Exhibit 10.1

 

LOAN AGREEMENT

 

for a loan in the amount of

 

$30,000,000

 

MADE BY AND BETWEEN

 

TS NEW BERN, LLC,
a Delaware limited liability company,
successor by merger with
Newbern Station Holdings, LLC
and
Fountains at Newbern Station, LLC,
each a North Carolina limited liability company

As "Borrower"

 

AND

 

NXT CAPITAL, LLC,
a Delaware limited liability company
As "Lender"

 

"Fountains at South End"

120 and 126 New Bern Street

Charlotte, North Carolina

 

Dated as of September 23, 2013

 

 

 

 

TABLE OF CONTENTS

 

ARTICLE 1 INCORPORATION OF EXHIBITS AND SCHEDULES; DEFINITIONAL PROVISIONS 1    
  1.1 Incorporation of Exhibits and Schedule. 1   1.2 Definitional Provisions. 1
        ARTICLE 2 LOAN AND LOAN DOCUMENTS 1       2.1 Conditions Precedent to
Funding of Loan. 1   2.2 Disbursement. 1   2.3 Interest. 1   2.4 Term of the
Loan. 2   2.5 Monthly Payments. 2   2.6 Prepayments. 2   2.7 Exit Fee/Minimum
Interest Recovery. 2   2.8 Late Charge. 3   2.9 Application of Payments and
Blocked Account. 3         ARTICLE 3 FINANCIAL REPORTING COVENANTS 4       3.1
Financial Information Reporting. 4   3.2 Other Information; Financial
Information Form and Examination. 4         ARTICLE 4 OPERATIONAL AND OTHER
COVENANTS 5       4.1 Leasing and Operational Covenants. 5   4.2 Other Borrower
Covenants. 6   4.3 Authorized Representative. 15         ARTICLE 5 BORROWER'S
REPRESENTATIONS AND WARRANTIES 15       5.1 Borrower's Representations and
Warranties. 15         ARTICLE 6 CASUALTY AND CONDEMNATION 21       6.1 Lender's
Election to Apply Insurance Proceeds on Indebtedness. 20   6.2 Borrower's
Obligation to Rebuild and Use of Insurance Proceeds Therefor. 21         ARTICLE
7 EVENTS OF DEFAULT AND REMEDIES 22       7.1 Events of Default. 22   7.2
Remedies Conferred Upon Lender. 23         ARTICLE 8 LOAN EXPENSE, COSTS AND
ADVANCES 24       8.1 Loan and Administration Expenses. 24   8.2 Increased
Costs. 25   8.3 Borrower Withholding. 25         ARTICLE 9 ASSIGNMENTS BY LENDER
AND DISCLOSURE 25       9.1 Assignments and Participations. 25   9.2 Disclosure
of Information and Confidentiality. 27   9.3 Dissemination of
Information/Cooperation. 27         ARTICLE 10 GENERAL PROVISIONS 27       10.1
Captions. 27   10.2 Waiver of Jury Trial; Waiver of Counterclaims. 27   10.3
Jurisdiction. 28   10.4 Governing Law. 28   10.5 Lawful Rate of Interest. 28  
10.6 Modification; Consent. 29   10.7 Waivers; Acquiescence or Forbearance Not
to Constitute Waiver of Lender's Requirements. 29   10.8 Disclaimer by Lender;
No Third Party Beneficiaries. 30

 

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  10.9 Partial Invalidity; Severability. 30   10.10 Definitions Include
Amendments. 30   10.11 Execution in Counterparts. 30   10.12 Entire Agreement.
30   10.13 Waiver of Damages. 30   10.14 Claims Against Lender. 30   10.15
Set-Offs. 31   10.16 Relationship. 31   10.17 Agents. 31   10.18 Interpretation.
31   10.19 Successors and Assigns. 31   10.20 Time is of the Essence. 31   10.21
Notices. 32   10.22 Advertisement/Publicity. 32

 

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LIST OF EXHIBITS AND SCHEDULES TO LOAN AGREEMENT

 

Joinder  Limited Joinder     Exhibit A Reserved     Exhibit B Reserved    
Exhibit C Reserved     Exhibit D Reserved     Exhibit E Insurance Requirements  
  Exhibit F Litigation     Exhibit G Organizational Chart     Exhibit H Rent
Roll     Exhibit I  Legal Description of Land     Schedule I Definitions    
Schedule II Press Release

 

iii

 

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT (as amended, modified, restated, extended, waived,
supplemented or replaced from time to time, this "Agreement") is dated as of
September 23, 2013, is by and between Borrower and Lender. In consideration of
the mutual covenants, conditions and agreements herein contained, Borrower and
Lender agree as follows:

 

ARTICLE 1
INCORPORATION OF EXHIBITS AND SCHEDULES; DEFINITIONAL PROVISIONS

 

1.1Incorporation of Exhibits and Schedule.

 

Exhibits A through I, the Limited Joinder and Schedules I and II to this
Agreement, attached hereto are incorporated in this Agreement and expressly made
a part hereof by this reference.

 

1.2Definitional Provisions.

 

All terms defined in Schedule I of this Agreement or otherwise in this Agreement
shall, unless otherwise defined therein, have the same meanings when used in the
Note, Security Instrument, any other Loan Documents, or any certificate or other
document made or delivered pursuant hereto. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement. All article, section or subsection references when used in
this Agreement shall, unless otherwise described, refer to the applicable
article, section or subsection of this Agreement. The word "include(s) " when
used in this Agreement and the other Loan Documents means "include(s), without
limitation," and the word "including" means "including, but not limited to."
Unless otherwise expressly modified in the Loan Documents, the term "days"
refers to calendar days.

 

ARTICLE 2
LOAN AND LOAN DOCUMENTS

 

2.1Conditions Precedent to Funding of Loan.

 

Borrower agrees that Lender's obligation to close the Loan is conditioned upon
Borrower's delivery, performance and satisfaction, as applicable, all in
Lender's sole and absolute discretion, of (i) all items set forth in the Loan
Application, including Borrower's payment to Lender of the Loan Fee, (ii) this
Agreement and the other Loan Documents, (iii) a legal opinion for the benefit of
Lender issued by counsel for Borrower, (iv) all items on that certain Closing
Checklist issued with respect to such Loan Application (other than those items
identified in said Closing Checklist to be delivered post-closing), and (v) such
other documents, instruments or certificates as Lender and its counsel may
require, including such documents as Lender deems necessary or appropriate to
effectuate the terms and conditions of this Agreement and the other Loan
Documents, and to comply with the Laws of the states of Illinois and North
Carolina.

 

2.2Disbursement.

 

Subject to the terms, provisions and conditions of this Agreement and the other
Loan Documents, on the Closing Date, Borrower agrees to borrow from Lender and
Lender shall disburse to Borrower the proceeds of the Loan.

 

2.3Interest.

 

Provided that no Event of Default exists, the principal amount of the Loan
outstanding from time to time shall bear interest at the Interest Rate. So long
as an Event of Default exists, interest shall accrue at the Default Rate and all
references to "Interest Rate" herein shall mean the Default Rate.

 

 

 

 

2.4Term of the Loan.

 

(a)          Unless due and payable sooner pursuant to Section 2.5 or Article 7,
all Indebtedness shall be due and payable in full on the Maturity Date, provided
that Borrower shall have the right to extend the Maturity Date (the "Extension
Option") for one additional 3 month term (such 3 month period is hereinafter
referred to as the "Extension Term"), thereby extending the Maturity Date to the
last day of the Extension Term.

 

(b)          Borrower may only exercise the Extension Option upon satisfying the
following conditions:

 

(i)           Borrower shall have delivered to Lender written notice of such
election no earlier than 120 days and no later than 90 days prior to the then
current Maturity Date;

 

(ii)          Such notice is accompanied by an extension fee equal to $150,000
(which extension fee shall be refunded to Borrower if Borrower does not qualify
for the Extension Option);

 

(iii)         Lender shall have received Borrower's and Guarantor's most recent
financial statements in the form approved by Lender, certified as complete and
correct by Borrower and Guarantor. There must be no Material Adverse Change in
Borrower's or Guarantor's financial condition as of the date of the notice of
extension and as of the commencement date of the Extension Term;

 

(iv)          No Default exists and no Event of Default previously occurred or
exists under the Loan Documents; and

 

(v)           Project Yield must be equal to or greater than 6.5% as of the date
of the notice of extension and as of the commencement date of the Extension
Term.

 

2.5Monthly Payments.

 

Commencing on the Payment Commencement Date and continuing on the first day of
each month thereafter, Borrower shall pay to Lender Accrued Interest.

 

At Lender's option, all monthly payments due to Lender shall be paid to Lender
by Automated Clearing House debit of immediately available funds from the
financial institution account designated by Borrower in the Automated Clearing
House debit authorization executed by Borrower in connection with this
Agreement; and shall be effective upon receipt. Borrower shall execute any and
all forms and documentation necessary from time to time to effectuate such
automatic debiting. In no event shall any such payments be refunded to Borrower.

 

2.6Prepayments.

 

Borrower shall have the right to make prepayments of the Loan in full, but not
in part, at any time, provided Borrower (i) gives Lender at least seven
(7) days' prior written notice, (ii) pays the Exit Fee due hereunder based upon
the amount of the Loan prepaid at such time, and (iii) pays the Minimum Interest
Recovery, if any. Any prepayment received hereunder shall be applied to the
Indebtedness in the manner set forth in Section 2.9.

 

In the event Borrower receives any payment or deposit proceeds with respect to a
purchase contract, other agreement, or a non-residential Lease of the Project
(other than rental payments and expense reimbursements) including lease
termination, retention of deposits, cancellation or similar fees and insurance
or condemnation proceeds, such payment shall be made to Lender and shall be
applied by Lender to prepay the principal balance of the Loan and a
proportionate share of the Exit Fee.

 

2.7Exit Fee/Minimum Interest Recovery.

 

Upon any repayment of the Loan in full, whether on the Maturity Date or on any
other date (including upon the acceleration of the Loan by Lender as provided
herein), Borrower will pay to Lender the Exit Fee, PLUS, the Minimum Interest
Recovery. The Exit Fee and Minimum Interest Recovery shall be deemed earned upon
the execution of this Agreement, and Borrower hereby acknowledges and agrees
that the Exit Fee and Minimum Interest Recovery is each a bargained for
consideration and a material inducement to Lender's making the Loan and is not a
penalty.

 

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2.8Late Charge.

 

If any payment of principal (other than the final payment of principal due at
maturity), interest due on the Loan, or any other amounts due hereunder or per
the Note or the other Loan Documents is not timely received by Lender within
five (5) days of the due date therefor, Borrower, without notice or demand by
Lender, promptly shall pay an amount equal to five percent (5%) of each
delinquent payment ("Late Charge").

 

2.9Application of Payments and Blocked Account.

 

(a)          Application of Payments. Except as otherwise provided in this
Agreement, all payments made on the Loan and all amounts in the Blocked Account
after an Event of Default shall be applied to the Indebtedness in such order,
priority and manner as Lender may elect. All amounts applied to reduce the
outstanding principal balance of the Loan shall result in a permanent principal
reduction of the Loan and shall not be available for re-borrowing.

 

(b)          Blocked Account: Borrower will cause all Gross Revenues (other than
tenant security deposits, which shall be deposited directly into the Security
Deposit Account) to be deposited to the Blocked Account and shall give
irrevocable notices to account debtors of Borrower or the Project (other than
residential tenants) to make all payments made by wire transfer, directly to the
Blocked Account. So long as no Event of Default has occurred under this
Agreement or any of the other Loan Documents, Borrower will disburse funds from
the Blocked Account in the following order of priority:

 

(i)          First, to pay any unpaid Expenses and other costs;

 

(ii)         next, to pay all Accrued Interest then due and payable;

 

(iii)        next, to Lender to make the required monthly payment amounts to the
Insurance Escrow and Property Tax Escrow pursuant to Section 4.2;

 

(iv)        next, to Lender to make the required deposits into the Replacement
Reserve under Section 4.1(m);

 

(v)         next, to pay other Indebtedness due under the Loan Documents;

 

(vi)        next, to pay Eligible Expenses; and

 

(vii)       Finally, Excess Cash Flow may be distributed by Borrower if there is
no Event of Default then outstanding, subject to the restriction on
distributions set forth in Section 4.1(e).

 

Commencing on the Payment Commencement Date and continuing on the first day of
each month thereafter, the amounts described in clauses (i), (ii), (iii),
(iv) and (v) above shall be due and payable whether or not Gross Revenues are
sufficient therefor. Pursuant to the Bank Account Control Agreement, Lender is
hereby authorized to notify any Depository Bank that an Event of Default has
occurred and is continuing under this Agreement or any of the other Loan
Documents.

 

(c)          Security Deposits. Borrower shall immediately transfer all security
deposits received from tenants at the Project to the Security Deposit Account
and Borrower shall utilize the funds in such accounts only strictly in
accordance with the terms of the applicable Leases governing the use of such
security deposits thereunder, and in accordance with applicable Law.

 

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ARTICLE 3
FINANCIAL REPORTING COVENANTS

 

3.1Financial Information Reporting.

 

(a)          Monthly Information. Within 20 days following the end of each
calendar month, Borrower shall deliver to Lender: (i) monthly unaudited
operating statements for the Project, showing actual sources and uses of cash
during such month, (ii) a current rent roll (including monthly delinquency
reports and a monthly schedule of delinquency receipts and payments) (iii) a
summary of all leasing activity then taking place with respect to the Project,
particularly describing the status of all pending non-residential lease
negotiations, if any, and (iv)  monthly bank statements for the Blocked Account
and the Security Deposit Account.

 

(b)          Quarterly Information. Within 45 days following the end of each
calendar quarter, Borrower shall deliver to Lender quarterly unaudited financial
statements (including a balance sheet, an income statement and a statement of
cash flows) of Borrower.

 

(c)          Annual Information. Within 15 days following the end of each fiscal
year, Borrower shall deliver to Lender the Project's updated annual operating
budget for the following fiscal year. Within 90 days following the end of each
fiscal year, Borrower shall deliver to Lender its annual unaudited financial
statements (including, balance sheet, an income statement and a statement of
cash flows).

 

(d)          Guarantor Information. Unless otherwise requested more frequently
by Lender, within 45 days after each calendar quarter, Borrower shall cause
Guarantor to deliver to Lender: (i) for each Guarantor that is an individual,
his/her current personal financial statement showing all contingent liabilities
of such Guarantor, and (ii) for each Guarantor that is an entity, its quarterly
unaudited financial statements showing all contingent liabilities of such
Guarantor (including a balance sheet, an income statement and a statement of
cash flows showing results for both the quarter and year to date together with a
certificate of compliance with the Net Worth covenant contained in Section 2 of
the Limited Joinder, and (iii) for each Guarantor, within 90 days after its
fiscal year, annual audited financial statements for such Guarantor), and
(iv) for each Guarantor that is an individual, within sixty (60) days of filing
such Guarantor's Federal and state tax returns, a copy of such Federal and state
tax returns for the immediately preceding calendar year.

 

(e)          Delivery of SEC Reports. Borrower agrees to send to Lender during
the term of the Loan, unless the following are filed with the SEC through EDGAR
and are available to the public through the EDGAR system, within one
(1) Business Day after the filing thereof with the SEC, a copy of each of
Guarantor's SEC Documents (as hereinafter defined).

 

3.2Other Information; Financial Information Form and Examination.

 

In addition to the foregoing required information, Borrower shall provide to
Lender any Other Information as Lender may from time to time request. Except as
otherwise specified herein or agreed to in writing by Lender, all financial
statements to be provided to Lender shall be prepared in accordance with sound
accounting practices applied on a consistent basis, fairly presenting the
financial condition as of the date indicated, and shall be certified as true,
complete and correct by the party who has prepared such information. Lender may
request that either Borrower's or Guarantor's annual financial statement be
audited by an independent certified public accountant reasonably acceptable to
Lender, at Borrower's sole cost and expense, at any time after an Event of
Default has occurred or after Lender asserts any claim under the Limited Joinder
attached hereto. Borrower shall permit or cause to permit Lender or any of
Lender's representatives (including an independent firm of certified public
accountants) to have access to and examine the Improvements and operation of the
Project, and all books and records of Borrower, and Guarantor, during regular
business hours. Unless otherwise approved by Lender in writing, all books and
records relating to Borrower and Guarantor will be located at Borrower's or
Guarantor's, as applicable, primary place of business.

 

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ARTICLE 4
OPERATIONAL AND OTHER COVENANTS

 

4.1Leasing and Operational Covenants.

 

(a)          Leasing Restrictions. Without the prior written consent of Lender,
Borrower shall not (i) enter into any lease for any residential unit at the
Project on a lease form other than the form of lease previously approved by
Lender, (ii) materially modify such approved lease form, (iii) enter into any
residential leases on terms substantially less favorable to Borrower than the
then-current market terms, (iv) accept any rental payment more than 30 days in
advance of its due date, (v) enter into any residential leases for a term of
more than one year, (vi) enter into any non-residential leases other than a
customary laundry lease for the Project reasonably acceptable to Lender, subject
to a subordination, non-disturbance and attornment agreement acceptable to
Lender in form and substance, (vii) modify, amend or terminate any
non-residential Lease, except in the event of an uncured default by a tenant
that would entitle Borrower, as landlord, to terminate such Lease, or
(viii) enter into any ground lease of the Project. Borrower shall provide Lender
not less than 10 Business Days to review any proposed non-residential leases,
any proposed material modifications of, or material amendments to, a Lease, and
any proposed change to the lease form for the leasing of residential units. All
Leases must contain an automatic attornment provision whereby in the event of a
foreclosure, the tenant automatically shall recognize the successor owner as
landlord and such tenant shall have no right to terminate its Lease in the event
of such foreclosure. If Borrower enters into any new non-residential lease or
any modification or renewal of any existing non-residential Lease, at Lender's
request, Borrower shall cause the Tenant thereunder to execute a subordination
and attornment agreement in form and substance satisfactory to Lender. Borrower
shall provide Lender with a copy of the fully executed original of all
non-residential Leases promptly following their execution.

 

(b)          Defaults Under Leases. Borrower will not suffer or permit (i) any
breach or default to occur in any of Borrower's or landlord's obligations under
any of the Leases, or (ii) any Lease termination by reason of any failure of
Borrower or landlord to meet any requirement of any Lease, including those with
respect to any time limitation within which any of Borrower's work is to be done
or the space is to be available for occupancy by the lessee. Borrower shall
notify Lender promptly in writing in the event a Tenant (other than, if
applicable, a residential tenant or a tenant of a self-storage unit at the
Project) commits a material default under a Lease.

 

(c)          Project Management. Borrower shall neither change the Property
Manager or enter into, modify, amend, terminate or cancel any management
agreement or any leasing agreement without the prior written approval of Lender,
which approval shall not be unreasonably withheld, conditioned or delayed.

 

(d)          Furnishing Notices. Borrower shall provide Lender with copies of
all material notices pertaining to Borrower, Guarantor or the Project received
by Borrower from any Tenant, Guarantor, Governmental Authority or insurance
company within seven (7) days after such notice is received. In addition,
Borrower shall promptly provide Lender with written notice of any litigation,
arbitration, or other proceeding or governmental investigation pending or, to
Borrower's or Guarantor's knowledge, threatened against Borrower, Guarantor
relating to the Project. Notwithstanding the foregoing, Borrower shall not be
obligated to provide Lender with such written notice in respect of personal
injury litigation against Borrower or the Project if the amount claimed is less
than $100,000.00, as long as the maximum liability under such cases is covered
in its entirety by liability insurance maintained by Borrower and the insurance
carrier has not refused the tender of defense or coverage.

 

(e)          Cash Distributions. Borrower shall not make any distributions to
its partners, members or shareholders while the Loan is outstanding, except that
so long as no Default or Event of Default exists hereunder or under any of the
other Loan Documents and all payments then owing to Lender have otherwise been
paid, Borrower may distribute monthly Excess Cash Flow.

 

(f)          Reserved.

 

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(g)          Compliance With Laws. Borrower shall comply with all applicable
Laws and requirements of any Governmental Authority having jurisdiction over
Borrower or the Project including all building, zoning, density, land use,
covenants, conditions and restrictions, and subdivision requirements (including
parcel maps and environmental impact and other environmental requirements),
whether now existing or later to be enacted and whether foreseen or unforeseen.
Without limiting the foregoing, Borrower shall comply, and cause the Project to
comply, with all requirements of the Brownfields Agreements, including without
limitation, the annual filing of the required land use restrictions update with
the North Carolina Department of Environment and Natural Resources (the "DENR")
and delivering to the DENR any required notice of change in ownership of the
Project.

 

(h)          No Commingling of Funds. Borrower shall not commingle the funds
related to the Project with funds from any other property.

 

(i)           Maintenance and Preservation of the Project. Borrower shall keep
the Project in good condition and repair (normal wear and tear excepted) and if
all or part of the Project becomes damaged or destroyed, Borrower shall promptly
and completely repair and/or restore the Project in a good and workmanlike
manner in accordance with sound building practices. Borrower shall not commit or
allow waste or permit impairment or deterioration of the Project nor take any
actions that might invalidate any insurance carried on the Project. Borrower
shall perform such acts to preserve the value of Project and Borrower shall not
abandon the Project.

 

(j)          RESERVED.

 

(k)         RESERVED.

 

(l)          RESERVED.

 

(m)        Replacement Reserve. In addition to any other construction,
renovation and maintenance requirements set forth in this Agreement, commencing
with the first Loan Year, Borrower shall expend at least $250 per unit per year
(exclusive of Insurance Proceeds) on maintenance of the Project. To the extent
Borrower does not provide evidence, reasonably satisfactory to Lender, that
Borrower has spent such sum on a cumulative annual basis, Borrower shall pay
Lender such amount not spent. Lender shall hold such sum in reserve (the
"Replacement Reserve") for Borrower's use to fund future maintenance expenses
after Borrower has spent in the aggregate at least $52,000 on maintenance of the
Project during the then current Loan Year. Each request for disbursement from
the Replacement Reserve shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided, waivers of
lien from each contractor providing materials, labor or services, and other
evidence satisfactory to Lender of payment of all such amounts and the
completion of such maintenance to the Project. Borrower hereby grants Lender a
first priority security interest in the Replacement Reserve, all funds contained
therein and all products and proceeds thereof and all such funds are pledged as
additional collateral for the Loan and Borrower shall execute any other
documents and take any other actions reasonably necessary to provide Lender with
such a perfected security interest in such funds. Upon the Maturity Date or at
any time following an Event of Default, the moneys then remaining in the
Replacement Reserve shall, at Lender's option, be applied against the
Indebtedness. All sums held in the Replacement Reserve may be commingled with
other borrower reserves held by Lender, and shall not be deemed to be held in
trust for the benefit of Borrower. The Replacement Reserve shall be maintained
at a financial institution designated by Lender from time to time, in its sole
and absolute discretion (so long as such institution's deposits are insured by
the Federal Deposit Insurance Corporation), and shall be under the sole dominion
and control of Lender, and Borrower shall have no right to control or direct the
investment of payment of funds therein.

 

4.2Other Borrower Covenants.

 

Borrower further covenants and agrees as follows:

 

(a)          Loan Closing. If the conditions precedent to the closing of the
Loan are not complied with as of the Closing Date, Lender may terminate Lender's
obligation to fund the Loan by written notice to Borrower.

 

(b)          Prohibition of Assignments and Transfers by Borrower.

 

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(i)          Generally. Borrower shall not assign or attempt to assign its
rights under this Agreement or any of the other Loan Documents or the Loan or
delegate or attempt to delegate any of its duties or obligations under this
Agreement or any of the other Loan Documents or the Loan and any purported
assignment or delegation shall be void. Without the prior written consent of
Lender, which consent may be withheld in Lender's sole and absolute discretion,
Borrower shall not suffer or permit any Transfer. In addition, until the
Indebtedness is repaid in full, an Affiliate of Guarantor shall at all times
Control the day-to-day management and operation of Borrower's business and all
material business decisions (including a sale or refinance) for Borrower.
Notwithstanding the foregoing, the following Transfers shall be permitted at any
time without the consent of Lender: (i) absent the existence of an Event of
Default under this Agreement or any of the other Loan Documents, transfers of
ownership interests in Borrower and Sole Member; and (ii) transfers of equity
interests in Guarantor; provided that with respect to any Transfers expressly
permitted hereunder, (A) after any such permitted Transfer, majority ownership
and Control of Borrower and Sole Member, directly or indirectly, remains with
Guarantor, (B) an Affiliate of Guarantor is at all times the general partner of
Sole Member and the manager/managing member Borrower, (C) Sole Member retains
majority ownership in Borrower and (D) if such permitted Transfer results in any
Person, together with any other Person Controlling, Controlled by or under
common Control with such Person, owning or encumbering 20% or more of the direct
or indirect ownership interests in Borrower, other than as the result of an
ownership interest in Guarantor, Lender shall have conducted its customary
background, OFAC and internal compliance checks as to such Person or Persons and
shall be satisfied with the results thereof.

 

(ii)          Transfers Prohibited by ERISA. In addition to the prohibitions set
forth in Section 4.2(b) (i), above, Borrower shall not engage in or permit a
Transfer that would constitute or result in the occurrence of one or more
non-exempt prohibited transactions under ERISA or the Internal Revenue Code.
Borrower agrees to unwind any such Transfer upon notice from Lender or, at
Lender's option, to assist Lender in obtaining such prohibited transaction
exemption(s) from the Employee Benefits Security Administration with respect to
such Transfer as are necessary to remedy such prohibited transactions. In
addition to its general obligation to indemnify Lender under Section 4.2(k),
Borrower shall reimburse Lender for any Expenses incurred by Lender to obtain
any such prohibited transaction exemptions. Borrower's obligations under this
Section 4.2(b) (ii) shall survive the expiration or termination of the Loan
Documents, Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under any of the Loan Documents) to be a non-exempt (under
a statutory or administrative class exemption) prohibited transaction under
ERISA. Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan Documents, as requested by Lender in its sole and absolute discretion, that
(i) Borrower is not an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a "governmental plan" within the
meaning of Section 3(32) of ERISA; (ii) Borrower is not subject to Federal or
state statutes regulating investments and fiduciary obligations with respect to
governmental plans; (iii) Borrower is not a party in interest to any plan
defined or regulated under ERISA, and the assets of Borrower are not "plan
assets" of any employee benefit plan covered by ERISA or Section 4975 of the
Internal Revenue Code; and (iv) one or more of the following circumstances is
true:

 

(A)          Equity interests in Borrower are publicly offered securities within
the meaning of 29 C.F.R. Section 2510.3-101(b) (2);

 

(B)          Less than 25 percent of each outstanding class of equity interests
in Borrower are held by "benefit plan investors" within the meaning of 29 C.F.R.
Section 2510.3-101(f) (2); or

 

(C)          Borrower qualifies as an "operating company" within the meaning of
29 C.F.R. Section 2510.3-101 or an investment company registered under the
Investment Company Act of 1940.

 

Borrower shall indemnify Lender and defend and hold Lender harmless from and
against all civil penalties, excise taxes, or other loss, cost damage and
expense (including, without limitation, reasonable attorneys' fees and
disbursements and costs incurred in the investigation, defense and settlement of
claims and losses incurred in correcting any prohibited transaction or in the
sale of a prohibited loan, and in obtaining any individual prohibited
transaction exemption under ERISA that may be required, in Lender's sole and
absolute discretion) that Lender may incur, directly or indirectly, as a result
of a Default or Event of Default under this Section. This indemnity shall
survive any termination of the Loan Documents or, satisfaction or foreclosure of
the Security Instrument.

 

-7-

 

 

(c)          Mechanics' Liens and Contest Thereof. Borrower will not suffer or
permit any mechanics' lien claims to be filed or otherwise asserted against the
Project and will promptly discharge the same in case of the filing of any claims
for lien or proceedings for the enforcement thereof, provided, however, that
Borrower shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien or claim provided that Borrower notifies
Lender of its desire to do so in writing and posts a statutory lien bond that
removes such lien from title to the Project within 30 days of the earlier of
written notice by Borrower to Lender of the existence of such lien or written
notice by Lender to Borrower of the existence of the lien. Lender will not be
required to make any further disbursements of the proceeds of the Loan unless or
until either (i) all mechanics' lien claims have been removed, or completely
bonded over, or insured over by the Title Insurer, or (ii) Lender, at its sole
option, elects to restrict disbursements to reserve sufficient sums to pay 150%
of all such lien claims. In the event either Borrower shall fail to discharge
any such lien or prosecute such contest as set forth above, or such lien is not
otherwise fully reserved for or bonded over as set forth above, Lender may, at
its election in its sole and absolute discretion, cause such lien to be
satisfied and released or otherwise provide security to the Title Insurer to
indemnify over such lien. Any amounts so expended by Lender, including premiums
paid or security furnished in connection with the issuance of any surety company
bonds, shall be deemed to constitute disbursement of the proceeds of the Loan
hereunder owing to Lender by Borrower. In settling, compromising or discharging
any claims for lien, Lender shall not be required to inquire into the validity
or amount of any such claim.

 

(d)          Maintenance of Insurance. Borrower shall not bring or keep any
article on the Project or cause or allow any condition to exist if that could
invalidate or would be prohibited by any insurance coverage required to be
maintained by Borrower on the Project. When any insurance policies expire or if
additional insurance is required by Lender, which it may do from time to time in
its commercially reasonable discretion, Borrower shall furnish to Lender any
additional and renewal insurance policies (along with evidence of the prepaid
premiums) with companies, coverage and in amounts satisfactory to Lender. Unless
Borrower provides Lender with appropriate evidence of the insurance coverage
required by this Agreement, Lender may purchase insurance at Borrower's expense
to protect Lender's interests in the Project and to maintain the insurance
required by this Agreement. Prior to purchasing any such insurance, Lender will
use its good faith efforts to provide notice to Borrower of its intention to do
so, provided, however, that Lender's failure to provide such notice shall not
affect Borrower's responsibility for the expense of such insurance purchased by
Lender. This insurance may, but need not, protect Borrower's interests. The
coverage purchased by Lender may not pay any claim made by Borrower or any claim
that is made against Borrower in connection with the Project or any required
insurance policy. Lender shall later cancel any insurance purchased by Lender,
but only after Borrower provides Lender with appropriate evidence that Borrower
has obtained insurance as required by this Agreement. If Lender purchases
insurance for the Project or insurance otherwise required by this Agreement,
Borrower will be responsible for the costs of that insurance and other charges
imposed by Lender in connection with the placement of the insurance until the
effective date of the cancellation or expiration of the insurance. The costs of
the insurance may be added to the Indebtedness effective as of the date Lender
purchases such insurance and such costs may be more than the cost of insurance
Borrower is able to obtain on its own. The effective date of coverage may be the
date the prior coverage lapsed or the date on which Borrower failed to provide
Lender proof of coverage.

 

(e)          Payment of Insurance. Borrower shall timely pay all premiums on all
insurance policies to assure that at all times Borrower has in effect insurance
as required pursuant to the Insurance Requirements attached hereto as Exhibit E.
In order to effectuate the timely payment of all premiums, Borrower shall pay to
Lender, at the time of and in addition to the monthly installments of principal
and/or interest due under the Note, a sum equal to 1/12 of the amount estimated
by Lender to be sufficient to enable Lender to pay at least 30 days before they
become due and payable, all insurance premiums relating to Borrower and the
Project as determined by Lender (the "Insurance Escrow"). Notwithstanding the
foregoing to the contrary, so long as (i) Lender has provided written approval
of the blanket insurance policy covering the Project, including with respect to
carrier and coverage (and such coverage shall comply in all respects with the
form of insurance required by the minimum insurance requirements set forth in
Exhibit E attached hereto), (ii) the protection afforded Borrower under any
blanket insurance approved hereunder shall be no less than that which would have
been afforded under a separate policy or policies relating to the Project, (iii)
such carrier has agreed to provide Lender with written notice of cancellation of
such policy 30 days prior thereto, (iv) Borrowers at all times during the term
of the Loan provide evidence of timely payment of all insurance premiums in
respect of such policy prior to the due date thereof, and (v) no Event of
Default exists hereunder, solely with respect to insurance provided by such
blanket policies, Borrower's obligation to impound funds in the Insurance Escrow
pursuant to this Section 4.2(e) shall be suspended.

 

-8-

 

 

(f)          Payment of Taxes. Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project (the "Property
Taxes") before the same become delinquent, and, unless Lender has paid such
taxes directly on Borrower's behalf, furnish to Lender evidence that the
Property Taxes are paid at least five (5) Business Days prior to the last date
for payment of such taxes and before imposition of any penalty or accrual of
interest. In order to effectuate the timely payment of all Property Taxes,
Borrower shall pay to Lender, at the time of and in addition to the monthly
installments of principal and/or interest due under the Note, a sum equal to
1/12 of the amount estimated by Lender to be sufficient to enable Lender to pay
at least 30 days before they become due and payable, all Property Taxes as
determined by Lender (the "Property Tax Escrow"). Borrower shall have the right
to pay Property Taxes under protest or to otherwise contest any such tax or
assessment, but only if (i) such contest has the effect of preventing the
collection of such taxes so contested and also of preventing the sale or
forfeiture of the Project or any part thereof or any interest therein,
(ii) Borrower has notified Lender of Borrower's intent to contest such taxes,
and (iii) Borrower has deposited security in form and amount satisfactory to
Lender in its sole and absolute discretion, which shall be added to the Property
Tax Escrow. If Borrower fails to commence such contest or, having commenced to
contest the same, shall thereafter fail to prosecute such contest in good faith
or with due diligence (as determined by Lender), or, upon adverse conclusion of
any such contest, shall fail to pay such Property Taxes, Lender shall apply the
sums held in the Property Tax Escrow to pay such Property Taxes, and if such
sums are insufficient, Lender may, at its election (but shall not be required
to), pay and discharge any such Property Taxes and any interest or penalty
thereon, and any amounts so expended by Lender shall be deemed to constitute
disbursements of the Loan proceeds hereunder (even if the total amount of
disbursements would exceed the face amount of the Note). Borrower shall timely
file the appropriate application and any related documentation required for the
qualification of the Project for Property Tax exclusion available to brownfields
property pursuant to North Carolina General Statutes § 105-277.13.

 

(g)          Property Tax Escrow and Insurance Escrow. So long as no Event of
Default exists hereunder and provided that Borrower shall have delivered to
Lender a copy of the insurance premium bill or Property Tax bill, as the case
may be, and the Insurance Escrow or Property Tax Escrow is sufficient for the
purpose of paying such insurance premium or Property Tax, respectively, then
Lender shall apply the sums in the Insurance Escrow to pay such insurance
premiums and the sums in the Property Tax Escrow to pay such Property Taxes.
Borrower shall pay a Disbursement Processing Fee in connection with each such
disbursement from the Property Tax Escrow and the Insurance Escrow. If the
amount held in the applicable escrow with Lender is insufficient to fully pay
such amounts, Borrower shall, within the earlier of (i) 10 days following notice
at any time from Lender or (ii) five (5) days prior to when such payment is due,
remit such additional sum as may be required for the full payment of such
insurance premiums or Property Taxes, and if Borrower fails to do so, Lender may
disburse such amounts from the Loan (even if the total amount of disbursements
would exceed the face amount of the Note). All sums reserved or held in the
Property Tax Escrow and the Insurance Escrow may be commingled with the general
funds of Lender, and shall not be deemed to be held in trust for the benefit of
Borrower. The Property Tax Escrow and Insurance Escrow shall be maintained at a
financial institution designated by Lender from time to time in its sole and
absolute discretion (so long as such institution's deposits are insured by the
Federal Deposit Insurance Corporation). Borrower hereby grants Lender a first
priority security interest in funds held in the Property Tax Escrow and the
Insurance Escrow, including all interest accruing thereon, and all such funds
are pledged as additional collateral for the Loan and Borrower shall execute any
other documents and take any other actions necessary to provide Lender with such
a perfected security interest in such funds. Upon the Maturity Date or at any
time following an Event of Default, the moneys then remaining in escrow with
Lender or its agent shall, at Lender's option, be applied against the
Indebtedness. The obligation of Borrower to pay Property Taxes and insurance
premiums is not affected or modified by the provisions of this paragraph.

 

(h)          Personal Property. All of Borrower's personal property, fixtures,
attachments and equipment delivered upon, attached to, used or required to be
used in connection with the operation of the Project (collectively, the
"Personal Property") shall always be located at the Project and shall be kept
free and clear of all liens, encumbrances and security interests. Borrower shall
not (nor shall it permit any Tenant to), without the prior written consent of
Lender, sell, assign, transfer, encumber, remove or permit to be removed from
the Project any of the Personal Property. So long as no Event of Default has
occurred and is continuing, Borrower may sell or otherwise dispose of the
Personal Property when obsolete, worn out, inadequate, unserviceable or
unnecessary for use in the operation of the Project, but, if material to the
operation of the Project, only upon replacing the same with other Personal
Property at least equal in value and utility to the Personal Property that is
disposed.

 

-9-

 

 

(i)          Appraisals. Lender shall have the right to obtain a new or updated
Appraisal of the Project from time to time, and Borrower shall cooperate with
Lender in this regard. The Borrower shall pay for any such Appraisal if (a) an
Event of Default exists, (b) the Appraisal is the first Appraisal obtained by
Lender during the Extension Term, or (c) if the Appraisal is obtained to comply
with any Laws or regulatory requests, or Lender policy promulgated to comply
therewith.

 

(j)          Loss of Note or other Loan Documents. Upon notice from Lender of
the loss, theft, or destruction of the Note and upon receipt of an affidavit of
lost note and an indemnity reasonably satisfactory to Borrower from Lender, or
in the case of mutilation of the Note, upon surrender of the mutilated Note,
Borrower shall make and deliver a new note of like tenor in lieu of the then to
be superseded Note. If any of the other Loan Documents were lost or mutilated,
Borrower agrees to execute and deliver replacement Loan Documents in the same
form of such Loan Document(s) that were lost or mutilated.

 

(k)          Indemnification. Borrower shall indemnify Lender, including each
party owning an interest in the Loan and their respective successors, assigns,
officers, directors, employees and consultants (each, an "Indemnified
Party") and defend and hold each Indemnified Party harmless from and against all
claims, suits, actions, losses, injuries, damages, liabilities, criminal and
civil penalties, excise taxes, costs and Expenses (including attorneys' fees and
costs) of any and every kind to any Persons or property by reason of or in any
way related to or arising out of (i) the operation or maintenance of the
Project; (ii) any breach of representation or warranty, Default or Event of
Default under any of the Loan Documents; (iii) any Indemnified Party's response
to a subpoena or involvement in discovery, litigation, or similar matters that
would not have occurred but for the Loan; (iv) any and all claims for brokerage,
leasing, finders or similar fees which may be made relating to the Project, the
Loan, the Indebtedness or the Loan Documents, or (v) any other matter arising in
connection with the Loan, Borrower, Guarantor, any Environmental Indemnitor, any
Lease, any Tenant, the Project or any Person claiming by or through any of the
foregoing or which may be asserted against, imposed on or incurred by an
Indemnified Party in connection with the Indebtedness, the Loan, the Loan
Documents, the Project or any portion of any of the foregoing or the exercise by
an Indemnified Party of rights or remedies granted to it under the Loan
Documents or applicable Law. Borrower further agrees to indemnify, defend and
hold harmless Lender from and against any claim that any documentary or mortgage
tax is due and payable in connection with the Loan or the execution, delivery or
recording of the Loan Documents and to pay such taxes and Expenses incurred by
Lender in connection therewith. Borrower may contest any determination that any
such taxes are due, but shall pay any such taxes (including penalties and
interest) when legally required. Notwithstanding anything contained in this
Section 4.2(k) to the contrary, no Indemnified Party shall be entitled to be
indemnified against its own gross negligence or willful misconduct. Upon written
request by an Indemnified Party, Borrower will undertake, at its own costs and
expense, on behalf of such Indemnified Party, using counsel reasonably
satisfactory to the Indemnified Party, the defense of any legal action or
proceeding whether or not such Indemnified Party shall be a party and for which
such Indemnified Party is entitled to be indemnified pursuant to this Section
4.2(k). At Lender's option, Lender may, at Borrower's expense, prosecute or
defend any action involving the priority, validity or enforceability of any of
the Loan Documents.

 

If any Indemnified Party is made a party defendant to any litigation or any
claim is threatened or brought against any Indemnified Party concerning the
Indebtedness, the Loan Documents, the Project or any part thereof, or any
interest therein, or the construction, maintenance, operation or occupancy or
use thereof, then Borrower shall indemnify, defend and hold the Indemnified
Parties harmless from and against all liability by reason of said litigation or
claims, including attorneys' fees and expenses incurred by the Indemnified
Parties in any such litigation or claim, whether or not any such litigation or
claim is prosecuted to judgment. If Lender commences an action against Borrower
to enforce any of the terms hereof or to prosecute any breach by Borrower of any
of the terms hereof or to recover any sum secured hereby, Borrower shall pay to
Lender its reasonable attorneys' fees and expenses. The right to such attorneys'
fees and expenses shall be deemed to have accrued on the commencement of such
action, and shall be enforceable whether or not such action is prosecuted to
judgment. If Borrower breaches any term of the Loan Documents, Lender may engage
the services of an attorney or attorneys to protect its rights hereunder, and in
the event of such engagement following any breach by Borrower, Borrower shall
pay Lender's reasonable attorneys' fees and expenses incurred by Lender, whether
or not an action is actually commenced against Borrower by reason of such
breach. All references to "attorneys" in this Subsection and elsewhere in the
Loan Documents shall include, without limitation, any attorney or law firm
engaged by Lender and Lender's in-house counsel, and all references to "fees and
expenses" in this Subsection and elsewhere in the Loan Documents shall include,
without limitation, any fees of such attorney or law firm, any appellate counsel
fees, if applicable, and any allocation charges and allocation costs of Lender's
in-house counsel.

 

-10-

 

 

A waiver of subrogation shall be obtained by Borrower from its insurance carrier
and, consequently, Borrower waives any and all right to claim or recover against
Lender, its officers, employees, agents and representatives, for loss of or
damage to Borrower, the Project, Borrower's property or the property of others
under Borrower's control from any cause insured against or required to be
insured against by the provisions of the Loan Documents.

 

The indemnification obligations hereunder shall survive the repayment of the
Loan and any foreclosure, deed-in-lieu or transfer in lieu of foreclosure or
similar proceeding or any transfer of title to the Project or any portion
thereof or a transfer of the ownership interest in Borrower.

 

(l)          No Additional Encumbrances. Borrower shall not cause or suffer to
occur or exist, directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, any sale, transfer, mortgage, pledge, lien or
encumbrance (other than Permitted Exceptions, liens for ad valorem taxes and
assessments that are not delinquent and those liens which Borrower is contesting
in accordance with the terms of this Agreement,) of all or any part of the
Project or any interest therein.

 

(m)          Organizational Documents. Borrower shall not, without the prior
written consent of Lender, (i) permit or suffer a material amendment or
modification of its Organizational Documents or the organizational documents of
any constituent entity within Borrower (other than shareholders of Guarantor),
or (ii) any change in its state of formation or incorporation or its name.

 

(n)          Single Purpose Entity. Borrower at all times shall remain a Single
Purpose Entity until after the Indebtedness has been repaid in full.
Specifically, Borrower represents, warrants and covenants as follows:

 

(i)          Borrower has not and will not:

 

(A)          incur any debt, secured or unsecured, direct or contingent
(including guaranteeing any obligation), other than (i) the Indebtedness,
(ii) unsecured trade payables incurred in the ordinary course of business of
operating the Project and indebtedness relating to financing of equipment and
personal property in the ordinary course of business of operating the Project;
provided however, the aggregate amount of such other indebtedness shall not
exceed 1% of the outstanding principal balance of the Note, and (iii) prior
loans paid in full prior to the date hereof;

 

(B)          engage in any business or activity other than the ownership,
operation and maintenance of the Project, and activities incidental thereto;

 

(C)          acquire or own any assets other than (i) the Project, and (ii) such
incidental Personal Property as may be necessary for the operation of the
Project;

 

(D)          merge into or consolidate with any Person, or dissolve, terminate,
liquidate in whole or in part, transfer or otherwise dispose of all or
substantially all of its assets or, except for transfers of ownership interests
in Borrower occurring prior to the date hereof and Transfers permitted
hereunder, change its legal structure;

 

(E)          fail to observe all organizational formalities, or fail to preserve
its existence as an entity duly organized, validly existing and in good standing
(if applicable) under the applicable Laws of the jurisdiction of its
organization or formation, or amend, modify, terminate or fail to comply with
the provisions of its organizational documents;

 

-11-

 

 

(F)          own any subsidiary, or make any investment in, any Person;

 

(G)          commingle its assets with the assets of any other Person, or permit
any Affiliate or constituent party independent access to its bank accounts;

 

(H)          fail to maintain its records, books of account, bank accounts,
financial statements, accounting records and other entity documents separate and
apart from those of any other Person; except that Borrower' financial position,
assets, liabilities, net worth and operating results may be included in the
consolidated financial statements of an Affiliate, provided that such
consolidated financial statements contain a footnote indicating that Borrower is
a separate legal entity and that it maintains separate books and records;

 

(I)          enter into any contract or agreement with any general partner,
member, shareholder, principal, guarantor of the obligations of Borrower, or any
Affiliate of the foregoing, except upon terms and conditions that are
intrinsically fair, commercially reasonable and substantially similar to those
that would be available on an arms-length basis with unaffiliated third parties;

 

(J)          maintain its assets in such a manner that it will be costly or
difficult to segregate, ascertain or identify its individual assets from those
of any other Person;

 

(K)          assume or guaranty the debts of any other Person, hold itself out
to be responsible for the debts of any other Person, or otherwise pledge its
assets for the benefit of any other Person or hold out its credit as being
available to satisfy the obligations of any other Person;

 

(L)          make any loans or advances to any Person;

 

(M)          fail to file its own tax returns or files a consolidated federal
income tax return with any Person (unless prohibited or required, as the case
may be, by applicable Laws);

 

(N)          fail either to hold itself out to the public as a legal entity
separate and distinct from any other Person or to conduct its business solely in
its own name or fail to correct any known misunderstanding regarding its
separate identity;

 

(O)          fail to maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations;

 

(P)          without the unanimous written consent of all of its members, and
the written consent of 100% of the directors or managers, as applicable, of
Borrower and Sole Member (if any), (a)  file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage of any creditors
rights Laws, (b) seek or consent to the appointment of a receiver, liquidator or
any similar official, (c) take any action that might cause such entity to become
insolvent, or (d) make an assignment for the benefit of creditors;

 

(Q)          fail to allocate shared expenses (including, without limitation,
shared office space and services performed by an employee of an Affiliate) among
the Persons sharing such expenses and to use separate stationery, invoices and
checks;

 

(R)          fail to remain solvent or pay its own liabilities (including,
without limitation, salaries of its own employees) only from its own funds,
provided that there are sufficient funds from the operation of the Project to do
so; or

 

(S)          acquire obligations or securities of its partners, members,
shareholders or other affiliates, as applicable;

 

-12-

 

 

(ii)          RESERVED.

 

(o)          Furnishing Reports. Upon Lender's request, Borrower shall provide
Lender with copies of all inspections, reports, test results and other
information received by Borrower, which in any way relate to the Project or any
part thereof.

 

(p)          Affiliate Transactions. Prior to entering into any agreement with
an Affiliate pertaining to the Project, Borrower shall deliver to Lender a copy
of such agreement, which shall be satisfactory to Lender in its sole and
absolute discretion. If requested by Lender, such agreement shall provide Lender
the right to terminate it upon Lender (or its designee or an appointed
receiver) taking possession of the Project or acquisition of the Project through
receivership, foreclosure, a deed in lieu of foreclosure, UCC sale or otherwise.

 

(q)          Site Visits, Observation and Testing. Lender and its agents and
representatives shall have the right upon notice to Borrower (except in the
event of an emergency), at any reasonable time, to enter and visit the Project
for the purpose of performing appraisals, observing the Project, taking and
removing soil or groundwater samples, and conducting tests on any part of the
Project. Lender has no duty, however, to visit or observe the Project or to
conduct tests, and no site visit, observation or testing by Lender, its agents
or representatives shall impose any liability on any of Lender, its agents or
representatives. Neither Borrower nor any other party is entitled to rely on any
site visit, observation or testing by any of Lender, its agents or
representatives. Neither Lender, its agents nor representatives owe any duty of
care to protect Borrower or any other party against, or to inform Borrower or
any other party of any other adverse condition affecting the Project. Lender
shall make reasonable efforts to avoid interfering with Borrower's use of the
Project in exercising any rights provided in this Section 4.2(q).

 

(r)          Compliance With Anti-Terrorism and Anti-Money Laundering Laws. Each
of Borrower, Sole Member, Guarantor and any Person owning, directly or
indirectly, twenty percent (20%) or more of Borrower or Guarantor: (i) is not,
and will not become a Blocked Person, (ii) is not and will not become owned or
controlled by a Blocked Person, (iii) is not acting and will not act for or on
behalf of a Blocked Person, (iv) is not otherwise associated with and will not
become associated with a Blocked Person, (v) is not providing and will not
provide material, financial or technological support or other services to or in
support of the illegal acts of a Blocked Person, or (vi) is not under
investigation by any governmental authority for any violation of any
Anti-Terrorism and Anti-Money Laundering Laws. Borrower shall immediately notify
Lender if Borrower has knowledge of any violation of the foregoing, and any
violation of the foregoing by Borrower, Sole Member, Guarantor or any Person
owning, directly or indirectly, twenty percent (20%) or more of Borrower or
Guarantor shall be deemed to be an Event of Default by Borrower hereunder.
Borrower will not cause or permit the transfer of any interest in Borrower to a
Blocked Person and will not enter into any Lease or undertake any activities in
violation of any Anti-Terrorism and Anti-Money Laundering Laws. Borrower shall
provide information as Lender may require from time to time to permit Lender to
satisfy its obligations under the Anti-Terrorism and Anti-Money Laundering Laws.
At all times throughout the term of the Loan, including after giving effect to
any Transfers permitted pursuant to the Loan Documents, none of the funds of
Borrower or Guarantor, as applicable, that are used to repay the Loan shall be
derived from any unlawful activity, with the result that the investment in
Borrower or Guarantor, as applicable (whether directly or indirectly), is
prohibited by Law or the Loan is in violation of Laws.

 

(s)          Notice of Change. Borrower shall give Lender prior written notice
of any change in the location of its primary place of business.

 

(t)          Defense of Title. If, while the Loan is outstanding, the title to
the Project or the interest of Lender therein shall be the subject, directly or
indirectly, of any action at Law or in equity, or be attached directly or
indirectly, or endangered, clouded or adversely affected in any manner,
Borrower, at Borrower's expense, shall take all necessary and proper steps for
the defense of said title or interest, including the employment of counsel
approved by Lender, the prosecution or defense of litigation, and the compromise
or discharge of claims made against said title or interest. Notwithstanding the
foregoing, in the event that Lender determines that Borrower is not adequately
performing its obligations under this Section, Lender may, without limiting or
waiving any other rights or remedies of Lender hereunder, take such steps with
respect thereto as Lender shall deem necessary or proper and any and all costs
and expenses incurred by Lender in connection therewith, together with interest
thereon at the Default Rate from the date incurred by Lender until actually paid
by Borrower, shall be immediately paid by Borrower on demand and shall be
secured by the Security Instrument and by all of the other Loan Documents
securing all or any part of the Indebtedness evidenced by the Note.

 

-13-

 

 

(u)          Payment of Utilities, Assessments, Charges, Etc. Borrower shall pay
when due the principal of and the interest on the Indebtedness in accordance
with the terms of this Agreement. Borrower shall also pay all charges, fees and
other sums required to be paid by Borrower as provided in the Loan Documents, in
accordance with the terms of the Loan Documents, and shall observe, perform and
discharge all obligations, covenants and agreements to be observed, performed or
discharged by Borrower set forth in the Loan Documents in accordance with their
terms. Further, Borrower shall promptly and strictly perform and comply with all
covenants, conditions, obligations and prohibitions required of Borrower in
connection with any other document or instrument affecting title to the Project,
or any part thereof, regardless of whether such document or instrument is
superior or subordinate to the Security Instrument. Borrower shall not default
in the payment of any indebtedness that is not cured within the time, if any,
specified therefor in any agreement governing the same.

 

(v)          Waste; Alteration of Improvements. No part of the Improvements may
be removed, demolished or materially altered, without the prior written consent
of Lender. Without the prior written consent of Lender, Borrower shall not
commence construction of any improvements on the Project other than improvements
required for the maintenance or repair of the Project. Lender reserves the right
to condition its consent to any material alteration, removal, demolition or new
construction on the following: such conditions as would be required by a prudent
interim construction lender, including, but not limited to, the prior approval
by Lender of plans and specifications, construction budgets, contractors and
form of construction contracts and the furnishing to Lender of evidence
regarding funds, permits, approvals bonds, insurance, lien waivers, title
endorsements, appraisals, surveys, certificates of occupancy, certificates
regarding completion, invoices, receipts and affidavits from contractors and
subcontractors, in form and substance satisfactory to Lender in its discretion.

 

(w)          Zoning. Without the prior written consent of Lender, Borrower shall
not seek, make, suffer, consent to or acquiesce in any change in the plat of
subdivision, zoning or conditions of use of the Project or the Improvements.
Borrower shall comply with and make all payments required under the provisions
of any covenants, conditions or restrictions affecting the Project or the
Improvements. Borrower shall keep all licenses, permits, franchises and other
approvals necessary for the operation of the Project in full force and effect.
Borrower shall operate the Project as a multi-family apartment project for so
long as the Indebtedness is outstanding. If, under applicable zoning provisions,
the use of all or any part of the Project or the Improvements is or becomes a
nonconforming use, Borrower shall not cause or permit such use to be
discontinued or abandoned without the prior written consent of Lender. Further,
without Lender's prior written consent, Borrower shall not file or subject any
part of the Project or the Improvements to any declaration of condominium or
co-operative or convert any part of the Project or the Improvements to a
condominium, co-operative or other form of multiple ownership and governance.

 

(x)          Books, Records, Maintenance of Existence. Borrower shall keep
accurate books and records of account of the Project and its own financial
affairs sufficient to permit the preparation of financial statements therefrom
in accordance with generally accepted accounting principles. Lender and its duly
authorized representatives shall have the right to examine, copy and audit
Borrower's records and books of account at all reasonable times. Borrower and
any general partner or managing member of Borrower shall (i) do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its existence, rights, and franchises, (ii) continue to engage in the business
presently conducted by it, (iii) obtain and maintain all licenses, and
(iv) qualify to do business and remain in good standing under the Laws of each
jurisdiction, in each case as and to the extent required for the ownership,
maintenance, management and operation of the Project.

 

(y)          Further Assurances. Borrower shall, on the request of Lender and at
the expense of Borrower: (a) promptly correct any defect, error or omission
which may be discovered in the contents of the Loan Documents; (b) promptly
execute, acknowledge, deliver and record or file such further instruments
(including, without limitation, further mortgages, deeds of trust, security
deeds, security agreements, financing statements, continuation statements and
assignments of rents or leases) and promptly do such further acts as may be
necessary, desirable or proper to carry out more effectively the purposes of the
Security Instrument and the other Loan Documents and to subject to the liens and
security interests hereof and thereof any property intended by the terms hereof
and thereof to be covered hereby and thereby, including specifically, but
without limitation, any renewals, additions, substitutions, replacements or
appurtenances to the Project; (c) promptly execute, acknowledge, deliver,
procure and record or file any document or instrument (including specifically,
without limitation, any financing statement) deemed advisable by Lender to
protect, continue or perfect the liens or the security interests hereunder
against the rights or interests of third persons; and (d) promptly furnish to
Lender, upon Lender's request, a duly acknowledged written statement and
estoppel certificate addressed to such party or parties as directed by Lender
and in form and substance supplied by Lender, setting forth all amounts due
under the Note, stating whether any Default or Event of Default has occurred
hereunder or under any of the other Loan Documents, stating whether any offsets
or defenses exist against the Indebtedness and containing such other matters as
Lender may reasonably require.

 

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(z)          Easements and Rights-of-Way. Borrower shall not grant any easement
or right-of-way with respect to all or any portion of the Project or the
Improvements without the prior written consent of Lender. The purchaser at any
foreclosure sale hereunder may, at its discretion, disaffirm any easement or
right-of-way granted in violation of any of the provisions of the Loan Documents
and may take immediate possession of the Project free from, and despite the
terms of, such grant of easement or right-of-way. If Lender consents to the
grant of an easement or right-of-way, Lender agrees to grant such consent
without charge to Borrower other than expenses, including, without limitation,
reasonable attorneys' fees, incurred by Lender in the review of Borrower's
request and in the preparation of documents effecting the subordination.

 

4.3Authorized Representative.

 

The Authorized Representative has been appointed by Borrower for purposes of
dealing with Lender on behalf of Borrower in respect of any and all matters in
connection with this Agreement, the other Loan Documents, and the Loan. The
Authorized Representative shall have the power, in his or her discretion, to
give and receive all notices, monies, approvals, and other documents and
instruments, and to take any other action on behalf of Borrower. All actions by
the Authorized Representative shall be final and binding on Borrower. Borrower
may appoint a new Authorized Representative with Lender's prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed. Lender
may rely on the authority given to the then existing Authorized Representative
to appoint a new Authorized Representative, or a duly authorized resolution from
the Borrower appointing a new Authorized Representative, whom Lender has
approved. No more than one person shall serve as Authorized Representative at
any given time. Nothing in this Section 4.3 shall be deemed to limit or prohibit
Lender from (i) communicating or dealing with Guarantor or any of its members,
partners, owners or employees, (ii) accepting the authority of the same to act
on behalf of such parties, or (iii) accepting the implied or apparent authority
of another representative to act on behalf of Borrower when the Authorized
Representative is unavailable.

 

ARTICLE 5
BORROWER'S REPRESENTATIONS AND WARRANTIES

 

5.1Borrower's Representations and Warranties.

 

To induce Lender to execute this Agreement and perform its obligations
hereunder, Borrower hereby represents and warrants to Lender, on the Closing
Date and until all amounts due under the Loan and Loan Documents are paid in
full and the Loan Documents are terminated, as follows:

 

(a)          Title. Borrower lawfully possesses and holds fee simple title to
the Project, free and clear of all liens, claims, encumbrances, covenants,
conditions and restrictions, security interest and claims of others, except only
the Permitted Exceptions. Borrower has full power and lawful authority to grant,
bargain, sell, convey, assign, transfer, encumber and mortgage its interest in
the Project in the manner and form contemplated by the Security Instrument.
Borrower will preserve its interest in and title to the Project and will forever
warrant and defend the same to Lender against any and all claims whatsoever and
will forever warrant and defend the validity and priority of the lien and
security interest created under the Security Instrument against the claims of
all Persons and parties whomsoever, subject to the Permitted Exceptions. The
Security Instrument creates (i) a valid, perfected lien on the Project, subject
only to Permitted Exceptions and the liens created by the Loan Documents and
(ii) perfected security interests in and to, and perfected collateral
assignments of, all personalty owned by Borrower (provided appropriate financing
statements are filed), all in accordance with the terms thereof, in each case
subject only to any applicable Permitted Exceptions, such other liens as are
permitted pursuant to the Loan Documents and the liens created by the Loan
Documents. There are no security agreements or financing statements affecting
all or any portion of the Project other than (i) as disclosed in writing by
Borrower to Lender prior to the date hereof and (ii) the security agreements and
financing statements created in favor of Lender. There are no claims for payment
for work, labor or materials affecting the Project which are or may become a
lien prior to, or of equal priority with, the liens created by the Loan
Documents. None of the Permitted Exceptions, individually or in the aggregate,
materially interfere with the benefits of the security intended to be provided
by the Security Instrument, materially and adversely affect the value of the
Project, impair the use or operations of the Project or impair Borrower's
ability to pay its obligations in a timely manner. The foregoing warranty of
title shall survive the foreclosure of the Security Instrument and shall inure
to the benefit of and be enforceable by Lender in the event Lender acquires
title to the Project pursuant to any foreclosure. Borrower is a Single Purpose
Entity.

 

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(b)          Litigation/Proceeding. There is no litigation or proceeding
pending, or to the best of Borrower's Knowledge threatened, against the Project,
Borrower, or Guarantor, other than as set forth in Exhibit F. There is no item
set forth in Exhibit F which could, if adversely determined, cause a Material
Adverse Change with respect to Borrower, Guarantor or the Project. There are no
Environmental Proceedings and Borrower has no knowledge of any threatened
Environmental Proceedings or any facts or circumstances which may give rise to
any future Environmental Proceedings.

 

(c)          Authorization. Borrower is a duly organized and validly existing
limited liability company and is in good standing under the Laws of the State of
Borrower's organization, formation or incorporation, with its principal place of
business at the address set forth in Schedule I. Borrower is in good standing
under, and is authorized to transact business in, the Laws of the State in which
the Project is located. Borrower has full power and authority to execute,
deliver and perform all Loan Documents to which Borrower is a party, and such
execution, delivery and performance have been duly authorized by all requisite
action on the part of Borrower. The Loan Documents have each been duly executed
and delivered and each constitutes the duly authorized, valid and legally
binding obligation of Borrower and Guarantor, as the case may be, enforceable
against Borrower and the Guarantor, as the case may be, in accordance with their
respective terms. Borrower's exact name is the name set forth in Schedule I.
Borrower uses no trade name(s) other than its actual name(s) set forth herein,
the names "Newbern Station Holdings, LLC" and "Fountains at Newbern Station,
LLC" and the name "Fountains at South End." Sole Member is a limited partnership
duly organized or formed, validly existing and in good standing under the Laws
of the State of Delaware with its principal place of business at 19950 W.
Country Club Drive, Suite 800, Aventura, Florida 33180. Sole Member is the sole
member of Borrower and owns 100% of the ownership interests in Borrower free and
clear of all liens, claims, encumbrances, and rights of others. Sole Member has
full right, power and authority to execute the Loan Documents on its own behalf
and on behalf of Borrower. As of the date of this Agreement, Guarantor owns not
less than 73% of the indirect interest in Borrower, free and clear of all liens,
claims, encumbrances and rights of others. As of the date of this Agreement, all
direct and indirect ownership interests in Borrower (except for the owners of
Guarantor) are set forth in the organizational chart attached hereto as
Exhibit G. As of the date of this Agreement, no Person owns, directly or
indirectly, greater than a 20% interest in Guarantor, other than Trade Street
Property Fund I liquidating trust.

 

(d)          Organizational Documents. A true and complete copy of the
Organizational Documents creating Borrower, and all other documents creating and
governing Borrower and any and all amendments thereto have been furnished to
Lender. There are no other agreements, oral or written, among any of the members
of Borrower relating to Borrower. The Organizational Documents were duly
executed and delivered, are in full force and effect, and binding upon and
enforceable against each of the respective partners and members, as the case may
be, in accordance with their terms. The Organizational Documents constitute the
entire understanding among the members of Borrower, and among the members of
Sole Member relating to Borrower, or Sole Member, respectively. No breach exists
under the Organizational Documents and no act has occurred and no condition
exists which, with the giving of notice or the passage of time, would constitute
a breach under the Organizational Documents.

 

(e)          Enforceability. The Loan Documents are not subject to and Borrower
has not asserted any right of rescission, set-off, counterclaim or defense. No
consent, approval or authorization of or declaration, registration or filing
with any person or entity, including any creditor, partner, Guarantor, member of
Borrower, or Governmental Authority, is required in connection with the
execution, delivery and performance of the Loan Documents, except for the
recordation of the Security Instrument, the filing of UCC Financing Statements,
and such consents, approvals, authorizations, declarations or filings where the
failure to so obtain would not have an adverse effect on Borrower or such
Guarantor or which have been obtained as of any date on which this
representation is made or remade. There is no Default or Event of Default
hereunder or under any of the other Loan Documents.

 

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(f)          Solvency. Neither Borrower, Sole Member nor Guarantor is insolvent
and at no time has there ever been any: (i) assignment made for the benefit of
the creditors of any of them; (ii) appointment of a receiver for any of them or
for the property of any of them; or (iii) bankruptcy, reorganization, or
liquidation proceeding instituted by or against any of them. No bankruptcy,
insolvency proceedings or liquidation of all or a substantial portion of the
Project is pending or contemplated by Borrower or, to the best knowledge of
Borrower, against Borrower or by or against any endorser or cosigner of the Note
or of any portion of the Indebtedness, or any guarantor or indemnitor under any
guaranty or indemnity agreement executed in connection with the Note or the
other Loan Documents. In addition, Borrower is not in default under any
contract, agreement, instrument or commitment to which it is a party or any
obligation or duty under any Permitted Exceptions or REA or any other agreement,
contract, instrument or commitment to which the Project is bound. The execution,
delivery and compliance with the terms and provisions of the Loan Documents will
not (a) violate any provisions of Law or any applicable regulation, order or
other decree of any court or governmental entity, or (b) conflict or be
inconsistent with, or result in any default under, any of the Borrower's
Organizational Documents or any contract, agreement, instrument or commitment to
which Borrower is bound. Borrower has delivered to Lender copies of any
agreements (including Leases) between Borrower and any Affiliate related in any
way to the Project and any other agreements or documents materially affecting
the use and operation of the Project. Borrower is not a party to any contract,
agreement or instrument or subject to any restriction which might adversely
affect Borrower, the Project, the Guarantor, or any business, properties,
operations or condition, financial or otherwise, of the Borrower or Guarantor.
No contract, agreement or instrument provides any party with the right to obtain
a lien or encumbrance upon the Project superior to the lien of the Security
Instrument. All contracts, agreements and instruments affecting the Project
entered into from and after the acquisition of the Land by Borrower have been
entered into at arms-length in the ordinary course of Borrower's business and
provide for the payment of fees in amounts and upon terms comparable to existing
market rates.

 

(g)          Condemnation. To the best of Borrower's and Guarantor's knowledge,
(i) no condemnation of any portion of the Project, (ii) no condemnation or
relocation of any roadways abutting or providing access to the Project, and
(iii) no proceeding to deny access to the Project from any point or planned
point of access to the Project, has commenced or is contemplated or threatened
by any Governmental Authority.

 

(h)          Use/Governmental Approvals/Accessibility. The general purpose and
use of the Project as a multi-family apartment project and the contemplated
accessory uses do not violate (i) any Laws (including subdivision, zoning,
building, environmental protection and wetland protection Laws), or (ii) any
building permits, covenants, conditions and restrictions of record, any REA or
other agreements affecting the Project or any part thereof. None of the zoning
authorizations, subdivision approvals or variances nor any other right to
construct or to use the Project is to any extent dependent upon or related to
any real estate other than the Land. No building or other improvement encroaches
upon any property line, building line, set back line, side yard line or any
recorded or visible easement (or other easement of which Borrower is aware or
has reason to believe may exist) with respect to the Project. No portion of the
Project is situated in an area designated as having special flood hazards as
defined by the Flood Disaster Protection Act of 1973, as amended, or as a
wetland by any governmental entity having jurisdiction over the Project. All
Governmental Approvals required for the operation of the Project have been
obtained. All Laws relating to the operation of the Improvements have been
complied with and all permits, licenses and intellectual property rights
required for the ownership and operation of the Project have been obtained. The
Project is accessible through fully improved and dedicated roads, accepted for
maintenance and public use by public authority having jurisdiction. The Project
has adequate water, gas and electrical supply, storm and sanitary sewerage
facilities, telephone facilities, other required public utilities, fire and
police protection, and means of access between the Project and public highways;
none of the foregoing will be foreseeably delayed or impeded by virtue of any
requirements under any applicable Laws. The Project includes all property and
rights that may be reasonably necessary or desirable to promote the present and
any reasonable future beneficial uses and enjoyment thereof. To the best of
Borrower's Knowledge, there are no, nor are there any alleged or asserted,
violations of Law, regulations, ordinances, codes, permits, licenses,
declarations, covenants, conditions or restrictions of record, or other
agreements relating to the Project, or any part thereof. In the event that all
or any part of the Improvements are destroyed or damaged, said Improvements can
be legally reconstructed to their condition prior to such damage or destruction
(subject to applicable changes to building and fire codes after the date
hereof), and thereafter exist for the same use without violating any zoning or
other ordinances applicable thereto and without the necessity of obtaining any
variances or special permits. The Project and Improvements do not require any
rights over, or restrictions against, other property in order to comply with any
Laws, governmental ordinances, orders or requirements. The Project was
constructed in compliance with the Brownfields Agreements and any notice of
change in ownership required pursuant to the Brownfields Agreements has been
properly provided to the DENR.

 

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(i)          Brokerage Fees. No brokerage fees or commissions are payable by or
to any person in connection with this Agreement or the Loan to be disbursed
hereunder.

 

(j)          Financial Statements. All financial statements and other documents
and information previously furnished to Lender by Borrower or Guarantor are
true, complete and correct, were prepared in accordance with sound accounting
practices applied on a consistent basis, fairly present the financial condition
as of the date(s) indicated, and do not fail to state any material fact
necessary to make such statements or information not misleading. No Material
Adverse Change with respect to Borrower, Guarantor, or the Project has occurred
since the respective dates of such statements and information. Neither Borrower
nor Guarantor has any material liability, contingent or otherwise, not disclosed
in such financial statements. No statement of fact made by Borrower or Guarantor
in any Loan Documents contains any untrue statement of a material fact or omits
to state any material fact necessary to make statements contained therein not
misleading. There is no material fact presently known to Borrower or Guarantor
that has not been disclosed to Lender which adversely affects, or, as far as
Borrower can foresee, might adversely affect, the Project or the business,
operations or condition (financial or otherwise) of Borrower or Guarantors.
Borrower has no contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments, unrealized or anticipated losses from any unfavorable
commitments or any liabilities or obligations not expressly permitted by the
Loan Documents. Since the date of the most recent financial statements delivered
to Lender, there has been no materially adverse change in the financial
condition, operations or business of Borrower, Guarantor or the Project from
that set forth in said financial statements.

 

(k)          Taxes/Assessments. The Project is taxed separately without regard
to any other property and for all purposes the Project may be mortgaged,
conveyed and otherwise dealt with as an independent parcel. There are no unpaid
or outstanding real estate or other taxes or assessments on or against the
Project or any part thereof, except general real estate taxes not yet due or
payable. To Borrower's and Guarantor's knowledge, there is no pending or
contemplated action pursuant to which any special assessment may be levied
against any portion of the Project. Borrower and any general partner or managing
member of Borrower, if any, has filed all federal, state and local tax returns
required to be filed as of the date hereof and has paid or made adequate
provision for the payment of all federal, state and local taxes, charges and
assessments payable by Borrower and any general partner or managing member, if
any, as of the date hereof. Borrower and any general partner or managing member,
if any, believe that their respective tax returns properly reflect the income
and taxes of Borrower and said general partner or managing member, if any, for
the periods covered thereby, subject only to reasonable adjustments required by
the Internal Revenue Service or other applicable tax authority upon audit.
Borrower and the Project are free from any past due obligations for sales and
payroll taxes.

 

(l)          Leases. Borrower and the previous owners of the Land have not
entered into any Leases, subleases or other arrangements for occupancy of space
within the Project that are currently in effect other than as set forth on the
rent roll attached hereto as Exhibit H, which Borrower certifies is true and
correct in all material respects. True, correct and complete copies of
Borrower's form lease and all Leases, as amended, have been delivered to Lender.
Except as disclosed to Lender in writing, all Leases are in full force and
effect and each Lease constitutes the legal, valid and binding obligation of
Borrower and, to the best of Borrower's Knowledge and belief, is enforceable
against the Tenant thereof. Except as disclosed to Lender in writing, to the
best of Borrower's Knowledge, Borrower is not in default under any Lease.
Borrower has disclosed to Lender in writing any monetary default, and any
material non-monetary default of which Borrower or the property manager has
given notice to such Tenant, by any Tenant under any Lease and no notice of
termination has been issued under any Lease. No Tenant under any Lease has, as
of the date hereof, paid rent more than thirty (30) days in advance, and the
rents under such Leases have not been waived, released, or otherwise discharged
or compromised. All security deposits required under such Leases have been fully
funded and are held by Borrower in a separate segregated account in compliance
with applicable Law.

 

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(m)          Proper Business Purposes. The proceeds of the Loan shall be used
for proper business purposes. The Loan is not being made for the purpose of
purchasing or carrying "margin stock" within the meaning of Regulation G, T, U
or X issued by the Board of Governors of the Federal Reserve System and no
portion of the proceeds of the Loan shall be used in any manner that would
violate such Regulations or otherwise violate the Securities Act of 1933 or the
Securities Exchange Act of 1934, and Borrower agrees to execute all instruments
necessary to comply with all the requirements of Regulation U of the Federal
Reserve System. Neither Borrower nor Guarantor is (i) an "investment company" or
a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended; (ii) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (iii) subject to any other
federal or state Law or regulation which purports to restrict or regulate its
ability to borrow money.

 

(n)          Foreign Person. Except resulting from Transfers of ownership
interests in the Guarantor following the Closing Date, neither Borrower, nor
Guarantor, is or will be, and no legal or beneficial interest of Borrower is or
will be held, directly or indirectly, by a Foreign Person.

 

(o)          Casualty. There has been no damage or destruction of any part of
the Project by fire or other casualty that has not been repaired. Except as part
of the routine maintenance, there are presently no existing defects in the
Project or any Improvements and no repairs or alterations thereof are reasonably
necessary or appropriate.

 

(p)          Flood Zone. None of the Improvements on the Property are located in
an area identified by the Federal Emergency Management Agency as an area having
special flood hazards, or, if any portion of the Improvements is located within
such area, Borrower has obtained the insurance required in the Loan Documents.

 

(q)          REA. All parties to any REA are in compliance with all of the terms
thereof and there are no defaults thereunder. Borrower shall not enter into,
terminate or modify any REA without Lender's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. Borrower
shall enforce, comply with, and cause each of the parties to the REA to comply
with all of the material economic terms and conditions contained in the REA.

 

(r)          Management Agreement. The Management Agreement is in full force and
effect and to the best of Borrower's Knowledge, there is no default, breach or
violation existing thereunder by any party thereto beyond the expiration of
applicable notice and grace periods thereunder and no event has occurred (other
than payments due but not yet delinquent) that, with the passage of time or the
giving of notice, or both, would constitute a default, breach or violation by
any party thereunder. The fee due under the Management Agreement, and the terms
and provisions of the Management Agreement, are subordinate to the Security
Instrument.

 

(s)          Fraudulent Transfer. Borrower has not entered into the Loan or any
Loan Document with the actual intent to hinder, delay, or defraud any creditor,
and Borrower has received reasonably equivalent value in exchange for its
obligations under the Loan Documents. Giving effect to the transactions
contemplated by the Loan Documents, the fair saleable value of Borrower's assets
exceeds and will, immediately following the execution and delivery of the Loan
Documents, exceed Borrower's total liabilities, including subordinated,
unliquidated, disputed or contingent liabilities, including the maximum amount
of its contingent liabilities or its debts as such debts become absolute and
matured. Borrower's assets do not and, immediately following the execution and
delivery of the Loan Documents will not, constitute unreasonably small capital
to carry out its business as conducted or as proposed to be conducted. Borrower
does not intend to, and does not believe that it will, incur debts and
liabilities (including contingent liabilities and other commitments) beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts to be payable on or in respect of obligations of Borrower).

 

(t)          Low Income Housing Credit. Borrower shall not claim a low income
housing credit for the Property under Section 42 of the Internal Revenue Code
without Lender's prior written consent.

 

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(u)          SEC Documents; Financial Statements. Guarantor will timely file all
SEC reports and related schedules, forms, statements and other documents
required to be filed by it pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements, notes and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates, the SEC Documents complied as to form in all material
respects with the requirements of the 1934 Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and none of the
SEC Documents (excluding for this purpose the exhibits thereto), at the time
they were filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. As of their respective dates, the
financial statements of Guarantor included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto as in effect as
of the time of filing. Such financial statements have been prepared in
accordance with GAAP, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of Guarantor as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments which will not be material, either individually or in the
aggregate).

 

(v)         No Undisclosed Events, Liabilities, Developments or Circumstances.
No event, liability, development or circumstance has occurred or exists or, to
the Borrower’s knowledge, is reasonably expected to exist or occur with respect
to Guarantor or any of its businesses, properties, liabilities, prospects,
operations (including results thereof) or condition (financial or otherwise),
that would be required to be disclosed by Guarantor under applicable securities
laws on its SEC Documents and which has not been publicly announced.

 

(w)          Sarbanes-Oxley Act. Guarantor is in compliance in all material
respects with all applicable requirements of the Sarbanes-Oxley Act of 2002 that
are effective as of the date hereof, and all applicable rules and regulations
promulgated by the SEC thereunder that are effective as of the date hereof.

 

(x)          Internal Accounting and Disclosure Controls. Guarantor maintains
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP, including
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets and liabilities is compared with the existing
assets and liabilities at reasonable intervals and appropriate action is taken
with respect to any difference. Guarantor maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15I under the 1934 Act) that are
effective in ensuring that information required to be disclosed by Guarantor in
the reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and
forms of the SEC, including, without limitation, controls and procedures
designed to ensure that information required to be disclosed by Guarantor in the
reports that it files or submits under the 1934 Act is accumulated and
communicated to Guarantor’s management, including its principal executive
officer or officers and its principal financial officer or officers, as
appropriate, to allow timely decisions regarding required disclosure. Guarantor
has received any notice or correspondence from any accountant or other Person
relating to any potential material weakness or significant deficiency in any
part of the internal controls over financial reporting of Guarantor.

 

Borrower shall reaffirm the foregoing representations and warranties in writing,
upon Lender's written request.

 

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ARTICLE 6

CASUALTY AND CONDEMNATION

 

6.1           Lender's Election to Apply Insurance Proceeds on Indebtedness.

 

(a)          Borrower shall give Lender prompt written notice of (i) the
occurrence of any casualty affecting the Project or any portion thereof,
(ii) the institution of any proceedings for eminent domain or for the
condemnation of the Project or any portion thereof or (iii) any written
notification threatening the institution of any proceedings for eminent domain
or for the condemnation of the Project or any portion thereof or any written
request to execute a deed in lieu of condemnation affecting the Project or any
portion thereof. All insurance proceeds on the Project, and all causes of
action, claims, compensation, awards and recoveries for any damage, condemnation
or taking, or any deed in lieu of condemnation, affecting all or any part of the
Project or for any damage or injury to it for any loss or diminution in value of
the Project, are hereby assigned to and shall be paid to Lender. Lender may
participate in any suits or proceedings relating to any such proceeds, causes of
action, claims, compensation, awards or recoveries, and Lender is hereby
authorized, in its own name or in Borrower's name, to adjust any loss covered by
insurance or any condemnation claim or cause of action, and to settle or
compromise any claim or cause of action in connection therewith, and Borrower
shall from time to time deliver to Lender any instruments required to permit
such participation; provided, however, that, so long as no Default or Event of
Default has occurred under this Agreement or any of the other Loan Documents,
Lender shall not have the right to participate in the adjustment of any loss
which is not in excess of the lesser of (i) one-half percent (.5%) of the then
outstanding principal balance of the Note and (ii) $100,000.

 

(b)          Subject to the provisions of Section 6.1(c) below, Lender may elect
to collect, retain and apply upon the Indebtedness of Borrower under this
Agreement or any of the other Loan Documents all proceeds of insurance resulting
from any loss at the Project or condemnation or other taking of the Project or a
portion thereof (individually and collectively referred to as "Insurance
Proceeds") after deduction of all expenses of collection and settlement,
including attorneys' and adjusters' fees and charges. Any proceeds remaining
after repayment of the Indebtedness shall be paid by Lender to Borrower.

 

(c)          Notwithstanding anything in Section 6.1(b) to the contrary, in the
event of any casualty to the Improvements or any condemnation of part of the
Project, Lender agrees to make available the Insurance Proceeds to restoration
of the Improvements if (i) no Default or Event of Default exists under this
Agreement or under any of the other Loan Documents, (ii) all Insurance Proceeds
are deposited with Lender, (iii) in Lender's reasonable judgment, the amount of
Insurance Proceeds available for restoration of the Improvements is sufficient
to pay the full and complete costs of such restoration, or if not sufficient,
Borrower has deposited with Lender an amount, which together with the amount of
the Insurance Proceeds available for restoration of the Improvements, in
Lender's reasonable judgment, will be sufficient to pay the full and complete
costs of such restoration, (iv) Project Yield (including any business
interruption insurance proceeds) will not decrease by more than one-half of one
percent (0.5%) as a result of such casualty or condemnation, (v) in Lender's
sole determination the Loan Amount will not exceed seventy-five percent (75%) of
the fair market value of the Project, assuming completion of restoration,
(vi) Guarantor reaffirms in writing their obligations under the Limited Joinder,
the Environmental Indemnity Agreement and under any other guaranty to Lender,
and (vii) in Lender's reasonable determination, such restoration is likely to be
completed not later than three (3) months prior to the Maturity Date.

 

6.2           Borrower's Obligation to Rebuild and Use of Insurance Proceeds
Therefor.

 

In case Lender does not elect to apply or does not have the right to apply the
Insurance Proceeds to the Indebtedness, as provided in Section 6.1 above,
Borrower shall:

 

(a)          Proceed with diligence to make settlement with insurers or the
appropriate governmental authorities and cause the Insurance Proceeds to be
deposited with Lender;

 

(b)          In the event of any delay in making settlement with insurers or the
appropriate governmental authorities or effecting collection of the Insurance
Proceeds, deposit with Lender prior to commencement of construction the full
amount required to complete construction as aforesaid;

 

(c)          In the event the Insurance Proceeds and the available proceeds of
the Loan are insufficient to assure Lender that all contemplated repairs or
construction will be completed, promptly deposit with Lender any amount
necessary to assure that such contemplated repairs or construction will be
completed; and

 

(d)          Promptly proceed with the assumption of construction of the
Improvements, including the repair of all damage resulting from any casualty,
condemnation or other cause and restoration to its former condition.

 

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Any request by Borrower for a disbursement by Lender of Insurance Proceeds and
funds deposited by Borrower shall be treated by Lender as if such request were
for a disbursement of the Loan hereunder, and the disbursement thereof shall be
conditioned upon Borrower's compliance with and satisfaction of the same
conditions precedent as would be applicable under this Agreement for a
disbursement of the Loan.

 

ARTICLE 7

EVENTS OF DEFAULT AND REMEDIES

 

7.1           Events of Default.

 

The occurrence of any one or more of the following shall constitute an "Event of
Default" as said term is used herein:

 

(a)          Failure of Borrower to pay the Indebtedness on or before the
Maturity Date or the failure to pay, within five (5) days of the due date, any
portion of the Indebtedness or any other payment obligation of Borrower to
Lender;

 

(b)          Failure of Borrower to strictly comply with the provisions of
Section 2.9(b) (blocked account), Section 4.2(b) (transfers and change of
control), Section 4.2(c) (mechanics' liens and contest thereof),
Sections 4.2(d) and (e) (insurance), Section 4.2(l) (no additional
encumbrances), Section 4.2(m) (organizational documents), Section 4.2(n) (single
purpose entity), and Section 4.2(r) (anti-terrorism and anti-money laundering
Laws);

 

(c)          Failure of Borrower for a period of 20 days after the earlier of
(i) Borrower's Knowledge thereof and (ii) written notice from Lender, to observe
or perform any non-monetary covenant or condition contained in this Agreement or
any other Loan Documents not set forth in any of the other subsections of this
Section 7.1; provided that if Lender determines any such failure concerning a
non-monetary covenant or condition is susceptible to cure and cannot reasonably
be cured within said 20 day period, then Borrower shall have an additional 20
day period to cure such failure and no Event of Default shall be deemed to exist
hereunder so long as (i) Borrower commences such cure within the initial 20 day
period and diligently and in good faith pursues such cure to completion within
such resulting 40 day period from the date of Lender's notice, and (ii) the
existence of such default will not result in Tenants under Leases constituting,
in the aggregate, 10% or more of the Gross Revenue from the Project having the
right to terminate their respective Leases due to such default; and provided
further that if a different notice or grace period is specified under any other
subsection of this Section 7.1 with respect to a particular breach, or if
another subsection of this Section 7.1 applies to a particular breach and does
not expressly provide for a notice or grace period, the specific provision shall
control;

 

(d)          Any material default by Borrower, as lessor, under the terms of any
Lease or Leases, which individually or in the aggregate constitutes 10% or more
of the Gross Revenue from the Project, following the expiration of any
applicable notice and cure period thereunder, provided that if the Lease does
not provide a notice and cure period, then the notice and cure period provided
in Subsection 7.1(a) will apply to any such monetary default, and the notice and
cure period provided in Subsection 7.1(c) will apply to any such non-monetary
default (which respective periods shall commence upon written notice of default
from Lender or the applicable Tenant, whichever occurs first);

 

(e)          If any warranty, representation, statement, report or certificate
made now or hereafter by Borrower or Guarantor is untrue or incorrect in any
material respect at the time made or delivered, provided that if such breach is
reasonably susceptible of cure, then no Event of Default shall exist so long as
the applicable party cures said breach (i) by the due date provided in
Subsection 7.1(a) for a breach that can be cured by the payment of money or
(ii) within the cure period provided in Subsection 7.1(c) for any other breach;

 

(f)          A petition under any Chapter of Title 11 of the United States Code
or any similar law or regulation is filed by or against Borrower, Sole Member,
or Guarantor (and in the case of an involuntary petition in bankruptcy, such
petition is not discharged within 60 days of its filing), or a custodian,
receiver or trustee for any of the Project is appointed, or Borrower, Sole
Member, or Guarantor makes an assignment for the benefit of creditors, or any of
them are adjudged insolvent by any state or federal court of competent
jurisdiction, or any of them admit their insolvency or inability to pay their
debts as they become due or an attachment or execution is levied against any of
the Project;

 

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(g)          Except as otherwise expressly provided in the Loan Documents, if
any of the taxes are not paid when the same are due and payable, unless there is
sufficient money in the Property Tax Escrow for payment of amounts then due and
payable and Lender's access to such money has not been constrained or restricted
in any manner;

 

(h)          If Borrower shall be in default beyond applicable notice and grace
periods under any other mortgage, deed of trust, deed to secure debt, other
security agreement or any other contract, agreement or instrument covering or
related to any part of the Project, whether it be superior or junior in lien to
the Security Instrument;

 

(i)          If any federal tax lien is filed against Borrower, Sole Member or
the Project and same is not discharged of record within thirty (30) days after
same is filed;

 

(j)          If a judgment is filed against the Borrower in excess of $10,000
which is not vacated or discharged within thirty (30) days;

 

(k)          If Borrower abandons all or any portion of the Project;

 

(l)          If any default occurs under any guaranty, indemnity or the other
Loan Documents and such default continues after the expiration of applicable
grace periods, if any;

 

(m)          If Borrower shall permit any event within its control to occur that
would cause any reciprocal easement agreement to terminate without notice or
action by any party thereto or would entitle any party to terminate any
reciprocal easement agreement and the term thereof by giving notice to Borrower;
or any reciprocal easement agreement shall be surrendered, terminated or
canceled for any reciprocal easement agreements on or under any circumstance
whatsoever except as provided for in such reciprocal easement agreement; or any
term of any reciprocal easement agreement shall be modified or supplemented
without Lender's consent; or Borrower shall fail, within ten (10) Business Days
after demand by Lender, to exercise its option to renew or extend the term of
any reciprocal easement agreement or shall fail or neglect to pursue diligently
all actions necessary to exercise such renewal rights pursuant to such
reciprocal easement agreement except as provided for in such reciprocal easement
agreement;

 

(n)          The occurrence of any other event or circumstance denominated as an
Event of Default herein or under any of the other Loan Documents and the
expiration of any applicable grace or cure periods, if any, specified for such
Event of Default herein or therein, as the case may be; or

 

(o)          The failure of Guarantor to strictly comply with Section 2 of the
Limited Joinder attached hereto.

 

7.2           Remedies Conferred Upon Lender.

 

Lender's rights, remedies and powers, as provided herein and the other Loan
Documents, are cumulative and concurrent, and may be pursued singly,
successively or together against Borrower, Guarantor, the security described in
the Loan Documents, and any other security given at any time to secure the
payment hereof, all at the sole and absolute discretion of Lender, it being the
intent hereof that none of such rights, remedies or powers shall be to the
exclusion of any other. Additionally, Lender may resort to every other right or
remedy available at Law or in equity without first exhausting the rights and
remedies contained herein, all in Lender's sole and absolute discretion. Failure
of Lender, for any period of time or on more than one occasion, to exercise its
option to accelerate the Maturity Date shall not constitute a waiver of the
right to exercise the same at any time during the continued existence of any
Event of Default or any subsequent Event of Default. In the event that Borrower
fails to perform any of Borrower's covenants, agreements or obligations
contained in this Agreement or any of the other Loan Documents (after the
expiration of applicable grace periods, except in the event of an emergency or
other exigent circumstances), Lender may (but shall not be required to) perform
any of such covenants, agreements and obligations, and any amounts expended by
Lender in so doing and shall constitute additional Indebtedness evidenced by the
Note and secured by the Security Instrument and the other Loan Documents and
shall bear interest at a rate per annum equal to the Interest Rate (or Default
Rate following an Event of Default). In addition, at any time after the
occurrence of any Event of Default, Lender may pursue any one or more of the
following remedies:

 

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(a)          Take possession of the Project and do anything that is necessary or
appropriate in its sole judgment to fulfill the obligations of Borrower under
this Agreement and the other Loan Documents. Without restricting the generality
of the foregoing and for the purposes aforesaid, Borrower hereby appoints and
constitutes Lender its lawful attorney-in-fact with full power of substitution
in the Project to use any portion of the Loan which may be reserved, escrowed or
set aside for any purposes hereunder at any time, or to advance funds in excess
of the face amount of the Note, to pay, settle or compromise all existing and
future bills and claims, which may be liens or security interests, or to avoid
such bills and claims becoming liens against the Project; to execute all
applications and certificates in the name of Borrower to prosecute and defend
all actions or proceedings in connection with the Improvements or Project; and
to do any and every act which the Borrower might do in its own behalf; it being
understood and agreed that this power of attorney shall be a power coupled with
an interest and cannot be revoked;

 

(b)          Declare the Note or the Indebtedness to be immediately due and
payable, and further provided that upon the occurrence of any Event of Default
under Section 7.1(f) all amounts evidenced by the Note shall automatically
become due and payable, without any presentment, demand, protest or notice of
any kind to Borrower;

 

(c)          Use and apply any monies or letters of credit deposited by Borrower
with Lender, regardless of the purposes for which the same was deposited, to
cure any such default or to apply on account of any Indebtedness under this
Agreement which is due and owing to Lender; and

 

(d)          Exercise or pursue any other remedy or cause of action permitted
under this Agreement or any other Loan Documents, or conferred upon Lender by
operation of Law.

 

ARTICLE 8

LOAN EXPENSE, COSTS AND ADVANCES

 

8.1           Loan and Administration Expenses.

 

Borrower unconditionally agrees to pay all costs and expenses of the Loan, and
any and all fees owing to or incurred by Lender pursuant to the Loan Documents,
and also including (a) all documentation, modification, or workout costs
relating to the Loan, (b) all recording, filing and registration fees and
charges, mortgage or documentary taxes, UCC searches, title and survey charges,
and all fees and disbursements of Lender's consultants, (c) any costs involved
in the disbursement and administration of the Loan, (d) any repair or
maintenance costs or payments made to remove or protect against liens, (e) all
expenses of collection and settlement of Insurance Proceeds, including
adjusters' fees and charges, (f) all costs and expenses incurred by Lender in
connection with the determination of whether or not Borrower has performed the
obligations undertaken by Borrower hereunder or has satisfied any conditions
precedent to the obligations of Lender hereunder, (g) if any Default or Event of
Default occurs under this Agreement or under any of the Loan Documents or if the
Loan or Note or any portion thereof is not paid in full when and as due, all
costs, expenses and advances of Lender incurred in attempting to enforce or
collect payment of the Loan or enforce any rights of Lender or Borrower's
obligations hereunder and expenses of Lender incurred (including expenses
relating to documentary and expert evidence, publication costs) in attempting to
realize, while a Default or Event of Default exists under this Agreement or any
of the other Loan Documents, on or protect, preserve or maintain any security or
incurred in connection with the sale, disposition (or preparation for sale or
disposition) or liquidation of any security for the Loan (including any
foreclosure sale, deed in lieu transaction or costs incurred in connection with
any litigation or bankruptcy or administrative hearing and any appeals therefrom
and any post-judgment enforcement action including, without limitation,
supplementary proceedings in connection with the enforcement of this Agreement),
and (h) all court costs, collection costs, legal fees and disbursements relating
to any of the foregoing (collectively, "Expenses"). All Expenses incurred or
advances or payments made by Lender shall be included as additional Indebtedness
evidenced by the Note and secured by the Security Instrument and the other Loan
Documents bearing interest at the Interest Rate (or Default Rate following an
Event of Default) until paid. Lender may require the payment of Expenses as a
condition to any disbursement of the Loan. Lender is hereby authorized, without
any specific request or direction by Borrower, to make disbursements from time
to time in payment of (or to reimburse Lender for) any Expenses. Borrower agrees
to pay all brokerage, finder or similar fees or commissions payable in
connection with the transactions contemplated hereby and shall indemnify, defend
and hold Lender harmless against all claims, liabilities, and Expenses arising
in relation to any claim by a broker, finder or similar person.

 

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8.2           Increased Costs.

 

Borrower agrees to pay Lender additional amounts to compensate Lender for any
increase in its actual costs incurred in maintaining the Loan or any portion
thereof outstanding or for the reduction of any amounts received or receivable
from Borrower as a result of any change after the date hereof in any applicable
Law, regulation or treaty, or in the interpretation or administration thereof,
or by any domestic or foreign court, changing the basis of taxation of payments
under this Agreement to Lender (other than taxes imposed on or measured by the
net income or receipts of Lender or any franchise tax imposed on Lender). Any
amount payable by Borrower under this Article 8 shall be paid within five
(5) days of receipt by Borrower of a notice by Lender setting forth the amount
due and the basis for the determination of such amount, which statement shall be
conclusive and binding upon Borrower, absent manifest error. Failure on the part
of Lender to demand payment from Borrower for any such amount attributable to
any particular period shall not constitute a waiver of Lender's right to demand
payment of such amount for any subsequent or prior period. In the event of the
enactment after the date hereof of any Law of the state in which the Project is
located or of any other governmental entity deducting from the value of the
Project for the purpose of taxing any lien or security interest thereon, or
imposing upon Lender the payment of the whole or any part of the taxes or
assessments or charges or liens herein required to be paid by Borrower, or
changing in any way the Laws relating to the taxation of deeds of trust,
mortgages or security agreements or debts secured by deeds of trust, mortgages
or security agreements or the interest of the beneficiary, mortgagee or secured
party in the property covered thereby, or the manner of collection of such
taxes, so as to adversely affect the Security Instrument or the Indebtedness or
Lender, then, and in any such event, Borrower, upon demand by Lender, shall pay
such taxes, assessments, charges or liens, or reimburse Lender therefor;
provided, however, that if in the opinion of counsel for Lender (a) it might be
unlawful to require Borrower to make such payment, or (b) the making of such
payment might result in the imposition of interest beyond the maximum amount
permitted by Law, then and in either such event, Lender may elect, by notice in
writing given to Borrower, to declare all of the Indebtedness to be and become
due and payable in full thirty (30) days from the giving of such notice, and, in
connection with the payment of such Indebtedness, no prepayment premium or fee
shall be due unless, at the time of such payment, an Event of Default or a
Default shall have occurred under this Agreement or any of the other Loan
Documents, which Default or Event of Default is unrelated to the provisions of
this Section 8.2, in which event any applicable prepayment premium or fee in
accordance with the terms of the Note shall be due and payable.

 

8.3           Borrower Withholding.

 

If by reason of a change in any applicable Laws occurring after the date hereof,
Borrower is required by Law to make any deduction or withholding in respect of
any taxes (other than taxes imposed on or measured by the net income of or
receipts of Lender or any franchise tax imposed on Lender), duties or other
charges from any payment due under the Note, the sum due from Borrower in
respect of such payment shall be increased to the extent necessary to ensure
that, after the making of such deduction or withholding, Lender receives and
retains a net sum equal to the sum which it would have received had no such
deduction or withholding been required to be made.

 

ARTICLE 9

ASSIGNMENTS BY LENDER AND DISCLOSURE

 

9.1           Assignments and Participations.

 

(a)          Lender may from time to time, without the consent of Borrower or
Guarantor, sell, transfer, pledge, assign, convey or syndicate the Note (or if
there is more than one note, some or all of the notes), the Loan and the Loan
Documents (or any interest therein), and any and all servicing rights with
respect thereto, and may grant participations in the Loan, delegate its duties
and obligations under the Loan and the Loan Documents, split the Loan into
multiple parts, or the Note into multiple component notes or tranches or issue
mortgage pass-through certificates or other securities evidencing a beneficial
interest in rated or unrated public offerings or private placement. In
connection with any such sale, transfer, assignment, conveyance, participation,
delegation, syndication, splitting or securitization, Lender may, acting for
this purpose as an agent of Borrower, maintain at its offices a register for the
recordation of the names and addresses of Lender's participants or assignees,
and the amount and terms of Lender's sales, transfers, assignments, conveyances
and participations including specifying any such participant's or assignee's
entitlement to payments of principal and interest, and any payments made, with
respect to each such sale, transfer, assignment, conveyance or participation.

 

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(b)          Without limiting the generality of the foregoing or Lender's other
rights under this Agreement or other Loan Documents, Lender in its sole and
absolute discretion, shall have the right at any time to require Borrower to
execute and deliver "component" notes (including senior and junior notes), which
notes may (i) be paid in such order of priority as may be designated by Lender,
and (ii) bear interest at rates different than the Interest Rate, provided that
(A) the aggregate principal amount of such "component" notes shall equal the
outstanding principal balance of the Loan immediately prior to the creation of
such "component" notes, (B) the weighted average interest rate of all such
"component" notes shall on the date created equal the Interest Rate which was
applicable to the Loan immediately prior to the creation of such "component"
notes, (C) the debt service payments on all such "component" notes shall on the
date created equal the debt service payments which were required under this
Agreement immediately prior to the creation of such component notes and (D) the
other terms and provisions of each of the "component" notes shall be otherwise
identical in substance and substantially similar in form to the Loan Documents.
Borrower, at Lender's expense shall cooperate with all reasonable requests of
Lender in order to establish the "component" notes and shall execute and deliver
such documents in addition to the component notes as shall reasonably be
required by Lender, including amendments to the Security Instrument, any
financing statements or other security documents necessary to evidence the
component notes and the appointment of any agent for the holders of such notes
(each, a "Holder") under the Co-Lender Agreement (defined below in subsection
Section 9.1(d) in connection therewith, all in form and substance reasonably
satisfactory to Lender including, without limitation, amendments to the Loan
Documents and the severance of security documents if requested. In the event
Borrower fails to execute and deliver such documents to Lender within five
(5) Business Days following such request by Lender, Borrower hereby absolutely
and irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect such transactions, Borrower ratifying all that such attorney
shall do by virtue thereof.

 

(c)          If at any time the Loan is evidenced by more than one Note,
Borrower acknowledges that the obligations of any Holder to make advances or
disbursements under any Note or perform any other obligations under this
Agreement or the other Loan Documents shall be several and not joint, and the
obligations of Borrower to any Holder shall not be reduced, discharged or
released as a result of the failure of any other Holder to perform its
obligations under this Agreement or the other Loan Documents. Borrower hereby
waives any existing or future right of offset, claim or defense against any
Holder arising out of the failure of any other Holder to make any disbursements
hereunder or perform any other obligations of such Holder under this Agreement
or the other Loan Documents.

 

(d)          At the option of Lender, the Loan or any portion thereof may be
serviced by Lender, its Affiliate or a servicer selected by Lender
("Servicer") and Lender may delegate all or any portion of its administrative
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a co-lender and servicing agreement (the "Co-Lender
Agreement") among the Holders and Servicer. Lender will notify Borrower of the
appointment of a Servicer, unless the Servicer is Lender. Servicer shall be
entitled to reimbursement of costs and expenses as and to the same extent (but
without duplication) as Lender is entitled thereto under the applicable
provisions of this Agreement and the other Loan Documents. To the extent
provided in the Co-Lender Agreement, Servicer shall have the right to exercise
all rights of Lender and enforce all obligations of Borrower pursuant to the
provisions of this Agreement, the Note and the other Loan Documents. The rights
and obligations of Holders inter se shall be governed by the Co-Lender
Agreement, including the priority of payments. The Co-Lender Agreement may
provide that Lender, Servicer or any Holder or custodian appointed by the
Holders shall be the agent of the Holders for purposes of holding the collateral
for the Loan and enforcing the liens created by the Loan Documents, and Borrower
will execute such amendments to the Loan Documents as may be necessary or
desirable to effectuate and acknowledge the appointment of such agent. Neither
Borrower, Guarantor, any Environmental Indemnitor nor any Person claiming by or
through any of the foregoing shall be a third party beneficiary of any agreement
referred to in this Section 9.1(d) or have any rights thereof.

 

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9.2           Disclosure of Information and Confidentiality.

 

Lender shall have the right (but shall be under no obligation) to make available
to (a) agents, employees, Affiliates, attorneys, advisors of Lender and any
regulator, governmental agency or authority and (b) prospective transferees,
participants or purchasers of any interest in the Loan (including any
prospective bidder at any foreclosure sale of the Project), any and all
information that Lender may have with respect to the Project, Borrower,
Guarantor and any Environmental Indemnitor, whether provided by such person or
any third party. Lender shall also have the right to disclose any information
that Lender may have (i) as required by Law, regulation, rule, request or order,
subpoena, judicial order or similar order, and in connection with any
litigation, and (ii) as may be required in connection with an examination, audit
or similar investigation provided that Lender exercises the same degree of care
that it exercises with respect to its own proprietary information to maintain
the confidentiality of any confidential information received with respect to the
Project, the Borrower, Guarantor and any Environmental Indemnitor. Confidential
information shall include only such information identified as such at the time
provided to Lender and shall not include information that is Publicly Available
or is disclosed to Lender by a third party (including information obtained as a
result of any environmental assessments) provided Lender does not have actual
knowledge that such third party is prohibited from disclosing such information.
Borrower, Guarantor and any Environmental Indemnitor agree that Lender shall
have no liability whatsoever as a result of delivering any such information to
any third party in accordance with the previous two (2) sentences, and Borrower,
Guarantor and any Environmental Indemnitor, on behalf of themselves and their
successors and assigns, hereby release and discharge Lender from any and all
liability, claims, damages, or causes of action, arising out of, connected with
or incidental to the delivery of any such information to any third party. This
provision supersedes any prior confidentiality agreements entered into by Lender
with the Borrower, Guarantor and any Environmental Indemnitors.

 

9.3           Dissemination of Information/Cooperation.

 

Lender may forward to each purchaser, transferee, assignee, or servicer of, and
each participant, or investor in, the Loan, or any participations and/or
securities or any of their respective successors (collectively, the
"Investor") or any Rating Agency rating the Loan, or any participations and/or
securities, each prospective Investor, and any organization maintaining
databases on the underwriting and performance of commercial mortgage loans, all
documents and information which Lender now has or may hereafter acquire relating
to the Indebtedness and to Borrower, Sole Member, any managing member or general
partner thereof, Guarantor and the Project, including financial statements,
whether furnished by Borrower or otherwise, as Lender determines necessary or
desirable. Borrower irrevocably waives any and all rights it may have under
applicable Law to prohibit such disclosure, including but not limited to any
right of privacy. At the request of the holder of the Note and, to the extent
not already required to be provided by Borrower under this Agreement, Borrower,
Sole Member and Guarantor shall use reasonable efforts to provide information
not in the possession of the holder of the Note in order to satisfy the market
standards to which the holder of the Note customarily adheres or which may be
reasonably required in the marketplace or by an Investor or other third parties
in connection with such sales or transfers.

 

ARTICLE 10

GENERAL PROVISIONS

 

10.1         Captions.

 

The captions and headings of various articles, sections and subsections of this
Agreement and the other Loan Documents and the Exhibits and Schedules pertaining
thereto are for convenience only and are not to be considered as defining or
limiting in any way the scope or intent of such provisions.

 

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10.2         Waiver of Jury Trial; Waiver of Counterclaims.

 

TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER, LENDER AND GUARANTOR EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY CLAIM, CONTROVERSY DISPUTE, ACTION OR PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (INCLUDING WITHOUT LIMITATION ANY
ACTIONS OR PROCEEDINGS FOR ENFORCEMENT OF THE LOAN DOCUMENTS) AND AGREE THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
BORROWER, LENDER AND GUARANTOR EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH OF THEM HAS RELIED
ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
THAT EACH OF THEM WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE
DEALINGS. BORROWER, LENDER AND GUARANTOR EACH WARRANT AND REPRESENT THAT EACH
HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND
THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS. BORROWER
WAIVES ANY RIGHT TO ASSERT A COUNTERCLAIM AGAINST LENDER OR ANY INDEMNIFIED
PARTY IN ANY ACTION BROUGHT BY LENDER OR AN INDEMNIFIED PARTY OTHER THAN A
COMPULSORY COUNTERCLAIM.

 

10.3         Jurisdiction.

 

TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER AND GUARANTOR HEREBY WAIVE ANY
AND ALL RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY
SUIT, ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A "PROCEEDING"),
BORROWER AND GUARANTOR IRREVOCABLY (A) SUBMIT TO THE NON-EXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY OF CHICAGO,
COUNTY OF COOK AND STATE OF ILLINOIS, AND (B) WAIVE ANY OBJECTION WHICH IT MAY
HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH
COURT, WAIVE ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM AND FURTHER WAIVE THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING,
THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS
AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER
JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE
JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.
BORROWER AND GUARANTOR HEREBY WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS AND
FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF
PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY
PROCEEDING IN ANY ILLINOIS STATE OR UNITED STATES COURT SITTING IN THE CITY OF
CHICAGO AND COUNTY OF COOK MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, DIRECTED TO BORROWER OR, AS APPLICABLE, TO GUARANTOR, AT THE
ADDRESS INDICATED BELOW OR AT THE ADDRESS ON THE ATTACHED LIMITED JOINDER (AS
APPLICABLE), AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF
BORROWER OR GUARANTOR SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED
COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.

 

10.4         Governing Law.

 

Irrespective of the place of execution and/or delivery, this Agreement and the
other Loan Documents shall be governed by, and shall be construed in accordance
with, the internal Laws of the State of Illinois, without regard to conflicts of
Law principles except as provided in the Security Instrument and except in such
cases where the parties have expressly chosen the law of another jurisdiction.

 

10.5         Lawful Rate of Interest.

 

In no event whatsoever shall the amount of interest paid or agreed to be paid to
Lender pursuant to this Loan Agreement, the Note or any of the Loan Documents
exceed the highest lawful rate of interest permissible under applicable Law. If,
from any circumstances whatsoever, fulfillment of any provision of this Loan
Agreement, the Note and the other Loan Documents shall involve exceeding the
lawful rate of interest which a court of competent jurisdiction may deem
applicable hereto ("Excess Interest"), then ipso facto, the obligation to be
fulfilled shall be reduced to the highest lawful rate of interest permissible
under such Law and if, for any reason whatsoever, Lender shall receive, as
interest, an amount which would be deemed unlawful under such applicable Law,
such interest shall be applied to the Loan (whether or not due and payable), and
not to the payment of interest, or refunded to Borrower if such Loan has been
paid in full. Neither Borrower, nor any Guarantor, endorser or surety nor their
heirs, legal representatives, successors or assigns shall have any action
against Lender for any damages whatsoever arising out of the payment or
collection of any such Excess Interest.

 

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10.6         Modification; Consent.

 

No modification, waiver, amendment or discharge of this Agreement or any other
Loan Document shall be valid unless the same is in writing and signed by the
party against which the enforcement of such modification, waiver, amendment or
discharge is sought. Consent by Lender to any act or omission by Borrower shall
not be construed as a consent to any other or subsequent act or omission or to
waive the requirement for Lender's consent to be obtained in any future or other
instance.

 

10.7         Waivers; Acquiescence or Forbearance Not to Constitute Waiver of
Lender's Requirements.

 

(a)          Borrower for itself and all endorsers, guarantors and sureties and
their respective heirs, legal representatives, successors and assigns,
(i) waives presentment for payment, demand, notice of nonpayment or dishonor,
protest of any dishonor, protest and notice of protest and all other notices in
connection with the delivery, acceptance, performance, default or enforcement of
the payment of the Loan, except such notices and demands as are expressly
required under the Loan Documents; (ii) waives and renounces all rights to the
benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption, appraisement,
or exemption and homestead Laws now provided, or which may hereafter be
provided, by the Laws of the United States and of any state thereof against the
enforcement and collection of the obligations evidenced by the Note or this Loan
Agreement or as a bar to the enforcement of the lien created by any of the Loan
Documents.

 

(b)          Borrower for itself and all endorsers, guarantors and sureties and
their respective heirs, legal representatives, successors and assigns,
(i) agrees that its liability shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver, or modification granted or
consented to by Lender; (ii) consents to any indulgences and all extensions of
time, renewals, waivers, or modifications that may be granted by Lender with
respect to the payment or other provisions of this Loan Agreement, the Note, or
any of the other Loan Documents, and to any substitution, exchange or release of
the collateral, or any part thereof, with or without substitution, and agrees to
the addition or release of Borrower, endorsers, guarantors, or sureties, or
whether primarily or secondarily liable, without notice to Borrower and without
affecting its liability hereunder; (iii) agrees that its liability shall be
unconditional and without regard to the liability of any other person or entity;
and (iv) expressly waives the benefit of any statute or rule of Law or equity
now provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing.

 

(c)          Each and every covenant and condition for the benefit of Lender
contained in this Agreement and the other Loan Documents may be waived by
Lender, provided, however, that to the extent that Lender may have acquiesced in
any noncompliance with any requirements or conditions precedent to the closing
of the Loan or to any subsequent disbursement of Loan proceeds, such
acquiescence shall not be deemed to constitute a waiver by Lender of such
requirements with respect to any future disbursements of Loan proceeds and
Lender may at any time after such acquiescence require Borrower to comply with
all such requirements. Any forbearance by Lender in exercising any right or
remedy under any of the Loan Documents, or otherwise afforded by applicable Law,
including any failure to accelerate the Maturity Date shall not be a waiver of
or preclude the exercise of any right or remedy nor shall it serve as a novation
of the Note or as a reinstatement of the Loan or a waiver of such right of
acceleration or the right to insist upon strict compliance of the terms of the
Loan Documents. Lender's acceptance of payment of any sum secured by any of the
Loan Documents after the due date of such payment shall not be a waiver of
Lender's right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment. The
procurement of insurance or the payment of taxes or other liens or charges by
Lender shall not be a waiver of Lender's right to accelerate the maturity of the
Loan, nor shall Lender's receipt of any awards, proceeds, or damages under
Article 6 of this Agreement operate to cure or waive Borrower's or Guarantor's
default in payment of sums secured by any of the Loan Documents.

 

-29-

 

 

10.8         Disclaimer by Lender; No Third Party Beneficiaries.

 

This Agreement and the other Loan Documents are made for the sole benefit of
Borrower and Lender, and no other Person or Persons (including any direct or
indirect owner in Borrower) shall have any benefits, rights or remedies under or
by reason of this Agreement or the other Loan Documents, or by reason of any
inaction or actions taken by Lender pursuant to this Agreement or the other Loan
Documents. Lender shall not be liable to any contractor, subcontractor,
supplier, architect, engineer, Tenant or other party for labor or services
performed or materials supplied in connection with the Project. Lender shall not
be liable for any debts or claims accruing in favor of any such parties against
Borrower or others or against the Project. Lender neither undertakes nor assumes
any responsibility or duty to Borrower or any other party (including any
investors of Borrower) to select, review, inspect, supervise, pass judgment upon
or inform Borrower of any matter in connection with the Project. Borrower shall
rely entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of information
to Borrower by Lender in connection with such matters is for the protection of
Lender only, and neither Borrower nor any third party is entitled to rely
thereon.

 

10.9         Partial Invalidity; Severability.

 

If any of the provisions of this Agreement or the other Loan Documents, or the
application thereof to any person, party or circumstances, shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement or the other Loan
Documents, or the application of such provision or provisions to persons,
parties or circumstances other than those as to whom or which it is held invalid
or unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by Law
and to this end, the provisions of this Agreement and all the other Loan
Documents are declared to be severable. All covenants and agreements of
Borrower, Guarantor and the Environmental Indemnitors shall be joint and
several.

 

10.10         Definitions Include Amendments.

 

Definitions contained in this Agreement which identify documents, including, but
not limited to, the Loan Documents, shall be deemed to include all amendments
and supplements to such documents from the date hereof, and all future
amendments, modifications, and supplements thereto entered into from time to
time to satisfy the requirements of this Agreement or otherwise with the consent
of Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this
Agreement.

 

10.11         Execution in Counterparts.

 

This Agreement and the other Loan Documents may be executed in any number of
counterparts and by different parties hereto or thereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.

 

10.12         Entire Agreement.

 

This Agreement, taken together with all of the other Loan Documents and all
certificates and other documents delivered by Borrower or Guarantor to Lender,
embody the entire agreement between Lender and such party and supersede all
prior commitments, agreements, representations, and understandings, written or
oral, relating to the subject matter hereof or thereof, and may not be
contradicted or varied by evidence of prior, contemporaneous, or subsequent oral
agreements or discussions of the parties hereto.

 

10.13         Waiver of Damages.

 

In no event shall Lender be liable to Borrower for punitive, exemplary, special,
indirect, incidental or consequential damages, including, without limitation,
lost profits, whatever the nature of a breach by Lender of its obligations under
this Agreement or any of the Loan Documents, and Borrower for itself and its
Guarantor waives all claims for punitive, exemplary, special, indirect,
incidental or consequential damages.

 

-30-

 

 

10.14         Claims Against Lender.

 

Lender shall not be in breach under this Agreement, or under any other Loan
Documents, unless a written notice specifically setting forth the claim of
Borrower shall have been given to Lender within three (3) months after Borrower
first had knowledge of the occurrence of the event which Borrower alleges gave
rise to such claim and Lender does not remedy or cure such breach, if any there
be, promptly thereafter. Borrower waives any claim, set-off or defense against
Lender arising by reason of any alleged breach by Lender as to which Borrower
does not give such notice timely as aforesaid. All payments required to be made
by Borrower, Guarantor and Environmental Indemnitors under the Loan Documents
shall be made without set-off, counterclaim or defense. Borrower acknowledges
that such waiver is or may be essential to Lender's ability to enforce its
remedies without delay and that such waiver therefore constitutes a substantial
part of the bargain between Lender and Borrower with regard to the Loan. No
Guarantor or Tenant is intended to have any rights as a third-party beneficiary
of the provisions of this Section 10.14.

 

10.15         Set-Offs.

 

After the occurrence and during the continuance of an Event of Default, Borrower
hereby irrevocably authorizes and directs Lender from time to time to charge
Borrower's accounts and deposits with Lender (or its Affiliates), and to pay
over to Lender an amount equal to any amounts from time to time due and payable
to Lender hereunder, under the Note or under any other Loan Document. Borrower
hereby grants to Lender a security interest in and to all such accounts and
deposits maintained by the Borrower with Lender (or its Affiliates).

 

10.16         Relationship.

 

The relationship between Lender and Borrower shall be that of creditor-debtor
only. No term in this Agreement or in the other Loan Documents and no course of
dealing between the parties shall be deemed to create any relationship of
agency, partnership or joint venture or any fiduciary duty by Lender to Borrower
or any other party.

 

10.17         Agents.

 

In exercising any rights under the Loan Documents or taking any actions provided
for therein, Lender may act through its employees, agents or independent
contractors as authorized by Lender.

 

10.18         Interpretation.

 

With respect to all Loan Documents, 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 word "obligations" is
used in its broadest and most comprehensive sense, and includes all primary,
secondary, direct, indirect, fixed and contingent obligations and duties. It
further includes all principal, interest, prepayment charges, late charges, loan
fees and any other fees and charges accruing or assessed at any time, as well as
all obligations to perform acts or satisfy conditions. No listing of specific
instances, items or matters in any way limits the scope or generality of any
language in the Loan Documents. This Agreement and all of the other Loan
Documents shall not be construed more strictly against one party than against
the other, merely by virtue of the fact that it may have been prepared primarily
by counsel for one of the parties. The term "Lender" shall mean Lender and its
successors and assigns, and subject to the applicable Co-Lender Agreement, each
Holder.

 

10.19         Successors and Assigns.

 

Subject to the restrictions on transfer and assignment contained in
Section 4.2(b) of this Agreement, this Agreement and the other Loan Documents
shall inure to the benefit of and shall be binding on Lender, Borrower and
Guarantor(s) and their respective heirs, successors and permitted assigns.

 

10.20         Time is of the Essence.

 

Borrower agrees that time is of the essence under this Agreement and the other
Loan Documents and the performance of each of the covenants and agreements
contained herein and therein.

 

-31-

 

 

10.21         Notices.

 

Any notice, demand, request or other communication which any party hereto may be
required or may desire to give hereunder shall be in writing and shall be deemed
to have been properly given (a) if hand delivered, when delivered; (b) if mailed
by United States Certified Mail (postage prepaid, return receipt requested),
three (3) Business Days after mailing; (c) if by any reliable overnight courier
service, on the next Business Day after delivered to such courier service; or
(d) if by telecopier on the day of transmission if before 3:00 p.m. (Chicago
time) on a Business Day so long as copy is sent on the same day by overnight
courier in each case to the address set forth below:

 

If to Borrower:

Millenia 700, LLC

19950 W. Country Club Drive, Suite 800

Aventura, Florida 33180

Attention:Collin Ross

Telephone:786-248-6019

Facsimile:786-248-3679

 

With a copy to:

Greenspoon Marder

Trade Center South

100 West Cypress Creek Road, Suite 700

Fort Lauderdale, Florida 33309

Attention:Barry E. Somerstein

Telephone:954-527-2405

Facsimile:954-333-4005

 

If to Lender:

 

NXT Capital, LLC,

a Delaware limited liability company

191 North Wacker Drive, Suite 1200

Chicago, Illinois 60606-1615

Attention:Timothy R. Verrilli, Managing Director

Telephone:312-450-8050

Facsimile:312-450-8100

 

With a copy to:

 

NXT Capital, LLC,

a Delaware limited liability company

191 North Wacker Drive, Suite 1200

Chicago, Illinois 60606-1615

Attention:Bruce Frank, General Counsel

Telephone:312-450-8181

Facsimile:312-450-8100

 

or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice. Any notice or demand delivered to the person or
entity named above to accept notices and demands for such party shall constitute
notice or demand duly delivered to such party, even if delivery is refused.

 

10.22         Advertisement/Publicity.

 

(a)          Borrower and Guarantor hereby authorize Lender to publish the names
of such Borrower and Guarantor, the existence of the financing arrangements
referenced under this Agreement, the primary purpose and/or structure of those
arrangements, the amount of credit extended under the Loan, and the total amount
of the Indebtedness evidenced hereby in any "tombstone", comparable
advertisement or press release which Lender elects to submit for publication.
Without limitation of the foregoing, Borrower hereby approves the press release
attached hereto as Schedule II.

 

-32-

 

 

(b)          Borrower shall not directly or indirectly publish, disclose or
otherwise use in any advertising or promotional material, or press release or
interview, the name, logo or any trademark of Lender, or any of its Affiliates.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE TO FOLLOW]

 

-33-

 

 

IN WITNESS WHEREOF, the parties hereto caused this Loan Agreement to be executed
as of the date first set forth above.

 

  BORROWER:               TS NEW BERN, LLC, a Delaware limited liability company
              By: Trade Street Operating Partnership, LP, a Delaware limited
partnership, its sole member                 By: Trade Street OP GP, LLC, a
Delaware limited liability company, its general partner                   By:
Trade Street Residential, Inc., a Maryland corporation, formerly known as
Feldman Mall Properties, Inc., its sole member                     By: /s/ David
Levin         Name: David Levin         Its: President

 

Signature Page to Loan Agreement

 

-34-

 

 

  LENDER:         NXT CAPITAL, LLC,   a Delaware limited liability company      
  By: /s/ Angela M. Fabus   Name:  Angela M. Fabus   Title: Vice President

 

Signature Page to Loan Agreement

 

-35-

 

 

LIMITED JOINDER

 

In order to induce Lender to make the Loan, the undersigned Guarantor has agreed
to enter into this Limited Joinder in connection with that certain Loan
Agreement (as amended, modified, restated, extended, waived, supplemented or
replaced from time to time, the "Loan Agreement") dated September 23, 2013
between TS New Bern, LLC, a Delaware limited liability company, successor by
merger with Newbern Station Holdings, LLC and Fountains at Newbern Station, LLC,
each a North Carolina limited liability company (together with its successors
and permitted assigns, "Borrower"), and NXT CAPITAL, LLC, a Delaware limited
liability company (collectively, with its successors and assigns, "Lender").
(All capitalized terms not otherwise defined herein shall have the meanings set
forth in the Loan Agreement.) Guarantor (together with its successors and
assigns, "Guarantor") acknowledges that without this Limited Joinder, Lender
would be unwilling to make the Loan. NOW, THEREFORE, in consideration of the
foregoing and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned hereby agrees and
covenants as follows:

 

1.          Retained Liabilities. Except for the Retained Liabilities (defined
below) and the obligations, if any, of Guarantor under any separate guaranty
provided to Lender in connection with the Loan, Guarantor shall not be
personally liable to pay the Loan, or any other amount due, or to perform any
obligation, under the Loan Documents, and Lender agrees to look solely to all
revenue and assets of Borrower, the Project and any other collateral heretofore,
now, or hereafter pledged by any party to secure the Loan. The obligations of
Guarantor hereunder are separate and independent obligations and are not secured
by the grant or pledge by Borrower pursuant to the Security Instrument. This
Limited Joinder is a guaranty of full and complete payment and performance and
not of collectability. Guarantor shall be personally liable for the following
(the "Retained Liabilities"):

 

(a)          All losses, damages, causes of actions, suits and Expenses incurred
by Lender or any Affiliate or agent thereof as a result of (i) any failure to
apply any portion of the Gross Revenues from the Project to the Loan as required
per the Loan Agreement or to customary operating expenses of the Project,
(ii) misapplication, misappropriation or conversion of any rents, proceeds or
funds deriving from (A) the Project, (B) any insurance proceeds paid by reason
of any loss, damage or destruction to the Project; and/or (C) any awards or
amounts received in connection with condemnation of all or a portion of the
Project, (iii) material misrepresentation, (iv) fraud, (v) any material waste or
abandonment of the Project, (vi) failure to keep the Project insured in
accordance with the terms of the Loan Documents, (vii) any fees paid to
Guarantor or any Affiliate after any Default or Event of Default under this
Agreement or any of the other Loan Documents, (viii) failure of Environmental
Indemnitors or any other indemnitor or guarantor to comply with the covenants,
obligations, liabilities, warranties and representations contained in the
Environmental Indemnity Agreement or otherwise pertaining to environmental
matters, (ix) any claim against Lender by any Depository Bank unless such claim
is solely the result of Lender's gross negligence or willful misconduct, and (x)
Borrower's or Affiliates' acquisition of the membership interest in the NC LLCs
(or either of them), rather than purchasing the Project or the merger of the NC
LLCs into Borrower.

 

(b)          Repayment of all Indebtedness in the event of (i) any Event of
Default under the Loan Agreement arising from any breach of any of the following
covenants of the Loan Agreement in (A) Section 4.2(b) (i) (transfers and change
of control), (B) Section 4.2(b) (ii) (transfers prohibited by ERISA),
(C) Section 4.2(l) (no additional encumbrances), or (D) Section 4.2(n) (single
purpose entity), (ii) the filing by Borrower or Sole Member of any proceeding
for relief under any federal or state bankruptcy, insolvency or receivership
Laws or any assignment for the benefit of creditors made by Borrower or Sole
Member, or (iii) any Involuntary Borrower Bankruptcy which is solicited,
procured, consented to or acquiesced in by any Borrower Party or any Affiliate
of any of them.

 

(c)          All attorney's fees, costs and expenses incurred in connection with
(i) the enforcement of, or collection of amounts due under, this Limited Joinder
or the Environmental Indemnity Agreement or (ii)  any bankruptcy,
reorganization, receivership, or other proceedings affecting creditors' rights
and involving a claim under this Limited Joinder or the Environmental Indemnity
Agreement (all of which are referred to herein as "Enforcement Costs"),
regardless of whether all or a portion of such Enforcement Costs are incurred in
a single proceeding brought to enforce this Limited Joinder and the
Environmental Indemnity Agreement as well as the other Loan Documents.

 

J-1

 

 

The liability of Guarantor shall be direct and immediate as a primary and not a
secondary obligation or liability, and is not conditional or contingent upon the
pursuit of any remedies against Borrower, or any other Guarantor or any other
person, or against any collateral or liens held by Lender. The foregoing shall
in no way limit or impair the enforcement against the Borrower, Project or any
other collateral security granted by the Loan Documents of any of the Lender's
rights and remedies pursuant to the Loan Documents.

 

2.          Net Worth. Until all of the Indebtedness have been paid in full,
Guarantor (i) shall maintain a Net Worth in excess of $1,000,000 (ii) shall not
sell, pledge, mortgage or otherwise transfer any of its assets, or any interest
therein, on terms materially less favorable than would be obtained in an
arms-length transaction and (iii) shall deliver to Lender, concurrently with the
delivery of each quarterly or annual financial statement required to be
delivered by Guarantor hereunder, a certificate of the chief financial officer
of Guarantor setting forth in reasonable detail Guarantor's Net Worth, based on
such financial statement. If requested, Guarantor shall provide Lender with
additional written evidence reasonably satisfactory to Lender of such Net Worth.

 

3.          Waivers. To the fullest extent permitted by applicable Law,
Guarantor waives all rights and defenses of sureties, guarantors, accommodation
parties and/or co-makers and agrees that its obligations under this Joinder
shall be direct, primary, absolute and unconditional and that its obligations
under this Joinder shall be unaffected by any of such rights or defenses,
including:

 

(a)          Any rights which it may have to require that (i) Lender first
proceed against Borrower, or any other person or entity with respect to the
Retained Liabilities; or (ii) Lender first proceed against any collateral held
by Lender; or (iii) any party to be joined in any proceeding to enforce the
Retained Liabilities;

 

(b)          The incapacity, lack of authority, death or disability of Borrower,
Guarantor or any other person or entity;

 

(c)          The failure of Lender to commence an action against Borrower or any
other person or entity or to proceed against or exhaust any security held by
Lender at any time or to pursue any other remedy whatsoever at any time;

 

(d)          Any duty on the part of Lender to disclose to Guarantor any facts
it may now or hereafter know regarding Borrower regardless of whether Lender has
reason to believe that any such facts materially increase the risk beyond that
which Guarantor intends to assume or has reason to believe that such facts are
unknown to Guarantor, Guarantor acknowledging that it is fully responsible for
being and keeping informed of the financial condition and affairs of Borrower;

 

(e)          Lack of notice of default, demand of performance or notice of
acceleration to Borrower, any other person or entity with respect to the Loan or
the Retained Liabilities;

 

(f)          The consideration for this Limited Joinder;

 

(g)          Any acts or omissions of Lender which vary, increase or decrease
the risk on Guarantor;

 

(h)          Any statute of limitations affecting the liability of Guarantor
hereunder, the liability of Borrower or Guarantor, or the enforcement hereof, to
the extent permitted by Law;

 

(i)          The application by Borrower of the proceeds of the Loan for
purposes other than the purposes represented by Borrower to Lender or intended
or understood by Lender or Guarantor;

 

(j)          An election of remedies by Lender, including any election to
proceed against any collateral by judicial or non-judicial foreclosure, whether
real property or personal property, or by deed in lieu thereof, and whether or
not every aspect of any foreclosure sale is commercially reasonable, and whether
or not any such election of remedies destroys or otherwise impairs the
subrogation rights of Guarantor or the rights of Guarantor to proceed against
Borrower or Guarantor for reimbursement, or both;

 

J-2

 

 

(k)          Any statute or rule of Law which provides that the obligation of a
surety must be neither larger in amount nor in any other aspects more burdensome
than that of a principal;

 

(l)          Any rights to enforce any remedy which Lender may have against
Borrower, any rights to participate in any security for the Loan and any rights
of indemnity, reimbursement, contribution or subrogation which Guarantor may
have against Borrower or any other person;

 

(m)          Lender's election, in any proceeding instituted under the Federal
Bankruptcy Code, of the application of Section 1111(b) (2) of the Federal
Bankruptcy Code or any successor statute; and

 

(n)          Any borrowing or any grant of a security interest under Section 364
of the Federal Bankruptcy Code.

 

4.          Consents and Releases. Guarantor hereby consents and agrees that
Lender may at any time, and from time to time, without notice to or further
consent from Guarantor and either with or without consideration do any one or
more of the following, all without affecting the agreements contained herein or
the liability of Guarantor for the Retained Liabilities: (a) surrender without
substitution any property or other collateral of any kind or nature whatsoever
held by it, or by any person, firm or corporation on its behalf or for its
account, securing the Loan or the Retained Liabilities; (b) modify the terms of
any document evidencing, securing or setting forth the terms of the Loan;
(c) grant releases, compromises and indulgences with respect to the Loan or the
Retained Liabilities or any persons or entities now or hereafter liable thereon;
(d) take or fail to take any action of any type whatsoever with respect to the
Loan or the Retained Liabilities; or (e) release any other Guarantor hereunder.
To the maximum extent permitted by Law, Guarantor knowingly, voluntarily and
intentionally agrees to be bound, just as Borrower is bound, by the provisions
of Article 3 of the Loan Agreement (solely with respect to providing financial
information with respect to itself) and Article 10 of the Loan Agreement,
including the waiver of the right to a trial by jury in Section 10.2, and the
consents to jurisdiction and the governing law of Illinois set forth in
Sections 10.3, and 10.4, respectively and any other term or provision of the
Loan Documents expressly requiring Guarantor's compliance therewith.

 

5.          Last Dollar. Unless otherwise elected by Lender in its sole
discretion, any recovery by Lender with respect to the obligations under any
Loan Document or otherwise (other than from Guarantor pursuant to this Limited
Joinder) (including, without limitation, the amount of any credit bid
successfully made by Lender or any credit to Borrower in any deed-in-lieu of
foreclosure or similar transaction) shall be applied in the following order.
(i) first, to the discharge of that portion of the obligations under the Loan
Documents which is not guaranteed by Guarantor pursuant to this Limited Joinder;
and (ii) second, to the discharge of the remaining portion of such obligations.

 

J-3

 

 

Executed as of September 23, 2013.

 

  GUARANTOR:       TRADE STREET RESIDENTIAL, INC.,   a Maryland corporation,
formerly known   as Feldman Mall Properties, Inc.       By: /s/ David Levin  
Name: David Levin   Its: President

 

Signature Page to Joinder

 

 

 

 

EXHIBIT A

 

RESERVED

 

 

 

 

EXHIBIT B

 

RESERVED

 

 

 

 

EXHIBIT C

 

RESERVED

 

 

 

 

EXHIBIT D

 

RESERVED

 

 

 

 

[tex10-1logo.jpg]

 

minimum requirements - property & casualty & liability insurance
(Real Estate Finance) 

 

EXHIBIT E

 

Property Insurance (must show the following):

 

1.Issued on Evidence of Property Insurance Acord 28 or equivalent, signed by
authorized agent and reflecting, among other information required by Acord 28,
the name of each member of Borrower's organizational group and each asset
location

2.Insurance carrier(s) rated A- VII or better (by A.M. Best)

3.All risk/special perils coverage form

4.Replacement cost coverage

5.No Co-Insurance coverage form or attachment of an Agreed Amount Endorsement

6.Building coverage greater than or equal to replacement cost valued by NXT
Capital or its representatives (if blanket limit or loss limit is indicated on
the policy, declared building value must be shown on the evidence of insurance)

7.Deductible no greater than reasonably acceptable to NXT Capital or its
representative and consistent with industry standards

8.Loss of Rents coverage, if applicable, greater than or equal to 12 months
rental income valued by NXT Capital or its representatives; use of tenant's
business interruption insurance does not satisfy this requirement unless the
property is leased to a single tenant and the tenant is contractually obligated
to continue rent payments without abatement for the period of restoration. (Copy
of lease agreement and Evidence of Insurance, Acord 28, from Tenant evidencing
such coverage is required.)

9.Business Income/ Extra Expense for Property and Boiler and Machinery risks in
an amount acceptable to NXT and consistent with industry standard (Contingent
Business Interruption may be required)

10.Boiler & Machinery coverage written on a "per accident" or “per occurrence”
basis; if written through a different carrier than the property, both polices
need to include the Joint Loss Agreement.

11.Building Law and Ordinance coverage - Undamaged Portion (at the full
building(s) value) Demolition & Increased Cost of Construction at values
acceptable to NXT or its representatives – applicable to Property and if insured
separately, Equipment Breakdown

12.Windstorm coverage must not be excluded and there may be no “named windstorm”
exclusion; if excluded from the property policy evidence of separate Windstorm
or DIC policy must be provided; coverage is required for the replacement cost
value of each covered location, or in an amount reasonably acceptable to NXT or
its representatives, with a deductible acceptable to NXT or its representatives
and consistent with industry standards

13.Flood coverage for properties in FEMA flood zones A, B, V, and X-Shaded may
be required at the maximum amount available under FEMA's flood insurance plans
(additional amounts may be required at NXT Capital's reasonable discretion) with
deductibles consistent with industry standards. If NXT becomes the Mortgagee of
the improvements/building(s) located in zone A or V, flood insurance is required
as per the National Flood Insurance Reform Act of 1994 and other key legislation
that governs the National Flood Insurance Program (NFIP). The declarations page
of the policy, or a copy of the application and premium payment, must be
received, reviewed and approved by NXT’s designated Compliance Officer prior to
loan closing. If this is not received, closing and funding of the loan may be
delayed.  If banking regulations dictate additional requirements or
documentation, you will be advised.

14.Earthquake coverage for properties located in Seismic Zones 3 and 4, is
required up to a limit of 100% of the building replacement cost (additional
amounts may be required at NXT Capital's discretion), with a deductible
acceptable to NXT or its representatives and consistent with industry standards

15.Builder's Risk coverage, to be carried when structural construction, repairs,
or alterations are being made with respect to the property included as part of
this agreement; coverage to be as outlined in this section at an amount equal to
the completed value of the insured building.

 

Exhibit E-1

 

 

[tex10-1logo.jpg]

 

minimum requirements - property & casualty & liability insurance
(Real Estate Finance) 

 

16.On all property policies "NXT Capital, LLC and its successors and assigns" is
to be named "non-contributory" Mortgagee and/or Lender Loss Payee (as
applicable) which includes 30 days’ notice of cancellation (10 days for
non-payment) to NXT Capital; a copy of the endorsement to the policy must be
provided.

17.A Waiver of Subrogation Clause favoring NXT Capital or an endorsement naming
NXT Capital as an Additional Insured is required.

18.Terrorism coverage with a limit equal to the full replacement cost of the
insured property

19.For hotel properties only: Bailee coverage covering property in insured's
care, custody and/or control and Crime insurance against the loss of hotel
and/or guest property due to criminal actions at coverage amounts reasonably
acceptable to NXT Capital or its representative and consistent with industry
standards

 

General Liability Insurance (must show the following):

1.Issued on Certificate of Insurance Acord 25, or equivalent, signed by
authorized agent

2.Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.Occurrence Form (CG0001 or equivalent)

4.Minimum Limits of Liability of $1,000,000 Occurrence and $2,000,000 Aggregate

5.Deductible reasonably acceptable to NXT Capital or its representative and
consistent with industry standards

6."NXT Capital, LLC and its successors and assigns" named as Additional Insured,
primary without right of contribution, of any other insurance carried by or on
behalf of NXT Capital in accordance with ISO endorsement CG2026 or equivalent;
Certificate of Liability Insurance must provide wording to this affect (and is
not to include “as required by written contract” wording) or a copy of the
endorsement is to be attached.

7.A copy of the endorsement favoring NXT Capital with 30 days’ notice of
cancellation must be attached

8.For hotel properties only: Liquor Liability, if restaurants, bars, and/or room
service provide the sale of alcoholic beverages; the appropriate marine
coverage(s) will be required if hotel is on a waterfront and/or provides boating
and/or marina services; each at coverage amounts reasonably acceptable to NXT
Capital or its representative and consistent with industry standards

 

Automobile Liability Insurance (must show the following):

1.Issued on Certificate of Insurance Acord 25, or equivalent, signed by
authorized agent

2.Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.Occurrence Form (CA0001 or equivalent)

4.Coverage applicable to All Owned (if applicable), Non-Owned, and Hired autos

5.Minimum Limit of Liability $1,000,000 and deductible no greater than
reasonably acceptable to NXT Capital or its representative and consistent with
industry standards

6.A copy of the endorsement favoring NXT Capital with 30 days’ notice of
cancellation must be attached

7.For hotel properties only: Garagekeepers Legal Liability at coverage amounts
reasonably acceptable to NXT Capital or its representative and consistent with
industry standards

 

Workers' Compensation and Employer's liability (must show the following):

1.Issued on Certificate of Insurance Acord 25, or equivalent, signed by
authorized agent

2.Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.Statutory Benefits in states of operations and Employer's Liability at minimum
limits of $500,000/ $500,000/$500,000

4.Deductible, if any, reasonably acceptable to NXT Capital or its representative
and consistent with industry standards

5.A copy of the endorsement favoring NXT Capital with 30 days’ notice of
cancellation must be attached

 

Umbrella Liability

 

1.Issued on Certificate of Insurance Acord 25, or equivalent, signed by
authorized agent

  

Exhibit E-2

 

 

[tex10-1logo.jpg]

 

minimum requirements - property & casualty & liability insurance
(Real Estate Finance) 

 

2.Insurance carrier (s) rated A- VII or better (by A.M. Best)

3.Limits to be determined at the time of review

4.Full policy limits of liability to be reflected on Certificate of Insurance

5.A copy of the endorsement favoring NXT Capital with 30 days’ notice of
cancellation (10 days for non-payment) must be attached

 

Professional/Technology Liability (if applicable)

 

1.Issued on Certificate of Insurance Acord 25, or equivalent, signed by
authorized agent

2.Coverage must be occurrence basis (or on a claims made basis with appropriate
retroactive date acceptable to NXT Capital or its representative and consistent
with industry standards)

3.Limits to be determined at the time of review

4.A copy of the endorsement favoring NXT Capital with 30 days’ notice of
cancellation (10 days for non-payment) must be attached

 

Important Notes:

 

Special coverage and/or increased limits may be required based on the size and
type of operations of the insured. The Certificate must show the Umbrella and/or
Excess policies at the full limit of liability.

 

NXT Capital reserves the absolute right to modify, amend or supplement these
requirements.

 

All Named Insured’s are to be reflected on all certificates.

 

certificate holder & additional Interest insurance consultant     NXT Capital,
LLC and its successors and assigns Lockton Companies, LLC Attn: Account Manager
for Insert Borrower Name 5847 San Felipe, Suite 320 191 North Wacker Drive,
Suite 1200 Houston, TX 77057 Chicago, IL 60606  

 

Exhibit E-3

 

 

[tex10-1logo.jpg]

 

minimum requirements - property & casualty & liability insurance
(Real Estate Finance) 

 

Exhibit A

 

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Exhibit E-4

 

 

[tex10-1logo.jpg]

 

minimum requirements - property & casualty & liability insurance
(Real Estate Finance) 

 

Exhibit B

 

Form of Letter re No Other Loss Payees

 

[LETTERHEAD OF INSURANCE AGENT]

 

____________ __, 20__

 

       

 

Re:     [OpCo 1], [OpCo 2], [HoldCo] and their Affiliates

 

Ladies and Gentlemen:

This letter is to confirm that _____________________________________, is the
sole loss payee of Policy(ies) Number(s) ____________________ issued by
___________________________________________ insuring property of [OpCo 1], [OpCo
2], [HoldCo] and their affiliates except for [list any other loss payees], as
their interests may appear.

 

  Very truly yours,       [Insurance Agent]         By:     Title:  

 

Exhibit E-5

 

 

EXHIBIT F

LITIGATION

 

None.

 

 

 

 

EXHIBIT G

ORGANIZATIONAL CHART

 

See Attached.

 

 

 

 

EXHIBIT H

RENT ROLL

`

See Attached.

 

 

 

 

EXHIBIT I

LEGAL DESCRIPTION OF LAND

 

Lying and being situate in Mecklenburg County, North Carolina, and being more
particularly described as follows:

 

Track One:

 

COMMENCING at NGS Monument “KIMBRELL”, having NC GRID NAD83 coordinates of
N:525,718.49 FT, E:1,439,499.23 FT; thence N 16°38'00" E a horizontal ground
distance of 7,319.50 feet to a new nail, said point being located in the center
line of the eastern rail road track of the City of Charlotte Light Rail

 

Line; said point having NC GRID NAD83 coordinates of N:532,730.62 ft, E:
1,441,594.08 ft, said point also being located at the northern most corner of
the 3030 Partners, LLC Property as described in Deed Book 17292, Page 219 of the
Mecklenburg County Registry; thence N 54°03'28" W a distance of 41.90 feet to a
calculated point, which is the POINT OF BEGINNING, said point being located 35
feet west of and perpendicular to the centerline between the east and west bound
tracks of the aforesaid City of Charlotte Light Rail Line; thence with a line
being at all points a distance of 35 feet west of and perpendicular to the
center line between the east and west bound tracks S 34°33'22" W a distance of
574.31 feet to a calculated point, said point being located on a northern line
of the City of Charlotte Property as described in Deed Book 14846, Page 97 of
the Mecklenburg County Registry; thence with the aforesaid City of Charlotte
Property N 56°14'09" W crossing a new iron rod at a distance of 91.63 feet for a
total distance of 411.48 feet to a new iron rod, said point being located at the
southern corner of the Kimbark, LLC Property as described in Deed Book 12376,
Page 145 and Resolution Book 23334, Page 580 of the Mecklenburg County Registry;
thence with the aforesaid line as described in Resolution Book 23334, Page 580 N
51°36'21" E crossing a new iron rod at a distance of 293.06 feet for a total
distance of 612.53 feet to a new nail, said point being located in the center
line of New Bern Street; thence with the center line of New Bern Street S
54°03'28" E a distance of 231.92 feet to the POINT OF BEGINNING; Containing
186,542 square feet or 4.2824 acres as shown on a survey by R.B. Pharr and
Associates P.A. dated July 30, 2013,(Map File W-4037A).

 

Easement:

 

TOGETHER WITH a non-exclusive easement described in that certain Easement
Agreement between the City of Charlotte and Fountains at NewBern Station, LLC,
dated January 6, 2012 and recorded January 9, 2012 in Book 27018, page 884,
Mecklenburg County Public Registry.

 

Tract Two:

 

BEING ALL of that land of approximately 7,635 square feet designated with dash
marks on Exhibit C-1 of that certain Resolution Closing a Portion of Foster
Avenue in the City of Charlotte, Mecklenburg County, North Carolina recorded in
Book 23334, Page 580, Mecklenburg County Registry and in Resolution Book 41,
Page 116 of the City Council of the City of Charlotte, North Carolina.

 

(continued on following page)

 

 

 

 

Also described as follows:

 

That certain parcel of land, situated, lying and being in the City of Charlotte,
Mecklenburg County, North Carolina, and being more particularly described as
follows:

 

COMMENCING at a new nail located at the intersection of the centerline of New
Bern Street and the extension of the southern right-of-way of Foster Avenue;
thence with the southern right-of-way of Foster Avenue S 51°36'21 W a distance
of 319.47 feet to a new iron rod, which is the POINT OF BEGINNING; having NC
GRID NAD83 coordinates of N: 532,692.94 ft, E:1,441,122.08 ft; thence S
51°36'21" W a distance of 293.06 feet to a new iron rod, said point being
located on a northern line of the City of Charlotte Property as described in
Deed Book 14846, Page 97 of the Mecklenburg County Registry, said point also
being located at the southern most corner of the Kimbark, LLC property as
described in Deed Book 12376, Page 145 and Resolution Book 23334, Page 580 of
the Mecklenburg County Registry; thence with the aforesaid Kimbark, LLC.
Property N 34°034'6" E a distance of 190.93 feet to a new iron rod, said point
being located on the southern right-of-way of Foster Avenue; thence with the
southern right-of-way of Foster Avenue with the are of a circular curve turning
to the left with a radius of 210.19 feet, and an are length of 126.96, (chord: N
79°00'37" E a distance of 125.04 feet) , to the POINT OF BEGINNING; Containing
7,636 square feet or 0.1753 acres as shown on a survey by R.B. Pharr and
Associates P.A. dated July 30, 2013, (Map File W-4037A).

 

Tract Three (Composite of Tracts One and Two):

 

COMMENCING at NGS Monument “KIMBRELL”, having NC GRID NAD83 coordinates of
N:525,718.49 FT, E:1,439,499.23 FT; thence N 16°38'00" E a horizontal ground
distance of 7,319.50 feet to a new nail, said point being located in the center
line of the eastern rail road track of the City of Charlotte Light Rail Line;
said point having NC GRID NAD83 coordinates of N:532,730.62 ft, E:1,441,594.08
ft, said point also being located at the northern most corner of the 3030
Partners, LLC Property as described in Deed Book 17292, Page 219 of the
Mecklenburg County Registry; thence N 54°03'28" W a distance of 41.90 feet to a
calculated point, which is the POINT OF BEGINNING, said point being located 35
feet west of and perpendicular to the centerline between the east and west bound
tracks of the aforesaid City of Charlotte Light Rail Line; thence with a line
being at all points a distance of 35 feet west of and perpendicular to the
center line between the east and west bound tracks S 34°33'22" W a distance of
574.31 feet to a calculated point, said point being located on a northern line
of the City of Charlotte Property as described in Deed Book 14846, Page 97 of
the Mecklenburg County Registry; thence with the aforesaid City of Charlotte
Property N 56°14'09" W crossing a new iron rod at a distance of 91.63 feet for a
total distance of 411.48 feet to a new iron rod, said point being located at the
southern corner of the Kimbark, LLC Property as described in Deed Book 12376,
Page 145 and Resolution Book 23334, Page 580 of the Mecklenburg County Registry;
thence with the aforesaid Kimbark, LLC Property N 34°03'46" E a distance of
190.93 feet to a new iron rod, said point being located on the eastern
right-of-way of Foster Avenue; thence with the eastern right-of-way of Foster
Avenue the following 2 courses and distances: 1) with the are of a circular
curve turning to the left with a radius of 210.19 feet, and an are length of
126.96, (chord: N 79°00’37" E a distance of 125.04 feet), to a new iron rod; 2)
N 51°36’21" E a distance of 319.47 feet to a new nail, said point being located
in the center line of New Bern Street; thence with the center line of New Bern
Street S 54°03'28" E a distance of 231.92 feet to the POINT OF BEGINNING;
Containing 194,178 square feet or 4.4577 acres as shown on a survey by R.B.
Pharr and Associates P.A. dated July 30, 2013, (Map File W-4037A).

 

 

 

 

SCHEDULE I

DEFINITIONS

 

Defined Terms.

 

Accrued Interest: Interest computed on the outstanding principal balance of the
Loan at the Interest Rate monthly in arrears.

 

Affiliate: With respect to a specified person or entity, any individual,
partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, Controls or is Controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner, or any such
person's immediate family members, direct ancestors or descendants.

 

Agreement: This Loan Agreement.

 

Anti-Terrorism and Anti-Money Laundering Laws: (a) all applicable Laws,
regulations, executive orders and government guidance on the prevention and
detection of money laundering (including 18 U.S.C. §§ 1956, 1957 and 1960), drug
trafficking, terrorist-related activities, or financial or other fraud, and any
predicate crimes to such Laws; (b) the Bank Secrecy Act (31 U.S.C. §§ 5311 et
seq. and 12 U.S.C. §§1818(s), 1829(b) and 1951-1959) and its implementing
regulations; and (c) all regulations and any other requirements of any
governmental authority (including, without limitation, the United States
Department of the Treasury Office of Foreign Assets Control) addressing,
relating to, or attempting to eliminate drug trafficking, terrorist acts and
acts of war.

 

Appraisal: An appraisal of the Project performed in accordance with FIRREA and
Lender's appraisal requirements by an independent appraiser licensed in the
state in which the Project is located and selected and retained by Lender.
Borrower may provide to Lender a copy of any FIRREA appraisal prepared for
another lender within the past three (3) months. Lender may, in its sole and
absolute discretion: (a) accept such appraisal; (b) request an update of such
appraisal; and (c) retain a state licensed appraiser to perform a new appraisal.

 

Authorized Representative: Richard H. Ross.

 

Base Rate:  For each calendar month in the Loan term, the rate of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
rate of interest per annum which is identified and normally published as the
"One Month London Interbank Offered Rate" in the Money Rates page of the Market
Data section of The Wall Street Journal online
(http://online.wsj.com) ("LIBOR") for the Business Day which is two Business
Days prior to the first calendar day of such month.  If The Wall Street Journal
does not publish the LIBOR, or Lender determines in good faith that the rate
published in the Money Rates section of The Wall Street Journal for a one month
or thirty (30) day period does not accurately reflect the "London Interbank
Offered Rate" available to Lender for a one month or thirty (30) day period, or
if such rate no longer exists, Lender may select a replacement rate or
replacement source.

 

Bank Account Control Agreement: That certain Control Agreement for Deposit
Accounts by and among Lender and Regions Bank, an Alabama corporation, dated as
of even date herewith, as amended, modified, restated, extended, supplemented or
replaced from time to time.

 

Bankruptcy Code: Means Title 11 of the United States Code, as amended from time
to time, and all rules and regulations promulgated thereunder.

 

Blocked Account: An account subject to the Bank Account Control Agreement.

 

Schedule I
Page 1

 

 

 

 

Blocked Person: Any person or entity (i) listed in the annex to, or otherwise
subject to the provisions of, Executive Order No. 13224; (ii) acting on behalf
of a person or entity subject to Executive Order No. 13224; (iii) with which
Lender is prohibited from dealing or otherwise engaging in any transaction by
any Ant-Terrorism and Anti-Money Laundering Law; (iv) that threatens or
conspires to commit or support "terrorism" as defined in Executive Order No.
13224; or (v) that is named a "specially designated national" or "blocked
person" on the most current list published by the U.S. Department of Treasury
Office of Foreign Assets Control or other similar list.

 

Borrower: TS New Bern, LLC, a Delaware limited liability company, successor by
merger with Fountains at Newbern Station, LLC, a North Carolina limited
liability company, and Newbern Station Holdings, LLC, a North Carolina limited
liability company, together with its successors and permitted assigns. All
references herein to Borrower shall be references to TS New Bern, LLC after the
consummation of the merger with the NC LLCs.

 

Borrower Party and Borrower Parties: Individually or collectively, the Borrower,
Sole Member, Michael Baumann and Guarantor.

 

Borrower's Knowledge: The actual knowledge, after reasonable inquiry, of
Borrower, Sole Member, Michael Baumann, Guarantor, each controlling shareholder,
individual general partner or managing member of Sole Member, and each
individual officer, employee or representative of Borrower or Guarantor or
Property Manager who exercises supervisory authority or has supervisory
responsibilities with respect to the Project.

 

Borrower's Principal Place of Business: 19950 W. Country Club Drive, Suite 800,
Aventura, Florida 33180.

 

Brownfields Agreements: Collectively, that certain Notice of Brownfields
Property recorded with the Mecklenburg County, North Carolina Register of Deeds
on August 3, 2007 in Book 22632, Page 304, together with the Brownfields
Agreement attached thereto as Exhibit A, that certain Notice of Brownfields
Property recorded with the Mecklenburg County, North Carolina Register of Deeds
on March 14, 2012 in Book 27184, Page 52, together with the Brownfields
Agreement attached thereto as Exhibit A, and any other documents affecting the
Project and related to the development of the Project under the Brownfields
Property Reuse Act of 1997, NCGS §130A, Article 9, Part 5, as all such documents
same may be amended, modified, supplemented, restated or replaced from time to
time.

 

Business Day: A day of the year on which banks are not required or authorized to
close in Chicago, Illinois.

 

Closing Date: The date of the disbursement of the Loan.

 

Closing Checklist: The list of items prepared, from time to time, by Lender that
includes various pre-closing prerequisites to fund the Loan.

 

Co-Lender Agreement: As such term is defined in Section 9.1(d).

 

Collateral Assignment of Management Agreement: That certain Collateral
Assignment of Management Agreement and Waiver of Property Management and
Broker's Liens of even date herewith by and between Borrower, Lender and
Property Manager, as amended, modified, restated, extended, supplemented or
replaced from time to time.

 

Control(s) or Controlled: As such term is used with respect to any person or
entity, including the correlative meanings of the terms "controlled by" and
"under common control with", shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management policies of such
person or entity, whether through ownership of 10% or more of the outstanding
voting securities in such entity, by contract or otherwise.

 

Default or default: Any event, circumstance or condition, which, if it were to
continue uncured, would, with notice or lapse of time or both, constitute an
Event of Default hereunder.

 

Schedule I
Page 2

 

 

 

 

Default Rate: The rate per annum equal to five percentage (5%) points (500 basis
points) in excess of the Interest Rate otherwise applicable on each outstanding
disbursement of the Loan, but shall not at any time exceed the highest rate
permitted by Law.

 

Depository Bank: Regions Bank, an Alabama corporation.

 

Derivative Obligations: All obligations of Borrower under any Interest Rate
Agreement.

 

Disbursement Processing Fee: A $500 fee payable to Lender for each disbursement
of proceeds from the Property Tax Escrow and Insurance Escrow.

 

Eligible Expenses: The ordinary and necessary operating expenses of the Project
during the applicable month which are either consistent with the operating
budget approved by Lender or otherwise reasonably incurred in the ordinary
course of Borrower's business, excluding any expenses paid to Borrower or any
Affiliate of Borrower, unless expressly permitted by Lender.

 

Environmental Indemnitors: Individually, Borrower and Guarantor, collectively
referred to as "Environmental Indemnitors".

 

Environmental Indemnity Agreement: That certain Environmental Indemnity
Agreement of even date herewith, executed by Environmental Indemnitors in favor
of Lender, as amended, modified, restated, extended, supplemented or replaced
from time to time.

 

Environmental Proceedings: Any environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative proceedings,
relating to the Project.

 

ERISA: The Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated thereunder from time to time.

 

Estoppel Letter: A written statement from Borrower setting forth the sums then
owing under the Loan Documents according to Borrower's books and records and any
right of set-off, counterclaim or other defense that exists against such sums,
and Borrower's obligations under the Loan Documents.

 

Event of Default: As such term is defined in Section 8.1.

 

Excess Cash Flow: For any period means, all revenues of Borrower, determined on
a cash basis, derived from the ownership, operation, use, leasing and occupancy
of the Project during such period including rents, lease termination fees,
expense reimbursements, interest income and forfeited security and other
deposits for such period less (1) the actual, customary and reasonable expenses
in connection with operating the Project actually paid during such period
including a management fee (in accordance with the property management
agreement), real estate taxes (in accordance with the monthly real estate tax
escrow), insurance (in accordance with the monthly insurance escrow), and
deposits made into reserves approved by Lender or required by the Loan Documents
(provided, however, that amounts included in such reserves shall not also be
included as an expense upon disbursement from such reserves) excluding: (A) any
loan proceeds, (B) proceeds or payments under insurance policies (but including
proceeds of business interruption insurance); (C) condemnation proceeds; (D) any
security deposits received from tenants in the Project, unless and until the
same are applied to rent or other obligations in accordance with the tenant's
Lease; and (E) any other extraordinary items approved by Lender, in its sole and
absolute discretion and (2) the current principal and interest payments accrued
or paid on the Loan for such period.

 

Excess Interest: As such term is defined in Section 10.5.

 

Exit Fee: an exit fee equal to $150,000.

 

Expenses: As such term is defined in Section 8.1.

 

Schedule I
Page 3

 

 

 

 

Extension Option: As such term is defined in Section 2.4.

 

Extension Term: As such term is defined in Section 2.4.

 

FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act of 1989,
as amended from time to time.

 

Foreign Person: Any "foreign corporation", "foreign partnership", "foreign
trust", "foreign estate", "foreign person", "affiliate" of a "foreign person" or
a "United States intermediary" of a "foreign person" within the meaning of the
Internal Revenue Code Sections 897, 1445 or 7701, the Foreign Investments in
Real Property Tax Act of 1980, the International Investment and Trade Services
Survey Act, the Agricultural Foreign Investment Disclosure Act of 1978, or the
regulations promulgated pursuant to such Acts or any amendments to such Acts.

 

GAAP: Generally accepted accounting principles, consistently applied.

 

Governmental Approvals: Collectively, all consents, licenses, and permits and
all other authorizations or approvals required from any Governmental Authority
to construct, improve, own or operate the Project.

 

Governmental Authority: Any federal, state, county or municipal government, or
political subdivision thereof, any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court, administrative tribunal, or public utility.

 

Gross Revenues: All rents, revenues and other income, from whatever source,
including, lease termination fees, returns of deposits and any other ordinary or
extraordinary revenues or income generated from or relating to the ownership,
leasing, management, maintenance or operation of the Project.

 

Guarantor: Trade Street Residential, Inc., a Maryland corporation, formerly
known as Feldman Mall Properties, Inc., and any other person or entity who, or
which from time to time, is liable for all or any portion of Borrower's
obligations under the Loan Documents, together with its heirs, successors and
permitted assigns.

 

Hazardous Material: Means and includes gasoline, petroleum, asbestos containing
materials, explosives, radioactive materials, microbial matter, biological
toxins, mycotoxins, mold or mold spores or any hazardous or toxic material,
substance or waste which is defined by those or similar terms or is regulated as
such under any Law of any Governmental Authority having jurisdiction over the
Project or any portion thereof or its use, including: (i) any "hazardous
substance" defined as such in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.A.
§ 9601(14) as may be amended from time to time, or any so-called "superfund" or
"superlien" Law, including the judicial interpretation thereof; (ii) any
"pollutant or contaminant" as defined in 42 U.S.C.A. § 9601(33); (iii) any
material now defined as "hazardous waste" pursuant to 40 C.F.R. Part 260;
(iv) any petroleum, including crude oil or any fraction thereof; (v) natural
gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for
fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910;
and (vii) any other toxic substance or contaminant that is subject to any other
Law or other past or present requirement of any Governmental Authority. Any
reference above to a Law, includes the same as it may be amended from time to
time, including the judicial interpretation thereof.

 

Holder: As such term is defined in Section 9.1(b).

 

Improvements: All improvements currently located on or under the Land or
subsequently constructed on or under the Land generally consisting of 2
residential buildings containing in the aggregate 208 residential units and
approximately 283 parking spaces. The general purpose and use of the Project is
as a multi-family apartment project.

 

Include or including: Including, but not limited to.

 

Indebtedness: Collectively, as of any date of determination, all indebtedness of
Borrower to Lender under the Loan Documents, including, the outstanding
principal balance of the Loan, Accrued Interest, unpaid fees (including the Exit
Fee), Minimum Interest Recovery, unpaid Expenses, and any Derivative
Obligations, as each of the same is amended, modified, restated, extended,
waived, supplemented or replace from time to time.

 

Schedule I
Page 4

 

 

 

 

Indemnified Party: As such term is defined in Section 4.2(k).

 

Initial Funding Amount: A portion of the Loan equal to Thirty Million and 00/100
Dollars ($30,000,000).

 

Insurance Escrow: As such term is defined in Section 4.2(e).

 

Insurance Proceeds: As such term is defined in Section 7.1(a).

 

Interest Rate: A rate equal to a floating rate per annum equal to the aggregate
of four and three-quarters percent (4.75%) plus the Base Rate , but in no event
shall the Interest Rate be lower than five and three-quarters percent (5.75%).
Interest shall be calculated based on 360 day year and charged for the actual
number of days elapsed.

 

Interest Rate Agreement: Any agreement (including any ISDA Master
Agreement) between Borrower and Lender or any of its Affiliates (or their
assignee) evidencing any interest rate, swap, cap, collar, floor or other
financing agreement or arrangement the value of which is dependent upon interest
rates.

 

Internal Revenue Code: The Internal Revenue Code of 1986, as amended from time
to time.

 

Involuntary Borrower Bankruptcy: means any involuntary case under the Bankruptcy
Code or any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, in which Borrower or Sole Member is a debtor or all or any
portion of the Project or any of Sole Member's assets is property of the estate
therein.

 

Land: The approximately 4.4577 acre parcel of land located at 120 and 126 New
Bern Street in the City of Charlotte, County of Mecklenburg, State of North
Carolina, commonly known as "Fountains at South End" and which is legally
described on Exhibit I attached hereto.

 

Late Charge: As such term is defined in Section 2.8.

 

Laws: Collectively, all federal, state and local Laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
presidential authority in the applicable jurisdiction.

 

Leases: The collective reference to all leases, subleases and occupancy
agreements affecting the Project or any part thereof now existing or hereafter
executed and all amendments, modifications or supplements thereto approved in
writing by Lender.

 

Lender: NXT Capital, LLC, a Delaware limited liability company, together with
its successors and assigns.

 

Lender's Address: 191 North Wacker Drive, Chicago, Illinois 60606, Attention:
Timothy R. Verrilli. Facsimile No. (312) 450-8100.

 

Lender's Consultant: An independent consulting architect, inspector, and/or
engineer designated by Lender in Lender's sole and absolute discretion.

 

Lender's Counsel: Goldberg Kohn Ltd., Jami L. Brodey, Esq.

 

Lender's Counsel's Address: 55 East Monroe Street, Suite 3300, Chicago, Illinois
60603. Facsimile No. (312) 332-2196.

 

LIBOR: As such term is defined in the definition of Base Rate in this Schedule
I.

 

Schedule I
Page 5

 

 

 

 

Loan: The loan made pursuant to this Agreement for refinancing the Project.

 

Loan Amount: Thirty Million and No/100ths Dollars ($30,000,000.00).

 

Loan Application: That certain Loan Application accepted by Guarantor on
September 3, 2013.

 

Loan Documents: The collective reference to this Agreement, the Limited Joinder
attached to this Agreement, the Note, the Security Instrument, Collateral
Assignment of Management Agreement, Bank Account Control Agreement,
Environmental Indemnity Agreement, and any other documents, agreements,
certificates or instruments evidencing or securing or which guaranty the
obligations of the Loan or executed in connection therewith, as each of the
foregoing is amended, modified, restated, extended, supplemented or replaced
from time to time.

 

Loan Fee: An amount equal to $300,000.

 

Loan Year: The period from the Closing Date through the last day of the same
month in the following year and thereafter each successive 12 month period.

 

Management Agreement: That certain Management Agreement dated as of even date
herewith by and between Borrower and Property Manager, as amended modified,
restated, extended, supplemented or replaced from time to time.

 

Material Adverse Change or material adverse change: If, in Lender's reasonable
discretion, the business prospects, operations or financial condition of a
person, entity or property has changed in a manner which could impair the value
of Lender's security for the Loan, prevent timely repayment of the Loan or
otherwise prevent the applicable person or entity from timely performing any of
its material obligations under the Loan Documents.

 

Maturity Date: March 24, 2014, subject to acceleration pursuant to Section 8.2
or extension pursuant to Section 2.4. Borrower has the right to extend the
Maturity Date for one 3 month period on the terms and conditions set forth in
Section 2.4.

 

Minimum Interest Recovery: The amount, if any, by which $580,000 exceeds the
amount of interest actually paid by Borrower to Lender prior to repayment of the
Loan in full or acceleration of the Loan.

 

NC LLCs: Collectively, Newbern Station Holdings, LLC and Fountains at Newbern
Station, LLC, each a North Carolina limited liability company, and each of which
was merged into TS New Bern, LLC, a Delaware limited liability company, as of
the date hereof.

 

Net Cash Flow: For any period means, all revenues of Borrower, determined on a
cash basis, derived from the ownership, operation, use, leasing and occupancy of
the Project during such period including rents, lease termination fees, expense
reimbursements, interest income and forfeited security and other deposits for
such period less the actual, customary and reasonable expenses actually paid in
connection with operating the Project paid during such period including a
management fee (in accordance with the property management agreement), real
estate taxes (in accordance with the monthly real estate tax escrow), insurance
(in accordance with the monthly insurance escrow), and deposits made into
reserves approved by Lender or required by the Loan Documents (provided,
however, that amounts included in such reserves shall not also be included as an
expense upon disbursement from such reserves) excluding: (A) any loan proceeds,
(B) proceeds or payments under insurance policies (but including proceeds of
business interruption insurance); (C) condemnation proceeds; (D) any security
deposits received from tenants in the Project, unless and until the same are
applied to rent or other obligations in accordance with the tenant's Lease; and
(E) any other extraordinary items approved by Lender, in its sole and absolute
discretion.

 

Net Operating Income: Revenue less Operating Expenses.

 

Schedule I
Page 6

 

 

 

 

Net Worth: As of a given date, (x) the total assets of Guarantor(s) as of such
date less (y) Guarantor's total liabilities as of such date, determined in
accordance with accounting principles consistently applied and consistent with
the financial statements previously delivered by Guarantor to Lender.

 

Note: That certain Promissory Note of even date herewith in the original
principal amount of the Loan made by Borrower and payable to the order of
Lender, together with all amendments thereto and substitutions therefor,
including any notes created pursuant to Section 9.1(b).

 

Operating Expenses: For the trailing twelve month period, the actual and
customary expenses incurred in connection with operating the Project, determined
on a stabilized accrual basis for such period (as reasonably adjusted by
Lender), including, without limitation: (i) recurring expenses (e.g., real
estate tax and insurance deposits, tenant improvements, leasing commissions,
carpeting replacement, appliance and drapery replacement and such others as
determined by Lender) which are not paid out of the replacement reserve,
(ii) management fees (whether paid or not) in an amount not less than 4% of
effective gross income, and (iii) a replacement reserve (whether reserved or
not) of not less than $250 per apartment unit.

 

Organizational Documents: The articles of organization, certificate of formation
and limited liability company operating agreement of Borrower.

 

Other Information: Any financial information, Project information, or other
information, including (i) any backup documentation (including invoices,
receipts and other evidence of costs incurred or revenues received) relating to
the Borrower, Guarantor or the Project, (ii) information regarding all capital
or other equity contributions to Borrower, and (iii) specific information
concerning Borrower's, and Guarantor's other real estate holdings, including
property income and expenses, debt service requirements and occupancy.

 

Payment Commencement Date: The first day of November, 2013.

 

Permitted Exceptions: Those matters listed on Schedule B to the Title Policy
which affect title to the Project as of the Closing Date and thereafter such
other title exceptions as Lender may reasonably approve in writing.

 

Person: An individual, corporation, limited liability company, business trust,
partnership, trust, unincorporated organization, joint stock company, sole
proprietorship, joint venture, Governmental Authority or any other form of
entity.

 

Personal Property: As such term is defined in Section 4.2(h).

 

Proceeding: As such term is defined in Section 10.3.

 

Project: The collective reference to (i) the Land, together with all buildings,
structures and improvements located or to be located thereon, including the
Improvements, (ii) all rights, privileges, easements and hereditaments relating
or appertaining thereto, (iii) the Leases, and (iv) the Personal Property.

 

Project Yield: The quotient of (x) Net Operating Income from the Project as
determined by Lender's audit, at Borrower's expense, at such time, divided by
(y) the sum of the then current outstanding principal balance of the Loan plus
accrued and unpaid interest thereon.

 

Property Manager: Trade Street Property Management, LLC, a Florida limited
liability company, and any successor manager of the Project approved by Lender
in writing pursuant to Section 4.1(c).

 

Property Taxes: As such term is defined in Section 4.2(f).

 

Property Tax Escrow: As such term is defined in Section 4.2(f).

 

Schedule I
Page 7

 

 

 

 

Publicly Available: Information that is in the public domain, or becomes part of
the public domain, after disclosure to such person through no fault of such
person.

 

Rating Agency: Standard & Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc., Moody's Investors Service, Inc., Fitch, Inc., and any other
nationally recognized statistical rating agency which has been designated by
Lender.

 

REA: Any construction, operation and reciprocal easement or similar agreement
(including, but not limited to, any separate or other agreement between Borrower
and one or more other parties related to an REA) affecting all or any portion of
the Project.

 

Retained Liabilities: As such term is defined in Paragraph 1 of the Limited
Joinder.

 

Revenue: The sum of (a) the annualization of all amounts collected from tenants
of the Project for the most current month, excluding corporate apartment income
and other income unless specifically included below, nonrecurring income and
non-property related income (as determined by Lender in its sole and absolute
discretion) and income from tenants (i) that are 30 or more days delinquent, or
(ii) that have been 30 or more days delinquent two or more times during the
immediately prior 6 month period, and (b) other revenue not to exceed $300,000
for laundry, vending, parking, utility reimbursement and late fees based upon
collections for the immediately prior 12 month period, less any payments which
Lender deems to be a rent concession in its sole and absolute discretion
adjusted based on an occupancy factor of the lesser of (a) actual occupancy or
(b) an assumed 94% occupancy rate.

 

Security Deposit Account: That certain account in Borrower's name held at
Depository Bank, which shall be subject to the Bank Account Control Agreement.

 

Security Instrument: A first priority Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date herewith encumbering
the Project, securing Borrower's obligations under the Loan and granting Lender
a first priority lien in the Project, as amended, modified, restated, extended,
supplemented or replaced from time to time.

 

Servicer: As such term is defined in Section 9.1(d).

 

Single Purpose Entity: An entity which satisfies and complies with each
representation, warranty and covenant set forth in Section 4.2(n) herein.

 

Sole Member: Trade Street Operating Partnership, LP, a Delaware limited
partnership.

 

Tenant: Any tenant under any Lease.

 

Title Insurer: Chicago Title Insurance Company, or such other title insurance
company licensed in the State of North Carolina as may be approved in writing by
Lender in Lender's sole and absolute discretion.

 

Title Policy: A 2006 ALTA Lender's Title Insurance Policy issued by the Title
Insurer insuring the lien of the Security Instrument as a valid first, prior and
paramount lien upon the Project and all appurtenant easements, and subject to no
other exceptions other than the Permitted Exceptions and otherwise satisfying
the requirements of Lender, including all endorsements required by Lender.

 

Transfer: Except as otherwise permitted hereunder or approved by Lender, any:
(i) sale, transfer, lease, conveyance, alienation, pledge, assignment, mortgage,
encumbrance hypothecation or other disposition of (a) all or any portion of the
Project or any portion of any other security for the Loan, (b) all or any
portion of the Borrower's right, title and interest (legal or equitable) in and
to the Project or any portion of any other security for the Loan, or (c) any
interest in Borrower, Sole Member or Guarantor (including any interest in the
profits, losses or cash distributions in any way relating to the Project, Sole
Member or the Borrower) or any interest in any entity which holds an interest
in, or directly or indirectly controls, Borrower, Sole Member or Guarantor or
(d) creation of any new ownership interest in Borrower, Sole Member or Guarantor
(including any interest in the profits, losses or cash distributions in any way
relating to the Project or Borrower, Sole Member or Guarantor.

 

Schedule I
Page 8

 

 

 

 

SCHEDULE II

 

PRESS RELEASE

 

NXT Capital recently closed a $30 million first mortgage loan used to facilitate
the acquisition of a Class A apartment community located in Charlotte, North
Carolina.

 

Keys to the deal:

 

·Institutional quality, newly built Class A collateral

 

·Property undergoing initial lease-up with excellent leasing velocity

 

·Desirable, urban in-fill location adjacent to a light rail stop

 

·Experienced sponsorship

 

NXT Capital provides structured financing solutions to middle-market clients
through its Real Estate Finance, Corporate Finance and Venture Finance groups,
originating transactions on a national basis. NXT Capital’s Real Estate Finance
group primarily serves experienced real estate investors with non-recourse first
mortgages of $10 million to $35 million for major-market properties with initial
DSC greater than 1.0X.