Exhibit
10.30


 


REQUESTED
BY


AND
WHEN RECORDED MAIL TO:


 


Thomas
A. Hauser, Esq.


Ballard
Spahr, LLP


300
East Lombard Street, 18th Floor


Baltimore,
Maryland 21202


 


MULTIFAMILY DEED OF TRUST,


ASSIGNMENT OF RENTS,


SECURITY AGREEMENT AND FIXTURE
FILING


(CALIFORNIA)


 


ATTENTION COUNTY RECORDER:  THIS
INSTRUMENT IS INTENDED TO BE EFFECTIVE AS A FINANCING STATEMENT FILED AS A
FIXTURE FILING PURSUANT TO SECTION 9502 OF THE CALIFORNIA COMMERCIAL CODE.  PORTIONS OF THE GOODS COMPRISING A PART OF
THE MORTGAGED PROPERTY ARE OR ARE TO BECOME FIXTURES RELATED TO THE LAND
DESCRIBED IN EXHIBIT A HERETO.  THIS
INSTRUMENT IS TO BE FILED FOR RECORD IN THE RECORDS OF THE COUNTY WHERE DEEDS
OF TRUST ON REAL PROPERTY ARE RECORDED AND SHOULD BE INDEXED AS BOTH A DEED OF
TRUST AND AS A FINANCING STATEMENT COVERING FIXTURES.  THE ADDRESSES OF BORROWER (DEBTOR) AND LENDER
(SECURED PARTY) ARE SPECIFIED IN THE FIRST PARAGRAPH ON PAGE 1 OF THIS
INSTRUMENT.


 

















 


TABLE OF CONTENTS


 


	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  UNIFORM
  COMMERCIAL CODE SECURITY AGREEMENT

  	
  7

  
	
   

  	
   

  	
   

  
	
  3.

  	
  ASSIGNMENT
  OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION

  	
  8

  
	
   

  	
   

  	
   

  
	
  4.

  	
  ASSIGNMENT
  OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY

  	
  10

  
	
   

  	
   

  	
   

  
	
  5.

  	
  PAYMENT
  OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM

  	
  12

  
	
   

  	
   

  	
   

  
	
  6.

  	
  EXCULPATION

  	
  12

  
	
   

  	
   

  	
   

  
	
  7.

  	
  DEPOSITS
  FOR TAXES, INSURANCE AND OTHER CHARGES

  	
  13

  
	
   

  	
   

  	
   

  
	
  8.

  	
  COLLATERAL
  AGREEMENTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  9.

  	
  APPLICATION
  OF PAYMENTS

  	
  14

  
	
   

  	
   

  	
   

  
	
  10.

  	
  COMPLIANCE
  WITH LAWS

  	
  14

  
	
   

  	
   

  	
   

  
	
  11.

  	
  USE
  OF PROPERTY

  	
  15

  
	
   

  	
   

  	
   

  
	
  12.

  	
  PROTECTION
  OF LENDER’S SECURITY

  	
  15

  
	
   

  	
   

  	
   

  
	
  13.

  	
  INSPECTION

  	
  16

  
	
   

  	
   

  	
   

  
	
  14.

  	
  BOOKS
  AND RECORDS; FINANCIAL REPORTING

  	
  16

  
	
   

  	
   

  	
   

  
	
  15.

  	
  TAXES;
  OPERATING EXPENSES

  	
  18

  
	
   

  	
   

  	
   

  
	
  16.

  	
  LIENS;
  ENCUMBRANCES

  	
  19

  
	
   

  	
   

  	
   

  
	
  17.

  	
  PRESERVATION,
  MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY

  	
  19

  
	
   

  	
   

  	
   

  
	
  18.

  	
  ENVIRONMENTAL HAZARDS

  	
  20

  



 


i

















 


	
  19.

  	
  PROPERTY
  AND LIABILITY INSURANCE

  	
  25

  
	
   

  	
   

  	
   

  
	
  20.

  	
  CONDEMNATION

  	
  27

  
	
   

  	
   

  	
   

  
	
  21.

  	
  TRANSFERS
  OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER

  	
  28

  
	
   

  	
   

  	
   

  
	
  22.

  	
  EVENTS
  OF DEFAULT

  	
  33

  
	
   

  	
   

  	
   

  
	
  23.

  	
  REMEDIES
  CUMULATIVE

  	
  34

  
	
   

  	
   

  	
   

  
	
  24.

  	
  FORBEARANCE

  	
  34

  
	
   

  	
   

  	
   

  
	
  25.

  	
  LOAN
  CHARGES

  	
  35

  
	
   

  	
   

  	
   

  
	
  26.

  	
  WAIVER
  OF STATUTE OF LIMITATIONS

  	
  35

  
	
   

  	
   

  	
   

  
	
  27.

  	
  WAIVER
  OF MARSHALLING

  	
  35

  
	
   

  	
   

  	
   

  
	
  28.

  	
  FURTHER
  ASSURANCES

  	
  36

  
	
   

  	
   

  	
   

  
	
  29.

  	
  ESTOPPEL
  CERTIFICATE

  	
  36

  
	
   

  	
   

  	
   

  
	
  30.

  	
  GOVERNING
  LAW; CONSENT TO JURISDICTION AND VENUE

  	
  36

  
	
   

  	
   

  	
   

  
	
  31.

  	
  NOTICE

  	
  37

  
	
   

  	
   

  	
   

  
	
  32.

  	
  SALE
  OF NOTE; CHANGE IN SERVICER

  	
  37

  
	
   

  	
   

  	
   

  
	
  33.

  	
  SINGLE
  ASSET BORROWER

  	
  37

  
	
   

  	
   

  	
   

  
	
  34.

  	
  SUCCESSORS
  AND ASSIGNS BOUND

  	
  38

  
	
   

  	
   

  	
   

  
	
  35.

  	
  JOINT
  AND SEVERAL LIABILITY

  	
  38

  
	
   

  	
   

  	
   

  
	
  36.

  	
  RELATIONSHIP
  OF PARTIES; NO THIRD PARTY BENEFICIARY

  	
  38

  
	
   

  	
   

  	
   

  
	
  37.

  	
  SEVERABILITY;
  AMENDMENTS

  	
  38

  
	
   

  	
   

  	
   

  
	
  38.

  	
  CONSTRUCTION

  	
  38

  
	
   

  	
   

  	
   

  
	
  39.

  	
  LOAN
  SERVICING

  	
  39

  
	
   

  	
   

  	
   

  
	
  40.

  	
  DISCLOSURE OF
  INFORMATION

  	
  39

  



 


ii

















 


	
  41.

  	
  NO
  CHANGE IN FACTS OR CIRCUMSTANCES

  	
  39

  
	
   

  	
   

  	
   

  
	
  42.

  	
  SUBROGATION

  	
  39

  
	
   

  	
   

  	
   

  
	
  43.

  	
  ACCELERATION;
  REMEDIES

  	
  40

  
	
   

  	
   

  	
   

  
	
  44.

  	
  RECONVEYANCE

  	
  41

  
	
   

  	
   

  	
   

  
	
  45.

  	
  SUBSTITUTE
  TRUSTEE

  	
  41

  
	
   

  	
   

  	
   

  
	
  46.

  	
  STATEMENT
  OF OBLIGATION

  	
  41

  
	
   

  	
   

  	
   

  
	
  47.

  	
  SPOUSE’S
  SEPARATE PROPERTY

  	
  41

  
	
   

  	
   

  	
   

  
	
  48.

  	
  FIXTURE
  FILING

  	
  42

  
	
   

  	
   

  	
   

  
	
  49.

  	
  ADDITIONAL
  PROVISION REGARDING APPLICATION OF PAYMENTS

  	
  42

  
	
   

  	
   

  	
   

  
	
  50.

  	
  WAIVER
  OF MARSHALLING; OTHER WAIVERS

  	
  42

  
	
   

  	
   

  	
   

  
	
  51.

  	
  ADDITIONAL
  PROVISIONS CONCERNING ENVIRONMENTAL HAZARDS

  	
  42

  
	
   

  	
   

  	
   

  
	
  52.

  	
  ADDITIONAL
  PROVISION REGARDING INSURANCE

  	
  44

  
	
   

  	
   

  	
   

  
	
  53.

  	
  WAIVER OF TRIAL BY JURY

  	
  44

  



 


iii
















 


MULTIFAMILY DEED OF TRUST,


ASSIGNMENT OF RENTS,


SECURITY AGREEMENT AND


FIXTURE FILING


 


THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT
AND FIXTURE FILING (the “Instrument”) is
dated as of the 28th day of October, 2009, by BEHRINGER HARVARD NOHO, LLC, a
limited liability company organized and existing under the laws of Delaware,
whose address is 15601 Dallas Parkway, Suite 600, Addison, Texas 75001, as
trustor (“Borrower”), to Chicago Title Company,
whose address is 700 S. Flower Street, Suite 800, Los Angeles, CA 90017, as
trustee (“Trustee”), for the benefit of Red
Mortgage Capital, Inc., a corporation organized and existing under the laws of
Ohio, whose address is Two Miranova Place, 12th Floor,
Columbus, Ohio 43215, as beneficiary (“Lender”).


 


Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee, in trust,
with power of sale, the Mortgaged Property, including the Land located in Los
Angeles County, State of California and described in Exhibit A attached to this
Instrument.


 


TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower’s Multifamily Note payable to Lender, dated as of the date of this
Instrument, and maturing on November 1, 2016, in the principal amount of
$51,300,000.00, and all renewals, extensions and modifications of the
Indebtedness, the payment of all sums advanced by or on behalf of Lender to
protect the security of this Instrument under Section 12, and the performance
of the covenants and agreements of Borrower contained in the Loan Documents.


 


Borrower represents and warrants that Borrower is lawfully seized of
the Mortgaged Property and has the right, power and authority to grant, convey
and assign the Mortgaged Property, and that the Mortgaged Property is
unencumbered.  Borrower covenants that
Borrower will warrant and defend generally the title to the Mortgaged Property
against all claims and demands, subject to any easements and restrictions
listed in a schedule of exceptions to coverage in any title insurance policy
issued to Lender contemporaneously with the execution and recordation of this
Instrument and insuring Lender’s interest in the Mortgaged Property.


 


Covenants.  Borrower and
Lender covenant and agree as follows:


 


1

















 


1.             DEFINITIONS.


 


The
following terms, when used in this Instrument (including when used in the above
recitals), shall have the following meanings:


 


(a)           “Borrower” means all persons or entities identified as “Borrower”
in the first paragraph of this Instrument, together with their successors and
assigns.


 


(b)           “Collateral Agreement” means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves for
the Mortgaged Property, establishing a fund to assure completion of repairs or
improvements specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the occupancy of or income
from the Mortgaged Property does not increase to a level specified in that
agreement, or any other agreement or agreements between Borrower and Lender
which provide for the establishment of any other fund, reserve or account.


 


(c)           “Environmental Permit” means any permit, license, or other
authorization issued under any Hazardous Materials Law with respect to any
activities or businesses conducted on or in relation to the Mortgaged Property.


 


(d)           “Event of Default” means the occurrence of any event listed
in Section 22.


 


(e)           “Fixtures” means all property which is so attached to the
Land or the Improvements as to constitute a fixture under applicable law,
including: machinery, equipment, engines, boilers, incinerators, installed
building materials; systems and equipment for the purpose of supplying or
distributing heating, cooling, electricity, gas, water, air, or light;
antennas, cable, wiring and conduits used in connection with radio, television,
security, fire prevention, or fire detection or otherwise used to carry
electronic signals; telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and extinguishing systems
and apparatus; security and access control systems and apparatus; plumbing
systems; water heaters, ranges, stoves, microwave ovens, refrigerators,
dishwashers, garbage disposers, washers, dryers and other appliances; light
fixtures, awnings, storm windows and storm doors; pictures, screens, blinds,
shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor
and wall coverings; fences, trees and plants; swimming pools; and exercise
equipment.


 


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


 


2

















 


(g)           “Hazardous Materials” means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and oil;
explosives; flammable materials; radioactive materials; polychlorinated
biphenyls (“PCBs”) and compounds containing them; lead and lead-based paint;
asbestos or asbestos-containing materials in any form that is or could become
friable; underground or above-ground storage tanks, whether empty or containing
any substance; any substance the presence of which on the Mortgaged Property is
prohibited by any federal, state or local authority; any substance that
requires special handling; and any other material or substance now or in the
future defined as a “hazardous substance,” “hazardous material,” “hazardous
waste,” “toxic substance,” “toxic pollutant,” “contaminant,” or “pollutant”
within the meaning of any Hazardous Materials Law.


 


(h)           “Hazardous Materials Laws” means all federal, state, and
local laws, ordinances and regulations and standards, rules, policies and other
governmental requirements, administrative rulings and court judgments and
decrees in effect now or in the future and including all amendments, that
relate to Hazardous Materials and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.,
the Toxic Substance Control Act, 15 U.S.C. Section 2601, et seq.,
the Clean Water Act, 33 U.S.C. Section 1251, et seq.,
and the Hazardous Materials Transportation Act, 49 U.S.C. Section 5101, et seq., and their state analogs.


 


(i)            “Impositions” and “Imposition Deposits”
are defined in Section 7(a).


 


(j)            “Improvements” means the buildings, structures, improvements,
and alterations now constructed or at any time in the future constructed or
placed upon the Land, including any future replacements and additions.


 


(k)           “Indebtedness” means the principal of, interest on, and all
other amounts due at any time under, the Note, this Instrument or any other
Loan Document, including prepayment premiums, late charges, default interest,
and advances as provided in Section 12 to protect the security of this
Instrument.


 


(l)            [Intentionally
omitted]


 


(m)          “Key Principal” means (A) the natural person(s) or entity
identified as such at the foot of this Instrument; (B) the natural person or
entity who signed either the Acknowledgement and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability or the Exceptions
to Non-Recourse Guaranty (or is otherwise a guarantor on the Indebtedness); and
(C) any person or entity who becomes a Key Principal after the date of this
Instrument and is identified as such in an assumption agreement, or another
amendment or supplement to this Instrument or who otherwise signs either the
Acknowledgement and Agreement of Key Principal to Personal Liability


 


3

















 


for
Exceptions to Non-Recourse Liability or Exceptions to Non-Recourse Guaranty (or
any other guaranty of the Indebtedness).


 


(n)           “Land” means the land described in Exhibit A.


 


(o)           “Leases” means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests now or hereafter
in force, whether oral or written, covering or affecting the Mortgaged
Property, or any portion of the Mortgaged Property (including proprietary
leases or occupancy agreements if Borrower is a cooperative housing
corporation), and all modifications, extensions or renewals.


 


(p)           “Lender” means the entity identified as “Lender” in the first
paragraph of this Instrument and its successors and assigns, or any subsequent
holder of the Note.


 


(q)           “Loan Documents” means the Note, this Instrument, all
guaranties, all indemnity agreements, all Collateral Agreements, O&M
Programs, and any other documents now or in the future executed by Borrower,
Key Principal, any guarantor or any other person in connection with the loan
evidenced by the Note, as such documents may be amended from time to time.


 


(r)            “Loan Servicer” means the entity that from time to time is
designated by Lender to collect payments and deposits and receive notices under
the Note, this Instrument and any other Loan Document, and otherwise to service
the loan evidenced by the Note for the benefit of Lender.  Unless Borrower receives notice to the
contrary, the Loan Servicer is the entity identified as “Lender” in the first
paragraph of this Instrument.


 


(s)           “Mortgaged Property” means all of Borrower’s present and future
right, title and interest in and to all of the following:


 


(1)           the Land;


 


(2)           the
Improvements;


 


(3)           the Fixtures;


 


(4)           the Personalty;


 


(5)           all current and future
rights, including air rights, development rights, zoning rights and other
similar rights or interests, easements, tenements, rights-of-way, strips and
gores of land, streets, alleys, roads, sewer rights, waters, watercourses, and
appurtenances related to or benefitting the Land or the Improvements, or both,
and all rights-of-way, streets, alleys and roads which may have been or may in
the future be vacated;


 


4

















 


(6)           all proceeds paid or to be
paid by any insurer of the Land, the Improvements, the Fixtures, the Personalty
or any other part of the Mortgaged Property, whether or not Borrower obtained
the insurance pursuant to Lender’s requirement;


 


(7)           all awards, payments and
other compensation made or to be made by any municipal, state or federal
authority with respect to the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property, including any awards or
settlements resulting from condemnation proceedings or the total or partial
taking of the Land, the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property under the power of eminent domain or otherwise
and including any conveyance in lieu thereof;


 


(8)           all contracts, options and
other agreements for the sale of the Land, the Improvements, the Fixtures, the
Personalty or any other part of the Mortgaged Property entered into by Borrower
now or in the future, including cash or securities deposited to secure
performance by parties of their obligations;


 


(9)           all proceeds from the
conversion, voluntary or involuntary, of any of the above into cash or
liquidated claims, and the right to collect such proceeds;


 


(10)         all Rents and Leases;


 


(11)         all earnings, royalties,
accounts receivable, issues and profits from the Land, the Improvements or any
other part of the Mortgaged Property, and all undisbursed proceeds of the loan
secured by this Instrument and, if Borrower is a cooperative housing
corporation, maintenance charges or assessments payable by shareholders or
residents;


 


(12)         all Imposition Deposits;


 


(13)         all refunds or rebates of Impositions
by any municipal, state or federal authority or insurance company (other than
refunds applicable to periods before the real property tax year in which this
Instrument is dated);


 


(14)         all tenant security deposits
which have not been forfeited by any tenant under any Lease; and


 


5

















 


(15)         all names under or by which
any of the above Mortgaged Property may be operated or known, and all
trademarks, trade names, and goodwill relating to any of the Mortgaged
Property.


 


(t)            “Note” means the Multifamily Note described on page 1 of this
Instrument, including the Acknowledgment and Agreement of Key Principal to
Personal Liability for Exceptions to Non-Recourse Liability (if any), and all
schedules, riders, allonges and addenda, as such Multifamily Note may be
amended from time to time.


 


(u)           “O&M Program” is defined in Section 18(a).


 


(v)           “Personalty”
means all equipment, inventory, general intangibles which are used now or in
the future in connection with the ownership, management or operation of the
Land or the Improvements or are located on the Land or in the Improvements,
including furniture, furnishings, machinery, building materials, appliances,
goods, supplies, tools, books, records (whether in written or electronic form),
computer equipment (hardware and software) and other tangible personal property
(other than Fixtures) which are used now or in the future in connection with
the ownership, management or operation of the Land or the Improvements or are
located on the Land or in the Improvements, and any operating agreements
relating to the Land or the Improvements, and any surveys, plans and
specifications and contracts for architectural, engineering and construction
services relating to the Land or the Improvements and all other intangible
property and rights relating to the operation of, or used in connection with,
the Land or the Improvements, including all governmental permits relating to
any activities on the Land.


 


(w)          “Property Jurisdiction” is defined in Section 30(a).


 


(x)            “Rents” means all rents (whether from residential or
non-residential space), revenues and other income of the Land or the
Improvements, including subsidy payments received from any sources (including,
but not limited to payments under any Housing Assistance Payments Contract),
parking fees, laundry and vending machine income and fees and charges for food,
health care and other services provided at the Mortgaged Property, whether now
due, past due, or to become due, and deposits forfeited by tenants.


 


(y)           “Taxes” means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all assessments for
schools, public betterments and general or local improvements, which are
levied, assessed or imposed by any public authority or quasi-public authority,
and which, if not paid, will become a lien, on the Land or the Improvements.


 


(z)            “Transfer” means (A) a sale, assignment, transfer, or other
disposition (whether voluntary, involuntary or by operation of law); (B) the
grant, creation, or attachment of a lien, encumbrance, or security interest
(whether voluntary, involuntary or by operation of law); (C) the


 


6

















 


issuance
or other creation of a direct or indirect ownership interest; or (D) the
withdrawal, retirement, removal or involuntary resignation of any owner or
manager of a legal entity.


 


(aa)         “Bankruptcy Event” means any one or more of the following: (i) the
commencement of a voluntary case under one or more of the Insolvency Laws by
the Borrower; (ii) the acknowledgment in writing by the Borrower that it is
unable to pay its debts generally as they mature; (iii) the making of a general
assignment for the benefit of creditors by the Borrower; (iv) an involuntary
case under one or more Insolvency Laws against the Borrower; (v) the
appointment of a receiver, liquidator, custodian, sequestrator, trustee or
other similar officer who exercises control over the Borrower or any
substantial part of the assets of the Borrower provided that any proceeding or
case under (iv) or (v) above is not dismissed within 90 days after filing.


 


(bb)         “Borrower
Affiliate” means, as to either Borrower or Key Principal, (i) any
entity that directly or indirectly owns, controls, or holds with power to vote,
20 percent or more of the outstanding voting securities of Borrower or of Key
Principal, (ii) any corporation 20 percent or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with power to
vote by Borrower or by Key Principal, (iii) any partner, shareholder or, if a
limited liability company, member of Borrower or Key Principal, or (iv) any
other entity that is related (to the third degree of consanguinity) by blood or
marriage to Borrower or Key Principal.


 


(cc)         “Insolvency Laws” means the United States Bankruptcy Code, 11
U.S.C. § 101, et seq., together
with any other federal or state law affecting debtor and creditor rights or
relating to the bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding, as
amended from time to time, to the extent applicable to the Borrower.


 


2.             UNIFORM
COMMERCIAL CODE SECURITY AGREEMENT.


 


This Instrument is also a security agreement under the Uniform
Commercial Code for any of the Mortgaged Property which, under applicable law,
may be subject to a security interest under the Uniform Commercial Code,
whether acquired now or in the future, and all products and cash and non-cash
proceeds thereof (collectively, “UCC Collateral”),
and Borrower hereby grants to Lender a security interest in the UCC
Collateral.  Borrower hereby authorizes
Lender to file financing statements, continuation statements and financing
statement amendments in such form as Lender may require to perfect or continue
the perfection of this security interest and Borrower agrees, if Lender so
requests, to execute and deliver to Lender such financing statements,
continuation statements and amendments. 
Borrower shall pay all filing costs and all costs and expenses of any
record searches for financing statements that Lender may require.  Without the prior written consent of Lender,
Borrower shall not create or permit to exist any other lien or security
interest in any of


 


7

















 


the
UCC Collateral.  If an Event of Default
has occurred and is continuing, Lender shall have the remedies of a secured
party under the Uniform Commercial Code, in addition to all remedies provided
by this Instrument or existing under applicable law.  In exercising any remedies, Lender may
exercise its remedies against the UCC Collateral separately or together, and in
any order, without in any way affecting the availability of Lender’s other
remedies.  This Instrument constitutes a
financing statement with respect to any part of the Mortgaged Property which is
or may become a Fixture.


 


3.             ASSIGNMENT
OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.


 


(a)           As part of the
consideration for the Indebtedness, Borrower absolutely and unconditionally
assigns and transfers to Lender all Rents. It is the intention of Borrower to
establish a present, absolute and irrevocable transfer and assignment to Lender
of all Rents and to authorize and empower Lender to collect and receive all
Rents without the necessity of further action on the part of Borrower.  Promptly upon request by Lender, Borrower
agrees to execute and deliver such further assignments as Lender may from time
to time require.  Borrower and Lender
intend this assignment of Rents to be immediately effective and to constitute
an absolute present assignment and not an assignment for additional security
only.  For purposes of giving effect to
this absolute assignment of Rents, and for no other purpose, Rents shall not be
deemed to be a part of the “Mortgaged Property,” as that term is defined in Section
1(s).  However, if this present, absolute
and unconditional assignment of Rents is not enforceable by its terms under the
laws of the Property Jurisdiction, then the Rents shall be included as a part
of the Mortgaged Property and it is the intention of the Borrower that in this
circumstance this Instrument create and perfect a lien on Rents in favor of
Lender, which lien shall be effective as of the date of this Instrument.


 


(b)           After the
occurrence of an Event of Default, Borrower authorizes Lender to collect, sue
for and compromise Rents and directs each tenant of the Mortgaged Property to
pay all Rents to, or as directed by, Lender, and Borrower shall, upon Borrower’s
receipt of any Rents from any sources (including, but not limited to subsidy
payments under any Housing Assistance Payments Contract), pay the total amount
of such receipts to the Lender.  However,
until the occurrence of an Event of Default, Lender hereby grants to Borrower a
revocable license to collect and receive all Rents, to hold all Rents in trust
for the benefit of Lender and to apply all Rents to pay the installments of
interest and principal then due and payable under the Note and the other amounts
then due and payable under the other Loan Documents, including Imposition
Deposits, and to pay the current costs and expenses of managing, operating and
maintaining the Mortgaged Property, including utilities, Taxes and insurance
premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. 
So long as no Event of Default has occurred and is continuing, the Rents
remaining after application pursuant to the preceding sentence may be retained
by Borrower free and clear of, and released from, Lender’s rights with respect
to


 


8

















 


Rents
under this Instrument.  From and after
the occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower’s license to collect Rents shall
automatically terminate and Lender shall without notice be entitled to all
Rents as they become due and payable, including Rents then due and unpaid.  Borrower shall pay to Lender upon demand all
Rents to which Lender is entitled.  At
any time after the occurrence of an Event of Default, Lender may give, and
Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of
the Mortgaged Property instructing them to pay all Rents to Lender; provided,
however, that the giving of any such notice by Lender shall not affect, in any
way, Lender’s entitlement to the Rents as of the date on which the Event of
Default occurs.  No tenant shall be
obligated to inquire further as to the occurrence or continuance of an Event of
Default, and no tenant shall be obligated to pay to Borrower any amounts which
are actually paid to Lender in response to such a notice.  Any such notice by Lender shall be delivered
to each tenant personally, by mail or by delivering such demand to each rental
unit.  Borrower shall not interfere with
and shall cooperate with Lender’s collection of such Rents.


 


(c)           Borrower
represents and warrants to Lender that Borrower has not executed any prior
assignment of Rents (other than an assignment of Rents securing indebtedness
that will be paid off and discharged with the proceeds of the loan evidenced by
the Note), that Borrower has not performed, and Borrower covenants and agrees
that it will not perform, any acts and has not executed, and shall not execute,
any instrument which would prevent Lender from exercising its rights under this
Section 3, and that at the time of execution of this Instrument there has been
no anticipation or prepayment of any Rents for more than two months prior to
the due dates of such Rents.  Borrower
shall not collect or accept payment of any Rents more than two months prior to
the due dates of such Rents.


 


(d)           If an Event of
Default has occurred and is continuing, Lender may, regardless of the adequacy
of Lender’s security or the solvency of Borrower and even in the absence of
waste, enter upon and take and maintain full control of the Mortgaged Property
in order to perform all acts that Lender in its discretion determines to be
necessary or desirable for the operation and maintenance of the Mortgaged
Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and
the execution or termination of contracts providing for the management,
operation or maintenance of the Mortgaged Property, for the purposes of
enforcing the assignment of Rents pursuant to Section 3(a), protecting the
Mortgaged Property or the security of this Instrument, or for such other
purposes as Lender in its discretion may deem necessary or desirable.  Alternatively, if an Event of Default has
occurred and is continuing, regardless of the adequacy of Lender’s security,
without regard to Borrower’s solvency and without the necessity of giving prior
notice (oral or written) to Borrower, Lender may apply to any court having
jurisdiction for the appointment of a receiver for the Mortgaged Property to
take any or all of the actions set forth in the preceding sentence.  If Lender elects to seek the appointment of a
receiver for the Mortgaged Property at any time after an Event of Default has
occurred and is continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the
appointment of a receiver ex parte if
permitted by applicable law.  Lender or
the receiver, as the


 


9

















 


case
may be, shall be entitled to receive a reasonable fee for managing the
Mortgaged Property.  Immediately upon
appointment of a receiver or immediately upon the Lender’s entering upon and
taking possession and control of the Mortgaged Property, Borrower shall
surrender possession of the Mortgaged Property to Lender or the receiver, as
the case may be, and shall deliver to Lender or the receiver, as the case may
be, all documents, records (including records on electronic or magnetic media),
accounts, surveys, plans, and specifications relating to the Mortgaged Property
and all security deposits and prepaid Rents. 
In the event Lender takes possession and control of the Mortgaged
Property, Lender may exclude Borrower and its representatives from the
Mortgaged Property.  Borrower
acknowledges and agrees that the exercise by Lender of any of the rights
conferred under this Section 3 shall not be construed to make Lender a
mortgagee-in-possession of the Mortgaged Property so long as Lender has not
itself entered into actual possession of the Land and Improvements.


 


(e)           If Lender
enters the Mortgaged Property, Lender shall be liable to account only to
Borrower and only for those Rents actually received.  Lender shall not be liable to Borrower,
anyone claiming under or through Borrower or anyone having an interest in the
Mortgaged Property, by reason of any act or omission of Lender under this Section
3, and Borrower hereby releases and discharges Lender from any such liability
to the fullest extent permitted by law.


 


(f)            If the Rents
are not sufficient to meet the costs of taking control of and managing the
Mortgaged Property and collecting the Rents, any funds expended by Lender for
such purposes shall become an additional part of the Indebtedness as provided
in Section 12.


 


(g)           Any entering
upon and taking of control of the Mortgaged Property by Lender or the receiver,
as the case may be, and any application of Rents as provided in this Instrument
shall not cure or waive any Event of Default or invalidate any other right or
remedy of Lender under applicable law or provided for in this Instrument.


 


4.             ASSIGNMENT
OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.


 


(a)           As part of the
consideration for the Indebtedness, Borrower absolutely and unconditionally
assigns and transfers to Lender all of Borrower’s right, title and interest in,
to and under the Leases, including Borrower’s right, power and authority to
modify the terms of any such Lease, or extend or terminate any such Lease.   It is the intention of Borrower to establish
a present, absolute and irrevocable transfer and assignment to Lender of all of
Borrower’s right, title and interest in, to and under the Leases.  Borrower and Lender intend this assignment of
the Leases to be immediately effective and to constitute an absolute present
assignment and not an assignment for additional security only.  For purposes of giving effect to this
absolute assignment of the Leases, and for no other purpose, the Leases shall
not be deemed to be a part of the “Mortgaged Property,” as that term is defined
in Section 1(s).  However, if this
present,


 


10

















 


absolute
and unconditional assignment of the Leases is not enforceable by its terms
under the laws of the Property Jurisdiction, then the Leases shall be included
as a part of the Mortgaged Property and it is the intention of the Borrower
that in this circumstance this Instrument create and perfect a lien on the
Leases in favor of Lender, which lien shall be effective as of the date of this
Instrument.


 


(b)           Until the
occurrence of an Event of Default, Borrower shall have all rights, power and
authority granted to Borrower under any Lease (except as otherwise limited by
this Section or any other provision of this Instrument), including the right,
power and authority to modify the terms of any Lease or extend or terminate any
Lease.  Upon the occurrence of an Event
of Default, the permission given to Borrower pursuant to the preceding sentence
to exercise all rights, power and authority under Leases shall automatically
terminate.  Borrower shall comply with
and observe Borrower’s obligations under all Leases, including Borrower’s
obligations pertaining to the maintenance and disposition of tenant security
deposits.


 


(c)           Borrower
acknowledges and agrees that the exercise by Lender, either directly or by a
receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession of the Land and
the Improvements.  The acceptance by
Lender of the assignment of the Leases pursuant to Section 4(a) shall not at
any time or in any event obligate Lender to take any action under this
Instrument or to expend any money or to incur any expenses.  Lender shall not be liable in any way for any
injury or damage to person or property sustained by any person or persons, firm
or corporation in or about the Mortgaged Property.  Prior to Lender’s actual entry into and
taking possession of the Mortgaged Property, Lender shall not (i) be obligated
to perform any of the terms, covenants and conditions contained in any Lease
(or otherwise have any obligation with respect to any Lease); (ii) be obligated
to appear in or defend any action or proceeding relating to the Lease or the Mortgaged
Property; or (iii) be responsible for the operation, control, care, management
or repair of the Mortgaged Property or any portion of the Mortgaged
Property.  The execution of this
Instrument by Borrower shall constitute conclusive evidence that all
responsibility for the operation, control, care, management and repair of the
Mortgaged Property is and shall be that of Borrower, prior to such actual entry
and taking of possession.


 


(d)           From and after
the occurrence of an Event of Default, and without the necessity of Lender
entering upon and taking and maintaining control of the Mortgaged Property
directly, by a receiver, or by any other manner or proceeding permitted by the
laws of the Property Jurisdiction, Lender immediately shall have all rights,
powers and authority granted to Borrower under any Lease, including the right,
power and authority to modify the terms of any such Lease, or extend or
terminate any such Lease.


 


(e)           Borrower shall,
promptly upon Lender’s request, deliver to Lender an executed copy of each
residential Lease then in effect. All Leases for residential dwelling units
shall be on forms approved by Lender, shall be for initial terms of at least
six months and not more than two


 


11

















 


years,
and shall not include options to purchase. 
If customary in the applicable market, residential Leases with terms of
less than six months may be permitted with Lender’s prior written consent.


 


(f)            Borrower shall
not lease any portion of the Mortgaged Property for non-residential use except
with the prior written consent of Lender and Lender’s prior written approval of
the Lease agreement.  Borrower shall not
modify the terms of, or extend or terminate, any Lease for non-residential use
(including any Lease in existence on the date of this Instrument) without the
prior written consent of Lender. 
Borrower shall, without request by Lender, deliver an executed copy of
each non-residential Lease to Lender promptly after such Lease is signed.   All non-residential Leases, including
renewals or extensions of existing Leases, shall specifically provide that (1) such
Leases are subordinate to the lien of this Instrument (unless waived in writing
by Lender); (2) the tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and effective upon
acquisition of title to the Mortgaged Property by any purchaser at a
foreclosure sale or by Lender in any manner; (3) the tenant agrees to execute
such further evidences of attornment as Lender or any purchaser at a
foreclosure sale may from time to time request; (4) the Lease shall not be
terminated by foreclosure or any other transfer of the Mortgaged Property; (5) after
a foreclosure sale of the Mortgaged Property, Lender or any other purchaser at
such foreclosure sale may, at Lender’s or such purchaser’s option, accept or
terminate such Lease; and (6) the tenant shall, upon receipt after the
occurrence of an Event of Default of a written request from Lender, pay all
Rents payable under the Lease to Lender.


 


(g)           Borrower shall
not receive or accept Rent under any Lease (whether residential or
non-residential) for more than two months in advance.


 


5.             PAYMENT
OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT PREMIUM.


 


Borrower shall pay the Indebtedness when due in accordance with the
terms of the Note and the other Loan Documents and shall perform, observe and
comply with all other provisions of the Note and the other Loan Documents.  Borrower shall pay a prepayment premium in
connection with certain prepayments of the Indebtedness, including a payment
made after Lender’s exercise of any right of acceleration of the Indebtedness,
as provided in the Note.


 


6.             EXCULPATION.


 


Borrower’s personal liability for payment of the Indebtedness and for
performance of the other obligations to be performed by it under this
Instrument is limited in the manner, and to the extent, provided in the Note.


 


12
















 


7.                                      DEPOSITS
FOR TAXES, INSURANCE AND OTHER CHARGES.


 


(a)                                  Borrower shall
deposit with Lender on the day monthly installments of principal or interest,
or both, are due under the Note (or on another day designated in writing by
Lender), until the Indebtedness is paid in full, an additional amount
sufficient to accumulate with Lender the entire sum required to pay, when due (1) any
water and sewer charges which, if not paid, may result in a lien on all or any
part of the Mortgaged Property, (2) the premiums for fire and other hazard
insurance, rent loss insurance and such other insurance as Lender may require
under Section 19, (3) Taxes, and (4) amounts for other charges
and expenses which Lender at any time reasonably deems necessary to protect the
Mortgaged Property, to prevent the imposition of liens on the Mortgaged
Property, or otherwise to protect Lender’s interests, all as reasonably
estimated from time to time by Lender. 
The amounts deposited under the preceding sentence are collectively
referred to in this Instrument as the “Imposition Deposits”.  The obligations of Borrower for which the
Imposition Deposits are required are collectively referred to in this
Instrument as “Impositions”.  The amount of the Imposition Deposits shall
be sufficient to enable Lender to pay each Imposition before the last date upon
which such payment may be made without any penalty or interest charge being
added.  Lender shall maintain records
indicating how much of the monthly Imposition Deposits and how much of the
aggregate Imposition Deposits held by Lender are held for the purpose of paying
Taxes, insurance premiums and each other obligation of Borrower for which
Imposition Deposits are required.  Any
waiver by Lender of the requirement that Borrower remit Imposition Deposits to
Lender may be revoked by Lender, in Lender’s discretion, at any time upon
notice to Borrower.


 


(b)                                 Imposition
Deposits shall be held in an institution (which may be Lender, if Lender is
such an institution) whose deposits or accounts are insured or guaranteed by a
federal agency.  Lender shall not be
obligated to open additional accounts or deposit Imposition Deposits in
additional institutions when the amount of the Imposition Deposits exceeds the
maximum amount of the federal deposit insurance or guaranty.  Lender shall apply the Imposition Deposits to
pay Impositions so long as no Event of Default has occurred and is
continuing.  Unless applicable law
requires, Lender shall not be required to pay Borrower any interest, earnings
or profits on the Imposition Deposits. 
Borrower hereby pledges and grants to Lender a security interest in the
Imposition Deposits as additional security for all of Borrower’s obligations
under this Instrument and the other Loan Documents.  Any amounts deposited with Lender under this Section 7
shall not be trust funds, nor shall they operate to reduce the Indebtedness,
unless applied by Lender for that purpose under Section 7(e).


 


(c)                                  If Lender
receives a bill or invoice for an Imposition, Lender shall pay the Imposition
from the Imposition Deposits held by Lender. 
Lender shall have no obligation to pay any Imposition to the extent it
exceeds Imposition Deposits then held by Lender.  Lender may pay an Imposition according to any
bill, statement or estimate from the appropriate public office


 


13

















 


or
insurance company without inquiring into the accuracy of the bill, statement or
estimate or into the validity of the Imposition.


 


(d)                                 If at any time
the amount of the Imposition Deposits held by Lender for payment of a specific
Imposition exceeds the amount reasonably deemed necessary by Lender, the excess
shall be credited against future installments of Imposition Deposits.  If at any time the amount of the Imposition
Deposits held by Lender for payment of a specific Imposition is less than the
amount reasonably estimated by Lender to be necessary, Borrower shall pay to
Lender the amount of the deficiency within 15 days after notice from Lender.


 


(e)                                  If an Event of
Default has occurred and is continuing, Lender may apply any Imposition
Deposits, in any amounts and in any order as Lender determines, in Lender’s
discretion, to pay any Impositions or as a credit against the Indebtedness.
Upon payment in full of the Indebtedness, Lender shall refund to Borrower any
Imposition Deposits held by Lender.


 


8.                                      COLLATERAL
AGREEMENTS.


 


Borrower shall deposit with Lender such amounts as may be required by
any Collateral Agreement and shall perform all other obligations of Borrower
under each Collateral Agreement.


 


9.                                      APPLICATION
OF PAYMENTS.


 


If at any time Lender receives, from Borrower or otherwise, any amount
applicable to the Indebtedness which is less than all amounts due and payable
at such time, then Lender may apply that payment to amounts then due and
payable in any manner and in any order determined by Lender, in Lender’s
discretion.  Neither Lender’s acceptance
of an amount which is less than all amounts then due and payable nor Lender’s
application of such payment in the manner authorized shall constitute or be
deemed to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.  Notwithstanding the
application of any such amount to the Indebtedness,  Borrower’s obligations under this Instrument
and the Note shall remain unchanged.


 


10.                               COMPLIANCE
WITH LAWS.


 


Borrower shall comply with all laws, ordinances, regulations and
requirements of any Governmental Authority and all recorded lawful covenants
and agreements relating to or affecting the Mortgaged Property, including all
laws, ordinances, regulations, requirements and covenants pertaining to health
and safety, construction of improvements on the Mortgaged


 


14

















 


Property,
fair housing, zoning and land use, and Leases. 
Borrower also shall comply with all applicable laws that pertain to the
maintenance and disposition of tenant security deposits.  Borrower shall at all times maintain records
sufficient to demonstrate compliance with the provisions of this Section 10.  Borrower shall take appropriate measures to
prevent, and shall not engage in or knowingly permit, any illegal activities at
the Mortgaged Property that could endanger tenants or visitors, result in
damage to the Mortgaged Property, result in forfeiture of the Mortgaged
Property, or otherwise materially impair the lien created by this Instrument or
Lender’s interest in the Mortgaged Property. 
Borrower represents and warrants to Lender that no portion of the
Mortgaged Property has been or will be purchased with the proceeds of any
illegal activity.


 


11.                               USE OF
PROPERTY.


 


Unless required by applicable law, Borrower shall not (a) except
for any change in use approved by Lender, allow changes in the use for which
all or any part of the Mortgaged Property is being used at the time this
Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in
the zoning classification of the Mortgaged Property, or (d) establish any
condominium or cooperative regime with respect to the Mortgaged Property.


 


12.                               PROTECTION
OF LENDER’S SECURITY.


 


(a)                                  If Borrower
fails to perform any of its obligations under this Instrument or any other Loan
Document, or if any action or proceeding (including a Bankruptcy Event) is
commenced which purports to affect the Mortgaged Property, Lender’s security or
Lender’s rights under this Instrument, including eminent domain, insolvency,
code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings
involving a bankrupt or decedent, then Lender at Lender’s option may make such
appearances, disburse such sums and take such actions as Lender reasonably
deems necessary to perform such obligations of Borrower and to protect Lender’s
interest, including (1) payment of fees and out-of-pocket expenses of
attorneys, accountants, inspectors and consultants, (2) entry upon the
Mortgaged Property to make repairs or secure the Mortgaged Property, (3) procurement
of the insurance required by Section 19, and (4) payment of amounts
which Borrower has failed to pay under Sections 15 and 17.


 


(b)                                 Any amounts
disbursed by Lender under this Section 12, or under any other provision of
this Instrument that treats such disbursement as being made under this Section 12,
shall be added to, and become part of, the principal component of the
Indebtedness, shall be immediately


 


15

















 


due
and payable and shall bear interest from the date of disbursement until paid at
the “Default Rate”, as defined in the Note.


 


(c)                                  Nothing in this
Section 12 shall require Lender to incur any expense or take any action.


 


13.                               INSPECTION.


 


Lender, its agents, representatives, and designees may make or cause to
be made entries upon and inspections of the Mortgaged Property (including
environmental inspections and tests) during normal business hours, or at any
other reasonable time.


 


14.                               BOOKS
AND RECORDS; FINANCIAL REPORTING.


 


(a)                                  Borrower shall
keep and maintain at all times at the Mortgaged Property or the management
agent’s offices, and upon Lender’s request shall make available at the
Mortgaged Property, complete and accurate books of account and records
(including copies of supporting bills and invoices) adequate to reflect
correctly the operation of the Mortgaged Property, and copies of all written
contracts, Leases, and other instruments which affect the Mortgaged
Property.  The books, records, contracts,
Leases and other instruments shall be subject to examination and inspection at
any reasonable time by Lender.


 


(b)                                 Borrower shall
furnish to Lender:


 


(1)                                  (i) except
as provided in clause (ii) below, within 45 days after the end of each
fiscal quarter of Borrower, a statement of income and expenses for Borrower’s
operation of the Mortgaged Property on a year-to-date basis as of the end of
each fiscal quarter, (ii) within 120 days after the end of each fiscal
year of Borrower, (A) a statement of income and expenses for Borrower’s
operation of the Mortgaged Property for such fiscal year, (B) a statement
of changes in financial position of Borrower relating to the Mortgaged Property
for such fiscal year, and (C) when requested by Lender, a balance sheet
showing all assets and liabilities of Borrower relating to the Mortgaged
Property as of the end of such fiscal year; and (iii) any of the foregoing
at any other time upon Lender’s request;


 


(2)                                  (i) except
as provided in clause (ii) below, within 45 days after the end of each
fiscal quarter of Borrower, and (ii) within 120 days after the end of each
fiscal year of Borrower, and at any other time upon Lender’s request, a rent
schedule for the Mortgaged Property showing the name of each tenant, and


 


16

















 


for each tenant, the space occupied, the lease expiration date, the
rent payable for the current month, the date through which rent has been paid,
and any related information requested by Lender;


 


(3)                                  within 120 days
after the end of each fiscal year of Borrower, and at any other time upon
Lender’s request, an accounting of all security deposits held pursuant to all
Leases, including the name of the institution (if any) and the names and
identification numbers of the accounts (if any) in which such security deposits
are held and the name of the person to contact at such financial institution,
along with any authority or release necessary for Lender to access information
regarding such accounts;


 


(4)                                  within 120 days
after the end of each fiscal year of Borrower, and at any other time upon
Lender’s request, a statement that identifies all owners of any interest in
Borrower and the interest held by each, if Borrower is a corporation, all
officers and directors of Borrower, and if Borrower is a limited liability
company, all managers who are not members;


 


(5)                                  upon Lender’s
request, a monthly property management report for the Mortgaged Property,
showing the number of inquiries made and rental applications received from
tenants or prospective tenants and deposits received from tenants and any other
information requested by Lender;


 


(6)                                  upon Lender’s
request, a balance sheet, a statement of income and expenses for Borrower and a
statement of changes in financial position of Borrower for Borrower’s most
recent fiscal year; and


 


(7)                                  if required by
Lender, within 30 days of the end of each calendar month, a monthly statement
of income and expenses for such calendar month on a year-to-date basis for
Borrower’s operation of the Mortgaged Property.


 


(c)                                  Each of the
statements, schedules and reports required by Section 14(b) shall be
certified to be complete and accurate by an individual having authority to bind
Borrower, and shall be in such form and contain such detail as Lender may
reasonably require.  Lender also may
require that any statements, schedules or reports be audited at Borrower’s
expense by independent certified public accountants acceptable to Lender.


 


(d)                                 If Borrower
fails to provide in a timely manner the statements, schedules and reports
required by Section 14(b), Lender shall have the right to have Borrower’s
books and records audited, at Borrower’s expense, by independent certified
public accountants selected by Lender in order to obtain such statements,
schedules and reports, and all related costs and expenses of Lender shall
become immediately due and payable and shall become an additional part of the
Indebtedness as provided in Section 12.


 


17

















 


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


 


(f)                                    Borrower
authorizes Lender to obtain a credit report on Borrower at any time.


 


15.                               TAXES;
OPERATING EXPENSES.


 


(a)                                  Subject to the
provisions of Section 15(c) and Section 15(d), Borrower shall
pay, or cause to be paid, all Taxes when due and before the addition of any
interest, fine, penalty or cost for nonpayment.


 


(b)                                 Subject to the
provisions of Section 15(c), Borrower shall pay the expenses of operating,
managing, maintaining and repairing the Mortgaged Property (including insurance
premiums, utilities, repairs and replacements) before the last date upon which
each such payment may be made without any penalty or interest charge being added.


 


(c)                                  As long as no
Event of Default exists and Borrower has timely delivered to Lender any bills
or premium notices that it has received, Borrower shall not be obligated to pay
Taxes, insurance premiums or any other individual Imposition to the extent that
sufficient Imposition Deposits are held by Lender for the purpose of paying
that specific Imposition.  If an Event of
Default exists, Lender may exercise any rights Lender may have with respect to
Imposition Deposits without regard to whether Impositions are then due and
payable.  Lender shall have no liability
to Borrower for failing to pay any Impositions to the extent that any Event of
Default has occurred and is continuing, insufficient Imposition Deposits are held
by Lender at the time an Imposition becomes due and payable or Borrower has
failed to provide Lender with bills and premium notices as provided above.


 


(d)                                 Borrower, at
its own expense, may contest by appropriate legal proceedings, conducted
diligently and in good faith, the amount or validity of any Imposition other
than insurance premiums, if (1) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (2) the
Mortgaged Property is not in danger of being sold or forfeited, (3) Borrower
deposits with Lender reserves sufficient to pay the contested Imposition, if
requested by Lender, and (4) Borrower furnishes whatever additional
security is required in the proceedings or is reasonably requested by Lender,
which may include the delivery to Lender of the reserves established by
Borrower to pay the contested Imposition.


 


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


 


18

















 


16.                               LIENS;
ENCUMBRANCES.


 


Borrower acknowledges that, to the extent provided in Section 21,
the grant, creation or existence of any mortgage, deed of trust, deed to secure
debt, security interest or other lien or encumbrance (a “Lien”)
on the Mortgaged Property (other than the lien of this Instrument) or on
certain ownership interests in Borrower, whether voluntary, involuntary or by
operation of law, and whether or not such Lien has priority over the lien of
this Instrument, is a “Transfer” which
constitutes an Event of Default.


 


17.                               PRESERVATION,
MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.


 


(a)  Borrower (1) shall not commit waste or permit impairment
or deterioration of the Mortgaged Property, (2) shall not abandon the
Mortgaged Property, (3) shall restore or repair promptly, in a good and
workmanlike manner, any damaged part of the Mortgaged Property to the
equivalent of its original condition, or such other condition as Lender may
approve in writing, whether or not insurance proceeds or condemnation awards
are available to cover any costs of such restoration or repair, (4) shall
keep the Mortgaged Property in good repair, including the replacement of
Personalty and Fixtures with items of equal or better function and quality, (5) shall
provide for professional management of the Mortgaged Property by a residential
rental property manager satisfactory to Lender under a contract approved by
Lender in writing, and (6) shall give notice to Lender of and, unless
otherwise directed in writing by Lender, shall appear in and defend any action
or proceeding purporting to affect the Mortgaged Property, Lender’s security or
Lender’s rights under this Instrument. 
Borrower shall not (and shall not permit any tenant or other person to)
remove, demolish or alter the Mortgaged Property or any part of the Mortgaged
Property except in connection with the replacement of tangible Personalty.


 


(b)  If, in connection with the making of the loan evidenced by
the Note or at any later date, Lender waives in writing the requirement of Section 17(a)(5) above
that Borrower enter into a written contract for management of the Mortgaged
Property and if, after the date of this Instrument, Borrower intends to change
the management of the Mortgaged Property, Lender shall have the right to
approve such new property manager and the written contract for the management
of the Mortgaged Property and require that Borrower and such new property
manager enter into an Assignment of Management Agreement on a form approved by
Lender.  If required by Lender (whether
before or after an Event of Default), Borrower will cause any Affiliate of
Borrower to whom fees are payable for the management of the Mortgaged Property
to enter into an agreement with Lender, in a form approved by Lender, providing
for subordination of those fees and such other provisions as Lender may
require.  “Affiliate of


 


19

















 


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


 


18.                               ENVIRONMENTAL
HAZARDS.


 


(a)                                  Except for
matters covered by a written program of operations and maintenance approved in
writing by Lender (an “O&M Program”)
or matters described in Section 18(b), Borrower shall not cause or permit
any of the following:


 


(1)                                  the presence,
use, generation, release, treatment, processing, storage (including storage in
above ground and underground storage tanks), handling, or disposal of any
Hazardous Materials on or under the Mortgaged Property or any other property of
Borrower that is adjacent to the Mortgaged Property;


 


(2)                                  the
transportation of any Hazardous Materials to, from, or across the Mortgaged
Property;


 


(3)                                  any occurrence
or condition on the Mortgaged Property or any other property of Borrower that
is adjacent to the Mortgaged Property, which occurrence or condition is or may
be in violation of Hazardous Materials Laws; or


 


(4)                                  any violation
of or noncompliance with the terms of any Environmental Permit with respect to
the Mortgaged Property or any property of Borrower that is adjacent to the
Mortgaged Property.


 


The matters described in clauses (1) through (4) above are
referred to collectively in this Section 18 as “Prohibited
Activities or Conditions”.


 


(b)                                 Prohibited
Activities and Conditions shall not include the safe and lawful use and storage
of quantities of (1) pre-packaged supplies, cleaning materials and
petroleum products customarily used in the operation and maintenance of
comparable multifamily properties, (2) cleaning materials, personal
grooming items and other items sold in pre-packaged containers for


 


20

















 


consumer
use and used by tenants and occupants of residential dwelling units in the
Mortgaged Property; and (3) petroleum products used in the operation and maintenance
of motor vehicles from time to time located on the Mortgaged Property’s parking
areas, so long as all of the foregoing are used, stored, handled, transported
and disposed of in compliance with Hazardous Materials Laws.


 


(c)                                  Borrower shall
take all commercially reasonable actions (including the inclusion of
appropriate provisions in any Leases executed after the date of this
Instrument) to prevent its employees, agents, and contractors, and all tenants
and other occupants from causing or permitting any Prohibited Activities or
Conditions.  Borrower shall not lease or
allow the sublease or use of all or any portion of the Mortgaged Property to
any tenant or subtenant for nonresidential use by any user that, in the
ordinary course of its business, would cause or permit any Prohibited Activity
or Condition.


 


(d)                                 If an O&M
Program has been established with respect to Hazardous Materials, Borrower
shall comply in a timely manner with, and cause all employees, agents, and
contractors of Borrower and any other persons present on the Mortgaged Property
to comply with the O&M Program.  All
costs of performance of Borrower’s obligations under any O&M Program shall
be paid by Borrower, and Lender’s out-of-pocket costs incurred in connection
with the monitoring and review of the O&M Program and Borrower’s
performance shall be paid by Borrower upon demand by Lender.  Any such out-of-pocket costs of Lender which
Borrower fails to pay promptly shall become an additional part of the
Indebtedness as provided in Section 12.


 


(e)                                  Borrower
represents and warrants to Lender that, except as previously disclosed by
Borrower to Lender in writing:


 


(1)                                  Borrower has
not at any time engaged in, caused or permitted any Prohibited Activities or
Conditions;


 


(2)                                  to the best of
Borrower’s knowledge after reasonable and diligent inquiry, no Prohibited
Activities or Conditions exist or have existed;


 


(3)                                  except to the
extent previously disclosed by Borrower to Lender in writing, the Mortgaged
Property does not now contain any underground storage tanks, and, to the best
of Borrower’s knowledge after reasonable and diligent inquiry, the Mortgaged
Property has not contained any underground storage tanks in the past.  If there is an underground storage tank
located on the Property which has been previously disclosed by Borrower to
Lender in writing, that tank complies with all requirements of Hazardous
Materials Laws;


 


(4)                                  Borrower has
complied with all Hazardous Materials Laws, including all requirements for
notification regarding releases of Hazardous Materials.


 


21

















 


Without limiting the generality of the foregoing, Borrower has obtained
all Environmental Permits required for the operation of the Mortgaged Property
in accordance with Hazardous Materials Laws now in effect and all such
Environmental Permits are in full force and effect;


 


(5)                                  no event has
occurred with respect to the Mortgaged Property that constitutes, or with the
passing of time or the giving of notice would constitute, noncompliance with
the terms of any Environmental Permit;


 


(6)                                  there are no
actions, suits, claims or proceedings pending or, to the best of Borrower’s
knowledge after reasonable and diligent inquiry, threatened that involve the
Mortgaged Property and allege, arise out of, or relate to any Prohibited
Activity or Condition; and


 


(7)                                  Borrower has
not received any complaint, order, notice of violation or other communication
from any Governmental Authority with regard to air emissions, water discharges,
noise emissions or Hazardous Materials, or any other environmental, health or
safety matters affecting the Mortgaged Property or any other property of
Borrower that is adjacent to the Mortgaged Property.


 


The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.


 


(f)                                    Borrower shall
promptly notify Lender in writing upon the occurrence of any of the following
events:


 


(1)                                  Borrower’s
discovery of any Prohibited Activity or Condition;


 


(2)                                  Borrower’s
receipt of or knowledge of any complaint, order, notice of violation or other
communication from any Governmental Authority or other person with regard to
present or future alleged Prohibited Activities or Conditions or any other
environmental, health or safety matters affecting the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged Property; and


 


(3)                                  any
representation or warranty in this Section 18 becomes untrue after the
date of this Agreement.


 


Any such notice given by Borrower shall not relieve Borrower of, or
result in a waiver of, any obligation under this Instrument, the Note, or any
other Loan Document.


 


22
















 


(g)                                 Borrower shall
pay promptly the costs of any environmental inspections, tests or audits (“Environmental Inspections”) required by Lender in connection
with any foreclosure or deed in lieu of foreclosure, or as a condition of
Lender’s consent to any Transfer under Section 21, or required by Lender
following a reasonable determination by Lender that Prohibited Activities or
Conditions may exist.  Any such costs
incurred by Lender (including the fees and out-of-pocket costs of attorneys and
technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay promptly shall
become an additional part of the Indebtedness as provided in Section 12.  The results of all Environmental Inspections
made by Lender shall at all times remain the property of Lender and Lender
shall have no obligation to disclose or otherwise make available to Borrower or
any other party such results or any other information obtained by Lender in
connection with its Environmental Inspections. 
Lender hereby reserves the right, and Borrower hereby expressly
authorizes Lender, to make available to any party, including any prospective
bidder at a foreclosure sale of the Mortgaged Property, the results of any
Environmental Inspections made by Lender with respect to the Mortgaged
Property.  Borrower consents to Lender
notifying any party (either as part of a notice of sale or otherwise) of the
results of any of Lender’s Environmental Inspections.  Borrower acknowledges that Lender cannot
control or otherwise assure the truthfulness or accuracy of the results of any
of its Environmental Inspections and that the release of such results to
prospective bidders at a foreclosure sale of the Mortgaged Property may have a
material and adverse effect upon the amount which a party may bid at such
sale.  Borrower agrees that Lender shall
have no liability whatsoever as a result of delivering the results of any of
its Environmental Inspections to any third party, and Borrower hereby releases
and forever discharges Lender from any and all claims, damages, or causes of
action, arising out of, connected with or incidental to the results of, the
delivery of any of Lender’s Environmental Inspections.


 


(h)                                 If any
investigation, site monitoring, containment, clean-up, restoration or other
remedial work (“Remedial Work”) is necessary to
comply with any Hazardous Materials Law or order of any Governmental Authority
that has or acquires jurisdiction over the Mortgaged Property or the use,
operation or improvement of the Mortgaged Property under any Hazardous
Materials Law, Borrower shall, by the earlier of (1) the applicable
deadline required by Hazardous Materials Law or (2) 30 days after notice
from Lender demanding such action, begin performing the Remedial Work, and
thereafter diligently prosecute it to completion, and shall in any event
complete the work by the time required by applicable Hazardous Materials
Law.  If Borrower fails to begin on a
timely basis or diligently prosecute any required Remedial Work, Lender may, at
its option, cause the Remedial Work to be completed, in which case Borrower
shall reimburse Lender on demand for the cost of doing so.  Any reimbursement due from Borrower to Lender
shall become part of the Indebtedness as provided in Section 12.


 


(i)                                     Borrower shall
cooperate with any inquiry by any Governmental Authority and shall comply with
any governmental or judicial order which arises from any alleged Prohibited
Activity or Condition.


 


23

















 


(j)                                     Borrower shall
indemnify, hold harmless and defend (i) Lender, (ii) any prior owner
or holder of the Note, (iii) the Loan Servicer, (iv) any prior Loan
Servicer, (v) the officers, directors, shareholders, partners, employees
and trustees of any of the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of each of the foregoing (collectively,
the “Indemnitees”) from and against all
proceedings, claims, damages, penalties and costs (whether initiated or sought
by Governmental Authorities or private parties), including fees and
out-of-pocket expenses of attorneys and expert witnesses, investigatory fees,
and remediation costs, whether incurred in connection with any judicial or
administrative process or otherwise, arising directly or indirectly from any of
the following:


 


(1)                                 any breach of
any representation or warranty of Borrower in this Section 18;


 


(2)                                 any failure by
Borrower to perform any of its obligations under this Section 18;


 


(3)                                 the existence
or alleged existence of any Prohibited Activity or Condition;


 


(4)                                     the presence or
alleged presence of Hazardous Materials on or under the Mortgaged Property or
any property of Borrower that is adjacent to the Mortgaged Property; and


 


(5)                                 the actual or
alleged violation of any Hazardous Materials Law.


 


(k)                                  Counsel
selected by Borrower to defend Indemnitees shall be subject to the approval of
those Indemnitees.  However, any
Indemnitee may elect to defend any claim or legal or administrative proceeding
at the Borrower’s expense.


 


(l)                                     Borrower shall
not, without the prior written consent of those Indemnitees who are named as
parties to a claim or legal or administrative proceeding (a “Claim”), settle or compromise the Claim if the settlement (1) results
in the entry of any judgment that does not include as an unconditional term the
delivery by the claimant or plaintiff to Lender of a written release of those
Indemnitees, satisfactory in form and substance to Lender; or (2) may
materially and adversely affect Lender, as determined by Lender in its
discretion.


 


(m)                               Lender agrees
that the indemnity under this Section 18 shall be limited to the assets of
Borrower and Lender shall not seek to recover any deficiency from any natural
persons who are general partners of Borrower.


 


(n)                                 Borrower shall,
at its own cost and expense, do all of the following:


 


(1)                                  pay or satisfy
any judgment or decree that may be entered against any Indemnitee or
Indemnitees in any legal or administrative proceeding


 


24

















 


incident to any matters against which Indemnitees are entitled to be
indemnified under this Section 18;


 


(2)                                  reimburse
Indemnitees for any expenses paid or incurred in connection with any matters
against which Indemnitees are entitled to be indemnified under this Section 18;
and


 


(3)                                  reimburse
Indemnitees for any and all expenses, including fees and out-of-pocket expenses
of attorneys and expert witnesses, paid or incurred in connection with the
enforcement by Indemnitees of their rights under this Section 18, or in
monitoring and participating in any legal or administrative proceeding.


 


(o)                                 In any
circumstances in which the indemnity under this Section 18 applies, Lender
may employ its own legal counsel and consultants to prosecute, defend or negotiate
any claim or legal or administrative proceeding and Lender, with the prior
written consent of Borrower (which shall not be unreasonably withheld, delayed
or conditioned), may settle or compromise any action or legal or administrative
proceeding.  Borrower shall reimburse
Lender upon demand for all costs and expenses incurred by Lender, including all
costs of settlements entered into in good faith, and the fees and out-of-pocket
expenses of such attorneys and consultants.


 


(p)                                 The provisions
of this Section 18 shall be in addition to any and all other obligations
and liabilities that Borrower may have under applicable law or under other Loan
Documents, and each Indemnitee shall be entitled to indemnification under this Section 18
without regard to whether Lender or that Indemnitee has exercised any rights
against the Mortgaged Property or any other security, pursued any rights
against any guarantor, or pursued any other rights available under the Loan
Documents or applicable law. If Borrower consists of more than one person or
entity, the obligation of those persons or entities to indemnify the
Indemnitees under this Section 18 shall be joint and several. The
obligation of Borrower to indemnify the Indemnitees under this Section 18
shall survive any repayment or discharge of the Indebtedness, any foreclosure
proceeding, any foreclosure sale, any delivery of any deed in lieu of
foreclosure, and any release of record of the lien of this Instrument.


 


19.                               PROPERTY
AND LIABILITY INSURANCE.


 


(a)                                  Borrower shall
keep the Improvements insured at all times against such hazards as Lender may
from time to time require, which insurance shall include but not be limited to
coverage against loss by fire and allied perils, general boiler and machinery
coverage, and business income coverage. 
Lender’s insurance requirements may change from time to time throughout
the term of the Indebtedness.  If Lender
so requires, such insurance shall also include sinkhole insurance, mine


 


25

















 


subsidence
insurance, earthquake insurance, and, if the Mortgaged Property does not
conform to applicable zoning or land use laws, building ordinance or law
coverage.  If any of the Improvements is
located in an area identified by the Federal Emergency Management Agency (or
any successor to that agency) as an area having special flood hazards, and if
flood insurance is available in that area, Borrower shall insure such
Improvements against loss by flood.


 


(b)                                 All premiums on
insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Lender has designated in writing
another method of payment.  All such
policies shall also be in a form approved by Lender.  All policies of property damage insurance shall
include a non-contributing, non-reporting mortgage clause in favor of, and in a
form approved by, Lender.  Lender shall
have the right to hold the original policies or duplicate original policies of
all insurance required by Section 19(a). 
Borrower shall promptly deliver to Lender a copy of all renewal and
other notices received by Borrower with respect to the policies and all
receipts for paid premiums.  At least 30
days prior to the expiration date of a policy, Borrower shall deliver to Lender
the original (or a duplicate original) of a renewal policy in form satisfactory
to Lender.


 


(c)                                  Borrower shall
maintain at all times commercial general liability insurance, workers’
compensation insurance and such other liability, errors and omissions and
fidelity insurance coverages as Lender may from time to time require.


 


(d)                                 All insurance
policies and renewals of insurance policies required by this Section 19
shall be in such amounts and for such periods as Lender may from time to time
require, and shall be issued by insurance companies satisfactory to Lender.


 


(e)                                  Borrower shall
comply with all insurance requirements and shall not permit any condition to
exist on the Mortgaged Property that would invalidate any part of any insurance
coverage that this Instrument requires Borrower to maintain.


 


(f)                                    In the event of
loss, Borrower shall give immediate written notice to the insurance carrier and
to Lender.  Borrower hereby authorizes
and appoints Lender as attorney-in-fact for Borrower to make proof of loss, to
adjust and compromise any claims under policies of property damage insurance,
to appear in and prosecute any action arising from such property damage
insurance policies, to collect and receive the proceeds of property damage
insurance, and to deduct from such proceeds Lender’s expenses incurred in the
collection of such proceeds.  This power
of attorney is coupled with an interest and therefore is irrevocable.  However, nothing contained in this Section 19
shall require Lender to incur any expense or take any action.  Lender may, at Lender’s option, (1) hold
the balance of such proceeds to be used to reimburse Borrower for the cost of
restoring and repairing the Mortgaged Property to the equivalent of its
original condition or to a condition approved by Lender (the “Restoration”), or (2) apply the balance of such
proceeds to the payment of the Indebtedness, whether or not then due. To the
extent Lender determines to apply insurance proceeds to Restoration, Lender
shall do so in accordance with Lender’s then-current policies relating to the
restoration of casualty damage on similar multifamily properties.


 


26

















 


(g)                                 Lender shall
not exercise its option to apply insurance proceeds to the payment of the
Indebtedness if all of the following conditions are met:  (1) no Event of Default (or any event
which, with the giving of notice or the passage of time, or both, would
constitute an Event of Default) has occurred and is continuing; (2) Lender
determines, in its discretion, that there will be sufficient funds to complete
the Restoration; (3) Lender determines, in its discretion, that the net
operating income generated by the Mortgaged Property after completion of the
Restoration will be sufficient to support a debt service coverage ratio not
less than the greater of (A) the debt service coverage ratio as of the
date of this Instrument (based on the final underwriting of the Mortgaged
Property) or (B) the debt service coverage ratio immediately prior to the
loss (in each case, Lender’s determination shall include all operating costs
and other expenses, Imposition Deposits, deposits to reserves and loan
repayment obligations relating to the Mortgaged Property); (4) Lender
determines, in its discretion, that the Restoration will be completed before
the earlier of (A) one year before the maturity date of the Note or (B) one
year after the date of the loss or casualty; and (5) upon Lender’s
request, Borrower provides Lender evidence of the availability during and after
the Restoration of the insurance required to be maintained by Borrower pursuant
to this Section 19.


 


(h)                                 If the
Mortgaged Property is sold at a foreclosure sale or Lender acquires title to
the Mortgaged Property, Lender shall automatically succeed to all rights of
Borrower in and to any insurance policies and unearned insurance premiums and
in and to the proceeds resulting from any damage to the Mortgaged Property
prior to such sale or acquisition.


 


20.                               CONDEMNATION.


 


(a)                                  Borrower shall
promptly notify Lender of any action or proceeding relating to any condemnation
or other taking, or conveyance in lieu thereof, of all or any part of the
Mortgaged Property, whether direct or indirect (a “Condemnation”).  Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation unless otherwise
directed by Lender in writing.  Borrower
authorizes and appoints Lender as attorney-in-fact for Borrower to commence,
appear in and prosecute, in Lender’s or Borrower’s name, any action or
proceeding relating to any Condemnation and to settle or compromise any claim
in connection with any Condemnation. 
This power of attorney is coupled with an interest and therefore is
irrevocable.  However, nothing contained
in this Section 20 shall require Lender to incur any expense or take any
action.  Borrower hereby transfers and
assigns to Lender all right, title and interest of Borrower in and to any award
or payment with respect to (i) any Condemnation, or any conveyance in lieu
of Condemnation, and (ii) any damage to the Mortgaged Property caused by
governmental action that does not result in a Condemnation.


 


(b)                                 Lender may
apply such awards or proceeds, after the deduction of Lender’s expenses
incurred in the collection of such amounts, at Lender’s option, to the restoration
or repair of the Mortgaged Property or to the payment of the Indebtedness, with
the balance, if any,


 


27

















 


to
Borrower.  Unless Lender otherwise agrees
in writing, any application of any awards or proceeds to the Indebtedness shall
not extend or postpone the due date of any monthly installments referred to in
the Note, Section 7 of this Instrument or any Collateral Agreement, or
change the amount of such installments. 
Borrower agrees to execute such further evidence of assignment of any
awards or proceeds as Lender may require.


 


21.                               TRANSFERS
OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.


 


(a)                                  The occurrence
of any of the following events shall constitute an Event of Default under this
Instrument:


 


(1)                                  a Transfer of
all or any part of the Mortgaged Property or any interest in the Mortgaged
Property;


 


(2)                                  a Transfer of a
Controlling Interest in Borrower;


 


(3)                                  a Transfer of a
Controlling Interest in any entity which owns, directly or indirectly through one
or more intermediate entities, a Controlling Interest in Borrower;


 


(4)                                  a Transfer of
all or any part of a Key Principal’s ownership interests in Borrower, or in any
other entity which owns, directly or indirectly through one or more
intermediate entities, an ownership interest in Borrower (other than a Transfer
of an aggregate beneficial ownership interest in the Borrower of 49% or less of
such Key Principal’s original ownership interest in the Borrower and which does
not otherwise result in a Transfer of the Key Principal’s Controlling Interest
in such intermediate entities or in the Borrower);


 


(5)                                  if Key
Principal is an entity, (A) a Transfer of a Controlling Interest in Key
Principal, or (B) a Transfer of a Controlling Interest in any entity which
owns, directly or indirectly through one or more intermediate entities, a
Controlling Interest in Key Principal;


 


(6)                                  if Borrower or
Key Principal is a trust, the termination or revocation of such trust; unless
the trust is terminated as a result of the death of an individual trustor, in
which event Lender must be notified and such Borrower or Key Principal must be
replaced with an individual or entity acceptable to Lender, in accordance with
the provisions of Section 21(c) hereof, within 90 days of such death
(provided however that no property inspection shall be required and a 1%
transfer fee will not be charged);


 


(7)                                  if Key
Principal is a natural person, the death of such individual; unless the Lender
is notified and such individual is replaced with an individual or entity
acceptable to


 


28

















 


Lender, in accordance with the provisions of Section 21(c) hereof,
within 90 days of such death (provided however that no property inspection
shall be required and a 1% transfer fee will not be charged);


 


(8)                                  the merger,
dissolution, liquidation, or consolidation of (i) Borrower, (ii) any
Key Principal that is a legal entity, or (iii) any legal entity holding,
directly or indirectly, a Controlling Interest in the Borrower or in any Key
Principal that is an entity;


 


(9)          a conversion of Borrower
from one type of legal entity into another type of legal entity (including the
conversion of a general partnership into a limited partnership and the
conversion of a limited partnership into a limited liability company), whether
or not there is a Transfer; if such conversion results in a change in any
assets, liabilities, legal rights or obligations of Borrower (or of Key
Principal, guarantor, or any general partner of Borrower, as applicable), by
operation of law or otherwise; and


 


(10)                            a Transfer of
the economic benefits or right to cash flows attributable to the ownership
interests in Borrower and/or, if Key Principal is an entity, Key Principal,
separate from the Transfer of the underlying ownership interests, unless the
Transfer of the underlying ownership interests would otherwise not be
prohibited by this Agreement


 


Lender shall not be required to demonstrate any actual impairment of
its security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.


 


(b)                                 The occurrence
of any of the following events shall not constitute an Event of Default under
this Instrument, notwithstanding any provision of Section 21(a) to
the contrary:


 


(1)                                  a Transfer to
which Lender has consented;


 


(2)                                  except as
provided in Section 21(a)(6) and (7), a Transfer that occurs by
devise, descent, pursuant to the provisions of a trust, or by operation of law
upon the death of a natural person;


 


(3)                                  the grant of a
leasehold interest in an individual dwelling unit for a term of two years or
less not containing an option to purchase;


 


(4)                                  a Transfer of
obsolete or worn out Personalty or Fixtures that are contemporaneously replaced
by items of equal or better function and quality, which are free of liens,
encumbrances and security interests other than those created by the Loan
Documents or consented to by Lender;


 


(5)                                  the grant of an
easement, servitude, or restrictive covenant if, before the grant, Lender
determines that the easement, servitude, or restrictive covenant will not


 


29

















 


materially affect the operation or value of the Mortgaged Property or
Lender’s interest in the Mortgaged Property, and Borrower pays to Lender, upon
demand, all costs and expenses incurred by Lender in connection with reviewing
Borrower’s request;


 


(6)                                  the creation of
a tax lien or a mechanic’s, materialman’s, or judgment lien against the
Mortgaged Property which is bonded off, released of record, or otherwise
remedied to Lender’s satisfaction within 45 days after Borrower has actual or
constructive notice of the existence of such lien; and


 


(7)                                  the conveyance
of the Mortgaged Property at a judicial or non-judicial foreclosure sale under
this Instrument.


 


(c)                                  Lender shall
consent to a Transfer that would otherwise violate this Section 21 if,
prior to the Transfer, Borrower has satisfied each of the following
requirements:


 


(1)                                  the submission
to Lender of all information required by Lender to make the determination
required by this Section 21(c);


 


(2)                                  the absence of
any Event of Default;


 


(3)                                  the transferee
meets all of the eligibility, credit, management, and other standards
(including any standards with respect to previous relationships between Lender
and the transferee and the organization of the transferee) customarily applied
by Lender at the time of the proposed Transfer to the approval of borrowers in
connection with the origination or purchase of similar mortgage finance
structures on similar multifamily properties, unless partially waived by Lender
in exchange for such additional conditions as Lender may require;


 


(4)                                  the Mortgaged
Property, at the time of the proposed Transfer, meets all standards as to its
physical condition that are customarily applied by Lender at the time of the
proposed Transfer to the approval of properties in connection with the
origination or purchase of similar mortgage finance structures on similar
multifamily properties, unless partially waived by Lender in exchange for such
additional conditions as Lender may require;


 


(5)                                  if transferor
or any other person has obligations under any Loan Document, the execution by
the transferee or one or more individuals or entities acceptable to Lender of
an assumption agreement (including, if applicable, an Acknowledgement and
Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse
Liability) that is acceptable to Lender and that, among other things, requires
the transferee to perform all obligations of transferor or such person set
forth in such Loan Document, and may require


 


30

















 


that the transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been waived by Lender;


 


(6)                                  if a guaranty
has been executed and delivered in connection with the Note, this Instrument or
any of the other Loan Documents, the Borrower causes one or more individuals or
entities acceptable to Lender to execute and deliver to Lender a substitute
guaranty in a form acceptable to Lender;


 


(7)                                  Lender’s
receipt of all of the following:


 


(A)                              a
non-refundable review fee in the amount of $3,000 and a transfer fee equal to 1
percent of the outstanding Indebtedness immediately prior to the Transfer; and


 


(B)        Borrower’s reimbursement of
all of Lender’s out-of-pocket costs (including reasonable attorneys’ fees)
incurred in reviewing the Transfer request, to the extent such expenses exceed
$3,000; and


 


(8)                                  Borrower has
agreed to Lender’s conditions to approve such Transfer, which may include, but
are not limited to (A) providing additional collateral, guaranties, or
other credit support to mitigate any risks concerning the proposed transferee
or the performance or condition of the Mortgaged Property, and (B) amending
the Loan Documents to (i) delete any specially negotiated terms or
provisions previously granted for the exclusive benefit of transferor and (ii) restore
to original provisions of the standard Fannie Mae form multifamily loan
documents, to the extent such provisions were previously modified.


 


(d)                                 For purposes of
this Section, the following terms shall have the meanings set forth below:


 


(1)                                  “Initial
Owners” means, with respect to Borrower or any other entity, the persons or
entities who on the date of the Note, directly or indirectly, own in the
aggregate 100% of the ownership interests in Borrower or that entity.


 


(2)                                  A Transfer of a “Controlling Interest” shall mean:


 


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


 


(i)                                     if such entity
is a general partnership or a joint venture, a Transfer of any general
partnership interest or joint venture interest which would cause the Initial
Owners to own less than 51% of all general partnership or joint venture
interests in such entity;


 


31

















 


(ii)                                  if such entity
is a limited partnership, (A) a Transfer of any general partnership
interest, or (B) a Transfer of any partnership interests which would cause
the Initial Owners to own less than 51% of all limited partnership interests in
such entity;


 


(iii)                               if such entity
is a limited liability company or a limited liability partnership, (A) a
Transfer of any membership or other ownership interest which would cause the
Initial Owners to own less than 51% of all membership or other ownership
interests in such entity, (B) a Transfer of any membership, or other
interest of a manager, in such entity that results in a change of manager, or (C) a
change of the non-member manager;


 


(iv)                              if such entity
is a corporation (other than a Publicly-Held Corporation) with only one class
of voting stock, a Transfer of any voting stock which would cause the Initial
Owners to own less than 51% of voting stock in such corporation;


 


(v)                                 if such entity
is a corporation (other than a Publicly-Held Corporation) with more than one
class of voting stock, a Transfer of any voting stock which would cause the
Initial Owners to own less than a sufficient number of shares of voting stock
having the power to elect the majority of directors of such corporation; and


 


(vi)                              if such entity
is a trust (other than a Publicly-Held Trust), the removal, appointment or
substitution of a trustee of such trust other than (A) in the case of a
land trust, or (B) if the trustee of such trust after such removal,
appointment, or substitution is a trustee identified in the trust agreement
approved by Lender; and/or


 


(B)                                any agreement
(including provisions contained in the organizational and/or governing
documents of Borrower or Key Principal) or Transfer not specified in clause
(A), the effect of which, either immediately or after the passage of time or
occurrence of a specified event or condition, including the failure of a
specified event or condition to occur or be satisfied, would (i) cause a
change in or replacement of the Person that controls the management and
operations of the Borrower or Key Principal or (ii) limit or otherwise
modify the extent of such Person’s control over the management and operations
of Borrower or Key Principal.


 


(3)                                  “Publicly-Held
Corporation” shall mean a corporation the outstanding voting
stock of which is registered under Section 12(b) or 12(g) of the
Securities and Exchange Act of 1934, as amended.


 


32
















 


(4)           “Publicly-Held Trust” shall mean a real estate investment trust the
outstanding voting shares or beneficial interests of which are registered under
Section 12 (b) or 12 (g) of the Securities Exchange Act of 1934,
as amended.


 


(e)           Lender shall be
provided with written notice of all Transfers under this Section 21,
whether or not such Transfers are permitted under Section 21(b) or
approved by Lender under Section 21(c), no later than 10 days prior to the
date of the Transfer.”


 


22.          EVENTS OF DEFAULT.


 


The occurrence of any one or more of the following shall constitute an
Event of Default under this Instrument:


 


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


 


(b)           any failure by
Borrower to maintain the insurance coverage required by Section 19;


 


(c)           any failure by
Borrower to comply with the provisions of Section 33;


 


(d)           fraud or material
misrepresentation or material omission by Borrower, or any of its officers,
directors, trustees, general partners or managers, Key Principal or any
guarantor in connection with (A) the application for or creation of the
Indebtedness, (B) any financial statement, rent roll, or other report or
information provided to Lender during the term of the Indebtedness, or (C) any
request for Lender’s consent to any proposed action, including a request for
disbursement of funds under any Collateral Agreement;


 


(e)           any (i) Event
of Default under Section 21 and/or (ii) occurrence of a Bankruptcy
Event;


 


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


 


(g)           any failure by
Borrower to perform any of its obligations under this Instrument (other than
those specified in Sections 22(a) through (f)), as and when required,
which continues for a period of 30 days after notice of such failure by Lender
to Borrower, but no such notice or grace period shall apply in the case of any
such failure which could, in Lender’s judgment, absent immediate exercise by
Lender of a right or remedy under this Instrument, result in harm to Lender,


 


33

















 


impairment
of the Note or this Instrument or any other security given under any other Loan
Document;


 


(h)           any failure by
Borrower to perform any of its obligations as and when required under any Loan
Document other than this Instrument which continues beyond the applicable cure
period, if any, specified in that Loan Document; and


 


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


 


23.          REMEDIES CUMULATIVE.


 


Each right and remedy provided in this Instrument is distinct from all
other rights or remedies under this Instrument or any other Loan Document or
afforded by applicable law, and each shall be cumulative and may be exercised
concurrently, independently, or successively, in any order.


 


24.          FORBEARANCE.


 


(a)           Lender may (but
shall not be obligated to) agree with Borrower, from time to time, and without
giving notice to, or obtaining the consent of, or having any effect upon the
obligations of, any guarantor or other third party obligor, to take any of the
following actions:  extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under
this Instrument, the Note, or any other Loan Document; release anyone liable
for the payment of any amounts under this Instrument, the Note, or any other
Loan Document; accept a renewal of the Note; modify the terms and time of
payment of the Indebtedness; join in any extension or subordination agreement;
release any Mortgaged Property; take or release other or additional security;
modify the rate of interest or period of amortization of the Note or change the
amount of the monthly installments payable under the Note; and otherwise modify
this Instrument, the Note, or any other Loan Document.


 


(b)           Any forbearance by
Lender in exercising any right or remedy under the Note, this Instrument, or
any other Loan Document or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any other right or remedy.  The acceptance by Lender of payment of all or
any part of the Indebtedness after the due date of such payment, or in an
amount which is less than the required payment, shall not be a waiver of Lender’s
right to require prompt payment when due of all other payments on account of
the Indebtedness or to exercise any remedies for any failure to make prompt
payment. Enforcement by Lender of any security for the Indebtedness shall not
constitute an election by Lender of remedies so as to preclude the


 


34

















 


exercise
of any other right available to Lender. 
Lender’s receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.


 


25.          LOAN CHARGES.


 


If any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower is interpreted so that any charge
provided for in any Loan Document, whether considered separately or together
with other charges levied in connection with any other Loan Document, violates
that law, and Borrower is entitled to the benefit of that law, that charge is
hereby reduced to the extent necessary to eliminate that violation.  The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the principal of the Indebtedness.  For
the purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness which constitutes interest, as well as all other
charges levied in connection with the Indebtedness which constitute interest,
shall be deemed to be allocated and spread over the stated term of the
Note.  Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a
manner that the rate of interest so computed is uniform throughout the stated
term of the Note.


 


26.          WAIVER OF STATUTE OF
LIMITATIONS.


 


Borrower hereby waives the right to assert any statute of limitations
as a bar to the enforcement of the lien of this Instrument or to any action
brought to enforce any Loan Document.


 


27.          WAIVER OF
MARSHALLING.


 


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


 


35

















 


28.          FURTHER ASSURANCES.


 


Borrower shall execute, acknowledge, and deliver, at its sole cost and
expense, all further acts, deeds, conveyances, assignments, estoppel certificates,
financing statements, transfers and assurances as Lender may require from time
to time in order to better assure, grant, and convey to Lender the rights
intended to be granted, now or in the future, to Lender under this Instrument
and the Loan Documents.


 


29.          ESTOPPEL CERTIFICATE.


 


Within 10 days after a request from Lender, Borrower shall deliver to
Lender a written statement, signed and acknowledged by Borrower, certifying to
Lender or any person designated by Lender, as of the date of such statement, (i) that
the Loan Documents are unmodified and in full force and effect (or, if there
have been modifications, that the Loan Documents are in full force and effect
as modified and setting forth such modifications); (ii) the unpaid
principal balance of the Note; (iii) the date to which interest under the
Note has been paid; (iv) that Borrower is not in default in paying the
Indebtedness or in performing or observing any of the covenants or agreements
contained in this Instrument or any of the other Loan Documents (or, if the
Borrower is in default, describing such default in reasonable detail); (v) whether
or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan Documents;
and (vi) any additional facts requested by Lender.


 


30.          GOVERNING LAW;
CONSENT TO JURISDICTION AND VENUE.


 


(a)           This Instrument, and
any Loan Document which does not itself expressly identify the law that is to
apply to it, shall be governed by the laws of the jurisdiction in which the
Land is located (the “Property Jurisdiction”).


 


(b)           Borrower agrees that
any controversy arising under or in relation to the Note, this Instrument, or
any other Loan Document shall be litigated exclusively in the Property
Jurisdiction.  The state and federal
courts and authorities with jurisdiction in the Property Jurisdiction shall
have exclusive jurisdiction over all controversies which shall arise under or
in relation to the Note, any security for the Indebtedness, or any other Loan
Document.  Borrower irrevocably consents
to service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.


 


36

















 


31.          NOTICE.


 


(a)           All notices, demands
and other communications (“notice”) under
or concerning this Instrument shall be in writing.  Each notice shall be addressed to the
intended recipient at its address set forth in this Instrument, and shall be
deemed given on the earliest to occur of (1) the date when the notice is
received by the addressee; (2) the first Business Day after the notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third
Business Day after the notice is deposited in the United States mail with
postage prepaid, certified mail, return receipt requested.  As used in this Section 31, the term “Business
Day” means any day other than a Saturday, a Sunday or any other day on which
Lender is not open for business.


 


(b)           Any party to this
Instrument may change the address to which notices intended for it are to be
directed by means of notice given to the other party in accordance with this Section 31.  Each party agrees that it will not refuse or
reject delivery of any notice given in accordance with this Section 31,
that it will acknowledge, in writing, the receipt of any notice upon request by
the other party and that any notice rejected or refused by it shall be deemed
for purposes of this Section 31 to have been received by the rejecting
party on the date so refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.


 


(c)           Any notice under the
Note and any other Loan Document which does not specify how notices are to be
given shall be given in accordance with this Section 31.


 


32.          SALE OF NOTE; CHANGE
IN SERVICER.


 


The Note or a partial interest in the Note (together with this
Instrument and the other Loan Documents) may be sold one or more times without
prior notice to Borrower.  A sale may
result in a change of the Loan Servicer. 
There also may be one or more changes of the Loan Servicer unrelated to
a sale of the Note.  If there is a change
of the Loan Servicer, Borrower will be given notice of the change.


 


33.          SINGLE ASSET
BORROWER.


 


Until the Indebtedness is paid in full, Borrower (a) shall not
acquire any real or personal property other than the Mortgaged Property and
personal property related to the operation and maintenance of the Mortgaged
Property;  (b) shall not operate any
business other than the management and operation of the Mortgaged Property; and
(c) shall not maintain its assets in a way difficult to segregate and
identify.


 


37

















 


34.          SUCCESSORS AND
ASSIGNS BOUND.


 


This Instrument shall bind, and the rights granted by this Instrument
shall inure to, the respective successors and assigns of Lender and
Borrower.  However, a Transfer not
permitted by Section 21 shall be an Event of Default.


 


35.          JOINT AND SEVERAL
LIABILITY.


 


If more than one person or entity signs this Instrument as Borrower,
the obligations of such persons and entities shall be joint and several.


 


36.          RELATIONSHIP OF
PARTIES; NO THIRD PARTY BENEFICIARY.


 


(a)           The relationship
between Lender and Borrower shall be solely that of creditor and debtor,
respectively, and nothing contained in this Instrument shall create any other
relationship between Lender and Borrower.


 


(b)           No creditor of any
party to this Instrument and no other person shall be a third party beneficiary
of this Instrument or any other Loan Document. 
Without limiting the generality of the preceding sentence, (1) any
arrangement (a “Servicing Arrangement”) between
the Lender and any Loan Servicer for loss sharing or interim advancement of
funds shall constitute a contractual obligation of such Loan Servicer that is
independent of the obligation of Borrower for the payment of the Indebtedness, (2) Borrower
shall not be a third party beneficiary of any Servicing Arrangement, and (3) no
payment by the Loan Servicer under any Servicing Arrangement will reduce the
amount of the Indebtedness.


 


37.          SEVERABILITY;
AMENDMENTS.


 


The invalidity or unenforceability of any provision of this Instrument
shall not affect the validity or enforceability of any other provision, and all
other provisions shall remain in full force and effect.  This Instrument contains the entire agreement
among the parties as to the rights granted and the obligations assumed in this
Instrument.  This Instrument may not be
amended or modified except by a writing signed by the party against whom
enforcement is sought.


 


38.          CONSTRUCTION.


 


The captions and headings of the sections of this Instrument are for
convenience only and shall be disregarded in construing this Instrument.  Any reference in this Instrument to an


 


 


38

















 


“Exhibit”
or a “Section” shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Instrument or to a
Section of this Instrument.  All
Exhibits attached to or referred to in this Instrument are incorporated by
reference into this Instrument.  Any
reference in this Instrument to a statute or regulation shall be construed as
referring to that statute or regulation as amended from time to time.  Use of the singular in this Agreement
includes the plural and use of the plural includes the singular.  As used in this Instrument, the term “including”
means “including, but not limited to.”


 


39.          LOAN SERVICING.


 


All actions regarding the servicing of the loan evidenced by the Note,
including the collection of payments, the giving and receipt of notice, inspections
of the Property, inspections of books and records, and the granting of consents
and approvals, may be taken by the Loan Servicer unless Borrower receives
notice to the contrary.  If Borrower
receives conflicting notices regarding the identity of the Loan Servicer or any
other subject, any such notice from Lender shall govern.


 


40.          DISCLOSURE OF
INFORMATION.


 


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


 


41.          NO CHANGE IN FACTS OR
CIRCUMSTANCES.


 


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


 


42.          SUBROGATION.


 


If, and to the extent that, the proceeds of the loan evidenced by the
Note are used to pay, satisfy or discharge any obligation of Borrower for the
payment of money that is secured by a


 


39

















 


pre-existing
mortgage, deed of trust or other lien encumbering the Mortgaged Property (a “Prior Lien”), such loan proceeds shall be deemed to have
been advanced by Lender at Borrower’s request, and Lender shall automatically,
and without further action on its part, be subrogated to the rights, including
lien priority, of the owner or holder of the obligation secured by the Prior
Lien, whether or not the Prior Lien is released.


 


43.          ACCELERATION;
REMEDIES.


 


If an Event of Default has occurred and is continuing,  Lender, at Lender’s option, may declare the
Indebtedness to be immediately due and payable without further demand, and may
invoke the power of sale and any other remedies permitted by California law or
provided in this Instrument or in any other Loan Document.  Borrower acknowledges that the power of sale
granted in this Instrument may be exercised by Lender without prior judicial
hearing.  Lender shall be entitled to
collect all costs and expenses incurred in pursuing such remedies, including
attorneys’ fees, costs of documentary evidence, abstracts and title reports.


 


If the power of sale is invoked, Lender shall execute a written notice
of the occurrence of an Event of Default and of Lender’s election to cause the
Mortgaged Property to be sold and shall cause the notice to be recorded in each
county in which the Mortgaged Property or some part of the Mortgaged Property
is located.  Trustee shall give notice of
default and notice of sale and shall sell the Mortgaged Property according to
California law.  Trustee may sell the
Mortgaged Property at the time and place and under the terms designated in the
notice of sale in one or more parcels and in such order as Trustee may
determine.  Trustee may postpone the sale
of all or any part of the Mortgaged Property by public announcement at the time
and place of any previously scheduled sale. 
Lender or Lender’s designee may purchase the Mortgaged Property at any
sale.


 


At the sale, Lender shall be entitled to credit bid, or to instruct
Trustee, on behalf of Lender to credit bid, up to and including the entire
amount of the Indebtedness plus Trustee’s fees and expenses.  Trustee shall deliver to the purchaser at the
sale, within a reasonable time, but in any event within 10 calendar days, after
the sale, a deed conveying the Mortgaged Property so sold without any express
or implied covenant or warranty.  The
recitals in Trustee’s deed shall be prima facie evidence of the truth of the
statements made in those recitals. 
Trustee shall apply the proceeds of the sale in the following
order:  (a) to all costs and
expenses of exercising the power of sale, including the payment of Trustee’s
fees and attorneys’ fees and costs of title evidence; (b) to the
Indebtedness in such order as Lender, in Lender’s discretion, directs; and (c) the
excess, if any, to the person or persons legally entitled to the excess.


 


40

















 


44.          RECONVEYANCE.


 


Upon
payment of the Indebtedness, Lender shall request Trustee to reconvey the
Mortgaged Property and shall surrender this Instrument and the Note to
Trustee.  Trustee shall reconvey the
Mortgaged Property without warranty to the person or persons legally entitled
to the Mortgaged Property.  Such person
or persons shall pay Trustee’s reasonable costs incurred in so reconveying the
Mortgaged Property.


 


45.          SUBSTITUTE TRUSTEE.


 


Lender, at Lender’s option, may from time to time, by a written instrument,
appoint a successor trustee, which instrument, when executed and acknowledged
by Lender and recorded in the office of the Recorder of the county or counties
where the Mortgaged Property is situated, shall be conclusive proof of proper
substitution of the successor trustee. 
The successor trustee shall, without conveyance of the Mortgaged
Property, succeed to all the title, authority, powers and duties conferred upon
the Trustee in this Instrument and by California law.  The instrument of substitution shall contain
the name of the original Lender, Trustee and Borrower under this Instrument,
the book and page where this Instrument is recorded, and the name and
address of the successor trustee.  If
notice of default has been recorded, this power of substitution cannot be
exercised until after the costs, fees and expenses of the then acting Trustee
have been paid to such Trustee, who shall endorse receipt of those costs, fees
and expenses upon the instrument of substitution.  The procedure provided for substitution of
trustee in this Instrument shall govern to the exclusion of all other
provisions for substitution, statutory or otherwise.


 


46.          STATEMENT OF
OBLIGATION.


 


Lender may collect a fee not to exceed the maximum allowed by
applicable law for furnishing the statement of obligation as provided in Section 2943
of the Civil Code of California.


 


47.          SPOUSE’S SEPARATE
PROPERTY.


 


Each Borrower who is a married person expressly agrees that recourse
may be had against his or her community property and separate property.


 


41
















 


48.          FIXTURE FILING.


 


This
Instrument is also a fixture filing under the Uniform Commercial Code of
California.


 


49.          ADDITIONAL PROVISION
REGARDING APPLICATION OF PAYMENTS.


 


In addition to the provisions of Section 9, Borrower further
agrees that, if Lender accepts a guaranty of only a portion of the
Indebtedness, Borrower waives its right under California Civil Code Section 2822(a),
to designate the portion of the Indebtedness which shall be satisfied by a
guarantor’s partial payment.


 


50.          WAIVER OF MARSHALLING;
OTHER WAIVERS.


 


To the extent permitted by law, Borrower waives (i) the benefit of
all present or future laws providing for any appraisement before sale of any
portion of the Mortgaged Property, (ii) all rights of redemption,
valuation, appraisement, stay of execution, notice of election to mature or
declare due the whole of the Indebtedness and marshalling in the event of
foreclosure of the lien created by this Instrument, (iii) all rights and
remedies which Borrower may have or be able to assert by reason of the laws of
the State of California pertaining to the rights and remedies of sureties, (iv) the
right to assert any statute of limitations as a bar to the enforcement of the
lien of this Instrument or to any action brought to enforce the Note or any
other obligation secured by this Instrument, and (v) any rights, legal or
equitable, to require marshalling of assets or to require upon foreclosure
sales in a particular order, including any rights under California Civil Code
Sections 2899 and 3433.  Lender shall
have the right to determine the order in which any or all of the Mortgaged
Property shall be subjected to the remedies provided by this Instrument.  Lender shall have the right to determine the
order in which any or all portions of the Indebtedness are satisfied from the
proceeds realized upon the exercise of the remedies provided by this
Instrument.  By signing this Instrument,
Borrower does not waive its rights under Section 2924c of the California
Civil Code.


 


51.          ADDITIONAL PROVISIONS
CONCERNING ENVIRONMENTAL HAZARDS.


 


In addition to the provisions of Section 18:


 


(a)           Except for matters
covered by an O&M Program or matters described in Section 18(b),
Borrower shall not cause or permit any lien (whether or not such lien has
priority over the


 


42

















 


lien
created by this Instrument) upon the Mortgaged Property imposed pursuant to any
Hazardous Materials Laws.  Any such lien
shall be considered a Prohibited Activity or Condition.


 


(b)           Borrower represents
and warrants to Lender that, except as previously disclosed by Borrower to
Lender in writing:


 


(1)                                  at the time of
acquiring the Mortgaged Property, Borrower undertook all appropriate inquiry
into the previous ownership and uses of the Mortgaged Property consistent with
good commercial or customary practice and no evidence or indication came to
light which would suggest that the Mortgaged Property has been or is now being
used for any Prohibited Activities or Conditions; and


 


(2)                                  the Mortgaged
Property has not been designated as “hazardous waste property” or “border zone
property” pursuant to Section 25220, et seq., of the
California Health and Safety Code.


 


The representations and warranties in this Section 51(b) shall
be continuing representations and warranties that shall be deemed to be made by
Borrower throughout the term of the loan evidenced by the Note, until the
Indebtedness has been paid in full.


 


(c)           Without limiting any
of the remedies provided in this Instrument, Borrower acknowledges and agrees
that each of the provisions in Section 18 and in this Section 51 is
an environmental provision (as defined in Section 736(f)(2) of the
California Code of Civil Procedure) made by Borrower relating to the real
property security (the “Environmental Provisions”),
and that Borrower’s failure to comply with any of the Environmental Provisions
will be a breach of contract that will entitle Lender to pursue the remedies
provided by Section 736 of the California Code of Civil Procedure (“Section 736”) for the recovery of damages and for the
enforcement of the Environmental Provisions. 
Pursuant to Section 736, Lender’s action for recovery of damages or
enforcement of the Environmental Provisions shall not constitute an action
within the meaning of Section 726(a) of the California Code of Civil
Procedure or constitute a money judgment for a deficiency or a deficiency
judgment within the meaning of Sections 580a, 580b, 580d, or 726(b) of the
California Code of Civil Procedure.


 


(d)           Any reference in
this Instrument or in any other Loan Document to Section 18 of this
Instrument shall be construed as referring together to Section 18 and this
Section 51.


 


43

















 


52.          ADDITIONAL PROVISION REGARDING
INSURANCE.


 


In
addition to the provisions of Section 19, Borrower further agrees that to
the extent that Borrower obtains any form of property damage insurance for the
Mortgaged Property or any portion thereof that insures perils not required to
be insured against by Lender, such policy of property damage insurance shall
include a standard mortgagee clause and shall name Lender as loss payee and,
within 10 days following Borrower’s purchase of such additional insurance,
Borrower shall cause to be delivered to Lender a duplicate original policy of
insurance with respect to such policy. 
Any insurance proceeds payable to Borrower under such policy shall be
additional security for the Indebtedness and Lender shall have the same rights
to such policy and proceeds as it has with respect to insurance policies
required by Lender pursuant to Section 19 (except that Lender shall not
require that the premium for such additional insurance be included among the
Imposition Deposits).


 


53.          WAIVER OF TRIAL BY
JURY.


 


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


 


44

















 


ATTACHED EXHIBITS.  The following Exhibits are attached to this
Instrument:


 


x Exhibit A   Description
of the Land (Required).


 


x Exhibit B   Modifications
to Instrument (Borrower Requested).


 


45

















 


IN WITNESS WHEREOF, Borrower has signed and
delivered this Instrument or has caused this Instrument to be signed and
delivered by its duly authorized representative.


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD NOHO, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Name:

  	
  Gerald
  J. Reihsen, III

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  



 


Fannie Mae Commitment Number: 860574


 


46

















 


STATE OF TEXAS


 


COUNTY OF DALLAS


 


This instrument was acknowledged before me on October 21,
2009 by Gerald J. Reihsen, III of BEHRINGER HARVARD NOHO, LLC, a Delaware
limited liability company, on behalf of said limited liability company.


 


 


	
   

  	
  /s/ Catherine E. Mea

  	
  (SEAL

  
	
   

  	
  Signature of Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  	
  (SEAL

  
	
   

  	
  Title of Officer

  	
   

  



 


My
Commission Expires: July 26, 2012


 


47

















 


KEY PRINCIPAL


 


Key Principal


 


	
  Name:

  	
   

  	
  BEHRINGER HARVARD
  MULTIFAMILY REIT I, INC.

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  15601 Dallas Parkway,
  Suite 600

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Addison, Texas 75001

  



 


48
















 


EXHIBIT B


 


MODIFICATIONS
TO INSTRUMENT


(Borrower
Requested)


 


The following modifications are made to the
text of the Instrument that precedes this Exhibit:


 


1.                                       Section 19(f) is modified by adding
the following at the end of the Section:


 


“Notwithstanding any provision to the
contrary in this Section 19(f), as long as no Event of Default, or any
event which, with the giving of Notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing, in the event of
a casualty resulting in damage to the Mortgaged Property which will cost
$50,000 or less to repair, the Borrower shall have the sole right to make proof
of loss, adjust and compromise the claim and collect and receive any proceeds
directly without the approval or prior consent of the Lender so long as the
insurance proceeds are used solely for the Restoration of the Mortgaged
Property.”


 


2.                                       Section 20(a) is modified by adding
the following at the end of the Section:


 


“Notwithstanding any provision to the
contrary in this Section 20(a), as long as no Event of Default, or any
event which, with the giving of Notice or the passage of time, or both, would
constitute an Event of Default, has occurred and is continuing, in the event of
a Condemnation resulting in damage to the Mortgaged Property which will cost
$50,000 or less to repair, the Borrower shall have the sole right to appear in
and prosecute or defend any action or proceeding relating to any Condemnation,
and to settle or compromise any claim, collect and receive any proceeds in
connection with any Condemnation directly without the approval or prior consent
of the Lender so long as the Condemnation proceeds are used solely for the
Restoration of the Mortgaged Property (provided; however, that this provision
shall not apply if such Condemnation in any way affects access to the Mortgaged
Property).”


 


3.                                       Section 21
is modified to add new Section 21(f) as follows:


 


“(f)                              The
requirement to pay a 1% transfer fee as provided in Section 21(c)(7)(A) shall
not apply to Transfers of the Mortgaged Property or of ownership interests held
by any person or entity to (i) one or more Key Principals or (ii) any
entity or entities in which a Key Principal has a direct or indirect
Controlling Interest (“Affiliated Entities”), including but not limited to the
following Affiliated Entities:  Behringer
Harvard Multifamily OP I LP.  However,
such Transfers to Affiliated Entities shall be subject to all other requirements
of Section 21(c) herein.”


 


4.                                       Section 21(b) is
modified to delete the period at the end of Section 21(b)(7) and
substitute “; and” therefor and to add a new Section 21(b)(8):


 


“(8)                            a
Transfer of the Mortgaged Property to an entity or entities in which the Key
Principal has a direct or indirect Controlling Interest; provided, however,
that such Transfer of ownership interests will not cause a change in the
management and control of Borrower (or other intermediate entity), and after
which Transfer, 


 


B-1

















 


the transferor Key Principal shall maintain the same right and ability
to manage and control Borrower (or other intermediate entity) as existed prior
to the Transfer; and”


 


5.                                       Section 21(b) is
modified to add new Section 21(b)(9) as follows:


 


“(9)                            a
Transfer of (i) a Controlling Interest in any entity which owns, directly
or indirectly through one or more intermediate entities, a Controlling Interest
in Borrower, or (ii) all or any part of the Key Principal’s ownership
interest in Borrower, or in any other entity which owns, directly or indirectly
through one of more intermediate entities, an ownership interest in Borrower;
provided however, that following such Transfer, Key Principal will hold a
Controlling Interest, either directly or indirectly, in Borrower.”


 


6.                                       Section 21(b) is
modified to add new Section 21(b)(9) as follows:


 


“(10)                      a Transfer of any stock in any
Publicly-Held Corporation.”


 


7.                                       All capitalized
terms used in this Exhibit not specifically defined herein shall have the
meanings set forth in the text of the Instrument that precedes this Exhibit.


 


[BORROWER INITIALS ON THE FOLLOWING PAGE]


 


B-2

















 


	
   

  	
  Borrower’s Initials:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ GJR

  



 


B-3