Investments described on Exhibit A hereto as directed from time to time by
Guarantor, and in the absence of such direction or upon and during the
continuance of a Termination Event under the Reimbursement Agreement, in
Permitted Investments of the type specified in Category 5 of Exhibit A hereto.
Earnings on the Deposit shall be held in the Stabilization Escrow and invested
in Permitted Investments.
Subject to Section 3.2(c) below, such earnings shall
be distributed quarterly to Guarantor no later than the 15th of the month next
following the end of each calendar quarter commencing with the end of the first
calendar quarter in 2008.
The Guarantor represents and warrants to Freddie Mac that as of December 27,
2007, the outstanding balance of the Bank Credit Facility is $350,000.00.
2.2
SHORTFALL FEE.
THE GUARANTOR SHALL PAY FREDDIE MAC A FEE EQUAL TO
THE SHORTFALL FEE PERCENTAGE (HEREINAFTER DEFINED) TIMES THE ESCROW SHORTFALL AS
OF THE FIRST DAY OF EACH CALENDAR MONTH (THE "SHORTFALL FEE").
THE SHORTFALL
FEE SHALL ACCRUE FROM JANUARY 1, 2008, SHALL BE DUE AND PAYABLE IN ARREARS ON
THE FIRST DAY OF EACH MONTH COMMENCING ON FEBRUARY 1, 2008, AND SHALL BE
CALCULATED ON A 30/360 BASIS.
THE "SHORTFALL FEE PERCENTAGE" SHALL BE FIVE
PERCENT (5%) PER ANNUM FOR THE SIX MONTH PERIOD COMMENCING JANUARY 1, 2008,
EIGHT PERCENT (8%) PER ANNUM FOR THE SIX-MONTH PERIOD COMMENCING JULY 1, 2008,
AND ELEVEN PERCENT (11%) PER ANNUM FOR THE PERIOD COMMENCING JANUARY 1, 2009.
3
2.3
REPORTS.
FREDDIE MAC OR THE INVESTMENT AGENT (HEREINAFTER
DEFINED) SHALL PROVIDE GUARANTOR (I) ON OR BEFORE THE 5TH BUSINESS DAY OF EACH
MONTH, A MONTHLY REPORT DETAILING THE AMOUNT OF THE ESCROW SHORTFALL (IF ANY),
THE BALANCE OF THE STABILIZATION ESCROW AND ALL EARNINGS ADDED THERETO AND
DISTRIBUTIONS THEREFROM, AND (II) CONTEMPORANEOUSLY WITH ANY QUARTERLY
RECALCULATION PURSUANT TO SECTION 3.3, AN UPDATED EXHIBIT B REFLECTING
NON-STABILIZED MORTGAGED PROPERTIES WHICH HAVE ACHIEVED STABILIZATION OR WHICH
HAVE BEEN RE-CLASSIFIED AS "LEASE-UP" UPON HAVING ACHIEVED COMPLETION.
2.4
LOSSES.
FREDDIE MAC SHALL NOT BE LIABLE FOR ANY LOSSES RESULTING
FROM INVESTMENT OF THE STABILIZATION ESCROW (EXCEPT FOR ANY LOSS RESULTING FROM
FREDDIE MAC'S WILLFUL MISCONDUCT OR GROSS NEGLIGENCE), NOR SHALL ANY SUCH LOSS
DIMINISH THE AMOUNT OF THE STABILIZATION OBLIGATIONS (AS HEREINAFTER DEFINED).
2.5
SECURITY INTEREST.
GUARANTOR ASSIGNS AND PLEDGES TO FREDDIE MAC
AND GRANTS TO FREDDIE MAC A CONTINUING SECURITY INTEREST IN AND LIEN ON ALL OF
GUARANTOR'S RIGHT, TITLE AND INTEREST IN THE DEPOSIT AND THE STABILIZATION
ESCROW (INCLUDING ALL MONIES OR PERMITTED INVESTMENTS HELD THEREIN), TOGETHER
WITH ALL ADDITIONS, SUBSTITUTIONS, REPLACEMENTS AND PROCEEDS THEREOF AND ALL
INCOME, INTEREST, DIVIDENDS AND OTHER DISTRIBUTIONS THEREON, AS SECURITY FOR ITS
GUARANTY HEREIN AND FOR ALL OF SPONSOR'S STABILIZATION OBLIGATIONS; PROVIDED,
HOWEVER, FREDDIE MAC SHALL HAVE THE RIGHT TO MAKE DISBURSEMENTS FROM THE
STABILIZATION ESCROW IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
2.6
INVESTMENT AGENT.
FREDDIE MAC MAY CONTRACT WITH A THIRD PARTY
(THE "INVESTMENT AGENT") TO HOLD, INVEST AND DISBURSE THE STABILIZATION ESCROW
PURSUANT