items of the Project Budget.
(C)
DEFICIENCY DEPOSIT.
IF LENDER DETERMINES THAT THE LOAN IS OUT OF
BALANCE, THEN, WITHIN TEN (10) DAYS AFTER WRITTEN NOTICE THEREOF FROM LENDER TO
BORROWER, BORROWER SHALL DEPOSIT, IN IMMEDIATELY AVAILABLE FUNDS, AN AMOUNT OF
CASH EQUAL TO THE AMOUNT LENDER REASONABLY ESTIMATES WILL BE SUFFICIENT TO PLACE
THE LOAN IN BALANCE (THE "DEFICIENCY DEPOSIT"). THEREAFTER, THE DEFICIENCY
DEPOSIT WILL BE DISBURSED BY LENDER PRIOR TO ANY FURTHER ADVANCES OF LOAN
PROCEEDS AND SHALL BE USED FOR PROJECT COSTS, SUBJECT TO BORROWER'S COMPLIANCE
WITH ALL CONDITIONS WHICH WOULD BE APPLIED TO AN ADVANCE FOR THE SAME PROJECT
BUDGET ITEMS TO WHICH THE DEFICIENCY DEPOSIT WILL BE APPLIED. ANY DEFICIENCY
DEPOSITS SHALL BE ADDED TO AND MADE A PART OF BORROWER'S EQUITY IN THE PROJECT
AND NO INTEREST SHALL BE PAID TO BORROWER WITH RESPECT TO ANY SUCH AMOUNTS.
FAILURE TO DEPOSIT THE DEFICIENCY DEPOSITS SHALL CONSTITUTE AN EVENT OF
DEFAULT.
LENDER SHALL MAKE NO FURTHER DISBURSEMENTS OF THE LOAN AT ANY TIME THE
LOAN IS OUT OF BALANCE.
SECTION 6.4
ACCOUNTS.
(A)
PROJECT ACCOUNT.
AS AND WHEN REQUIRED BY LENDER DURING THE TIME
OF THE LOAN, BORROWER COVENANTS AND AGREES TO ESTABLISH AND THEREAFTER (UNTIL
THE SECURED OBLIGATIONS HAVE BEEN PAID IN FULL) SHALL MAINTAIN WITH LENDER, ONE
OR MORE (AS DETERMINED BY LENDER) DEPOSIT ACCOUNTS INTO WHICH ALL OF BORROWER'S
ADDITIONAL EQUITY, DEFICIENCY DEPOSITS AND REAL ESTATE TAX DEPOSITS SHALL BE
DEPOSITED (COLLECTIVELY, THE "PROJECT ACCOUNT"); PROVIDED HOWEVER, LENDER
ACKNOWLEDGES THAT ADVANCES OF THE LOAN MAY BE MADE FROM THE REAL ESTATE TAXES
LINE ITEM OF THE PROJECT BUDGET TO PAY REAL ESTATE TAXES IN ACCORDANCE WITH
SECTION 6.5.
(B)
OPERATING ACCOUNT.
BORROWER COVENANTS AND AGREES TO ESTABLISH THE
OPERATING ACCOUNT WITH LENDER ON OR BEFORE THE CLOSING DATE.
BORROWER COVENANTS
AND AGREES TO DEPOSIT, OR CAUSE TO BE DEPOSITED, ALL NOI WITH RESPECT TO THE
PROPERTY INTO THE OPERATING ACCOUNT AND THE FAILURE TO DEPOSIT ALL NOI INTO THE
OPERATING ACCOUNT SHALL CONSTITUTE AN EVENT OF DEFAULT. ALL AVAILABLE NOI IN THE
OPERATING ACCOUNT SHALL BE USED BY BORROWER FIRST FOR THE PAYMENT OF MONTHLY
INTEREST DUE ON THE LOAN IN ACCORDANCE WITH SECTION 5.4, AND THEN SHALL BE USED
FOR OTHER PROJECT COSTS PRIOR TO ANY FURTHER ADVANCES OF LOAN PROCEEDS.
DISBURSEMENTS FROM THE OPERATING ACCOUNT WILL BE SUBJECT TO LENDER'S APPROVAL
BASED UPON BORROWER'S COMPLIANCE WITH ALL CONDITIONS WHICH WOULD BE APPLIED TO
AN ADVANCE FOR THE SAME PROJECT BUDGET ITEMS TO WHICH THE NOI WILL BE APPLIED.
(C)
PLEDGE OF ACCOUNTS.
TO SECURE THE PAYMENT AND PERFORMANCE OF THE
SECURED OBLIGATIONS, BORROWER HEREBY PLEDGES AND ASSIGNS TO LENDER, ALL OF
BORROWER'S RIGHT, TITLE AND INTEREST IN, AND HEREBY GRANTS TO LENDER, A SECURITY
INTEREST IN AND RIGHT OF SET-OFF AGAINST (SAID RIGHT OF SET-OFF SHALL NOT BE
EXERCISED UNTIL THE OCCURRENCE OF AND DURING THE CONTINUANCE OF AN EVENT OF
DEFAULT): (I) THE PROJECT ACCOUNT AND THE OPERATING ACCOUNT; (II) ALL CASH,
INSTRUMENTS, SECURITIES, INVESTMENTS AND OTHER PROPERTY FROM