extend, any Lease
other than (i) residential leases substantially in the form of the Standard
Form Lease or (ii) any retail lease comprising less than 6,000 square feet, or
amend or modify any Lease in any materially adverse respect.

 

5.8                               Changes in Construction Documents.  Except for
Minor Change Orders, Borrower shall not amend or modify any provisions of the
Plans or Construction and Development

 

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Documents without providing prior written notice, along with copies of such
amendments or modifications, to Lender and obtaining its prior consent.

 

5.9                               Reserved.

 

5.10                        Continuation of or Change in Business.  Borrower
shall not engage in any business other than the business conducted on the date
of this Agreement by Borrower and Borrower shall conduct and operate such
business substantially as conducted and operated by Borrower  during the fiscal
year which includes the date of this Agreement, and Borrower shall not permit
any material change in such business.

 

5.11                        Liens.  Except for the Permitted Encumbrances,
Borrower shall not at any time, create, incur, assume or suffer to exist or be
created, or permit any pledge of, any deed of trust, mortgage, Lien (including
any Lien or other encumbrance authorized by Environmental Laws), charge,
security interest or encumbrances of any nature with respect to the Land or the
Improvements, or assign, pledge or in any way transfer or encumber its rights to
receive income from the Land or the Improvements, or any of its property or
assets, tangible or intangible, now owned or hereafter acquired, or agree to
become liable to do so.

 

5.12                        Value of Collateral.  Borrower shall not take any
action which would result in any material impairment of the value of any
Collateral.

 

5.13                        Transfer of Personalty on Land or Improvements. 
Borrower shall not voluntarily or by operation of law, directly or indirectly,
sell, assign, transfer, encumber, pledge, mortgage, hypothecate, convey or
otherwise dispose of any interest in or any part of any personalty located upon
the Project or used or intended to be used in connection therewith, provided
that Borrower may dispose of any worn-out personal property as long as the same
is promptly replaced with personal property that is the functional equivalent of
the replaced property within such time as would not impair the operation of the
Project.

 

5.14                        Disposition of Rents.  Borrower shall not consent to
or permit or enter into any sale, conveyance, pledge, mortgage, hypothecation or
other disposition of any rents, income, issues, profits or other funds arising
from or in connection with the Land and/or the Improvements.

 

5.15                        Indebtedness.  Borrower shall not, at any time
create, incur, assume or suffer to exist any Indebtedness, except:

 

(a)                                 Indebtedness under the Loan Documents;

 

(b)                                 Indebtedness under any Interest Rate Hedge
permitted pursuant to Section 4.12 [Interest Rate Hedge]; and/or

 

(c)                                  Trade debt in the ordinary course of
business.

 

5.16                        Dividends and Related Distributions.  Borrower shall
not make or pay, or agree to become or remain liable to make or pay, any
dividend or other distribution of any nature (whether in cash, property,
securities or otherwise) on account of or in respect of its shares of

 

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capital stock, partnership interests or limited liability company interests or
on account of the purchase, redemption, retirement or acquisition of its shares
of capital stock (or warrants, options or rights therefor), partnership
interests or limited liability company interests; provided that, notwithstanding
the foregoing, Borrower shall be permitted to make distributions so long as,
before and as a result of giving effect to any distribution, (i) no Event of
Default or Potential Default shall exist and (ii) certificates of occupancy have
been issued for no less than one hundred ninety (190) of the apartment units
comprising the Project, and prior to making any such distribution, Borrower
shall have provided written confirmation of the foregoing to Lender in form and
substance satisfactory to Lender.

 

5.17                        Materials and Fixtures.  Borrower shall not use, or
allow the use of, any materials, furnishings, fixtures or equipment intended to
become a part of the Improvements or otherwise included in the Plans which are
under or subject to any lease or similar agreement or which have been purchased
upon a conditional bill of sale or to which Borrower does not have absolute and
unencumbered fee title.

 

5.18                        Pension Plans and Benefit Arrangements.  Borrower
and each other member of the ERISA Group shall not:

 

(a)                                 fail to satisfy the minimum funding
requirements of ERISA and the Internal Revenue Code with respect to any Pension
Plan;

 

(b)                                 request a minimum funding waiver from the
IRS with respect to any Pension Plan;

 

(c)                                  engage in a Prohibited Transaction with any
Pension Plan, Benefit Arrangement or Multiemployer Plan which, alone or in
conjunction with any other circumstances or set of circumstances resulting in
liability under ERISA, would constitute a Material Adverse Change;

 

(d)                                 permit the aggregate actuarial present value
of all benefit liabilities (whether or not vested) under each Pension Plan,
determined on a plan-termination basis, as disclosed in the most recent
actuarial report completed with respect to such Pension Plan, to exceed, as of
any actuarial valuation date, the fair market value of the assets of such
Pension Plan;

 

(e)                                  fail to make when due any contribution to
any Multiemployer Plan that Borrower or any member of the ERISA Group may be
required to make under any agreement relating to such Multiemployer Plan, or any
Law pertaining thereto;

 

(f)                                   withdraw (completely or partially) from
any Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA
to withdraw) from any Multiple Employer Plan, where any such withdrawal is
likely to result in a material liability of Borrower or any member of the ERISA
Group;

 

(g)                                  terminate, or institute proceedings to
terminate, any Pension Plan, where such termination is likely to result in a
material liability to Borrower or any member of the ERISA Group;

 

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(h)                                 make any amendment to any Pension Plan with
respect to which security is required under Section 307 of ERISA; or

 

(i)                                     fail to give any and all notices and
make all disclosures and governmental filings required under ERISA or the
Internal Revenue Code, where such failure is likely to result in a Material
Adverse Change.

 

5.19                        Financial Covenants.  Until indefeasible payment in
full of the Obligations and satisfaction of all of Borrower’s other obligations
hereunder and under the other Loan Documents, Borrower shall comply at all times
with the following financial covenants (“Financial Covenants”):

 

(a)                                 The Debt Service Coverage for the Project,
as measured on the last day of the calendar month preceding the thirty-nine
month anniversary of the Closing Date for the three (3) calendar months then
ended, shall equal or exceed .85:1.00, as evidenced by Borrower’s delivery of
the Certificate of Debt Service Coverage Ratio.

 

(b)                                 The Debt Service Coverage for the Project,
as measured on the last day of the calendar month preceding the forty-five month
anniversary of the Closing Date for the three (3) calendar months then ended,
shall equal or exceed 1.10:1.00, as evidenced by Borrower’s delivery of the
Certificate of Debt Service Coverage Ratio.

 

(c)                                  During the first Extension Period, if
applicable, the Debt Service Coverage Ratio for the Project shall equal or
exceed 1.20:1.00 as of the end of each fiscal quarter, as evidenced by
Borrower’s delivery of the Certificate of Debt Service Coverage Ratio.

 

(d)                                 During the second Extension Period, if
applicable, the Debt Service Coverage Ratio for the Project shall equal or
exceed 1.25:1.00 as of the end of each fiscal quarter, as evidenced by
Borrower’s delivery of the Certificate of Debt Service Coverage Ratio.

 

In the case of Borrower’s failure to comply with any applicable Financial
Covenant set forth above, Borrower may cure such failure by making a permanent
principal payment to Lender within ten (10) days of Borrower’s knowledge of such
failure but in no event later than forty (40) days after the end of any calendar
quarter, in an amount necessary to reduce the outstanding principal balance of
the Loan to the point where the applicable Financial Covenant requirement is
satisfied.

 

6.                                      CLOSING AND DISBURSEMENT MATTERS

 

6.1                               Procedures.

 

(a)                                 Lender shall be entitled to disburse Loan
proceeds for interest, fees and other amounts due to Lender under the Loan to
the extent that cash flow from the Project is insufficient to pay the same, as
evidenced to the satisfaction of Lender.  Lender may make up to one (1)
additional disbursement of Loan proceeds per month pursuant to Borrower’s
Disbursement Request in the form attached hereto as Exhibit 6.1, if approved by
Lender.  Upon receipt of a Disbursement Request, Lender shall cause an
inspection to be made by the Inspecting Architect (if said inspection has not
already been scheduled or completed prior to

 

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Lender’s receipt of the Disbursement Request) of the progress of construction
with respect to the costs of construction.  If Lender reasonably determines that
construction is proceeding substantially in accordance with the Plans and
otherwise in the manner required by this Agreement and that all conditions to
such disbursement shall have been fulfilled, Lender shall make the disbursement
in the manner specified in paragraph (b) of this Section 6.1 below and shall
make such disbursement within ten (10) Business Days after Lender’s receipt of a
duly completed Disbursement Request and those items specified in Section 6.1(c)
below.

 

(b)                                 Subject to paragraph (d) of this Section
6.1, all disbursements will be made, at Lender’s option, into the Project
Account, or advanced directly (or jointly with Borrower, as Lender may elect) to
such party or parties as have actually supplied labor, material or services in
connection with the construction of the Improvements, or advanced to a title
company or other escrow agent acceptable to Lender for disbursement to such
third parties.  Borrower shall pay, upon being billed therefor, Lender’s
standard charges for account maintenance and wiring of funds.  All Loan proceeds
will be considered to have been advanced to and received by Borrower upon, and
interest on the Loan proceeds will be payable by Borrower from and after, the
deposit or advance of the Loan proceeds as aforesaid or the charge against the
Loan proceeds as provided in subsection (d) below.

 

(c)                                  As a condition precedent to each
disbursement of the Loan proceeds, Borrower shall furnish or cause to be
furnished to Lender the following documents covering each Disbursement Request,
in form and substance satisfactory to Lender:

 

(i)                               The form of Borrower’s Disbursement Request,
together with an itemized disbursement request summary.  Without limiting the
foregoing, in connection with any Disbursement Request, Borrower shall submit
copies of signed and notarized applications for payment similar to AIA Forms
G702/703 for the Contractor (“Applications for Payment”), copies of
subcontractor invoices or Applications for Payment for costs included in such
Disbursement Request and invoices for all soft costs included in such
Disbursement Request.  Invoices submitted with all Disbursement Requests except
the first Disbursement Request shall not be dated prior to the date that is
ninety (90) days preceding the date of the Disbursement Request;

 

(ii)                            Payment receipts and lien releases (which shall
be unconditional with respect to disbursements for which payment has been
received and conditioned only on payment of the amount in the pending
Disbursement Request with respect to disbursements for which payment is pending)
, in form and substance satisfactory to Lender, from the Contractor covering the
pending disbursement and from all subcontractors, covering all disbursements
within sixty (60) days of the pending disbursement;

 

(iii)                         Copies of any change orders, whether proposed or
executed, which have not been previously furnished to Lender and the pending
change order log maintained by the Contractor or Developer;

 

(iv)                        Upon request by Lender or the Inspecting Architect,
copies of Major Subcontracts not previously furnished;

 

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(v)                           An up to date rent roll for the Project listing
all executed Leases for the Project;

 

(vi)                        Such other documentation as may be required by the
title insurer to issue a date down endorsement to Lender’s title policy in the
form attached hereto as Schedule 6.1 covering the amount of the requested
disbursement;

 

(vii)                     If any significant dispute arises between Borrower and
Contractor, a written summary of the nature of such dispute; and

 

(viii)                  Such other information that Lender may reasonably
require to verify information contained in the Disbursement Request.

 

(d)                                 Notwithstanding the provisions of subsection
(c) of this Section 6.1, Lender may elect, without obtaining authorization by
Borrower, to use the Loan proceeds to pay, as and when due, any Loan fees owing
to Lender, interest on the Loan, reasonable fees and disbursements of the
Inspecting Architect and Lender’s attorneys which are payable by Borrower as
provided in the Loan Documents and such other sums as may be owing from time to
time by Borrower to Lender with respect to the Loan or the transactions
contemplated by this Agreement.  Such payments may be made by recording a
funding under the Loan in the amount of such payments.

 

(e)                                  All advances of the Loan proceeds shall be
evidenced by the Note and secured by the Collateral Documents.

 

6.2                               Disbursement Amounts.

 

(a)                                 Aggregate advances of the Loan shall be
limited to the maximum amount of the Loan.  The aggregate amount of the Loan for
any Category shall be limited to the amount shown in the Development Budget for
such Category, after adjustment for the expenditure of the Equity Contribution
as shown on the Development Budget, taking into account any reallocation
authorized by Lender pursuant to Section 6.3 [Cost Information] hereof.  Prior
to disbursement of any Loan proceeds, Borrower shall have expended, for costs
approved by Lender, sums at least equal to the Equity Contribution.

 

(b)                                 Subject to the terms of this Agreement,
Lender will make disbursements of the Loan to defray actual and reasonable costs
approved by Lender, as applicable, and shown on the Development Budget of (i)
labor performed on the Improvements and equipment and materials incorporated
into the Improvements; (ii) materials suitably stored on the Land, if approved
by Lender; (iii) materials stored off-site provided requirements set forth on
Exhibit 6.2 are satisfied; (iv) acquisition of the Land; (v) developing and
financing the Improvements, including any other costs within the Categories
shown on the Development Budget and (vi) advance deposits (“Deposits”) for
materials that are to be fabricated for the Project and appliances to be
incorporated into the Project, in each case subject to purchase orders or
similar documents reasonably acceptable to Lender; provided however that
disbursements of the Loan for Deposits shall not exceed $100,000 individually or
$500,000 in  the aggregate..  The undisbursed balance of the Loan and the sums
delivered and held by Lender pursuant to Section 6.7 [Deposit of Funds by
Borrower] of this Agreement shall at no time be less than the sum of (1) the
amount

 

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reasonably estimated by Lender to complete the construction, development and
financing of the Improvements and (2) the aggregate amount of the Retainage to
date.

 

(c)                                  Subject to the terms of this Agreement,
disbursements of the Loan to the General Contractor under the General
Construction Contract for the contractor’s fee or general conditions shall not
exceed the amount set forth in the Development Budget for each such item and
shall be disbursed by Lender based on a percentage of lien-free completion.  The
parties expressly acknowledge that no development fee or any similar payment to
any developer is included in the Development Budget.

 

(d)                                 Lender shall not be obligated to make
disbursements of the proceeds under the Loan after the Completion Date unless
all of the conditions contained in Section 6.4 [First Disbursement], Section 6.5
[Subsequent Disbursements] and Section 6.6 [Retainage Disbursements] hereof
shall continue to be satisfied; provided, however, that in no event shall Lender
be obligated to make any disbursement of proceeds of the Loan after the Initial
Expiration Date or during any Extension Period, if applicable.

 

(e)                                  To the extent that a permit issued by an
Official Body or a Governmental Approval is necessary to construct any portion
of the Improvements for which Loan proceeds are being requested, the amounts
allocated to the “hard cost” categories of the Development Budget applicable to
such work shall not be available for disbursement until the permit or
Governmental Approval pertaining to such work has been validly issued, is in
full force and effect and has been delivered to Lender and Inspecting Architect.

 

(f)                                   Subject to the terms of this Agreement,
the amounts allocated to the “Hard Cost Contingency” category of the Development
Budget shall not be subject to disbursement or reallocation without the prior
approval of Lender which approval shall not be unreasonably withheld or
delayed.  Notwithstanding the foregoing or any other provision to the contrary,
Borrower may, from time to time, without the prior approval of Lender but with
written notice to Lender, and provided that such cost saving are used toward
Project related expenses (i) reallocate any verified cost savings (other than
from the “Interest Reserve” or “Operating Deficit Reserve” Categories of the
Development Budget) to any other hard cost line item of the Development Budget,
and/or (ii) reallocate up to $600,000 in the aggregate from the “Hard Cost
Contingency” Category of the Development Budget to defray costs in any other
line items.

 

(g)                                  The amounts allocated to “Interest Reserve”
Category of the Development Budget shall not be subject to reallocation without
the written consent of Lender.

 

(h)                                 Upon Completion of Construction and receipt
by Lender of evidence to its satisfaction that the Debt Service Coverage Ratio
is equal to or greater than 1.0 to 1.0 for three (3) consecutive calendar
months, any amounts remaining in the line items in the Development Budget for
“Interest Reserve”, “Hard Cost Contingency” and “Operating Deficit Reserve”
shall be funded to Borrower so long as no Event of Default or Potential Default
exists.

 

(i)                                     Disbursements for leasing commissions
payable with respect to executed Leases for any retail space will be disbursed
by Lender upon execution.

 

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6.3                               Cost Information.  If Borrower becomes aware
of any change in the approved costs set forth in the Development Budget which
would increase, change or cause a reallocation of the costs as shown on the
Development Budget, Borrower shall immediately notify Lender in writing and
promptly submit a proposed revised Development Budget to Lender.  Lender shall
have no obligation to make further disbursements unless and until the revised
Development Budget is approved by Lender.  Lender shall have the right to
withhold consent of the proposed revised Development Budget pending the deposit
of funds, if necessary, pursuant to Section 6.7 [Deposit of Funds by Borrower]
hereof.

 

6.4                               Closing Conditions.  Lender shall not be
obligated to close the Loan until Borrower, at its sole cost and expense, shall
have fulfilled all terms, provisions and conditions of this Agreement applicable
thereto, including, without limitation, the delivery and approval of the items
referred to on Exhibit 4.28 attached hereto and made a part hereof which are
required to be delivered pursuant to Section 4.28 [Conditions Precedent] hereof,
and satisfaction of the following conditions:

 

(a)                                 No portion of the Improvements shall have
been damaged by fire or other casualty and no condemnation or taking of the Land
or the Improvements or any material portion thereof shall be pending or
threatened;

 

(b)                                 Lender shall have received all duly executed
Loan Documents on or before the Closing Date and the Collateral Documents and
other documents to be placed of record shall have been duly recorded and filed
in all appropriate offices;

 

(c)                                  The security interest in all property
described in the Collateral Documents shall have been duly perfected and shall
be a valid and enforceable first lien;

 

(d)                                 The Closing Fee and any other applicable
fees shall have been paid;

 

(e)                                  Lender shall have received all duly
executed Construction and Development Documents and the Subguard Policy required
pursuant to Section 4.34 [Subguard Policy];

 

(f)                                   All Governmental Approvals with respect to
the Project (other than those not obtainable until a later stage of
construction) shall be in full force and effect, and no notices of violation or
revocation with respect thereto shall have been received which have not been
cured to the satisfaction of the applicable Official Body;

 

(g)                                  Lender shall have received, at Borrower’s
expense, the Title Insurance Policy, in form and substance satisfactory to
Lender, insuring the first priority of the Lien of the Deed of Trust and
containing no exception other than the Permitted Encumbrances;

 

(h)                                 No Event of Default or Potential Default
shall have occurred and be continuing under this Agreement or any of the other
Loan Documents;

 

(i)                                     No Material Adverse Change shall have
occurred;

 

(j)                                    Lender shall have received effective lien
waivers and releases (conditioned solely upon payment of amounts included in the
First Disbursement or included in the Disbursement

 

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Request, as applicable) and their corresponding Applications for Payment from
the Contractor and all subcontractors, suppliers and other Persons having a
right to file a mechanic’s or materialman’s Lien, notice of unpaid balance,
construction lien or any similar instrument against the Land and Improvements
with respect to the work completed through a date no earlier than thirty (30)
days prior to the date of the First Disbursement, together with any other
information required by Lender from time to time; and

 

(k)                                 The representations and warranties contained
in Article 8 [Representations and Warranties] hereof shall be true and accurate
on and as of the date of the First Disbursement with the same effect as though
such representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and Borrower shall have performed
and complied with all covenants and conditions hereof.

 

6.5                               First and Subsequent Disbursements.  Lender
shall not be obligated to make any disbursements of the Loan (the first such
disbursement being called the “First Disbursement” or any subsequent
disbursements of the Loan (including the Retainage disbursements referred to in
Section 6.6 [Retainage Disbursements] hereof) (each, a “Subsequent
Disbursement”), until Borrower, at its sole cost and expense, shall have
fulfilled all terms, conditions and provisions of this Agreement applicable
thereto, including, without limitation, the items set forth below, all in a
manner satisfactory to Lender:

 

(a)                                 The conditions of the preceding Section 6.4
[First Disbursement] hereof shall continue to be met;

 

(b)                                 Lender shall have received evidence of the
expenditure of the Equity Contribution for Project costs in accordance with the
Development Budget;

 

(c)                                  Lender shall have received effective lien
waivers and releases (conditioned solely upon payment of amounts included in the
Disbursement Request) and their corresponding Applications for Payment from the
Contractor and all subcontractors, suppliers and other Persons having a right to
file a mechanic’s or materialman’s Lien, notice of unpaid balance, construction
lien or any similar instrument against the Land and Improvements with respect to
the work completed prior to the date of the Subsequent Disbursement, together
with any other information required by Lender from time to time.

 

(d)                                 Lender shall have received a report
satisfactory to Lender from the Inspecting Architect concerning its review of
the Subsequent Disbursement, the Improvements, the Plans, the Construction
Contract, the Major Subcontracts (to the extent requested), the Development
Budget, the Governmental Approvals and the construction schedule;

 

(e)                                  Lender shall have received, at Borrower’s
expense, a Construction Loan Endorsement satisfactory to Lender insuring the
priority of the Lien of the Deed of Trust in the amount of all disbursements
hereunder, insuring the Land and Improvements as described in the updated survey
referred to in Section 6.5(j) below, and containing no exception other than the
Permitted Encumbrances;

 

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(f)                                   All Governmental Approvals (other than
those not obtainable until a later stage of construction) shall be in full force
and effect, and no notices of violation or revocation with respect thereto shall
have been received which have not been cured to the satisfaction of the
applicable Official Body; provided no disbursement for vertical construction
shall be made until Lender shall have received a copy of the vertical building
permit for the Project;

 

(g)                                  No Event of Default or Potential Default
shall have occurred and be continuing under this Agreement or any of the other
Loan Documents;

 

(h)                                 No Material Adverse Change shall have
occurred;

 

(i)                                     The representations and warranties
contained in Article 8 [Representations and Warranties] hereof shall be true and
accurate on and as of the date of the disbursement of Loan proceeds with the
same effect as though such representations and warranties had been made on and
as of such date (except representations and warranties which relate solely to an
earlier date or time, which representations and warranties shall be true and
correct on and as of the specific dates or times referred to therein), and
Borrower shall have performed and complied with all covenants and conditions
hereof; and

 

(j)                                    Within forty five (45) days after the
actual location of the foundation for the Improvements, a foundation survey
shall be delivered to Lender showing the location of the Improvements and the
absence of any encroachment of the Improvements over any building, zoning,
right-of-way or property boundary lines and shall be otherwise satisfactory to
Lender.

 

6.6                               Retainage Disbursements.

 

(a)                                 The amount of each disbursement shall be
subject to Retainage in accordance with the provisions of the General
Construction Contract, which Retainage shall be ten percent (10%) of costs
incurred under the General Construction Contract until the Project is fifty
percent (50%) completed and five percent (5%) thereafter.

 

(b)                                 Reserved.

 

(c)                                  Lender shall authorize the release of the
Retainage only upon the fulfillment of the following conditions, together with
any other reasonable requirements, conditions, documentation and determinations
of the Inspecting Architect:

 

(i)                               All conditions of Section 6.4 [First
Disbursement] and Section 6.5 [Subsequent Disbursements] hereof shall continue
to be met;

 

(ii)                                                                           
Lender shall have received a certificate of the Architect and Contractor to the
effect, inter alia, that the Improvements have been completed in accordance with
the Plans, all Laws and all Governmental Approvals, and the matters in such
certificate shall have been verified by the Inspecting Architect.  If Retainage
is released prior to completion of any punch list work, an amount equal to 150%
of the estimated cost of performing remaining punch list work (as verified by
the Inspecting Architect) shall be withheld from disbursement until all punch
list work is complete;

 

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(iii)                         The Certificate of Occupancy shall have been duly
issued, and Lender shall have received a copy thereof;

 

(iv)                        Lender shall have received a Construction Loan
Endorsement or other endorsement to Lender’s Title Insurance Policy, in a form
and substance approved by Lender, insuring the priority of the lien of the Deed
of Trust in the full amount of the Loan and containing no exception other than
the Permitted Encumbrances and otherwise insuring that no encroachments exist
over any building, zoning, right of way or property boundary lines;

 

(v)                           Lender and the title company shall have received
an as-built ALTA survey, showing the location of all applicable Improvements,
easements, rights-of-way and other plottable matters affecting the Land,
certified to each and dated within sixty (60) days of delivery to Lender and
title company;

 

(vi)                        Lender shall have received effective lien releases
and waivers (conditioned solely upon payment of Retainage amounts, provided that
effective final lien releases and waivers shall be delivered within thirty (30)
days thereafter), and their corresponding Applications for Payment, from the
Contractor and all subcontractors suppliers and other Persons having a right to
file a mechanic’s or materialman’s Lien, notice of unpaid balance, construction
lien or any similar instrument against the Land and Improvements with respect to
the work performed in connection with the construction and equipping of the
Improvements, together with any other information required by Lender from time
to time;

 

(vii)                     Lender shall have received tax receipts evidencing the
payment of the current year’s real estate taxes and assessments to the extent
such taxes and assessments are then due and payable;

 

(viii)                  Lender shall have received evidence satisfactory to
Lender that the All Risk coverage insurance policy with respect to the
Improvements is in full force and effect;

 

(ix)                        Lender shall have received the written consent of
any and all third parties as may be reasonably required by Lender; and

 

(x)                           Lender shall have received a letter from Borrower
whereby Borrower represents and warrants that Borrower has inspected the
applicable Improvements and, to its knowledge, the Improvements have been
completed in accordance with the applicable Plans.

 

(d)                                 Notwithstanding the terms, conditions and
provisions of subsections 6.6(a) and (b) above to the contrary, Lender shall
release any Retainage, to the extent under the General Construction Contract
such Retainage is required to be released to the applicable subcontractor, upon
the final completion by a subcontractor of said subcontractor’s portion of the
Project, all as determined by the Inspecting Architect and as evidenced and
certified by said subcontractor in a payment receipt/lien release, in a form
satisfactory to Lender.

 

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6.7                               Deposit of Funds by Borrower.  If Lender, at
any time and from time to time, in good faith determines that (a) the amount of
the undisbursed Loan proceeds will not be sufficient to pay in full all costs
required to complete the construction of the Improvements in accordance with the
Plans, and financing and development costs covered by the Development Budget, or
that (b) any amount shown in any Category will not be sufficient to pay in full
the items to which such amount is allocated, then Lender may make demand on
Borrower to deposit with Lender within ten (10) Business Days after the date of
demand, funds equal to the insufficiency so determined by Lender, such funds to
be held in an account with Lender in which Lender has a security interest. 
Lender shall have no obligation to make further disbursements until the demanded
funds shall have been so deposited by Borrower with Lender. Whenever Lender has
any such funds on deposit, such funds shall be additional security for the Loan,
and all disbursements will be considered to be made by Lender first from those
funds until they are exhausted.

 

6.8                               Additional Security.  As additional security
for Borrower’s obligations under this Agreement and the other Loan Documents,
Borrower irrevocably assigns and grants to Lender a security interest in all
Loan proceeds now or hereafter held by Lender or any other financial
institution, whether or not disbursed.  Borrower further irrevocably assigns and
grants to Lender as additional security for Borrower’s obligations under the
Loan Documents all of Borrower’s interest in (a) all funds now or hereafter
deposited by Borrower with Lender under this Agreement or any of the other Loan
Documents, including, without limitation, amounts held in the Project Account,
(b) all Governmental Approvals to the extent permitted by Law or by the terms
thereof, and (c) all reserves, deferred payments, deposits, refunds, cost
savings and payments of any kind relating to the construction of the
Improvements.  Upon the occurrence of an Event of Default and so long thereafter
as such Event of Default shall remain uncured, Lender, in addition to any other
rights and remedies they may have under the Loan Documents or at law or in
equity, may use any of the other property referred to above for any purpose for
which Borrower could have used them under this Agreement or with respect to the
construction or financing of the Improvements.  Further, Borrower hereby assigns
to Lender all of Borrower’s rights under the Construction and Development
Documents, subject to the terms thereof, which rights Lender may exercise upon
the occurrence of an Event of Default.  Such assignment is made for collateral
purposes only and imposes no obligations upon Lender.

 

7.                                      REPORTING REQUIREMENTS

 

7.1                               Appraisals, Title Reports and Environmental
Reports.

 

(a)                                 Appraisal.  In addition to the Appraisal
required prior to the Closing Date as set forth on Exhibit 4.28 attached hereto,
until the Obligations are repaid in full, Lender shall have the right at any
time and from time to time, but no more frequently than once each calendar year
prior to the occurrence of an Event of Default, to obtain an Appraisal with
respect to the Project, which Appraisal shall be at the sole cost and expense of
Borrower.  After the occurrence of an Event of Default and so long thereafter as
such Event of Default shall remain uncured, Lender shall have the right to
obtain such Appraisals as it may require at the sole cost and expense of
Borrower without limitation.

 

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(b)                                 Title Reports. In addition to the title
bringdowns required under Article 6 [Closing and Disbursement Matters] hereof,
at the option of Lender exercised not more than once each calendar year prior to
the occurrence of an Even of Default, Lender may request and Borrower shall
deliver within fifteen (15) days of such request, an updated title report on the
Project, prepared and issued by the same title insurance company that delivered
to Lender the Title Insurance Policy in connection with the delivery of the Deed
of Trust at the sole cost and expense of Borrower.  After the occurrence of an
Event of Default and so long thereafter as such Event of Default shall remain
uncured, Borrower shall furnish such title reports, endorsements or policies as
Lender shall require without limitation.  If Borrower fails to deliver the title
updates, reports, endorsements or policies required pursuant to this Section
7.1(b), Lender, may obtain such item(s) and Borrower shall reimburse Lender,
upon demand for any and all for costs incurred.

 

(c)                                  Environmental Reports.  Within thirty (30)
days following the request of Lender, (i) if Lender reasonably suspects that
there has been a breach of the Environmental Indemnity Agreement, (ii) if a
previously undisclosed adverse environmental condition becomes apparent, (iii)
if a change in applicable Law with respect to environmental matters should
occur, or (iv) at any time following the occurrence of an Event of Default,
Borrower shall cause an Environmental Report of the Project to be prepared at
Borrower’s sole reasonable cost and expense, which Environmental Report will be
in form and performed by a consultant approved by Lender, and if Borrower does
not respond to Lender’s request within thirty (30) days, Lender shall cause an
Environmental Report of the Project to be performed provided, however, that in
any event Borrower shall, upon demand, will reimburse Lender, for any and all
costs incurred in connection with any such Environmental Report.

 

7.2                               Financial Reports.  Until the Obligations are
repaid in full, the Loan Parties shall furnish or cause to be furnished to
Lender, within the time periods specified on Exhibit 7.2 attached hereto, the
financial reports and information listed on Exhibit 7.2.

 

8.                                      REPRESENTATIONS AND WARRANTIES

 

The Loan Parties hereby represent and warrant to Lender as follows, which
warranties and representations shall be recertified as true and correct to
Lender with each Disbursement Request:

 

8.1                               Due Formation; Capacity.

 

(a)                                 Borrower is a limited liability company duly
organized, validly existing and in good standing under the Laws of the state of
its jurisdiction of organization, and has full power and authority to own or
lease and operate properties, and to engage in the business it presently
conducts and proposes to conduct.  Borrower is duly licensed or qualified and in
good standing in each jurisdiction where the property owned or leased by it or
the nature of the business transacted by it or both makes such licensing or
qualification necessary.  Borrower shall not reorganize in another state during
the term of the Loan.

 

(b)                                 Guarantor is a corporation duly organized,
validly existing and in good standing under the Laws of the state of its
jurisdiction of organization, and has full power and authority to

 

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engage in the business it presently conducts and proposes to conduct.  Guarantor
is duly licensed or qualified and in good standing in each jurisdiction where
the property owned or leased by it or the nature of the business transacted by
it or both makes such licensing or qualification necessary.

 

8.2                               Power and Authority.  Each of the Loan Parties
has full power and authority to enter into, execute, deliver and carry out this
Agreement and the other Loan Documents and the Construction and Development
Documents to which it is a party, to incur the Indebtedness contemplated by the
Loan Documents and to perform its obligations hereunder and thereunder and all
such actions have been duly authorized by all necessary proceedings on its part.

 

8.3                               Validity and Binding Effect.  This Agreement,
the other Loan Documents and the Construction and Development Documents will
have been duly executed and delivered by the Loan Parties to the extent they are
a party thereto upon delivery of such document by such Loan Party.  This
Agreement, the other Loan Documents and the Construction and Development
Documents constitute, or will constitute, legal, valid and binding obligations
of each Loan Party which is or will be a party thereto on and after delivery
thereof by such Loan Party, enforceable against such Loan Party in accordance
with their respective terms.

 

8.4                               No Conflict.  Neither the execution and
delivery of this Agreement, the other Loan Documents or the Construction and
Development Documents, by any Loan Party, nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof, will conflict with, constitute a default under or
result in any breach of (a) the terms and conditions of the Organizational
Documents of any Loan Party or (b) any Governmental Approval, any applicable Law
or any material agreement, instrument, order, writ, judgment, injunction or
decree to which any Loan Party is a party or by which any Loan Party is bound,
or to which it is subject, or result in the creation or enforcement of any Lien,
charge or encumbrance whatsoever upon any property (now or hereafter acquired)
of any Loan Party (other than Liens granted under the Loan Documents).

 

8.5                               Material Contracts.  All material contracts to
which Borrower is a party are valid, binding and enforceable upon Borrower and
each of the other parties thereto in accordance with their respective terms, and
there is no default thereunder, to Borrower’s knowledge, with respect to parties
other than Borrower.  Borrower is not bound by any contractual obligation, or
subject to any restriction in any Organizational Document, or any requirement of
Law which could result in a Material Adverse Change.

 

8.6                               No Potential Default or Event of Default;
Compliance with Instruments.  No event has occurred and is continuing and no
condition exists or will exist after giving effect to the First Disbursement or
Subsequent Disbursements of the Loan under or pursuant to the Loan Documents
which constitutes an Event of Default or Potential Default.  Borrower is not in
violation of any term of any Organizational Documents of Borrower.  None of the
Loan Parties is in violation of any material agreement or instrument to which
such Loan Party is a party or by which such Loan Party or any of such Loan
Party’s properties may be subject or bound where such violation would constitute
a Material Adverse Change.

 

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8.7                               No Litigation or Investigations.  There are no
actions, suits, proceedings or investigations pending or, to the knowledge of
any Loan Party, threatened against such Loan Party at law or in equity before
any Official Body which individually or in the aggregate would question the
capacity, ability or authority of any of the Loan Parties to execute, deliver
and perform the Loan Documents or Construction and Development Documents to
which it is a party, or if adversely determined may result in any Material
Adverse Change.  None of the Affiliates of any Loan Party is in violation of any
order, writ, injunction or any decree of any Official Body which may result in
any Material Adverse Change.

 

8.8                               Financial Statements and Other Information.

 

(a)                                 The Loan Parties have delivered to Lender
copies of their respective fiscal year-end (or calendar year-end, as applicable)
financial statements (hereinafter collectively referred to as “Annual
Statements”).  In addition, the Loan Parties have delivered to Lender copies of
their respective interim financial statements for the fiscal year (or calendar
year, as applicable) to date and as of the end of their respective most recent
fiscal quarter (or calendar quarter, as applicable) (hereinafter collectively
referred to as “Interim Statements” and hereinafter the Annual Statements and
the Interim Statements as well as all other financial reports and information
delivered to Lender in connection with the Loan shall be collectively referred
to as “Historical Statements”).  The Historical Statements are correct, accurate
and complete in all respects and fairly present the financial condition of the
Loan Parties as of their dates and the results of operations for the fiscal
periods (or calendar periods, as applicable) then ended, subject (in the case of
the Interim Statements) to normal year-end audit adjustments.  All other
financial data and information given to Lender by or with respect to the Loan
Parties is accurate, correct and complete in all material respects.  The Loan
Parties do not have any liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Historical Statements or in
the notes thereto, and except as disclosed therein there are no unrealized or
anticipated losses from any commitments of the Loan Parties which may cause a
Material Adverse Change.  Since June 30, 2015, no Material Adverse Change has
occurred.

 

(b)                                 To Borrower’s knowledge, all surveys, plot
plans and similar documents heretofore furnished by Borrower to Lender with
respect to the Improvements are accurate and complete in all material respects
as of their respective dates.

 

(c)                                  All other information given to Lender by
and with respect to any Loan Party is accurate, correct and complete in all
respects.

 

8.9                               Title Aspects.  Borrower has good and
marketable fee simple title to the Land, subject only to Permitted
Encumbrances.  Borrower has been granted all easements appropriate for the
construction of the Improvements, and any mortgage liens now or hereafter
affecting any land burdened by such easements are subordinate to such
easements.  Each Loan Party has good and marketable title to or valid leasehold
interest in all properties, assets and other rights which it purports to own or
lease or which are reflected as owned or leased on its books and records, free
and clear of all Liens and encumbrances except Permitted Encumbrances, and
subject to the terms and conditions of the applicable leases.  All leases of
property are in full force and effect without the necessity for any consent
which has not previously been obtained upon consummation of the transactions
contemplated hereby.

 

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8.10                        Zoning and Governmental Approvals.  The development,
construction, use and occupancy of the Improvements in accordance with the Plans
will conform to all applicable Laws, all existing Governmental Approvals, and
all covenants, conditions and restrictions contained in a deed, lease or other
instrument or agreement covering or affecting all or any portion of the Land
and/or the Improvements.  All Governmental Approvals (except to the extent the
same are of a nature so as not to be obtainable until a later stage of
construction or until Completion of Construction) have been obtained and are
valid and in full force and effect.

 

8.11                        Plans.  The Plans are accurate, true and correct and
are satisfactory to Borrower and, to the extent required by applicable Law, have
been approved by each Official Body having jurisdiction over the Land and/or the
Improvements and any others whose approval of the Plans, in whole or in part,
may be called for by applicable undertakings of Borrower or by an applicable
law, rule, regulation or the like.

 

8.12                        Utilities.  All utility and municipal services
necessary for the construction, completion, use and occupancy of the
Improvements are available to the Land and have sufficient capacity to operate
the Improvements for their intended purposes, including water supply, storm and
sanitary sewer facilities, gas, electricity and telephone facilities.  All
impact, connection or other requisite fees for such services have been paid or
are included in the Development Budget.  All streets and easements necessary for
the completion of the Improvements and the operation thereof for their intended
purpose are available to the boundaries of the Land.

 

8.13                        Security Interests.  The liens and security
interests granted or to be granted to Lender pursuant to this Agreement and the
other Loan Documents constitute and, subject to the filing of any continuation
statements required by Law as described in the next sentence, will continue to
constitute valid perfected Prior Security Interests under the Uniform Commercial
Code as in effect in each applicable jurisdiction or other applicable Law,
entitled to all the rights, benefits and priorities provided by the Uniform
Commercial Code or any other Law.  Upon the filing of the applicable Loan
Documents and financing statements relating to said liens and security interests
in each office and in each jurisdiction where required in order to establish the
liens and perfect the security interests described above, as applicable, all
such action as is necessary or advisable to establish such rights of Lender will
have been taken, and there will be upon execution and delivery of the Collateral
Documents, such filings and such taking of possession, as is necessary to
establish said liens and perfect said security interests and there shall be no
necessity for any further action in order to preserve, protect and continue such
rights, except the filing of continuation statements with respect to any such
financing statements within six (6) months prior to each five-(5) year
anniversary of the filing of such financing statements.  All filing fees and
other expenses in connection with each such action have been or will be paid by
Borrower, and the collateral secured by such Loan Documents is subject to no
other Liens or encumbrances except for the Permitted Encumbrances.

 

8.14                        Deed of Trust Liens.  The Lien granted to Lender
pursuant to the Deed of Trust will, upon proper recording, constitute a valid,
perfected first-priority Lien under applicable Law, and the Land, the
Improvements and any other property, in whatever form, whether real, personal or
otherwise, secured by the Deed of Trust is subject to no other Liens or
encumbrances except for the Permitted Encumbrances.  All action as is necessary
or advisable to establish such

 

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Lien and its priority as described in the preceding sentence, including
recordation of the Deed of Trust in the appropriate offices, will be taken
promptly following the Closing Date, and there will be, upon execution, delivery
and recordation of the Deed of Trust, no necessity for any further action in
order to protect, preserve and continue such Lien and such priority.

 

8.15                        Compliance with Laws.  Borrower is in compliance
with all applicable Laws in all jurisdictions in which it is organized or is
doing business presently or will be doing business.  Guarantor is in compliance
in all material respects with all applicable Laws in all jurisdictions in which
it is organized or is presently or will be doing business.

 

8.16                        Construction and Development Documents.  Lender and
the Inspecting Architect have been furnished with copies of all Construction and
Development Documents.  The Construction and Development Documents constitute
all of the agreements which have been executed by or for the benefit of Borrower
in connection with the development, construction or provision of labor,
materials or design or supervisory services with respect to the Land and the
Improvements.  The Construction and Development Documents will cover all work
and services necessary or desirable for the design, construction and development
of the Land and Improvements, including, without limitation, all work and
services necessary for the Improvements to be completed in accordance with all
Governmental Approvals and any and all requirements of applicable Law.  No work
or construction of any kind is to be performed pursuant to the Construction and
Development Documents on any property owned by others or within any easement or
right-of-way.

 

8.17                        Development Budget.  The Development Budget attached
hereto as Exhibit 1.1(D) is true, correct and complete, shows all sources and
provides for all costs and expenses to be incurred in connection with the
acquisition and development of the Land, the construction and equipping of the
Improvements, all financing fees and interest expenses on the Loan through the
Expiration Date, and all other items of cost and expense to be incurred in
connection with the design and construction of the Improvements, the leasing of
the Improvements and the closing of the Loan, including, without limitation, all
costs and expenses to be incurred pursuant to the Construction and Development
Documents.

 

8.18                        Solvency.  Each of the Loan Parties is Solvent as of
the Closing Date and will be Solvent after giving effect to the transactions
contemplated by the Loan Documents, including all Indebtedness incurred thereby,
the security interests granted therein and the payment of all fees, costs,
expenses and the like related thereto.

 

8.19                        Pension Plans and Benefit Arrangements.

 

(a)                                 Borrower and each other member of the ERISA
Group are in compliance in all respects with any applicable provisions of ERISA
with respect to all Benefit Arrangements, Pension Plans and Multiemployer
Plans.  There has been no Prohibited Transaction with respect to any Benefit
Arrangement or any Pension Plan or, to the best knowledge of Borrower, with
respect to any Multiemployer Plan or Multiple Employer Plan, which could result
in any material liability of Borrower or any other member of the ERISA Group. 
Borrower and all other members of the ERISA Group have made when due any and all
payments required to be made under any agreement relating to a Multiemployer
Plan or a Multiple Employer Plan or any Law

 

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pertaining thereto.  With respect to each Pension Plan and Multiemployer Plan,
Borrower and each other member of the ERISA Group (i) have fulfilled in all
material respects their obligations under the minimum funding standards of
ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not had
asserted against them any penalty for failure to fulfill the minimum funding
requirements of ERISA.

 

(b)                                 To the best of Borrower’s knowledge, each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.

 

(c)                                  Neither Borrower nor any other member of
the ERISA Group has instituted or intends to institute proceedings to terminate
any Pension Plan.

 

(d)                                 No event requiring notice to the PBGC under
Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur
with respect to any Pension Plan, and no amendment with respect to which
security is required under Section 307 of ERISA has been made or is reasonably
expected to be made to any Pension Plan.

 

(e)                                  The aggregate actuarial present value of
all benefit liabilities (whether or not vested) under each Pension Plan,
determined on a plan termination basis, as disclosed in, and as of the date of,
the most recent actuarial report for such Pension Plan, does not exceed the
aggregate fair market value of the assets of such Pension Plan.

 

(f)                                   Neither Borrower nor any other member of
the ERISA Group has incurred or reasonably expects to incur any material
withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer
Plan.  Neither Borrower nor any other member of the ERISA Group has been
notified by any Multiemployer Plan or Multiple Employer Plan that such
Multiemployer Plan or Multiple Employer Plan has been terminated within the
meaning of Title IV of ERISA, and, to the best knowledge of Borrower, no
Multiemployer Plan or Multiple Employer Plan is reasonably expected to be
reorganized or terminated, within the meaning of Title IV of ERISA.

 

(g)                                  To the extent that any Benefit Arrangement
is insured, Borrower and all members of the ERISA Group have paid when due all
premiums required to be paid for all periods through and including the Closing
Date.  To the extent that any Benefit Arrangement is funded other than with
insurance, Borrower and all other members of the ERISA Group have made when due
all contributions required to be paid for all periods through the Closing Date.

 

(h)                                 All Pension Plans, Benefit Arrangements and
Multiemployer Plans have been administered in accordance with their terms and
applicable Law.

 

8.20                        Investment Companies; Regulated Entities.  None of
the Loan Parties is an “investment company” registered or required to be
registered under the Investment Company Act of 1940 or under the “control” of an
“investment company” as such terms are defined in the Investment Company Act of
1940 and shall not become such an “investment company” or under such “control.” 
None of the Loan Parties is subject to any other federal, local or state
statute, rule or regulation limiting said Loan Party’s ability to incur
Indebtedness for borrowed money.

 

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8.21                        Use of Proceeds; Margin Stock.  No part of the
proceeds of any Loan has been or will be used, immediately, incidentally or
ultimately, to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock or to refund
Indebtedness originally incurred for such purpose, or for any purpose which
entails a violation of or which is inconsistent with the provisions of the
regulations of the Board of Governors of the Federal Reserve System. including,
without limitation, Regulation U.

 

8.22                        Full Disclosure.  Neither this Agreement nor any
other Loan Document or Construction and Development Document, nor any
certificate, statement, agreement or other documents furnished to Lender in
connection herewith or therewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein and therein, in light of the circumstances under which they
were made, not misleading.  There is no fact known to Borrower which materially
adversely affects the business, property, assets, financial condition, results
of operations or prospects of Borrower which has not been set forth in this
Agreement or in the certificates, statements, agreements or other documents
furnished in writing to Lender prior to or on the date hereof in connection with
the transactions contemplated hereby.

 

8.23                        Impositions.  All returns for Impositions required
to have been filed with respect to Borrower have been timely filed, and payment
has been made (or adequate provision for the payment thereof has been made) of
all Impositions which have or may become due pursuant to said returns or to
assessments received, prior to the date upon which any penalty or fine may be
imposed, except to the extent that such Impositions are being contested in good
faith by appropriate proceedings diligently conducted in accordance with the
provisions of Section 4.2 [Payment of Liabilities, Including Impositions]. 
There are no agreements or waivers extending the statutory period of limitations
applicable to any Impositions of Borrower for any period.

 

8.24                        Consents and Approvals.  Except for the filing of
financing statements, the Deed of Trust and the Assignment of Leases and Rents
in the applicable state and county filing offices, no consent, approval,
exemption, order or authorization of, or a registration or filing with, any
Official Body or any other Person is required by any Law or any agreement in
connection with the execution, delivery and carrying out of this Agreement, the
other Loan Documents or the Construction and Development Documents by any Loan
Party, all of which shall have been obtained or made on or prior to the Closing
Date. Borrower hereby authorizes Lender to file all financing statements,
together with any amendments or modifications thereof which Lender deems
necessary or desirable to perfect, under the applicable Uniform Commercial Code,
the security interest in the collateral described in the Deed of Trust, the
other Collateral Documents and this Agreement.

 

8.25                        Anti-Money Laundering/International Trade Law
Compliance.  No Covered Entity is a Sanctioned Person.  No Covered Entity,
either in its own right or through any third party, (a) has any of its assets in
a Sanctioned Country or in the possession, custody or control of a Sanctioned
Person in violation of any Anti-Terrorism Law; (b) does business in or with, or
derives any of its income from investments in or transactions with, any
Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law;
or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism
Law.

 

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9.                                      DEFAULTS AND REMEDIES

 

9.1                               Events of Default.  The following shall be
deemed to be Events of Default under this Agreement (whatever the reason
therefor and whether voluntary, involuntary or effected by operation of Law):

 

(a)                                 Borrower shall fail to make any principal
payment due under the Loan, including, without limitation, any Mandatory
Principal Payment, or shall fail to pay any interest on the Loan or any other
scheduled payment owing hereunder or under the other Loan Documents after such
principal, interest or other scheduled payment shall become due and payable in
accordance with the terms hereof;

 

(b)                                 (i) Any representation or warranty contained
in Section 8.25 [Anti-Money Laundering/International Trade Law Compliance] is or
becomes false or misleading at any time and (ii) any representation or warranty
(other than a representation or warranty in Section 8.25) made at any time by
any of the Loan Parties herein or in any other Loan Document, or in any
certificate, other instrument or written statement furnished by any Loan Party
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished;

 

(c)                                  Any Loan Party shall fail to make any of
the deposits with Lender or to the Project Account required under this Agreement
(including without limitation Section 6.7 [Deposit of Funds by Borrower]), or
shall fail to comply with any covenant or obligation contained in this Agreement
or any of the other Loan Documents which calls for the payment of money, other
than those monetary defaults expressly referred to in Section 9.1(a) above, and
shall not cure that failure within ten (10) Business Days after written demand
by Lender;

 

(d)                                 Any of the Loan Parties shall fail to comply
with any covenant or obligation contained in this Agreement or any of the other
Loan Documents, other than (i) defaults or Events of Default under the Note and
the Deed of Trust, or (ii) those defaults expressly referred to in the other
subparagraphs of this Section 9.1, and shall not cure that failure within thirty
(30) days after written notice thereof by Lender to Borrower or such shorter
period of time for cure specified in any Loan Document (such grace period to be
applicable only in the event such default can be remedied by corrective action
of the applicable Loan Party as determined by Lender in its sole discretion);

 

(e)                                  Any of the Loan Parties, as applicable, 
shall fail to comply with any of the following sections of this Agreement, as
applicable to the respective Loan Parties; Section 4.6 [Maintenance of
Insurance], Section 4.33 [Single Purpose Entity], Section 4.38 [Anti-Money
Laundering/International Trade Law Compliance], Section 5.2 [Transfer of Land
and Improvements], Section 5.3 [Change in Ownership], Section 5.4 [Liquidations,
Mergers, Consolidations, Acquisitions], Section 5.10 [Continuation of or Change
in Business], Section 5.15 [Indebtedness], Section 5.16 [Dividends and Related
Distributions], or Section 5.19 [Financial Covenants];

 

(f)                                   Construction of the Improvements is
abandoned for a period in excess of ten (10) consecutive Business Days or is not
completed on or before the Required Completion Date;

 

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(g)                                  A default by Borrower shall occur under the
Construction and Development Documents and such default shall not be cured
within any available cure period provided therein;

 

(h)                                 Any of the Loan Parties shall cease to be
Solvent or shall be unable to pay their respective debts as the same shall
mature;

 

(i)                                     Any Lien or encumbrance, other than a
Permitted Encumbrance, is entered against the Land or Improvements and such Lien
or encumbrance is not discharged, by bond or otherwise within fifteen (15)
Business Days after the filing thereof;

 

(j)                                    Any final judgment(s) for the payment of
money shall be entered against Borrower by a court having jurisdiction which is
not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days from the date of entry of such judgment(s).  Any final
judgment(s) for the payment of money shall be entered against Guarantor by a
court having jurisdiction which is not discharged, vacated, bonded or stayed
pending appeal within a period of thirty (30) days from the date of entry of
such judgment(s) for an aggregate amount of $10,000,000 or more;

 

(k)                                 There shall occur any uninsured or
inadequately insured damage to or loss, theft or destruction of any material
portion of the Collateral including, without limitation, the Land and/or any of
the Improvements and Borrower shall have failed to deposit into the Project
Account, or as otherwise directed by Lender, any shortfall of such insurance
proceeds within ten (10) Business Days following determination of such
shortfall;

 

(l)                                     The Collateral or any other of the Loan
Parties’ assets are attached, seized, levied upon or subjected to a writ or
distress warrant, or such come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors and the same is not cured
within thirty (30) days thereafter;

 

(m)                             Any of the Loan Documents shall cease to be
legal, valid and binding agreements enforceable against the Loan Parties in
accordance with the respective terms thereof or shall in any way be terminated
(except in accordance with their terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested or cease to give or
provide the respective Liens, security interests, rights, titles, interests,
remedies, powers or privileges intended to be created thereby;

 

(n)                                 Any party shall obtain an order or decree in
any court of competent jurisdiction enjoining the construction of the
Improvements or to delay construction of the same or to enjoin or prohibit
Lender or the Loan Parties from carrying out the terms and conditions of any of
the Loan Documents to which they are a party and such order or decree is not
vacated or stayed within ten (10) Business Days after the filing thereof;

 

(o)                                 Any of the following occurs:  (i) any
Reportable Event, which Lender determines in good faith constitutes grounds for
the termination of any Pension Plan by the PBGC or the appointment of a trustee
to administer or liquidate any Pension Plan, shall have occurred and be
continuing; (ii) proceedings shall have been instituted or other action taken to
terminate any Pension Plan, or a termination notice shall have been filed with
respect to any Pension Plan; (iii) a trustee shall be appointed to administer or
liquidate any Pension Plan; (iv) the PBGC shall

 

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give notice of its intent to institute proceedings to terminate any Pension Plan
or Pension Plans or to appoint a trustee to administer or liquidate any Pension
Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above,
Lender determines in good faith that the amount of Borrower’s liability is
likely to cause a Material Adverse Change; (v) Borrower or any member of the
ERISA Group shall fail to make any contributions when due to a Pension Plan or a
Multiemployer Plan; (vi) Borrower or any member of the ERISA Group shall make
any amendment to a Pension Plan with respect to which security is required under
Section 307 of ERISA; (vii) Borrower or any member of the ERISA Group shall
withdraw completely or partially from a Multiemployer Plan; (viii) Borrower or
any member of the ERISA Group shall withdraw (or shall be deemed under Section
4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any
applicable Law is adopted, changed or interpreted by any Official Body with
respect to or otherwise affecting one or more Pension Plans, Multiemployer Plans
or Benefit Arrangements and, with respect to any of the events specified in (v),
(vi), (vii), (viii) or (ix), Lender determines in good faith that any such
occurrence would be reasonably likely to materially and adversely affect the
total enterprise represented by Borrower and the other members of the ERISA
Group;

 

(p)                                 A proceeding shall have been instituted in a
court having jurisdiction in the premises seeking a decree or order for relief
in respect of any Loan Party in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or for the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or similar official) of any Loan Party for
any substantial part of its property, or for the winding-up or liquidation of
its affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of thirty (30) consecutive days or such court shall enter a
decree or order granting any of the relief sought in such proceeding;

 

(q)                                 Any Loan Party shall commence a voluntary
case under any applicable bankruptcy, insolvency, reorganization or other
similar law now or hereafter in effect, shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator, conservator (or other similar official) of itself or for
any substantial part of its property or shall make a general assignment for the
benefit of creditors, or shall fail generally to pay its debts as they become
due, or shall take any action in furtherance of any of the foregoing;

 

(r)                                    An Event of Default shall have occurred
under the Note or the Deed of Trust or any other document executed and delivered
in connection therewith;

 

(s)                                   An event of default occurs under any other
lien or claim against the Land and/or the Improvements (other than residential
leases), whether alleged to be superior or junior to the lien of the Deed of
Trust;

 

(t)                                    Any action or proceeding is commenced,
excepting an action to foreclose the lien of the Deed of Trust or to collect the
indebtedness thereby secured, to which action or proceeding Lender is made a
party by reason of the execution of the Deed of Trust or the Note, or in which
it becomes necessary to defend or uphold the lien of the Deed of Trust, or the
priority thereof or possession of the Land and the Improvements, or otherwise
protect the security under

 

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the Deed of Trust and such action or proceeding is not dismissed within thirty
(30) days of the commencement thereof; or

 

(u)                                 Borrower shall sell, assign, give, mortgage,
pledge, hypothecate, encumber or otherwise transfer the Land and/or the
Improvements, or any part thereof or interest therein, voluntarily or
involuntarily, other than Leases permitted hereunder.

 

9.2                               Remedies.  Lender may exercise any or all of
the following rights and remedies:

 

(a)                                 Upon the occurrence of an Event of Default
or at any time thereafter during the continuance thereof, (i) if such event is
an Event of Default specified in clause (p) or (q) above, Lender shall be under
no further obligation to make disbursements of the Loan hereunder and the Loan,
all accrued and unpaid interest thereon, and all other amounts owing under the
Loan Documents shall immediately become due and payable, and Lender may exercise
any and all remedies and other rights provided in the Loan Documents, at law or
in equity, and (ii) if such event is any other Event of Default, any or all of
the following actions may be taken:  (x) Lender shall be under no further
obligation to make disbursements of the Loan hereunder; (y) Lender may declare
the unpaid principal amount of the Loan then outstanding and, all accrued and
unpaid interest thereon and all other amounts owing under the Loan Documents to
be due and payable forthwith, whereupon the same shall immediately become due
and payable to Lender without presentment, demand, protest or any other notice
of any kind, all of which are expressly hereby waived; and (z) Lender may
exercise any and all remedies and other rights provided pursuant to the Loan
Documents, at law or in equity.  Except as otherwise provided in this Section
9.2, presentment, demand, protest and all other notices of any kind are hereby
expressly waived.  Borrower hereby further expressly waives and covenants not to
assert any appraisement, valuation, stay, extension, redemption or similar laws,
now or at any time hereafter in force which might delay, prevent or otherwise
impede the performance or enforcement of any Loan Document.

 

(b)                                 If an Event of Default shall occur, Lender
and any branch, subsidiary or Affiliate of Lender shall have the right, in
addition to all other rights and remedies available to it, without notice to any
Loan Party, to set-off against and apply to the then unpaid balance of the Loan
and all other obligations of the Loan Parties hereunder or under any other Loan
Document any debt owing to, and any other funds held in any manner for the
account of, Borrower or such other Loan Party by Lender, or by such branch,
subsidiary or Affiliate of Lender, including without limitation, all funds in
all deposit accounts (whether time or demand, general or special, provisionally
credited or finally credited, or otherwise) now or hereafter maintained by
Borrower or such other Loan Party for its own account (but not including funds
held in custodian or trust accounts) with Lender or such branch, subsidiary or
Affiliate.  Such right shall exist whether or not Lender shall have made any
demand under this Agreement or any other Loan Document, whether or not such debt
owing to or funds held for the account of Borrower or such other Loan Party is
or are matured or unmatured and regardless of the existence or adequacy of any
Collateral, the Guaranties or other security, right or remedy available to
Lender;

 

(c)                                  If an Event of Default shall occur, and so
long thereafter as such Event of Default shall remain uncured, and whether or
not Lender shall have accelerated the maturity of the Loan pursuant to any of
the foregoing provisions of this Section 9.2, Lender may proceed to protect

 

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and enforce its rights by suit in equity, action at law and/or other appropriate
proceeding, for the specific performance of any covenant or agreement contained
in this Agreement or the other Loan Documents, including as permitted by
applicable Law, the obtaining of the ex parte appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of Lender;

 

(d)                                 From and after the date on which Lender has
taken any action pursuant to this Article 9 and until all Obligations have been
paid in full, any and all proceeds received by Lender from any sale or other
disposition of any Collateral, or any part thereof, or the exercise of any other
remedy by Lender, shall be applied as follows:

 

(i)                               first, to reimburse Lender for any additional
compensation due pursuant to Section 3.11 [Additional Compensation in Certain
Circumstances] hereof and for out-of-pocket costs, expenses and disbursements,
including without limitation, reasonable attorneys and paralegals’ fees and
legal expenses incurred by Lender in connection with realizing on any Collateral
or collection of any obligations of the Loan Parties under any of the Loan
Documents, including advances made subsequent to an Event of Default by  Lender
for the reasonable maintenance, preservation, protection or enforcement of, or
realization upon, any Collateral, advances for Impositions, insurance, repairs
and the like and reasonable expenses incurred to sell or otherwise realize on,
or prepare for sale or other realization on, any of the Collateral;

 

(ii)                            second, to the repayment of all Obligations in
the order determined by Lender in its discretion as to principal, interest fees
or other amounts; and

 

(iii)                         the balance, if any, as required by Law;

 

Notwithstanding anything to the contrary contained herein, no Swap Obligations
of any Non-Qualifying Party shall be paid with amounts received from such
Non-Qualifying Party under its Guaranty (including sums received as a result of
the exercise of remedies with respect to such Guaranty) or from the proceeds of
such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute
Excluded Hedge Liabilities, provided, however, that to the extent possible
appropriate adjustments shall be made with respect to payments and/or the
proceeds of Collateral from other Borrowers and/or Guarantors that are Eligible
Contract Participants with respect to such Swap Obligations to preserve the
allocation to Obligations otherwise set forth herein.

 

(e)                                  Lender shall have all of the rights and
remedies contained in this Agreement and the other Loan Documents (including the
right to appoint a receiver and all other rights described in the Deed of
Trust).  In addition, Lender shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code or other applicable Law, all of
which rights and remedies shall be cumulative and non-exclusive, to the extent
permitted by Law.  Lender may exercise all post-default rights granted to Lender
under the Loan Documents or applicable Law; and

 

(f)                                   Lender shall have the further right to
enter the Land and Improvements and take any and all actions necessary, in its
judgment, to secure, winterize, protect and preserve the

 

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Improvements and any materials or supplies located on the Land, to complete in
part or in full the construction of the Improvements, including, but not limited
to, making changes in the Plans, and entering into, and, subject to the terms
thereof, modifying or terminating the Construction and Development Documents and
other contractual arrangements.  If Lender elects to continue with the
construction of the Improvements, Lender will not assume any liability to
Borrower or any other Person for completing the Improvements or for the manner
or quality of construction of the Improvements and Borrower expressly waives any
such liability, except to the extent that such liability shall be caused
directly by the gross negligence or willful misconduct of Lender.  Borrower
irrevocably appoints Lender as its attorney-in-fact, with full power of
substitution, to complete the Improvements in Borrower’s name or Lender may
elect to complete construction in its own name.  In any event, all sums actually
expended by Lender in completing construction or otherwise exercising its rights
hereunder or under the other Loan Documents will be secured by the Deed of Trust
and all other Collateral Documents and shall bear interest at the Default Rate.

 

9.3                               Notice of Sale.  Any notice required to be
given by Lender of a sale, lease, or other disposition of any Collateral or any
other intended action by Lender, if given five (5) Business Days prior to such
proposed action, shall constitute commercially reasonable and fair notice
thereof to Borrower.

 

10.                               MISCELLANEOUS

 

10.1                        Modifications; No Implied Waivers; Cumulative
Remedies; Writing Required.  Except as may be otherwise provided in any Loan
Document, Lender and Borrower may from time to time enter into written
agreements amending or changing any provision of any Loan Document or the rights
of Lender or Loan Parties hereunder or thereunder, and Lender may grant written
waivers or consents to a departure from the due performance of the obligations
of Loan Parties hereunder or thereunder.  Such agreements, waivers or consents
will bind all Loan Parties, provided however, that unless otherwise provided by
the terms of this Agreement, no agreement, waiver or consent which could modify
the interests, rights or obligations of Lender will be effective without the
written consent, waiver or agreement of Lender.  The Loan Parties hereby
expressly and knowingly acknowledge and agree that the provisions of this
Section 10.1 shall apply to any amendments, changes, waivers or consents which
increase the risk of any Loan Party.  Notwithstanding anything herein to the
contrary, Lender may modify this Agreement for the purposes of completing
missing content or correcting erroneous content, without the need for a written
amendment, provided that Lender shall thereafter send a copy of any such
modification to  Borrower (which notice may be given by electronic mail to
Borrower).  No course of dealing and no delay or failure of Lender in exercising
any right, power, remedy or privilege under this Agreement or any other the Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall any single or partial exercise thereof or any
abandonment or discontinuance of steps to enforce such a right, power, remedy or
privilege preclude any further exercise thereof or of any other right, power,
remedy or privilege.  The rights and remedies of Lender under this Agreement and
any other Loan Documents are cumulative and not exclusive of any rights or
remedies which they would otherwise have.  Any amendment or modification of this
Agreement or any other Loan Document and any waiver, permit, consent or approval
of any kind or character on the part of Lender of any breach or default under
this Agreement or any such waiver of any provision or condition of this
Agreement

 

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must be a writing signed by Lender and shall be effective only to the extent
specifically set forth in such writing.

 

10.2                        Reimbursement and Indemnification of Lender by
Borrower; Impositions.  Borrower unconditionally agrees to pay or reimburse
Lender and hold Lender harmless from and against (a) liability for the payment
of all reasonable out of pocket costs, expenses and disbursements, including,
but not limited to, fees and expenses of Lender’s Consultants (as hereinafter
defined), incurred by Lender (i) in connection with the development,
negotiation, preparation, administration, printing, execution, syndication,
interpretation and performance of this Agreement and the other Loan Documents,
(ii) relating to any amendments, waivers or consents requested by Borrower
pursuant to the provisions hereof, (iii) in connection with the enforcement of
this Agreement or any other Loan Document or collection of amounts due hereunder
or thereunder or the proof and allowability of any claim arising under this
Agreement or any other Loan Document, whether in bankruptcy or receivership
proceedings or otherwise, it being expressly understood that in the event of a
judgment on the Loan, Borrower shall pay all costs and expenses incurred by
Lender in satisfying such judgment, including, without limitation, reasonable
fees and expenses of Lender’s counsel and such agreement by Borrower to pay all
post judgment costs and expenses is absolute and unconditional and (A) shall
survive and not merge into the entry of such judgment and (B) shall not be
limited regardless of whether (or to the extent) Lender exercises any available
rights or remedies against the Collateral, (iv) in any workout or restructuring
or in connection with the protection, preservation, exercise or enforcement of
any of the terms hereof or of any rights hereunder or under any other Loan
Document or in connection with any foreclosure, collection or bankruptcy
proceedings, and (v) in connection with any claim threatened or asserted against
Lender in any way relating to or arising out of this Agreement or any other Loan
Documents (including, without limitation, the protection, preservation, exercise
or enforcement of any of the terms hereof or of any rights hereunder or under
any other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings or in any workout or restructuring), and (b) all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against Lender in any way relating to or
arising out of this Agreement or any other Loan Documents or any action taken or
omitted by Lender hereunder or thereunder.  For the purposes of the foregoing,
the term “Lender’s Consultants” shall mean the Inspecting Architect, appraisers
and Lender’s legal counsel, insurance consultants, environmental consultants,
accountants, financial consultants and other third party consultants retained
pursuant to the Loan Documents in connection with the foregoing.  In addition,
Borrower agrees to reimburse and pay all reasonable out of pocket expenses of
Lender’s regular employees and agents periodically to perform audits of the Loan
Parties’ books, records and business properties; provided such expenses shall
not exceed $2,500 per calendar year.

 

10.3                        Holidays.  Whenever payment of any portion of the
Loan to be made or taken hereunder shall be due on a day which is not a Business
Day such payment shall be due on the next Business Day (except as provided in
Section 3.2 [Loan Requests/Interest Periods] hereof with respect to Interest
Periods under the LIBOR Rate Option) and such extension of time may be included
in computing interest and fees, except that the Loan shall be due on the
Business Day preceding the Expiration Date if the Expiration Date is not a
Business Day.  Whenever any payment or action to be made or taken hereunder
(other than payment of the Loans) shall be

 

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stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day, and such extension of
time may not be included in computing interest or fees, if any, in connection
with such payment or action.

 

10.4                        Funding by Branch, Subsidiary or Affiliate.

 

(a)                                 Notional Funding.  Lender shall have the
right from time to time, without notice to Borrower, to deem any branch,
subsidiary or Affiliate (which for the purposes of this Section 10.4 shall mean
any corporation or association which is directly or indirectly controlled by or
is under direct or indirect common control with any corporation or association
which directly or indirectly controls Lender) of Lender to have made, maintained
or funded any portion of the Loan to which the LIBOR Rate Option applies at any
time, provided that immediately following (on the assumption that a payment were
then due from Borrower to such other office), and as a result of such change,
Borrower would not be under any greater financial obligation pursuant to Section
3.11 [Additional Compensation in Certain Circumstances] hereof than it would
have been in the absence of such change.  Notional funding offices may be
selected by Lender without regard to Lender’s actual methods of making,
maintaining or funding the Loan or any sources of funding actually used by or
available to Lender.

 

(b)                                 Actual Funding.  Lender shall have the right
from time to time to make or maintain any portion of the Loan by arranging for a
branch, subsidiary or Affiliate of Lender to make or maintain such portion of
the Loan subject to the last sentence of this Section 10.4(b).  If Lender causes
a branch, subsidiary or Affiliate to make or maintain any portion of the Loan
hereunder, all terms and conditions of this Agreement shall, except where the
context clearly requires otherwise, be applicable to such portion of the Loan to
the same extent as if such portion of the Loan were made or maintained by
Lender, but in no event shall Lender’s use of such a branch, subsidiary or
Affiliate to make or maintain any part of the Loan hereunder cause Lender or
such branch, subsidiary or Affiliate to incur any cost or expenses payable by
Borrower hereunder or require Borrower to pay any other compensation to Lender
(including any expenses incurred or payable pursuant to Section 3.11 [Additional
Compensation in Certain Circumstances] hereof) which would otherwise not be
incurred.

 

10.5                        Notices.  Any notice, request, demand, direction or
other communication (for purposes of this Section 10.5 only, a “Notice”) to be
given to or made upon any party hereto under any provision of this Agreement
shall be given or made in writing (which includes means of electronic
transmission (i.e., “e-mail”) or facsimile transmission has previously been
delivered to the applicable parties hereto by another means set forth in this
Section 10.5) in accordance with this Section 10.5.  Any such Notice must be
delivered to the applicable parties hereto at the addresses and numbers set
forth under their respective names on Schedule 1.1(B) attached hereto or in
accordance with any subsequent unrevoked Notice from any such party that is
given in accordance with this Section 10.5.  Any Notice shall be effective:

 

(a)                                 In the case of hand-delivery, when
delivered;

 

(b)                                 If given by mail, four (4) days after such
Notice is deposited with the United States Postal Service, with first-class
postage prepaid, return receipt requested;

 

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(c)                                  In the case of facsimile transmission, when
sent to the applicable party’s facsimile machine’s telephone number, if the
party sending such Notice receives confirmation of the delivery thereof from its
own facsimile machine;

 

(d)                                 In the case of electronic transmission, when
actually received; and

 

(e)                                  If given by any other means (including by
overnight courier), when actually received.

 

10.6                        Severability.  The provisions of this Agreement are
intended to be severable.  If any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.

 

10.7                        Governing Law.  This Agreement shall be deemed to be
a contract under the State of North Carolina and for all purposes shall be
governed by and construed and enforced in accordance with the internal Laws of
the State of North Carolina without regard to its conflict of laws principles.

 

10.8                        Prior Understanding.  This Agreement and the other
Loan Documents, supersede all prior understandings and agreements, whether
written or oral, between the parties hereto and thereto relating to the
transactions provided for herein and therein, including any prior
confidentiality agreements and commitments.  This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.

 

10.9                        Duration; Survival.  All representations and
warranties of the Loan Parties contained herein or made in connection herewith
shall survive the making of the Loan and shall not be waived by the execution
and delivery of this Agreement, any investigation by Lender, the making of the
Loan, or payment in full of the Obligations in each case.  All covenants and
agreements of the Loan Parties contained in Article 4 [Affirmative Covenants],
Article 5 [Negative Covenants] and Article 7 [Reporting Requirements] hereof
shall continue in full force and effect from and after the date hereof until
payment in full of the Obligations.  All covenants and agreements of Borrower
contained herein relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification, including those set
forth in the Note and Section 3.11 [Additional Compensation in Certain
Circumstances] and Section 10.2 [Reimbursement and Indemnification of Lender by
Borrower; Impositions] hereof, shall survive payment in full of the Obligations.

 

10.10                 Successors and Assigns.

 

(a)                                 This Agreement shall be binding upon and
shall inure to the benefit of Lender and the Loan Parties and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights and obligations hereunder or any interest herein. 
Lender may, at its own cost, make assignments of or sell participations in all
or any part of the Loan.

 

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Upon surrender of any Note subject to such assignment, Borrower shall execute
and deliver a replacement note or notes.

 

(b)                                 Notwithstanding any other provision in this
Agreement, Lender may at any time pledge or grant a security interest in all or
any portion of its rights under this Agreement, the Note and the other Loan
Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB
or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent
of Borrower or Lender.  No such pledge or grant of a security interest shall
release Lender of its obligations hereunder or under any other Loan Document.

 

(c)                                  The Loan Parties agree to make
modifications to the Loan Documents required by a prospective assignee so long
as such modification (1) is necessary to effectuate a partial assignment of the
Loan, (2) does not relate to the Expiration Date, the aggregate amount of the
Loan or any fee, rate of interest or other amount payable by such Loan Party,
and (3) does not affect the Loan Parties’ rights or obligations under the Loan
Documents in a material adverse manner.  Permitted modifications will include
those relating to the relationship between Lender and any prospective assignee.

 

10.11                 Confidentiality.

 

(a)                                 Lender agrees to keep confidential all
information obtained from any Loan Party which Lender knows is nonpublic and
confidential or proprietary in nature (including any information Borrower
specifically designates as confidential), except as provided below, and to use
such information only in connection with their respective capacities under this
Agreement and for the purposes contemplated hereby.  Lender shall be permitted
to disclose such information (i) to outside legal counsel, accountants and other
professional advisors who need to know such information in connection with the
administration and enforcement of this Agreement, subject to agreement of such
Persons to maintain the confidentiality, (ii) to assignees and participants as
contemplated by Section 10.10 [Successors and Assigns] hereof, (iii) to the
extent requested by any bank regulatory authority or, with notice to Borrower,
as otherwise required by applicable Law or by any subpoena or similar legal
process, or in connection with any investigation or proceeding arising out of
the transactions contemplated by this Agreement, (iv) if it becomes publicly
available other than as a result of a breach of this Agreement or becomes
available from a source not known to be subject to confidentiality restrictions,
or (v) if Borrower shall have consented to such disclosure.  Lender shall
satisfy its obligations to maintain confidentiality pursuant to this Section
10.11 if Lender utilizes the same control (but no less than reasonable) as it
would employ to avoid disclosure of its own confidential information of similar
importance. This obligation in this Section 10.11 shall have no force or effect
following one (1) year after indefeasible payment of the Loan.

 

(b)                                 Each Loan Party acknowledges that from time
to time financial advisory, investment banking and other services may be offered
or provided to Borrower or one or more of its Affiliates (in connection with
this Agreement or otherwise) by Lender or by one or more subsidiaries or
Affiliates of Lender and each of the Loan Parties hereby authorizes Lender to
share any information delivered to Lender by such Loan Party pursuant to this
Agreement, or in connection with the decision of Lender to enter into this
Agreement, to any such subsidiary or Affiliate of Lender, it being understood
that any such subsidiary or Affiliate of Lender receiving

 

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such information shall be bound by the provisions of this Section 10.11 as if it
were a Lender hereunder.  Such authorization shall survive the repayment of the
Loan.

 

10.12                 Counterparts.  This Agreement may be executed by different
parties hereto on any number of separate counterparts, each of which, when so
executed and delivered, shall be an original, and all such counterparts shall
together constitute one and the same instrument.

 

10.13                 Lender’s Consent.  Except as otherwise expressly provided
in this Agreement or any of the other Loan Documents, whenever Lender’s consent
is required to be obtained under this Agreement or any of the other Loan
Documents as a condition to any action, inaction, condition or event, Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion and to condition its consent upon the giving of additional
collateral, the payment of money or any other matter.

 

10.14                 Exceptions.  The representations and warranties and
covenants contained herein shall be independent of each other, and no exception
to any representation, warranty or covenant shall be deemed to be an exception
to any other representation, warranty or covenant contained herein unless
expressly provided, nor shall any such exceptions be deemed to permit any action
or omission that would be in contravention of applicable Law.

 

10.15                 Consent to Forum.  BORROWER HEREBY IRREVOCABLY CONSENTS TO
THE NONEXCLUSIVE JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE COUNTY OR
JUDICIAL DISTRICT WHERE THE PROJECT IS LOCATED, AND ANY APPELLATE COURT FROM ANY
OF THE FOREGOING, PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT LENDER
FROM BRINGING ANY ACTION, ENFORCING ANY AWARD OR JUDGMENT OR EXERCISING ANY
RIGHTS AGAINST BORROWER INDIVIDUALLY AGAINST ANY SECURITY OR AGAINST ANY
PROPERTY OF BORROWER WITHIN ANY OTHER COUNTY, STATE OR OTHER FOREIGN OR DOMESTIC
JURISDICTION.  BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND AGREES THAT
ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO
BORROWER AT THE ADDRESSES PROVIDED FOR IN SECTION 10.5 [NOTICES] HEREOF AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. 
BORROWER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE.

 

10.16                 No Third Parties Benefited.  This Agreement is made and
entered into for the sole protection and benefit of the Loan Parties and
Lender.  No trust fund is created by this Agreement and no other Persons or
entities will have any right of action under this Agreement or any right against
Lender to obtain any proceeds of the Loan.

 

10.17                 Authority to File Notices.  Borrower irrevocably appoints
Lender as its attorney-in-fact, with full power of substitution, to file for
record, at Borrower’s cost and expense and in

 

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Borrower’s name, any notices that Lender considers reasonably necessary or
desirable to protect the Collateral.

 

10.18                 Signs; Publicity.  Borrower may, at Borrower’s expense,
erect a sign or signs as reasonably approved by Lender upon the Land and
Improvements at any reasonable location indicating the source of the development
and construction financing.  The announcement of, and the issuance of any
publicity with respect to, the Loan and the transactions contemplated hereby
shall be subject to the prior written approval of Lender, which approval shall
not be unreasonably withheld or delayed.  To the extent permitted by law, at the
request of Lender, Borrower shall, at Lender’s expense, install a sign(s) of
Lender’s choosing on the Land, stating that construction financing is provided
by Lender.  Borrower shall obtain any necessary approvals required to display
such sign(s).  Any such sign(s) shall be located at or near the entrance to the
project or at another mutually acceptable location which will permit the viewing
of the sign(s) by the public and shall be removed upon the earlier of the
Completion Date or the Expiration Date.

 

10.19                 Interpretation.  Whenever the context requires, all words
used in the singular will be construed to have been used in the plural, and vice
versa, and each gender will include any other gender.  The captions of the
articles, sections, schedules and exhibits of this Agreement are for convenience
only and do not define or limit any terms or provisions.  In the event of a
conflict between the terms of the other Loan Documents and the terms of this
Agreement, the terms of this Agreement shall control.

 

10.20                 Status of Parties.  It is understood and agreed that the
relationship of the parties hereto is that of borrower and lender and that
nothing contained herein or in any of the other Loan Documents shall be
construed to constitute a partnership, joint venture or co tenancy among the
Loan Parties or Lender.

 

10.21                 Brokerage Fee.  The Loan Parties represent to Lender that
no broker or other Person is entitled to a brokerage fee or commission as a
result of the Loan Parties’ actions or undertakings in connection with the
financing of the Improvements and agrees to hold Lender harmless from all claims
for brokerage commissions which may be made as a result of such actions or
undertakings, if any.

 

10.22                 Dispute Resolution.

 

(i)                                     Arbitration of Disputes.  Borrower and
Lender shall submit any and all disputes arising out of or relating to this
Agreement or the breach thereof (a “Dispute”) to binding arbitration pursuant to
and in accordance with the AAA Commercial Arbitration Rules and, where
applicable, the Supplementary Rules for Large, Complex Commercial Disputes, and
judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.  Such arbitration shall be conducted in a mutually
acceptable location and any arbitrator shall have experience in real estate
finance and development.  The procedures specified herein shall be the sole and
exclusive procedures for the resolution of Disputes; provided, however, that
Borrower or Lender may seek provisional or ancillary remedies, such as
preliminary injunctive relief, from a court having jurisdiction, before, during
or after the pendency of any arbitration proceeding.  The institution and
maintenance of any action for such judicial relief, or pursuit of provisional or
ancillary remedies, shall not constitute a waiver of the

 

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right or obligation of any party to submit any claim or dispute to arbitration. 
Nothing herein shall in any way limit or modify any remedies available to Lender
under the Loan Documents or otherwise at law or in equity.

 

(ii)                                  Motion Practice.  In any arbitration
hereunder, the arbitrator(s) shall decide any pre-hearing motions which are
substantially similar to pre-hearing motions to dismiss for failure to state a
claim or motions for summary adjudication.

 

(iii)                               Discovery.  Discovery shall be limited to
the pre-hearing exchange of all documents which Borrower and Lender intend to
introduce at the hearing and any expert reports prepared by any expert who will
testify at the hearing.

 

(iv)                              Sequential Hearing Days.  At the
administrative conference conducted by the AAA, Borrower and Lender and the AAA
shall determine how to ensure that the hearing is started and completed on
sequential hearing days.  Potential arbitrators shall be informed of the
anticipated length of the hearing and they shall not be subject to appointment
unless they agree to abide by the parties’ intent that, absent exigent
circumstances, the hearing shall be conducted on sequential days.

 

(v)                                 Award.  The award of the arbitrator(s) shall
be accompanied by a statement of the reasons upon which such award is based.

 

(vi)                              Fees and Expenses.  Borrower and Lender shall
each bear equally all fees and costs and expenses of the arbitration, and each 
shall bear its own legal fees and expenses and the costs of its experts and
witnesses; provided, however, that if the arbitration panel shall award to a
party substantially all relief sought by such party, then, notwithstanding any
applicable governing law provisions, the other party shall pay all costs, fees
and expenses incurred by the prevailing party and such costs, fees and expenses
shall be included in such award.

 

(vii)                           Confidentiality of Disputes.  The entire
procedure shall be confidential and none of the parties nor arbitrator(s) may
disclose the existence, content, or results of any arbitration hereunder without
the written consent of all parties to the Dispute, except (i) to the extent
disclosure is required to enforce any applicable arbitration award or may
otherwise be required by law and (ii) that either party may make such
disclosures to its regulators, auditors, accountants, attorneys and insurance
representatives.  No conduct, statements, promises, offers, views, or opinions
of any party involved in an arbitration hereunder shall be discoverable or
admissible for any purposes in litigation or other proceedings involving the
parties to the Dispute and shall not be disclosed to anyone not an agent,
employee, expert, witness, or representative for any of such parties.

 

10.23                 Time of Essence.  Time is of the essence with respect to
each obligation of the Loan Parties and Lender hereunder.

 

10.24                 USA Patriot Act Notice.  To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify and record information that identifies
Borrower that opens an account.  What this means: when Borrower opens an
account, Lender will ask for the business name, business address, taxpayer

 

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identifying number and other information that will allow Lender to identify
Borrower, such as organizational documents. For some businesses and
organizations, Lender may also need to ask for identifying information and
documentation relating to certain individuals associated with the business or
organization.

 

[SIGNATURE PAGES FOLLOW]

 

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[SIGNATURE PAGE TO CONSTRUCTION LOAN AGREEMENT]

 

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed this Construction Loan Agreement under seal as of the
day and year first above written with the intent to be legally bound hereby.

 

 

 

BORROWER:

 

 

 

 

 

FMF MOREHEAD LLC, a Delaware limited liability company

 

 

 

 

 

 

By:

Forestar (USA) Real Estate Group Inc., a Delaware corporation, its sole member

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Charles D. Jehl

[SEAL]

 

 

 

Name:

Charles D. Jehl

 

 

 

Title:

Chief Financial Officer and Treasurer

 

 

STATE OF COLORADO

)

 

)               ss:

COUNTY OF DENVER

)

 

On this, the 15th  day of October, 2015, before me, a Notary Public, the
undersigned officer, personally appeared Charles D. Jehl, who acknowledged
himself to be the Chief Financial Officer and Treasurer of Forestar (USA) Real
Estate Group Inc., a Delaware corporation, the sole member of FMF MOREHEAD LLC,
a Delaware limited liability company, and that he, in such capacity, being
authorized to do so, executed the foregoing instrument for the purposes therein
contained by signing on behalf of said limited liability company.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

 

 

/s/ Natalie Bell

 

Notary Public

 

OF Colorado

 

My commission expires: June 2, 2019

 

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[SIGNATURE PAGE TO CONSTRUCTION LOAN AGREEMENT]

 

 

LENDER:

 

 

 

PNC BANK, NATIONAL ASSOCIATION

 

 

 

 

 

 

 

By:

/s/ Richard Trzybinski

 

Name:

Richard Trzybinski

 

Title:

Senior Vice President

 

--------------------------------------------------------------------------------

 

JOINDER OF GUARANTOR

 

The undersigned (“Guarantor”) hereby joins in this Construction Loan Agreement,
solely for the purpose of making the representations and warranties with respect
to it contained in Article 8 of this Construction Loan Agreement and for the
purpose of covenanting and agreeing to be bound by the covenants and agreements
with respect to it contained in Article 4, Article 5 and elsewhere in this
Construction Loan Agreement.

 

 

 

GUARANTOR:

 

 

 

 

 

FORESTAR GROUP INC., a Delaware corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Charles D. Jehl

[SEAL]

 

 

 

Name:

Charles D. Jehl

 

 

 

Title:

Chief Financial Officer and Treasurer

 

 

STATE OF COLORADO

)

 

)               ss:

COUNTY OF DENVER

)

 

On this, the 15th day of October, 2015, before me, a Notary Public, the
undersigned officer, personally appeared Charles D. Jehl, who acknowledged
himself to be the Chief Financial Officer and Treasurer of FORESTAR GROUP INC.,
a Delaware corporation, and that he, in such capacity, being authorized to do
so, executed the foregoing instrument for the purposes therein contained by
signing on behalf of said corporation.

 

IN WITNESS WHEREOF, I hereunto set my hand and official seal.

 

 

 

/s/ Natalie Bell

 

Notary Public

 

OF Colorado

 

My commission expires: June 2, 2019

 

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