exv10w3






Exhibit 10.3




MULTIFAMILY LOAN AND SECURITY AGREEMENT

(NON-RECOURSE)




BY AND BETWEEN



SIR CLARION PARK, LLC,

a Delaware limited liability company



AND



PNC BANK, NATIONAL ASSOCIATION,

a national banking association



DATED AS OF



JUNE 28, 2011









 









 








TABLE OF CONTENTS




	 	 	 	 	 

	ARTICLE 1
— DEFINITIONS; SUMMARY OF MORTGAGE LOAN TERMS
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Defined Terms
	 	 	1	 
	Section 1.02 Schedules, Exhibits and Attachments Incorporated
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 — GENERAL MORTGAGE LOAN TERMS
	 	 	2	 
	 
	 	 	 	 
	Section 2.01 Mortgage Loan Origination and Security
	 	 	2	 
	(a) Making of Mortgage Loan
	 	 	2	 
	(b) Security for Mortgage Loan
	 	 	2	 
	(c) Protective Advances
	 	 	2	 
	Section 2.02 Payments on Mortgage Loan
	 	 	2	 
	(a) Debt Service Payments
	 	 	2	 
	(b) Capitalization of Accrued But Unpaid Interest
	 	 	3	 
	(c) Late Charges
	 	 	3	 
	(d) Default Rate
	 	 	4	 
	(e) Address for Payments
	 	 	5	 
	(f) Application of Payments
	 	 	5	 
	Section 2.03 Lockout/Prepayment
	 	 	6	 
	(a) Prepayment; Prepayment Lockout; Prepayment Premium
	 	 	6	 
	(b) Voluntary Prepayment in Full
	 	 	6	 
	(c) Acceleration of Mortgage Loan
	 	 	7	 
	(d) Application of Collateral
	 	 	7	 
	(e) Casualty and Condemnation
	 	 	7	 
	(f) No Effect on Payment Obligations
	 	 	7	 
	(g) Loss Resulting from Prepayment
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 3 — PERSONAL LIABILITY
	 	 	8	 
	 
	 	 	 	 
	Section 3.01 Non-Recourse Mortgage Loan; Exceptions
	 	 	8	 
	Section 3.02 Personal Liability of Borrower (Exceptions to Non-Recourse
Provision)
	 	 	8	 
	(a) Personal Liability Based on Lender’s Loss
	 	 	8	 
	(b) Full Personal Liability for Mortgage Loan
	 	 	9	 
	Section 3.03 Personal Liability for Indemnity Obligations
	 	 	10	 
	Section 3.04 Lender’s Right to Forego Rights Against Mortgaged Property
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 4 — BORROWER STATUS
	 	 	10	 
	 
	 	 	 	 
	Section 4.01 Representations and Warranties
	 	 	10	 
	(a) Due Organization and Qualification
	 	 	10	 
	(b) Location
	 	 	11	 
	(c) Power and Authority
	 	 	11	 
	(d) Due Authorization
	 	 	11	 
	(e) Valid and Binding Obligations
	 	 	11	 
	(f) Effect of Mortgage Loan on Borrower’s Financial Condition
	 	 	11	 
	(g) Economic Sanctions, Anti-Money Laundering and Anti-Corruption
	 	 	12	 
	(h) Borrower Single Asset Status
	 	 	13	 
	(i) No Bankruptcies or Judgments
	 	 	13	 
	(j) No Litigation
	 	 	14	 






					
	 	 	 	 	 
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	(k) Payment of Taxes, Assessments and Other Charges
	 	 	14	 
	(l) Not a Foreign Person
	 	 	14	 
	(m) ERISA
	 	 	14	 
	(n) Default Under Other Obligations
	 	 	15	 
	(o) Prohibited Person
	 	 	15	 
	Section 4.02 Covenants
	 	 	16	 
	(a) Maintenance of Existence; Organizational Documents
	 	 	16	 
	(b) Economic Sanctions and Anti-Money Laundering
	 	 	16	 
	(c) Payment of Taxes, Assessments and Other Charges
	 	 	17	 
	(d) Borrower Single Asset Status
	 	 	17	 
	(e) ERISA
	 	 	18	 
	(f) Notice of Litigation or Insolvency
	 	 	18	 
	(g) Payment of Costs, Fees, and Expenses
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 5 — THE MORTGAGE LOAN
	 	 	19	 
	 
	 	 	 	 
	Section 5.01 Representations and Warranties
	 	 	19	 
	(a) Receipt and Review of Loan Documents
	 	 	20	 
	(b) No Default
	 	 	20	 
	Section 5.02 Covenants
	 	 	20	 
	(a) Ratification of Covenants; Estoppels; Certifications
	 	 	20	 
	(b) Further Assurances
	 	 	21	 
	(c) Sale of Mortgage Loan
	 	 	21	 
	(d) Limitations on Further Acts of Borrower
	 	 	22	 
	(e) Financing Statements; Record Searches
	 	 	22	 
	 
	 	 	 	 
	ARTICLE 6 — PROPERTY USE, PRESERVATION AND MAINTENANCE
	 	 	22	 
	 
	 	 	 	 
	Section 6.01 Representations and Warranties
	 	 	22	 
	(a) Compliance with Law; Permits and Licenses
	 	 	22	 
	(b) Property Characteristics
	 	 	23	 
	(c) Property Ownership
	 	 	23	 
	Section 6.02 Covenants
	 	 	23	 
	(a) Use of Property
	 	 	23	 
	(b) Property Maintenance
	 	 	24	 
	(c) Property Preservation
	 	 	25	 
	(d) Property Inspections
	 	 	26	 
	(e) Compliance with Laws
	 	 	26	 
	Section 6.03 Mortgage Loan Administration Matters Regarding the Property
	 	 	27	 
	(a) Property Management
	 	 	27	 
	(b) Subordination of Fees to Affiliated Property Managers
	 	 	27	 
	(c) Physical Needs Assessment
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 7 — LEASES AND RENTS
	 	 	28	 
	 
	 	 	 	 
	Section 7.01 Representations and Warranties
	 	 	28	 
	(a) Prior Assignment of Rents
	 	 	28	 
	(b) Prepaid Rents
	 	 	28	 
	Section 7.02 Covenants
	 	 	28	 
	(a) Leases
	 	 	28	 
	(b) Commercial Leases
	 	 	29	 
	(c) Payment of Rents
	 	 	30	 






					
	 	 	 	 	 
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	(d) Assignment of Rents
	 	 	30	 
	(e) Further Assignments of Leases and Rents
	 	 	30	 
	(f) Options to Purchase by Tenants
	 	 	30	 
	Section 7.03 Mortgage Loan Administration Regarding Leases and Rents
	 	 	31	 
	(a) Material Commercial Lease Requirements
	 	 	31	 
	(b) Residential Lease Requirements
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 8 — BOOKS AND RECORDS; FINANCIAL REPORTING
	 	 	31	 
	 
	 	 	 	 
	Section 8.01 Representations and Warranties
	 	 	31	 
	(a) Financial Information
	 	 	32	 
	(b) No Change in Facts or Circumstances
	 	 	32	 
	Section 8.02 Covenants
	 	 	32	 
	(a) Obligation to Maintain Accurate Books and Records
	 	 	32	 
	(b) Items to Furnish to Lender
	 	 	32	 
	(c) Delivery of Books and Records
	 	 	34	 
	Section 8.03 Mortgage Loan Administration Matters Regarding Books and Records
and Financial Reporting
	 	 	34	 
	(a) Right to Audit Books and Records
	 	 	34	 
	(b) Credit Reports; Credit Score
	 	 	35	 
	 
	 	 	 	 
	ARTICLE 9 — INSURANCE
	 	 	35	 
	 
	 	 	 	 
	Section 9.01 Representations and Warranties
	 	 	35	 
	(a) Compliance with Insurance Requirements
	 	 	35	 
	(b) Property Condition
	 	 	35	 
	Section 9.02 Covenants
	 	 	35	 
	(a) Insurance Requirements
	 	 	35	 
	(b) Delivery of Policies, Renewals, Notices and Proceeds
	 	 	36	 
	Section 9.03 Mortgage Loan Administration Matters Regarding Insurance
	 	 	37	 
	(a) Lender’s Ongoing Insurance Requirements
	 	 	37	 
	(b) Application of Proceeds on Event of Loss
	 	 	37	 
	(c) Payment Obligations Unaffected
	 	 	39	 
	(d) Foreclosure Sale
	 	 	40	 
	(e) Appointment of Lender as Attorney-In-Fact
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 10 — CONDEMNATION
	 	 	40	 
	 
	 	 	 	 
	Section 10.01 Representations and Warranties
	 	 	40	 
	(a) Prior Condemnation Action
	 	 	40	 
	(b) Pending Condemnation Actions
	 	 	40	 
	Section 10.02 Covenants
	 	 	40	 
	(a) Notice of Condemnation
	 	 	40	 
	(b) Condemnation Proceeds
	 	 	41	 
	Section 10.03 Mortgage Loan Administration Matters Regarding Condemnation
	 	 	41	 
	(a) Application of Condemnation Awards
	 	 	41	 
	(b) Payment Obligations Unaffected
	 	 	41	 
	(c) Appointment of Lender as Attorney-In-Fact
	 	 	41	 
	(d) Application of Proceeds
	 	 	41	 






					
	 	 	 	 	 
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	ARTICLE 11 — LIENS, TRANSFERS AND ASSUMPTIONS
	 	 	42	 
	 
	 	 	 	 
	Section 11.01 Representations and Warranties
	 	 	42	 
	(a) No Labor or Materialmen’s Claims
	 	 	42	 
	(b) No Other Interests
	 	 	42	 
	Section 11.02 Covenants
	 	 	42	 
	(a) Liens; Encumbrances
	 	 	42	 
	(b) Transfers
	 	 	42	 
	Section 11.03 Mortgage Loan Administration Matters Regarding Liens, Transfers
and Assumptions
	 	 	45	 
	(a) Assumption of Mortgage Loan
	 	 	45	 
	(b) Transfers to Key Principal-Owned Affiliates or Guarantor-Owned Affiliates
	 	 	46	 
	(c) Estate Planning
	 	 	47	 
	(d) Termination or Revocation of Trust
	 	 	47	 
	(e) Death of Key Principal or Guarantor
	 	 	47	 
	(f) Bankruptcy of Guarantor
	 	 	49	 
	(g) Further Conditions to Transfers and Assumption
	 	 	50	 
	 
	 	 	 	 
	ARTICLE 12 — IMPOSITIONS
	 	 	51	 
	 
	 	 	 	 
	Section 12.01 Representations and Warranties
	 	 	51	 
	(a) Payment of Taxes, Assessments and Other Charges
	 	 	51	 
	Section 12.02 Covenants
	 	 	51	 
	(a) Imposition Deposits, Taxes, and Other Charges
	 	 	51	 
	Section 12.03 Mortgage Loan Administration Matters Regarding Impositions
	 	 	52	 
	(a) Maintenance of Records by Lender
	 	 	52	 
	(b) Imposition Accounts
	 	 	52	 
	(c) Payment of Impositions; Sufficiency of Imposition Deposits
	 	 	53	 
	(d) Imposition Deposits Upon Event of Default
	 	 	53	 
	(e) Contesting Impositions
	 	 	53	 
	(f) Release to Borrower
	 	 	54	 
	 
	 	 	 	 
	ARTICLE 13 — REPLACEMENT RESERVE AND REPAIRS
	 	 	54	 
	 
	 	 	 	 
	Section 13.01 Covenants
	 	 	54	 
	(a) Initial Deposits to Replacement Reserve Account and Repairs Escrow Account
	 	 	54	 
	(b) Monthly Replacement Reserve Deposits
	 	 	54	 
	(c) Payment for Replacements and Repairs
	 	 	54	 
	(d) Assignment of Contracts for Replacements and Repairs
	 	 	55	 
	(e) Indemnification
	 	 	55	 
	(f) Amendments to Loan Documents
	 	 	55	 
	(g) Administrative Fees and Expenses
	 	 	55	 
	Section 13.02 Mortgage Loan Administration Matters Regarding Reserves
	 	 	56	 
	(a) Accounts, Deposits, and Disbursements
	 	 	56	 
	(b) Approvals of Contracts; Assignment of Claims
	 	 	62	 
	(c) Delays and Workmanship
	 	 	63	 
	(d) Appointment of Lender as Attorney-In-Fact
	 	 	63	 
	(e) No Lender Obligation
	 	 	63	 
	(f) No Lender Warranty
	 	 	64	 






					
	 	 	 	 	 
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	ARTICLE 14 — DEFAULTS/REMEDIES
	 	 	64	 
	 
	 	 	 	 
	Section 14.01 Events of Default
	 	 	64	 
	(a) Automatic Events of Default
	 	 	64	 
	(b) Events of Default Subject to a Specified Cure Period
	 	 	65	 
	(c) Events of Default Subject to Extended Cure Period
	 	 	66	 
	Section 14.02 Remedies
	 	 	66	 
	(a) Acceleration; Foreclosure
	 	 	66	 
	(b) Loss of Right to Receive Replacement Reserve Disbursements and Repairs
Disbursements
	 	 	67	 
	(c) Remedies Cumulative
	 	 	67	 
	Section 14.03 Additional Lender Rights; Forbearance
	 	 	67	 
	(a) No Effect Upon Obligations
	 	 	67	 
	(b) No Waiver of Rights or Remedies
	 	 	68	 
	(c) Appointment of Lender as Attorney-in-Fact
	 	 	69	 
	Section 14.04 Waiver of Marshaling
	 	 	70	 
	 
	 	 	 	 
	ARTICLE 15 — MISCELLANEOUS
	 	 	71	 
	 
	 	 	 	 
	Section 15.01 Governing Law; Consent to Jurisdiction and Venue
	 	 	71	 
	(a) Governing Law
	 	 	71	 
	(b) Venue
	 	 	71	 
	Section 15.02 Notice
	 	 	71	 
	(a) Process of Serving Notice
	 	 	71	 
	(b) Change of Address
	 	 	72	 
	(c) Default Method of Notice
	 	 	72	 
	(d) Receipt of Notices
	 	 	72	 
	Section 15.03 Successors and Assigns Bound; Sale of Mortgage Loan
	 	 	72	 
	(a) Binding Agreement
	 	 	72	 
	(b) Sale of Mortgage Loan; Change of Servicer
	 	 	73	 
	Section 15.04 Counterparts
	 	 	73	 
	Section 15.05 Joint and Several (or Solidary) Liability
	 	 	73	 
	Section 15.06 Relationship of Parties; No Third Party Beneficiary
	 	 	73	 
	(a) Solely Creditor and Debtor
	 	 	73	 
	(b) No Third Party Beneficiaries
	 	 	73	 
	Section 15.07 Severability; Entire Agreement; Amendments
	 	 	74	 
	Section 15.08 Construction
	 	 	74	 
	Section 15.09 Mortgage Loan Servicing
	 	 	75	 
	Section 15.10 Disclosure of Information
	 	 	75	 
	Section 15.11 Waiver; Conflict
	 	 	75	 
	Section 15.12 Determinations by Lender
	 	 	75	 
	Section 15.13 Subrogation
	 	 	75	 
	Section 15.14 Counting of Days
	 	 	76	 
	Section 15.15 Revival and Reinstatement of Indebtedness
	 	 	76	 
	Section 15.16 Time is of the Essence
	 	 	76	 
	Section 15.17 Final Agreement
	 	 	76	 
	Section 15.18 WAIVER OF TRIAL BY JURY
	 	 	77	 






					
	 	 	 	 	 
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SCHEDULES & EXHIBITS




	 	 	 	 	 
	Schedules	 	 	 	 
	Schedule 1

	 	Definitions Schedule (required)
	 	Form 6101.FR
	Schedule 2

	 	Summary of Loan Terms (required)
	 	Form 6102.FR

 and
Form 6102.03
	Schedule 3

	 	Interest Rate Type Provisions (required)
	 	Form 6103.FR
	Schedule 4

	 	Prepayment Premium Schedule (required)
	 	Form 6104.01
	Schedule 5

	 	Required Replacement Schedule (required)
	 	Form 6001.NR
	Schedule 6

	 	Required Repair Schedule (required)
	 	Form 6001.NR
	Schedule 7

	 	Exceptions to Representations and
Warranties Schedule (required)
	 	Form 6001.NR






	 	 	 	 	 
	Exhibits	 	 	 	 
	Exhibit A

	 	Modifications to Loan Agreement (Tax Credit
Properties)
	 	Form 6219






					
	 	 	 	 	 
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MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Non-Recourse)




     This MULTIFAMILY LOAN AND SECURITY AGREEMENT (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the “Loan Agreement”) is made as of the
Effective Date (as hereinafter defined) by and between SIR CLARION PARK, LLC, a Delaware limited
liability company (“Borrower”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(“Lender”).



RECITALS:




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



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



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



AGREEMENTS:




ARTICLE 1 — DEFINITIONS; SUMMARY OF MORTGAGE

LOAN TERMS



Section 1.01 Defined Terms.




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



Section 1.02 Schedules, Exhibits and Attachments Incorporated.




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






					
	 	 	 	 	 
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ARTICLE 2  — GENERAL MORTGAGE LOAN TERMS




Section 2.01 Mortgage Loan Origination and Security.




     (a) Making of Mortgage Loan.



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




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




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



     (b) Security for Mortgage Loan.



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



     (c) Protective Advances.



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



Section 2.02 Payments on Mortgage Loan.




     (a) Debt Service Payments.



          (1) Short Month Interest.





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







					
	 	 	 	 	 
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     (2) Interest Accrual and Computation.




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




     (3) Monthly Debt Service Payments.




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




     (4) Payment at Maturity.




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




     (5) Interest Rate Type.




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



     (b) Capitalization of Accrued But Unpaid Interest.



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



     (c) Late Charges.




     (1) If any Monthly Debt Service Payment (other than the payment due on the Maturity
Date for repayment of the Mortgage Loan in full) due hereunder is not received by Lender
within ten (10) days (or fifteen (15) days for any Mortgaged Property located in Mississippi
or North Carolina to comply with applicable law) after the applicable Payment Date, or if
any other amount payable under this Loan Agreement or any other Loan Document is not
received by Lender within ten (10) days (or fifteen (15) days for any Mortgaged Property
located in Mississippi or North Carolina to comply with applicable law) after the date such
amount is due, inclusive of the date on which such







					
	 	 	 	 	 
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amount is due, Borrower shall pay to Lender, immediately and without demand by Lender,
the Late Charge.




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




     (2) Borrower acknowledges and agrees that:




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




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




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




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



     (d) Default Rate.




     (1) Default interest shall be paid as follows:




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




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




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





          (2) Borrower acknowledges and agrees that:





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







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




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




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




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




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




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




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



     (e) Address for Payments.



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



     (f) Application of Payments.



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







					
	 	 	 	 	 
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Section 2.03 Lockout/Prepayment.




     (a) Prepayment; Prepayment Lockout; Prepayment Premium.




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




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



     (b) Voluntary Prepayment in Full.



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




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




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




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




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




     (C) the Prepayment Premium; plus




     (D) all other Indebtedness.


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






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




     (c) Acceleration of Mortgage Loan.



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




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




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




     (3) the Prepayment Premium; and




     (4) all other Indebtedness.



     (d) Application of Collateral.



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



     (e) Casualty and Condemnation.



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



     (f) No Effect on Payment Obligations.



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






					
	 	 	 	 	 
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     (g) Loss Resulting from Prepayment.



     Borrower acknowledges and agrees that:




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




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




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




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



ARTICLE 3  — PERSONAL LIABILITY




Section 3.01 Non-Recourse Mortgage Loan; Exceptions.




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



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




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



     Borrower shall be personally liable to Lender for the repayment of the portion of the
Indebtedness equal to any loss or damage suffered by Lender as a result of:




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






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




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




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




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




     (6) waste or abandonment of the Mortgaged Property;


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




     (b) Full Personal Liability for Mortgage Loan.



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




     (1) failure by Borrower to comply with the single-asset entity requirements of this
Loan Agreement or any other Loan Document;




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




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






					
	 	 	 	 	 
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     (4) fraud or written material misrepresentation by Borrower, Guarantor, Key Principal,
or any officer, director, partner, member, or shareholder of Borrower, Guarantor, or Key
Principal or material omission in connection with: any application for or creation of the
Indebtedness, on-going financial or other reporting, or any request for action or consent by
Lender.



Section 3.03 Personal Liability for Indemnity Obligations.




     Borrower shall be personally and fully liable to Lender for Borrower’s indemnity obligations
under Section 13.01(e), the Environmental Indemnity Agreement and any other indemnity provided by
Borrower under any other Loan Document. Borrower’s liability for such indemnity obligations shall
not be limited by the amount of the Indebtedness, the repayment of the Indebtedness, or otherwise.



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




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




ARTICLE 4 — BORROWER STATUS




Section 4.01 Representations and Warranties.




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



     (a) Due Organization and Qualification.



     Borrower is validly existing and qualified to transact business and is in good standing in the
state in which it is formed or organized, the Property Jurisdiction and in each other jurisdiction
that qualification or good standing is required according to applicable law to conduct its business
with respect to the Mortgaged Property and where the failure to be so qualified or in good standing
would adversely affect Borrower’s operation of the Mortgaged Property or the






					
	 	 	 	 	 
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validity, enforceability or the ability of Borrower to perform its obligations under this Loan
Agreement or any other Loan Document.




     (b) Location.



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



     (c) Power and Authority.



     Borrower has the requisite power and authority:




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




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



     (d) Due Authorization.



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



     (e) Valid and Binding Obligations.



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



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



     Borrower is not presently Insolvent and the Mortgage Loan will not render Borrower Insolvent.
Borrower has sufficient working capital, including proceeds from the Mortgage Loan, cash flow from
the Mortgaged Property, or other sources, not only to adequately maintain the






					
	 	 	 	 	 
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Mortgaged Property, but also to pay all of Borrower’s outstanding debts as they come due,
including all Debt Service Amounts.




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



     None of Borrower, any Guarantor, any Key Principal, or any Principal, nor to Borrower’s
knowledge, its general partners, managing members, managers (if non-member managed), or any Person
owning or controlling any of them:




     (1) is in violation of:




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




     (B) any applicable economic sanction laws administered by OFAC or by the United
States Department of State; or




     (C) any applicable anti-drug trafficking, anti-terrorism, or anti-corruption
laws, civil or criminal; or




     (2) is a Person:




     (A) that is charged with, or has reason to believe that he, she or it is under
investigation for, any violation of any such laws;




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




     (C) named on the list of “Specially Designated Nationals or Blocked Persons”
maintained by OFAC (or any successor United States government office or list), or
any similar list maintained by the United States Department of State (or any
successor United States government office or list);




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




     (E) that is owned, controlled by, or affiliated with any Person identified in
clause (A), (B), (C), and/or (D) of this Section 4.01(g)(2); or




     (3) is in violation of any obligation to maintain appropriate internal controls as
required by the governing laws of the jurisdiction of such Person as are necessary to






					
	 	 	 	 	 
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ensure compliance with the economic sanctions, anti-money laundering and
anti-corruption laws of the United States and the jurisdiction where the Person resides, is
domiciled or has its principal place of business.



     (h) Borrower Single Asset Status.



     Borrower:




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




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




     (3) has no material financial obligation under any indenture, mortgage, deed of trust,
deed to secure debt, loan agreement or other agreement or instrument to which Borrower is a
party or by which Borrower or the Mortgaged Property is otherwise bound, other than
unsecured obligations incurred in the ordinary course of the operation of the Mortgaged
Property and obligations under the Loan Documents and obligations secured by the Mortgaged
Property to the extent permitted by the Loan Documents;




     (4) has accurately maintained its financial statements, accounting records and other
partnership, real estate investment trust, limited liability company or corporate documents,
as the case may be, separate from those of any other Person;




     (5) has not commingled its assets or funds with those of any other Person;




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




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




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



     (i) No Bankruptcies or Judgments.



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






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




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




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




     (4) Insolvent.



     (j) No Litigation.



     Except as disclosed by Borrower to Lender via an email from Borrower’s counsel on June 21,
2011, and described on Schedule 7 hereto, there are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority now pending or, to Borrower’s knowledge, threatened
against or affecting Borrower, any Guarantor, any Key Principal, any Principal or the Mortgaged
Property.



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



     Borrower confirms that:




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




     (2) it has paid all taxes, governmental charges and assessments due and payable with
respect to such returns and reports, that could ultimately result in a lien against the
Property if not paid;




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




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



     (l) Not a Foreign Person.



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



     (m) ERISA.



     Borrower acknowledges that:







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




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




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




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




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




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



     (n) Default Under Other Obligations.




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




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



     (o) Prohibited Person.



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






					
	 	 	 	 	 
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Section 4.02 Covenants.




     (a) Maintenance of Existence; Organizational Documents.



     Borrower shall maintain its existence, its entity status, franchises, rights and privileges
under the laws of the state of its formation or organization (as applicable). Borrower shall
continue to be duly qualified and in good standing to transact business in each jurisdiction that
qualification or standing is required according to applicable law to conduct its business with
respect to the Mortgaged Property and where the failure to do so would adversely affect Borrower’s
operation of the Mortgaged Property or the validity, enforceability or the ability of Borrower to
perform its obligations under this Loan Agreement or any other Loan Document. Borrower shall not
make any material change to its organizational documents, including changes relating to control of,
or the ability to oversee management and day-to-day operations of, Borrower, without Lender’s prior
written consent.



     (b) Economic Sanctions and Anti-Money Laundering.




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




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




     (B) any applicable economic sanction laws administered by OFAC or by the United
States Department of State; and




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




     (2) At no time shall Borrower, or its general partners, managing members, managers (if
non-member managed), any Guarantor, Key Principal, Principal, or any Person owning or
controlling any of them, be a Person:




     (A) that is charged with, or has reason to believe that he, she or it is under
investigation for, any violation of any such laws;




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




     (C) named on the list of “Specially Designated Nationals or Blocked Persons”
maintained by OFAC (or any successor United States government office or list), or
any similar list maintained by the United States Department of State (or any
successor United States government office or list);






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




     (E) that is owned, controlled by or affiliated with any Person identified in
clause (A), (B), (C), and/or (D) of this Section 4.02(b)(2).




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



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



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



     (d) Borrower Single Asset Status.



     Until the Indebtedness is fully paid, Borrower:




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




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




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




     (4) shall accurately maintain its financial statements, accounting records and other
partnership, real estate investment trust, limited liability company or corporate documents,
as the case may be, separate from those of any other Person;




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






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



     (e) ERISA.



     Borrower acknowledges that:




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




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




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




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




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




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



     (f) Notice of Litigation or Insolvency.



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




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



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




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




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




     (A) the Mortgaged Property;




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




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




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




     (4) any Bankruptcy Event or Guarantor Bankruptcy Event;




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



ARTICLE 5 — THE MORTGAGE LOAN




Section 5.01 Representations and Warranties.




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






					
	 	 	 	 	 
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     (a) Receipt and Review of Loan Documents.



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



     (b) No Default.



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



Section 5.02 Covenants.




     (a) Ratification of Covenants; Estoppels; Certifications.



     Borrower shall:




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




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




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




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




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




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




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




     (F) any additional facts reasonably requested by Lender.





					
	 	 	 	 	 
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(b) Further Assurances.




     (1) Other Documents As Lender May Require.



     Borrower shall execute, acknowledge and deliver, at its 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 Loan Agreement and the other Loan Documents.



     (2) Corrective Actions.



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



(c) Sale of Mortgage Loan.



Borrower shall:




     (1) do anything necessary to comply with the requirements of Lender or any Investor of
the Mortgage Loan or provide, or cause to be provided, to Lender or any Investor of the
Mortgage Loan, at Borrower’s cost and expense, such further documentation or information
required by Lender or Investor, in order to enable:



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




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




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




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



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



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




					
	 	 	 	 	 
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     (d) Limitations on Further Acts of Borrower.



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




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




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



     (e) Financing Statements; Record Searches.




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




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




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




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



ARTICLE 6 — PROPERTY USE, PRESERVATION AND MAINTENANCE




Section 6.01 Representations and Warranties.




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



     (a) Compliance with Law; Permits and Licenses.




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




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




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




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




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



     (b) Property Characteristics.




     (1) The Mortgaged Property contains not less than:




     (A) the Property Square Footage;




     (B) the Total Parking Spaces; and




     (C) the Total Residential Units.




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



     (c) Property Ownership.



     Borrower is sole owner of the Mortgaged Property.



Section 6.02 Covenants




     (a) Use of Property.



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




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




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




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




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




     (5) subdivide the Land.



     (b) Property Maintenance.



     Borrower shall:




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




     (2) keep the Mortgaged Property in good repair and marketable condition (including the
replacement of Personalty and Fixtures with items of equal or better function and quality)
and subject to Section 9.03(b) restore or repair promptly, in a good and workmanlike manner,
any damaged part of the Mortgaged Property to the equivalent of its original condition as of
the date of this Loan Agreement, or condition immediately prior to the damage (if improved
after the Effective Date), whether or not insurance proceeds are or any condemnation award
is available to cover any costs of such restoration or repair, unless Lender has elected to
apply such proceeds to the Indebtedness in which event Borrower’s failure to make the
restoration and/or repair(s) related to such insurance and/or condemnation proceeds shall
not constitute a violation of this Section 6.02(b)(2);




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




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




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




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




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




     (A) in a good and workmanlike manner as soon as practicable following the
commencement thereof, free and clear of any Liens, including mechanics’ or
materialmen’s liens and encumbrances (except for Permitted Encumbrances, and
subsequently arising liens which Borrower is diligently contesting in good faith and
which have been bonded off to the satisfaction of Lender);




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




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




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




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




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




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



     (c) Property Preservation.



     Borrower shall:




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




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




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




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




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



     (d) Property Inspections.



     Borrower shall:




     (1) permit Lender, its agents, representatives and designees to enter upon and inspect
the Mortgaged Property (including in connection with any replacement, repair or
environmental inspections), and shall cooperate and provide access to all areas of the
Mortgaged Property (subject to the rights of tenants under the Leases) during normal
business hours or at such other reasonable time upon reasonable written notice, and at any
time after an Event of Default or when exigent circumstances exist; and




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



     (e) Compliance with Laws.



     Borrower shall:




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



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




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




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




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



Section 6.03 Mortgage Loan Administration Matters Regarding the Property.




     (a) Property Management.



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



     (b) Subordination of Fees to Affiliated Property Managers.



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



     (c) Physical Needs Assessment.



     If, in connection with any inspection of the Mortgaged Property, Lender reasonably determines
that the condition of the Mortgaged Property has deteriorated since the Effective Date, Lender may
obtain, at Borrower’s expense, a physical needs assessment of the Mortgaged Property. Lender’s
right to obtain a physical needs assessment pursuant to this Section 6.03(c) shall be in addition
to any other rights available to Lender under this Loan Agreement in connection with any such
deterioration. Any such inspection or physical needs assessment may



					
	 	 	 	 	 
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result in Lender requiring Additional Lender Repairs or Additional Lender Replacements as further described in Section
13.02(a)(9)(B).




ARTICLE 7 — LEASES AND RENTS




Section 7.01 Representations and Warranties.




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



     (a) Prior Assignment of Rents.



     Borrower has not executed any:




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




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



     (b) Prepaid Rents.



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



Section 7.02 Covenants.




     (a) Leases.



     Borrower shall:




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




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




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



					
	 	 	 	 	 
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     (b) Commercial Leases.




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




     (A) enter into any Material Commercial Lease except with the prior written
consent of Lender and Lender’s written approval of such Material Commercial Lease;
or




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




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




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




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




     (3) With respect to any Material Commercial Lease or non-Material Commercial Lease,
Borrower shall use commercially reasonable efforts to cause the applicable tenant to provide
within ten (10) days of the request, a certificate of estoppel, or if not provided by the
applicable tenant within such ten (10) day period, Borrower
shall provide a landlord estoppel which shall remain binding upon Borrower until such
time, if any, that such certificate of estoppel is provided by the applicable tenant, in
each case certifying:




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




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




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



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




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




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




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



     (c) Payment of Rents.



     Borrower shall:




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




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




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



     (d) Assignment of Rents.



     Borrower shall not:




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




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



     (e) Further Assignments of Leases and Rents.



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



     (f) Options to Purchase by Tenants.



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



					
	 	 	 	 	 
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Section 7.03 Mortgage Loan Administration Regarding Leases and Rents.




     (a) Material Commercial Lease Requirements.



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




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




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




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




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




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



     (b) Residential Lease Requirements.



     All Residential Leases shall be:




     (1) on forms approved by Lender; and




     (2) for initial lease terms of not less than six (6) months and not more than
twenty-four (24) months (however, if customary in the applicable market, Residential Leases
with terms of less than six (6) months may be permitted with Lender’s prior written
consent).



ARTICLE 8 — BOOKS AND RECORDS; FINANCIAL REPORTING




Section 8.01 Representations and Warranties.




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



					
	 	 	 	 	 
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     (a) Financial Information.



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




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




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



     (b) No Change in Facts or Circumstances.



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



Section 8.02 Covenants.




     (a) Obligation to Maintain Accurate Books and Records.



     Borrower shall keep and maintain at all times at the Mortgaged Property or the property
management agent’s offices or Borrower’s General Business Address and, upon not less than 24 hours
prior written request by Lender, shall make available during normal business hours at such
applicable location:




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




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



     (b) Items to Furnish to Lender.



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




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




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



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




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




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




     (D) a written certification ratifying and affirming that:




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




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




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




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




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




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




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




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




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




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




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




     (5) Notwithstanding the foregoing, with respect to any item in this subsection 8.02(b)
that Lender may request at any time or from time to time, Lender agrees that, provided no
Event of Default exists, it shall not request such item more frequently than quarterly.
Additionally, Lender hereby agrees that, for so long a Guarantor is a regulated public
company, nothing herein or in any other Loan Document shall be deemed to require Borrower or
Guarantor to deliver any information in violation of applicable law or any non-public
information unless Lender has provided a customary non-disclosure agreement.



     (c) Delivery of Books and Records.



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



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




     (a) Right to Audit Books and Records.



     Lender may require that any or all of the statements, schedules and reports of Borrower or the
Mortgaged Property be audited, at Borrower’s expense, by independent certified public accountants
acceptable to Lender; provided that such requirement shall be limited to not more than once per
Borrower’s fiscal year so long as no Event of Default has occurred (or any event which, with the
giving of notice or the passage of time, or both, would constitute an Event of Default has occurred
and is continuing), and that such audit right shall only be exercised by Lender in the event that
Lender has a reasonable basis for requiring such audit, as determined by Lender in its sole
discretion. If Borrower fails, in a timely manner, to provide any such required audited materials,
after written notice to Borrower and a reasonable amount of time thereafter to cure as determined
by Lender in its sole discretion (unless an Event of Default shall then exist, in



					
	 	 	 	 	 
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which event no such notice and cure period shall be required or provided), Lender shall have the right, at
Borrower’s expense, to have such materials audited by independent certified public accountants
selected by Lender. All related costs and expenses of Lender shall become immediately due and
payable within ten (10) Business Days after demand therefor.




     (b) Credit Reports; Credit Score.



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



ARTICLE 9 — INSURANCE




Section 9.01 Representations and Warranties.




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



     (a) Compliance with Insurance Requirements.



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



     (b) Property Condition.




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




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



Section 9.02 Covenants.




     (a) Insurance Requirements.




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




     (A) keep the Improvements insured at all times against any hazards, which
insurance shall include coverage against loss by fire and allied perils, general
boiler and machinery coverage, business income coverage and flood (if any of the
Improvements are located in an area identified by the Federal



					
	 	 	 	 	 
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Emergency Management
Agency (or any successor) as an area having special flood hazards and to the extent
flood insurance is available in that area), and may include sinkhole insurance, mine
subsidence insurance, earthquake insurance, terrorism insurance and, if the
Mortgaged Property does not conform to applicable building, zoning or land use laws,
ordinance and law coverage;




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




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



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



     Borrower shall:




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




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




     (3) deliver evidence, in form and content acceptable to Lender, that each existing
insurance policy has been renewed not less than thirty (30) days prior to the
applicable expiration date and (if such evidence is other than an original or duplicate
original of a renewal policy) deliver the original or duplicate original of each renewal
policy in form and content acceptable to Lender within ninety (90) days after the applicable
expiration date of the original insurance policy);




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




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




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



					
	 	 	 	 	 
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Section 9.03 Mortgage Loan Administration Matters Regarding Insurance




     (a) Lender’s Ongoing Insurance Requirements.



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




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




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




     (3) issued by insurance companies satisfactory to Lender.



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



     (b) Application of Proceeds on Event of Loss.




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




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




     (B) apply such proceeds to the payment of the Indebtedness, whether or not then
due; provided, however, Lender shall not apply insurance proceeds to



					
	 	 	 	 	 
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the payment of the Indebtedness and shall permit Restoration pursuant to Section
9.03(b)(1) if all of the following conditions are met:




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




     (ii) Lender determines that there will be sufficient funds to complete
the Restoration;




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




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




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




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




     (2) Notwithstanding the foregoing, if any loss is estimated to be in an amount equal to
or less than $50,000, Lender shall not exercise its rights and remedies as power-of-attorney
herein and shall allow Borrower to make proof of loss, to adjust and compromise any claims
under policies of property damage insurance, to appear in and prosecute any action arising
from such policies of property damage insurance, and to collect and receive the proceeds of
property damage insurance; provided that each of the following conditions
shall be satisfied:




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




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



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




     (D) there will be sufficient funds to complete the Restoration;




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




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




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




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




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




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



     (c) Payment Obligations Unaffected.



     The application of any insurance proceeds to the Indebtedness shall not extend or postpone the
Maturity Date or the due date or the full payment of any Monthly Debt Service Payment, Monthly
Replacement Reserve Deposit, any other installments referred to in this Loan Agreement or in any
other Loan Document. Notwithstanding the foregoing, if Lender applies insurance proceeds to the
Indebtedness in connection with a casualty of less than the entire Mortgaged Property, and after
such application of proceeds the debt service coverage ratio (as determined by Lender) is less than
1.25x based on the then-applicable Monthly Debt Service Payment and the anticipated on-going net
operating income of the Mortgaged Property after such casualty event, then Lender may, at its
discretion, permit an adjustment to the Monthly Debt Service Payments that become due and owing
thereafter, based on Lender’s then-current



					
	 	 	 	 	 
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underwriting requirements. In no event shall the
preceding sentence obligate Lender to make any adjustment to the Monthly Debt Service Payments.




     (d) Foreclosure Sale.



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



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



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



ARTICLE 10 — CONDEMNATION




Section 10.01 Representations and Warranties.




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



     (a) Prior Condemnation Action.



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



     (b) Pending Condemnation Actions.



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



Section 10.02 Covenants.




     (a) Notice of Condemnation.



     Borrower shall:




     (1) promptly notify Lender of any Condemnation Action;




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



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



     (b) Condemnation Proceeds.



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



Section 10.03 Mortgage Loan Administration Matters Regarding Condemnation.




     (a) Application of Condemnation Awards.



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




     (1) the restoration or repair of the Mortgaged Property; or




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



     (b) Payment Obligations Unaffected.



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



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



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



     (d) Application of Proceeds.



     If Lender elects to apply condemnation proceeds or awards to the Indebtedness in accordance
with the terms of this Loan Agreement, Borrower shall not be obligated to restore or repair the
Mortgaged Property. Rather, Borrower shall restrict access to the damaged portion of the Mortgaged
Property and, at its expense and regardless of whether such costs are covered by insurance, clean
up any debris resulting from the casualty event, and, if required or otherwise permitted by Lender,
demolish or raze any remaining part of the damaged Mortgaged Property to the extent necessary to
keep and maintain the Mortgaged Property in a safe, habitable and marketable condition. Nothing in
this Section 10.03(d) shall affect any of Lender’s remedial rights against Borrower in connection
with a breach by Borrower of any of its obligations under this Loan Agreement or under any Loan
Document, including any failure to timely pay Monthly Debt Service Payments or maintain the
insurance coverage(s) required by this Loan Agreement.



					
	 	 	 	 	 
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ARTICLE 11 — LIENS, TRANSFERS AND ASSUMPTIONS



Section 11.01 Representations and Warranties.




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



     (a) No Labor or Materialmen’s Claims.



     All parties furnishing labor and materials have been paid in full and there are no mechanics’
or materialmen’s liens or claims outstanding for work, labor or materials affecting the Mortgaged
Property, whether prior to, equal with or subordinate to the lien of the Security Instrument.



     (b) No Other Interests.



     No Person:




     (1) other than Borrower has any possessory ownership or interest in the Mortgaged
Property or right to occupy the same except under and pursuant to the provisions of existing
Leases, the material terms of all such Leases having been previously disclosed to Lender;




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


Section 11.02 Covenants.




     (a) Liens; Encumbrances.



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



     (b) Transfers.




     (1) Mortgaged Property.




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




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



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




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




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




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




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




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




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




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




     (B) more than forty-nine percent (49%) of any Key Principal’s or Guarantor’s
direct or indirect ownership interests in Borrower that existed on the Effective
Date (individually or on an aggregate basis);




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




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



					
	 	 	 	 	 
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     (E) Lender acknowledges and agrees that (i) as of the date hereof, Guarantor is
a non-traded public real estate investment company which is not currently a
Publicly-Held Trust but is expected to become a Publicly-Held Trust during the term
of the Loan, and (ii) neither (x) the registration of the outstanding voting shares
or beneficial interests of Guarantor under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, nor (y) the sale or transfer of shares in
Guarantor (provided Guarantor continues to be a non-traded public real estate
investment company or a Publicly-Held Trust), nor (z) the conversion of Guarantor
from a non-traded public real estate investment company, shall be considered a
Transfer or shall constitute an Event of Default, and no fees under Section
11.03(g)(2) below or otherwise shall be due and payable to Lender in connection
therewith.




     (3) Entity Conversion.




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




     (i) a Transfer of a Controlling Interest; or




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




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




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




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




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




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




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



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




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


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




     (a) Assumption of Mortgage Loan.



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




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




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




     (3) Lender determines that:




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




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




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



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




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




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




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




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




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




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



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




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




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




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




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


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




					
	 	 	 	 	 
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     (c) Estate Planning.



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




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




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




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


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




     (d) Termination or Revocation of Trust.



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




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




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


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




     (e) Death of Key Principal or Guarantor.




     (1) If Key Principal or Guarantor is a natural person, Borrower must notify Lender in
writing within ninety (90) days in the event Key Principal or Guarantor dies. Unless waived
in writing by Lender, the deceased Key Principal or Guarantor shall be replaced by an
individual or entity within one hundred eighty (180) days, subject to Borrower’s
satisfaction of the following conditions:



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




     (B) Lender determines that:




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




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




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




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




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




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




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




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




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



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




     (f) Bankruptcy of Guarantor.




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




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




     (B) Lender determines that




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




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




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




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




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




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




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




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



					
	 	 	 	 	 
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previously engaged, a property manager reasonably acceptable to Lender be
engaged); or




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


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




     (g) Further Conditions to Transfers and Assumption.




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




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




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




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




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




     (A) the Transfer Fee (to the extent charged by Lender; provided, however, that
such Transfer Fee shall not be due in connection with a merger or consolidation of
Guarantor with another public real estate investment company);




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




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



					
	 	 	 	 	 
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     (3) Borrower shall provide Lender written notice of all Transfers whether or not such
Transfers are permitted under this Loan Agreement or approved by Lender no later than ten
(10) days prior to the date of the Transfer, provided that Borrower shall not be required to
provide notice of Transfers of Residential Leases or of the replacement of Fixtures or
Personalty performed pursuant to the terms of the Loan Documents, and provided further that
such prior written notice shall not be required for any involuntary Transfer, it being
understood and agreed that Borrower may provide written notice of any involuntary Transfer
promptly after becoming aware thereof.



ARTICLE 12 — IMPOSITIONS



Section 12.01 Representations and Warranties.




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



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




     Borrower has:




     (1) paid (or with the approval of Lender, established an escrow fund sufficient to pay
when due and payable) all amounts and charges relating to the Mortgaged Property that have
become due and payable, including Impositions, leasehold payments and ground rents;




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




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




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




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


Section 12.02 Covenants.




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



     Borrower shall:



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




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




     (3) pay, or cause to be paid, all Impositions, leasehold payments, ground rents and
Borrower taxes when due and before the addition of any interest, fine, penalty or cost for
nonpayment;




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




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


Section 12.03 Mortgage Loan Administration Matters Regarding Impositions.




     (a) Maintenance of Records by Lender.



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



     (b) Imposition Accounts.



     All Imposition Deposits shall be held in an institution (which may be Lender, if Lender is
such an institution) whose deposits or accounts are insured or guaranteed by a federal agency and
which accounts meet the standards for custodial accounts as required by Lender from time to time.
Lender shall not be obligated to open additional accounts, or deposit Imposition Deposits in
additional institutions, when the amount of the Imposition Deposits exceeds the maximum amount of
the federal deposit insurance or guaranty. No interest, earnings or profits on the Imposition
Deposits shall be paid to Borrower unless applicable law so requires. Imposition Deposits shall
not be trust funds, nor shall they operate to reduce the Indebtedness, unless applied by Lender for
that purpose in accordance with this Loan Agreement. For the purposes of 9-104(a)(3) of the UCC,
Lender is the owner of the Imposition Deposits and shall be deemed a “customer” with sole control
of the account holding the Imposition Deposits.



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



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




     (1) no Event of Default exists;




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




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



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



     (d) Imposition Deposits Upon Event of Default.



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



     (e) Contesting Impositions.



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




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




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




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




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



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



     (f) Release to Borrower.



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



ARTICLE 13 — REPLACEMENT RESERVE AND REPAIRS



Section 13.01 Covenants.




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



     On the Effective Date, Borrower shall pay to Lender:




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




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



     (b) Monthly Replacement Reserve Deposits.



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



     (c) Payment for Replacements and Repairs.



     Borrower shall:




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




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




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



					
	 	 	 	 	 
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Borrower Requested Repairs and
Additional Lender Repairs (by the date specified by Lender for any such Borrower Requested
Repairs or Additional Lender Repairs)).



     (d) Assignment of Contracts for Replacements and Repairs.



     Borrower shall assign to Lender any contract or subcontract to which Borrower is a party or a
third-party beneficiary or otherwise holds a right of assignment for Replacements or Repairs, upon
Lender’s request, on a form of assignment approved by Lender. To the extent that Borrower is not a
party or third-party beneficiary to any such subcontract and does not hold a right of assignment
with respect to the same, Borrower shall use commercially reasonable efforts to cause such
subcontract to be assigned to Lender by the contractor thereunder.



     (e) Indemnification.



     Borrower shall indemnify and hold Lender harmless from and against any and all actions, suits,
claims, demands, liabilities, losses, damages, obligations and costs or expenses, including
litigation costs and reasonable attorneys’ fees, arising from or in any way connected with the
performance of the Replacements or Repairs or investment of the Reserve/Escrow Account Funds,
except to the extent arising as a result of Lender’s gross negligence and/or willful misconduct.



     (f) Amendments to Loan Documents.



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



     (g) Administrative Fees and Expenses.



     Borrower shall pay to Lender:




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




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




     (3) upon demand, all reasonable fees charged by any engineer, architect, inspector or
other person inspecting the Mortgaged Property on behalf of Lender for each



					
	 	 	 	 	 
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inspection of
the Mortgaged Property in connection with a Repair or Replacement, plus all other reasonable
costs and out-of-pocket expenses relating to such inspections.


Section 13.02 Mortgage Loan Administration Matters Regarding Reserves.




     (a) Accounts, Deposits, and Disbursements.




     (1) Custodial Accounts.




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




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




     (2) Disbursements by Lender Only.




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




     (3) Adjustment of Deposits.




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




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



					
	 	 	 	 	 
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when
required and/or the amount to be held in the Repairs Escrow Account may be adjusted
by Lender so that the Repairs Escrow Deposit is sufficient to fund the Repairs as
and when required.




     (B) Transfers.




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




     (4) Insufficient Funds.




     Lender may, upon thirty (30) days prior written notice to Borrower, require an
additional deposit(s) to the Replacement Reserve Account or Repairs Escrow Account, or an
increase in the amount of the Monthly Replacement Reserve Deposit, if Lender determines that
the amounts on deposit in either the Replacement Reserve Account or the Repairs Escrow
Account are not sufficient to cover the costs for Required Repairs or Required Replacements
or, pursuant to the terms of Section 13.02(a)(9), not sufficient to cover the costs for
Borrower Requested Repairs, Additional Lender Repairs, Borrower Requested Replacements or
Additional Lender Replacements. Borrower’s agreement to complete the Replacements or
Repairs as required by this Loan Agreement shall not be affected by the insufficiency of any
balance in the Replacement Reserve Account or the Repairs Escrow Account, as applicable.




     (5) Disbursements for Replacements and Repairs.




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



					
	 	 	 	 	 
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Account
shall not be less than the Minimum Replacement Reserve Disbursement Amount.




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




     (6) Disbursement Requests.




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




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




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




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




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




     (E) contain a certification by Borrower that the Repair or Replacement has been
completed lien free and in a good and workmanlike manner (or such other evidence
that Borrower is diligently contesting any such liens which have



					
	 	 	 	 	 
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been bonded off to
the satisfaction of Lender), in accordance with any plans and specifications
previously approved by Lender (if applicable) and in compliance with all applicable
laws, ordinances, rules and regulations of any Governmental Authority having
jurisdiction over the Mortgaged Property, and otherwise in accordance with the
provisions of this Loan Agreement).




     (7) Conditions to Disbursement.




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




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




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




     (C) either:




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




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




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



					
	 	 	 	 	 
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     (8) Joint Checks for Periodic Disbursements.




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




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




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




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




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




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




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




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




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




     (A) Borrower Requested Replacements and Borrower Requested Repairs.




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



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




     (ii) the costs are reasonable;




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




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




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




     (B) Additional Lender Replacements and Additional Lender Repairs.




     Lender may require, as set forth in Section 6.02(b)(3), Section 6.03(c), or
otherwise from time to time, upon written notice to Borrower, that Borrower make
Additional Lender Replacements or Additional Lender Repairs. Lender may make
disbursements from the Replacement Reserve Account for Additional Lender
Replacements or from the Repairs Escrow Account for Additional Lender Repairs, as
applicable, if Lender determines that:




     (i) the costs are reasonable;




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



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




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




     (10) Excess Costs.




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




     (A) the excess cost is reasonable;




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




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




     (11) Final Disbursements.




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



     (b) Approvals of Contracts; Assignment of Claims.



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



					
	 	 	 	 	 
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     (c) Delays and Workmanship.



     If Lender reasonably determines that any work for any Replacement or Repair has not timely
commenced, has not been timely performed in a workmanlike manner, or has not been timely completed
in a workmanlike manner, Lender may, after providing reasonable prior written notice of the same to
Borrower and a reasonable opportunity to cure:




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




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




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




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


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




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



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



     (e) No Lender Obligation.



     Nothing in this Loan Agreement shall:




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




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




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



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



     (f) No Lender Warranty.



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



ARTICLE 14 — DEFAULTS/REMEDIES




Section 14.01 Events of Default.




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



     (a) Automatic Events of Default.



     The following shall constitute automatic Events of Default:




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




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




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




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




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




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



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




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




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




     (7) the occurrence of a Bankruptcy Event;




     (8) the commencement of a forfeiture action or proceeding, whether civil or criminal,
which, in Lender’s reasonable judgment, could result in a forfeiture of the Mortgaged
Property or otherwise materially impair the lien created by this Loan Agreement or the
Security Instrument or Lender’s interest in the Mortgaged Property, and such action or
proceeding is not dismissed or otherwise bonded over or insured in a manner reasonably
acceptable to Lender within thirty (30) days of commencement; provided, however, that no
such notice or grace period shall apply in the case of any such failure which could, in
Lender’s sole and absolute judgment, absent immediate exercise by Lender of a right or
remedy under this Loan Agreement, result in harm to Lender, impairment of the Note or this
Loan Agreement or any other security given under any other Loan Document;




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




     (10) if Borrower, Guarantor or Key Principal is a trust, the termination or revocation
of such trust, except as set forth in Section 11.03(d);




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




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



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



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




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



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




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



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



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




     (1) Any failure by Borrower to perform any of its obligations under this Loan Agreement
or any Loan Document (other than those specified in Section 14.01(a) or Section 14.01(b)
above) as and when required, which failure continues for a period of thirty (30) days after
notice of such failure by Lender to Borrower, provided, however, such period
may be extended for up to an additional sixty (60) days if Borrower, in the discretion of
Lender, is diligently pursuing a cure of such; provided, further,
however, no such notice, grace period or extension shall apply if, in Lender’s
discretion, immediate exercise by Lender of a right or remedy under this Loan Agreement or
any Loan Document is required to avoid harm to Lender or impairment of the Mortgage Loan
(including the Loan Documents), the Mortgaged Property or any other security given for the
Mortgage Loan.



Section 14.02 Remedies.




     (a) Acceleration; Foreclosure.



     Upon the occurrence of an Event of Default, the entire unpaid principal balance of the
Mortgage Loan, any Accrued Interest, interest accruing at the Default Rate, the Prepayment Premium
(if applicable), and all other Indebtedness shall at once become due and payable, at the option of
Lender, without any prior notice to Borrower, unless applicable law requires otherwise (and in such
case, after any required notice has been given). Lender may exercise this option to accelerate
regardless of any prior forbearance. In addition, Lender shall have all rights and remedies
afforded to it hereunder and under the other Loan Documents, including, foreclosure on and/or the
power of sale of the Mortgaged Property, as provided in the Security Instrument, and any rights and
remedies available to it at law or in equity (subject to Borrower’s statutory rights of
reinstatement, if any, prior to a Foreclosure Event). Any proceeds of a foreclosure or other sale
under this Loan Agreement or any other Loan Document may be held and applied by Lender as
additional collateral for the Indebtedness pursuant to this Loan Agreement. Notwithstanding the
foregoing, the occurrence of any Bankruptcy Event shall automatically accelerate the Mortgage Loan
and all obligations and Indebtedness shall be immediately due and payable without notice or further
action by Lender.



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



     Upon the occurrence of an Event of Default under this Loan Agreement that has not been cured
to Lender’s satisfaction, Borrower shall immediately lose all of its rights to receive
disbursements from the Reserve/Escrow Accounts and any Collateral Accounts. Upon any such Event of
Default, Lender may use the Reserve/Escrow Account Funds and any Collateral Account Funds (or any
portion thereof) for any purpose, including:




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




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




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




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


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




     (c) Remedies Cumulative.



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



Section 14.03 Additional Lender Rights; Forbearance.




     (a) No Effect Upon Obligations.



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



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




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




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




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




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




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




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




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




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




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




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



     (b) No Waiver of Rights or Remedies.



     Any waiver of an Event of Default or forbearance by Lender in exercising any right or remedy
under this Loan Agreement or any other Loan Document or otherwise afforded by applicable law, shall
not be a waiver of any other Event of Default or preclude the exercise or failure to exercise of
any other right or remedy. The acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an amount which is less than the required
payment, shall not be a waiver of Lender’s right to require prompt payment when due of all other
payments on account of the Indebtedness or to exercise any remedies for



					
	 	 	 	 	 
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any failure to make prompt payment. Enforcement by Lender of any security for the
Indebtedness shall not constitute an election by Lender of remedies so as to preclude the exercise
or failure to exercise of any other right available to Lender. Lender’s receipt of any
condemnation awards or insurance proceeds shall not operate to cure or waive any Event of Default.




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



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




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




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




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




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




     (5) adjust and compromise any claims under any and all policies of insurance required
pursuant to this Loan Agreement and any other Loan Document;




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




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




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




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




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




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



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




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




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




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



Section 14.04 Waiver of Marshaling.




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



					
	 	 	 	 	 
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ARTICLE 15 — MISCELLANEOUS




Section 15.01 Governing Law; Consent to Jurisdiction and Venue.




     (a) Governing Law.



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



     (b) Venue.



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



Section 15.02 Notice.




     (a) Process of Serving Notice.



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




     (1) in writing and shall be:




     (A) delivered, in person;




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




     (C) sent by overnight courier; or




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




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




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




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



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




     (4) Lender shall endeavor to give Borrower’s counsel a courtesy copy of any notice
given to Borrower by Lender, at the address set forth below; provided, however, failure to
provide such courtesy copy notice shall not affect the validity or sufficiency of any notice
to Borrower, shall not affect Lender’s rights and remedies hereunder or under any other Loan
Documents, nor subject Lender to any claim by or liability to Borrower.


Garrett DeFrenza Stiepel LLP

Park Tower

695 Town Center Drive, Suite 500

Costa Mesa, California 92626-1924

Attn: Marc DeFrenza and Jim Mullen




     (b) Change of Address.



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



     (c) Default Method of Notice.



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



     (d) Receipt of Notices.



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



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




     (a) Binding Agreement.



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



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



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



Section 15.04 Counterparts.




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



Section 15.05 Joint and Several (or Solidary) Liability.




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



Section 15.06 Relationship of Parties; No Third Party Beneficiary.




     (a) Solely Creditor and Debtor.



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



     (b) No Third Party Beneficiaries.



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




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




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



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



Section 15.07 Severability; Entire Agreement; Amendments.




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



Section 15.08 Construction.




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



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



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



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



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



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



     (g) Unless otherwise provided in this Loan Agreement, if Lender’s approval is required for any
matter hereunder, such approval may be granted or withheld in Lender’s sole and absolute
discretion.



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



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



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



Section 15.09 Mortgage Loan Servicing.




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



Section 15.10 Disclosure of Information.




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



Section 15.11 Waiver; Conflict.




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



Section 15.12 Determinations by Lender.




     In any instance in this Loan Agreement where the consent or approval of Lender may be given or
is required, or where any determination, judgment or decision is to be rendered by Lender under
this Loan Agreement, except as otherwise provided herein, the granting, withholding or denial of
such consent or approval and the rendering of such determination, judgment or decision shall be
made or exercised by Lender (or its designated representative) at its discretion.



Section 15.13 Subrogation.




     If, and to the extent that, the proceeds of the Mortgage Loan are used to pay, satisfy or
discharge any obligation of Borrower for the payment of money that is secured by a pre-existing



					
	 	 	 	 	 
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mortgage, deed of trust or other lien encumbering the Mortgaged Property, such Mortgage Loan
proceeds shall be deemed to have been advanced by Lender at Borrower’s request, and Lender shall
automatically, and without further action on its part, be subrogated to the rights, including lien
priority, of the owner or holder of the obligation secured by such prior lien, whether or not such
prior lien is released.




Section 15.14 Counting of Days.




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



Section 15.15 Revival and Reinstatement of Indebtedness.




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



Section 15.16 Time is of the Essence.




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



Section 15.17 Final Agreement.




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



					
	 	 	 	 	 
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party against which the enforcement of the waiver, modification, amendment, discharge or
termination is sought, and then only to the extent set forth in that agreement.




Section 15.18 WAIVER OF TRIAL BY JURY.




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



[Remainder of Page Intentionally Blank]




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



	 	 	 	 	 
	 	BORROWER:



SIR CLARION PARK, LLC,

a Delaware limited liability company

 	 
	 	By:  	Steadfast Income Advisor, LLC,

a Delaware limited liability company
 	 
	 	Its:  	Manager

 	 
	 	By:  	/s/ Ana Marie del Rio
 	 
	 	 	Name:  	Ana Marie del Rio 	 
	 	 	Title:  	Secretary 	 
	 



[SIGNATURES CONTINUED ON NEXT PAGE]




					
	 	 	 	 	 
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	 	LENDER:



PNC BANK, NATIONAL ASSOCIATION,

a national banking association

 	 
	 	By:  	/s/ Kelli A. Tyler
 	 
	 	 	Name:  	Kelli A. Tyler 	 
	 	 	Title:  	Vice President 	 
	 



					
	 	 	 	 	 
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SCHEDULE 1

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT




Definitions Schedule

(Interest Rate Type — Fixed Rate)



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


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



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



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



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



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



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



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




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



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



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



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



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


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



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



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




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



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



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



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



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



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



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



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



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



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



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



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



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



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



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



“Controlling Interest” means:




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




     (1) if such entity is a general partnership or a joint venture, fifty-one percent (51%)
of all general partnership or joint venture interests in such entity;




     (2) if such entity is a limited partnership:




     (A) any general partnership interest; or




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




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



					
	 	 	 	 	 
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     (A) fifty-one percent (51%) of all membership or other ownership interests in
such entity;




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




     (C) the interest of any manager;




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




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




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



     (b) the power or right in any agreement (including provisions contained in the organizational
and/or governing documents of Borrower) to control or otherwise limit or modify, directly or
indirectly, the management and operations of Borrower, including the power to:




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




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


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



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



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




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



					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 4

© 2011 Fannie Mae






 









 






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


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



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



“Employee Benefit Plan” has the meaning as defined in Section 3(3) of ERISA.



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



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



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



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



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



“Exceptions to Representations and Warranties” means the exceptions to Borrower’s representations
and warranties set forth on Schedule 7 (Exceptions to Representations and Warranties
Schedule) to the Loan Agreement.



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



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



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



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



“Foreclosure Event” means:




     (a) foreclosure under the Security Instrument;



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



					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 5

© 2011 Fannie Mae






 









 






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



     (d) in Louisiana, any dation en paiement.


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



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



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




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



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



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



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



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


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



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



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



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




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 6

© 2011 Fannie Mae






 









 





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



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



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



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



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



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



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



“Insolvent” means:




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



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


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



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



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



“Interest Rate” means the Fixed Rate.



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



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




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 7

© 2011 Fannie Mae






 









 





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



“Key Principal” means, collectively:




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



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


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



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



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



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



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



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



“Lender” means the entity identified as “Lender” in the first paragraph of the Loan Agreement and
its transferees, successors and assigns, or any subsequent holder of the Note.



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



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



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



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



“Loan Agreement” means the Multifamily Loan and Security Agreement dated as of the Effective Date
executed by and between Borrower and Lender to which this Definitions Schedule is attached, as the
same may be amended, restated, replaced, supplemented or otherwise modified from time to time.




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 8

© 2011 Fannie Mae






 









 





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



“Loan Application” means the application for the Mortgage Loan submitted by Borrower to Lender.



“Loan Documents” means the Note, the Loan Agreement, the Security Instrument, the Environmental
Indemnity Agreement, the Guaranty, all guaranties, all indemnity agreements, all Collateral
Agreements, all O&M Programs, and any other documents now or in the future executed by Borrower,
Guarantor, Key Principal, any guarantor or any other person in connection with the Mortgage Loan,
as such documents may be amended, restated, replaced, supplemented or otherwise modified from time
to time.



“Loan Servicer” means the entity that from time to time is designated by Lender to collect payments
and deposits and receive notices under the Note, the Loan Agreement, the Security Instrument and
any other Loan Document, and otherwise to service the Mortgage Loan for the benefit of Lender.
Unless Borrower receives notice to the contrary, the Loan Servicer shall be the Lender originally
named on the Summary of Loan Terms.



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



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



“Material Commercial Lease” means any non-Residential Lease, including any master lease (which term
“master lease” shall include any master lease to a single corporate tenant), other than:




     (a) a non-Residential Lease that comprises less than five percent (5%) of total gross income
of the Mortgaged Property on an annualized basis, so long as the lease is not a cell tower lease or
a solar (power) lease;



     (b) a cable television lease, so long as the lessee is not a Borrower Affiliate, Key Principal
or Guarantor;



     (c) storage units leased pursuant to any Residential Lease; or



     (d) a laundry lease, so long as:




     (1) the lessee is not a Borrower Affiliate, Key Principal or Guarantor;




     (2) the rent payable is not below-market (as determined by Lender); and




     (3) such laundry lease is terminable for cause by lessor.


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




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 9

© 2011 Fannie Mae






 









 





“Maximum Inspection Fee” has the meaning set forth in the Summary of Loan Terms.



“Maximum Repair Cost” shall be the amount(s) set forth in the Required Repair Schedule, if any.



“Maximum Repair Disbursement Interval” has the meaning set forth in the Summary of Loan Terms.



“Maximum Replacement Reserve Disbursement Interval” has the meaning set forth in the Summary of
Loan Terms.



“Minimum Repairs Disbursement Amount” has the meaning set forth in the Summary of Loan Terms.



“Minimum Replacement Reserve Disbursement Amount” has the meaning set forth in the Summary of Loan
Terms.



“Monthly Debt Service Payment” has the meaning set forth in the Summary of Loan Terms.



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



“Mortgage Loan” means the mortgage loan made by Lender to Borrower in the principal amount of the
Note made pursuant to the Loan Agreement, evidenced by the Note and secured by the Loan Documents
that are expressly stated to be security for the Mortgage Loan.



“Mortgaged Property” has the meaning set forth in the Security Instrument.



“Multifamily Project” has the meaning set forth in the Summary of Loan Terms.



“Multifamily Project Address” has the meaning set forth in the Summary of Loan Terms.



“Non-Recourse Guaranty” means, if applicable, that certain Guaranty of Non-Recourse Obligations of
even date herewith executed by Guarantor to and for the benefit of Lender, as the same may be
amended, restated, replaced, supplemented or otherwise modified from time to time.



“Note” means that certain Multifamily Note of even date herewith in the original principal amount
of the stated Loan Amount made by Borrower in favor of Lender, and all schedules, riders, allonges
and addenda attached thereto, as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.



“Notice” means any notices, requests, demands or other communications.




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 10

© 2011 Fannie Mae






 









 





“O&M Program” has the meaning set forth in the Environmental Indemnity Agreement.



“OFAC” means the United States Treasury Department, Office of Foreign Assets Control, and any
successor thereto.



“Payment Date” means the First Payment Date and the first day of each month thereafter until the
Mortgage Loan is fully paid.



“Payment Guaranty” means, if applicable, that certain Guaranty (Payment) of even date herewith
executed by Guarantor to and for the benefit of Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



“Permitted Encumbrance” has the meaning set forth in the Security Instrument.



“Permitted Prepayment Date” means the last Business Day of a calendar month.



“Person” means an individual, an estate, a trust, a corporation, a partnership, a limited liability
company or any other organization or entity (whether governmental or private).



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



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



“Prepayment Notice” means the written notice that Borrower is required to provide to Lender in
accordance with Section 2.03 (Lockout/Prepayment) of the Loan Agreement in order to make a
prepayment on the Mortgage Loan, which shall include, at a minimum, the Intended Prepayment Date.



“Prepayment Premium” means the amount payable by Borrower in connection with a prepayment of the
Mortgage Loan, as provided in Section 2.03 (Lockout/Prepayment) of the Loan Agreement and
calculated in accordance with the Prepayment Premium Schedule.



“Prepayment Premium Period End Date” or “Yield Maintenance Period End Date” has the meaning
set forth in the Summary of Loan Terms.



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



“Prepayment Premium Schedule” means that certain Schedule 4 (Prepayment Premium) to the
Loan Agreement.



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




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 11

© 2011 Fannie Mae






 









 





“Prohibited Person” means:




     (a) any Person with whom Lender or Fannie Mae is prohibited from doing business pursuant to any
law, rule, regulation, judicial proceeding or administrative directive; or



     (b) any Person identified on the United States Department of Housing and Urban Development’s
“Limited Denial of Participation, HUD Funding Disqualifications and Voluntary Abstentions List,” or
on the General Services Administration’s “Excluded Parties List System,” each of which may be
amended from time to time, and any successor or replacement thereof; or



     (c) any Person that is determined by Fannie Mae to pose an unacceptable credit risk due to the
aggregate amount of debt of such Person owned or held by Fannie Mae; or



     (d) any Person that has caused any unsatisfactory experience of a material nature with Fannie
Mae or Lender, such as a default, fraud, intentional misrepresentation, litigation, arbitration or
other similar act.


“Property Jurisdiction” has the meaning set forth in the Security Instrument.



“Property Square Footage” has the meaning set forth in the Summary of Loan Terms.



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



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



“Remedial Work” means, in connection with the Mortgaged Property, any investigation, site
monitoring, containment, clean-up, restoration or other remedial work necessary to comply with any
Environmental Law or order of any Governmental Authority.



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



“Repair Threshold” has the meaning set forth in the Summary of Loan Terms.



“Repairs” means, individually and collectively, the Required Repairs, Borrower Requested Repairs,
and Additional Lender Repairs.



“Repairs Escrow Account” means the account established by Lender into which the Repairs Escrow
Deposit is deposited to fund the Repairs.



“Repairs Escrow Account Administrative Fee” has the meaning set forth in the Summary of Loan Terms.




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 12

© 2011 Fannie Mae






 









 





“Repairs Escrow Deposit” has the meaning set forth in the Summary of Loan Terms.



“Replacement Reserve Account” means the account established by Lender into which the Replacement
Reserve Deposits are deposited to fund the Replacements.



“Replacement Reserve Account Administration Fee” has the meaning set forth in the Summary of Loan
Terms.



“Replacement Reserve Account Interest Disbursement Frequency” has the meaning set forth in the
Summary of Loan Terms.



“Replacement Reserve Deposits” means the Initial Replacement Reserve Deposit, Monthly Replacement
Reserve Deposits and any other deposits to the Replacement Reserve Account required by the Loan
Agreement.



“Replacement Threshold” has the meaning set forth in the Summary of Loan Terms.



“Replacements” means, individually and collectively, the Required Replacements, Borrower Requested
Replacements and Additional Lender Replacements.



“Required Repair Schedule” means that certain Schedule 6 (Required Repairs) to the Loan
Agreement.



“Required Repairs” means those items listed on the Required Repair Schedule.



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



“Required Replacements” means those items listed on the Required Replacement Schedule.



“Reserve/Escrow Account Funds” means, collectively, the funds on deposit in the Reserve/Escrow
Accounts.



“Reserve/Escrow Accounts” means, together, the Replacement Reserve Account and the Repairs Escrow
Account.



“Residential Lease” means a leasehold interest in an individual dwelling unit and shall not include
any master lease.



“Restoration” means restoring and repairing the Mortgaged Property to the equivalent of its
original economic and physical condition or to a condition approved by Lender following a casualty.




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 13

© 2011 Fannie Mae






 









 





“Review Fee” means the non-refundable fee of Three Thousand Dollars ($3,000) payable to Lender in
connection with a Transfer for which Lender’s consent is required (including any assumption of the
Mortgage Loan).



“Schedule of Interest Rate Type Provisions” means that certain Schedule 3 (Schedule of
Interest Rate Type Provisions) to the Loan Agreement.



“Security Instrument” means that certain multifamily mortgage, deed to secure debt or deed of trust
executed and delivered by Borrower as security for the Mortgage Loan and encumbering the Mortgaged
Property, including all riders or schedules attached thereto, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.



“Servicing Arrangement” means any arrangement between Lender and the Loan Servicer for loss sharing
or interim advancement of funds.



“Summary of Loan Terms” means that certain Schedule 2 (Summary of Loan Terms) to the Loan
Agreement.



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



“Title Policy” means the mortgagee’s loan policy of title insurance issued in connection with the
Mortgage Loan and insuring the lien of the Security Instrument as set forth therein, as approved by
Lender.



“Total Parking Spaces” has the meaning set forth in the Summary of Loan Terms.



“Total Residential Units” has the meaning set forth in the Summary of Loan Terms.



“Transfer” means:




     (a) a sale, assignment, transfer or other disposition (whether voluntary, involuntary, or by
operation of law (other than a condemnation));



     (b) a granting, pledging, creating or attachment of a lien, encumbrance or security interest
(whether voluntary, involuntary, or by operation of law);



     (c) an issuance or other creation of a direct or indirect ownership interest;



     (d) a withdrawal, retirement, removal or involuntary resignation of any owner or manager of a
legal entity; or



     (e) a merger, consolidation, dissolution or liquidation of a legal entity.



					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 14

© 2011 Fannie Mae






 









 





“Transfer Fee” means a fee equal to one percent (1%) of the unpaid principal balance of the
Mortgage Loan payable to Lender in connection with a Transfer of the Mortgaged Property or of an
ownership interest in Borrower, Guarantor or Key Principal for which Lender’s consent is required
(including in connection with an assumption of the Mortgage Loan).




[CONTINUED ON NEXT PAGE]




					
	 	 	 	 	 
	Schedule 1 to Multifamily Loan and 

Security Agreement — Definitions 

Schedule (Interest Rate — Fixed Rate) 

Fannie Mae
	 	Form 6101.FR

01-11
	 	Page 15

© 2011 Fannie Mae






 









 





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



“UCC Collateral” has the meaning set forth in the Security Instrument.



“Voidable Transfer” means any fraudulent conveyance, preference or other voidable or recoverable
payment of money or transfer of property.



“Yield Maintenance Period End Date” or “Prepayment Premium Period End Date” has the meaning
set forth in the Summary of Loan Terms.



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




	 	 	 	 	 
	 	 	 
	 	                                                           ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement 

(Non-Recourse) 

Schedule 1
	 	Form 6001.NR

04-11
	 	Page 1

© 2011 Fannie Mae







 











 





SCHEDULE 2

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT




Summary of Loan Terms

(Interest Rate Type — Fixed Rate)



	 	 	 

	I. GENERAL PARTY AND MULTIFAMILY PROJECT INFORMATION

	 
	 	 
	Borrower
	 	SIR CLARION PARK, LLC,
	 
	 	a Delaware limited liability company
	 
	 	 
	Lender
	 	PNC BANK, NATIONAL ASSOCIATION,
	 
	 	a national banking association
	 
	 	 
	Key Principal
	 	STEADFAST INCOME REIT, INC.,
	 
	 	a Maryland corporation
	 
	 	 
	Guarantor
	 	STEADFAST INCOME REIT, INC.,
	 
	 	a Maryland corporation
	 
	 	 
	Multifamily Project
	 	CLARION PARK APARTMENTS
	 
	 	 
	ADDRESSES

	 
	 	 
	Borrower’s General Business Address
	 	18100 Von Karman Avenue, Suite 500
	 
	 	Irvine, California 92612
	 
	 	 
	Borrower’s Notice Address
	 	18100 Von Karman Avenue, Suite 500
	 
	 	Irvine, California 92612
	 
	 	Attention:  Ana Marie del Rio
	 
	 	Telephone:  (949) 623-7716
	 
	 	Facsimile:  (949) 777-8216
	 
	 	Email:  adelrio@steadfastcompanies.com
	 
	 	 
	Multifamily Project Address
	 	16700 West 127th Street
	 
	 	Olathe, Kansas 66062
	 
	 	 
	Multifamily Project County
	 	Johnson
	 
	 	 
	Key Principal’s General Business
	 	18100 Von Karman Avenue, Suite 500
	Address
	 	Irvine, California 92612





 
					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 1
	Schedule 2
	 	04-11
	 	© 2011 Fannie Mae





 









 






	 	 	 

	 
	 	 
	Key Principal’s Notice Address
	 	18100 Von Karman Avenue, Suite 500
	 
	 	Irvine, California 92612
	 
	 	Attention:  Ana Marie del Rio
	 
	 	Telephone:  (949) 623-7716
	 
	 	Facsimile:  (949) 777-8216
	 
	 	Email:  adelrio@steadfastcompanies.com
	 
	 	 
	Guarantor’s General Business Address
	 	18100 Von Karman Avenue, Suite 500
	 
	 	Irvine, California 92612
	 
	 	 
	Guarantor’s Notice Address
	 	18100 Von Karman Avenue, Suite 500
	 
	 	Irvine, California 92612
	 
	 	Attention:  Ana Marie del Rio
	 
	 	Telephone:  (949) 623-7716
	 
	 	Facsimile:  (949) 777-8216
	 
	 	Email:  adelrio@steadfastcompanies.com
	 
	 	 
	Lender’s General Business Address
	 	26901 Calabasas Road, Suite 200
	 
	 	Calabasas Hills, California 91301
	 
	 	 
	Lender’s Notice Address
	 	26901 Calabasas Road, Suite 200
	 
	 	Calabasas Hills, California 91301
	 
	 	Attention:  Kelli A. Tyler
	 
	 	Telephone:  (858) 537-0704 X100
	 
	 	Facsimile: (858) 537-0714
	 
	 	Email:  kelli.tyler@pnc.com
	 
	 	 
	Lender’s Payment Address
	 	26901 Calabasas Road, Suite 200
	 
	 	Calabasas Hills, California 91301
	 
	 	 
	II. MULTIFAMILY PROJECT INFORMATION

	 
	 	 
	Property Square Footage
	 	687,396
	 
	 	 
	Total Parking Spaces
	 	439
	 
	 	 
	Total Residential Units
	 	220





					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 2
	Schedule 2
	 	04-11
	 	© 2011 Fannie Mae






 









 






	 	 	 

	 
	 	 
	III. MORTGAGE LOAN INFORMATION

	 
	 	 
	Amortization Period
	 	360 months
	 
	 	 
	Amortization Type
	 	þ     Amortizing
	 
	 	o     Full Term Interest Only
	 
	 	o     Partial Interest Only
	 
	 	 
	Effective Date
	 	June 28, 2011.
	 
	 	 
	First Payment Date
	 	The first day of August, 2011.
	 
	 	 
	First Principal and Interest
	 	Not Applicable
	Payment Date
	 	 
	 
	 	 
	Fixed Rate
	 	4.58%
	 
	 	 
	Interest Accrual Method
	 	o 30/360 (computed on the basis of a three hundred sixty (360) day year consisting of twelve (12) thirty (30) day months).
	 
	 	 
	 
	 	or
	 
	 	 
	 
	 	þ Actual/360 (computed on the basis of a three hundred
sixty (360) day year and the actual number of calendar days during the applicable month, calculated by multiplying the unpaid principal balance of the Mortgage Loan
by the Interest Rate, dividing the product by three hundred sixty (360), and multiplying the quotient obtained by the actual
number of days elapsed in the applicable month).
	 
	 	 
	Interest Only Term
	 	0 months
	 
	 	 
	Interest Rate
	 	The Fixed Rate
	 
	 	 
	Interest Rate Type
	 	Fixed Rate
	 
	 	 
	Last Interest Only Payment Date
	 	Not applicable





 
					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 3
	Schedule 2
	 	04-11
	 	© 2011 Fannie Mae





 









 






	 	 	 

	 
	 	 
	Loan Amount
	 	$8,972,000.00
	 
	 	 
	Loan Term
	 	84 months
	 
	 	 
	Loan Year
	 	The period beginning on the Effective Date and ending on the last day of June, 2012, and each successive twelve  (12) month period thereafter.	 	 
	 
	 	 
	Maturity Date
	 	The first day of July, 2018, or any earlier date on which the unpaid
principal balance of the Mortgage Loan becomes due and payable by acceleration or otherwise.
	 
	 	 
	Monthly Debt Service Payment
	 	$45,887.28
	 
	 	 
	Prepayment
Lockout Period
	 	0 years from the Effective Date
	 
	 	 
	IV. YIELD MAINTENANCE/PREPAYMENT PREMIUM INFORMATION

	 
	 	 
	Yield Maintenance Period End Date
	 	The last day of December, 2017.
	 
	 	 
	Yield Maintenance Period Term
	 	Seventy-eight (78) months
	 
	 	 
	V. RESERVE INFORMATION

	 
	 	 
	
Completion Period
	 	Within 12 months after the Effective Date or as otherwise shown on the Required Repair Schedule.
	 
	 	 
	Initial Replacement Reserve
	 	$0.00
	Deposit
	 	 
	 
	 	 
	Maximum Inspection Fee
	 	$1,000.00
	 
	 	 
	Maximum Repair Disbursement
	 	One time per calendar month.
	Interval
	 	 
	 
	 	 
	Maximum Replacement Reserve
	 	One time per calendar quarter.
	Disbursement Interval
	 	 





 
					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 4
	Schedule 2
	 	04-11
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	Minimum Repairs Disbursement
	 	$5,000.00
	Amount
	 	 
	 
	 	 
	Minimum Replacement Reserve
	 	$5,000.00
	Disbursement Amount
	 	 
	 
	 	 
	Monthly Replacement Reserve
	 	$7,828.93
	Deposit
	 	 
	 
	 	 
	Repair Threshold
	 	$50,000.00
	 
	 	 
	Repairs Escrow Account
	 	$0.00
	Administrative Fee
	 	 
	 
	 	 
	Repairs Escrow Deposit
	 	$121,250.00
	 
	 	 
	Replacement Reserve Account Administration Fee
	 	One-eighth of one percent (0.125%) of the average Replacement Reserve account balance, payable annually
	 
	 	 
	Replacement Reserve Account
	 	Monthly
	Interest Disbursement Frequency
	 	 
	 
	 	 
	Replacement Threshold
	 	$50,000.00






	 	 	 	 	 
	 	 	 
	 	                                                             ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 




					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 5
	Schedule 2
	 	04-11
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MODIFICATIONS
TO MULTIFAMILY LOAN AND SECURITY AGREEMENT


ADDENDA TO SCHEDULE 2 — SCHEDULE OF LOAN TERMS

(Tax Credit Properties)




	 	 	 

	 
	 	 
	VI. TAX CREDIT PROPERTIES

	 
	 	 
	Borrower General Partner
	 	Steadfast Income REIT Operating Partnership, L.P., a Delaware limited partnership
	 
	 	 
	Equity Investor
	 	N/A
	 
	 	 
	Equity Investor General Partner
	 	N/A
	 
	 	 
	Equity Investor Notice Address
	 	N/A






	 	 	 	 	 
	 	 	 
	 	
ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
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	(Non-Recourse)
	 	Form 6001.NR
	 	Page 6
	Schedule 2
	 	04-11
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SCHEDULE 3

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT




Schedule of Interest Rate Type Provisions

(Fixed Rate)




	1.	 	Defined Terms.





     Capitalized terms not otherwise defined in this Schedule have the meanings given to such terms in the Definitions Schedule to the Loan Agreement.




	2.	 	Interest Accrual.





     Except as otherwise provided in the Loan Agreement, interest shall accrue at the Interest Rate until fully paid.



	 	 	 	 	 
	 	 	 
	 	
ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 1
	Schedule 3
	 	04-11
	 	© 2011 Fannie Mae







 











 





SCHEDULE 4

TO MULTIFAMILY LOAN AND SECURITY AGREEMENT




Prepayment Premium Schedule

(Standard Yield Maintenance — Fixed Rate)


1. Defined Terms.




     All capitalized terms used but not defined in this Prepayment Premium Schedule shall have the
meanings assigned to them in the Loan Agreement.


2. Prepayment Premium.




     Any Prepayment Premium payable under Section 2.03 (Lockout/Prepayment) of the Loan Agreement
shall be computed as follows:



     (a) If the prepayment is made at any time after the Effective Date and before the Yield
Maintenance Period End Date, the Prepayment Premium shall be the greater of:




     (1) one percent (1%) of the amount of principal being prepaid; or




     (2) the product obtained by multiplying:




     (i) the amount of principal being prepaid,




     by




     (ii) the difference obtained by subtracting from the Fixed Rate on the Mortgage
Loan, the Yield Rate (as defined below) on the twenty-fifth (25th) Business Day
preceding (i) the Intended Prepayment Date, or (ii) the date Lender accelerates the
Mortgage Loan or otherwise accepts a prepayment pursuant to Section 2.03(d)
(Application of Collateral) of the Loan Agreement,




     by




     (iii) the present value factor calculated using the following formula:








	 	[r =  	 	Yield Rate
	 
	 	n = 	 	 the number of months remaining
between (i) either of the following: (x) in the case of a
voluntary prepayment, the





					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 1
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	 	04-11
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	 	 	 	last day of the month in which the prepayment is made, or (y) in
any other case, the date on which Lender accelerates the unpaid
principal balance of the Mortgage Loan and (ii) the Yield
Maintenance Period End Date.
	 
	 	 	 	For purposes of this clause (ii), the “Yield Rate” means the
yield calculated by interpolating the yields for the
immediately shorter and longer term U.S. “Treasury constant
maturities” (as reported in the Federal Reserve Statistical
Release H.15 Selected Interest Rates (the “Fed Release”)
under the heading “U.S. government securities”) closest to
the remaining term of the Yield Maintenance Period Term, as
follows (rounded to three (3) decimal places):










	 	a =  	 	the yield for
the longer U.S. Treasury constant maturity
	 
	 	b = 	 	 the yield for
the shorter U.S. Treasury constant maturity
	 
	 	x = 	 	 the term of the
longer U.S. Treasury constant maturity
	 
	 	y = 	 	 the term of the
shorter U.S. Treasury constant maturity
	 
	 	z = 	 	 “n” (as defined
in the present value factor calculation above) divided
by twelve (12).






	 	 	 	Notwithstanding any provision to the contrary, if “z” equals
a term reported under the U.S. “Treasury constant maturities”
subheading in the Fed Release, the yield for such term shall
be used, and interpolation shall not be necessary. If
publication of the Fed Release is discontinued by the Federal
Reserve Board, Lender shall determine the Yield Rate from
another source selected by Lender. Any determination of the
Yield Rate by Lender will be binding absent manifest error.]





[CONTINUED ON NEXT PAGE]




     (b) If the prepayment is made on or after the Yield Maintenance Period End Date but before the
last calendar day of the fourth (4th) month prior to the month in which the Maturity



					
	 	 	 	 	 
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Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 2
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Date occurs, the Prepayment Premium shall be one percent (1%) of the amount of principal
being prepaid.




     (c) Notwithstanding the provisions of Section 2.03 (Lockout/Prepayment) of the Loan Agreement,
no Prepayment Premium shall be payable with respect to any prepayment made on or after the last
calendar day of the fourth (4th) month prior to the month in which the Maturity Date occurs.



	 	 	 	 	 
	 	 	 
	 	ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 3
	Schedule 4
	 	04-11
	 	© 2011 Fannie Mae






 









 






SCHEDULE 5 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT




Required Replacement Schedule



[See attached]



	 	 	 	 	 
	 	 	 
	 	ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 1
	Schedule 5
	 	04-11
	 	© 2011 Fannie Mae






 









 






SCHEDULE 6 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT




Required Repair Schedule



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Time Frame	 
	Item	 	Cost	 	 	% Collected	 	 	Escrow Amt.	 	 	(in months)	 
	Asphalt Paving:
Remove and replace
deteriorated
asphalt paving
throughout the
subject property,
including crack
sealing with a
traffic rated
sealant and
sectional
overlays.
	 	$	54,000	 	 	 	125	%	 	$	67,500	 	 	 	12	 
	Seal Coat and
Striping: Seal coat
all asphalt paved
parking and drive
areas to prolong
the useful service
life of the asphalt
paving system.
	 	$	15,000	 	 	 	125	%	 	$	18,750	 	 	 	12	 
	Composite Siding
and Trim: Replace
deteriorated siding
at select
locations.
	 	$	3,000	 	 	 	125	%	 	$	3,750	 	 	 	12	 
	Stairs: Remove and
replace
deteriorated stair
treads. Paint
all ironwork
(stringers and
handrails).
	 	$	25,000	 	 	 	125	%	 	$	31,250	 	 	 	12	 
	Pedestrian Paving: Trip hazards were
noted in the
pedestrian walkways
at isolated
locations and are
recommended to
ground flush to a
smooth transition.
	 	$	0	 	 	 	125	%	 	$	0	 	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals:
	 	$	97,000	 	 	 	125	%	 	$	121,250	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 






	 	 	 	 	 
	 	 	 
	 	ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 1
	Schedule 6
	 	04-11
	 	© 2011 Fannie Mae






 









 






SCHEDULE 7 TO

MULTIFAMILY LOAN AND SECURITY AGREEMENT




Exceptions to Representations and Warranties Schedule


Section 4.01(j):



Pending Case No. 10CV1743 filed February 24, 2010 in the District Court of Johnson County, Kansas,
styled Norma Baskin, as plaintiff, vs. Olathe Housing Associates Limited Partnership, et al, as
defendants.




	 	 	 	 	 
	 	 	 
	 	ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Multifamily Loan and Security
Agreement	 	 	 	 
	(Non-Recourse)
	 	Form 6001.NR
	 	Page 2
	Schedule 7
	 	04-11
	 	© 2011 Fannie Mae






 









 






EXHIBIT A




MODIFICATIONS TO MULTIFAMILY LOAN AND SECURITY AGREEMENT

(Tax Credit Properties)



     The foregoing Loan Agreement is hereby modified as follows:



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



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




“Extended Use Agreement” has the meaning set forth in the Security Instrument.




“Minimum Set-Aside Test” means the set-aside test selected by Borrower pursuant to
Section 42(g) of the Internal Revenue Code with respect to the percentage of units
build or to be built upon the Mortgaged Property to be occupied by tenants with
incomes equal to no more than a certain percentage of area median income. Borrower
has selected or will select the 40-60 Set-Aside Test as the Minimum Set-Aside Test
for the Mortgaged Property.




“Rent Restriction Test” means the test pursuant to Section 42(g) of the Internal
Revenue Code whereby the gross rent charged to tenant(s) of the low-income units
cannot exceed thirty percent (30%) of the imputed income limitation of the
applicable units.




“Tax Credits” means the low-income housing tax credits being utilized in connection
with the Mortgaged Property pursuant to Section 42 of the Internal Revenue Code.



     3. Intentionally omitted.



     4. Section 14.01(a) (Events of Default — Automatic Events of Default) of the Loan Agreement
is hereby amended by adding the following provision to the end thereof:




(d) any default, event of default, or breach (however such terms may be
defined) after the expiration of any applicable notice and/or cure periods
under the Extended Use Agreement.



     5. Intentionally omitted.



					
	 	 	 	 	 
	Modifications to Multifamily Loan

 and Security Agreement (Tax 

Credit Properties)
	 	Form 6219
	 	Page A-1
	Fannie Mae
	 	01-11
	 	© 2011 Fannie Mae






 









 






     6. The following article is hereby added to the Loan Agreement as Article 16 (Items Related to
Tax Credit Properties):



ARTICLE 16 — ITEMS RELATED TO TAX CREDIT PROPERTIES




     Section 16.01 Annual LIHTC Reporting Requirements.




     Borrower must submit to Lender, each year at the time of annual submission of
Borrower’s financial analysis of operations, a copy of the following sections of
Borrower’s federal tax return: Internal Revenue Forms 1065, 8586, 8609 and Form
8609, Schedule A, which must reflect the total low-income housing tax credits
allocated to the Mortgaged Property and the low-income housing tax credits claimed
for the Mortgaged Property in the preceding year.



     Section 16.02 Annual Compliance.




     Borrower shall submit to Lender on an annual basis, evidence that the Mortgaged
Property is in ongoing compliance with all income, occupancy and rent restrictions
under the Extended Use Agreement (as defined in the Security Instrument) relating to
the Mortgaged Property. Such submissions shall be made contemporaneously with
Borrower’s reports required to be made to the regulator under the Extended Use
Agreement.



     Section 16.03 Tax Credit Representations and Warranties.




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




     (a) there are no restrictions on the sale or refinancing of the Mortgaged
Property, other than the restrictions set forth in this Loan Agreement, the Extended
Use Agreement and Section 42 of the Internal Revenue Code and except as previously
approved by Lender;




     (b) the Mortgaged Property will and shall continue to satisfy, all
restrictions, including tenant income and rent restrictions, applicable to projects
generating Tax Credits under Section 42 of the Internal Revenue Code;




     (c) the only tenant eligibility requirements or rent restrictions applicable
are those that apply to residential units that satisfy the Minimum Set-Aside Test
for the term of the Extended Use Agreement;



[CONTINUED ON NEXT PAGE]




					
	 	 	 	 	 
	Modifications to Multifamily Loan 

and
Security Agreement (Tax 

Credit
Properties)
	 	Form 6219
	 	Page A-2
	Fannie Mae
	 	01-11
	 	© 2011 Fannie Mae






 









 







     (d) the term of the Extended Use Agreement will not exceed forty (40) years and
neither the Extended Use Agreement nor any other document, instrument or agreement
to which Borrower is a party shall restrict, limit or waive the right of Lender to
cause a termination of the Extended Use Agreement prior to the end of such forty
(40) year term in accordance with Internal Revenue Code Section 42(h)(6)(E)(i)(I);
and




     (e) all requirements shall be met which are necessary to obtain or achieve (1)
compliance with the Minimum Set-Aside Test, the Rent Restriction Test, and any other
requirements necessary to initially qualify, and to continue to qualify, for Tax
Credits, including all applicable requirements set forth in the Extended Use
Agreement, (2) issuance of IRS Form 8609, and (3) issuance of all necessary
permanent, unconditional certificates of occupancy, including all governmental
approvals required to permit occupancy of all the units.



	 	 	 	 	 
	 	 	 
	 	ADR
 	 
	 	Borrower Initials 	 
	 	 	 
	 



					
	 	 	 	 	 
	Modifications to Multifamily Loan 

and
Security Agreement (Tax 

Credit
Properties)
	 	Form 6219
	 	Page A-3
	Fannie Mae
	 	01-11
	 	© 2011 Fannie Mae