Document:

ex4_2.htm

    
      

    

    Exhibit
4.2

     

     

    COMMON
STOCK PURCHASE WARRANT (SERIES [_])

     

    NEITHER
THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

     

    COMMON
STOCK PURCHASE WARRANT (SERIES [_])

    Warrant
No:  [_]-1

    

    To
Purchase 763,825 Shares of Common Stock of

    

    CLINICAL
DATA, INC.

    

    THIS
COMMON STOCK PURCHASE WARRANT (SERIES [_]) (the “Warrant”) certifies
that, for value received, ____________________________ (the “Holder”), is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time six (6) months after the date
hereof (the “Initial
Exercise Date”) and on or prior to the close of business on the fifth
(5th) year anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Clinical Data, Inc., a
Delaware corporation (the “Company”), up to
763,825 shares (the “Warrant Shares”) of
Common Stock, par value $0.01 per share, of the Company (the “Common
Stock”).  The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     

    Section
1.              Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated February 25, 2009, among the Company and the purchasers signatory
thereto.

     

    Section
2.              Exercise.

     

    (a)           Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company of a duly executed facsimile copy of the Notice of Exercise Form annexed
hereto (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such Holder
appearing on the books of the Company); provided, however, within five
(5) Trading Days of the date said Notice of Exercise is delivered to the
Company, the Holder shall have surrendered this Warrant to the Company and the
Company shall have received payment of the aggregate Exercise Price of the
shares thereby purchased in the manner described in clause (i) or (ii)
below:

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

     

    (i)           Cash
Exercise.  Payment may be made in cash or by certified or
official bank check payable to the order of the Company.

     

    (ii)          Cashless
Exercise.  In lieu of payment of the Exercise Price as provided
in clause (i), the Holder may elect a cashless net exercise.  In the
case of such cashless net exercise, the Holder shall surrender this Warrant for
cancellation and receive in exchange therefore the full number of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
as is computed using the following formula:

     

    X=Y*(A-B)

    A

    Where:

     

    X=      the
number of shares of Common Stock to be issued to the Holder upon cashless
exercise of this Warrant

     

    Y=      the
total number of shares Common Stock covered by this Warrant which the Holder has
surrendered at such time for cashless exercise (including both shares to be
issued to the Holder upon cashless exercise of this Warrant and shares to be
cancelled as payment therefore)

     

    A=     
the Current Market Value as of the business day on which the Holder surrenders
this Warrant to the Company

     

    B
=     the Exercise Price then in effect under this
Warrant at the time at which the Holder surrenders this Warrant to the
Company

     

    For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that the Common Stock issued in a cashless exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Common Stock shall be deemed to have commenced, on the date this Warrant was
originally issued.

     

    For the
purposes of the foregoing, the term “Current Market Value” shall mean the fair
market value of the shares of Common Stock as determined as
follows:

     

    (x)          if
the Common Stock is traded on a securities exchange or the Nasdaq Stock Market,
the value shall be deemed to be the average of the closing prices of the Common
Stock on such exchange or market over the five (5) trading day period ending
three (3) days prior to the date of determination;

     

    
      
        
           

        

        
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    (y)     if
the Common Stock is actively traded over-the-counter, the value shall be deemed
to be the average of the closing bid over the five (5) trading day period ending
three (3) days prior to the date of determination; or

     

    (z)      if
there is no active public market for the Common Stock, the value shall be the
fair market value thereof, as determined in good faith by the Board of Directors
of the Company.

     

    (b)           Exercise
Price.  The per share exercise price of the Common Stock under
this Warrant shall be [$8.12000 for Series A Warrants] [$9.74400 for Series B
Warrants], subject to adjustment hereunder (the “Exercise
Price”).

     

    (c)           Mechanics of
Exercise.

     

    (i)           Authorization of Warrant
Shares.  The Company covenants that all Warrant Shares which
may be issued upon the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges imposed by the Company in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
with such issue).

     

    (ii)         Delivery of Certificates
Upon Exercise.  Certificates for Warrant Shares purchased
hereunder shall be transmitted by the transfer agent of the Company to the
Holder by crediting the account of the Holder’s prime broker with the Depository
Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is a participant in such system, and otherwise by physical delivery to
the address specified by the Holder in the Notice of Exercise within five (5)
Trading Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant and payment of the aggregate Exercise Price as set
forth above (“Warrant
Share Delivery Date”).  This Warrant shall be deemed to have
been exercised on the date the Exercise Price and completed Notice of Exercise
are received by the Company.  The Warrant Shares shall be deemed to
have been issued, and Holder or any other person so designated to be named
therein shall be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by the Holder,
if any, pursuant to Section
2(c)(vi) prior to the issuance of such shares, have been
paid.

     

    (iii)        Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant.

     

    (iv)        Rescission
Rights.  If the Company fails to cause its transfer agent to
transmit to the Holder a certificate or certificates representing the Warrant
Shares pursuant to this Section 2(c) by
the Warrant Share Delivery Date, then the Holder will have the right to rescind
such exercise until such time as the Company causes its transfer agent to
transmit such certificate or certificates.

     

    
      
         

      

      
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    (v)         No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise
Price.

     

    (vi)        Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    (vii)       Closing of
Books.  The Company will not close its stockholder books or
records prior to the Termination Date in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

     

    (viii)      Buy-In.  In
addition to the rights specified in clause (ii) above, if by the Warrant Share
Delivery Date, the Company fails to deliver the required number of Warrant
Shares in certificated form in the manner required pursuant to this Section 2(c),
and if after the Warrant Share Delivery Date and prior to the receipt of such
Warrant Shares in certificated form, the Holder purchases in a bona fide arm’s length
transaction for fair market value (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then
the Company shall pay in cash to the Holder the amount by which (x) the Holder’s
total purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue by (B) the Exercise
Price.  The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In.

     

    (d)           HSR
Filing.  If, prior to any proposed issuance of Warrant Shares
to the Holder upon exercise of this Warrant, it is determined by the Company or
the Holder that such issuance would require the filing of a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the “HSR
Act”), with the U.S. Federal Trade Commission and the Antitrust Division
of the U.S. Department of Justice, then the Company shall (i) cooperate fully
with the Holder and its Affiliates with respect to completing such filing as
soon as practicable, (ii) respond as promptly as practicable to any inquiries
received from the U.S. Federal Trade Commission and the Antitrust Division of
the U.S. Department of Justice for additional information or documentation and
to all inquiries and requests received from any State Attorney General or other
governmental authority in connection with antitrust matters, and (iii) not
extend any waiting period under the HSR Act or enter into any other agreement
with the U.S. Federal Trade Commission or the Antitrust Division of the U.S.
Department of Justice with respect to the transaction contemplated by such
filing without the prior written consent of the Holder.  Each of the
Company and the Holder shall be responsible for, and shall pay the amount of,
any filing fee required to be paid by it under the HSR Act.

     

    
      
        
           

        

        
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    Section
3.               Certain
Adjustments.

     

    (a)           Stock Dividends and
Splits.  If the Company, at any time while this Warrant is
outstanding: (A) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant), (B) subdivides outstanding shares of Common Stock
into a larger number of shares, (C) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon exercise of this Warrant shall be proportionately adjusted.  Any
adjustment made pursuant to this Section 3(a)
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

     

    (b)           Fundamental
Transaction.  If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another Person, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, or (D) the Company
effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property (in any such case, a “Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder, (a) upon exercise of this
Warrant, the number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate
Consideration”) receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event or (b) if the Company is acquired in an all cash
transaction, cash equal to the value of this Warrant as determined in accordance
with the Black-Scholes option pricing formula.  For purposes of any
such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Exercise Price
among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration.  If
holders of Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.  To
the extent necessary to effectuate the foregoing provisions, any successor to
the Company or surviving entity in such Fundamental Transaction shall issue to
the Holder a new warrant consistent with the foregoing provisions and evidencing
the Holder’s right to exercise such warrant into Alternate
Consideration.  The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 3(b) and
ensuring that this Warrant (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

     

    
      
        
           

        

        
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    (c)           Calculations.  All
calculations under this Section 3 shall
be made to the nearest cent or the nearest 1/100th of a share, as the case may
be.  For purposes of this Section 0, the number of
shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.

     

    (d)           Voluntary Adjustment By
Company.  The Company may at any time during the term of this
Warrant reduce the then current Exercise Price to any amount and for any period
of time deemed appropriate by the Board of Directors of the
Company.

     

    (e)           Notice to
Holders.

     

    (i)           Adjustment to Exercise
Price.  Whenever the Exercise Price is adjusted pursuant to
this Section 3, the
Company shall promptly mail to each Holder a notice setting forth the Exercise
Price after such adjustment and setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which such
adjustment was made.

     

    (ii)           Notice to Allow Exercise by
Holder.  If (A) the Company shall declare a dividend (or any
other distribution) on the Common Stock; (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock; (C) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least five (5) calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  The Holder is entitled to exercise this Warrant
during the 5-day period commencing on the date of such notice to the effective
date of the event triggering such notice.

     

    
      
         

      

      
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    Section
4.               Transfer of
Warrant.

     

    (a)           Transferability.  Subject
to compliance with any applicable securities laws and the conditions set forth
in Sections 5(a)
and 4(d) hereof and to the
provisions of Section 7 of the Purchase Agreement, after the Initial
Exercise Date this Warrant and all rights hereunder are transferable, in whole
or in part, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant substantially in the
form attached hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

     

    (b)           New
Warrants.  This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or
attorney.  Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company
shall execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such
notice.

     

    
      
         

      

      
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    (c)           Warrant
Register.  The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    (d)           Transfer
Restrictions.  If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of this Warrant
shall not be registered pursuant to an effective registration statement under
the 1933 Act and under applicable state securities or blue sky laws, the Company
may require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a written
opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect that
such transfer may be made without registration under the 1933 Act and under
applicable state securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
promulgated under the 1933 Act or a qualified institutional buyer as defined in
Rule 144A(a) under the 1933 Act.

     

    Section
5.               Miscellaneous.

     

    (a)           Title to
Warrant.  Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of
this Warrant, this Warrant and all rights hereunder are transferable, in whole
or in part, at the office or agency of the Company by the Holder in person or by
duly authorized attorney, upon surrender of this Warrant together with the
Assignment Form annexed hereto properly endorsed.  The transferee
shall sign an investment letter in form and substance reasonably satisfactory to
the Company.

     

    (b)           No Rights as Shareholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof.  Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be
deemed to be issued to such Holder as the record owner of such shares as of the
close of business on the later of the date of such surrender or
payment.

     

    (c)           Loss, Theft, Destruction or
Mutilation of Warrant.  The Company covenants that upon receipt
by the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     

    
      
        
           

        

        
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    (d)           Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall be a
Saturday, Sunday or a legal holiday, then such action may be taken or such right
may be exercised on the next succeeding day not a Saturday, Sunday or legal
holiday.

     

    (e)           Authorized
Shares.  The Company covenants that during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this
Warrant.  The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged with the
duty of executing stock certificates to execute and issue the necessary
certificates for the Warrant Shares upon the exercise of the purchase rights
under this Warrant.  The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the Trading Market upon which the Common Stock may be
listed.

     

    (f)           Further
Assurances.  Except and to the extent as waived or consented to
by the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (b) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant, and (c) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Company to perform its obligations under this
Warrant.  Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions
thereof, or consents thereto, as may be necessary from any public regulatory
body or bodies having jurisdiction thereof.

     

    (g)           Jurisdiction.  All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    (h)           Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

     

    
      
         

      

      
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    (i)           
 Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date.  If the Company willfully and knowingly fails to comply with any
provision of this Warrant, which results in any material damages to the Holder,
the Company shall pay to Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.

     

    (j)            
Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

     

    (k)         
  Limitation
of Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant or purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    (l)            
Remedies.  Holder,
in addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Warrant.  The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of the provisions of this Warrant and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate.

     

    (m)           Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
permitted assigns of Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Warrant
Shares.

     

    (n)           Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and the holders of at least fifty percent (50%)
of the Conversion Shares and Warrant Shares issued or issuable pursuant to the
Notes and Warrants (each as defined in the Purchase Agreement).

     

    (o)           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (p)           Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

     

     

    [SIGNATURE
PAGE FOLLOWS]

    

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.

     

    Dated:  February
25, 2009

     

    
      
        	 
      	
                CLINICAL
      DATA, INC.

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
	 
      	 
      	
                Caesar
      J.  Belbel

              
	 
      	 
      	
                Executive
      Vice President,

                Chief Legal Officer
      and Secretary

              

      

    

    

     

    Signature
Page to Warrant No: A-1

     

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    NOTICE
OF EXERCISE

     

    TO:
CLINICAL DATA, INC.

     

    (1)       The
undersigned hereby elects to purchase _____ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the Exercise Price in full, together with all
applicable transfer taxes, if any.

     

    (2)       Payment
shall take the form of in lawful money of the United States.

     

    (3)       Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    
       

        
          

        

      

    

     

    The
Warrant Shares shall be delivered to the following:

     

    
       

        
          

        

      

    

     

    
      
        
          

        

      

    

     

    
      
        
          
            

          

        

      

    

     

    (4)      Accredited
Investor.  The undersigned is an “accredited investor” as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

     

    [SIGNATURE
OF HOLDER]

     

    
      
        	
                Name
      of Investing Entity:

              	 
      	 
      

      

    

    

    
      
        
          	
                  Signature of Authorized
      Signatory of Investing Entity:

                	 
      	 
      

        

      

    

    

    
      
        
          	
                  Name
      of Authorized Signatory:

                	 
      	 
      

        

      

    

    

    
      
        	
                Title
      of Authorized Signatory:

              	 
      	 
      

      

    

    

    
      
        
          	
                  Date:

                	 
      	 
      

        

      

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    ASSIGNMENT
FORM

     

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

     

    FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

     

    
      
        
          
            	 
      	
                    whose

                  
	
                    address
      is

                  	 
      
	 
      	 
      
	 
      	 
      

          

        

      

    

     

    
      
        
          
            	 
      	
                    Dated:_________,
      _____

                  

          

        

      

      

       

      
        
          
            
              
                
                  
                    	
                            Holder’s
      Signature:

                          	 
      	 
	 
      	 
      	 
	 
      	 
      	 

                  

                

              

            

          

        

      

      

       

      
        
          
            
              	
                      Signature
      Guaranteed:

                    	 
      	 
      

            

          

        

      

    

     

    NOTE: The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

     

    
3ex10_31.htm

    
      

    

    Exhibit
10.31
  

    
      Loan
Number: 080609

    

    
       

      
 

      CREDIT
AGREEMENT

       

      BY
AND BETWEEN

    

    
      

       

      ESSEX
CAL-WA, L.P., as Borrower

       

       

    

    
      AND

       

       

    

    
      NORTHMARQ
CAPITAL, INC., as Lender

    

    
      

       

      November
17,2008

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      
        
          
            	
                    1.

                  	
                    DEFINITIONS

                  	
                    1

                  
	 
      	
                    1.1.

                  	
                    Definitions

                  	
                    1

                  
	 
      	
                    1.2.

                  	
                    Construction

                  	
                    14

                  
	 
      	
                    1.3.

                  	
                    Accounting
      Principles

                  	
                    15

                  
	
                    2.

                  	
                    REVOLVING
      CREDIT FACILITY

                  	
                    15

                  
	 
      	
                    2.1.

                  	
                    Revolving
      Credit Commitment

                  	
                    15

                  
	 
      	
                    2.2.

                  	
                    Term

                  	
                    16

                  
	 
      	
                    2.3.

                  	
                    Nature
      of Lender's Obligations with Respect to the Loan

                  	
                    18

                  
	 
      	
                    2.4.

                  	
                    Fees
      and Costs

                  	
                    18

                  
	 
      	
                    2.5.

                  	
                    Loan
      Requests

                  	
                    21

                  
	 
      	
                    2.6.

                  	
                    The
      Loan

                  	
                    24

                  
	 
      	
                    2.7.

                  	
                    The
      Note

                  	
                    24

                  
	 
      	
                    2.8.

                  	
                    Use
      of Proceeds

                  	
                    25

                  
	 
      	
                    2.9.

                  	
                    Additions
      to the Collateral Pool

                  	
                    25

                  
	 
      	
                    2.10.

                  	
                    Release
      of Collateral

                  	
                    27

                  
	 
      	
                    2.11.

                  	
                    Payment
      of the Loan Balance Without Termination

                  	
                    28

                  
	 
      	
                    2.12.

                  	
                    Valuations

                  	
                    28

                  
	 
      	
                    2.13.

                  	
                    Termination

                  	
                    29

                  
	 
      	
                    2.14.

                  	
                    Material
      Adverse Change to Borrower or a Collateral Pool
    Property.....

                  	
                    31

                  
	 
      	
                    2.15.

                  	
                    Release
      of Collateral Followed by a Permanent Loan

                  	
                    32

                  
	 
      	
                    2.16.

                  	
                    Loan
      Documents

                  	
                    33

                  
	
                    3.

                  	
                    INTEREST
      RATES

                  	
                    33

                  
	 
      	
                    3.1.

                  	
                    Interest
      Rate

                  	
                    34

                  
	 
      	
                    3.2.

                  	
                    Interest
      Rate Determinations

                  	
                    34

                  
	 
      	
                    3.3.

                  	
                    Interest
      Periods

                  	
                    34

                  
	 
      	
                    3.4.

                  	
                    Reference
      Bills® Rate Unascertainable: Illegality; Increased Costs

                  	
                    37

                  
	
                    4.

                  	
                    PAYMENTS

                  	
                    38

                  
	 
      	
                    4.1.

                  	
                    Payments

                  	
                    38

                  
	 
      	
                    4.2.

                  	
                    Payment
      Dates

                  	
                    38

                  
	 
      	
                    4.3.

                  	
                    Prepayments

                  	
                    38

                  
	 
      	
                    4.4.

                  	
                    Prepayment
      Fee

                  	
                    40

                  
	 
      	
                    4.5.

                  	
                    Additional
      Payment Obligations

                  	
                    41

                  
	 
      	
                    4.6.

                  	
                    Additional
      Compensation in Certain Circumstances

                  	
                    41

                  

          

        

      

    

    
      
         

      

      
        - i
-

        
          

        

      

      
         

      

    

    
      
        
          
            	 
      	
                    4.7.

                  	
                    Non-Recourse

                  	
                    42

                  
	
                    5.

                  	
                    CONDITIONS
      OF LENDING

                  	
                    42

                  
	 
      	
                    5.1.

                  	
                    Initial
      Borrowing Tranche

                  	
                    43

                  
	 
      	
                    5.2.

                  	
                    Each
      Subsequent Borrowing Tranche

                  	
                    45

                  
	
                    6.

                  	
                    REPRESENTATIONS
      AND WARRANTIES

                  	
                    45

                  
	 
      	
                    6.1.

                  	
                    Representations
      and Warranties

                  	
                    45

                  
	 
      	
                    6.2.

                  	
                    Updates

                  	
                    55

                  
	 
      	
                    6.3.

                  	
                    Survival
      of Representations and Warranties

                  	
                    55

                  
	
                    7.

                  	
                    COVENANTS

                  	
                    56

                  
	 
      	
                    7.1.

                  	
                    Covenants

                  	
                    56

                  
	 
      	
                    7.2.

                  	
                    Reporting
      Requirements

                  	
                    62

                  
	 
      	
                    7.3.

                  	
                    Escrows

                  	
                    63

                  
	
                    8.

                  	
                    DEFAULT

                  	
                    63

                  
	 
      	
                    8.1.

                  	
                    Events
      of Default

                  	
                    63

                  
	 
      	
                    8.2.

                  	
                    Consequences
      of Event of Default

                  	
                    65

                  
	 
      	
                    8.3.

                  	
                    Notice
      of Sale

                  	
                    66

                  
	
                    9.

                  	
                    MISCELLANEOUS

                  	
                    66

                  
	 
      	
                    9.1.

                  	
                    Cooperation
      by Borrower; Borrower's Obligations

                  	
                    66

                  
	 
      	
                    9.2.

                  	
                    Successors
      and Assigns

                  	
                    66

                  
	 
      	
                    9.3.

                  	
                    Modifications,
      Amendments or Waivers

                  	
                    66

                  
	 
      	
                    9.4.

                  	
                    Forbearance

                  	
                    66

                  
	 
      	
                    9.5.

                  	
                    Remedies
      Cumulative

                  	
                    67

                  
	 
      	
                    9.6.

                  	
                    Reimbursement
      and Indemnification of Lender and Servicer by Borrower;
    Taxes

                  	
                    67

                  
	 
      	
                    9.7.

                  	
                    Holidays

                  	
                    68

                  
	 
      	
                    9.8.

                  	
                    Notices

                  	
                    68

                  
	 
      	
                    9.9.

                  	
                    Severability

                  	
                    69

                  
	 
      	
                    9.10.

                  	
                    Governing
      Law; Consent to Jurisdiction and Venue

                  	
                    69

                  
	 
      	
                    9.11.

                  	
                    Prior
      Understanding

                  	
                    70

                  
	 
      	
                    9.12.

                  	
                    Duration;
      Survival

                  	
                    70

                  
	 
      	
                    9.13.

                  	
                    Disclosure
      of Information

                  	
                    70

                  
	 
      	
                    9.14.

                  	
                    Exceptions

                  	
                    70

                  
	 
      	
                    9.15.

                  	
                    Relationship
      of Parties; No Third Parties Benefited

                  	
                    70

                  

          

        

      

    

    
      
         

      

      
        - ii
-

        
          

        

      

      
         

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	
                                            9.16.

                                          	
                                            Authority
      to File Notices

                                          	
                                            71

                                          
	 
      	
                                            9.17.

                                          	
                                            WAIVER
      OF TRIAL BY JURY

                                          	
                                            71

                                          
	 
      	
                                            9.18.

                                          	
                                            Interpretation

                                          	
                                            71

                                          
	 
      	
                                            9.19.

                                          	
                                            Brokerage
      Fee

                                          	
                                            71

                                          
	 
      	
                                            9.20.

                                          	
                                            Advertising

                                          	
                                            72

                                          
	 
      	
                                            9.21.

                                          	
                                            Time
      of Essence

                                          	
                                            72

                                          
	 
      	
                                            9.22.

                                          	
                                            Counterparts

                                          	
                                            72

                                          
	 
      	
                                            9.23.

                                          	
                                            NOTICE
      OF FINAL AGREEMENT

                                          	
                                            72

                                          
	
                                            SCHEDULE
      1.1(A) LIST OF COLLATERAL POOL PROPERTIES AND ASSOCIATED INITIAL NET
      OPERATING INCOMES AND MARKET VALUES

                                          	
                                            1

                                          
	
                                            SCHEDULE
      1.1(B) LIST OF COLLATERAL POOL PROPERTY DOCUMENTS

                                          	
                                            1

                                          
	
                                            SCHEDULE
      1.1(C) FORM OF FIXED RATE NOTE

                                          	
                                            1

                                          
	
                                            SCHEDULE
      2.2 FORM OF SCHEDULED MATURITY DATE EXTENSION CONFIRMATION

                                          	
                                            1

                                          
	
                                            SCHEDULE
      2.4.6.2 FORM OF NET SPREAD CONFIRMATION

                                          	
                                            1

                                          
	
                                            SCHEDULE
      2.5 FORM OF LOAN REQUEST

                                          	
                                            1

                                          
	
                                            SCHEDULE
      2.5.2 FORM OF COMMITMENT LETTER

                                          	
                                            1

                                          
	
                                            SCHEDULE
      3.2 NET SPREAD TABLE

                                          	
                                            1

                                          
	
                                            SCHEDULE
      3.3.3 RENEWAL REQUEST

                                          	
                                            1

                                          
	
                                            SCHEDULE
      4.4 BASE RATE BORROWING TRANCHE PREPAYMENT FEE

                                          	
                                            1

                                          

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      

        
          
             

          

          
            - iii
-

            
              

            

          

          
             

          

        

      

       

    

    
      CREDIT
AGREEMENT

    

    
       

      THIS
CREDIT AGREEMENT ("Agreement") is dated
as of November 17, 2008 and is made by and between ESSEX CAL-WA, L.P., a
California limited partnership, having an address at 925 East Meadow Drive, Palo
Alto, CA 94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 500, Bloomington, MN
55431-4435.

    

    
       

      RECITALS

    

    
       

      WHEREAS,
Borrower desires to obtain a revolving credit facility from Lender in an amount
up to, but not exceeding ONE HUNDRED FIFTY MILLION and NO/100 Dollars
($150,000,000.00, subject to increase to an amount not to exceed TWO HUNDRED
FIFTY MILLION and NO/100 Dollars ($250,000,000.00) as provided
herein;

    

    
       

      WHEREAS,
Borrower has offered to grant Lender a security interest in certain real
property and other assets owned by Borrower as security for Borrower's repayment
of such revolving loan; and

    

    
       

      WHEREAS,
Lender is willing to make the above described loan to Borrower secured by an
interest in such real property and other assets owned by
Borrower.

    

    
       

      NOW,
THEREFORE, the parties hereto, in consideration of their mutual covenants and
agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:

    

    
       

      1.             DEFINITIONS

    

    
       

      1.1.          Definitions.

    

    
       

      In
addition to words and terms defined elsewhere in this Agreement, the following
words and terms shall have the following meanings, respectively, unless the
context hereof clearly requires otherwise:

    

    
       

      "Addition Fee" shall
have the meaning set forth in Section
2.9.3.

    

    
       

      "Affiliate" or "Affiliates" shall
mean (x) as to Borrower, any Essex Affiliate (as defined in the Security
Instrument) and (y) as to any Person (other than Borrower), any other Person (i)
which directly or indirectly controls, is controlled by, or is under common
control with such Person, (ii) which beneficially owns or holds five percent
(5%) or more of any class of the voting or other equity interests of such
Person, or (iii) five percent (5%) or more of any class of voting interests or
other equity interests of which is beneficially owned or held, directly or
indirectly, by such Person. Control, as used in this definition, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power to
elect a majority of the directors or trustees of a corporation or trust, as the
case may be.

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      "Agreement"
shall mean this Credit Agreement, as the same may be supplemented or amended
from time to time, including all schedules attached hereto.

    

    
       

      "Authorized Officer"
shall mean those individuals, designated by written Notice to Lender from
Borrower, authorized to execute Notices, reports and other documents on behalf
of Borrower required hereunder; provided, further, that the
individuals so designated as the Authorized Officers of Borrower shall be the
sole representatives of Borrower for the purpose of giving or receiving any
Notices permitted or required by this Agreement. Borrower may amend such list of
individuals from time to time by giving written Notice of such amendment to
Lender.

    

    
       

      "Base
Rate" shall mean the Reference Bills® Rate plus the applicable Margin (or the
LIBO Rate, but only as provided for in Sections
3.4.1 and
3.4.2
of this Agreement, plus the applicable Margin). Interest accruing at the Base
Rate shall be calculated monthly in the manner provided in this Agreement based
on the aggregate principal balance of the Base Rate Borrowing Tranches
outstanding during the applicable Month, and such interest shall be paid in
arrears, as provided herein. The Reference Bills® Rate (or the LIBO Rate, but
only as provided for in Sections 3.4.1 and 3.4.2 of this Agreement), with
respect to each Base Rate Borrowing Tranche shall remain fixed throughout the
applicable Interest Period and shall then be recalculated as of each renewal of
such Base Rate Borrowing Tranche in accordance with Section
3.2.1. The Margin
with respect to each Base Rate Borrowing Tranche shall be determined and
redetermined from time to time in accordance with Section
3.2.1.

    

    
       

      "Base
Rate Borrowing
Tranche" shall mean any Borrowing Tranche which accrues interest at the
Base Rate.

    

    
       

      "Benefit
Arrangement"
shall mean at any time an "employee benefit plan," within the meaning of Section
3(3) of ERISA, including without limitation a Pension Plan or a Multiemployer
Plan and which is maintained, sponsored or otherwise contributed to by any
member of the ERISA Group.

    

    
       

      "Borrower" shall mean
the entity(ies) defined as Borrower in the Recitals together with any Proposed
Borrower that joins in this Agreement pursuant to the terms and conditions of
Section
2.9.2.2.

    

    
       

      "Borrower's knowledge"
shall mean the knowledge of any officer or employee of Borrower and/or any
Affiliate, including, but not limited to, any Affiliate which manages or
operates any of the Collateral Pool Properties.

    

    
       

      "Borrowing
Date" shall mean, with respect to any Borrowing Tranche, the date of borrowing
or renewal, as the case may be, which shall be a Business Day or, in the case of
a renewal which would otherwise fall on a day other than a Business Day, the
first Business Day thereafter.

    

    
       

      "Borrowing Tranche" shall mean
each advance at the Base Rate hereunder having a particular Interest Period
outstanding at any one time, and all advances at the Prime Rate and each advance
at a Fixed Rate pursuant to a Fixed Rate Note. Two (2) or more Borrowing
Tranches accruing interest at a Base Rate may be combined to form a single
Borrowing Tranche with the same Interest Period (a) without Prepayment Fee or
other penalty or fee in the event such two (2) or more Borrowing Tranches mature
and are renewed at the same time with the same Interest Period or (b) in the
event two (2) or more Borrowing Tranches mature at different times, with the
applicable Prepayment Fee if one (1) or more Borrowing Tranches are advanced or
prepaid and at the request of the Borrower then combined with one (1) or more
other Borrowing Tranches with the same Interest Period. For all purposes
hereunder, all Prime Rate fundings required hereunder shall be aggregated and
deemed a single Borrowing Tranche.

    

    
      
         

      

      
        - 2 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Breakage Fee" shall
have the meaning set forth in Section
2.5.2.2.

    

    
       

      "Business Day" shall
mean any day other than (i) a Saturday or Sunday or a legal holiday on which
either Lender or Servicer is closed for business, and (ii) in connection with
any Loan Request or Renewal Request for a Base Rate Borrowing Tranche which will
accrue interest in part based on the LIBO Rate, any day in which business is not
carried on in the London interbank market.

    

    
       

      "Closing Date" shall
mean the first date on which both of the following requirements are met: (i)
this Agreement has been fully executed and (ii) all conditions to closing set
forth in Section
5.1 hereof
shall have been satisfied. The closing shall take place on the Closing Date at
such time and place as the parties agree. Lender shall notify Borrower promptly
after the Closing Date in writing setting forth the Closing
Date.

    

    
       

      "Collateral" shall
mean the Collateral Pool Properties, and all other property of Borrower on which
first priority liens and security interests have been granted for the benefit of
Lender to secure the Loan and all other obligations of Borrower under the
Collateral Pool Property Documents.

    

    
       

      "Collateral
Agreements" shall mean (i) any agreements between Borrower and Lender for
the purpose of establishing replacement reserves for the Collateral Pool
Properties or a particular Collateral Pool Property, including (a) agreements
establishing a fund to assure the completion of repairs or improvements
specified in any such agreement, or (b) agreements assuring a reduction of the
outstanding principal balance of the Loan if the occupancy income from a
Collateral Pool Property does not increase to a level specified in such
agreement, and (ii) any other agreement or agreements between Borrower and
Lender which provide for the establishment of any other fund, reserve or
account, all of the foregoing to be imposed only pursuant to an express written
agreement between Borrower and Lender entered into (a) at the Closing Date, or
(b) with respect to real estate properties added to the Collateral Pool pursuant
to Section
2.9, at or prior
to such addition.

    

    
       

      "Collateral Pool",
"Collateral Pool
Property" and "Collateral Pool
Properties" shall mean the multi-family real property or properties, as
the case may be, as set forth in Schedule
1.1(A). together
with any multi-family real properties which have been added to the Collateral
Pool and less any real properties which have been released from the Collateral
Pool hereunder. Schedule
1.1(A) shall
be deemed amended each time a Collateral Pool Property is added to the
Collateral Pool or released from the Collateral Pool.

    

    
       

      "Collateral Pool Property
Documents" shall mean the Lender's then current versions of the Security
Instruments, assignments of leases and rents, guaranties, indemnities,
Collateral Agreements,
O&M Programs, and any other documents now or in the future executed (or, in
the case of a UCC financing statement, authorized) by Borrower, any guarantor or
any other person or entity in connection with the Loan or the Collateral, as
such documents may be amended from time to time. The Collateral Pool Property
Documents shall include, but not be limited to, those documents set forth in
Schedule
1.1(B).

    

    
      
         

      

      
        - 3 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Commitment" shall
mean ONE HUNDRED AND FIFTY MILLION and NO/100 Dollars ($150,000,000.00) as of
the Closing Date, subject to increase as provided in Section
2.1(b) hereof.

    

    
       

      "Commitment Letter"
shall mean a commitment letter issued by Lender in connection with locking a
Fixed Rate for a Fixed Rate Borrowing Tranche pursuant to Section
2.5.2 hereof, which commitment
letter shall be substantially in the form of Schedule
2.5.2 hereto.

    

    
       

      "Deemed Minimum Loan
Amount" shall mean an amount equal to twenty-five percent (25%) of the
Commitment.

    

    
       

      "Dollar", "U.S. Dollars" and the
symbol $ shall mean lawful money of the United States of
America.

    

    
       

      "Early Termination
Fee" shall have the meaning set forth in Section
2.13.4 hereof.

    

    
       

      "ERISA" shall mean the
Employee Retirement Income Security Act of 1974, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and
the rules and regulations thereunder, as from time to time in
effect.

    

    
       

      "ERISA Group" shall
mean, at any time, Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with Borrower, are treated
as a single employer under Section 414 of the Internal Revenue
Code.

    

    
       

      "Event of Default"
shall mean any of the events described in Section
8.1 or
otherwise referred to herein as an "Event of Default".

    

    
       

      "Expansion Option
Date" shall have the meaning set forth in Section
2.1(b) hereof.

    

    
       

      "Expiration Date"
shall mean the earlier to occur of (i) the Maturity Date, or (ii) the date
specified by Borrower as the Expiration Date under Section
2.13.2.

    

    
       

      "Facility Debt
Service" shall mean, for the purposes of this Agreement, the sum of (i)
the interest due on the Note, including any default interest (with respect to
the Revolving Credit Note, subject to a floor of two percent (2.0%), for the
Reference Bills® Rate or any other index then being used by Lender to determine
the interest rate of the Revolving Credit Note pursuant to this Agreement) and
(ii) with respect to the Revolving Credit Note, an amount equal to one hundred
basis points (0.01) of the then outstanding amount of such Revolving Credit
Note, but exclusive of any voluntary or mandatory principal prepayments allowed
or required hereunder. Facility Debt Service shall be annualized at the time of
Lender's determination based on the interest rates then accruing under all
outstanding Borrowing Tranches, notwithstanding the duration of any Interest
Period or the maturity date of any Fixed Rate Note. Facility Debt Service shall
be recalculated (a) as of each Loan Request, (b) as of each Renewal Request, or
deemed renewal under Section
3.3.3, (c) on or
about September 1st of each calendar year during the term of this Agreement,
commencing on or about September 1, 2009, (d) as of each addition, substitution
or deletion of a property to or from the Collateral Pool, (e) as of each
repayment of any principal portion of the Loan, (f) as of the exercise of the
First Extension Option or the Second Extension Option, as applicable, (g) as of
the Expansion Option Date and (h) upon the occurrence of any Material Adverse
Change.

    

    
      
         

      

      
        - 4 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Facility Debt Service
Coverage Ratio" shall mean, at the time of Lender's determination, the
then prevailing computation of Net Operating Income of the Collateral Pool
Properties divided by the then prevailing computation of Facility Debt
Service.

    

    
       

      "First Extension
Option" shall have the meaning set forth in Section 2.2(b)
hereof.

    

    
       

      "Fixed Rate" shall
mean, with respect to any Fixed Rate Borrowing Tranche, the sum of (i) the US
Treasury Security index (as published in The Wall Street
Journal or other available publications, as determined by Lender) plus
(ii) the applicable Margin.

    

    
       

      "Fixed Rate Borrowing
Tranche" shall mean any Borrowing Tranche evidenced by a Fixed Rate Note.
For all purposes hereunder, each Fixed Rate Note shall evidence a single Fixed
Rate Borrowing Tranche and each Fixed Rate Borrowing Tranche shall accrue
interest at the Fixed Rate set forth in the Fixed Rate Note evidencing such
Borrowing Tranche. If Borrower exercises the First Extension Option or the
Second Extension Option, as applicable, in accordance with Section
2.2 hereof,
(i) the Fixed Rate that will be applicable for any Fixed Rate Borrowing Tranche
existing on the applicable Scheduled Maturity Date during such applicable
extension period will be redetermined by Lender based on the then current market
level determined in its sole discretion and communicated to Borrower (provided, that
Lender will communicate an indicative (but not final) Fixed Rate for such
extension period to Borrower at least forty-five (45) days prior to the
applicable Scheduled Maturity Date) and (ii) the Margin that will be used to
determine the Fixed Rate applicable for any Fixed Rate Borrowing Tranche
advanced during such applicable extension period shall be determined by Lender
based on the then current market level determined in its sole discretion and
communicated to Borrower in accordance with Section
2.5.2.
Notwithstanding the foregoing, if Borrower exercises the First Extension
Option or the Second Extension Option, as applicable, in accordance with Section
2.2 hereof, Borrower may elect at any time during such extension period
to convert any Fixed Rate Borrowing Tranche existing on the applicable Scheduled
Maturity Date to a Base Rate Borrowing Tranche, and the Net Spread applicable
for any such Base Rate Borrowing Tranche(s) during such extension period shall
be determined by Lender in accordance with Section
2.4.6.2.

    

    
       

      "Fixed Rate Note"
shall mean collectively (or individually, as and when the context shall require)
any Freddie Mac Multifamily Note evidencing indebtedness accruing interest at
the fixed interest rate set forth in such Multifamily Note as calculated
pursuant to such Multifamily Note, together with all amendments, extensions,
renewals, replacements, refinancings, refundings or replacements of any such
Multifamily Note, in whole or in part. The form of each Fixed Rate Note shall be
substantially similar to the form attached hereto as Schedule
1.1(C).

    

    
      
         

      

      
        - 5 -

        
          

        

      

      
         

      

    

    
       

      "Freddie Mac" shall
mean the Federal Home Loan Mortgage Corporation.

    

    
       

      "GAAP" shall mean
generally accepted accounting principles as are in effect from time to time,
subject to the provisions of Section
1.3, and applied
on a consistent basis both as to classification of items and
amounts.

    

    
       

      "Indebtedness" shall
mean at any time and from time to time the principal amount of the Revolving
Credit Note and/or any Fixed Rate Note then outstanding, interest thereon, and
any other amounts due under the Revolving Credit Note and/or any Fixed Rate
Note, this Agreement, the Security Instrument(s) or any other Loan Document,
including, without limitation, prepayment premiums, Prepayment Fees, Unused
Facility Fees, Minimum Usage Fees, other fees due hereunder or thereunder, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument.

    

    
       

      "Initial Market Value"
shall mean the Market Value of any Collateral Pool Property as of the date the
same is included in the Collateral Pool pursuant to the provisions hereof. The
Initial Market Value of the Collateral Pool Properties is shown at Schedule
1.1(A).

    

    
       

      "Interest Period"
shall have the meaning assigned to such term in
Section 3.3.

    

    
       

      "Internal Revenue
Code" shall mean the Internal Revenue Code of 1986, as the same may be
amended or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.

    

    
       

      "Law"
shall mean any applicable law (including common law), constitution, statute,
treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.

    

    
       

      "Lender" shall mean at
any time and from time to time, the entity that is the holder of the Revolving
Credit Note and any Fixed Rate Note, provided that Lender
may in its sole discretion designate Servicer to perform some or all of Lender's
obligations under this Agreement, the Revolving Credit Note, any Fixed Rate Note
and the other Loan Documents. NorthMarq, the initial Lender, intends to sell the
Revolving Credit Note and any Fixed Rate Note to Freddie Mac and assign all of
its interests in this Agreement and the other Loan Documents to Freddie Mac
subsequent to the Closing Date, provided the Collateral Pool Properties serve as
Collateral for the Loan as of the date of said assignment.

    

    
       

      "LIBO Rate" shall
mean, with respect to any Base Rate Borrowing Tranche, the rate of interest,
rounded to the nearest basis point (i.e., one-hundredth of one percent (.0001)),
displayed as of 11:00 a.m. London time on the second Business Day preceding the
first day of the applicable Interest Period on the Bloomberg, L.P., page "BBAM",
as the British Bankers Association ("BBA") LIBO Rate (such page, or such other
page as may replace page BBAM on that service, or at the option of Lender (i)
the applicable page on another credible and generally recognized service which
electronically transmits or displays BBA LIBO Rates for the applicable Interest
Period or (ii) any publication of LIBO Rates available from BBA for the
applicable Interest Period, is referred to as the "Designated Bloomberg
Page") for purposes of calculating effective rates of interest for loans
or obligations for an amount comparable to such Borrowing Tranche and having a
term equal to the Interest Period. If the Designated Bloomberg Page is not
available, but such information is generally still published, the LIBO Rate for
such Interest Period will be the BBA LIBO Rate most recently published for such
Interest Period.

    

    
      
         

      

      
        - 6 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Lien" shall mean any
Security Instrument, pledge, lien, security interest, charge or other
encumbrance or security arrangement of any nature whatsoever, whether
voluntarily or involuntarily given, including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security and any filed financing statement or other
notice of any of the foregoing (whether or not a lien or other encumbrance is
created or exists at the time of the filing).

    

    
       

      "Loan" shall mean the
sum of all Borrowing Tranches outstanding at any one time.

    

    
       

      "Loan Document" or
"Loan
Documents" shall mean any or all of this Agreement, the Revolving Credit
Note, the Fixed Rate Note(s), if any, the Collateral Pool Property Documents and
any other instruments, certificates or documents delivered or contemplated to be
delivered hereunder or thereunder or in connection herewith or therewith, as the
same may be supplemented or amended from time to time in accordance herewith or
therewith.

    

    
       

      "Loan to Value Ratio"
shall mean the product, expressed as a percentage, determined by dividing the
Loan by the aggregate of the then current Market Values of the Collateral Pool
Properties. The Loan to Value Ratio shall be recalculated based on Lender's then
current underwriting policies consistently applied (a) as of each Loan Request,
(b) as of each Renewal Request, or deemed renewal under Section
3.3.3, (c) on or
about September 1st of each calendar year during the term of this Agreement,
commencing on or about September 1, 2009, (d) as of each addition, substitution
or deletion of a property to or from the Collateral Pool, (e) as of each
repayment of any principal portion of the Loan, (f) as of the exercise of the
First Extension Option or the Second Extension Option, as applicable, (g) as of
the Expansion Option Date and (h) upon the occurrence of any Material Adverse
Change.

    

    
       

      "Loan Request" shall
have the meaning given to such term in Section
2.5.

    

    
       

      "Margin" shall mean
(i) with respect to a Base Rate Borrowing Tranche, the sum of the Net Spread and
the Servicing Spread and (ii) with respect to a Fixed Rate Borrowing Tranche,
the sum of the Required Net Yield and the Servicing Spread.

    

    
       

      "Market Value" shall
mean as to each individual Collateral Pool Property, the Initial Market Value of
such property, as such Market Value may be subsequently increased or decreased
in accordance with the terms and conditions of this Agreement; provided, that,
with respect to Collateral Pool Properties acquired by Borrower (or an
Affiliate) within twelve months prior to such property being added to the
Collateral Pool, the Initial Market Value shall not exceed the sum of (i) the
purchase price paid by Borrower (or an Affiliate) for such Collateral Pool
Property, (ii) the acquisition costs (not to exceed three percent (3%) of the
purchase price paid by Borrower (or an Affiliate) paid by Borrower (or an
Affiliate) in connection with the purchase of such Collateral Pool Property and
(iii) any escrows held by or on behalf of Lender on account of capital
expenditures (i.e. replacement reserves or repair escrows) for such Collateral
Pool Property.

    

    
      
         

      

      
        - 7 -

        
          

        

      

      
         

      

    

    
      "Material Adverse
Change" shall mean any set of circumstances or events which, in Lender's
reasonable discretion would have or is then reasonably expected to have a
material adverse effect on (i) the validity or enforceability of this Agreement
or the other Loan Documents taken as a whole, (ii) the ability of Borrower to
duly and punctually pay or perform its Obligations, (iii) the ability of Lender
to enforce its legal remedies pursuant to this Agreement or the other Loan
Documents taken as a whole, including, without limitation, by realizing upon any
Collateral or any guaranty, (iv) the business prospects or financial condition
of Borrower or any guarantor, (v) the financial performance or Market Value of
any Collateral Pool Property, or (vi) the compliance of any Collateral Pool
Property with any Law dealing with the use, ownership or operating of a
Collateral Pool Property, the noncompliance with which could reasonably be
expected to have a material adverse effect on the financial performance or
Market Value of any Collateral Pool Property.

    

    
       

      "Maturity Date" shall
mean, the earlier of (i) the Scheduled Maturity Date and (ii) the date on which
the unpaid principal balance of the Revolving Credit Note and/or any Fixed Rate
Note becomes due and payable by acceleration or otherwise pursuant to this
Agreement or any Loan Document or the exercise by Lender of any right or remedy
under this Agreement or any Loan Document.

    

    
       

      "Maximum Facility
Available" shall mean, at the time of determination, the maximum amount
which Borrower may borrow under this Agreement without violating the Sublimits
set forth in Section
2.5.3.

    

    
       

      "Maximum Loan to Value
Ratio" shall mean sixty-five percent (65%).

       

    

    
      "Minimum Usage Fee"
shall have the meaning set forth in Section
2.4.4.

       

    

    
      "Month" shall mean the
appropriate calendar month.

       

    

    
      "Monthly Payment
Statement" shall have the meaning given to such term in Section
4.2.

    

    
       

      "Mortgage Review Fee"
shall mean a non-refundable fee in the amount of FIVE THOUSAND and NO/100
Dollars ($5,000.00) per real property.

    

    
       

      "Multiemployer Plan"
shall mean any employee benefit plan which is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA and to which Borrower or any member of
the ERISA Group is then making or accruing an obligation to make contributions
or, within the preceding five (5) Pension Plan years, has made or. had an
obligation to make such contributions.

    

    
       

      "Net Operating Income"
shall mean an annualized dollar amount, as determined by Lender in its sole but
reasonable discretion in accordance with Lender's then applicable underwriting
standards, which is equal to all income from the operations of the Collateral
Pool Properties that is available for repayment of debt and return of equity
after deducting for economic vacancy and all expenses (exclusive of debt service
on account of the Loan). Net Operating Income shall be calculated by Lender for
each individual Collateral Pool Property as of the Closing Date and thereafter
on or about September 1st, commencing on or about September 1, 2009, of each
calendar year during the term of this Agreement, in accordance with Lender's
then current methodology, consistently applied, excluding from such calculation
expenses from depreciation, amortization, interest expenses, non-recurring items
and capital expenses, but including in such calculation an assumed capital
expense reserve in an amount consistent with Lender's then current requirements
for such capital reserves. In addition, upon the addition, substitution or
release of any real property in the Collateral Pool pursuant to the provisions
hereof, Lender shall redetermine Net Operating Income for the Collateral Pool in
the following manner: (i) in the event of an addition of a real property to the
Collateral Pool, Lender shall add the Net Operating Income of the real property
added to the Collateral Pool to the most recent determination of Net Operating
Income for the existing Collateral Pool; (ii) in the event of a release of a
real property from the Collateral Pool, Lender shall subtract the Net Operating
Income of the real property released from the Collateral Pool from the most
recent determination of Net Operating Income for the Collateral Pool; of (iii)
in the event of a substitution of a real property in the Collateral Pool, Lender
shall (x) add the Net Operating Income of the real property added to in the
Collateral Pool to the most recent determination of Net Operating Income for the
existing Collateral Pool and (y) subtract the Net Operating Income of the real
property released from the Collateral Pool from the most recent determination of
Net Operating Income for the Collateral Pool.

    

    
      
         

      

      
        - 8 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Net Spread" shall
have the meaning set forth in Section
2.4.6.2 with
respect to any Base Rate Borrowing Tranche hereunder.

    

    
       

      "NorthMarq" shall mean
NorthMarq
Capital, Inc., a Minnesota corporation.

    

    
       

      "Note" shall mean the
Revolving Credit Note and the Fixed Rate Note(s), if any, individually or
collectively, as the context may require.

    

    
       

      "Notice" shall have
the meaning given to that term in Section
9.8.

    

    
       

      "O&M Programs"
shall mean a written program of operations and maintenance for a Collateral Pool
Property approved in writing by Lender.

    

    
       

      "Obligation" shall
mean any obligation or liability of Borrower to Lender, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under or in connection with this
Agreement, the Revolving Credit Note, any Fixed Rate Note or any other Loan
Document, excluding any Permanent Loan or any other liability of Borrower to
Lender not created under this Agreement, the Revolving Credit Note, any Fixed
Rate Note or the other Loan Documents.

    

    
       

      "Official Body" shall
mean any national, federal, state, local or other government or political
subdivision or any agency, authority, bureau, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.

    

    
       

      "Payment Date" shall
have the meaning given to that term in Section
4.2.

    

    
       

      "PBGC" shall mean the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title
IV of ERISA or any successor.

    

    
      
         

      

      
        - 9 -

        
          

        

      

      
         

      

    

    
      "Pension Plan" shall
mean at any time an employee pension benefit plan which is covered by Title IV
of ERISA or is subject to the minimum funding standards under Section 412 of the
Internal Revenue Code and either (i) is maintained by any member of the ERISA
Group for employees of any member of the ERISA Group or (ii) has at any time
within the preceding five (5) years been maintained by any entity which was at
such time a member of the ERISA Group for employees of any entity which was at
such time a member of the ERISA Group.

    

    
       

      "Permanent Loan" shall
have the meaning assigned to that term in Section
2.15.1.

    

    
       

      "Permanent Loan
Collateral" shall have the meaning assigned to that term in Section
2.15.1.

    

    
       

      "Permitted Exceptions"
shall mean:

    

    
       

      (a)           Liens
for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable;

    

    
       

      (b)           Liens
of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing
obligations incurred in the ordinary course of business that are not yet due and
payable;

    

    
       

      (c)           Encumbrances
consisting of zoning restrictions, easements or other restrictions on the use of
a real property, none of which (i) materially impairs the use of such property
or the value thereof, (ii) is violated in any material respect by existing or
proposed structures or land use, subject to "grandfathering" and other permitted
non-conforming uses as permitted by Lender during underwriting, or (iii) impairs
Borrower's ability to rebuild, repair or restore any improvements located on a
Collateral Pool Property following a casualty unless the same has been disclosed
to Lender in writing and is subject to law and ordinances coverage acceptable to
Lender in its sole discretion;

    

    
       

      (d)           Liens,
security interests and mortgages in favor of Lender for the benefit of
Lender;

    

    
       

      (e)           Encumbrances
listed as exceptions to Lender's title insurance policies for the Collateral
Pool Properties;

    

    
       

      (f)           Rights
of tenants under residential leases and other retail and commercial leases
permitted under the Loan Documents;

    

    
       

      (g)           Liens
on or leases of personal property; and

    

    
       

      (h)          
Liens or encumbrances otherwise agreed to by Lender in writing from time to
time.

    

    
       

      "Person" shall mean
any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.

    

    
      
         

      

      
        - 10 -

        
          

        

      

      
         

      

    

    
      "Potential Default"
shall mean any event or condition which, with the passage of time, the giving of
notice, or a determination by Lender, or any combination of the foregoing, would
constitute an Event of Default.

    

    
       

      "Prepayment Fee" shall
have the meaning set forth in Section
4.4.

    

    
       

      "Prime Rate" shall
mean the rate of interest per annum established on the first day of each Month
during the term hereof and published in The Wall Street
Journal as the prime rate, or any comparable publication reasonably
selected by Lender in the event The Wall Street Journal
no longer publishes the prime rate.

    

    
       

      "Prime Rate Borrowing
Tranche" shall mean all Prime Rate fundings in the aggregate which accrue
interest at the Prime Rate. Notwithstanding anything to the contrary contained
herein, no Prime Rate Borrowing Tranches will be permitted hereunder except as
may be required pursuant to Sections
3.3.2 or
3.4.3.

    

    
       

      "Prohibited
Transaction" shall mean any prohibited transaction as defined in Section
4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an
individual nor a class exemption has been issued by the United States Department
of Labor.

    

    
       

      "Proposed Borrower"
shall mean a Single Asset Entity that is an Affiliate of Borrower and is the
owner of one or more properties which have been proposed to be included in the
Collateral Pool, pursuant to the terms hereof.

    

    
       

      "Rate Lock" shall have
the meaning set forth in Section
2.5.2.1.

    

    
       

      "Rate Lock Termination
Event" shall have the meaning set forth in Section
2.5.2.2.

    

    
       

      "Reference Bills "
shall mean the unsecured general obligations of Freddie Mac designated by
Freddie Mac as "Reference Bills® Securities" and issued by Freddie Mac at
regularly scheduled auctions. In the event Freddie Mac shall at any time cease
to designate any unsecured general obligations of Freddie Mac as "Reference
Bills , Lender shall be permitted to exercise its rights under Section
3.4.

    

    
       

      "Reference Bills®
Rate" shall mean, with respect to each Base Rate Borrowing Tranche, the
"Money Market Yield" (or any equivalent terms designated by Lender) applicable
to the Reference Bills® (i) having an original maturity most comparable to the
term of the Interest Period for the applicable Borrowing Tranche and (ii) issued
at the most recently conducted regularly scheduled auction preceding the
commencement of the Interest Period for such Borrowing Tranche, as the same is
displayed (a) on the Reference Bill Index Page (i.e., the Freddie Mac debt
securities web page accessed via the Freddie Mac website at www.freddiemac.com),
or (b) at the option of Lender, in any publication of Reference Bills® auction
results designated by Freddie Mac. Notwithstanding any of the foregoing to the
contrary, in the event Freddie Mac has not conducted a Reference Bills® auction
within the sixty (60) calendar day period prior to the first day of the Interest
Period for any Base Rate Borrowing Tranche requested under Sections
2.5 or 3^3 hereof, the Reference
Bills® Rate shall be deemed to be unascertainable and Lender shall be permitted
to exercise its rights under Section
3.4.

    

    
      
         

      

      
        - 11 -

        
          

        

      

      
         

      

    

     

    
      "Release Fee" shall
have the meaning set forth in Section
2.10.

       

    

    
      "Renewal Date" shall
have the meaning given to such term in Section
3.3.3.

       

    

    
      "Renewal Request"
shall have the meaning given to such term in Section
3.3.3.

    

    
       

      "Reportable Event"
shall mean a reportable event described in Section 4043 of ERISA and regulations
thereunder with respect to a Pension Plan or Multiemployer
Plan.

    

    
       

      "Required Net Yield"
shall mean the required net yield used to calculate the Margin applicable to any
Fixed Rate Borrowing Tranche advanced on or after the Closing Date, as
determined by Lender in its sole discretion in accordance with Section
2.5.2.

    

    
       

      "Revolving Credit
Note" shall mean the Multifamily Note of Borrower, in the face amount of
the Commitment, which evidences the Loan, together with all amendments,
extensions, renewals, replacements, refinancings or refundings thereof in whole
or in part.

    

    
       

      "Revolving Credit Note
Re-Pricing Termination Option" shall have the meaning given to such term
in Section
2.13.2.

    

    
       

      "Scheduled Maturity
Date" shall mean December 1, 2013, unless otherwise extended pursuant to
Section
2.2(b) and
Section
2.2(c) hereof.

    

    
       

      "Second Extension
Option" shall have the meaning set forth in Section 2.2(c)
hereof.

    

    
       

      "Security Instrument"
shall mean any mortgage, deed of trust, or deed to secure debt secured by any of
the Collateral Pool Property(ies).

    

    
       

      "Seismic Report Fee"
shall mean a non-refundable fee equal to Lender's reasonable out-of-pocket costs
and expenses incurred in obtaining a seismic report with respect to any real
property for which Lender, in its discretion, deems such report
necessary.

    

    
       

      "Servicer" shall mean
NorthMarq, or
any subsequent independent contractor appointed by Lender, at Lender's sole cost
and expense, to administer the Loan and the Loan Documents or otherwise perform
certain functions in connection therewith under the terms of a Servicing
Agreement. Pursuant to the terms of any Servicing Agreement, Lender may
designate Servicer to perform some or all of Lender's obligations under this
Agreement, the Revolving Credit Note, any Fixed Rate Note and the other Loan
Documents.

    

    
       

      "Servicing Agreement"
shall mean any agreement between Lender and an independent contractor pursuant
to which Lender appoints said independent contractor as Servicer under this
Agreement, the Revolving Credit Note, any Fixed Rate Note and the other Loan
Documents.

    

    
       

      "Servicing Spread"
shall mean four basis points (0.0004).

    

    
       

      "Single Asset Entity"
shall mean an entity which conforms to the requirements of Section 33 of the
Security Instrument.  Notwithstanding the foregoing, a Single Asset
Entity may own one or more of the Collateral Pool Properties so long as each
Collateral Pool Property is subject to the Liens created pursuant to the Loan
Documents.

    

    
      
         

      

      
        - 12 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Solvent" shall mean,
with respect to any Person on a particular date, that on such date (i) the fair
value of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent liabilities, of such
Person, (ii) the present fair saleable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (iii) such Person is
able to realize upon its assets and pay its debts and other liabilities,
contingent obligations and other commitments as they mature in the normal course
of business, (iv) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (v) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the industry in which
such Person is engaged. In computing the amount of contingent liabilities at any
time, it is intended that such liabilities will be computed at the amount which,
in light of all the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured
liability of such Person after giving effect to any rights of contribution,
subrogation or indemnification of such Person.

    

    
       

      "Streamlined Refinancing
Program" shall mean Lender's then current program for refinancing a
performing loan in its loan portfolio.

    

    
       

      "Sublimits" shall have
the meaning assigned to that term in Section
2.5.3.

    

    
       

      "Treasury Rate" shall
mean the yield rate as of the date which is five (5) Business Days prior to the
Expiration Date, on a U.S. Treasury Security with a term of five (5) years and a
maturity date most nearly approximating the Maturity Date, as reported in The
Wall Street Journal, expressed as a decimal calculated to five (5) digits. In
the event no yield is published on the applicable date for such Treasury
Security, Lender, in its reasonable discretion, shall select the non-callable
U.S. Treasury Security maturing in the same year as the Maturity Date with the
lowest yield published in The Wall Street Journal as of the applicable date. If
the publication of such yield rate in The Wall Street Journal is discontinued
for any reason, Lender shall, in its reasonable discretion, select a security
with a comparable rate and term to a U.S. Treasury Security with a term of five
(5) years and a maturity date most nearly approximating the Maturity
Date.

    

    
       

      "Underwriting
Materials" shall mean all materials required by Lender pursuant to
Lender's then current loan underwriting requirements including, without
limitation, a current appraisal acceptable to Lender for the proposed real
property(ies).

    

    
       

      "Uniform Commercial
Code" shall have the meaning assigned to that term in Section
6.1.13.

    

    
       

      "Unused Facility Fee"
shall have the meaning assigned to that term in Section
2.4.3.

    

    
       

      "Valuation" shall have
the meaning set forth in Section
2.12.

    

    
      
         

      

      
        - 13 -

        
          

        

      

      
         

      

    

    
       

    

    
      "Window Period" shall
mean, with respect to any Fixed Rate Note, the three (3) consecutive calendar
month period prior to the initial Scheduled Maturity Date.

    

    
       

      1.2.         
Construction.

    

    
       

      Unless
the context of this Agreement otherwise clearly requires, the following rules of
construction shall apply to this Agreement and each of the other Loan
Documents.

    

    
       

      1.2.1.      
Number;
Inclusion.

    

    
       

      References
to the plural include the singular, the plural, the part and the whole; "or" has
the inclusive meaning represented by the phrase "and/or", and "including" has
the meaning represented by the phrase "including without
limitation";

    

    
       

      1.2.2.       Determination.

    

    
       

      References
to "determination" of or by Lender shall be deemed to include good-faith
estimates by Lender (in the case of quantitative determinations) and good-faith
beliefs by Lender (in the case of qualitative determinations) and such
determinations shall be conclusive absent manifest error;

    

    
       

      1.2.3.        Lender's Discretion and
Consent; References to Lender's Requirements.

    

    
       

      Whenever
Lender is granted the right herein to act in its sole discretion or to grant or
withhold consent, such right shall be exercised in good faith, and whenever a
reference is made to "Lender's then current requirements", "Lender's then
current programs" or the like, such reference shall be deemed to mean such
requirements, programs and the like as are then standard in the secondary
multifamily mortgage industry, as such standards are generally reflected in the
then current version of the Freddie Mac Multifamily Seller/Servicer
Guide;

    

    
       

      1.2.4.        Documents Taken as a
Whole.

    

    
       

      The words
"hereof," "herein," "hereunder," "hereto" and similar terms in this Agreement or
any other Loan Document refer to this Agreement or such other Loan Document as a
whole and not to any particular provision of this Agreement or such other Loan
Document;

    

    
       

      1.2.5.        Headings.

    

    
       

      The
section and other headings contained in this Agreement or such other Loan
Document and the Table of Contents preceding this Agreement or such other Loan
Document are for reference purposes only and shall not control or affect the
construction of this Agreement or such other Loan Document or the interpretation
thereof in any respect;

    

    
       

      1.2.6.        Implied References to this
Agreement.

    

    
       

      Article,
section, subsection, clause, and schedule references are to this Agreement
unless otherwise specified, and schedules attached hereto are incorporated
herein by this reference;

    

    
      

        
          
             

          

          
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      1.2.7.        Persons.

    

    
       

      Reference
to any Person includes such Person's successors and assigns (but only if such
successors and assigns are permitted by this Agreement or such other Loan
Document, as the case may be), and reference to a Person in a particular
capacity excludes such Person in any other capacity;

    

    
       

      1.2.8.        Modifications to
Documents.

    

    
       

      Reference
to any agreement (including this Agreement and any other Loan Document together
with any schedules and exhibits hereto or thereto), document or instrument means
such agreement, document or instrument as amended, modified, replaced,
substituted for, superseded or restated;

    

    
       

      1.2.9.        From, To and
Through.

    

    
       

      Relative
to the determination of any period of time, "from" means "from and including",
"to" means "to but excluding", and "through" means "through and including";
and

    

    
       

      1.2.10.      Conflicts with Other Loan
Documents.

    

    
       

      In the
event of any conflict between the terms and provisions of this Agreement and any
other Loan Document, the terms and provisions of this Agreement shall
prevail.

    

    
       

      1.3.         
Accounting
Principles.

    

    
       

      Except as
otherwise provided in this Agreement, all computations and determinations as to
accounting or financial matters and all financial statements to be delivered
pursuant to this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate) and all accounting or
financial terms shall have the meanings ascribed to such terms by GAAP. In the
event of any change after the date hereof in GAAP, and if such change would
result in the inability to determine compliance with any financial covenants set
form herein, then the parties hereto agree to endeavor, in good faith, to agree
upon an amendment to this Agreement that would adjust such financial covenants
in a manner that would not affect the substance thereof, but would allow
compliance therewith to be determined in accordance with Borrower's financial
statements at that time.

    

    
       

      2.            
REVOLVING CREDIT
FACILITY

    

    
       

      2.1.         
Revolving Credit
Commitment.

    

    
       

      (a)
Subject to the terms and conditions hereof and relying upon the representations
and warranties herein set forth, Lender agrees to advance funds to Borrower at
any time or from time to time during the term hereof, provided that after
giving effect to any particular advance the Loan amount outstanding at any one
time shall not exceed the amount which would be permitted to be outstanding
under the Sublimits. Within such limits of time and amount and subject to the
other provisions of this Agreement, Borrower may borrow, repay and reborrow
pursuant to this Section
2.1. All advances
under this Agreement, the Revolving Credit

    

    
      
         

      

      
        - 15 -

        
          

        

      

      
         

      

    

    
      Note and
any Fixed Rate Note constitute a single indebtedness, and all of the Collateral
is security for the Revolving Credit Note, any and all Fixed Rate Notes then
outstanding and for the performance of all of the
Obligations.

    

    
       

      (b)          
Prior to the twenty-fourth month anniversary of the Closing Date, (the "Expansion Option
Date") Borrower shall have the one-time right to increase the Commitment
as described below, up to a maximum aggregate amount of TWO HUNDRED FIFTY
MILLION and NO/100 Dollars ($250,000,000.00); provided, that (x)
Borrower shall be in compliance with the Sublimits, (y) Borrower shall be in
good standing under its jurisdiction of formation and, if required by law in the
applicable jurisdiction where a Collateral Pool Property is located, shall be
qualified to do business and in good standing in each jurisdiction where the
Collateral Pool Properties are located and (z) there are no Potential Defaults
or Event of Default(s) that have occurred and are continuing. Borrower shall
exercise such right by (i) delivering to Lender on or prior to the Expansion
Option Date written Notice of its intent to increase the Commitment, which
Notice shall be accompanied by a deposit for all reasonable costs and expenses
that Lender and Servicer may incur in connection with documenting such increase,
including, but not limited to, reasonable attorneys' fees and (ii) by executing
and where appropriate acknowledging (a) amendments to this Agreement, the
Revolving Credit Note and any of the other Loan Documents, in form and substance
reasonably acceptable to Lender, as Lender deems necessary to evidence the
increase in the Commitment, and (b) any other amendments or agreements deemed
necessary by Lender, including, but not limited to, amendments to the title
insurance policy(ies) increasing the amount of coverage provided thereunder. All
amendments referred to in clause (ii)(a) of the preceding sentence shall be
prepared by Lender's counsel and delivered to Borrower within a reasonable time
of Borrower's Notice to Lender under clause (i) of the preceding sentence. Upon
Borrower's compliance with all of the provisions of this Section 2.1(b) and
upon Borrower's payment or reimbursement of all reasonable costs and expenses
that Lender and Servicer incurred in connection with documenting the increase of
the Commitment contemplated hereunder (including, but not limited to, reasonable
attorneys' fees) that exceed any deposit delivered by Borrower above, the
Commitment shall be increased to an aggregate amount of TWO HUNDRED FIFTY
MILLION and NO/100 Dollars ($250,000,000.00). Borrower shall have the right at
any time to request an increase in the Commitment; if such request occurs on or
after the Expansion Option Date or is for amounts in excess of an aggregate
amount of TWO HUNDRED FIFTY MILLION and NO/100 Dollars ($250,000,000.00), any
such request shall be subject to Lender's approval in its sole discretion and
subject to re-pricing and such other conditions as Lender shall require in its
sole discretion.

    

    
       

      2.2.         
Term.

    

    
       

      (a)           The
term of the Loan shall commence on the Closing Date and shall terminate on the
Expiration Date unless otherwise terminated earlier pursuant to the provisions
hereof. The entire Indebtedness shall be due and payable on the Scheduled
Maturity Date without prepayment penalty or fee (other than accrued and unpaid
Minimum Usage Fees or Unused Facility Fees due hereunder).

    

    
       

      (b)           Provided
the following conditions are met and subject to Lender's approval, in its sole
and reasonable discretion, Borrower shall have the option to extend the
Scheduled Maturity Date for an additional period of one (1) year (the "First Extension
Option"):

    

    

      
        
           

        

        
          - 16 -

          
            

          

        

        
           

        

      

    

     

    
      (i)       Borrower
shall provide written Notice to Lender at least sixty (60) days, but no more
than ninety (90) days, prior to the initial Scheduled Maturity Date, which
Notice shall be supplemented by such additional information as Lender may
reasonably require to determine, in its sole and reasonable discretion, whether
the conditions set forth in this Section
2.2(b) have
been satisfied;

    

    
       

      (ii)     
Borrower shall pay all of Lender's and Servicer's costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred in connection therewith
prior to the initial Scheduled Maturity Date;

    

    
       

      (iii)     Borrower
shall provide to Lender all documents in connection therewith as Lender shall
require, in its sole and reasonable discretion (including, without limitation,
any new or amended Notes);

    

    
       

      (iv)    
no Potential Default or Event of Default shall have occurred and be continuing
under this Agreement or any of the Loan Documents; and

    

    
       

      (v)      Borrower
shall be in compliance with the Sublimits.

    

    
       

      (c)           Provided
the following conditions are met and subject to Lender's approval,
in its sole and reasonable discretion, Borrower shall have the option to extend
the Scheduled
Maturity Date for an additional period of one (1) year (the "Second Extension
Option"):

    

    
       

      (i)      
Borrower shall have exercised the First Extension Option pursuant to Section
2.2(b);

    

    
       

      (ii)     
Borrower shall provide written Notice to Lender at least sixty (60) days, but no
more than ninety (90) days, prior to the Scheduled Maturity Date, which Notice
shall be supplemented by such additional information as Lender may reasonably
require to determine, in its sole and reasonable discretion, whether the
conditions set forth in this Section
2.2(c) have
been satisfied;

    

    
       

      (iii)    
Borrower shall pay all of Lender's and Servicer's reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) incurred in
connection therewith prior to the then Scheduled Maturity
Date;

    

    
       

      (iv)    
Borrower shall provide to Lender all documents in connection therewith as Lender
shall require, in its sole and reasonable discretion (including, without
limitation, any new or amended Notes);

    

    
       

      (v)     
no Potential Default or Event of Default shall have occurred and be continuing
under this Agreement or any of the Loan Documents; and

    

    
       

      (vi)    
Borrower shall be in compliance with the Sublimits.

    

    
       

      (d)           Provided
that if the First Extension Option is exercised pursuant to Section
2.2(b)
hereof, the Scheduled Maturity Date shall be December 1, 2014, and (i) the Net
Spread applicable for any Base Rate Borrowing Tranche shall be redetermined by
Lender in its sole discretion in accordance with Section
2.4.6.2 hereof and (ii) the
Fixed Rate applicable for any Fixed Rate Borrowing Tranche shall be redetermined
by Lender in its sole discretion in accordance with Section
2.4.6.1.
Notwithstanding the foregoing, if Borrower exercises the First Extension
Option, Borrower may elect at any time during such extension period to convert
any Fixed Rate Borrowing Tranche existing on the initial Scheduled Maturity Date
to a Base Rate Borrowing Tranche, and the Net Spread applicable for any such
Base Rate Borrowing Tranche(s) during such extension period shall be determined
by Lender in accordance with Section
2.4.6.2 below. Lender and Borrower shall evidence the new Scheduled
Maturity Date and applicable Net Spread pursuant to this Section
2.2(d) by
executing a Scheduled Maturity Date extension confirmation substantially in the
form attached hereto as Schedule
2.2.

    

    

    
      
        
           

        

        
          - 17 -

          
            

          

        

        
           

        

      

    

    
       

    

    
      (e)           Provided
that if the Second Extension Option is exercised pursuant to Section
2.2(c) hereof, the Scheduled
Maturity Date shall be December 1, 2015, and (i) the Net Spread applicable for
any Base Rate Borrowing Tranche shall be redetermined by Lender in its sole
discretion in accordance with Section
2.4.6.2 hereof and (ii) the
Fixed Rate applicable for any Fixed Rate Borrowing Tranche shall be redetermined
by Lender in its sole discretion in accordance with Section
2.4.6.1.
Notwithstanding the foregoing, if Borrower exercises the Second Extension
Option, Borrower may elect at any time during such extension period to convert
any Fixed Rate Borrowing Tranche existing on the Scheduled Maturity Date, as
extended pursuant to Section
2.2(d) hereof, to a Base Rate
Borrowing Tranche, and the Net Spread applicable for any such Base Rate
Borrowing Tranche(s) during such extension period shall be determined by Lender
in accordance with Section
2.4.6.2 below. Lender and
Borrower shall evidence tihie new Scheduled Maturity Date and applicable Net
Spread pursuant to this Section
2.2(e) by
executing a Scheduled Maturity Date extension confirmation substantially in the
form attached hereto as Schedule
2.2.

    

    
       

      (f)          
 If Borrower does not exercise the First Extension Option, the entire
Indebtedness shall be payable on the initial Scheduled Maturity Date without the
payment of a prepayment penalty or fee (other than accrued and unpaid Minimum
Usage Fees or Unused Facility Fees due hereunder).

    

    
       

      (g)           If
the Borrower does not exercise the Second Extension Option, the entire
Indebtedness shall be payable on the Scheduled Maturity Date, as extended
pursuant to Section
2.2(d) hereof, without the
payment of a prepayment penalty or fee (other than accrued and unpaid Minimum
Usage Fees or Unused Facility Fees due hereunder).

    

    
       

      2.3.           Nature of Lender's
Obligations with Respect to the Loan.

    

    
       

      Subject
to the provisions of this Agreement, the aggregate amount of the Loan
outstanding hereunder at any time shall never exceed the amount which would be
permitted to be outstanding under the Sublimits. Lender shall have no obligation
to make any additional advance hereunder on or after the Business Day
immediately preceding the Maturity Date. While a Potential Default, Event of
Default or Material Adverse Change exists, Lender may refuse to make any
additional advances to Borrower.

    

    
       

      2.4.           Fees and
Costs.

    

    

    
      
        
           

        

        
          - 18 -

          
            

          

        

        
           

        

      

    

    

    
      2.4.1.        Fees Paid Prior to the
Closing Date.

    

    
       

      Lender
acknowledges that, in addition to Borrower's obligations under Section
5.1.6, Borrower
has paid to Lender, as consideration for Lender's costs in underwriting the
transaction contemplated hereby, (x) a non-refundable transaction fee in the
amount of TWO HUNDRED FIFTY THOUSAND and NO/100 Dollars ($250,000.00) and (y) a
Mortgage Review Fee and a Seismic Report Fee, if and as applicable, for each
property described at Schedule
1.1(A) and
proposed by Borrower to be included in the Collateral Pool on the Closing
Date.

    

    
       

      2.4.2.        Costs Due on the Closing
Date.

    

    
       

      2.4.2.1.
Transaction
Costs. Borrower shall pay on the Closing Date (simultaneously with the
closing of the Loan), as further consideration for Lender's cost in underwriting
the commitment, all reasonable out-of-pocket costs, expenses and disbursements
(including fees and expenses of counsel for Lender and Servicer), incurred by
Lender and Servicer in connection with the negotiation and execution of this
Agreement and other instruments and documents to be delivered
hereunder.

    

    
       

      2.4.3.        Unused Facility
Fee.

    

    
       

      Accruing
from the Closing Date until the Maturity Date, Borrower shall pay to Lender, as
consideration for Lender's commitment hereunder, a nonrefundable unused facility
fee (the "Unused
Facility Fee") equal to fifteen basis points (0.0015) per annum (computed
on the basis of a year of 360 days and actual days elapsed) on the average daily
difference between the amount of (i) the Commitment (reduced by the outstanding
principal amounts of all Fixed Rate Borrowing Tranches) and (ii) the greater of
(a) the Deemed Minimum Loan Amount (reduced by the outstanding principal amounts
of all Fixed Rate Borrowing Tranches) or (b) the outstanding principal amount of
the Loan (reduced by the outstanding principal amounts of all Fixed Rate
Borrowing Tranches). Except as otherwise provided in connection with Borrower's
election to terminate this Agreement prior to the Maturity Date pursuant to
Section
2.13.2, in which
instance a liquidated Unused Facility Fee shall be payable in accordance with
the provisions of Section
2.13.2, all
Unused Facility Fees shall be payable monthly in arrears on each Payment Date
and shall be set forth on the applicable Monthly Payment Statement. Unused
Facility Fee payments which cover less than one (1) month shall be prorated
based on the actual number of days elapsed. Any accrued but unpaid Unused
Facility Fees shall also be due and payable on the Expiration
Date.

    

    
       

      2.4.4.        Minimum Usage
Fee.

    

    
       

      The
average annual outstanding borrowings under the Note (as reduced by the
outstanding principal amounts of all Fixed Rate Borrowing Tranches) must equal
or exceed the Deemed Minimum Loan Amount (as reduced by the outstanding
principal amounts of all Fixed Rate Borrowing Tranches) in order for the
Borrower to avoid paying any Minimum Usage Fee under this Section
2.4.4. In the
event the average annual outstanding borrowings under the Note (as reduced by
the outstanding principal amounts of all Fixed Rate Borrowing Tranches) does not
equal or exceed the Deemed Minimum Loan Amount (as reduced by the outstanding
principal amounts of all Fixed Rate Borrowing Tranches), Borrower shall pay to
Lender, as further consideration for Lender's commitment hereunder, a
nonrefundable minimum usage fee (the "Minimum Usage Fee")
equal to the positive difference, if any, between (i) the product of (a) the
Deemed Minimum Loan Amount (reduced by the outstanding principal amounts of all
Fixed Rate Borrowing Tranches) times (b) the lowest applicable Net Spread and
(ii) the total amount of interest attributable to the Net Spread collected
during the calendar year. The Minimum Usage Fee shall accrue from the Closing
Date to the Expiration Date, shall be computed for each calendar year, or part
thereof, during the term of this Agreement and shall be payable, if at all, in
arrears on the Payment Date scheduled for January of each year of the term
hereof, provided that any
Minimum Usage Fee due in the year in which the Expiration Date falls shall be
due and payable on the Expiration Date. Upon Borrower's election to terminate
the Loan and the parties' obligations under the Loan Documents pursuant to the
terms of Section
2.13.2, Borrower
shall pay the liquidated Minimum Usage Fee computed in accordance with Section
2.13.4. Minimum
Usage Fee payments which cover a period of less than one (1) calendar year shall
be prorated based on the actual number of days elapsed.

    

    

    
      
        
           

        

        
          - 19 -

          
            

          

        

        
           

        

      

    

    
       

    

    
      2.4.5.        Intentionally
omitted.

    

    
       

      2.4.6.        Margin and Net
Spread.

    

     

    
      2.4.6.1.    Fixed Rate Borrowing
Tranches. The Margin that will be used to determine the Fixed Rate
applicable for any Fixed Rate Borrowing Tranche advanced on or after the Closing
Date shall be determined by Lender based on the then current market level
determined in its sole discretion and communicated to Borrower in accordance
with Section
2.5.2.
If Borrower exercises the First Extension Option or the Second Extension Option,
as applicable, in accordance with Section
2.2 hereof,
(i) the Fixed Rate that will be applicable for any Fixed Rate Borrowing Tranche
existing on the applicable Scheduled Maturity Date during such applicable
extension period will be redetermined by Lender based on the then current market
level determined in its sole discretion and communicated to Borrower (provided, that Lender
will communicate an indicative (but not final) Fixed Rate for such extension
period to Borrower at least forty-five (45) days prior to the applicable
Scheduled Maturity Date) and (ii) the Margin that will be used to determine the
Fixed Rate applicable for any Fixed Rate Borrowing Tranche advanced during such
applicable extension period shall be determined by Lender based on the then
current market level determined in its sole discretion and communicated to
Borrower in accordance with Section
2.5.2.
Notwithstanding the foregoing, if Borrower exercises the First Extension
Option or the Second Extension Option, as applicable, in accordance with Section
2.2 hereof,
Borrower may elect at any time during such extension period to convert any Fixed
Rate Borrowing Tranche existing on the applicable Scheduled Maturity Date to a
Base Rate Borrowing Tranche, and the Net Spread applicable for any such Base
Rate Borrowing Tranche(s) during such extension period shall be determined by
Lender in accordance with Section
2.4.6.2 below.

    

    
       

      2.4.6.2.    Base Rate Borrowing
Tranches. The net spread (the "Net Spread")
applicable for any Base Rate Borrowing Tranche on or before the third
anniversary of the Closing Date shall be as set forth in Schedule
3.2. On and after
the third anniversary of the Closing Date, the Net Spread applicable for any
Base Rate Borrowing Tranche shall be redetermined by Lender in its sole
discretion and communicated to Borrower in writing at least thirty-five (35)
days prior to the third anniversary of the Closing Date (provided, that Lender
will communicate
indicative (but not final) Net Spreads at least forty-five (45) days prior to
the third anniversary of the Closing Date). Lender and Borrower shall evidence
the new applicable Net Spread pursuant to this Section
2.4.6.2 by
executing a Net Spread confirmation substantially in the form attached hereto as
Schedule
2.4.6.2 (provided, that
Borrower's failure to deliver thirty (30) days advance written Notice of its
election to exercise the Revolving Credit Note Re-pricing Termination Option
pursuant to Section
2.13.2 shall
be deemed to be Borrower's acceptance of the new applicable Net Spread pursuant
to this Section
2.4.6.2). With
respect to (i) the First Extension Option, the Net Spread applicable for any
Base Rate Borrowing Tranche during such extension period shall be determined by
Lender in its sole discretion and communicated to Borrower (provided, that
Lender will communicate indicative (but not final) Net Spreads for such
extension period to Borrower at least forty-five (45) days prior to the initial
Scheduled Maturity Date) and (ii) the Second Extension Option, the Net Spread
applicable for any Base Rate Borrowing Tranche during such extension period then
current shall be determined by Lender in its sole discretion and communicated to
Borrower (provided, that Lender
will communicate indicative (but not final) Net Spreads for such extension
period to Borrower at least forty-five (45) days prior to the Scheduled Maturity
Date as extended pursuant to Section
2.2(d)). Lender
and Borrower shall evidence the new applicable Net Spread pursuant to this Section
2.4.6.2, by
executing a Scheduled Maturity Date extension confirmation substantially in the
form attached hereto as Schedule
2.2.

    

    

    
      
        
           

        

        
          - 20 -

          
            

          

        

        
           

        

      

    

     

    
      2.5.           Loan
Requests.

    

    
      

    

    
      2.5.1.        Except
as otherwise provided herein, Borrower may from time to time prior to the
Maturity Date request Lender to make an advance, consistent with the Sublimits,
by delivering Notice to Servicer (a "Loan Request") in the
form attached hereto as Schedule
2.5. Borrower may
at any one time submit one (1) or more Loan Requests; each Loan Request shall
specify the items set forth on Schedule
2.5. including,
but not limited to, (i) the proposed Borrowing Date (which Borrowing Date shall
be in accordance with the requirements of Section
2.6);
(ii) the amount of the proposed Borrowing Tranche, which shall not be less than
TEN MILLION and NO/100 Dollars ($10,000,000.00). Notwithstanding anything to the
contrary contained herein, no Prime Rate Borrowing Tranches will be permitted
hereunder except as may be required pursuant to Sections
3.3.2 or
3.4.3.

    

    
      

    

    
      (a)           
In the case of a Loan Request for a Base Rate Borrowing Tranche, Borrower shall
deliver a Loan Request, fully completed, authorized and executed by Servicer and
an Authorized Officer, indicating (a) the Interest Period for purposes of
determining the Reference Bills Rate (or such alternative index as may be
selected by Lender in accordance with the provisions of Section
3.4) and (b)
the Base Rate, including the Reference Bills® Rate (or such alternative index as
may be selected by Lender in accordance with the provisions of Section
3.4) and Margin that comprise
such Base Rate.

    

    
      

    

    
      (b)           
In the case of a Loan Request for a Fixed Rate Borrowing Tranche, Borrower shall
deliver a Loan Request indicating the maturity date (which shall be the initial
Scheduled Maturity Date or, if Borrower has elected the First Extension Option
or the Second Extension Option, as applicable, in accordance with Section
2.2 hereof,
the applicable Scheduled Maturity Date during such applicable extension period)
and term (which shall be the remaining term of the Loan to the initial Scheduled
Maturity Date or, if Borrower has elected the First Extension Option or the
Second Extension Option, as applicable, in accordance with Section
2.2 hereof, to the applicable Scheduled Maturity Date during such
applicable extension period) of the requested Fixed Rate Borrowing Tranche.
Borrower must deliver the Loan Request to Lender, subject to Lender's review and
approval, at least three (3) full Business Days prior to the proposed Borrowing
Date set forth in the Loan Request and must comply with Section
2.5.2 hereof (it being understood that Lender shall be under no
obligation to fund such requested advances until all conditions set forth in
this Agreement and the Loan Documents for such advances are
satisfied).

    

    

    
      
        
           

        

        
          - 21 -

          
            

          

        

        
           

        

      

    

    

    
      (c)           
Notwithstanding the foregoing, any Loan Request made contemporaneously with a
request for the addition of a real property under Section
2.9 shall be
subject to the time requirements set forth in Section
2.9. Subject to
the terms of Section
2.5.2,
Borrower may revoke any pending but unfunded Loan Request provided that
Borrower reimburses Lender and Servicer for any reasonable costs and expenses
(including reasonable attorneys' fees) incurred in connection with such Loan
Request.

    

    
      

    

    
      2.5.2.        Fixed Rate Borrowing Tranche
Rate-Lock.

    

    
      

    

    
      2.5.2.1.     Lender
shall determine in its sole discretion the actual Margin that will be used to
determine the Fixed Rate that will be applied to the requested Fixed Rate
Borrowing Tranche. Lender shall communicate its Margin determination to Servicer
and Servicer will communicate the Margin to Borrower via telephone. If Borrower
is satisfied with Lender's Margin determination, Borrower shall request that
Lender deliver to Borrower a Commitment Letter setting forth the Margin and
certain other applicable terms for such requested Fixed Rate Borrowing Tranche.
Borrower shall execute the applicable Commitment Letter and send a fully
completed copy thereof to Lender via facsimile before 4:00 p.m. Washington D.C.
local time on the same date as Lender delivers the applicable Commitment Letter
to Borrower (provided Lender has delivered the applicable Commitment Letter to
Borrower by 3:00 p.m. Washington D.C. local time; if Lender delivers the
applicable Commitment Letter after 3:00 p.m. Washington D.C. local time, then
Borrower shall have until 4:00 p.m. Washington D.C. local time of the following
Business Day to send a fully executed and completed copy thereof to Lender via
facsimile). Borrower shall thereafter deliver a fully executed original of the
applicable Commitment Letter to Lender within one (1) Business Day. If Borrower
wishes to lock a Fixed Rate based on the indicated Margin referenced in the
applicable Commitment Letter ("Rate
Lock"), provided Borrower
is in compliance with the Sublimits on the date of such Rate Lock, Borrower may,
within five (5) Business Days of the date of the Commitment Letter, contact via
telephone the Servicer between the hours of 10:00 a.m. and 2:00 p.m. Washington,
D.C. local time. Lender shall confirm Rate Lock via telephone and shall deliver
to Borrower an updated fully completed Exhibit A to the Commitment Letter
evidencing the Fixed Rate applicable to the requested Fixed Rate Borrowing
Tranche. Borrower shall deliver (i) completed and executed copies of the Loan
Request, Fixed Rate Note and Exhibit A to the Commitment Letter, authorized and
executed by Servicer (in the case of a Loan Request) and by an Authorized
Officer, to Lender via facsimile before 4:00 p.m. Washington D.C. local time on
the same date as Rate Lock (provided Rate Lock has occurred prior to 3:00 p.m.
Washington D.C. local time; if Rate Lock occurs after 3:00 p.m. Washington D.C.
local time, then Borrower shall have until 4:00 p.m. Washington D.C. local time
of the following Business Day to send such executed copies to Lender via
facsimile) and (ii) originals of the applicable Loan Request, Fixed Rate
Note and Exhibit A to the Commitment Letter to Lender within two (2) Business
Days of Rate Lock. In the event Borrower for any reason fails to Rate Lock
within five (5) Business Days of the date of the applicable Commitment Letter,
Lender shall have no further obligation to advance any funds at the Margin
referenced in such Commitment Letter.

    

    

    
      
        
           

        

        
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      2.5.2.2.     Borrower
acknowledges that Lender will incur certain costs in connection with a Rate Lock
and, if after Rate Lock, Borrower (i) fails to deliver the relevant fully
executed originals of the applicable Commitment Letter, Exhibit A to the
Commitment Letter, Loan Request and Fixed Rate Note to Lender in accordance with
Section
2.5.2.1 or
(ii) otherwise revokes the pending but unfunded Loan Request (each, a "Rate Lock Termination
Event"), Lender will suffer damages for taking a position in the
financial markets in reliance on its expectation that Borrower would deliver the
relevant fully executed originals of the applicable Commitment Letter, Exhibit A
to the Commitment Letter, Loan Request and Fixed Rate Note to Lender in
accordance with Section
2.5.2.1 and
accept the advance of the requested Fixed Rate Borrowing Tranche. Borrower shall
be obligated to promptly reimburse Lender for any breakage fee as calculated
pursuant to Schedule
2.5.2 hereof (the "Breakage Fee") if a
Rate Lock Termination Event occurs after Rate Lock. Borrower's obligation to pay
any Breakage Fee hereunder shall be secured by the Collateral Pool and the
Collateral Pool Property Documents. In addition to any Breakage Fees due
hereunder, Borrower shall also reimburse Servicer for any reasonable costs and
expenses (including reasonable attorneys' fees) incurred in connection with any
Rate Lock hereunder.

    

    
      

    

    
      2.5.2.3.     Upon
receipt of fully executed originals of the Commitment Letter, Exhibit A to the
Commitment Letter, the Loan Request and the Fixed Rate Note and provided
Borrower does not revoke the pending but unfunded Loan Request after Rate Lock,
Lender shall, as soon as reasonably practicable after all other conditions to
advance are satisfied under this Agreement and the Loan Documents, deliver the
requested funds to Borrower pursuant to the applicable Loan Request; provided, that
interest under any Fixed Rate Note shall not begin to accrue until Lender
delivers such requested funds to Borrower.

    

    
      

    

    
      2.5.3.        Sublimits.

    

    
      

    

    
      Notwithstanding
anything to the contrary set forth herein, Borrower may borrow hereunder only to
the extent that after giving effect to such borrowing (collectively, the "Sublimits"):

    

    
      

    

    
      2.5.3.1.     the
Loan to Value Ratio shall not exceed the Maximum Loan to Value
Ratio;

    

    
      

    

    
      2.5.3.2.     the
Facility Debt Service Coverage Ratio shall not be less than 1.60:
1.00;

    

    
      

    

    
      2.5.3.3.     the
number of Borrowing Tranches outstanding shall not exceed ten (10);
and

    

    
      

    

    
      2.5.3.4.     the
Loan shall not exceed the Commitment.

    

    

    
      
        
           

        

        
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      Notwithstanding
the foregoing, in the event either of the Sublimits set forth in Section
2.5.3.1 or
Section
2.5.3.2 above are not satisfied
at any time prior to the Expiration Date, Borrower shall be entitled to renew or
consolidate (but not increase the outstanding principal amount of) such existing
outstanding Borrowing Tranches with an Interest Period of one month, provided that, (i) as
of the date of such renewal or consolidation (a) no Event of Default, Potential
Default or Material Adverse Change, other than Borrower's failure to comply with
Sections
2.5.3.1 or
2.5.3.2, shall then exist, (b)
Borrower's failure to comply with Sections
2.5.3.1 or
2.5.3.2 shall have been for a
period of less than ninety (90) days, and (c) Borrower is otherwise in full
compliance with all other terms and conditions of the Loan Documents and (ii)
throughout the period of Borrower's non-compliance with Sections
2.5.3.1 or
2.5.3.2, Borrower shall comply with
the provisions of Section
4.5. Borrower
must assure compliance with Sections
2.5.3.1 or
2.5.3.2 pursuant to the
provisions of Section
4.3.
Notwithstanding the foregoing, if Borrower is unable to cause compliance
with the Sublimits within fifteen (15) Business Days following Lender's
determination of Borrower's non-compliance with the Sublimits, then, for so long
as Borrower fails to comply with the Sublimits, (i) the Net Spread applicable to
all Base Rate Borrowing Tranches then outstanding (and thereafter renewed) shall
automatically increase to one-hundred basis points (0.01) over the highest Net
Spread shown on Schedule
3.2 (as such
Net Spreads are adjusted by Lender pursuant to Sections
2.2(d). 2.2(e) and 2.4.6.2), further increased, if at
all, in accordance with Schedule
3.2, as a result
of the duration of such Base Rate Borrowing Tranche(s) and (ii) the interest
rate applicable to all Fixed Rate Borrowing Tranches shall automatically
increase by one-hundred basis points (0.01). In the event that the Facility Debt
Service Coverage Ratio shall continue to be less than required pursuant to Section
2.5.3.2 or the Loan to Value Ratio shall exceed the ratio permitted in
accordance with Section
2.5.3.1 for a period of ninety (90) consecutive days from the date of
Borrower's receipt of Notice of such non-compliance, the same shall constitute
an Event of Default.

    

    
      

    

    
      2.6.           The
Loan.

    

    
      

    

    
      After
receipt by Servicer of a Loan Request pursuant to Section
2.5.1, and
subject to the Sublimits of Section
2.5.3 and
the provisions of Section
5.2, Lender,
relying on the truth and accuracy of the matters set forth in the Loan Request
(but without any obligation to inquire into the truth and accuracy of such
matters), shall fund the amount requested in such Loan Request to Borrower in
U.S. Dollars and immediately available funds on the Borrowing Date. Provided all
conditions set forth in this Agreement and the other Loan Documents are
satisfied, the Borrowing Date shall be the Business Day set forth in the Loan
Request, provided that such
date is at least three (3) but not more than five (5) Business Days after the
date of the Loan Request. Lender shall fund the amounts requested in any Loan
Request by 3:00 p.m. Eastern Time on the Borrowing Date. Notwithstanding the
foregoing, any Loan Request (other than a Loan Request which is not related to
or dependent on the addition of a real property under Section
2.9) made
contemporaneously with a request for the addition of a real property under Section
2.9 shall be
subject to the time requirements set forth in Section
2.9.

    

    
      

    

    
      2.7.           The
Note.

    

    
      

    

    
      The
obligation of Borrower to repay the aggregate unpaid principal amount of the
Loan, together with interest thereon, shall be evidenced by the Note payable to
the order of Lender.

    

    

    
      
        
           

        

        
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      2.8.           Use of
Proceeds.

    

    
      

    

    
      The
proceeds of the Loan may be used by Borrower solely for the purpose of carrying
on a business or commercial enterprise (as set forth in the Borrower's
organizational documents) and not for personal, family, household or
agricultural purposes.

    

    
      

    

    
      2.9.           Additions to the Collateral
Pool.

    

    
      

    

    
      2.9.1.        Procedure for Proposing a
Real Property Addition to the Collateral Pool.

    

    
      

    

    
      Borrower
or Proposed Borrower, as the case may be, may propose to add one or more
multi-family real properties to the Collateral Pool by delivering to Lender (i)
a written proposal for addition of the proposed real property(ies), (ii) a
Mortgage Review Fee for each proposed real property, (iii) a Seismic Report Fee,
if and as applicable, for each proposed real property, and (iv) the Underwriting
Materials with respect to the proposed real property(ies) and with respect to
Proposed Borrower, if applicable, provided that, no
more than one (1) such proposal shall be submitted to Lender in any one (1)
Month. Upon Lender's receipt of all fees required hereunder and all Underwriting
Materials, Lender shall notify Borrower or Proposed Borrower of the same. The
determination of whether Borrower or Proposed Borrower has provided Lender with
all Underwriting Materials shall be in Lender's discretion. For purposes of this
Section
2.9, Borrower or
Proposed Borrower may submit a multi-family real property for addition to the
Collateral Pool, if Borrower or Proposed Borrower has a contract to purchase
such real property, provided that
Borrower or Proposed Borrower consummates the purchase of such real property on
or before the date such real property is proposed to be added to the Collateral
Pool. Both the Mortgage Review Fee and the Seismic Report Fee, if any, shall be
deemed earned upon delivery thereof, whether or not Lender approves or
disapproves such real property for addition hereunder. Borrower shall pay all
costs and expenses that Lender and Servicer incur in connection with any such
proposal to add a real property to the Collateral Pool, including, but not
limited to, reasonable attorneys' fees and any reasonable costs and expenses
incurred with respect to third party reports, whether or not Lender approves or
disapproves such real property for addition hereunder. Borrower or its Affiliate
shall be permitted to engage and pay directly the third-party consultants to be
retained for the required property condition reports and environmental reports,
provided that
(A) Lender and Servicer approve in advance and in writing each such consultant
and the scope of each such report, and (B) each such report states that it is
made for the benefit, use and reliance of Lender and Servicer, as well as
Borrower and/or its Affiliate.

    

    
      

    

    
      2.9.2.        Procedure for Adding a Real
Property to the Collateral Pool.

    

    

    
      
        
           

        

        
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      2.9.2.1.     With
respect to any fully stabilized multi-family real property that Borrower or
Proposed Borrower, as the case may be, proposes for addition to the Collateral
Pool, Lender shall, within fifty (50) days of the date on which Lender notifies
Borrower or Proposed
Borrower that it has received all Underwriting Materials and all applicable
fees, use its best efforts
to accept or reject in writing the proposed real property on the basis of
whether such proposed real property meets Lender's then current requirements for
addition to the Collateral Pool, and in the event that Lender accepts the
proposed real property for addition to the Collateral Pool, Lender shall provide
Borrower with a written approval letter and use its best efforts to add such real property to
the Collateral Pool within twenty (20) days of the date of such acceptance, subject to Borrower's or
Proposed Borrower's timely performance of all obligations listed under
Section
2.9.2.2. Each property must pass Lender's own
assessment of earthquake risk to be included in the Collateral Pool.
Notwithstanding anything contained herein to the contrary, no real property shall be
submitted for addition unless (x) the Collateral Pool Properties (after taking into consideration the
Market Value of the real property submitted for addition), in the aggregate,
have a Loan to Value Ratio as determined by Lender in its sole discretion no
greater than the Maximum Loan to Value Ratio and (y) such property has a value
as determined by Lender in its sole discretion that exceeds NINE MILLION NINE
HUNDRED NINETY-NINE THOUSAND NINE HUNDRED NINETY-NINE AND NO/100 Dollars
($9,999,999.00). The failure of Lender to respond to Borrower's or Proposed
Borrower's request within such fifty (50) day period shall be deemed a rejection
by Lender of the proposal to add the real property to the Collateral Pool. If
Lender provides the reason(s) for such rejection, Borrower or Proposed Borrower
shall have fifty (50) days to cure or otherwise resolve to the satisfaction of
Lender, the objections of Lender to such proposed real property (Lender, in its
sole discretion, may require that Borrower provide within such fifty (50) day
cure period necessary updates of any or all of the Underwriting Materials). If
Borrower or Proposed Borrower does not satisfy Lender's objections, then such
proposal shall be deemed terminated (unless Lender, in its sole discretion shall
opt to extend such fifty (50) day cure period) provided that, any such termination shall not
prevent Borrower or Proposed Borrower from subsequently resubmitting a real
property (together with all applicable fees due hereunder and the Underwriting
Materials) for addition to the Collateral Pool, further provided that Borrower may not resubmit the
same real property for addition to the Collateral Pool more often than one (1)
time in any twelve (12) month period. Notwithstanding anything contained in the
foregoing to the contrary, under no circumstances shall the addition of any real
property increase the amount of the Commitment.

    

    
      

    

    
      2.9.2.2.     If
and upon the date of acceptance by Lender of a multi-family real property
submitted for addition to the Collateral Pool (such acceptance to be in writing,
together with Lender's determination of the Initial Market Value of such real
property and the Net Operating Income of such property), whether following the
initial proposal of such real property or after satisfying any objections of
Lender, such real property shall be added to the Collateral Pool, provided that, prior to such addition (or in
the instance of the documents required under item (iii)(b) below, as soon as
practicable after such addition), Borrower or Proposed Borrower shall (i) pay
the Addition Fee pursuant to Section
2.9.3,
(ii) pay all costs and
expenses that Lender or Servicer incur in connection with the inclusion of such
real property, including, but not limited to, attorneys' fees, and (iii) submit
the following to Lender: (a) all Collateral Pool Property Documents reasonably
requested by Lender, where appropriate, fully executed and where appropriate duly
acknowledged and filed of record in the appropriate official public records, (b) copies of all
filing receipts and acknowledgements issued by any governmental authority
evidencing any recordation or filing necessary to perfect Lender's Lien on the
subject real property or other evidence reasonably satisfactory to Lender of
such recordation and filing of the applicable Security Instrument, (c) evidence
reasonably satisfactory to Lender that, subject to the Permitted Exceptions, (1)
in the case of personal property, the Lien constitutes a first priority security
interest in favor of Lender and, (2) in the case of real property, the Security Instrument constitutes a
valid and perfected first priority Lien in favor of Lender (such evidence to be
in the form of a title insurance policy acceptable to Lender in both form and
substance), and (d) opinions of counsel reasonably acceptable to Lender and (iv)
in the case of a Proposed
Borrower, such Proposed Borrower shall execute (a) separate allonges to the
Revolving Credit Note and
any Fixed Rate Note(s) then outstanding and (b) a joinder agreement,
both of which shall be in
form and substance reasonably satisfactory to Lender in its sole discretion. If
Borrower or Proposed Borrower fails to perform any of the acts, where
applicable, or to submit
any of the documents and evidence listed under (i), (ii), (iii) and (iv) above
together with any and all
updates to the Underwriting Materials reasonably requested by Lender within
fifty (50) days of the date of Lender's acceptance, Lender may at its option
reject the proposed real property and terminate such proposal. In the event that
Borrower or Proposed Borrower performs all of the acts and submits all of the
documents and evidence listed in (i), (ii), (iii) and (iv) above within fifty
(50) days of the date of Lender's acceptance, the proposed real property shall
be added to the Collateral Pool.

    

    

    
      
        
           

        

        
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      2.9.3.        Addition
Fee.

    

    
      

    

    
      For each
property added to the Collateral Pool, Borrower shall pay all of Lender's or
Servicer's costs and expenses in connection with such addition (including, but
not limited to, attorneys' fees) and a fee to Lender, in addition to any other
fees payable to Lender upon such addition, in the amount of FIFTEEN THOUSAND and
NO/100 Dollars ($15,000.00) (the "Addition Fee"). The
Addition Fee shall be due and payable upon consummation of the addition of the
proposed real property to the Collateral Pool.

    

    
      

    

    
      2.10.         Release of
Collateral.

    

    
      

    

    
      Lender shall, upon thirty (30) days
advance written Notice, release the Liens granted hereunder with respect to a
Collateral Pool Property or Properties which constitute(s) less than
all Collateral Pool
Properties, provided that (i) prior to such release
Borrower shall pay Lender a non-refundable fee of TEN THOUSAND and
NO/100 Dollars ($10,000.00) (a "Release
Fee'") and all costs and
expenses that Lender or Servicer incur in connection with such release,
including, but not limited to, attorneys' fees and all other amounts due to
Lender hereunder in connection with such release, including, without limitation,
Prepayment Fees and accrued and unpaid interest, if applicable, (ii) at the time
of the request for such release, no Event of Default or Potential Default shall
exist, (iii) after giving effect to such release, no Event of Default or
Potential Default shall
exist, and (iv) Borrower shall be in compliance with all provisions hereof,
including without
limitation, the Sublimits, provided, however, that if such release would otherwise
cause Borrower to be in non-compliance with the Sublimits set forth in
Section
2.5.3,
Borrower shall have the
opportunity to cure the same prior to or simultaneously with such release by
either (a) pledging multi-family real property collateral, in form, substance,
value and in a manner all acceptable to Lender, in its sole discretion, in
accordance with Section
2.9 or (b) prepaying so much of the Loan as
is necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section
4.3.
Notwithstanding the
foregoing, if Borrower is unable to cause compliance with the Sublimits within
fifteen (15) Business Days following Lender's determination of Borrower's
non-compliance with the Sublimits, then, for so long as Borrower fails to comply
with the Sublimits, (i) the Net Spread applicable to all Base Rate Borrowing
Tranches then outstanding (and thereafter renewed) shall automatically increase
to one-hundred basis
points (0.01) over the highest Net Spread shown on Schedule
3.2 (as such Net Spreads are adjusted by Lender pursuant
to Sections
2.2(d).
2.2(e) and 2.4.6.2), further increased, if at all, in accordance
with Schedule
3.2,
as a result of the
duration of such Base Rate Borrowing Tranche(s) and (ii) the
interest rate applicable to all Fixed Rate Borrowing Tranches shall
automatically increase by one-hundred basis points (0.01). Notwithstanding such
thirty (30) day time period to obtain a release, Lender shall upon five (5)
Business Days Notice provide a "payoff letter", if applicable, stating the
amount necessary to obtain a release so as to effectuate a sale or refinance of
the subject Collateral Pool Property. Upon the release of a Lien on a
Collateral Pool Property,
if the Borrower that is the owner of such Collateral Pool Property owns
no other Collateral Pool
Properties, such Borrower shall be released from its obligations under the Loan
Documents, except as otherwise expressly provided in the Loan Documents.
Notwithstanding the foregoing, under no circumstances may Borrower receive a
release of the Security Instrument with respect to the last property in the
Collateral Pool prior to the Maturity Date, unless Borrower has elected to
terminate this Agreement under Section
2.13 hereunder. Borrower may revoke a
pending request to release a Collateral Pool Property at any time; provided that Borrower pays all of Lender's
reasonable costs and expenses with respect to such release request, including,
without limitation, reasonable attorneys fees; provided, further, that Borrower shall not be entitled
to reimbursement of the Release Fee paid to Lender in connection with such
request to release a Collateral Pool Property.

    

    

    
      
        
           

        

        
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      2.11.        
Payment of the Loan
Balance Without Termination.

    

    
      

    

    
      Prior to
the Maturity Date, Borrower shall have the right to repay the entire Loan (i.e.,
the Revolving Credit Note and any Fixed Rate Note then outstanding), subject in
each instance to the provisions of Sections
4.3 and
4.4, all
without any release of any Lien, and subsequently reborrow hereunder, provided that
Borrower is at such time, and thereafter remains, in compliance with the
provisions of this Agreement, including, without limitation, the obligation to
be in compliance with the Sublimits and the obligations to pay all fees due and
payable hereunder. Under no circumstances shall Borrower be entitled to any
additional advances or re-advances under (a) any Fixed Rate Note at any time or
(b) the Revolving Credit Note on or after the Maturity Date.

    

    
      

    

    
      2.12.         Valuations.

    

    
      

    

    
      2.12.1.      Timing and Procedure of
Valuation.

    

    
      

    

    
      In addition to any other provisions
requiring valuations hereunder, Lender shall perform an annual valuation (the
"Valuation") to determine, in its sole but
reasonable discretion in accordance with its then current underwriting policies,
practices and procedures consistently applied, (i) the then Market Value and
(ii) the Net Operating Income of each of the Collateral Pool Properties, which
Valuation shall be performed on or about September 1st of each calendar year during the term
of this Agreement, commencing on or about September 1, 2009. In connection with
such Valuation, Borrower shall deliver to Servicer by no later than June 1 of
each calendar year, a current rent roll (which shall be no more than thirty (30)
days old) and a twelve (12) month operating statement with respect to each
Collateral Pool Property, each certified by an Authorized Officer. Any operating
statement required hereunder shall relate to the operations of the applicable
Collateral Pool Property during the preceding calendar year. Without limiting
the foregoing, each such rent roll and operating statement shall be in such form
and contain such detail as Lender may reasonably require and Lender may require
that any such rent rolls
and operating statements shall be verified by an independent party acceptable to
Lender.

    

    

    
      
        
           

        

        
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      2.12.2.      Valuations that Disclose a
Decrease in Market Value and/or Net Operating Income.

    

    
      

    

    
      If any
Valuation discloses that the Market Value and/or Net Operating Income of the
Collateral Pool Properties has decreased below the then current values or
calculations thereof, the Maximum Facility Available may be adjusted, if
necessary, in accordance with the provisions of Section
2.5.3, and in the
event such decrease in Market Value or Net Operating Income shall cause Borrower
to be in non-compliance with the Sublimits set forth in Section
2.5.3, Borrower
shall within the time periods set forth in (i) and (ii) below, cure the same by
bringing the Loan into compliance with the Sublimits, by either (i) within
ninety (90) days of Notice from Lender of such decrease, pledging multi-family
real property collateral in form, substance, value and in a manner all
acceptable to Lender, in its sole discretion, in accordance with Section
2.9 or (ii)
within fifteen (15) days of Notice from Lender of such decrease, prepaying so
much of the Loan as is necessary to cause compliance with the Sublimits, each in
accordance with the provisions of Section
4.3.
Notwithstanding the foregoing, if Borrower is unable to cause compliance
with the Sublimits within fifteen (15) Business Days following Lender's
determination of Borrower's non-compliance with the Sublimits, then, for so long
as Borrower fails to comply with the Sublimits, (i) the Net Spread applicable to
all Base Rate Borrowing Tranches then outstanding (and thereafter renewed) shall
automatically increase to one-hundred basis points (0.01) over the highest Net
Spread shown on Schedule
3.2 (as such
Net Spreads are adjusted by Lender pursuant to Sections
2.2(d). 2.2(e) and 2.4.6.2), further increased, if at
all, in accordance with Schedule
3.2, as a result
of the duration of such Base Rate Borrowing Tranche(s) and (ii) the interest
rate applicable to all Fixed Rate Borrowing Tranches shall automatically
increase by one-hundred basis points (0.01).

    

    
      

    

    
      2.12.3.      Valuations that Disclose an
Increase in Market Value and/or Net Operating Income

    

    
      

    

    
      If any
Valuation discloses that the Market Value and/or Net Operating Income of the
Collateral Pool Properties has increased above the then current values thereof,
the Maximum Facility Available may be adjusted, if necessary, in accordance with
the provisions of Section
2.5.3, and
Borrower shall be entitled to borrow and reborrow hereunder, subject to the
Sublimits, up to the amount of the Commitment in accordance with the terms of
this Agreement.

    

    
      

    

    
      2.13.         Termination.

    

    
      

    

    
      2.13.1.      Rights to
Terminate.

    

    
      

    

    
      Borrower
and Lender shall have the rights to terminate this Agreement or to accelerate
the Loan, as applicable, as set forth in this Section
2.13.

    

    

    
      
        
           

        

        
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      2.13.2.      Borrower's Right to
Terminate the Agreement. At any time during the term of the Loan,
Borrower shall have the right to terminate this Agreement in full and the
parties' obligations under the Loan Documents, provided that
Borrower (i) delivers to Lender thirty (30) days advance written Notice of its
revocable election to terminate this Agreement specifying the Expiration Date,
(ii) repays all accrued interest on, and principal with respect to, the Loan in
full and (iii) performs all Obligations under this Agreement, the Note and the
other Loan Documents, including, but not limited to, Borrower's obligations to
pay all fees as specified in Section
2.13.4. In
addition to the foregoing, upon receipt of Lender's written Notice pursuant to
Section
2.4.6.2 hereof of Lender's
redetermination of the Net Spread applicable to the Revolving Credit Note from
and after the third anniversary of the Closing Date, Borrower shall have the
one-time right (the "Revolving Credit Note
Re-pricing Termination Option") to terminate this Agreement in full and
the parties' obligations under the Loan Documents as of the third anniversary of
the Closing Date; provided that,
Borrower must satisfy the conditions set forth in the first sentence of this
Section
2.13.2; provided, further, that if (x)
Lender's redetermination of the Net Spread applicable on and after the third
anniversary of the Closing Date in accordance with Section
2.4.6.2 results in the Net
Spread being greater than the Net Spread applicable on the Closing Date and (y)
Borrower elects the Revolving Credit Note Re-Pricing Termination Option,
Borrower shall not be required to pay the fees set forth in Section
2.13.4 hereof (except for the
Prepayment Fees specified therein). In the event Borrower has complied with the
requirements set forth in this Section
2.13.2. Lender
shall release the Liens granted hereunder on the Expiration Date in accordance
with Section
2.10. Without
limiting any other provision contained herein, in the event Borrower shall
revoke any such request to terminate its obligations under this Agreement in
full and the parties' obligations under the Loan Documents, Borrower shall pay
all reasonable costs and expenses incurred by Lender and Servicer in connection
with such revocation, including, without limitation, reasonable attorneys'
fees.

    

    
      

    

    
      2.13.3.      Lender's Right to
Accelerate.

    

    
      

    

    
      Upon an
Event of Default that remains uncured by Borrower beyond the expiration of any
applicable cure period under this Agreement, the Note, or any other of the Loan
Documents, Lender shall have the right to (i) accelerate the Loan and to (ii)
collect the Prepayment Fee and liquidated fees pursuant to Section
2.13.4.

    

    
      

    

    
      2.13.4.      Fees Due Upon Early
Termination and/or Acceleration.

    

    
      

    

    
      In the event Borrower shall terminate
Borrower's obligations under the Loan Documents pursuant to the provisions of
Section
2.13.2,
or Lender shall accelerate
the Loan pursuant to the provisions of Section
2.13.3 prior to the Scheduled Maturity Date,
Borrower shall pay (i) a Prepayment Fee with respect to each outstanding Base
Rate Borrowing Tranche calculated in accordance with Section
4.4,
(ii) a Prepayment Fee for
each Fixed Rate Note calculated in accordance with the terms of the applicable
Fixed Rate Note, and (iii) an early termination fee ("Early
Termination Fee") equal to
the greater of (a) one percent (1.0%) of the unpaid principal balance of the
Revolving Credit Note and any Fixed Rate Note or (b) the sum of (x) a liquidated
Unused Facility Fee equal
to fifteen basis points (15) per annum (computed on the basis of a year
of 360 days and actual
days elapsed) times the difference between the Commitment (as the same shall
exist as of such date) and the Deemed Minimum Loan Amount, for each Month which
will elapse from the Month in which such termination and/or acceleration occurs
through and including the Scheduled Maturity Date (provided, that if such termination and/or
acceleration of the Loan occurs prior to the third anniversary of the Closing
Date, then such fee shall be calculated through and including the third
anniversary of the Closing Date), such liquidated Unused Facility Fee to be discounted to
net present value at a discount rate equal to the Treasury Rate, together with
all accrued Unused Facility Fees payable as of the date of such termination, and
(y) a liquidated Minimum Usage Fee, to be calculated as the product of an
assumed Base Rate Borrowing Tranche in an amount equal to the Deemed Minimum
Loan Amount times the sum of (a) the lowest Net Spread shown on Schedule
3.2 (or any replacement schedule of Net
Spreads in accordance with Sections
2.2(d),
2.2(e) or 2.4.6.2) plus (b) the Servicing Spread, for each
Month which will elapse from the Month in which such termination and/or
acceleration occurs through and including the Scheduled Maturity Date,
(provided, that if such termination and/or
acceleration of the Loan occurs prior to the third anniversary of the Closing
Date, then such fee shall be calculated through and including the third
anniversary of the Closing Date) such liquidated Minimum Usage Fee to be
discounted to net present value at a discount rate equal to the Treasury Rate,
together with all accrued Minimum Usage Fees, if any, payable as of the date of
such termination and/or acceleration.

    

    

    
      
        
           

        

        
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      2.14.         Material Adverse Change to
Borrower or a Collateral Pool Property.

    

    
      

    

    
      If (i) Borrower or a Collateral Pool
Property experiences a Material Adverse Change or (ii) a Material Adverse Change
occurs with respect to this Agreement or any of the other Loan Documents taken
as a whole, Borrower shall promptly notify Lender of the same in writing as soon
as Borrower has notice thereof. If Lender shall receive Notice of a Material
Adverse Change in accordance with the preceding sentence, or otherwise becomes
aware of a Material Adverse Change, which Material Adverse
Change affects a Collateral Pool Property, Lender may promptly conduct a Valuation of the
affected Collateral Pool Property pursuant to Section
2.12.
Until such time as such
Valuation, if requested, shall be completed, the Collateral Pool Property which
experienced the Material Adverse Change, or which is owned by a Borrower that
experienced a Material Adverse Change, shall be deemed for the purposes of
determining whether any new borrowing request satisfies all of the Sublimits set
forth in Section
2.5.3 to have the Market Value and Net
Operating Income reasonably determined and quantified by Lender upon the
information then available to Lender. Lender shall promptly provide Borrower
with written Notice of the
results of such Valuation. If the results of such Valuation disclose that
the Market Value of the
affected Collateral Pool Property has decreased, then the Market Value shall
thereafter be deemed to be the amount shown in such Valuation. In the event that
such Valuation hereunder
shall cause Borrower to be in non-compliance with the Sublimits set forth in
Section
2.5.3,
Borrower shall, within the
time periods set for the in (x) and (y) below, cure the same by bringing the
Loan into compliance with the Sublimits by either (x) within ninety (90) days of
the Notice of such valuation, pledging multi-family real property collateral in
form, substance, value and in a manner all acceptable to Lender, in its sole
discretion, in accordance with Section
2.9 or (y) within fifteen (15) days of
Notice from Lender of such decrease, prepaying so much of the Loan as is
necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section
4.3. Notwithstanding the
foregoing, if Borrower is unable to cause compliance with the Sublimits within
fifteen (15) Business Days following Lender's determination of Borrower's
non-compliance with the Sublimits, then, for so long as Borrower fails to comply
with the Sublimits, (i) the Net Spread applicable to all Base Rate Borrowing
Tranches then outstanding (and thereafter renewed) shall automatically increase
to one-hundred basis
points (0.01) over the highest Net Spread shown on Schedule
3.2 (as such Net Spreads are adjusted by Lender pursuant
to Sections
2.2(d). 2.2(e) and 2.4.6.2), further increased, if at all, in accordance
with Schedule
3.2,
as a result of the
duration of such Base Rate Borrowing Tranche(s) and (ii) the
interest rate applicable to all Fixed Rate Borrowing Tranches shall
automatically increase by one-hundred basis points (0.01). If Lender shall
receive Notice of a Material Adverse Change from Borrower hereunder, or
otherwise becomes aware of a Material Adverse Change which affects Borrower or
the enforceability of this Agreement or the other Loan Documents taken as a whole,
Borrower shall immediately provide any information or documents reasonably requested by
Lender, including, but not limited to, (a) with respect to a Material Adverse
Change which affects Borrower, financial statements and Borrower's business plan
to cure such Material Adverse Change or (b) with respect to a Material Adverse
Change which affects the enforceability of this Agreement or the other Loan
Documents taken as a whole, replacement documents in form and substance
acceptable to Lender in its discretion, together with a legal opinion regarding
the enforceability of such replacement documents, acceptable to Lender in its
discretion.

    

    

    
      
        
           

        

        
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      2.15.         Release of Collateral
Followed by a Permanent Loan.

    

    
      

    

    
      2.15.1.      Permanent
Loan.

    

    
      

    

    
      Borrower
may request that Lender cause Servicer to make a permanent loan (the "Permanent Loan") to
be secured by one or more Collateral Pool Properties designated by Borrower (the
"Permanent Loan
Collateral") to be simultaneously released from the Collateral Pool and
encumbered in favor of Servicer as security for Borrower's obligations under the
Permanent Loan, which request shall be made in accordance with the provisions of
Section
2.15.2. The
Permanent Loan shall be made in accordance with the terms and conditions of the
Streamlined Refinancing Program. Notwithstanding the foregoing, under no
circumstances may Borrower receive a release of the Security Instrument with
respect to the last property in the Collateral Pool prior to the Maturity Date,
unless Borrower has elected to terminate this Agreement under Section
2.13 hereunder.

    

    
      

    

    
      2.15.2.      Procedure for Making a
Permanent Loan.

    

    
      

    

    
      Borrower may request that Lender cause
Servicer to make a Permanent Loan to Borrower, which request (i) shall be in
writing, which writing shall specify (a) the Collateral Pool Property(ies) that
will constitute the Permanent Loan Collateral, (b) the original principal amount
of the requested Permanent Loan, which amount shall be greater than or equal to
TEN MILLION and No/100 Dollars ($10,000,000.00), (c) the related reduction in
the Maximum Facility Available, (d) whether Borrower has selected Lender's then
current early rate lock delivery option, and (e) any payment or prepayment of a
Borrowing Tranche, and (ii) shall be accompanied by (a) any fees then due and
owing under Lender's Streamlined Refinancing Program for each Collateral Pool
Property proposed by Borrower to be subject to the Permanent Loan, and (b) the
Underwriting Materials. Following receipt of all of the items specified in (i)
and (ii) of the previous sentence, Lender shall use its best efforts to consent
to Borrower's request within sixty (60) days of such Notice, provided that (1) at the time of such request
no Event of Default or
Potential Default exists, (2) the Permanent Loan shall be made in accordance
with the terms and
conditions of the Streamlined Refinancing Program, (3) after giving effect to
such release no Event of Default or Potential Default shall exist and Borrower
will be in compliance with all provisions hereof, including the Sublimits set
forth in Section
2.5.3,
further provided that if any release occasioned by a
Permanent Loan would otherwise cause Borrower to be in non-compliance with the
Sublimits, Borrower shall have the opportunity to cure the same, prior to or
simultaneously with the release and the consummation of the Permanent Loan
(which shall occur pursuant to the Streamlined Refinancing Program), by either
(A) pledging collateral in form, substance, value and in a manner all acceptable
to Lender, in its sole discretion, or (B) prepaying so much of the Loan as is
necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section
4.3, (4) Borrower shall provide evidence
to Lender of title insurance in form and substance acceptable to Lender and in
the face amount of the Permanent Loan, (5) the proposed Borrower under the
Permanent Loan shall execute and deliver such documents as Lender, in its
discretion, may request in order to evidence the making of the Permanent Loan
and in order to grant Lender a first priority Lien on the real and personal
property constituting the Permanent Loan Collateral subject, in each case, to
any Permitted Exceptions, and (6) Borrower shall pay Lender any fees then due
and owing under Lender's Streamlined Refinancing Program. Thereafter, Lender
shall use commercially reasonable efforts to consummate the Permanent Loan
within ninety (90) days after its consent to Borrower's request thereof.
Notwithstanding the foregoing, if Borrower is unable to cause compliance with
the Sublimits within fifteen (15) Business Days following Lender's determination
of Borrower's non-compliance with the Sublimits, then, for so long as Borrower
fails to comply with the Sublimits, (i) the Net Spread applicable to all Base
Rate Borrowing Tranches then outstanding (and thereafter renewed) shall
automatically increase to one-hundred basis points (0.01) over the highest Net Spread shown on
Schedule
3.2 (as such Net Spreads are adjusted by
Lender pursuant to
Sections
2.2(d).
2.2(e) and 2.4.6.2), further increased, if at all, in
accordance with Schedule
3.2,
as a result of the
duration of such Base Rate Borrowing Tranche(s) and (ii) the interest rate
applicable to all Fixed Rate Borrowing Tranches shall automatically increase by
one-hundred basis points (0.01). Notwithstanding the foregoing, in the event
that Borrower selects Lender's then current early rate lock delivery option,
Lender shall use its best efforts, subject to Borrower's timely compliance with
Lender's requests, to lock the interest rate for the requested Permanent Loan
within fifteen (15) Business Days of Borrower's Notice hereunder. Any Permanent
Loan granted pursuant to the foregoing provisions shall not reduce the
Commitment hereunder. Simultaneous with the closing of the Permanent Loan,
Lender shall release the Lien granted hereunder on the Permanent Loan
Collateral. Notwithstanding the foregoing, at any time prior to the release and
consummation of the Permanent Loan, Borrower may by written Notice revoke its
request for a release and a Permanent Loan pursuant to this Section
2.15;
provided, however, that
Borrower shall reimburse Lender and Servicer respectively, for Lender's and
Servicer's reasonable costs and expenses, including breakage costs and
reasonable attorneys' fees and any other fees due under this Agreement, that
Lender or Servicer incur in connection with such proposed release and Permanent
Loan financing prior to Borrower's revocation.

    

    

    
      
        
           

        

        
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      2.16.         Loan
Documents.

    

    
      

    

    
      From time
to time, Lender in its sole discretion revises its form Loan Documents to add,
delete or change requirements, conditions and other provisions of its form
documents. The revised form of Loan Documents shall be used in conjunction with
any Fixed Rate Notes executed after the date hereof, or any Properties added to
the Collateral Pool after the date hereof.

    

    
      

    

    
      3.             
INTEREST
RATES

    

    

    
      
        
           

        

        
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      3.1.           Interest
Rate.

    

    
      

    

    
      The
interest rate on each Borrowing Tranche evidenced by the Revolving Credit Note
shall be the Base Rate or, if required pursuant to Sections
3.3.2 or
3.4.3 hereof, the Prime Rate.
Interest rates under this Agreement and each Note shall be computed on the basis
of a year of three hundred sixty (36Q) days and actual days
elapsed.

    

    
      

    

    
      3.2.           Interest Rate
Determinations.

    

    
      

    

    
      3.2.1.        Prime Rate and Base Rate
Determination.

    

    
      

    

    
      (a)           
The initial Prime Rate applicable to any Prime Rate Borrowing Tranche required
under Sections
3.3.2 or
3.4.3 shall equal the Prime
Rate as of the Borrowing Date or Renewal Date, as applicable. The Prime Rate
shall thereafter fluctuate in accordance with any changes to the Prime Rate as
published from time to time during the term of the Prime Rate Borrowing
Tranche.

    

    
      

    

    
      (b)          
 The Base Rate applicable to any Base Rate Borrowing Tranche hereunder
shall, subject to the provisions set forth below, equal the Base Rate calculated
as of the date of the Loan Request and set forth in the Loan Request. In the
event that the Base Rate, calculated as of the Borrowing Date, is more than
twenty-five basis points (0.0025) higher or lower than the Base Rate set forth
in the Loan Request, the Base Rate applicable to such Loan Request shall instead
be the Base Rate calculated as of the Borrowing Date. Thereafter, (i) the
portion of the Base Rate attributable to the Reference Bills® Rate (or such
alternative index as may be selected by Lender in accordance with the provisions
of Section
3.4) for any
Base Rate Borrowing Tranche shall be redetermined as of each renewal of such
Borrowing Tranche pursuant to Section
3.3.3 and
(ii) the Margin for all Base Rate Borrowing Tranches then outstanding shall be
redetermined as of each determination and redetermination of the Net Spread. As
determined and redetermined pursuant to this Agreement, the same Margin shall
apply to all Base Rate Borrowing Tranches then outstanding. The portion of the
Margin attributable to the Net Spread shall be determined based on the Facility
Debt Service Coverage Ratio in accordance with the table set forth in Schedule
3.2. The Facility
Debt Service Coverage Ratio and Net Operating Income shall each be redetermined
in accordance with the definitions thereof, as applicable.

    

    
      

    

    
      3.2.2.        Prime Rate, Base Rate and
Margin Quotations.

    

    
      

    

    
      Borrower
may call Servicer on or before the date on which a Loan Request is to be
delivered or prior to the end of an Interest Period, to receive both a
calculation of the resulting Facility Debt Service Coverage Ratio for a proposed
Prime Rate (if required pursuant to Sections
3.3.2 or 3.4.3) or Base Rate Borrowing
Tranche and an indication of the rates then in effect, including the Margin, but
both parties acknowledge that such projection shall not be binding on Lender or
Borrower, nor shall such projection affect the rate of interest which thereafter
is actually in effect when the election is made.

    

    
      

    

    
      3.3.           Interest
Periods.

    

    
      

    

    
      Upon each Loan Request for a new Base
Rate Borrowing Tranche, and upon each Renewal Request applicable to a Base Rate
Borrowing Tranche, Borrower shall notify Lender of the period (the "Interest
Period") (which may only
be one-month (having original durations to maturity of approximately thirty (30)
days), three-month (having original durations to maturity of approximately
ninety (90) days), six-month (having original durations to maturity of
approximately one hundred eighty (180) days) or twelve-month (having original
durations to maturity of approximately three hundred sixty (360) days)) for
which the Reference Bills® Rate or LIBO Rate, as the case may be, shall be
determined.

    

    

    
      
        
           

        

        
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      3.3.1.        Interest Period to End on a
Business Day.

    

    
      

    

    
      If the
last day of any Interest Period is not a Business Day, the Interest Period shall
be deemed to mature on the Business Day immediately following such
date.

    

    
      

    

    
      3.3.2.        No Interest Periods Beyond
the Expiration Date.

    

    
      

    

    
      Borrower
shall not select or renew an Interest Period for any Base Rate Borrowing Tranche
that would end after the Expiration Date. If at the time of any such selection
or renewal the period of time remaining prior to the Expiration Date is less
than thirty (30) days then such Borrowing Tranche shall bear interest at the
Prime Rate. No Prime Rate Borrowing Tranche may remain outstanding in excess of
thirty (30) days at any one time.

    

    
      

    

    
      3.3.3.        Renewals.

    

    
      

    

    
      In the case of a redetermination of an
Interest Period at the end of an Interest Period, for purposes of calculating
interest due under the applicable Base Rate Borrowing Tranche the first day of
the new Interest Period shall be the first Business Day immediately following
the last day of the preceding Interest Period (such date, the "Renewal
Date"). For each Base Rate
Borrowing Tranche, if no new Interest Period is specified within two (2)
Business Days prior to the last day of such Interest Period, by delivery to
Lender via facsimile of a fully completed, authorized and executed request
therefor (a "Renewal
Request") in the form
attached hereto as Schedule
3.3.3,
the Borrowing Tranche
shall be renewed for an Interest Period of one month at the Base Rate then
applicable to a Borrowing Tranche disbursed on the applicable Renewal Date
having a one-month Interest Period. Notwithstanding anything contained herein to
the contrary, (i) no Borrowing Tranche may be renewed with a principal amount of
less than TEN MILLION and NO/100 Dollars ($10,000,000.00) and (ii) in the event
the Facility Debt Service Coverage Ratio is less than required in accordance
with Section
2.5.3.2 or the Loan to Value Ratio exceeds the
ratio required in accordance with Section
2.5.3.1, Borrower may renew or consolidate (but
not increase the outstanding principal amount of) any Borrowing Tranche(s) with
Interest Periods of one-month then outstanding, all in
accordance with the provisions of this Section
3.3.3,
provided
that, as of the date of
such renewal or consolidation (a) no Event of Default or Potential Default,
other than Borrower's failure to comply with Section
2.5.3.1
or Section
2.5.3.2, shall then exist, (b) Borrower's
failure to comply with Section
2.5.3.1
or Section
2.5.3.2 shall have been for a period of less
than ninety (90) days, and (c) Borrower is otherwise in full compliance with all
other terms and conditions of the Loan Documents, including the provisions of
Section
4.5. Borrower must assure compliance with
Section
2.5.3.1
or Section
2.5.3.2 pursuant to the provisions of
Section
4.3.
Notwithstanding the
foregoing, if Borrower is unable to cause compliance with the Sublimits within
fifteen (15) Business Days following Lender's determination of Borrower's
non-compliance with the Sublimits, then, for so long as Borrower fails to comply with the Sublimits, (i)
the Net Spread applicable to all Base Rate Borrowing Tranches then outstanding
(and thereafter renewed) shall automatically increase to one-hundred basis
points (0.01) over the highest Net Spread shown on Schedule
3.2 (as such Net Spreads are adjusted by
Lender pursuant to Sections
2.2(d), 2.2(e) and 2.4.6.2), further increased, if at all, in
accordance with Schedule
3.2,
as a result of the
duration of such Base Rate Borrowing Tranche(s) and (ii) the interest rate
applicable to all Fixed Rate Borrowing Tranches shall automatically increase by
one-hundred basis points (0.01).

    

    

    
      
        
           

        

        
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      3.3.4.        Interest After
Default.

    

    
      

    

    
      So long
as (i) any payment under this Agreement remains past due for thirty (30) days or
more, or (ii) any other Event of Default has occurred and is continuing,
interest on the Loan shall accrue on the unpaid principal balance from the
earlier of the due date of the first unpaid installment or the occurrence of
such other Event of Default at the default rate set forth in the Note. If the
unpaid principal balance and all accrued interest on the Loan are not paid in
full on the Expiration Date, the unpaid principal balance and all accrued
interest on the Loan shall thereafter bear interest at the default rate set
forth in the Note. Borrower acknowledges that (a) its failure to make timely
payments will cause Lender to incur additional expenses in servicing and
processing the Loan, (b) during the time that any installment is delinquent for
more than thirty (30) days, Lender will incur additional costs and expenses
arising from its loss of the use of the money due and from the adverse impact on
Lender's ability to meet its other obligations and to take advantage of other
investment opportunities, and (c) it is extremely difficult and impractical to
determine those additional costs and expenses. Borrower also acknowledges that,
during the time that any installment is delinquent for more than thirty (30)
days or any other Event of Default has occurred and is continuing, Lender's risk
of nonpayment will be materially increased and Lender is entitled to be
compensated for such increased risk. Borrower agrees that the increase in the
rate of interest set forth in the Note represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Agreement, of the additional 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 delinquent
loan.

    

    
      

    

    
      3.3.5.        Late
Charge.

    

    
      

    

    
      If any
amount payable under this Agreement, the Note or any other Loan Document, other
than (i) the outstanding amount of the Revolving Credit Note payable on the
Maturity Date, (ii) the then outstanding amount of any Fixed Rate Note payable
on the Maturity Date, or (iii) the then outstanding amount of the Loan payable
upon acceleration of the Note, is not received by Lender as provided in the
Note, Borrower shall pay to Lender, immediately and without demand by Lender, a
late charge as specified in the Note. Borrower acknowledges that its failure to
make timely payments will cause Lender to incur additional expenses in servicing
and processing the Loan, and that it is extremely difficult and impractical to
determine those additional expenses. Borrower agrees that the late charge
payable specified in the Note represents a fair and reasonable estimate, taking
into account all circumstances existing on the date of this Agreement, of the
additional expenses Lender will incur by reason of such late payment. The late
charge is payable in addition to, and not in lieu of, any interest payable at
the default rate specified in the Note.

    

    

    
      
        
           

        

        
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      3.4.           Reference Bills® Rate
Unascertainable: Illegality; Increased Costs.

    

    
      

    

    
      3.4.1.        Unascertainable.

    

    
      

    

    
      In the
event Freddie Mac shall at any time cease to designate any unsecured general
obligations of Freddie Mac as "Reference Bills®", at its option, Lender may (i)
select from time to time another unsecured general obligation of Freddie Mac
having original maturities, most comparable to the term of the Interest Period
for the applicable Borrowing Tranche, and issued by Freddie Mac at regularly
scheduled auctions within the sixty (60) day period prior to the first day of
such Interest Period, and the term "Reference Bills®" as used herein shall mean
such other unsecured general obligations as selected by Lender; or (ii) for any
one or more Interest Periods, use the applicable LIBO Rate for purposes of
determining the Base Rate for such Interest Period(s). If Freddie Mac has not
conducted an auction of its Reference Bills® or other unsecured general
obligations within sixty (60) days prior to the first day of the Interest Period
for the proposed Borrowing Tranche, the Base Rate shall be determined as the
LIBO Rate plus the Margin for such Interest Period(s).

    

    
      

    

    
      3.4.2.        Illegality; Increased
Costs.

    

    
      

    

    
      At any
time at which (i) the Reference Bills® Rate shall not be available and the Base
Rate shall be determined based on the LIBO Rate in accordance with the
provisions of Section
3.4.1 and
(ii) Lender shall have also reasonably determined that (a) adequate and
reasonable means do not exist for ascertaining the applicable LIBO Rate, (b) a
contingency has occurred which materially and adversely affects the London
interbank market, (c) the making, maintenance or funding of any Borrowing
Tranche bearing interest in part at the LIBO Rate has been made unlawful by
Lender's compliance in good faith with any Law or any interpretation or
application thereof by any Official Body or with any request or directive of any
such Official Body (whether or not having the force of Law, but other than as a
result of any misconduct by Lender), (d) the Base Rate (as determined with
reference to the LIBO Rate) will not adequately and fairly reflect the cost to
Lender of the establishment or maintaining of any such Borrowing Tranche, or (e)
after making all reasonable efforts, deposits of the relevant amount in Dollars
for the relevant Interest Period for a Borrowing Tranche are not available to
Lender in the London interbank market, then Lender shall have the rights
specified in Section
3.4.3.

    

    
      

    

    
      3.4.3.        Lender's
Rights.

    

    
      

    

    
      In the case of the events specified in
items (i) and (ii) of Section
3.4.2 above, Lender shall promptly notify
Borrower thereof. Upon the date as shall be specified in such Notice, the
obligation of Lender to make advances under any Borrowing Tranche(s) at the Base
Rate shall be suspended until Lender shall have later notified Borrower of
Lender's reasonable determination that the circumstances set forth in
Section
3.4.2 no longer exist. If at any time Lender
notifies Borrower that it has made a determination under Section
3.4.2, then with respect to any Loan Request previously
submitted but not yet funded, and with respect to any Borrowing Tranche on which
an Interest Period shall thereafter expire, each such new or renewal Borrowing
Tranche(s) shall thereafter bear interest at the Prime Rate (unless, with
respect to a pending Loan Request, Borrower immediately notifies
Lender by written Notice of its election not to borrow such funds, or, in the
case of a Renewal Borrowing Tranche, Borrower instead elects to repay
such Borrowing Tranche upon the
expiration of the applicable Interest Period in accordance with the terms of
this Agreement), in each case subject to Section
3.3.2 hereof.

    

    

    
      
        
           

        

        
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      4.             
PAYMENTS

    

    
      

    

    
      4.1.           Payments.

    

    
      

    

    
      All
payments and prepayments to be made in respect of principal, interest, Unused
Facility Fees, Minimum Usage Fees or other fees or amounts due from Borrower
hereunder shall be due and payable on the date when due without presentment,
demand, protest, or notice of any kind, including, but not limited to, notice of
Lender's intent to accelerate Borrower's Obligations under the Loan and notice
of such acceleration, all of which (unless expressly provided in the Loan
Documents) are hereby waived by Borrower, and without set-off, counterclaim or
other deduction of any nature, and an action therefor shall immediately accrue.
Such payments shall be made to Lender in immediately available funds when due.
Lender's Monthly Payment Statement shall, in the absence of manifest error, be
conclusive as to the amount of principal of and interest on the Loan and other
amounts owing under this Agreement, provided that
Borrower may challenge the accuracy of any Monthly Payment Statement within one
(1) year of the date of such Monthly Payment Statement.

    

    
      

    

    
      4.2.           Payment
Dates.

    

    
      

    

    
      Subject
to the provisions of Section
4.3, interest on
the Loan shall be payable in arrears and shall be due, together with all other
amounts set forth on the applicable Monthly Payment Statement, prior to 2:00
Eastern Time on the first (1st) day of any calendar month during the term hereof
(the "Payment
Date"), and shall be paid by wire transfer of immediately available funds
to an account specified by Servicer. Lender shall deliver to Borrower an invoice
(the "Monthly Payment
Statement") detailing the interest (and principal, if applicable), Unused
Facility Fees, Minimum Usage Fees and other fees due and payable. Except in the
case of a prepayment under Section
4.3, Lender shall
deliver the Monthly Payment Statement detailing charges due for the current
calendar month via fax at least five (5) Business Days prior to the first day of
the succeeding calendar month. In the instance of a renewal of an Interest
Period pursuant to Section
3.3.3, interest
on such renewed Borrowing Tranche shall be due and payable on the next Payment
Date, subject to any adjustments in interest rates, as if the Interest Period
had not expired and then been renewed. Interest on prepayments under Section
4.3 shall be
due on the date such prepayment is due. Interest on the principal amount of the
Loan or other monetary Obligation shall be due and payable on demand after such
principal amount or other monetary Obligation becomes due and payable (whether
on the stated maturity date, upon acceleration or otherwise).

    

    
      

    

    
      4.3.           Prepayments.

    

    
      

    

    
      4.3.1.        Voluntary
Prepayments.

    

    
      

    

    
      Borrower shall have the right, at its
option, from time to time to prepay the Loan in whole or part at any time, but no prepayment
may be less than the outstanding principal balance and accrued interest of the
applicable Borrowing Tranche(s) being prepaid. Whenever Borrower desires to prepay any part of the Loan,
Borrower shall provide a prepayment Notice to Lender by 2:00 Eastern Time at least two (2)
Business Days prior to the date of the proposed prepayment setting forth the
following information:

    

    

    
      
        
           

        

        
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      (x)       
     the estimated date on which the proposed
prepayment is to be made; and

    

    
      

    

    
      (y)        
   a statement indicating the application of the prepayment to a
particular Base Rate Borrowing Tranche(s) or Fixed Rate Borrowing
Tranche(s).

    

    
      

    

    
      All
prepayment Notices shall be irrevocable. The principal amount of the Borrowing
Tranche(s) for which a prepayment Notice is given, together with interest on
such principal amount, shall be due and payable by 2:00 Eastern Time on the date
specified in such prepayment Notice as the date on which the proposed prepayment
is to be made. Lender shall, upon receipt of Borrower's Notice, prepare and
deliver to Borrower the same day via facsimile or other electronic transmittal a
statement of interest due with respect to such prepayment, provided that in the
event Borrower's prepayment Notice is not received by Lender prior to 2:00
Eastern Time, Lender shall not be obligated to prepare and deliver such
statement of interest until the Business Day following Lender's receipt of such
Notice.

    

    
      

    

    
      4.3.2.        Prepayment Fee Not
Applicable (Mandatory Prepayment / Collateral
Addition).

    

    
      

    

    
      4.3.2.1.     If
at the time of the release of a portion of the Collateral pursuant to Section
2.10, Borrower
shall be in violation of any of the Sublimits set forth in Section
2.5.3, Borrower
may cure such violation prior to or simultaneously with such release by either
(i) pledging multi-family real property collateral in form, substance, value and
in a manner all acceptable to Lender, in its sole discretion, in accordance with
Section
2.9 or (ii)
prepaying that portion of the Loan outstanding as is necessary to cause
compliance with such Sublimit without any Prepayment Fee or similar fee or
penalty. Notwithstanding the foregoing, if Borrower is unable to cause
compliance with the Sublimits within fifteen (15) Business Days following
Lender's determination of Borrower's non-compliance with the Sublimits, then,
for so long as Borrower fails to comply with the Sublimits, (i) the Net Spread
applicable to all Base Rate Borrowing Tranches then outstanding (and thereafter
renewed) shall automatically increase to one-hundred basis points (0.01) over
the highest Net Spread shown on Schedule
3.2 (as such
Net Spreads are adjusted by Lender pursuant to Sections
2.2(d). 2.2(e) and 2.4.6.2), further increased, if at
all, in accordance with Schedule
3.2, as a result
of the duration of such Base Rate Borrowing Tranche(s) and (ii) the interest
rate applicable to all Fixed Rate Borrowing Tranches shall automatically
increase by one-hundred basis points (0.01). Lender shall deliver to Borrower as
soon as practicable, but in any event not less than two (2) Business Days prior
to such release, a statement of the principal and interest due with respect to
any required prepayment.

    

    
      

    

    
      4.3.2.2.     If
at the time of a Valuation pursuant to Section
2.12 or at
any other time, Borrower shall be in violation of any of the Sublimits set forth
in Section
2.5.3, Borrower
shall cure such violation, within the time periods set forth in (a) and (b)
below, by either (a) within ninety (90) days of Notice, pledging multi-family
collateral in form, substance, value and in a manner all acceptable to Lender in
its sole discretion, in accordance with Section
2.9 or (b)
within fifteen (15) days of Notice from Lender of such decrease, prepaying so
much of the Loan as is necessary to cause compliance with the Sublimits
(together with the payment of any applicable Prepayment Fee or similar fee or
penalty). If at the time of a Material Adverse Change pursuant to Section
2.14, Borrower
shall cure such violation within the time periods set forth in (i), (ii) and
(iii) below, by either (i) within ninety (90) days of Notice, pledging
multi-family collateral in form, substance, value and in a manner all acceptable
to Lender in its sole discretion, in accordance with Section
2.9, (ii) within
fifteen (15) days of Notice from Lender of such decrease, prepaying so much of
the Loan as is necessary to cause compliance with the Sublimits, or (iii) provided that
Borrower is not in violation of a Sublimit, within ninety (90) days of Notice,
releasing one or more Collateral Pool Properties (together with the payment of
any applicable Prepayment Fee or similar fee or penalty). Lender shall deliver
to Borrower within two (2) Business Days following the notice of Valuation,
Material Adverse Change or other event, as the case may be, a statement of the
principal and interest due with respect to any required prepayment.
Notwithstanding the foregoing, if Borrower is unable to cause compliance with
the Sublimits within fifteen (15) Business Days following Lender's determination
of Borrower's non-compliance with the Sublimits, then, for so long as Borrower
fails to comply with the Sublimits, (i) the Net Spread applicable to all Base
Rate Borrowing Tranches then outstanding (and thereafter renewed) shall
automatically increase to one-hundred basis points (0.01) over the highest Net
Spread shown on Schedule
3.2 (as such
Net Spreads are adjusted by Lender pursuant to Sections
2.2(d).
2.2(e) and 2.4.6.2), further
increased, if at all, in accordance with Schedule
3.2, as a result
of the duration of such Base Rate Borrowing Tranche(s) and (ii) the interest
rate applicable to all Fixed Rate Borrowing Tranches shall automatically
increase by one-hundred basis points (0.01).

    

    

    
      
        
           

        

        
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      4.3.2.3.    
In the event of a casualty or condemnation affecting any of the Collateral Pool
Properties, any award and/or proceeds payable with respect to such casualty or
condemnation shall be treated in accordance with the provisions of the
applicable Loan Documents, provided that
Borrower may elect to terminate this Agreement in accordance with Section
2.13.

    

    
      

    

    
      4.3.2.4.     Any
mandatory prepayment of the Loan in accordance with the provisions of this Section
4.3.2
shall be applied, as directed by Borrower, to a particular Base Rate Borrowing
Tranche or Base Rate Borrowing Tranches under the Revolving Credit Note until
the Revolving Credit Note has been repaid in full and thereafter, to the
outstanding principal balances of the Fixed Rate Note(s) pro rata or, in the
absence of any specific direction from Borrower, as selected by Lender in its
sole discretion.

    

    
      

    

    
      4.4.           Prepayment
Fee.

    

    
      

    

    
      Unless Borrower for any reason (i)
repays a Borrowing Tranche permitted hereunder accruing interest at the Prime
Rate, (ii) has elected to prepay in advance all of the interest, applicable to
the particular Borrowing Tranche being prepaid, which would have otherwise
accrued over the applicable Interest Period, (iii) repays all or a part of a
Base Rate Borrowing Tranche upon the expiration of such Base Rate Borrowing
Tranche's Interest Period or (iv) repays a Fixed Rate Note within the applicable
Window Period, any prepayment under Section
4.3 shall be accompanied by a prepayment
fee (the "Prepayment
Fee"), unless otherwise
provided herein. The Prepayment Fee for (x) any Base Rate Borrowing Tranche,
shall be determined in
accordance with Schedule
4.4 and (y) any Fixed Rate Borrowing
Tranche, shall be determined in accordance with the
applicable Fixed Rate Note. The Prepayment Fee shall not constitute the payment of interest and
therefore shall not be included in the calculation of Facility Debt Service Coverage Ratio or the
determination of Borrower's compliance with the Sublimits set forth in
Section
2.5.3.
In addition, upon Lender's
exercise of any right of acceleration under this Agreement, the Note, or any
other Loan Document following an Event of Default, Borrower shall pay to Lender
the Prepayment Fee on all Base Rate Borrowing Tranches and Fixed Rate Borrowing
Tranches outstanding at the time of acceleration in addition to all interest
accrued thereon, and all other sums and fees payable to Lender hereunder, in
lieu of determining the same based on the principal amounts being prepaid under
the Revolving Credit Note as specified in Schedule
4.4.

    

    

    
      
        
           

        

        
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      4.5.           Additional Payment
Obligations.

    

    
      

    

    
      Notwithstanding
anything to the contrary set forth herein, if Lender shall determine that the
Facility Debt Service Coverage Ratio is less than required pursuant to Section
2.5.3.2 or
that the Loan to Value Ratio exceeds the ratio permitted in accordance with
Section
2.5.3.1, and such
noncompliance shall continue uncured for fifteen (15) Business Days following
Lender's determination of Borrower's non-compliance with the Sublimits, then,
for so long as Borrower fails to comply with the Sublimits, (i) the Net Spread
applicable to all Base Rate Borrowing Tranches then outstanding (and thereafter
renewed) shall automatically increase to one-hundred basis points (0.01) over
the highest Net Spread shown on Schedule
3.2 (as such
Net Spreads are adjusted by Lender pursuant to Sections
2.2(d). 2.2(e) and 2.4.6.2), further increased, if at
all, in accordance with Schedule
3.2, as a result
of the duration of such Base Rate Borrowing Tranche(s) and (ii) the interest
rate applicable to all Fixed Rate Borrowing Tranches shall automatically
increase by one-hundred basis points (0.01). In the event that the Facility Debt
Service Coverage Ratio shall continue to be less than required pursuant to Section
2.5.3.2 or
the Loan to Value Ratio shall exceed the ratio permitted in accordance with
Section
2.5.3.1 for
a period of ninety (90) consecutive days after receipt of Notice of the same,
the same shall constitute an Event of Default.

    

    
      

    

    
      4.6.           Additional Compensation in
Certain Circumstances.

    

    
      

    

    
      4.6.1.        Increased Costs Resulting
from Taxes, Etc.

    

    
      

    

    
      If any
change in any Law, guideline or interpretation or application thereof by any
Official Body charged with the interpretation or administration thereof or
compliance with any written request or directive of any Official Body (other
than as a result of any misconduct by Lender) which is applicable to
Lender:

    

    
      

    

    
      4.6.1.1.     subjects
Lender to any tax or changes the basis of taxation with respect to this
Agreement, the Note, the Loan or payments by Borrower of any principal,
interest, fees, or other amounts due from Borrower hereunder or under the
Revolving Credit Note or any Fixed Rate Note (except for taxes on the overall
net or gross income of Lender or any franchise taxes);

    

    
      

    

    
      4.6.1.2.     imposes
upon Lender any condition or denies Lender any right, the result of which is to
increase the cost to, reduce the income receivable by, or impose any expense
(including breakage costs) upon Lender with respect to this Agreement, the Note
or the making, maintenance or funding of any Borrowing Tranche by an amount
which Lender in its discretion deems to be material;

    

    

    
      
        
           

        

        
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      then
Lender shall from time to time notify Borrower of the amount determined in good
faith (using any averaging and attribution methods employed in good faith) by
Lender to be necessary to compensate Lender for such increase in cost. Such
Notice shall set forth in reasonable detail the basis for such determination.
Such amount shall be due and payable by Borrower to Lender thirty (30) days
after such Notice is given.

    

    
      

    

    
      4.6.2.        Termination.

    

    
      

    

    
      Upon the
occurrence of any event described in Section
4.6.1, Borrower
may elect to terminate this Agreement and the parties' obligations under the
Loan Documents in accordance with the provisions of Section
2.13, and
Borrower's obligations hereunder shall terminate upon Borrower's repayment in
full of the Loan and the Borrower shall not be obligated to pay the fees set
forth in Section
2.13.4

    

    
      

    

    
      4.6.3.        Indemnity.

    

    
      

    

    
      In
addition to the compensation required by Section
4.6.1, Borrower
shall jointly and severally indemnify Lender and Servicer against all
liabilities, losses or expenses (excluding opportunity costs but including
breakage costs) which Lender and/or Servicer sustains or incurs as a consequence
of any:

    

    
      

    

    
      4.6.3.1.     attempt
by Borrower to revoke (expressly, by later inconsistent notices or otherwise) in
whole or part any Loan Request under Section
2.5 (except
as provided in Section
3.4.3), any
request to release a Collateral Pool Property under Section
2.10. or notice
relating to prepayments under Section
4.3,
or

    

    
      

    

    
      4.6.3.2.     default
by Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure of
Borrower to pay when due (by acceleration or otherwise) any principal, interest,
Prepayment Fee, Unused Facility Fee, Minimum Usage Fee or any other amount due
hereunder.

    

    
      

    

    
      If Lender
sustains or incurs any such loss or expense, it shall from time to time notify
Borrower of the amount determined in good faith by Lender (which determination
may include such assumptions, allocations of costs and expenses and averaging or
attribution methods as Lender shall deem reasonable) to be necessary to
indemnify Lender for such loss or expense. Such Notice shall set forth in
reasonable detail the basis for such determination (which shall be conclusive
absent manifest error). Such amount shall be due and payable by Borrower to
Lender thirty (30) days after such Notice is given.

    

    
      

    

    
      4.7.           Non-Recourse.

    

    
      

    

    
      The Loan
shall be non-recourse as and to the extent provided in the Loan
Documents.

    

    
      

    

    
      5.            
 CONDITIONS OF
LENDING

    

    

    
      
        
           

        

        
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      The
obligation of Lender to fund the Loan hereunder is subject to the performance by
Borrower of its Obligations to be performed hereunder at or prior to (i) the
funding of indebtedness to any Fixed Rate Borrowing Tranche(s) and (ii) the
funding of any Base Rate or permitted Prime Rate Borrowing Tranche(s), and to
the satisfaction of the following further conditions:

    

    
      

    

    
      5.1.           Initial Borrowing
Tranche.

    

    
      

    

    
      On the
Closing Date:

    

    
      

    

    
      5.1.1.        Delivery of Loan
Documents.

    

    
      

    

    
      All Loan
Documents not previously executed and delivered to Lender shall have been duly
executed and delivered to Lender, together with all appropriate financing
statements.

    

    
      

    

    
      5.1.2.        Validity of
Representations.

    

    
      

    

    
      The
representations and warranties of Borrower contained in Section
6 and in
each of the other Loan Documents shall be true and accurate in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of the
specific dates or times referred to therein), and Borrower shall have performed
and complied with all covenants and conditions hereof and thereof, no Event of
Default or Potential Default shall have occurred and be continuing or shall
exist.

    

    
      

    

    
      5.1.3.        Officer's
Certificate.

    

    
      

    

    
      There
shall be delivered to and for the benefit of Lender a certificate, in form and
substance reasonably acceptable to Lender, dated the Closing Date and signed by
an Authorized Officer, certifying as appropriate as to:

    

    
      

    

    
      5.1.3.1.     all
required actions taken by Borrower in connection with this Agreement and the
other Loan Documents;

    

    
      

    

    
      5.1.3.2.     the
names of the officer or officers authorized to sign this Agreement and the other
Loan Documents and the true signatures of such officer or officers and
specifying the Authorized Officers permitted to act on behalf of Borrower for
purposes of this Agreement and the true signatures of such Authorized Officers,
on which Lender may conclusively rely;

    

    
      

    

    
      5.1.3.3.     copies
of the organizational documents of Borrower including its certificate of
incorporation, by-laws, certificate of limited partnership, partnership
agreement, certificate of formation, and limited liability company agreement, as
applicable, as in effect on the Closing Date certified by the appropriate state
official where such documents are filed in a state office together with
certificates from the appropriate state officials as to the continued existence
and good standing of Borrower in each state where organized or qualified to do
business and bring-down certificates by facsimile dated within thirty (30) days
of the Closing Date, all of which shall be attached to such officer's
certificate; and

    

    

    
      
        
           

        

        
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      5.1.3.4.     the
matters described in Section
5.1.8.

    

    
      

    

    
      5.1.4.        Opinion of
Counsel.

    

    
      

    

    
      There
shall be delivered to Lender, written opinions of counsel for Borrower dated the
Closing Date and in form and substance satisfactory to Lender and its counsel as
to matters customary to the transactions contemplated herein, or as Lender may
reasonably request.

    

    
      

    

    
      5.1.5.        Legal
Details.

    

    
      

    

    
      All legal
details and proceedings in connection with the transactions contemplated by this
Agreement and the other Loan Documents shall be in form and substance reasonably
satisfactory to Lender and counsel for Lender, and Lender shall have received
all such other counterpart originals or certified or other copies of such
documents and proceedings in connection with such transactions, in form and
substance reasonably satisfactory to Lender and said counsel, as Lender or said
counsel may reasonably request.

    

    
      

    

    
      5.1.6.        Payment of
Fees.

    

    
      

    

    
      Borrower
shall have paid or caused to be paid to Lender and Freddie Mac to the extent not
previously paid all fees accrued through the Closing Date and all of Lender's
and Freddie Mac's reasonable costs and expenses, including, but not limited to,
attorneys' fees, title insurance premiums, surveys, appraisals, all costs
incurred in obtaining environmental, engineering and credit reports, all third
party due diligence costs and other costs and expenses incurred by either Lender
or Freddie Mac in connection with the closing of this Loan.

    

    
      

    

    
      5.1.7.        Consents.

    

    
      

    

    
      All
material consents required to effectuate the transactions contemplated hereby
shall have been obtained.

    

    
      

    

    
      5.1.8.        No Material Adverse
Change.

    

    
      

    

    
      Since the
date of Borrower's formation, no Material Adverse Change shall have occurred;
prior to the Closing Date, there shall have been no material change in the
ownership or management of Borrower.

    

    
      

    

    
      5.1.9.        No Violation of
Laws.

    

    
      

    

    
      The
making of the Loan shall not contravene any Law applicable to Borrower, its
Affiliates or Lender.

    

    
      

    

    
      5.1.10.      No Actions or
Proceedings.

    

    

    
      
        
           

        

        
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      No
action, proceeding, investigation, regulation or legislation shall have been
instituted, or, to Borrower's knowledge threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, this Agreement, the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or which, in
Lender's sole discretion, would make it inadvisable to consummate the
transactions contemplated by this Agreement or any of the other Loan
Documents.

    

    
      

    

    
      5.1.11.      Collateral Initially
Included in Collateral Pool.

    

    
      

    

    
      With
respect to the Collateral which is part of the Collateral Pool at Closing,
Borrower shall have delivered all Underwriting Materials required hereunder for
inclusion of such Collateral into the Collateral Pool, and Lender shall have
approved the inclusion therein.

    

    
      

    

    
      5.1.12.      Other
Conditions.

    

    
      

    

    
      Borrower
shall have satisfied such other reasonable conditions as required by Lender or
Lender's legal counsel.

    

    
      

    

    
      5.2.          Each Subsequent Borrowing
Tranche.

    

    
      

    

    
      At the
time of funding of any Base Rate Borrowing Tranche or Fixed Rate Borrowing
Tranche (excluding renewals, conversions and continuances of any outstanding
Base Rate Borrowing Tranche(s) or Fixed Rate Borrowing Tranche(s) which do not
increase the outstanding principal amount of the Loan made hereunder) other than
the funds advanced on the Closing Date, and after giving effect to the proposed
extensions of credit: (i) the representations and warranties of Borrower
contained in Section
6 and in the
other Loan Documents shall be true and correct in all material respects on and
as of the date of the funding of any such Base Rate Borrowing Tranche or Fixed
Rate Borrowing Tranche with the same effect as though such representations and
warranties had been made on and as of the date of the funding of any such Base
Rate Borrowing Tranche or Fixed Rate Borrowing Tranche (except representations
and warranties that expressly relate solely to an earlier date or time, which
representations and warranties shall be true and correct in all material
respects on and as of the specific dates or times referred to therein and except
such changes as would not constitute a Material Adverse Change) and Borrower
shall have performed and complied with all covenants and conditions hereof; (ii)
no Event of Default or, to Borrower's knowledge, Potential Default shall have
occurred and be continuing or shall exist; (iii) the funding of any Borrowing
Tranche shall not contravene any Law applicable to Borrower, its Affiliates or
Lender; (iv) Borrower shall have delivered to Lender a duly executed and
completed Loan Request or Renewal Request, as the case may be; and (v) Borrower
shall have paid all reasonable fees and expenses incurred by Lender or Servicer
in connection therewith.

    

    
      

    

    
      6.             REPRESENTATIONS AND
WARRANTIES

    

    
      

    

    
      6.1.          Representations and
Warranties.

    

    
      

    

    
      Borrower
represents and warrants to Lender as follows:

    

    

    
      
        
           

        

        
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      6.1.1.       
Organization and
Qualification.

    

    
      

    

    
      Borrower
is a corporation, partnership, limited liability company, or real estate
investment trust, duly organized, validly existing and in good standing under
the Laws of its jurisdiction of organization or formation, as the case may be,
and Borrower has the lawful power to own or lease the Collateral Pool Properties
and to engage in the business it presently conducts or proposes to conduct.
Borrower is duly licensed or qualified and in good standing in all jurisdictions
where the property owned or leased by it or where the nature of the business
transacted by it or both makes such licensing or qualification necessary and
where the failure to be so qualified would result in a Material Adverse
Change.

    

    
      

    

    
      6.1.2.        Single Asset
Entity.

    

    
      

    

    
      Borrower
is a Single Asset Entity, with a purpose limited to owning, maintaining and
operating only the Collateral Pool Properties.

    

    
      

    

    
      6.1.3.        Power and
Authority.

    

    
      

    

    
      Borrower
has full power to enter into, execute, deliver and carry out this Agreement and
the other Loan Documents to which it is a party, to incur the Loan contemplated
by the Loan Documents and to perform its Obligations under the Loan Documents to
which it is a party, and all such actions have been duly authorized by all
necessary proceedings on its part.

    

    
      

    

    
      6.1.4.        Validity and Binding
Effect.

    

    
      

    

    
      This
Agreement has been duly and validly executed and delivered by Borrower and each
other Loan Document which Borrower is required to execute and deliver on or
after the date hereof will have been duly executed and delivered by Borrower on
the required date of delivery of such Loan Document. This Agreement and each
other Loan Document constitutes, or will constitute, legal, valid and binding
obligations of Borrower on and after its date of delivery thereof, enforceable
against Borrower in accordance with its terms, except to the extent that
enforceability of any of such Loan Documents may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting the
enforceability of creditors' rights generally or limiting the right of specific
performance. There is no offset, defense, counterclaim or right of rescission
with respect to any of the Loan Documents.

    

    
      

    

    
      6.1.5.        No
Conflict.

    

    
      

    

    
      Neither the execution and delivery of
this Agreement or the other Loan Documents by Borrower nor the consummation of
the transactions herein or therein contemplated or compliance with the terms and
provisions hereof or thereof by any of them will conflict with, constitute a
default under or result in any breach or violation of (i) the terms and
conditions, as applicable, of the certificate of incorporation, by-laws,
certificate of limited partnership, partnership agreement, certificate of
formation, limited liability company agreement or other organizational documents
of Borrower or its Affiliates, (ii) any Law or any material agreement or
instrument or order, writ, judgment, injunction or decree to which Borrower or
any of its Affiliates is a party or is subject, or by which Borrower or any of
its Affiliates is bound, or (iii) result in the creation or enforcement of any
Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of
Borrower (other than Liens granted under the Loan Documents), nor will they
result in or require (except as specifically contemplated by this Agreement) the
creation or imposition of any lien of any nature upon any of the collateral of
Borrower other than the Liens of the Loan Documents.

    

    

    
      
        
           

        

        
          - 46 -

          
            

          

        

        
           

        

      

    

    

    
      6.1.6.        Litigation.

    

    
      

    

    
      There are
no actions, suits, proceedings or investigations pending, or to Borrower's
knowledge threatened, against Borrower or its Affiliates at law or equity before
any Official Body which individually or in the aggregate may result in any
Material Adverse Change. Neither Borrower nor its Affiliates are in violation of
any order, writ, injunction or decree of any Official Body which may result in
any Material Adverse Change.

    

    
      

    

    
      6.1.7.        Title to Collateral Pool
Properties.

    

    
      

    

    
      Borrower
has good and marketable title to all Collateral Pool Properties and to all other
assets which it purports to own or which are reflected as owned on its books and
records, free and clear of all Liens and encumbrances except the Permitted
Exceptions. The Permitted Exceptions do not and will not materially and
adversely affect (i) the ability of Borrower to pay in full all sums due under
the Revolving Credit Note, any Fixed Rate Note or any of its other Obligations
in a timely manner, (ii) the use of any Collateral Pool Property for the use
currently being made thereof, (iii) the operation of any Collateral Pool
Property as currently being operated, or (iv) the value of any Collateral Pool
Property.

    

    
      

    

    
      6.1.8.        Use of
Proceeds.

    

    
      

    

    
      Borrower
intends to use the proceeds of the Loan in accordance with Section
2.8.

    

    
      

    

    
      6.1.9.        Full
Disclosure.

    

    
      

    

    
      Neither
this Agreement nor any other Loan Document, nor any material certificate,
statement, agreement or other documents furnished to Lender in connection
herewith or therewith, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which they were made,
not misleading. There is no fact known to Borrower which materially adversely
affects the business, property, assets, financial condition, results of
operations or prospects of Borrower, or any of its Affiliates which has not been
set forth in this Agreement or in the certificates, statements, agreements,
financial projections or other documents furnished in writing to Lender prior to
or at the date hereof in connection with the transactions contemplated
hereby.

    

    
      

    

    
      6.1.10.      Taxes.

    

    
      

    

    
      All federal, state, local and other tax
returns required to have been filed with respect to Borrower and its Affiliates
have been filed, and payment or adequate provision has been made for the payment
of all taxes, fees, assessments and other governmental charges which have or may
become due pursuant to said returns or to assessments received, except to the
extent that such taxes, fees, assessments and other charges are being contested
in good faith by appropriate proceedings diligently conducted and
for which such reserves or other appropriate provisions, if any, as shall be
required by GAAP shall have been made. There are no agreements or waivers
extending the statutory period of limitations applicable to any federal income
tax return of Borrower, or its Affiliates for any
period.

    

    

    
      
        
           

        

        
          - 47 -

          
            

          

        

        
           

        

      

    

    

    
      6.1.11.      Consents and
Approvals.

    

    
      

    

    
      Except
for the filing of financing statements and the relevant Collateral Pool Property
Documents in the appropriate state and county filing offices, there are no other
filings, consents or approvals necessary for the execution of this Agreement by
Borrower or its performance hereunder or under the Loan Documents, all of which
shall have been obtained or made on or prior to the Closing
Date.

    

    
      

    

    
      6.1.12.      No Event of Default;
Compliance with Instruments.

    

    
      

    

    
      No event
has occurred and is continuing and no condition exists or will exist after
giving effect to the borrowings or other extensions of credit to be made on the
Closing Date or thereafter under or pursuant to the Loan Documents, which
constitutes an Event of Default or a Potential Default.

    

    
      

    

    
      6.1.13.      Security
Interests.

    

    
      

    

    
      The Liens
and security interests granted to and for the benefit of Lender pursuant to the
Loan Documents constitute and will continue to constitute first priority
security interests under the Uniform Commercial Code as in effect in each
applicable jurisdiction (the "Uniform Commercial
Code") or other Law, entitled to all the rights, benefits and priorities
provided by the Uniform Commercial Code or such Law, subject to the Permitted
Exceptions. Upon the filing of financing statements relating to said security
interests in each office in which filing is required under the Uniform
Commercial Code all such action as is necessary in Lender's sole opinion to
establish such rights of Lender will have been taken, and there will be, upon
execution and delivery of the Loan Documents, such filings and such taking of
possession, no necessity for any further action in order to preserve, protect
and continue such rights, except the filing of continuation statements with
respect to such financing statements within six (6) months prior to the
expiration of such filing of such financing statements. All filing fees and
other expenses in connection with each such action have been or will be paid by
Borrower. All continuations and any assignments of any such financing statements
have been or will be timely filed or refiled, as appropriate, in the appropriate
recording offices. Without limiting the foregoing representations and
warranties, Borrower hereby authorizes Lender to file financing statements,
continuation statements and financing statement amendments, in such form as
Lender may require to perfect or continue the perfection of such security
interests and in all events without Borrower's signature.

    

    
      

    

    
      6.1.14.      Mortgage
Liens.

    

    
      

    

    
      The Liens granted to and for the
benefit of Lender pursuant to the Collateral Pool Property Documents constitute
a valid first priority Lien under applicable Law, subject to any Permitted
Exceptions. All such action as will be necessary in Lender's sole opinion to
establish such Lien of Lender and its priority as described in the preceding
sentence will be taken at or prior to the time required for such
purpose, and there will be as of the date of execution and delivery of the Collateral Pool
Property Documents no necessity for any further action in order to protect, preserve and continue such
Lien and such priority (except for the timely filing in the required offices of
Uniform Commercial Code financing statement continuations). All filing fees and
other expenses in connection with each such action have been or will be paid by
Borrower.

    

    

    
      
        
           

        

        
          - 48 -

          
            

          

        

        
           

        

      

    

    

    
      6.1.15.      Insurance.

    

    
      

    

    
      All
insurance policies and other bonds to which Borrower and its Affiliates are a
party are valid and in full force and effect. No notice has been given, no claim
has been made, and no grounds exist, to cancel or avoid any of such policies or
bonds or to reduce the coverage provided thereby. Such policies and bonds
provide adequate coverage from reputable and financially sound insurers in
amounts sufficient to insure the assets and risks of Borrower and its Affiliates
in accordance with prudent business practice in the industry of Borrower and its
Affiliates. The representations made in this Section
6.1.15 with
respect to Affiliates of the Borrower are given only to the extent that the same
could result in a Material Adverse Change.

    

    
      

    

    
      6.1.16.      Material Contracts;
Burdensome Restrictions.

    

    
      

    

    
      All
material contracts relating to Borrower and those contracts relating to
Affiliates of the Borrower, of which a default thereunder could result in a
Material Adverse Change, taken as a whole, are valid, binding and enforceable
(subject to bankruptcy and creditor's rights laws) upon Borrower and such
Affiliates, as applicable, and, to Borrower's knowledge, each of the other
parties thereto in accordance with their respective terms (except as disclosed
in writing by Borrower to Lender prior to the date hereof). There is no default
under any such contracts by Borrower, or to Borrower's knowledge by any of the
other parties thereto, except for defaults which would not result in a Material
Adverse Change. Neither Borrower nor any of its Affiliates is bound by any
contractual obligation, or subject to any restriction in any organizational
document, or any requirement of Law, which is reasonably expected to result in a
Material Adverse Change.

    

    
      

    

    
      6.1.17.      Investment Companies;
Regulated Entities.

    

    
      

    

    
      Borrower
is not an "investment company" registered or required to be registered under the
Investment Company Act of 1940 or under the "control" of an "investment company"
as such terms are defined in the Investment Company Act of 1940 and shall not
become such an "investment company" or under such "control." Borrower is not
subject to any other federal or state statute or regulation limiting its ability
to incur any debt.

    

    
      

    

    
      6.1.18.      Pension Plans and Benefit
Arrangements.

    

    
      

    

    
      The
representations and warranties set forth in this Section
6.1.18 shall
only apply to the extent Borrower is at any time, and from time to time, subject
to the provisions of ERISA.

    

    
      

    

    
      6.1.18.1.   Borrower and
each other member of the ERISA Group are in compliance in all material respects
with any applicable provisions of ERISA with respect to all Benefit
Arrangements, Pension Plans and Multiemployer Plans.  There has been
no Prohibited Transaction
with respect to any Benefit Arrangement or any Pension Plan or, with respect to
any Multiemployer Plan, which could result in any material liability of Borrower
or any other member of the ERISA Group. Borrower and all members of the ERISA
Group have made when due any and all payments required to be made under any
agreement relating to a Multiemployer Plan or any Law pertaining thereto. With
respect to each Pension Plan and Multiemployer Plan, Borrower and each member of
the ERISA Group (i) have fulfilled in all material respects their obligations
under the minimum funding standards of ERISA, (ii) have not incurred any
liability to the PBGC, and (iii) have not had asserted against them any penalty
for failure to fulfill the minimum funding requirements of
ERISA.

    

    

    
      
        
           

        

        
          - 49 -

          
            

          

        

        
           

        

      

    

    

    
      6.1.18.2.   Each
Multiemployer Plan is able to pay benefits thereunder when
due.

    

    
      

    

    
      6.1.18.3.   Neither
Borrower nor any other member of the ERISA Group has instituted or intends to
institute proceedings to terminate any Pension Plan.

    

    
      

    

    
      6.1.18.4.   No
event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has
occurred or is reasonably expected to occur with respect to any Pension Plan,
and no amendment with respect to which security is required under Section 307 of
ERISA has been made or is reasonably expected to be made to any Pension
Plan.

    

    
      

    

    
      6.1.18.5.   The
aggregate actuarial present value of all benefit liabilities (whether or not
vested) under each Pension Plan, determined on a plan termination basis, as
disclosed in, and as of the date of, the most recent actuarial report for such
Pension Plan, does not exceed the aggregate fair market value of the assets of
such Pension Plan.

    

    
      

    

    
      6.1.18.6.   Neither
Borrower nor any other member of the ERISA Group has incurred or reasonably
expects to incur any material withdrawal liability under ERISA to any
Multiemployer Plan. Borrower nor any other member of the ERISA Group has been
notified by any Multiemployer Plan that such Multiemployer Plan has been
terminated within the meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be reorganized or terminated, within the meaning of Title
IV of ERISA.

    

    
      

    

    
      6.1.18.7.   To
the extent that any Benefit Arrangement is insured, Borrower and all members of
the ERISA Group have paid when due all premiums required to be paid for all
periods through and including the Closing Date. To the extent that any Benefit
Arrangement is funded other than with insurance, Borrower and all other members
of the ERISA Group have made when due all contributions required to be paid for
all periods through the Closing Date.

    

    
      

    

    
      6.1.18.8.   All
Pension Plans, Benefit Arrangements and Multiemployer Plans have been
administered in accordance with their terms and any Law.

    

    
      

    

    
      6.1.19.      Other
Indebtedness.

    

    
      

    

    
      Other
than the Loan, Borrower has not incurred any debt other than (i) unsecured trade
debt incurred in the ordinary course of business and (ii) subordinate
intercompany debt.

    

    

    
      
        
           

        

        
          - 50 -

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              6.1.20.

            	
              Solvency,

            

    

     

    Borrower
is Solvent. After giving effect to the transactions contemplated by the Loan
Documents, including the Loan incurred thereunder and the Liens granted to and
for the benefit of Lender, Borrower will be Solvent. Borrower has not entered
into this Credit Agreement or any Loan Document with the actual intent to
hinder, delay, or defraud any creditor, and Borrower has received reasonably
equivalent value in exchange for its obligations under the Loan Documents.
Borrower does not intend to, and Borrower does not believe that it will, incur
debts and liabilities beyond its ability to pay such debts as they mature
(taking into account the timing and amounts to be payable on or in respect of
obligations of Borrower).

     

    
      	
               
      

            	
              6.1.21.

            	
              Agreements.

            

    

     

    Borrower
is not a party to any agreement or instrument or subject to any restriction
which is likely to result in a Material Adverse Change. Borrower is not in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any indenture, agreement
or instrument to which it is a party or by which Borrower or any Collateral Pool
Property is bound which default is likely to result in a Material Adverse
Change.

     

    
      	
               
      

            	
              6.1.22.

            	
              No Bankruptcy
      Filing.

            

    

     

    Borrower
is not contemplating either the filing of a petition by it under any state or
federal bankruptcy or insolvency Laws or the liquidation of all or a major
portion of its assets or property of Borrower and Borrower has no knowledge of
any Person contemplating the filing of any such petition against
Borrower.

     

    
      	
               
      

            	
              6.1.23.

            	
              Formation.

            

    

     

    Borrower
was formed in the State of California.

     

    
      	
               
      

            	
              6.1.24.

            	
              Compliance.

            

    

     

    Borrower,
each Collateral Pool Property and the use thereof and operations thereat by
Borrower, comply in all material respects with all applicable Laws. Borrower is
not in default or violation of any order, writ, injunction, decree or demand of
any Official Body, the violation of which is reasonably likely to result in a
Material Adverse Change. All required permits, licenses, and certificates for
the lawful use and operation of the Collateral Pool Properties, including, but
not limited to, certificates of occupancy, apartment licenses, or the equivalent
have been obtained and are in full force and effect.

     

    
      	
               
      

            	
              6.1.25.

            	
              Not a Foreign
      Person.

            

    

     

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

    

    
      
        
           

        

        
          - 51
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              6.1.26.

            	
              Labor
      Matters.

            

    

     

    Borrower
is not a party to any collective bargaining agreements.

     

    
      	
               
      

            	
              6.1.27.

            	
              Condemnation.

            

    

     

    No
taking, condemnation or eminent domain proceeding has been commenced or, to
Borrower's knowledge, is contemplated with respect to all or any portion of any
Collateral Pool Property or for the relocation of roadways providing access to
any Collateral Pool Property.

     

    
      	
               
      

            	
              6.1.28.

            	
              Utilities and Public
      Access.

            

    

     

    Each
Collateral Pool Property has adequate rights of access to public ways and is
served by adequate water, sewer, sanitary sewer and storm drain facilities as
are adequate for full utilization of such Collateral Pool Property for its use
as a multifamily residential property. All public utilities necessary to the
continued use and enjoyment of each Collateral Pool Property as presently used
and enjoyed are located in the public right-of-way abutting the premises or an
easement for same, and all such utilities are connected so as to serve each
Collateral Pool Property either (i) without passing over other property or, (ii)
if such utilities pass over other property, pursuant to valid easements. All
roads necessary for the full utilization of each Collateral Pool Property for
its current purpose have been completed and dedicated to public use and accepted
by all Official Bodies or are the subject of access easements for the benefit of
such Collateral Pool Property.

     

    
      	
               
      

            	
              6.1.29.

            	
              No Joint Assessment;
      Separate Lots.

            

    

     

    Borrower
has not suffered, permitted or initiated the joint assessment of any Collateral
Pool Property (i) with any other real property constituting a separate tax lot,
and (ii) with any portion of such Collateral Pool Property which may be deemed
to constitute personal property, or any other procedure whereby the lien of any
taxes which may be levied against such personal property shall be assessed or
levied or charged to such Collateral Pool Property as a single lien, which joint
assessment would result in a Material Adverse Change. Borrower shall not suffer,
permit or initiate the joint assessment of any Collateral Pool Property (i) with
any other real property constituting a separate tax lot, and (ii) with any
portion of such Collateral Pool Property which may be deemed to constitute
personal property, or any other procedure whereby the lien of any taxes which
may be levied against such personal property shall be assessed or levied or
charged to such Collateral Pool Property as a single lien. Each Collateral Pool
Property is comprised of one or more parcels, each of which constitutes a
separate tax lot and none of which constitutes a portion of any other tax lot in
any manner which would result in a Material Adverse Change.

     

    
      	
               
      

            	
              6.1.30.

            	
              Assessments.

            

    

     

    Except as
disclosed in the title insurance policies, there are no pending or, to the
Borrower's knowledge proposed special or other assessments for public
improvements or otherwise affecting any Collateral Pool Property, nor, to
Borrower's knowledge are there any contemplated improvements to any Collateral
Pool Property that may result in such special or other
assessments.

     

    
      	
               
      

            	
              6.1.31.

            	
              No
      Liabilities.

            

    

     

    Borrower
has no liabilities or obligations including, without limitation, contingent
obligations (including, without limitation, liabilities or obligations in tort,
in contract, at law, in equity, pursuant to a statute or regulation, or
otherwise) other than those liabilities and obligations expressly permitted by
this Agreement, including those addressed in Section
7.2.2.

     

    
      	
               
      

            	
              6.1.32.

            	
              No Prior
      Assignment.

            

    

     

    As of the
Closing Date, (i) Lender shall be assignee of Borrower's interest under any
leases with respect to the Collateral Pool Properties, and (ii) there are no
prior assignments of any such leases or any portion of the rents due and payable
thereunder or to become due and payable thereunder which are presently
outstanding.

    

    
      
        
           

        

        
          - 52
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              6.1.33.

            	
              Certificate of
      Occupancy.

            

    

     

    Borrower
has obtained in its own name (or is the express successor or assignee of) all
permits necessary to use and operate the Collateral Pool Properties for the uses
described in Section
2.8, and all such
permits are in full force and effect. The use being made of each Collateral Pool
Property is in conformity in all respects with the certificate of occupancy
and/or permits for such Collateral Pool Property and any other restrictions,
covenants or conditions affecting such Collateral Pool Property, including
without limitation, the applicable zoning and land use ordinances except as
otherwise disclosed in writing to Lender prior to the Closing Date. Each
Collateral Pool Property contains all equipment necessary to use and operate
such Collateral Pool Property in a manner similar to that as of Lender's final
inspection thereof. Borrower will continue to operate each Collateral Pool
Property in substantially the manner in which it is presently being
operated.

     

    
      	
               
      

            	
              6.1.34.

            	
              Intellectual
      Property.

            

    

     

    All
trademarks, trade names and service marks that Borrower owns or has pending, or
under which Borrower is licensed, are in good standing and uncontested, the
failure of which would result in a Material Adverse Change. Borrower has not
infringed, is not infringing, and has not received notice of infringement with
respect to any asserted trademarks, trade names or service marks of others,
which infringement would result in a Material Adverse Change. To Borrower's
knowledge there is no infringement by others of any trademarks, trade names or
service marks of Borrower.

     

    
      	
               
      

            	
              6.1.35.

            	
              Conduct of
      Business.

            

    

     

    Borrower
does not conduct its business "also known as", "doing business as" or under any
other name.

     

    
      	
               
      

            	
              6.1.36.

            	
              Intentionally
      Omitted.

            

    

     

    
      	
               
      

            	
              6.1.37.

            	
              No
      Default.

            

    

     

    The
execution, delivery and performance of the obligations imposed on Borrower, if
any, under this Agreement, the Revolving Credit Note and the other 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. There is no litigation or other claim pending before any court or
administrative or governmental body or overtly threatened by a written
communication against Borrower, any Collateral Pool Property, or any other
property of Borrower which would result in a Material Adverse Change or which is
not covered by insurance.

    

    
      
        
           

        

        
          - 53
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              6.1.38.

            	
              Condition of the
      Collateral Pool Properties.

            

    

     

    To the
extent that any Collateral Pool Property has been damaged by fire, water, wind,
earthquake or other cause of casualty, such Collateral Pool Property has been
fully restored.

     

    
      	
               
      

            	
              6.1.39.

            	
              Non-Residential
      Leases.

            

    

     

    Each
Collateral Pool Property is a multi-family housing project. Gross income derived
from commercial space, if any, located in any Collateral Pool Property shall not
exceed twenty-five percent (25%) of the total gross income of such Collateral
Pool Property. Neither Borrower, nor any general partner, managing member or
principal thereof, is an Affiliate or otherwise related to the lessee under any
leases for laundry equipment, telecommunications, television or similar systems
on or about any of the Collateral Pool Properties. For the purposes of this
Section, leases of parking to tenants shall not be deemed to be derived from
commercial space.

     

    
      	
               
      

            	
              6.1.40.

            	
              No Low Income Housing
      Tax Credit.

            

    

     

    Except as
disclosed to Lender in writing, Borrower has not claimed, nor does Borrower
intend to claim, a low income housing tax credit for any of the Collateral Pool
Properties under Section 42 of the Internal Revenue Code of 1986, or any
successor Section thereto. Should Borrower later decide to pursue claiming such
a tax credit, Borrower will not proceed without obtaining Lender's prior written
consent to do so, to be granted in Lender's sole discretion.

     

    
      	
               
      

            	
              6.1.41.

            	
              No
      Restrictions.

            

    

     

    Except as
disclosed to Lender in writing, there are no rent level restrictions or tenant
income restrictions on any Collateral Pool Property.

     

    
      	
               
      

            	
              6.1.42.

            	
              No Adverse Affect on
      the Loan.

            

    

     

    Nothing
involving the Collateral Pool Properties, Borrower or Borrower's credit standing
may be reasonably expected to (i) cause any payments under this Agreement, the
Revolving Credit Note or any other Loan Documents to become delinquent or (ii)
materially adversely affect the Market Value of any Collateral Pool
Property.

     

    
      	
               
      

            	
              6.1.43.

            	
              Term of
      Leases.

            

    

     

    All
Leases for residential dwelling units with respect to the Collateral Pool
Properties shall be on forms approved by Lender, shall be for initial terms of
at least six (6) months and not more than two (2) years, and shall not include
options to purchase.

    

    
      
        
           

        

        
          - 54
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              6.1.44.

            	
              Authorized
      Officer.

            

    

     

    The
Authorized Officers of Borrower are those individuals that are identified as
"Authorized Representatives" on that certain Certificate of Authorized
Representative (Freddie Mac Form 988MF 7/08) delivered by Borrower to Lender on
November 4, 2008 (as such list of Authorized Officers may be amended from time
to time by written Notice to Lender).

     

    
      	
               
      

            	
              6.1.45.

            	
              Fraudulent
      Conveyances.

            

    

     

    Borrower
has not entered into any agreements, transactions or series of transactions with
the intent to hinder, delay, or defraud any creditor, and Borrower has not
entered into any agreements, transactions or series of transactions other than
for valid consideration of reasonably equivalent value in exchange for its
obligations thereunder.

     

    
      	
               
      

            	
              6.1.46.

            	
              Affiliate
      Transactions.

            

    

     

    Except as
approved in writing by Lender, Borrower has not entered into and is not a party
to any contract, lease or other agreement with any Person directly or indirectly
controlling, controlled by, or under common control with Borrower for the
provision of any service, materials or supplies to any Collateral Pool Property
(including any contract, lease or agreement for the provision of property
management services, cable television services or equipment, gas, electric or
other utilities, security services or equipment, laundry services or equipment,
or telephone services or equipment).

     

    
      	
               
      

            	
              6.1.47.

            	
              No Existing Material
      Adverse Circumstances.

            

    

     

    As of the
date hereof, there exists no set of circumstances which, had such circumstances
arisen subsequent to the date hereof, would constitute a Material Adverse
Change.

     

    
      	
               
      

            	
              6.2.

            	
              Updates.

            

    

     

    Borrower
shall provide with each Loan Request that will result in an increase in the
Loan, written revisions to any representations or warranties in this Agreement
which have become outdated or incorrect in any material respect. In addition,
should any such updates, corrections or additions relate to a matter which would
be a Material Adverse Change, Borrower shall promptly provide Lender in writing
with such revisions as may be necessary or appropriate, to correct or update
same. Notwithstanding the providing of revised information, a breach of warranty
or representation resulting from the prior inaccuracy or incompleteness shall
not be deemed to have been cured thereby or waived by Lender unless and until
Lender, in its sole and absolute discretion, shall have accepted in writing such
revisions or updates; further provided that no
representation or warranty shall be deemed to have been updated by any such
revision unless and until Lender funds the additional Loan
Request.

     

    
      	
               
      

            	
              6.3.

            	
              Survival of
      Representations and
Warranties.

            

    

     

    Borrower
agrees that (i) all of the representations and warranties of Borrower set forth
in this Agreement and in the other Loan Documents delivered on the Closing Date
are made as of the Closing Date (except as expressly otherwise provided) and
(ii) all representations and warranties made by Borrower shall survive the
delivery of the Note and continue (a) for so long as any amount remains owing to
Lender under this Agreement, the Note or any of the other Loan Documents or (b)
until the date on which Lender releases all assets in the Collateral Pool from
any Lien securing the Loan Documents pursuant to the provisions of Section
2.10 or
Section
2.15, whichever
is later. All representations, warranties, covenants and agreements made in this
Agreement or in the other Loan Documents shall be deemed to have been relied
upon by Lender notwithstanding any investigation heretofore or hereafter made by
Lender or on its behalf.

    

    
      
        
           

        

        
          - 55
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              7.

            	
              COVENANTS

            

    

     

    
      	
               
      

            	
              7.1.

            	
              Covenants.

            

    

     

    Borrower
covenants and agrees that until the later of (i) payment in full of the Loan and
interest thereon, and satisfaction of all of the other Obligations of Borrower
under the Loan Documents and (ii) the Expiration Date, Borrower shall comply at
all times with the following covenants:

     

    
      	
               
      

            	
              7.1.1.

            	
              Preservation of
      Existence.

            

    

     

    Borrower
shall, and shall cause each of its Affiliates to, maintain its legal existence
as a corporation, general or limited partnership or limited liability company
and its license or qualification and good standing in each jurisdiction in which
its ownership or lease of property or the nature of its business makes such
license or qualification necessary unless the failure to maintain the same shall
not result in a Material Adverse Change to Borrower or any Collateral Pool
Property.

     

    
      	
               
      

            	
              7.1.2.

            	
              Maintenance of
      Collateral Pool Properties and
Leases.

            

    

     

    Borrower
(i) shall not commit waste or permit impairment or deterioration of the
Collateral Pool Properties, (ii) shall not abandon any Collateral Pool Property,
(iii) shall restore or repair promptly, in a good and workmanlike manner, any
damaged part of any Collateral Pool Property to the equivalent of its original
condition, or such other condition as Lender may reasonably approve in writing,
whether or not insurance proceeds or condemnation awards are available to cover
any costs of such restoration or repair (provided that Lender
shall make any insurance proceeds or condemnation awards received by Lender
available to Borrower for restoration and repair), (iv) shall keep the
Collateral Pool Properties in good repair (normal wear and tear excepted),
including the replacement of any personalty and fixtures located on any
Collateral Pool Property with items of equal or better function and quality, (v)
shall provide for professional management of the Collateral Pool Properties by a
residential rental property manager satisfactory to Lender under a contract
approved by Lender in writing (provided that
Lender's approval is not required for a manager or a management agreement where
Borrower or an Affiliate of Borrower is the manager), (vi) shall not change the
use of any Collateral Pool Property as a multi-family residential property,
(vii) shall give Notice to Lender of and, unless otherwise directed in writing
by Lender, shall appear in and defend any action or proceeding purporting to
affect any Collateral Pool Property, Lender's security or Lender's rights under
this Agreement, and (viii) shall make any reasonable repairs to a Collateral
Pool Property which are requested by Lender. Borrower shall not (and shall not
permit any tenant or other person to) remove, demolish or materially alter any
Collateral Pool Property or any part thereof except in connection with the
replacement of tangible personalty.

    

    
      
        
           

        

        
          - 56
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              7.1.3.

            	
              Collateral
      Agreements.

            

    

     

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

     

    
      	
               
      

            	
              7.1.4.

            	
              Inspection
      Rights.

            

    

     

    Lender,
its agents, representatives, and designees may make or cause to be made entries
upon and inspections of any Collateral Pool Property (including environmental
inspections and tests) during normal business hours, or at any other reasonable
time upon reasonable advance notice, except that no such notice shall be
required in cases of emergency. In the case of environmental inspections,
Lender, its agents, representatives, or designees shall, in providing notice
pursuant to this section, identify any third party inspectors.

     

    
      	
               
      

            	
              7.1.5.

            	
              Single Asset
      Borrower.

            

    

     

    Prior to
the Expiration Date, Borrower (i) shall not own or acquire any real or personal
property other than the Collateral Pool Properties and personal property related
to the operation and maintenance of the Collateral Pool Properties, (ii) shall
not operate any business other than the ownership, management and operation of
the Collateral Pool Properties, and (iii) shall not maintain its assets in a way
difficult to segregate and identify.

     

    
      	
               
      

            	
              7.1.6.

            	
              Use of
      Proceeds.

            

    

     

    Borrower
will use the proceeds of the Loan only for lawful purposes in accordance with
Section
2.8 hereof.

     

    
      	
               
      

            	
              7.1.7.

            	
              Further
      Assurances.

            

    

     

    Borrower
shall, from time to time, at its expense, faithfully preserve and protect
Lender's Lien on and security interest in the Collateral as a continuing first
priority perfected Lien, subject only to Permitted Exceptions, and shall do such
other acts and things as Lender in its sole discretion may deem necessary or
advisable from time to time in order to preserve, perfect and protect the Liens
granted under the Loan Documents and to exercise and enforce its rights and
remedies thereunder with respect to the Collateral, provided that (i) the
terms and conditions of this Agreement and the other Loan Documents are not
changed thereby, (ii) Lender will use its best efforts to minimize costs and
expenses incurred in connection with a request under this subsection, (iii)
Borrower's obligations hereunder or under any other Loan Documents are not
increased or otherwise adversely affected thereby except for incidental costs
and expenses such as recording fees and reasonable attorneys' fees and expenses,
and (iv) Borrower's rights hereunder or under any other Loan Documents are not
decreased or otherwise adversely affected thereby.

     

    
      	
               
      

            	
              7.1.8.

            	
              Collateral Pool
      Properties.

            

    

     

    7.1.8.1.    
Borrower shall be in compliance with the Sublimits set forth in Section
2.5.3 at
such times as expressly required in this Agreement; and

    

    
      
        
           

        

        
          - 57
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    7.1.8.2.    
Borrower shall own at all times the entire fee simple interest in each
Collateral Pool Property.

     

    
      	
               
      

            	
              7.1.9.

            	
              Subsequent Periodic
      Valuations.

            

    

     

    Borrower
shall cooperate with Lender and its agents and provide such information in its
possession as such parties shall reasonably require to complete a new Valuation
for each Collateral Pool Property.

     

    
      	
               
      

            	
              7.1.10.

            	
              Special ERISA Related
      Covenants.

            

    

     

    The
covenants set forth in this Section
7.1.10, shall
only apply to the extent Borrower is at any time and from time to time subject
to the provisions of ERISA.

     

    7.1.10.1.  Borrower
shall at all times be a "real estate operating company" within the meaning of
such term contained in 29 CFR § 2510.3-101(d) or an entity whose underlying
assets are not deemed to be assets of a Pension Plan as defined in Section 3(3)
of ERISA.

     

    7.1.10.2.  Borrower
shall, and shall cause each other member of the ERISA Group to, comply with
ERISA, the Internal Revenue Code and other applicable Laws applicable to Pension
Plans and Benefit Arrangements. Without limiting the generality of the
foregoing, Borrower shall cause all of its Pension Plans and all Pension Plans
maintained by any member of the ERISA Group to be funded in accordance with the
minimum funding requirements of ERISA and shall make, and cause each member of
the ERISA Group to make, in a timely manner, all contributions due to Pension
Plans, Benefit Arrangements and Multiemployer Plans.

     

    7.1.10.3.  Borrower
and members of the ERISA Group shall not:

     

    (i)          
  fail to satisfy the minimum funding requirements of ERISA and
the
Internal Revenue Code with respect to any Pension Plan;

     

    (ii)          
 request a minimum funding waiver from the Internal Revenue Service
with respect to any Pension Plan;

     

    (iii)           engage
in a Prohibited Transaction with any Pension Plan, Benefit Arrangement
or Multiemployer Plan which, alone or in conjunction with any other circumstances
or set of circumstances resulting in liability under ERISA, would constitute
a Material Adverse Change;

     

    (iv)           permit
the aggregate actuarial present value of all benefit liabilities (whether
or not vested) under each Pension Plan, determined on a plan termination basis,
as
disclosed in the most recent actuarial report completed with respect to such
Pension Plan, to
exceed, as of any actuarial valuation date, the fair market value of the assets
of such
Pension Plan;

    

    
      
        
           

        

        
          - 58
-

          
            

          

        

        
           

        

      

    

     

    (v)        
   fail to make when due any contribution to any Multiemployer
Plan that
Borrower or any member of the ERISA Group may be required to make under any
agreement
relating to such Multiemployer Plan, or any Law pertaining thereto;

     

    (vi)           withdraw
(completely or partially) from any Multiemployer Plan or
withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any
Multiple
Employer Pension Plan (as such term is defined in ERISA), where any such
withdrawal
is likely to result in a material liability of Borrower or any member of the
ERISA
Group;

     

    (vii)          terminate,
or institute proceedings to terminate, any Pension Plan, where
such termination is likely to result in a material liability to Borrower or any
member of
the ERISA Group;

     

    (viii)         make
any amendment to any Pension Plan with respect to which security
is required under Section 307 of ERISA; or

     

    (ix)           fail
to give any and all Notices and make all disclosures and governmental
filings required under ERISA or the Internal Revenue Code, where such
failure
is likely to result in a Material Adverse Change.

     

    
      	
               
      

            	
              7.1.11.

            	
              Indebtedness.

            

    

     

    Borrower
shall not, at any time create, incur, assume or suffer to exist any
indebtedness, except:

     

    7.1.11.1. Indebtednes s under the
Loan Documents;

     

    7.1.11.2. Trade debt incurred in the
ordinary course of business and any subordinate
intercompany debt.

     

    
      	
               
      

            	
              7.1.12.

            	
              Liens.

            

    

     

    Borrower
shall not, at any time create, incur, assume or suffer to exist any Lien on any
of its property or assets, tangible or intangible, now owned or hereafter
acquired, or agree or become liable to do so, except the Permitted Exceptions.
Upon Lender's reasonable request, which request shall not be made more
frequently than annually unless Lender has a reasonable suspicion of a title
defect, Borrower shall promptly perform or cause to be performed, at Borrower's
sole cost and expense, a title search reasonably satisfactory to Lender,
demonstrating compliance with the provisions of this Section
7.1.12.

     

    
      	
               
      

            	
              7.1.13.

            	
              Liquidations, Mergers,
      Consolidations,
Acquisitions.

            

    

     

    Borrower
shall not dissolve, liquidate or wind-up its affairs, or become a party to any
merger or consolidation, or acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock of any other
Person.

    

    
      
        
           

        

        
          - 59
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              7.1.14.

            	
              Dispositions of Assets
      or Affiliates.

            

    

     

    Borrower
shall not sell, convey, assign, lease, abandon or otherwise transfer or dispose
of, voluntarily or involuntarily, all or substantially all of its assets, provided that the
foregoing shall not be construed to prevent Borrower from selling, conveying or
leasing its assets as permitted pursuant to the terms of this Agreement or any
of the other Loan Documents.

     

    
      	
               
      

            	
              7.1.15.

            	
              Affiliate Trans
      actions.

            

    

     

    Borrower
shall not acquire or purchase an asset in which any Affiliate has a direct or
indirect ownership interest otherwise than upon terms which are no less
favorable than those terms which would be obtained in an arms length transaction
with a third party.

     

    
      	
               
      

            	
              7.1.16.

            	
              Continuation of or
      Change in Business.

            

    

     

    Borrower
shall not engage in any business activities except as permitted under its
organizational documents and this Agreement.

     

    
      	
               
      

            	
              7.1.17.

            	
              Changes in
      Organizational Documents;
Name.

            

    

     

    Borrower
and its general partners, managing members, or principals shall not amend in any
respect their respective certificate of incorporation (including any provisions
or resolutions relating to capital stock), by-laws, certificate of limited
partnership, or limited partnership agreement (as applicable) or other formation
agreement or other organizational documents without first sending Notice to
Lender and obtaining the prior written consent of Lender, which shall be granted
or denied in Lender's reasonable discretion within thirty (30) Business Days of
Lender's receipt of the proposed amendment, a brief explanation of its purpose
and effect, and such other documents as Lender may reasonably request. Borrower
shall not amend, revise or otherwise change its name in any respect, without the
prior written consent of Lender, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, this Section 7.1.17 shall
not apply to (i) Essex Property Trust, Inc. for so long as it remains a publicly
traded entity or to (ii) Essex Portfolio, L.P. unless such change or amendment
would result in a Material Adverse Change.

     

    
      	
               
      

            	
              7.1.18.

            	
              Properties Under
      Development.

            

    

     

    Except as
disclosed to Lender in writing, no Collateral Pool Property shall be raw land or
property under construction or development with respect to which property
construction or reconstruction will be needed before the property can be leased
to tenants paying rent.

     

    
      	
               
      

            	
              7.1.19.

            	
              Further
      Documentation.

            

    

     

    In the
event any further documentation or information is reasonably required by Lender
to enable Lender to sell the Loan, Borrower shall provide, or cause to be
provided to Lender, at Borrower's sole cost and expense, such documentation or
information. Borrower shall execute and deliver to Lender such documentation,
including, but not limited to, any amendments, corrections, deletions or
additions to this Agreement, the Note, and the other Loan Documents as is
reasonably required by Lender; provided that Borrower shall not be required to
do anything that has the effect of (i) changing the material economic or other
business terms of this Agreement, the Note, or any other Loan Documents, (ii)
imposing on Borrower greater liability or obligation than that set forth in this
Agreement, the Note or any other Loan Documents, or (iii) decreasing or
otherwise adversely affecting the rights of Borrower under this Agreement or any
other Loan Documents.

    

    
      
        
           

        

        
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              7.1.20.

            	
              Compliance with Lender
      Requirements.

            

    

     

    Borrower
shall comply with the requirements of Lender in order to enable Lender to sell
the Loan, provided that Borrower shall not be required to do anything that has
the effect of (i) changing the material economic or other business terms of this
Agreement, the Note, or any other Loan Documents or (ii) imposing on Borrower
greater liability or obligation than that set forth in this Agreement, the Note
or any other Loan Documents.

     

    
      	
               
      

            	
              7.1.21.

            	
              Subordination of
      Leases.

            

    

     

    Borrower
covenants, if any lease of any Collateral Pool Property is not subordinate to
the Security Instrument securing such Collateral Pool Property, Borrower shall
(i) use a new standard lease form containing subordination language reasonably
acceptable to Lender, for all new leases of such Collateral Pool Property; and
(ii) execute the new form of lease on any renewal of any existing leases of such
Collateral Pool Property.

     

    
      	
               
      

            	
              7.1.22.

            	
              Enforceability of Loan
      Documents.

            

    

     

    In the
event that any of the Loan Documents shall cease to be legal, valid and binding
agreements enforceable against the party executing the same or such party's
successors and assigns (as permitted under the Loan Documents) in accordance
with the respective terms thereof (except to the extent that enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting the enforceability of creditors' rights generally or
limiting the right to specific performance) or shall in any way be terminated
(except in accordance with its terms) or become or be declared ineffective or
inoperative or shall in any way be challenged or contested, resulting in the
failure to provide the practical benefit of the respective Liens, security
interests, rights, titles, interests, remedies, powers or privileges intended to
be created thereby, Borrower shall use best efforts to cure any such defect(s)
in such Loan Document(s), provided that if Borrower is unable to cure any such
defect(s) within a reasonable time period, not to exceed thirty (30) days, and
further provided that such defect is likely to result in a Material Adverse
Change, Lender may in its discretion, upon ten (10) days notice to Borrower,
accelerate Borrower's obligations under the Note.

    

    
      
        
           

        

        
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              7.1.23.

            	
              ERISA
      Matters.

            

    

     

    The
provisions set forth in this Section
7.1.23, shall
only apply to the extent Borrower is at any time and from time to time subject
to the provisions of ERISA. In the event that any of the following occurs: (i)
any Reportable Event, which Lender determines in good faith constitutes grounds
for the termination of any Pension Plan by the PBGC or the appointment of a
trustee to administer or liquidate any Pension Plan, shall have occurred and be
continuing; (ii) proceedings shall have been instituted or other action taken to
terminate any Pension Plan, or a termination notice shall have been filed with
respect to any Pension Plan; (iii) a trustee shall be appointed to administer or
liquidate any Pension Plan; (iv) the PBGC shall give notice of its intent to
institute proceedings to terminate any Pension Plan or Pension Plans or to
appoint a trustee to administer or liquidate any Pension Plan; and, in the case
of the occurrence of (i), (ii), (iii) or (iv) above, Lender determines in good
faith that the amount of Borrower's liability is likely to cause a Material
Adverse Change; (v) Borrower or any member of the ERISA Group shall fail to make
any contributions when due to a Pension Plan or a Multiemployer Plan; (vi)
Borrower or any member of the ERISA Group shall make any amendment to a Pension
Plan with respect to which security is required under Section 307 of ERISA;
(vii) Borrower or any member of the ERISA Group shall withdraw completely or
partially from a Multiemployer Plan; or (viii) any applicable Law, rule or
regulation is adopted, changed or interpreted by any governmental authority or
agency or court with respect to or otherwise affecting one or more Pension
Plans, Multiemployer Plans or Benefit Arrangements; and, with respect to any of
the events specified in (v), (vi), (vii) or (viii), Lender determines in good
faith that any such occurrence would be reasonably likely to materially and
adversely affect the total enterprise represented by Borrower and the other
members of the ERISA Group, Borrower shall use best efforts to cure such
occurrence(s), provided that if
Borrower is unable to cure any such occurrence(s) within a reasonable time
period, not to exceed thirty (30) days, Lender may in its discretion, upon ten
(10) days Notice to Borrower, accelerate Borrower's obligations under the
Revolving Credit Note.

     

    
      	
               
      

            	
              7.2.

            	
              Reporting
      Requirements.

            

    

     

    Borrower
covenants and agrees that until the later of (i) payment in full of the Loan and
satisfaction of all of Borrower's other Obligations hereunder and under the
other Loan Documents and (ii) the Expiration Date, Borrower will furnish or
cause to be furnished to Lender:

     

    
      	
               
      

            	
              7.2.1.

            	
              Notice of
      Default.

            

    

     

    If to
Borrower's knowledge an Event of Default or Potential Default has occurred with
respect to Borrower, a certificate signed by an Authorized Officer of Borrower
setting forth the details of such Event of Default or Potential Default and the
actions that Borrower proposes to take with respect thereto;

     

    
      	
               
      

            	
              7.2.2.

            	
              Notice of
      Litigation.

            

    

     

    Promptly
after the commencement thereof, Notice of all actions, suits, proceedings or
investigations before or by any Official Body or any other Person which (a)
relate to the Collateral, or (b) involve a claim or series of claims in excess
of ONE HUNDRED THOUSAND and NO/100 Dollars ($100,000.00) and, as to claims
described under sections (a) or (b) above, which (i) are not covered by
Borrower's insurance policies and (ii) if adversely determined would constitute
a Material Adverse Change; and

     

    
      	
               
      

            	
              7.2.3.

            	
              Notice of Material
      Adverse Change.

            

    

     

    Borrower
shall promptly notify Lender of any Material Adverse Change affecting Borrower,
any Collateral Pool Property, this Agreement or the other Loan Documents taken
as a whole.

     

    
      
        
        

      

      
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    7.3.          
Escrows.

     

    Borrower
shall be responsible for the payment of real estate taxes on the Collateral Pool
Properties and fire, hazard and other insurance premiums (collectively, the
"Impositions").
Collection of monthly escrow deposits for the payment of Impositions relating to
real estate taxes will be deferred; provided, that
collections of real estate taxes may subsequently be initiated as set forth in
the Loan Documents. Collection of monthly escrow deposits for the payment of
Impositions relating to fire, hazard and other insurance premiums will be
deferred; provided, that
collections of insurance premiums may subsequently be initiated as set forth in
the Loan Documents. Collection of monthly escrow deposits for required
replacements will be deferred under the Replacement Reserve Agreement; provided, that
collections of monthly escrow deposits for required replacements may
subsequently be initiated as set forth in the Loan Documents.

     

    
      	
              8.

            	
              DEFAULT

            

    

     

    
      	
               
      

            	
              8.1.

            	
              Events of
      Default.

            

    

     

    The
occurrence or existence of any one or more of the following events or conditions
(whatever the reason therefor and whether voluntary, involuntary or effected by
operation of Law) shall be an "Event of Default":

     

    
      	
               
      

            	
              8.1.1.

            	
              Payments Under Loan
      Documents.

            

    

     

    Borrower
shall fail to pay any principal under any Base Rate Borrowing Tranche or Fixed
Rate Borrowing Tranche (including scheduled installments, mandatory prepayments
or the payment due at maturity), or shall fail to pay any interest on any Loan
or any other amount owing hereunder or under any other Loan Documents after such
principal, interest or other amount becomes due in accordance with the terms
hereof or thereof;

     

    
      	
               
      

            	
              8.1.2.

            	
              Breach of
      Representation or Warranty.

            

    

     

    Any
representation or warranty made at any time by Borrower herein or in any other
Loan Document, or in any certificate, other instrument or statement furnished
pursuant to the provisions hereof or thereof, shall prove to have been false or
misleading in any material respect as of the time it was made or furnished and
the result of such false or misleading representation, warranty, certificate,
other instrument or statement is a Material Adverse Change which is not cured
within thirty (30) days after written Notice thereof from Lender to Borrower, or
within such additional reasonable time as may be necessary, in Lender's judgment
to cure such breach, in the event Borrower commences such cure within such
thirty (30) day period and thereafter diligently pursues such cure, not to
exceed sixty (60) additional days;

     

    
      	
               
      

            	
              8.1.3.

            	
              Breach of
      Covenant.

            

    

     

    Borrower
shall default in the observance or performance of any covenant, condition or
provision hereof or under any other Loan Document, which default is not
otherwise specified as an "Event of Default" under (i) the provisions of this
Article
8 or (ii)
Section 22 of any Security Instrument with respect to the initial Collateral
Pool Properties (or the same sections or any similar sections of any Security
Instrument with respect to any future Collateral Pool Property(ies)) and is not
cured within thirty (30) days after Notice thereof from Lender to Borrower of
such default, provided that, no
such Notice or grace period shall apply in the case of any default which could,
in Lender's judgment, absent immediate exercise by Lender of a right or remedy
under this Agreement or any of the other Loan Documents, result in additional
harm to Lender, impairment of the Note, or any rights of Lender under this
Agreement or any security given under any other Loan Document;

    

    
      
        
           

        

        
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              8.1.4.

            	
              Event of Default under
      the Loan Documents.

            

    

     

    Borrower
shall be in default under any provision of the Revolving Credit Note, or any
other Loan Document, including, without limitation, any Security Instrument,
beyond any applicable cure period;

     

    8.1.5.        Final Judgments or
Orders.

     

    Any final
judgments or orders for the payment of money in excess of ONE HUNDRED THOUSAND
and NO/100 Dollars ($100,000.00) in the aggregate shall be entered against
Borrower by a court having jurisdiction in the premises, which judgment is not
discharged, vacated, bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry;

     

    
      	
               
      

            	
              8.1.6.

            	
              Notice of Lien or
      Assessment.

            

    

     

    A notice
of Lien or assessment in excess of ONE MILLION and NO/100 Dollars
($1,000,000.00) which is not a Permitted Exception is filed of record with
respect to all or any part of any of Borrower's assets, or any taxes or debts
owing at any time or times hereafter to the United States, or any department,
agency or instrumentality thereof, or by any state, county, municipal or other
governmental agency, including the PBGC, becomes payable and the same is not
paid or otherwise discharged within thirty (30) days after the same becomes
payable, unless the same is being contested in accordance with the Loan
Documents;

     

    
      	
               
      

            	
              8.1.7.

            	
              Insolvency.

            

    

     

    Borrower
ceases to be Solvent or admits in writing its inability to pay its debts as they
mature;

     

    
      	
               
      

            	
              8.1.8.

            	
              Cessation of
      Business.

            

    

     

    Borrower
ceases to conduct the business of Borrower, or Borrower is enjoined, restrained
or in any way prevented by court order from conducting all or any material part
of the business of Borrower, and such injunction, restraint or other preventive
order is not dismissed within ten (10) Business Days after the entry
thereof;

     

    
      	
               
      

            	
              8.1.9.

            	
              Lien
      Priority.

            

    

     

    The Liens
granted to and for the benefit of Lender do not constitute valid first priority
Liens (subject to Permitted Exceptions) under applicable Laws and such default
shall continue unremedied for a period of thirty (30) Business Days after
Borrower's knowledge of the occurrence thereof or such additional reasonable
time period necessary to cure such default, in the event Borrower commences such
cure within such thirty (30) day period and thereafter diligently pursues such
cure, not to exceed sixty (60) additional days (such cure period to be
applicable only in the event such default can be remedied by corrective action
of Borrower to the satisfaction of Lender as determined by Lender in its
reasonable discretion); or

    

    
      
        
           

        

        
          - 64
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              8.1.10.

            	
              Bankruptcy and Other
      Proceedings.

            

    

     

    Borrower
voluntarily files for bankruptcy protection under the United States Bankruptcy
Code or voluntarily becomes subject to any reorganization, receivership,
insolvency proceeding or other similar proceeding pursuant to any other federal
or state Law affecting debtor and creditor rights, or an involuntary case is
commenced against Borrower by any creditor (other than Lender) of Borrower
pursuant to the United States Bankruptcy Code or other federal or state Law
affecting debtor and creditor rights and is not dismissed or discharged within
sixty (60) days after filing.

     

    
      	
               
      

            	
              8.1.11.

            	
              Material Adverse
      Change.

            

    

     

    There
shall occur a Material Adverse Change which is not corrected to the reasonable
satisfaction of Lender within thirty (30) days after the occurrence of such
Material Adverse Change, or such additional reasonable time period necessary to
cure such Material Adverse Change, in the event Borrower commences such cure
within such thirty (30) day period and thereafter diligently pursues such cure,
not to exceed thirty (30) additional days (such cure period to be applicable
only in the event such default can be remedied by corrective action of Borrower
to the satisfaction of Lender as determined by Lender in its reasonable
discretion). Notwithstanding the foregoing, if Borrower is otherwise in
compliance with all other provisions of this Agreement dealing with facts or
circumstances which would otherwise be a Material Adverse Change, Borrower shall
be deemed to be diligently pursuing a cure pursuant to this Section
8.1.11 and
the time periods of this Section
8.1.11 shall
be extended to a date coterminous with the cure periods provided in any other
section of this Agreement with regard to remedying such facts or
circumstances

     

    
      	
               
      

            	
              8.2.

            	
              Consequences of Event
      of Default.

            

    

     

    
      	
               
      

            	
              8.2.1.

            	
              Remedies
      Cumulative.

            

    

     

    Upon an
Event of Default under Section
8.1, Lender shall
be entitled to all of the rights and remedies granted to Lender under the Loan
Documents and applicable Law, all of which rights and remedies shall be
cumulative and non-exclusive, to the extent permitted by Law.

     

    
      	
               
      

            	
              8.2.2.

            	
              Acceleration of
      Loan.

            

    

     

    Upon an
Event of Default, Lender shall be entitled, without limitation, to (a)
accelerate the Loan, and to (b) collect as liquidated damages (i) a Prepayment
Fee applicable to any outstanding Base Rate Borrowing Tranches and Fixed Rate
Borrowing Tranches and (ii) the Early Termination Fee all in accordance with
Section
2.13.4.

    

    
      
        
           

        

        
          - 65
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              8.3.

            	
              Notice of
      Sale.

            

    

     

    Any
notice required to be given by Lender of a sale, lease, or other disposition of
any Collateral that is personal property or any other intended action by Lender
under the Uniform Commercial Code, if given at least ten (10) days prior to such
proposed action, shall constitute commercially reasonable and fair notice
thereof to Borrower.

     

    
      	
              9.

            	
              MISCELLANEOUS

            

    

     

    
      	
               
      

            	
              9.1.

            	
              Cooperation by
      Borrower; Borrower's
Obligations.

            

    

     

    Borrower
grants to Lender the right to distribute on a confidential basis financial and
other information concerning Borrower, each indemnitor, other Person, the
Collateral Pool Properties, and other pertinent information with respect to the
Loan to any party purchasing securities issued by Lender.

     

    
      	
               
      

            	
              9.2.

            	
              Successors and
      Assigns.

            

    

     

    This
Agreement shall be binding upon and shall inure to the benefit of Lender,
Borrower and their respective successors and assigns, except that Borrower may
not assign or transfer any of its respective rights or Obligations hereunder or
any interest herein, except as permitted under this Agreement or the other Loan
Documents.

     

    
      	
               
      

            	
              9.3.

            	
              Modifications,
      Amendments or Waivers.

            

    

     

    Lender
and Borrower may from time to time enter into written agreements amending or
changing any provision of this Agreement or any other Loan Document or the
rights of Lender or Borrower hereunder or thereunder, or may grant written
waivers or consents to a departure from the due performance of the Obligations
of Borrower hereunder or thereunder. Any such written agreement, waiver or
consent (i) shall be effective to bind Lender and Borrower and (ii) shall be
accompanied at all times by a written joinder agreement executed by the
guarantor under that certain Guaranty dated as of the date hereof in favor of
Lender, consenting and/or agreeing to the same.

     

    
      	
               
      

            	
              9.4.

            	
              Forbearance.

            

    

     

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

     

    Any
forbearance by Lender in exercising any right or remedy under the Note, this
Agreement, or any other Loan Document or otherwise afforded by applicable Law,
shall be in writing and shall not be deemed a waiver of or preclude the exercise
of any right or remedy. The acceptance by Lender of payment of all or any part
of the Loan 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 Loan or to
exercise any remedies for any failure to make prompt payment. Enforcement by
Lender of any security for the Loan shall not constitute an election by Lender
of remedies so as to preclude the exercise of any other right available to
Lender to the extent permitted by Law. Lender's receipt of any awards or
proceeds shall not operate to cure or waive any Event of Default.

    

    
      
        
           

        

        
          - 66
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              9.5.

            	
              Remedies
      Cumulative.

            

    

     

    Each
right and remedy provided in this Agreement is distinct from all other rights or
remedies under this 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.

     

    
      	
               
      

            	
              9.6.

            	
              Reimbursement and
      Indemnification of Lender and Servicer by Borrower;
      Taxes.

            

    

     

    Borrower
agrees unconditionally upon demand to pay or reimburse to Lender and Servicer
and to hold Lender and Servicer harmless against (i) liability for the payment
of all reasonable third party out-of-pocket costs, expenses and disbursements
customary within the commercial mortgage loan servicing industry (including fees
and expenses of counsel for Lender and Servicer, incurred by Lender and Servicer
(a) in connection with the administration and interpretation of this Agreement,
and other instruments and documents to be delivered hereunder, provided such
interpretation is in response to Borrower' request for same, (b) relating to any
amendments, waivers or consents pursuant to the provisions hereof, (c) in
connection with the enforcement of this Agreement or any other Loan Document, or
collection of amounts due hereunder or thereunder or the proof and allowability
of any claim arising under this Agreement or any other Loan Document, whether in
bankruptcy or receivership proceedings or otherwise, and (d) in any workout or
restructuring or in connection with the protection, preservation, exercise or
enforcement of any of the terms hereof or of any rights hereunder or under any
other Loan Document or in connection with any foreclosure, collection or
bankruptcy proceedings, or (ii) all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Lender or Servicer, in its capacity as such, in any way relating to or
arising out of this Agreement or any other Loan Documents or any action taken or
omitted by Lender or Servicer hereunder or thereunder, provided that no
Borrower shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements (A) if the same results from Lender's negligence or willful
misconduct or breach of this Agreement, (B) if the same results from any action
taken with respect to a Collateral Pool Property after Lender has acquired title
to such Collateral Pool Property in a foreclosure proceeding or deed-in-lieu of
foreclosure, (C) if Borrower was not given notice of the subject claim and the
opportunity to participate in the defense thereof, at its expense (except that
Borrower shall remain liable to the extent such failure to give notice does not
result in a loss to Borrower), or (D) if the same results from a compromise or
settlement agreement entered into without the consent of Borrower, which shall
not be unreasonably withheld. Borrower agrees unconditionally to pay all stamp,
document, transfer, mortgage registration, recording or filing taxes or fees and
similar impositions now or hereafter determined by Lender to be payable in
connection with this Agreement or any other Loan Document, and Borrower agrees
unconditionally to hold Lender and Servicer harmless from and against any and
all present or future claims, liabilities or losses with respect to or resulting
from any omission to pay or delay in paying any such taxes, fees or
impositions.

    

    
      
        
           

        

        
          - 67
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              9.7.

            	
              Holidays.

            

    

     

    Whenever
the funding of a Borrowing Tranche hereunder shall be due on a day which is not
a Business Day such payment shall be due on the next Business Day and such
extension of time shall be included in computing interest and fees, except that
the Loan shall be due on the Business Day preceding the Expiration Date if the
Expiration Date is not a Business Day. Whenever any payment or action to be made
or taken hereunder (other than payment of the Loan) shall be stated to be due on
a day which is not a Business Day, such payment or action shall be made or taken
on the next following Business Day, and such extension of time shall not be
included in computing interest or fees, if any, in connection with such payment
or action.

     

    
      	
               
      

            	
              9.8.

            	
              Notices.

            

    

     

    All
notices, requests, demands, directions and other communications ("Notice") given to or
made upon any party hereto under the provisions of this Agreement shall be in
writing unless otherwise expressly provided hereunder and shall be delivered or
sent by telex, facsimile, certified mail or hand delivery if to Lender, to
Lender at the address and numbers set forth below, and if to Borrower or
Proposed Borrower, to each of them at the addresses and numbers set forth below,
or in accordance with any subsequent unrevoked written direction from any party
to the others. All such Notices shall, except as otherwise expressly herein
provided, be effective (a) in the case of facsimile, when received if received
prior to 5:00 p.m. at the recipient's time on a Business Day, otherwise at 9:00
a.m. on the next Business Day, (b) in the case of hand-delivered Notice, when
hand-delivered, (c) if given by certified mail, three (3) Business Days after
such communication is deposited in the mail with first-class postage prepaid,
return receipt requested, and (d) if given by any other means (including by air
courier), when delivered. Notwithstanding anything to the contrary contained in
this Agreement, all Notices to Lender required hereunder or under any Loan
Document shall be delivered to Servicer, as agent on behalf of Lender, unless
notified otherwise in writing by Lender.

     

    Lender's
Notice Address and Numbers:

     

    NorthMarq Capital,
Inc.

    3500
American Boulevard West

    Suite
500

    Bloomington,
MN 55431-4435

    Attention:
Servicing

    Facsimile: 
(952)356-0099

     

    Borrower's
Notice Addresses and Numbers:

     

    Essex
CAL-WA, L.P.

    c/o Essex
Property Trust, Inc.

    925 East
Meadow Drive

    Palo
Alto, CA 94303

    Attention:
MarkMikl

    Facsimile:
(650) 843-1514

    

    
      
        
           

        

        
          - 68
-

          
            

          

        

        
           

        

      

    

     

    with a
copy to:

     

    Essex
CAL-WA, L.P.

    c/o Essex
Property Trust, Inc.

    925 East
Meadow Drive

    Palo
Alto, CA 94303

    Attention:
Jordan E. Ritter

    Facsimile:
(650) 858-1372

     

    and
to:

     

    Essex
CAL-WA, L.P.

    c/o Essex
Property Trust, Inc.

    925 East
Meadow Drive

    Palo
Alto, CA 94303

    Attention:
Michael Dance

    Facsimile:
(650) 858-0139

     

    
      	
               
      

            	
              9.9.

            	
              Severability.

            

    

     

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

     

    
      	
               
      

            	
              9.10.

            	
              Governing Law: Consent
      to Jurisdiction and Venue.

            

    

     

    This
Agreement, and any Loan Document which does not itself expressly identify the
Law that is to apply to it, shall be governed by the Laws of the Commonwealth of
Virginia. Borrower agrees that any controversy arising under or in relation to
this Agreement or any other Loan Document which does not expressly identify the
Law that is to apply to it, shall be litigated in the courts located in the
Commonwealth of Virginia. The state and federal courts and authorities with
jurisdiction in the Commonwealth of Virginia shall have non-exclusive
jurisdiction over all controversies which shall arise under or in relation to
this Agreement. 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.
However, nothing in this Agreement is intended to limit any right that Lender
may have to bring any suit, action or proceeding relating to matters arising
under this Credit Agreement in any court of any other jurisdiction.

    

    
      
        
           

        

        
          - 69
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              9.11.

            	
              Prior
      Understanding.

            

    

     

    This
Agreement and the other Loan Documents supersede all prior understandings and
agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein and therein, including any
prior confidentiality agreements and commitments.

     

    
      	
               
      

            	
              9.12.

            	
              Duration;
      Survival.

            

    

     

    All
representations and warranties of Borrower contained herein or made in
connection herewith shall survive the funding of the initial advance hereunder
and shall not be waived by the execution and delivery of this Agreement, any
investigation by Lender, the funding of any Borrowing Tranche, or payment in
full of the Loan. All covenants and agreements of Borrower contained herein
shall continue in full force and effect from and after the date hereof so long
as Borrower may borrow hereunder and until the later of (i) the Expiration Date
or (ii) the payment in full of the Obligations. All covenants and agreements of
Borrower contained herein relating to the payment of principal, interest,
premiums, additional compensation or expenses and indemnification, including
those set forth in the Note, shall survive payment in full of the Loan and the
Expiration Date. Notwithstanding any of the foregoing to the contrary, in no
event shall (a) the release of Lender's Lien on any Collateral Pool Property,
(b) the maturity, expiration or early termination of the Revolving Credit Note,
or any Fixed Rate Note or (c) the expiration or early termination of this
Agreement, be deemed to terminate any covenants, agreements, representations or
warranties contained in this Agreement, the Note or any of the other Loan
Documents, to the extent that such covenant, agreement, representation or
warranty, shall, by its terms survive the, release, maturity, expiration or
early termination of this Agreement, the Note or any of the other Loan
Documents.

     

    
      	
               
      

            	
              9.13.

            	
              Disclosure of
      Information.

            

    

     

    Lender
may furnish information regarding Borrower or the Collateral Pool Properties to
third parties with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or securitization of the Loan,
including, but not limited to, 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, but not limited to, any right of privacy.

     

    
      	
               
      

            	
              9.14.

            	
              Exceptions.

            

    

     

    The
representations, warranties and covenants contained herein shall be independent
of each other, and no exception to any representation, warranty or covenant
shall be deemed to be an exception to any other representation, warranty or
covenant contained herein unless expressly provided, nor shall any such
exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.

     

    
      	
               
      

            	
              9.15.

            	
              Relationship of
      Parties; No Third Parties
Benefited.

            

    

     

    The
relationship between Lender and Borrower shall be solely that of creditor and
debtor, respectively, and nothing contained in this Agreement shall create any
other relationship between Lender and Borrower. No creditor of any party to this
Agreement and no other person shall be a third party beneficiary of this
Agreement or any other Loan Document. Without limiting the generality of the
preceding sentence, (i) an agreement, if any, including any Servicing Agreement,
between Lender and Servicer for interim advancement of funds shall constitute a
contractual obligation of such Servicer that is independent of the obligation of
Borrower for the payment of the Loan, (ii) Borrower shall not be a third party
beneficiary of any Servicing Agreement, and (iii) no payment by Servicer under
any such agreement will reduce the outstanding principal amount of the Loan or
any interest accrued thereon.

    

    
      
        
           

        

        
          - 70
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              9.16.

            	
              Authority to File
      Notices.

            

    

     

    Borrower
irrevocably appoints Lender as its attorney-in-fact, with full power of
substitution, to file for record, at Borrower's cost and expense and in
Borrower's name, any notices that Lender considers reasonably necessary or
desirable to protect the Collateral.

     

    
      	
               
      

            	
              9
      17.

            	
              WAIVER
      OF TRIAL BY JURY.

            

    

     

    BORROWER
AND LENDER EACH (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH
RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT 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.

     

    
      
        
          	 
      	
                  /s/
      Mark J. Mikl

                
	 
      	
                  Name:
      Mark J. Mikl

                  Title: Senior Vice
President

                

        

      

    

     

    
      	
               
      

            	
              9.18.

            	
              Interpretation.

            

    

     

    Whenever
the context requires, all words used in the singular will be construed to have
been used in the plural, and vice versa, and each gender will include any other
gender. The captions of the articles, sections and schedules of this Agreement
are for convenience only and do not define or limit any terms or provisions. In
the event of a conflict between the terms of the other Loan Documents and the
terms of this Agreement, the terms of this Agreement shall
control.

     

    
      	
               
      

            	
              9.19.

            	
              Brokerage
      Fee.

            

    

     

    Borrower
represents to Lender that no broker or other Person is entitled to a brokerage
fee or commission as a result of Borrower's actions or undertakings in
connection with the financing contemplated hereunder and agrees to hold Lender
harmless from all claims for brokerage commissions which may be made as a result
of such actions or undertakings, if any. Lender represents to Borrower that no
broker or Person is entitled to a brokerage fee or commission as a result of
Lender's actions or undertakings in connection with the financing contemplated
hereunder and agrees to hold Borrower harmless from all claims for brokerage
commissions which may be made as a result of such actions or undertakings, if
any.

    

    
      
        
           

        

        
          - 71
-

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              9.20.

            	
              Advertising.

            

    

     

    Lender
may include the name of Borrower, the name and location of any Collateral Pool
Property, the Commitment and the number of apartment units contained in any
Collateral Pool Property on Lender's client list and in any typical
advertisement.

     

    
      	
               
      

            	
              9.21.

            	
              Time of
      Essence.

            

    

     

    Time is
of the essence with respect to each obligation of Borrower and Lender
hereunder.

     

    
      	
               
      

            	
              9.22.

            	
              Counterparts.

            

    

     

    This
Agreement may be executed by different parties hereto on any number of separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.

     

    
      	
               
      

            	
              9.23.

            	
              NOTICE
      OF FINAL AGREEMENT.

            

    

     

    THIS
AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES HERETO.

    

    

    

    

     

    [Signatures
Commence on the Following Page]

    

    
      
        
           

        

        
          - 72
-

          
            

          

        

        
           

        

      

    

    

    IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          	 
      	
                                                                                  BORROWER:

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                  ESSEX CAL-WA, L.P., a
      California limited partnership

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                  By:

                                                                                	
                                                                                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                  By:

                                                                                	
                                                                                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                                                  By:

                                                                                	
                                                                                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                                                                                  By:

                                                                                	
                                                                                  /s/
      Mark J Mikl

                                                                                
	 
      	 
      	 
      	 
      	 
      	
                                                                                  Name:
      Mark J Mikl

                                                                                
	 
      	 
      	 
      	 
      	 
      	
                                                                                  Title:
      Senior Vice President

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                  LENDER:

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                  NORTHMARQ CAPITAL, INC.,
      a Minnesota corporation

                                                                                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                                                  By:

                                                                                	 
      
	 
      	 
      	
                                                                                  Name:
      Paul W. Cairns

                                                                                
	 
      	 
      	
                                                                                  Title:
      Senior Vice
President

                                                                                

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    IN WITNESS WHEREOF, the parties hereto, by their
officers thereunto duly authorized, have executed this Agreement as of the day and year first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            	 
      	
                                                    BORROWER:

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                    ESSEX CAL-WA, L.P., a
      California limited partnership

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                                                    By:

                                                  	
                                                    Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                    By:

                                                  	
                                                    Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                    By:

                                                  	
                                                    Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                                                    By:

                                                  	 
      
	 
      	 
      	 
      	 
      	 
      	
                                                    Name:

                                                  
	 
      	 
      	 
      	 
      	 
      	
                                                    Title:

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 	 	 	 	 	 
	 
      	 
      	 
      	 
      	
                                                    LENDER:

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                                                    NORTHMARQ
      CAPITAL,
      INC., a Minnesota corporatron

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                                                    By:

                                                  	
                                                    /s/ Paul W. Cairns

                                                  
	 
      	 
      	 
      	 
      	 
      	
                                                    Name:
      Paul W. Cairns

                                                  
	 
      	 
      	 
      	 
      	 
      	
                                                    Title:
      Senior Vice President

                                                  
	 
      	 
      	 
      	 
      	 
      	 
      

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
1.1(A)

    

    LIST OF COLLATERAL POOL
PROPERTIES

    AND ASSOCIATED INITIAL NET
OPERATING INCOMES AND MARKET VALUES

    

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Collateral Pool Property

                                  	 	
                                    Initial Net

                                    Operating Income

                                  	 	 	
                                    Initial Market

                                    Value

                                  	 
	1.	 	
                                    Mira
      Woods Villas, San Diego, California

                                  	 	$	3,392,031	 	 	$	56,534,000	 
	2.	 	
                                    Forest
      View, Renton, Washington

                                  	 	$	1,602,263	 	 	$	26,704,371	 
	3.	 	
                                    Castle
      Creek, New Castle, Washington

                                  	 	$	1,820,852	 	 	$	30,347,505	 
	4.	 	
                                    Bonita
      Cedars, Bonita, California

                                  	 	$	1,198,654	 	 	$	19,977,585	 
	5.	 	
                                    Windsor
      Ridge, Sunnyvale, California

                                  	 	$	3,004,456	 	 	$	50,247,000	 
	6.	 	
                                    Mission
      Hills, Oceanside, California

                                  	 	$	2,667,975	 	 	$	44,466,000	 
	7.	 	
                                    Walnut
      Heights, Walnut California

                                  	 	$	1,682,612	 	 	$	28,045,000	 
	8.	 	
                                    Bristol
      Commons Apartments, Sunnyvale, California

                                  	 	$	2,470,950	 	 	$	41,182,514	 

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      
        
           

        

        
          Sch. 1.1(A) - 1

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
1.1(B)

    

    LIST OF

    COLLATERAL POOL PROPERTY
DOCUMENTS

     

    
      	
              (a)

            	
              Mortgage/Deed
      of Trust/Deed to Secure Debt

            

    

     

    
      	
              (b)

            	
              UCC-1
      Financing Statements

            

    

     

    
      	
              (c)

            	
              FIRPTA
      Certificate

            

    

     

    
      	
              (d)

            	
              Collateral
      Agreements (if any)

            

    

     

    
      	
              (e)

            	
              Documents
      evidencing O & M Programs (if
any)

            

    

     

    
      	
              (f)

            	
              Title
      insurance policy acceptable to Lender, in an amount equal to not less than
      the Initial Market Value of such Collateral Pool Property, which title
      insurance shall include the following endorsements (where and if
      applicable): (i) a tie-in endorsement, (ii) a multiple foreclosure
      endorsement, (iii) a first loss endorsement, (iv) a last dollar
      endorsement, (v) a variable rate mortgage endorsement, and (vi) a
      revolving credit endorsement.

            

    

    

    
      
        
           

        

        
          Sch.
1.1(B) - 1

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
1.1(C)

     

    FORM OF FIXED RATE
NOTE

    

    

     

    [See
attached]

    

    
      
        
           

        

        
          Sch.
1.1(C) - 1

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
1.1(C)

    

    FORM OF FIXED RATE
NOTE

     

    Freddie
Mac Loan Number: 080609

    

    MULTIFAMILY
NOTE

    (FOR
USE ONLY WITH REVOLVING CREDIT FACILITY)

    MULTISTATE
- FIXED RATE

    (REVISION
DATE 2-15-2008; specially modified on 11-09-2008)

     

    
      
        	
                US
      $______________________

              	 
      	
                Effective
      Date: ______________________

              

      

    

     

    FOR VALUE
RECEIVED, the undersigned (together with such party's or parties' successors and
assigns, "Borrower")
jointly and severally (if more than one) promises to pay to the order of
_________ , a _________  , the principal sum of _________ Dollars (US
$ _________ ), with interest on the unpaid principal balance, as hereinafter
provided.

     

    
      	
               
      

            	
              1.

            	
              Defined
      Terms.

            

    

     

    
      	
               
      

            	
              (a)

            	
              As
      used in this Note:

            

    

     

    "Base Recourse" means a
portion of the Indebtedness equal to zero percent (0%) of the original principal
balance of this Note.

     

    "Credit Agreement" means that
certain Credit Agreement dated as of November 17, 2008 by and between Borrower
and NorthMarq Capital, Inc., together with all amendments or modifications
thereto

     

    "Default Rate" means an annual
interest rate equal to four (4) percentage points above the Fixed Interest Rate.
However, at no time will the Default Rate exceed the Maximum Interest
Rate.

     

    "Fixed Interest Rate" means
the annual interest rate of _____________ percent (         %)•

     

    "Installment Due Date" means,
for any monthly installment of interest only or principal and interest, the date
on which such monthly installment is due and payable pursuant to Section 3 of
this Note. The "First
Installment Due Date" under this Note is _____________ 1,
_____________.[insert the
first day of the second month following the origination date; however, if the
loan is originated on the first day of a month, insert the first day of the
first month following the origination date]

    

    
      
        
           

        

        
          Page
1

          
            

          

        

        
           

        

      

    

     

    "Lender" means the holder from
time to time of this Note.

     

    "Loan" means the loan
evidenced by this Note.

     

    "Maturity Date" has the
meaning set forth in the Credit Agreement.

     

    "Maximum Interest Rate" means
the rate of interest that results in the maximum amount of interest allowed by
applicable law.

     

    "Prepayment Premium Period"
means the period during which, if a prepayment of principal occurs, a
prepayment premium will be payable by Borrower to Lender. The Prepayment Premium
Period is the period from and including the date of this Note until but not
including the first day of the Window Period.

     

    "Related Party" shall mean:
(i) any Borrower; (ii) any person or entity that holds, directly or indirectly,
any ownership interest in or right to manage Borrower, including without
limitation, any shareholder, member or partner of Borrower; (iii) any person or
entity in which any ownership interest (direct or indirect) or right to manage
is held by Borrower or any partner, shareholder or member of, or any other
person or entity holding an interest in, Borrower; and (iv) any other creditor
of Borrower that is related by blood, marriage or adoption to Borrower, or any
partner, shareholder or member of, or any other person or entity holding an
interest in, Borrower.

     

    "Rent" shall have the meaning
set forth in the Security Instrument.

     

    "Security Instrument" means,
individually and collectively, the multifamily mortgage(s), deed(s) to secure
debt and deed(s) of trust effective as of the effective date of this Note, and
subsequently executed pursuant to the Credit Agreement, from Borrower to or for
the benefit of Lender and securing this Note.

     

    "Transfer" shall have the
meaning set forth in the Security instrument.

     

    "Window Period" means the
three (3) consecutive calendar month period prior to the Scheduled Maturity
Date.

     

    "Yield Maintenance Period"
means the period from and including the date of this Note until but not
including _____________ 1, _____________. [The date is determined by the
number of months in the Yield Maintenance Period as provided for in the Freddie
Mac Commitment/ERL Application, beginning with the first day of the first
calendar month following the date of the Note. For example, if the date of the
Note is June 15, 2004, a 120-month Yield Maintenance Period will end July 1,
2014.]

    

    
      
        
           

        

        
          Page
2

          
            

          

        

        
           

        

      

    

     

    (b) Other
capitalized terms used but not defined in this Note shall have the meanings
given to such terms in the Credit Agreement or, if not defined therein, in the
Security Instrument.

     

    2.            
Address for Payment. All
payments due under this Note shall be payable by wire transfer of immediately
available funds to an account specified by Lender, whose address is NorthMarq
Capital, Inc., 3500 American Boulevard West, Suite 500, Bloomington, MN 55431-
4435, or such other place or account as may be designated by Notice to Borrower
from or on behalf of Lender.

     

    
      	
               
      

            	
              3.

            	
              Payments.

            

    

     

    (a)            Interest
will accrue on the outstanding principal balance of this Note at the Fixed
Interest Rate, subject to the provisions of Section 8 of this Note.

     

    (b)            Interest
under this Note shall be computed, payable and allocated on the basis of an
actual/360 interest calculation schedule. Each monthly payment of principal and
interest will first be applied to pay in full interest due, and the balance of
the monthly payment paid by Borrower will be credited to principal.

     

    (c)            The
Installment Due Date for the first monthly installment payment under Section
3(d) of interest only or principal and interest, as applicable, will be the
First Installment Due Date set forth in Section 1(a) of this Note. Except as
provided in Section 10, accrued interest will be payable in
arrears.

     

    (d)            Beginning
on the First Installment Due Date, and continuing until and including the
monthly installment due on the Maturity Date, accrued interest only shall be
payable by Borrower in consecutive monthly installments due and payable on the
first day of each calendar month. The amount of the monthly installment of
interest only payable pursuant to this Section 3(d) on an Installment Due Date
shall vary, and shall equal $ _____________ [insert the per diem amount,
expressed
to the fifth decimal place, derived by multiplying the original
principal balance of the Loan by the Fixed Interest Rate and dividing the
product by 360] multiplied by the number of days in the month prior to
the Installment Due Date.

     

    (e)            All
remaining Indebtedness, including all principal and interest, shall be due and
payable by Borrower on the Maturity Date. Notwithstanding anything to the
contrary in this Note, the Credit Agreement or any other Loan Document, the
Maturity Date of this Note may not be extended pursuant to Sections 2.2(b) or
2.2 (c) of the Credit Agreement. If Borrower exercises the First Extension
Option or the Second Extension Option pursuant to Sections 2.2(b)

    

    
      
        
           

        

        
          Page
3

          
            

          

        

        
           

        

      

    

     

    (f)           All
payments under this Note shall be made in immediately available
U.S.

     

    funds.

     

    (g)           Any
regularly scheduled monthly installment of interest only or principal and
interest payable pursuant to this Section 3 that is received by Lender before
the date it is due shall be deemed to have been received on the due date for the
purpose of calculating interest due.

     

    (h)           Any
accrued interest remaining past due for 30 days or more, at Lender's discretion,
may be added to and become part of the unpaid principal balance of this Note and
any reference to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any amount added to principal
pursuant to the Loan Documents shall bear interest at the applicable rate or
rates specified in this Note and shall be payable with such interest upon demand
by Lender and absent such demand, as provided in this Note for the payment of
principal and interest.

     

    (i)           In
accordance with Section 14, interest charged under this Note cannot exceed the
Maximum Interest Rate. If the Fixed Interest Rate at any time exceeds the
Maximum Interest Rate, resulting in the charging of interest hereunder to be
limited to the Maximum interest Rate, then any subsequent reduction in the Fixed
Interest Rate shall not reduce the rate at which interest under this Note
accrues below the Maximum Interest Rate until the total amount of interest
accrued hereunder equals the amount of interest which would have accrued had the
Fixed Interest Rate at all times been in effect.

     

    4.           Application of Payments. If at
any time Lender receives, from Borrower or otherwise, any amount applicable to
the Indebtedness which is less than all amounts due and payable at such time,
Lender may apply the amount received to amounts then due and payable in any
manner and in any order determined by Lender, in Lender's discretion. Borrower
agrees that neither Lender's acceptance of a payment from Borrower in an amount
that is less than all amounts then due and payable nor Lender's application of
such payment shall constitute or be deemed to constitute either a waiver of the
unpaid amounts or an accord and satisfaction.

     

    5.           Security. The Indebtedness is
secured by, among other things, the Security Instrument and the Credit
Agreement, and reference is made to the Security Instrument and the Credit
Agreement for other rights of Lender as to collateral for the
Indebtedness.

     

    6.           Acceleration. If an Event of
Default has occurred and is continuing, the entire unpaid principal balance, any
accrued interest, any prepayment premium payable under the Credit Agreement, if
any, and all other amounts payable under this Note, the Credit Agreement and any
other Loan Document, shall at once become due and payable, at the option of
Lender, without any prior notice to Borrower (except if notice is required by
applicable law, then after such notice). Lender may exercise this option to
accelerate regardless of any prior forbearance.

     

    For
purposes of exercising such option, Lender shall calculate the prepayment
premium, if any, as if prepayment occurred on the date of acceleration. If
prepayment occurs thereafter, Lender shall recalculate the prepayment premium,
if any, as of the actual prepayment date.

    

    
      
        
           

        

        
          Page
4

          
            

          

        

        
           

        

      

    

     

    7.      
      Late Charge.

     

    (a)           If
any monthly installment of interest or principal and interest or other amount
payable under this Note, the Credit Agreement, the Security Instrument or any
other Loan Document, other than the outstanding principal balance of the Loan
payable on the Maturity Date or upon acceleration of the Note, is not received
in full by Lender within ten (10) days after the installment or other amount is
due, counting from and including the date such installment or other amount is
due (unless applicable law requires a longer period of time before a late charge
may be imposed, in which event such longer period shall be substituted),
Borrower shall pay to Lender, immediately and without demand by Lender, a late
charge equal to five percent (5%) of such installment or other amount due
(unless applicable law requires a lesser amount be charged, in which event such
lesser amount shall be substituted).

     

    (b)           Borrower
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan and that it is
extremely difficult and impractical to determine those additional expenses.
Borrower agrees that the late charge payable pursuant to this Section represents
a fair and reasonable estimate, taking into account all circumstances existing
on the date of this Note, of the additional expenses Lender will incur by reason
of such late payment. The late charge is payable in addition to, and not in lieu
of, any interest payable at the Default Rate pursuant to Section 8.

    

     

    8.         
   Default
Rate.

     

    (a)           So
long as (i) any monthly installment under this Note remains past due for thirty
(30) days or more or (ii) any other Event of Default has occurred and is
continuing, then notwithstanding anything in Section 3 of this Note to the
contrary, interest under this Note shall accrue on the unpaid principal balance
from the Installment Due Date of the first such unpaid monthly installment or
the occurrence of such other Event of Default, as applicable, at the Default
Rate.

     

    (b)           From
and after the Maturity Date, the unpaid principal balance shall continue to bear
interest at the Default Rate until and including the date on which the entire
principal balance is paid in full.

     

    (c)           Borrower
acknowledges that (i) its failure to make timely payments will cause Lender to
incur additional expenses in servicing and processing the Loan, (ii) during the
time that any monthly installment under this Note is delinquent for thirty (30)
days or more, Lender will incur additional costs and expenses arising from its
loss of the use of the money due and from the adverse impact on Lender's ability
to meet its other obligations and to take advantage of other investment
opportunities; and (iii) it is extremely difficult and impractical to determine
those additional costs and expenses. Borrower also acknowledges that, during the
time that any monthly installment under this Note is delinquent for thirty (30)
days or more or any other Event of Default has occurred and is continuing,
Lender's risk of nonpayment of this Note will be materially increased and Lender
is entitled to be compensated for such increased risk. Borrower agrees that the
increase in the rate of interest payable under this Note to the Default Rate
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional costs and expenses Lender
will incur by reason of the Borrower's delinquent payment and the additional
compensation Lender is entitled to receive for the increased risks of nonpayment
associated with a delinquent loan.

    

    
      
        
           

        

        
          Page
5

          
            

          

        

        
           

        

      

    

     

    9.        
    Limits
on Personal Liability.

     

    (a)           Except
as otherwise provided in this Section 9, in the Revolving Credit Note or in any
guaranty, Borrower shall have no personal liability under this Note, the
Security Instrument, the Credit 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 the Indebtedness and the performance of such obligations shall
be Lender's exercise of its rights and remedies with respect to the Collateral
Pool Property and to 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 of the indebtedness or
any guarantor of any other obligations of Borrower.

     

    (b)           Borrower
shall be personally liable to Lender for the amount of the Base Recourse, plus
any other amounts for which Borrower has personal liability under this Section
9.

     

    (c)           In
addition to the Base Recourse, Borrower shall be personally liable to Lender for
the repayment of a further portion of the Indebtedness equal to any loss or
damage suffered by Lender as a result of the occurrence of any of the following
events:

     

    
      	
               
      

            	
              (i)

            	
              Borrower
      fails to pay to Lender upon demand after, but only during the continuance
      of, an Event of Default all Rents to which Lender is entitled under
      Section 3(a) of the Security Instrument and the amount of all security
      deposits collected by Borrower from tenants then in residence. However,
      Borrower will not be personally liable for any failure described in this
      subsection (i) if Borrower is unable to pay to Lender all Rents and
      security deposits as required by the Security Instrument because of a
      valid order issued in a bankruptcy, receivership, or similar judicial
      proceeding.

            

    

     

    
      	
               
      

            	
              (ii)

            	
              Borrower
      fails to apply all insurance proceeds and condemnation proceeds as
      required by the Security Instrument. However, Borrower will not be
      personally liable for any failure described in this subsection (ii) if
      Borrower is unable to apply insurance or condemnation proceeds as required
      by the Security Instrument because of a valid order issued in a
      bankruptcy, receivership, or similar judicial
  proceeding.

            

    

    

    
      
        
           

        

        
          Page
6

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              Borrower
      fails to comply with Section 14(g) or (h) of the Security Instrument
      relating to the delivery of books and records, statements, schedules and
      reports.

            

    

    

     

    
      	
               
      

            	
              (iv)

            	
              Borrower
      fails to pay when due in accordance with the terms of the Security
      Instrument the amount of any item below marked "Deferred"; provided
      however, that if no item is marked "Deferred", this Section 9(c)(iv) shall
      be of no force or effect.

            

    

    

     

    
      	
               
      

            	
              [Deferred]

            	
              Hazard
      Insurance premiums or other insurance
premiums,

            

    

     

    
      	
               
      

            	
              [Deferred]

            	
              Taxes,

            

    

     

    
      	
               
      

            	
              [Deferred]

            	
              water
      and sewer charges (that could become a lien on the Mortgaged
      Property),

            

    

     

    
      	
               
      

            	
              [Collect]

            	
              ground
      rents, if applicable

            

    

     

    
      	
               
      

            	
              [Deferred]

            	
              assessments
      or other charges (that could become a lien on the Mortgaged
      Property)

            

    

     

    (d)           In
addition to the Base Recourse, Borrower shall be personally liable to
Lender
for:

     

    
      
        	
              	
                (i)

              	
                the
      performance of all of Borrower's obligations under Section 18 of the
      Security Instrument (relating to environmental
  matters);

              

      

    

    

    
      	
            	
              (ii) 

            	
              the
      costs of any audit under Section 14(g) of the Security Instrument;
      and

            

    

     

    
      
        	
              	
                (iii)

              	
                any
      costs and expenses incurred by Lender in connection with the collection of
      any amount for which Borrower is personally liable under this Section 9,
      including Attorneys' Fees and Costs and the costs of conducting any
      independent audit of Borrower's books and records to determine the amount
      for which Borrower has personal
liability.

              

      

    

     

    (e)           All
payments made by Borrower with respect to the Indebtedness and all amounts
received by Lender from the enforcement of its rights under the Security
Instrument and the other Loan Documents shall be applied first to the portion of
the Indebtedness for which Borrower has no personal liability.

     

    (f)           Notwithstanding
the Base Recourse, Borrower shall become personally liable to Lender for the
repayment of all of the Indebtedness upon the occurrence of any of the following
Events of Default:

    

    
      
        
           

        

        
          Page
7

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              (i)

            	
              Borrower's
      ownership of any property or operation of any business not permitted by
      Section 33 of the Security
Instrument;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              a
      Transfer (including, but not limited to, a lien or encumbrance) that is an
      Event of Default under Section 21 of the Security Instrument, other than a
      Transfer consisting solely of the involuntary removal or involuntary
      withdrawal of a general partner in a limited partnership or a manager in a
      limited liability company; or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              fraud
      or written material misrepresentation by Borrower or any officer,
      director, partner, member or employee of Borrower in connection with the
      application for or creation of the Indebtedness or any request for any
      action or consent by Lender.

            

    

     

    (g)           Notwithstanding
the Base Recourse, Borrower shall become personally liable to Lender for the
repayment of all of the Indebtedness upon the occurrence of any of the following
events:

     

    
      	
               
      

            	
              (i)

            	
              any
      Borrower voluntarily files for bankruptcy protection under the United
      States Bankruptcy Code; or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      Borrower voluntarily becomes subject to any reorganization, receivership,
      insolvency proceeding, or other similar proceeding pursuant to any other
      federal or state law affecting debtor and creditor rights;
    or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              an
      order of relief is entered against any Borrower pursuant to the United
      States Bankruptcy Code or other federal or state law affecting debtor and
      creditor rights in any involuntary bankruptcy proceeding initiated or
      joined in by a Related Party (provided, that if such Borrower or any
      Related Party has solicited creditors to initiate or participate in any
      proceeding referred to in this Section 9, regardless of whether any of the
      creditors solicited actually initiates or participates in the proceeding,
      then such proceeding shall be considered as having been initiated by a
      Related Party).

            

    

     

    (h)           To
the extent that Borrower has personal liability under this Section 9, Lender may
exercise its rights against Borrower personally without regard to whether Lender
has exercised any rights against the Collateral Pool Property or any other
security, or pursued any other rights available to Lender under this Note, the
Credit Agreement, the Security Instrument, any other Loan Document or applicable
law. For purposes of this Section 9, the term "Collateral Pool Property" shall
not include any funds that (1) have been applied by Borrower as required or
permitted by the Security Instrument prior to the occurrence of an Event of
Default or following the cure, if Lender consents to such cure, of an Event of
Default or (2) Borrower was unable to apply as required or permitted by the
Security Instrument because of a bankruptcy, receivership, or similar
proceeding. To the fullest extent permitted by applicable law, in any action to
enforce Borrower's
personal liability under this Section 9, Borrower waives any right to set off
the value of the Collateral Pool Property against such personal
liability.

    

    
      
        
           

        

        
          Page
8

          
            

          

        

        
           

        

      

    

     

    10.           Voluntary and Involuntary
Prepayments.

     

    (a)           Any
receipt by Lender of principal due under this Note prior to the Maturity Date,
other than principal required to be paid in monthly installments pursuant to
Section 3, constitutes a prepayment of principal under this Note. Without
limiting the foregoing, any application by Lender, prior to the Maturity Date,
of any proceeds of collateral or other security to the repayment of any portion
of the unpaid principal balance of this Note constitutes a prepayment under this
Note.

     

    (b)           Borrower
may voluntarily prepay all of the unpaid principal balance of this Note on an
Installment Due Date so long as Borrower designates the date for such prepayment
in a Notice from Borrower to Lender given at least 30 days prior to the date of
such prepayment. If an Installment Due Date (as defined in Section 1(a)) falls
on a day which is not a Business Day, then with respect to payments made under
this Section 10 only, the term "Installment Due Date" shall mean the Business
Day immediately preceding the scheduled Installment Due Date.

     

    (c)           Notwithstanding
subsection (b) above, Borrower may voluntarily prepay all of the unpaid
principal balance of this Note on a Business Day other than an Installment Due
Date if Borrower provides Lender with the Notice set forth in subsection (b) and
meets the other requirements set forth in this subsection. Borrower acknowledges
that Lender has agreed that Borrower may prepay principal on a Business Day
other than an Installment Due Date only because Lender shall deem any prepayment
received by Lender on any day other than an Installment Due Date to have been
received on the Installment Due Date immediately following such prepayment and
Borrower shall be responsible for all interest that would have been due if the
prepayment had actually been made on the Installment Due Date immediately
following such prepayment.

     

    (d)           Unless
otherwise expressly provided in the Loan Documents, Borrower may not voluntarily
prepay less than all of the unpaid principal balance of this Note. In order to
voluntarily prepay all or any part of the principal of this Note, Borrower must
also pay to Lender, together with the amount of principal being prepaid, (i) all
accrued and unpaid interest due under this Note, plus (ii) all other sums due to
Lender at the time of such prepayment, plus (iii) any prepayment premium
calculated pursuant Section
10(e) below.

     

    (e)           Except
as provided in Section 10(f), a prepayment premium shall be due and payable by
Borrower in connection with any prepayment of principal under this Note during
the Prepayment Premium Period. The prepayment premium shall be computed as
follows:

     

    
      	
               
      

            	
              (i)

            	
              For
      any prepayment made during the Yield Maintenance Period, the prepayment
      premium shall be whichever is the greater of subsections (A) and (B)
      below:

            

    

    

    
      
        
           

        

        
          Page
9

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              (A)

            	
              1.0%
      of the amount of principal being prepaid;
or

            

    

     

    
      	
               
      

            	
              (B)

            	
              the
      product obtained by multiplying:

            

    

     

    
      	
               
      

            	
              (1)

            	
              the
      amount of principal being prepaid or accelerated, by

            

    

     

    
      	
               
      

            	
              (2)

            	
              the
      excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
      Rate,

            

    

    by

    
      	
               
      

            	
              (3)

            	
              the
      Present Value Factor.

            

    

     

    For
purposes of subsection (B), the following definitions shall apply:

     

    Monthly Note Rate: one-twelfth
(1/12) of the Fixed Interest Rate, expressed as a decimal calculated to five
digits.

     

    Prepayment Date: in the case
of a voluntary prepayment, the date on which the prepayment is made; in the case
of the application by Lender of collateral or security to a portion of the
principal balance, the date of such application.

     

    Assumed Reinvestment Rate:
one-twelfth (1/12) of the yield rate, as of the close of the trading
session which is 5 Business Days before the Prepayment Date, on the Treasury
Security, as reported in The Wall Street Journal, expressed as a decimal
calculated to five digits. In the event that no yield is published on the
applicable date for the Treasury Security, Lender, in its discretion, shall
select the non-callable Treasury Security maturing in the same year as the
Treasury Security with the lowest yield published in The Wall Street Journal as of the applicable
date. If the publication of such yield rates in The Wall Street Journal is discontinued for any
reason, Lender shall select a security with a comparable rate and term to the
Treasury Security. The selection of an alternate security pursuant to this
Section shall be made in Lender's discretion.

     

    Present Value Factor: the
factor that discounts to present value the costs resulting to Lender from the
difference in interest rates during the months remaining in the Yield
Maintenance Period, using the Assumed Reinvestment Rate as the discount rate,
with monthly compounding, expressed numerically as follows:

    

    
      
        
           

        

        
          Page
10

          
            

          

        

        
           

        

      

    

    

    1-(1/1+ARR)

    ARR

     

    n = the number of months
remaining in Yield Maintenance Period; provided, however, if a prepayment occurs
on an Installment Due Date, then the number of months remaining in the Yield
Maintenance Period shall be calculated beginning with the month in which such
prepayment occurs and if such prepayment occurs on a Business Day other than an
Installment Due Date, then the number of months remaining in the Yield
Maintenance Period shall be calculated beginning with the month immediately
following the date of such prepayment.

     

    ARR = Assumed Reinvestment Rate

    

     

    
      	
               
      

            	
              (ii)

            	
              For
      any prepayment made after the expiration of the Yield Maintenance Period
      but during the remainder of the Prepayment Premium Period, the prepayment
      premium shall be 1.0% of the amount of principal being
      prepaid.

            

    

     

    (f)           No
prepayment premium shall be payable with respect to (i) any prepayment made
during the Window Period, (ii) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument or (iii) as otherwise set forth in the Credit Agreement.

     

    (g)           Unless
Lender agrees otherwise in writing, a permitted or required prepayment of less
than the unpaid principal balance of this Note shall not extend or postpone the
due date of any subsequent monthly installments or change the amount of such
installments.

     

    (h)           Borrower
recognizes that any prepayment of any of the unpaid principal balance of this
Note, whether voluntary or involuntary or resulting from an Event of Default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in Section
10(e) above
represents a reasonable estimate of the damages Lender will incur because of a
prepayment. Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and that the
terms of this Note are in other respects more favorable to Borrower as a result
of the Borrower's voluntary agreement to the prepayment premium
provisions.

    

    
      
        
           

        

        
          Page
11

          
            

          

        

        
           

        

      

    

     

    11.           Costs and Expenses. To the
fullest extent allowed by applicable law, Borrower shall pay all expenses and
costs, including Attorneys' Fees and Costs incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.

     

    12.           Forbearance. Any forbearance
by Lender in exercising any right or remedy under this Note, the Credit
Agreement, the Security Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
that or any other right or remedy. The acceptance by Lender of any payment 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 or to exercise any right or remedy with respect to any
failure to make prompt payment. Enforcement by Lender of any security for
Borrower's obligations under this Note shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right or remedy
available to Lender.

     

    13.           Waivers. Borrower and all
endorsers and guarantors of this Note and all other third party obligors waive
presentment, demand, notice of dishonor, protest, notice of acceleration, notice
of intent to demand or accelerate payment or maturity, presentment for payment,
notice of nonpayment, grace, and diligence in collecting the
Indebtedness.

     

    14.           Loan Charges. Neither this
Note, the Credit Agreement nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the Maximum Interest Rate.
If any applicable law limiting the amount of interest or other charges permitted
to be collected from Borrower in connection with the Loan is interpreted so that
any interest or other charge provided for in the Credit Agreement or any other
Loan Document, whether considered separately or together with other charges
provided for in the Credit Agreement or any other Loan Document, violates that
law, and Borrower is entitled to the benefit of that law, that interest or
charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the unpaid principal balance of
this Note. For the purpose of determining whether any applicable law limiting
the amount of interest or other charges permitted to be collected from Borrower
has been violated, all Indebtedness that constitutes interest, as well as all
other charges made in connection with the Indebtedness that constitute interest,
shall be deemed to be allocated and spread ratably over each Base Rate Borrowing
Tranche and Prime Rate Borrowing Tranche comprising the Revolving Credit Note,
this Note and each other Fixed Rate Note, if any, over the stated term of such
Notes. Unless otherwise required by applicable law, such allocation and
spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of such Notes.

    

    
      
        
           

        

        
          Page
12

          
            

          

        

        
           

        

      

    

     

    15.           Commercial Purpose. Borrower
represents that Borrower is incurring the Indebtedness solely for the purpose of
carrying on a business or commercial enterprise, and not for personal, family,
household, or agricultural purposes.

     

    16.           Counting of Days. Except where
otherwise specifically provided, any reference in this Note to a period of
"days" means calendar days, not Business Days.

     

    17.           Governing Law. This Note shall
be governed by the laws of the Commonwealth of Virginia.

     

    18.           Captions. The captions of the
Sections of this Note are for convenience only and shall be disregarded in
construing this Note.

     

    19.           Notices; Written
Modifications.

     

    (a)           All
Notices, demands and other communications required or permitted to be given
pursuant to this Note shall be given in accordance with the Credit
Agreement.

     

    (b)           Any
modification or amendment to this Note shall be ineffective unless in writing
signed by the party sought to be charged with such modification or amendment;
provided, however, that in the event of a Transfer under the terms of the
Security Instrument that requires Lender's consent, any or some or all of the
Modifications to Multifamily Note set forth in Exhibit A to this Note may be
modified or rendered void by Lender at Lender's option, by Notice to Borrower
and the transferee, as a condition of Lender's consent.

     

    20.           Consent to Jurisdiction and Venue.
Borrower agrees that any controversy arising under or in relation to this
Note may be litigated in the courts of the Commonwealth of Virginia. The state
and federal courts and authorities with jurisdiction in the Commonwealth of
Virginia shall have jurisdiction over all controversies that shall arise under
or in relation to this Note. 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. However, nothing in this Note is intended to limit any
right that Lender may have to bring any suit, action or proceeding relating to
matters arising under this Note in any court of any other
jurisdiction.

     

    21.           WAIVER OF TRIAL BY
JURY.   BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL
BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP
BETWEEN THE PARTIES AS LENDER AND BORROWER 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.

     

    22.           [Intentionally
Omitted].

     

    23.           Joinder. In accordance with
the provisions set forth in the Credit Agreement, certain Affiliates of Borrower
may become liable under this Note, the Credit Agreement and the other Loan
Documents by executing (a) a separate Allonge to this Note, (b) a joinder
agreement in form satisfactory to Lender, and (c) any other documents reasonably
required by Lender to evidence and/or secure such Affiliate's obligations
hereunder, the Credit Agreement or under the other Loan Documents, all as set
forth in the Credit Agreement.

     

    24.           Credit Agreement. In the event
that the terms of this Note directly conflict with the terms of the Credit
Agreement, the terms of the Credit Agreement shall control.

     

    [Signatures
Commence on the Following Page]

    

    
      
        
           

        

        
          Page
13

          
            

          

        

        
           

        

      

    

     

    IN WITNESS WHEREOF, and in consideration of the
Lender's agreement to lend Borrower the principal amount set forth above,
Borrower has signed and delivered this Note under seal or has caused this Note
to be signed and delivered under seal by its duly authorized representative.
Borrower intends that this Note shall be deemed to be signed and delivered as a
sealed instrument.

    

    

    
      
        
          	 
      	 
      	
                  BORROWER:

                   

                
	 
      	 
      	
                  ESSEX CAL-WA, L.P., a California limited
      partnership

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	
                  Essex

                
	 
      	 
      	 
      	
                  SPE,
      LLC, a Delaware limited liability company, its general
    partner

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  By:

                	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                  By:

                	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	
                  By:

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	
                  Name:

                  Title:

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  84-1627047

                
	 
      	 
      	
                  Borrower's
      Social Security/Employer ID
Number

                

        

      

    

    

    
      
        
           

        

        
          Page
14

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

     

    APPROVED
MODIFICATIONS TO NOTE

     

     

    None.

    

    
      
        
           

        

        
          Page Ex.
A-1

          
            

          

        

        
           

        

      

    

     

    SCHEDULE 2.2

     

    FORM OF

    SCHEDULED MATURITY DATE
EXTENSION CONFIRMATION

    

     

    [_______________], 20[______]

    

     

    Essex
CAL-WA, L.P. 

    c/o Essex
Property Trust, Inc. 

    925 East
Meadow Drive 

    Palo
Alto, CA 94303 

    Attention:
[________]

    

     

    Ladies
and Gentlemen:

     

    Reference
is made to that Credit Agreement dated as of November 17, 2008, as amended (the
"Credit
Agreement") initially by and between ESSEX CAL-WA, L.P., a California
limited partnership, having an address at 925 East Meadow Drive, Palo Alto, CA
94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 500, Bloomington, MN 55431-4435 (together with
its successors and assigns, "Lender"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.

     

    Pursuant
to Section [2.2(d)]
I [2.2(e)] of the Credit
Agreement, the Scheduled Maturity Date of the Credit Agreement shall be extended
to [December 1, 2014] /
[December 1, 2015]. Pursuant to Section 2.4.6.2 of the Credit Agreement,
the Net Spread applicable to any Base Rate Borrowing Tranche during the
extension period related to the [First Extension Option]
I [Second Extension Option]
shall be as set for the on Exhibit
A hereto.

     

    By
acknowledging and agreeing to the terms of this letter, Borrower represents and
warrants that all the terms and conditions set forth in Section [2.2(b)] I [2.2(c)] of the Credit
Agreement have been satisfied.

     

     

    Sincerely,

    

    
      
        	 
      	
                LENDER:

              
	 
      	 
      
	 
      	 
      
	 
      	
                [________________________________],

              
	 
      	
                a[_________]

              
	 
      	 
      
	 
      	 
      

      

    

    

    
      
        
          
            	 
      	
                    By:

                  	 
      	 
      
	 
      	
                    Name:

                  	 
      	 
      
	 
      	
                    Title:

                  	 
      	 
      

          

        

      

    

     

    
      
        
           

        

        
          Sch.
2.4.6.2 - 1

          
            

          

        

        
           

        

      

    

     

    [signatures
continue on next page]

    

    
      
        
           

        

        
          Sch.
2.4.6.2 - 2

          
            

          

        

        
           

        

      

    

     

    
      ACKNOWLEDGED AND AGREED
BORROWER:

    

     

    ESSEX CAL-WA, L.P., a
California limited partnership

    

    
      
        
          	
                  By:

                	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	
                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	
                  By:

                	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	
                  By:

                	 
      	
                   
      

                	 
      
	 
      	 
      	 
      	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	 
      	 
      	
                   
      

                	 
      
	 
      	 
      	 
      	
                  By:

                	
                   
      

                	 
      
	 
      	 
      	 
      	 
      	
                  Name:

                  Title:

                	 
      

        

      

    

     

    
      
        
           

        

        
          Sch.
2.4.6.2 - 3

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
A TO SCHEDULE 2.2

     

    NET
SPREAD TABLE APPLICABLE DURING AN EXTENSION PERIOD

    

     

    
      
        	
                Facility
      Debt Service Coverage Ratio

              	
                Net
      Spread*

              	
                Margin*

              
	
                Greater
      than or equal to [ ___ ]:
      1.00 but less than [ ___ ]:
      1.00

              	
                [_______]

              	
                [_______]

              
	
                Greater
      than or equal to [ ___ ]:
      1.00 but less than [ ___ ]:
      1.00

              	
                [_______]

              	
                [_______]

              
	
                Greater
      than or equal to [ ___ ]:
      1.00

              	
                [_______]

              	
                [_______]

              

      

    

     

    * The Net
Spread and Margin set forth above assumes that the Base Rate Borrowing Tranches
will have a one-month Interest Period. The Net Spread and Margin shall be
increased by
[ _____ ] basis points ([ _____ ]) for any Base Rate Borrowing Tranche
having a three-month Interest Period,
increased by [ ______ ] basis points ([ ______ ]) for any Base Rate
Borrowing Tranche having a six-month
Interest Period, and increased by [ _______ ] basis points ([ ______ ]) for any
Base Rate Borrowing
Tranche having a twelve-month Interest Period.

    

    
      
        
           

        

        
          Sch.
2.4.6.2 - 4

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
2.4.6.2

    

    FORM OF

    NET SPREAD
CONFIRMATION

     

    [__________], 20 [_____]

    

    Essex
CAL-WA, L.P.

    c/o Essex
Property Trust, Inc.

    925 East
Meadow Drive

    Palo
Alto, CA 94303

    Attention:
[___________]

    

     

    Ladies
and Gentlemen:

     

    Reference
is made to that Credit Agreement dated as of November 17, 2008, as amended (the
"Credit
Agreement") initially by and between ESSEX CAL-WA, L.P., a California
limited partnership, having an address at 925 East Meadow Drive, Palo Alto, CA
94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 500, Bloomington, MN 55431-4435 (together with
its successors and assigns, "Lender"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.

     

    Pursuant
to Section 2.4.6.2 of the Credit Agreement, the Net Spread applicable to any
Base Rate Borrowing Tranche on or after December 1, 2011 until initial Scheduled
Maturity Date shall be as set for the on Exhibit
A
hereto.

    

    Sincerely,

     

    

    
      
        	 
      	
                LENDER:

              
	 
      	 
      	 
      
	 
      	
                [_____________________],

              
	 
      	
                a
      [________]

              
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	
                Name:

              	 
      
	 
      	
                Title:

              	 
      

      

    

    

    
      
        
           

        

        
          Sch.
2.4.6.2 - 1

          
            

          

        

        
           

        

      

    

     

    
       
[signatures
continued on next page]

    

     

    
      
        
           

        

        
          Sch.
2.4.6.2 - 2

          
            

          

        

        
           

        

      

    

     

    
      
        
          
            
              
                	ACKNOWLEDGED AND
      AGREED BORROWER:	 
      
	ESSEX CAL-WA, L.P., a
      California limited partnership	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	By:	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                        By:

                      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                        By:

                      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                        By:

                      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	
                        Name:

                        Title:

                      	 
      

              

            

          

        

      

    

    

    
      
        
           

        

        
          Sch.
2.4.6.2 - 3

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
A TO SCHEDULE 2.4.6.2

     

    NET
SPREAD TABLE APPLICABLE ON AND AFTER [DECEMBER] 1,2011

     

    
      
        	
                Facility
      Debt Service Coverage Ratio

              	
                Net
      Spread*

              	
                Margin*

              
	
                Greater than or equal to [ ___ ]: 1.00 but less than [ ___ ]:
       1.00

              	
                [__________]

              	
                [__________]

              
	
                Greater than or equal to [ ___ ]: 1.00 but less than [ ___ ]:
1.00

              	
                [__________]

              	
                [__________]

              
	
                Greater than or equal to [ ___ ]:
1.00

              	
                [__________]

              	
                [__________]

              

      

    

     

    * The Net
Spread and Margin set forth above assumes that the Base Rate Borrowing Tranches
will have a one-month Interest Period. The Net Spread and Margin shall be
increased by
[ _____ ] basis points ([  _____ ]) for any Base Rate
Borrowing Tranche having a three-month Interest Period,
increased by [ _____ ] basis points ([ _____ ]) for any Base
Rate Borrowing Tranche having a six-month
Interest Period, and increased by [ _____ ] basis points
([ _____ ]) for any Base Rate Borrowing
Tranche having a twelve-month Interest Period.

    

    
      
        
           

        

        
          Sch.
2.4.6.2 - 4

          
            

          

        

        
           

        

      

    

     

    [BORROWER
MAY, SUBJECT TO LENDER'S CONSENT, REVISE THIS FORM OF LOAN REQUEST TO PROVIDE
FOR MULTIPLE BORROWING TRANCHES UNDER A SINGLE LOAN REQUEST FORM]

    

    SCHEDULE
2.5

    

    FORM OF

    LOAN
REQUEST

     

    [____________], 20[____]

    

     

    NorthMarq
Capital, Inc.

    3500
American Boulevard West

    Suite
500

    Bloomington,
MN 55431-4435

    Attention:
Servicing

     

    Ladies
and Gentlemen:

     

    Reference
is made to that Credit Agreement dated as of November 17, 2008, as amended (the
"Credit
Agreement") initially by and between ESSEX CAL-WA, L.P., a California
limited partnership, having an address at 925 East Meadow Drive, Palo Alto, CA
94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 500, Bloomington, MN 55431-4435 (together with
its successors and assigns, "Lender"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.

    

     

    I, [ ____________ ], the [ ___________ ] of Borrower, a [ ___________ ], do hereby
certify on behalf of Borrower as of the date hereof, as follows:

    

     

    Borrower
is entitled to and hereby requests Lender to make an advance under the Credit
Agreement in the amount of $[__________]
(which must be greater than or equal to [______________] and NO/100 Dollars ($[_______________]). Funds should be delivered
to Borrower by wire to the following account:

     

    Bank Name
and Location: [______________________________________________]

    ABA
Number: [______________________________________________________ ]

    Account
Name: [_____________________________________________________]

    Account
Number: [___________________________________________________ ]

    Further
Credit Instructions: [____________________________________________]

    Attention:
[_________________________________________________________]

     

    1.           The
requested date  of
the  advance  (the  "Borrowing
Date")  is [________________].

     

    
      2.         
 The
Borrowing Tranche shall bear interest at (check one):

    

     

    
      
        
        

      

      
        Sch. 2.5 -
1

        
          

        

      

      
        
        

      

    

     

    _____
Base Rate

     

    _____Fixed
Rate

    

    
    

    3.         The
Interest Period (if the Base Rate is selected) applicable to the advance
is (check
one):

     

    _____
one-month

     

    _____ three-month*

     

    _____ six-month**

     

    _____ twelve-month***

    

     

    *subject
to a [ ______ ] basis point ([
_________ ]) increase in the Margin otherwise applicable
to such Borrowing Tranche

    

     

    **subject
to a [ _________ ] basis point ([ ________]) increase in the Margin
otherwise applicable
to such Borrowing Tranche

    

     

    ***subject
to a [ __________ ] basis point ([ _________ ]) increase in the
Margin otherwise applicable
to such Borrowing Tranche

    

     

    4.         
  Borrower will (check one):

     

    
      	
               
      

            	
              ______

            	
              Pay
      all interest due and payable under the requested Borrowing Tranche in
      monthly installments pursuant to the terms of the Credit
      Agreement.

            

    

     

    
      	
               
      

            	
              ______

            	
              Prepay
      all interest for such Borrowing Tranche as of the Borrowing
      Date.

            

    

    

    

    5.

     

    (a)           If
applicable, the Base Rate for the Base Rate Borrowing Tranche requested
hereunder shall be [_______] ([_______]%) consisting of a Reference Bills®
Rate/LIBO Rate of [_______] percent ([_______]%) and a Margin of [_______]
([_______]%).

     

    (b)           If
applicable, the Fixed Rate for the Fixed Rate Borrowing Tranche requested
hereunder shall be [_______] ([_______]%) consisting of the year US Treasury
Security (as determined by Lender) and a Margin of [_______]
([_______]%).

    

     

    6.           Following
the disbursement of the funds comprising the Borrowing Tranche requested herein,
the total number of Borrowing Tranches outstanding will be [_______]
([_______]), which is not more than ten (10).

     

    7.           If
applicable (i.e. in the event of a Loan Request for a Base Rate Borrowing
Tranche), the maturity date of the Interest Period of the Borrowing Tranche
requested herein is (choose and complete one of the following):

     

    [ _______],
20[_______] (which is the last day of the Interest Period, in the event that
such date is a Business Day)

    

    
      
        
           

        

        
          Sch. 2.5 -
2

          
            

          

        

        
           

        

      

    

     

    [_______],
20[ __] (which is the Business Day following the last day of the Interest
Period, in the event that such date is not a Business Day).

     

    8.           This
request for an advance is made pursuant to and in accordance with the provisions
of the Credit Agreement. The proceeds of such advance are to be used for a
permitted purpose under Section 2.8 of the
Credit Agreement.

     

    9.           The
principal amount outstanding under the Credit Agreement on the date hereof,
prior to any advance in response to this request, is $[_______].

     

    10.           To
the best of Borrower's knowledge and belief following diligent inquiry, the
advance of the funds requested herein will not cause Borrower to be in
non­compliance with the Sublimits set forth in Section 2.5.3 of the
Credit Agreement.

     

    11.           To
the best of Borrower's knowledge and belief following diligent inquiry, the
computations set forth in Paragraphs 19 through 22 as certified by Servicer are
accurate.

     

    12.           All
of the covenants and all of the representations and warranties contained in the
Credit Agreement and the other Loan Documents, and all of the other terms,
covenants and conditions contained in the Loan Documents continue to be
materially true and correct and continue to be complied with on the date hereof,
and will continue to be materially true and correct in accordance with Section 5.2 of the
Credit Agreement.

     

    13.           No
Potential Default or Event of Default has occurred or is continuing under the
Loan Documents.

     

    14.           There
has been no Material Adverse Change to any Collateral Pool Property or Borrower
since the date of the last Loan Request that will cause Borrower to be in
violation of the Sublimits after the funding of the Borrowing Tranche requested
herein or will render the Base Rate requested herein inaccurate.

     

    15.           All
of the other terms and conditions set forth in the Credit Agreement and the
other Loan Documents pertaining to the Loan have been satisfied.

     

    16.           All
items that Borrower is required to furnish to Lender pursuant to the Credit
Agreement accompany this request and are true and complete in all
respects.

     

    17.           The
undersigned is an Authorized Officer of Borrower.

     

    18.           Notice
of this Loan Request shall be deemed received by Lender when (i) sent by
facsimile to (703) 714-3002 and (ii) verbally confirmed by telephone call to
either (when called in the following order of priority): (1) primary contact in
Loan Accounting, currently Denise Sanchez, ((703) 714-3239), (2) secondary
contact in Loan Accounting, currently Steve Dillon ((703) 714-2691), and (3)
Loan Accounting Manager, currently Wendy McLain ((703) 714-2926) or such other
names and numbers as Lender may specify upon prior written Notice to
Borrower.

    

    
      
        
           

        

        
          Sch. 2.5 -
3

          
            

          

        

        
           

        

      

    

     

    [The
Loan Request continues on the following page]

    

    
      
        
           

        

        
          Sch. 2.5 -
4

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the undersigned has executed this Certificate this [._____] day
of  [______], [___].

     

    
      
        
          	 
      	
                  BORROWER:

                   

                
	 
      	
                  ESSEX CAL-WA, L.P., a California limited
      partnership

                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  By:

                	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                  By:

                	 
      
	 
      	 
      	 
      	 
      	 
      	
                  Name:

                  Title:

                

        

      

    

     

    [The
Loan Request continues on the following page]

    

    
      
        
           

        

        
          Sch. 2.5 -
5

          
            

          

        

        
           

        

      

    

     

    19.     The
current Loan to Value Ratio is [ ___________ ] ([ ______ ]%),
which is less than or
equal to the Maximum Loan to Value Ratio specified in Section 2.5.3.1 of
sixty-five percent (65%), determined as follows:

    

    
      
        
          
            
              	 	
                      A.

                    	
                      The
      current Loan balance

                    	
                      $[__________________]

                    	
                       

                    
	 	 
      	 
      	
                       
      

                    	
                       

                    
	 	
                      B.

                    	
                      The
      current aggregate Market Value
      of the Collateral Pool

                    	
                      $[__________________]

                    	
                       

                    
	 	 
      	
                       

                    	
                       
      

                    	
                       

                    
	 	
                      C.

                    	
                      Item
      A divided by Item B and then multiplied by 100% equals the Loan to Value
      Ratio

                    	
                      [_________________]%

                    	
                       

                    

            

          

        

      

    

     

    20.           Following
the disbursement of the funds comprising the Borrowing Tranche requested herein,
the Loan to Value Ratio will equal [________] ([_____]%), which is less than
or equal to the Maximum Loan to Value Ratio set forth in Section 2.5.3.1 of
sixty-five percent (65%), determined as follows:

    

    
      
        
          
            
              
                	 	
                        A.

                      	
                        The
      Loan balance upon disbursement of the funds comprising the Borrowing
      Tranche(s) requested herein

                      	
                        
                          $[__________________]

                        

                      	
                         

                      
	 	 
      	 
      	 
      	
                         

                      
	 	
                        B.

                      	
                        The
      current aggregate Market Value of the Collateral Pool

                      	
                        
                          $[__________________]

                        

                      	
                         

                      
	 	 
      	 
      	 
      	
                         

                      
	 	
                        C.

                      	
                        Item
      A divided by Item B and then multiplied by 100% equals the Loan to
      Value Ratio

                      	
                        
                          [___________________]%

                        

                      	
                         

                      

              

            

          

        

      

    

     

    21.     The
current Facility Debt Service Coverage Ratio is [ _________ ]: 1.00, which
is not less
than 1.60: 1.00, determined as follows:

     

    
      
        
          	
                   

                	
                  A.

                	
                  Net
      Operating Income of the Collateral Pool Properties determined by
      Lender

                	
                  
                    $[__________________]

                  

                	 
	
                   

                	 
      	 
      	
                   

                	 
	
                   

                	
                  B.

                	
                  Facility
      Debt Service (as defined in the Credit Agreement)

                	
                  
                    $[__________________]

                  

                	 
	 	 
      	 
      	
                   

                	 
	
                   

                	
                  C.

                	
                  Item
      A divided by Item B equals the Facility Debt Service Coverage
      Ratio

                	
                  
                    [___________________]%

                  

                	 

        

      

    

     

    
      
        
           

        

        
          Sch. 2.5 -
6

          
            

          

        

        
           

        

      

    

     

    22.     Following
the disbursement of the funds comprising the Borrowing Tranche
requested herein, the Facility Debt Service Coverage Ratio will be
[ _____ ]: 1.00, which is

    not less
than 1.60: 1.00, determined as follows:

     

    
      
        
          	 	
                  A.

                	
                  Net
      Operating Income of the Collateral Pool Properties as determined by
      Lender

                	
                  $[_________________
      ]

                	 
	 	 
      	 
      	 
      	 
	 	
                  B.

                	
                  Facility
      Debt Service (as defined in the Credit Agreement)

                	
                  $[_________________
      ]

                	 
	 	 
      	 
      	 
      	 
	 	
                  C.

                	
                  Item
      A divided by Item B equals the Facility Debt Service Coverage
      Ratio

                	
                  [_________________
      ]%

                	 

        

      

    

     

    Servicer
hereby certifies (i) to the accuracy of each of the mathematical computations
set forth in paragraphs 19 through 22 above (acknowledging that Servicer has
relied, with Lender's consent and without independent verification thereof, on
the Net Operating Income and Market Value(s) prepared by Lender), and (ii) to
the best of its knowledge and belief, that all statements made by Borrower
herein are true and accurate in all material respects.

    

    
      
        
          
            	 
      	
                    SERVICER:

                     

                  
	 
      	
                    NORTHMARQ CAPITAL, INC.,
      a Minnesota corporation

                  
	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Name:
      Paul W. Cairns

                    Title:
      Senior Vice
President

                  

          

        

      

    

     

    
      
        
           

        

        
          Sch. 2.5 -
7

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
2.5.2

    

    FORM OF COMMITMENT
LETTER

    

    LETTER
OF RATE LOCK COMMITMENT FORM

    FOR
FIXED RATE BORROWING TRANCHES

    PURSUANT
TO REVOLVING CREDIT FACILITIES

    (Revised
8-28-2008)

    

     

    (LENDER
LETTERHEAD)

    

    

     

    DATE
[ __________]

     

    Essex
CAL-WA, L.P.

    c/o Essex
Property Trust, Inc.

    925 East
Meadow Drive

    Palo
Alto, CA 94303

     

    Attention:
[ ___________]

     

    Re:
Credit Agreement dated as of November 17, 2008, as amended (the "Credit Agreement") by
and between ESSEX CAL-WA, L.P., a California limited partnership, having an
address at 925 East Meadow Drive, Palo Alto, CA 94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 500, Bloomington, MN 55431-4435 (together with
its successors and assigns, "Lender").

     

    Lender
Loan Number: [  ________________________________ ]

     

    Dear
[ _________________ ]:

     

    This
letter is a commitment ("Commitment") by
Lender to advance funds at a Fixed Rate for the Fixed Rate Borrowing Tranche
requested by Borrower pursuant to that certain Loan Request dated as
of [ _____________ ] (the "Requested Borrowing
Tranche"). Upon Borrower's timely acceptance
of this Commitment in the manner provided in Part A below and subject to
Borrower's satisfaction of the conditions precedent set forth in Part B below
and in the Credit Agreement, this Commitment will obligate Lender to advance
funds for the Requested Borrowing Tranche in accordance with the provisions and
conditions set forth in this Commitment and in the Credit Agreement. Capitalized
terms used but not defined in this Commitment will have the meanings assigned to
them in the Credit Agreement.

     

    
      	
              A.

            	
              Expiration;
      Acceptance of the Commitment.

            

    

     

    
      	
               
      

            	
              1.

            	
              Expiration.

            

    

    

    
      
        
           

        

        
          Sch. 2.5.2
- 1

          
            

          

        

        
           

        

      

    

     

    This
Commitment will expire at 4:00 p.m. time on [ _____________ ] FIVE
BUSINESS DAYS
AFTER THE DATE OF THIS LETTER ("Expiration Date"), at
which time, this Commitment will become null and void.

     

    2.            Acceptance.

     

    If
Borrower desires to accept this Commitment:

     

    
      	
               
      

            	
              (a)

            	
              Borrower
      must execute one original of this Commitment and cause it to be received
      by Lender, via facsimile, before 4:00 p.m. Washington D.C. local time on
      the same date as Lender delivers this Commitment to Borrower;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Borrower
      shall thereafter deliver a fully executed original of this Commitment to
      Lender within one (1) Business Day of the date of this
      Commitment.

            

    

     

    
      	
              B.

            	
              Interest Rate Lock and
      Selection of Other Loan
Terms.

            

    

     

    If
Borrower accepts this Commitment in the manner provided in Part A above, then
Borrower will have until the Expiration Date ("Rate Lock Period") to
lock the Fixed Rate for the Requested Borrowing Tranche ("Interest Rate Lock").
Notwithstanding anything in this Commitment or the Credit Agreement to the
contrary, the Rate Lock Period will terminate on the Expiration Date. If the
Borrower fails to Interest Rate Lock prior to the Expiration Date, this
Commitment will terminate and become null and void.

     

    Lender's
Required Net Yield ("RNY") for the Requested Borrowing Tranche will be [ _______
] basis
points above the yield for the [ __________ ] year US Treasury
Security (as determined
by Lender) ("Benchmark
US Treasury Security"). The Servicing Spread for the Requested Borrowing
Tranche will be four (4) basis points. The actual yield of the applicable
Benchmark US Treasury Security as determined by Lender at the time of Interest
Rate Lock will be used to determine the Fixed Rate. Borrower must communicate
its Interest Rate Lock to Lender during the Rate Lock Period by telephoning one
of the Servicer contacts identified in the Credit Agreement between the
hours     of     10:00     a.m.     and     2:00     p.m.     Washington,     DC     time.

     

    Notwithstanding
anything to the contrary contained in this Commitment Letter, Borrower will not
be permitted to Interest Rate Lock in accordance with this Commitment Letter and
the Credit Agreement if it is not in compliance with the Sublimits on the Rate
Lock Date (as defined below).

     

    
      	
              C.

            	
              Fixed Rate
      Note.

            

    

     

    When
Borrower locks the Fixed Rate as provided in Part B above ("Rate Lock Date"), the
Borrower will be obligated to accept funds advanced by Lender for the Requested
Borrowing Tranche in accordance with the provisions and conditions set forth in
this Commitment and the Credit Agreement by the Delivery Date specified in Exhibit
A

     

    
      
        
           

        

        
          Sch. 2.5.2
- 2

          
            

          

        

        
           

        

      

    

     

    (Interest
Rate Lock and Borrowing Tranche Terms Confirmation Sheet) attached to this
Commitment. On the Rate Lock Date, Lender will deliver to Borrower by facsimile
(fax) or by overnight mail or courier a completed Exhibit
A to
evidence the terms of the Rate Lock. Borrower must execute and deliver the
completed Exhibit
A to
Lender in accordance with Section 2.5.2.1 of the Credit Agreement. Borrow must
also satisfy all the other conditions and delivery requirements set forth in,
and in accordance with, Section 2.5.2 of the Credit Agreement. Failure by
Borrower to satisfy the document delivery requirements in accordance with
Section 2.5.2 of the Credit Agreement will constitute a Rate Lock Termination
Event.

     

    
      	
              D.

            	
              Rate Lock Termination
      Event. In accordance with Section 2.5.2.2 of the Credit Agreement,
      if a Rate Lock Termination Event occurs, Borrower shall promptly reimburse
      Lender for any Breakage Fee as calculated pursuant to Exhibit
      B hereto.

            

    

     

    
      	
              E.

            	
              Potential Defaults or
      Events of Default. Lender will not be obligated to advance funds
      hereunder if a Potential Default or Event of Default has occurred under
      the Credit Agreement or any Loan
Document.

            

    

     

    
      	
              F.

            	
              Exhibits.

            

    

     

    The
following Exhibits are attached to this Commitment and are a part of this
Commitment:

     

    
      	
               
      

            	
              x

            	
              Exhibit
      A

            	
              Interest
      Rate Lock and Borrowing Tranche Terms Confirmation
  Sheet

            

    

    

     

    
      	
            	
              x 

            	
                  
           Exhibit
      B                Breakage
      Fee Calculation

            

    

     

    SIGNATURE
PAGE AND ACCEPTANCE CONTINUE ON NEXT PAGE

    

    
      
        
           

        

        
          Sch. 2.5.2
- 3

          
            

          

        

        
           

        

      

    

     

    Please
call the undersigned if you have any questions about this Commitment. We look
forward to your acceptance of this Commitment and consummation of the Interest
Rate Lock.

    

     

    Sincerely,

     

    [ ______________
]

     

    AGREED
AND ACCEPTED BY BORROWER

     

    Lender Loan Number [_________________]

     

    

    Date: [__________________________]

    

     

    BORROWER:

     

    ESSEX CAL-WA, L.P., a
California limited partnership

    

    
      
        
          	
                  By:

                	
                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                	
                   
      

                
	 
      	 
      	 
      	 
      	 
      	
                   
      

                
	 
      	
                  By:

                	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                	
                   
      

                
	 
      	 
      	
                   
      

                	 
      	 
      	
                   
      

                
	 
      	 
      	
                  By:

                	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                	
                   
      

                
	 
      	 
      	 
      	 
      	 
      	
                   
      

                
	 
      	 
      	 
      	
                  By:

                	 
      	
                   
      

                
	 
      	 
      	 
      	 
      	 
      	
                   
      

                
	 
      	 
      	 
      	 
      	
                  Name:

                  Title:

                	
                   
      

                

        

      

    

    

    
      
        
           

        

        
          Sch. 2.5.2
- 4

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
A 

    COMMITMENT

     

    INTEREST
RATE LOCK AND BORROWING TRANCHE TERMS 

    CONFIRMATION
SHEET

    

    

     

    Lender
Loan Number: [ ______________________________ ]

    

     

    Date of
Interest Rate Lock: [ ________________________________ ]

    

     

    
      
        
          	
                  Fixed
      Rate Borrowing Tranche amount

                	
                  $

                
	
                  Annual
      debt service amount

                	
                  $

                
	
                  Monthly
      payment: Interest only per diem pavment**[MUST BE EXPRESSED TO THE FIFTH
      DECIMAL]

                	
                  $

                
	 
      	 
      
	
                  Index

                	
                  [____]-year
      US Treasury Security

                
	
                  Yield
      Rate on Index on date of Interest Rate Lock

                	
                  %

                
	
                  Lender
      RNY

                	
                  %

                
	
                  Servicing
      Spread

                	
                  0.04%

                
	
                  Term

                	
                  [______]
      months [MUST BE THE
      NUMBER OF MONTHS REMAINING UNTIL THE INITIAL MATURITY DATE (i.e., December
      1, 2011)]

                
	
                  Delivery
      Date

                	 
      

        

      

    

    ** The
per diem amount above is an approximation. The actual calculation of the monthly
interest only payment will be made in accordance with Section 3 of the
Note.

     

    AGREED
AND ACCEPTED BY BORROWER

     

    Lender
Loan Number [ _________________________ ]

     

    Date: [ _________________________
]

     

    BORROWER:

     

    ESSEX CAL-WA, L.P., a
California limited partnership

    

    
      
        
          	
                  By:

                	
                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  By:

                	 
      	 
      
	 
      	 
      	 
      	 
      	
                   

                  Name:

                  Title:

                	 
      

        

      

    

    

    
      
        
           

        

        
          Sch. 2.5.2
- 5

          
            

          

        

        
           

        

      

    

     

    EXHIBIT
B 

    COMMITMENT

     

    BREAKAGE
FEE CALCULATION

     

    The
Breakage Fee will be the greater of (A) or (B) below:

     

    
      	
              A.

            	
              2%
      of the Rate Locked Fixed Rate Borrowing Tranche Loan Amount; or

            

    

     

    
      	
              B.

            	
              the
      product obtained by multiplying:

            

    

     

    
      	
               
      

            	
              1.

            	
              the
      Rate Locked Fixed Rate Borrowing Tranche Loan Amount,
  by

            

    

     

    
      	
               
      

            	
              2.

            	
              the
      value obtained by subtracting

            

    

     

    
      	
               
      

            	
              (a)

            	
              the
      Monthly Yield Rate at Breakage less 1.125 basis points,
    from

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      Monthly Yield Rate at Rate-Lock, by

            

    

     

    
      	
               
      

            	
              3.

            	
              the
      Present Value Factor

            

    

     

    For
purposes of this Exhibit
B the
following definitions will apply: "Breakage Date": the
date that a Rate Lock Termination Event occurs.

     

    "Rate Locked Fixed Rate
Borrowing Tranche Loan Amount": the Loan amount of the Requested
Borrowing Tranche as set forth in this Commitment Letter.

     

    "Yield Rate at
Breakage": the yield rate on the Index (set forth on Exhibit A) as of the
close of the trading session on the Breakage Date, as reported in The Wall
Street Journal, expressed as a decimal calculated to five digits. In the event
that no yield is published on the applicable date for the Index, Lender, in its
discretion, will select the non-callable Treasury Security maturing in the same
year as the Index with the lowest yield published in The Wall Street Journal as
of the applicable date. If the publication of such yield rates in The Wall
Street Journal is discontinued for any reason, Lender will select a security
with a comparable rate and term to the Index. The selection of an alternate
security pursuant to this Exhibit
B will be
made in Lender's discretion.

     

    "Monthly Yield Rate at
Breakage": the Yield Rate at Breakage divided by 12.

     

    "Yield Rate at
Rate-Lock": the yield rate on the Index at rate lock (as set forth in
this Commitment Letter).

    

    "Monthly Yield Rate at
Rate-Lock": the Yield Rate at Rate Lock divided by 12.

    

    "Present Value
Factor": the factor that discounts to present value the costs resulting
to Lender from the difference in the Yield Rate at Rate-Lock and the Yield Rate
at Breakage calculated using the following formula:

    

    
      
        
           

        

        
          Sch. 2.5.2
- 6

          
            

          

        

        
           

        

      

    

     

    1 - (1 + r)n

    (r)

     

    
      	
               
      

            	
              r
      =

            	
              Monthly
      Yield Rate at Breakage

            

    

    
      	
               
      

            	
              n
      =

            	
              the
      number of months remaining until the Scheduled Maturity
    Date

            

    

    

    
      
        
           

        

        
          Sch. 2.5.2
- 7

          
            

          

        

        
           

        

      

    

     

    SCHEDULE
3.2

     

    NET SPREAD
TABLE

    

     

    
      
        
          
            	
                    Facility
      Debt Service Coverage Ratio

                  	
                    Net
      Spread Fee*

                  	
                    Margin*

                  
	
                    Greater
      than or equal to 1.60 : 1.00 but less than 1.90 : 1.00

                  	
                    0.0146

                  	
                    0.0150

                  
	
                    Greater
      than or equal to 1.90 : 1.00 but less than 2.20 : 1.00

                  	
                    0.0126

                  	
                    0.0130

                  
	
                    Greater
      than or equal to 2.20 : 1.00

                  	
                    0.0095

                  	
                    0.0099

                  

          

        

      

    

     

    * The Net
Spread and Margin set forth above assumes that the Base Rate Borrowing Tranches
will have a one-month Interest Period. The Net Spread and Margin shall be
increased by five basis points (0.0005) for any Base Rate Borrowing Tranche
having a three-month Interest Period, increased by fifteen basis points (0.0015)
for any Base Rate Borrowing Tranche having a six-month Interest Period, and
increased by thirty basis points (0.0030) for any Base Rate Borrowing Tranche
having a twelve-month Interest Period.

    

    
      
        
           

        

        
          Sch. 3.2 -
1

          
            

          

        

        
           

        

      

    

     

    [BORROWER
MAY, SUBJECT TO LENDER'S CONSENT, REVISE THIS FORM OF RENEWAL REQUEST TO PROVIDE
FOR THE RENEWAL OF MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL REQUEST
FORM OR TO PROVIDE FOR THE SPLITTING OF A MATURING BORROWING TRANCHE INTO
MULTIPLE BORROWING TRANCHES UNDER A SINGLE RENEWAL REQUEST FORM]

     

    SCHEDULE
3.3.3

    RENEWAL
REQUEST

     

    [ _____________ ],
20[ __ ]

    

     

    NorthMarq
Capital, Inc.

    3500
American Boulevard West

    Suite
500

    Bloomington
, MN 55431-4435

    Attention:
Servicing

    Attention:

    

     

    Ladies
and Gentlemen:

     

    Reference
is made to that Credit Agreement dated as of November 17, 2008, as amended (the
"Credit
Agreement") initially by and between ESSEX CAL-WA, L.P., a California
limited partnership, having an address at 925 East Meadow Drive, Palo Alto, CA
94303 ("Borrower") and
NORTHMARQ CAPITAL, INC., a Minnesota corporation, having an address at 3500
American Boulevard West, Suite 50Q, Bloomington, MN 55431-4435 (together with
its successors and assigns, "Lender"). Unless
otherwise defined herein, terms defined in the Credit Agreement are used herein
with the same meanings.

     

    I,   [
________________ ],   the  [ ________________
]   of    Borrower,    a
[ ________________ ], do hereby certify on behalf of Borrower as of the date
hereof, as follows:

     

    ________
Borrower hereby requests Lender to renew the Borrowing Tranche in the amount of
$[ __ ], whose then-current Interest Period will mature on [ ______ ], [ ______
].

     

    Or

    ______
Borrower, in accordance with the provisions of the Credit Agreement, will repay
$[__________] of the outstanding principal amount of the Borrowing Tranche
originally funded in the amount of/, whose Interest Period will mature on
[______], [________],  prior to such maturity date, and hereby
requests Lender to renew such Borrowing Tranche in the amount of the remaining
principal balance of such Borrowing Tranche, the remaining principal balance
being equal to $[________].

     

    [or

    

    
      
        
           

        

        
          Sch. 3.3.3
- 1

          
            

          

        

        
           

        

      

    

     

    _____
Borrower hereby requests Lender to combine two (2) or more Borrowing Tranches
pursuant to the provisions of the Credit Agreement into a single Borrowing
Tranche, specifically Borrower hereby requests that Lender combine the Borrowing
Tranche in the amount of $[______________], whose Interest Period will mature on
[____________], [_______] with the Borrowing Tranche in the amount of
$________________, whose Interest Period will mature on
[_____________],[_______] [add descriptions of additional Borrowing Tranches as
necessary.]

     

    
      1.           The
Borrowing Tranche shall bear interest at (check one):

    

     

    _______
Prime Rate*

     

    _______
Base Rate

     

     
*Prime Rate is available only as specified in the Credit Agreement

     

    2.           The
Interest Period (if the Base Rate is selected) applicable to the renewed
Borrowing Tranche is (check one):

     

    _______ one-month

     

    _______ three-month*

     

    _______ six-month**

     

    _______ twelve-month***

    

     

     *subject
to a [ _______ ] basis point ([ _________ ] )
increase in the Margin otherwise applicable
to such Borrowing Tranche

     

     
**subject to a [ _____________ ] basis point- ([ ___________ ])
increase in the Margin otherwise applicable
to such Borrowing Tranche

     

     
***subject to a [ _____________ ] basis point ([ _____________ ]) increase
in the Margin

     

     
otherwise applicable to such Borrowing Tranche

     

    3.          Borrower
will (check one):

     

    
      	
               
      

            	
              ______

            	
              Pay
      all interest due and payable under the requested Borrowing Tranche in
      monthly installments pursuant to the terms of the Credit
      Agreement.

            

    

     

    
      	
               
      

            	
              ______

            	
              Prepay
      all interest for such Borrowing Tranche as of the Borrowing
      Date.

            

    

     

    4.         
  The principal amount outstanding under the Credit Agreement on the
date hereof, prior to any advance in response to this request, is
$[].

     

    5.        
   If applicable, the Base Rate for the Borrowing Tranche renewed
hereunder shall be [_____________] ([____]%) consisting of a
Reference Bills® Rate/LIBO Rate of [ __________ ] percent ([_____]%) and a Margin of
[_____] ([____]%).

    

    
      
        
           

        

        
          Sch. 3.3.3
- 2

          
            

          

        

        
           

        

      

    

     

    6.           If
applicable (i.e., in the event of the
renewal a Base Rate Borrowing Tranche), the maturity date of the Interest Period
of the Borrowing Tranche requested herein is (choose and complete one of the
following):

    

    [_____________
], 20[ ____________ ] (which is the last day of the
Interest Period, in the event
that such date is a Business Day)

     

    [ _____________ ], 20[ _____________ ] (which
is the Business Day following the last day

    of the
Interest Period, in the event that such date is not a Business
Day).

     

    7.           To
the best of Borrower's knowledge and belief following diligent inquiry, the
computations set forth in Paragraphs 12 through 14 as certified by Servicer are
accurate.

     

    8.           [Check
one of the following:]

     

     
_______ No Potential Default or Event of Default has occurred or is
continuing
under the Loan Documents; or

     

     
_______ No Potential Default or Event of Default, other than Borrower's non-
compliance with Section
2.5.3.2 of
the Credit Agreement, has occurred or is continuing under the Loan Documents,
Borrower is otherwise in full compliance with the terms of the Loan Agreement,
and will not increase the outstanding principal balance of the Loan pursuant to
this Renewal Request.

     

    9.           All
of the other terms and conditions set forth in the Credit Agreement and the
other Loan Documents pertaining to the Loan have been satisfied.

     

    10.           The
undersigned is an Authorized Officer of Borrower.

     

    11.           Notice
of this Loan Request shall be deemed received by Lender when (i) sent by
facsimile to (703) 714-3002 and (ii) verbally confirmed by telephone call to
either (when called in the following order of priority): (1) primary contact in
Loan Accounting, currently Denise Sanchez, ((703) 714-3239), (2) secondary
contact in Loan Accounting, currently Steve Dillon ((703) 714-2691), and (3)
Loan Accounting Manager, currently Wendy McLain ((703) 714-2926) or such other
names and numbers as Lender may specify upon prior written Notice to
Borrower.

     

    [The
Renewal Request continues on the following page]

    

    
      
        
           

        

        
          Sch. 3.3.3
- 3

          
            

          

        

        
           

        

      

    

     

    IN
WITNESS WHEREOF, the undersigned has executed this Certificate this [_____] day
of [_____________], [_____].

    

    
      
        
          	 
      	
                  BORROWER:

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                  ESSEX CAL-WA, L.P., a California limited
      partnership

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	
                  Essex
      SPE, LLC, a Delaware limited liability company, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                  By:

                	
                  Essex
      Portfolio, L.P., a California limited partnership, its sole
      member

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                  By:

                	
                  Essex
      Property Trust, Inc., a Maryland corporation, its general
      partner

                	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                  By:

                	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	
                  Name:

                  Title:

                	 
      

        

      

    

     

    [The
Renewal Request continues on the following page]

    

    
      
        
           

        

        
          Sch. 3.3.3
- 4

          
            

          

        

        
           

        

      

    

     

    12.           The
current Loan to Value Ratio is [_________] ([_____]%), which is less than or
equal to the Maximum Loan to Value Ratio set forth in Section
2.5.3.1 of the Credit
Agreement of sixty-five percent (65%), determined as follows:

    

    
      
        
          	 	
                  A.

                	
                  The
      current Loan balance

                	
                  $[___________]

                	 
	 	 
      	 
      	 
      	 
	 	
                  B.

                	
                  The
      current aggregate Market Value of the Collateral Pool

                	
                  $[___________]

                	 
	 	 
      	 
      	 
      	 
	 	
                  C.

                	
                  Item
      A divided by Item B and then multiplied by 100% equals the Loan to Value
      Ratio

                	
                  [___________]%

                	 

        

      

    

    

     

    13.           
The current Facility Debt Service Coverage Ratio is ____________ :
1.00, which (check
one):

     

    _______
is less than 1.60 : 1.00, or

     

    _______
is greater than or equal to 1.60 : 1.00,

     

    determined
as follows:

    

    
      
        
          	 	
                  A.

                	
                  Net
      Operating Income of the Collateral Pool Properties determined by
      Lender

                	
                  $[____________]

                	 
	 	 
      	 
      	
                   
      

                	 
	 	
                  B.

                	
                  Facility
      Debt Service (as defined in the Credit Agreement)

                	
                  $[____________]

                	 
	 	 
      	 
      	
                   
      

                	 
	 	
                  C.

                	
                  Item
      A divided by Item B equals the Facility Debt Service Coverage
      Ratio

                	
                  [_____________]%

                	 

        

      

    

     

    14.           
  Following the renewal of the Borrowing Tranche for the Interest
Period requested herein, the Facility Debt Service Coverage Ratio will be_____:
1.00, which (check one):

     

    _______
is less than 1.60 : 1.00, or

     

    _______
is greater than or equal to 1.60 : 1.00, determined as follows:

    

    
      
        
          	 	
                  A.

                	
                  Net
      Operating Income of the Collateral Pool Properties as determined by
      Lender

                	
                  $[____________]

                	 
	 	 
      	 
      	 
      	 
	 	
                  B.

                	
                  Facility
      Debt Service (as defined in the Credit Agreement)

                	
                  $[____________]

                	 
	 	 
      	 
      	 
      	 
	 	
                  C.

                	
                  Item
      A divided by Item B equals the Facility Debt Service Coverage
      Ratio

                	
                  [_____________]%

                	 

        

      

    

    

    
      
        
           

        

        
          Sch. 3.3.3
- 5

          
            

          

        

        
           

        

      

    

     

    Servicer
hereby certifies (i) to the accuracy of each of the mathematical computations
set forth in paragraphs 12 through 14 above (acknowledging that Servicer has
relied, with Lender's consent and without independent verification thereof, on
the Net Operating Income and Market Value(s) prepared by Lender), and (ii) to
the best of its knowledge and belief, that all statements made by Borrower
herein are true and accurate in all material respects.

     

    
      
        
          	 
      	
                  SERVICER:

                
	 
      	 
      	 
      
	 
      	
                  NORTHMARQ CAPITAL, INC.,
      a Minnesota corporation

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  By:.

                	 
      
	 
      	 
      	
                  Name:
      Paul W. Cairns Title: Senior Vice
President

                

        

      

    

     

    
      
        
           

        

        
          Sch. 3.3.3
- 6

          
            

          

        

        
           

        

      

    

    

    SCHEDULE
4.4

     

    BASE RATE BORROWING TRANCHE
PREPAYMENT FEE

     

    1.           Definitions - As used in this
Schedule 4.4, the words and terms set forth below shall have the meanings set
forth below. Capitalized terms used in this Schedule 4.4 and not otherwise
defined shall have the meanings set forth in the Credit Agreement.

     

    
      	
               
      

            	
              (a)

            	
              Interest Period Balance:
      shall mean the number of days remaining in the Interest Period for
      the applicable Borrowing Tranche as of the Prepayment
  Date.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Reference BillsSM Rate: shall mean that
      portion of the Base Rate for the applicable Borrowing Tranche attributable
      to the Reference BillsSM
      Rate for the applicable Borrowing Tranche, expressed as a decimal
      calculated to four (4) digits.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Prepayment Date: shall
      mean (i) in the case of a prepayment under Section 4.3.1 of the Credit
      Agreement, the date on which the prepayment is made or (ii) in any other
      case in which a Prepayment Fee is payable pursuant to the terms of the
      Credit Agreement, the date on which Lender accelerates the unpaid
      principal balance of the Revolving Credit
Note.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Reinvestment Rate: shall
      mean, as of the date that is five (5) Business Days prior to the
      Prepayment Date, the Reference BillsSM
      Rate for the Reference BillsSM
      which matures as close as possible, but not prior to, the maturity date of
      the Interest Period for the applicable Borrowing Tranche, expressed as a
      decimal calculated to four (4)
digits.

            

    

     

    2.           Determination
of the Prepayment Fee - The Prepayment Fee
payable under Section 4.4 of the Credit Agreement applicable to any particular
Borrowing Tranche shall be equal to the greater of the amounts obtained by the
formulae set forth in subparagraphs (a) and (b) below.

     

     

    
      	
               
      

            	
              (a)

            	
              the
      amount obtained by:

            

    

     

    
      
        	
              	
                (i) 

              	
                 dividing:

              

      

    

    

    
      
        	
              	
                (A) 

              	
                 the
      Interest Period Balance

              

      

    

     

    by

     

    
      
        	
              	
                (B) 

              	
                 three
      hundred and sixty (360) days

              

      

    

     

    
      
        	
              	
                (ii) 

              	
                 then
      multiplying the figure obtained in (i) above by one percent (1%);
      and

              

      

    

    

    
      
        
           

        

        
          Sch. 4.4 -
1

          
            

          

        

        
           

        

      

    

     

    
      	
               
      

            	
              (iii)

            	
              then
      multiplying the figure obtained in (ii) above by the amount of principal
      being prepaid; or

            

    

     

    
      	
               
      

            	
              (b)

            	
              the
      amount obtained by

            

    

     

    
      	
               
      

            	
              (i)

            	
              multiplying

            

    

     

    
      	
               
      

            	
              (A)

            	
              the
      amount of principal being prepaid

            

    

     

    by

     

    
      	
               
      

            	
              (B)

            	
              the
      excess (if a positive number) of the Reference BillsSM
      Rate over the Reinvestment
Rate;

            

    

    

     

    
      	
               
      

            	
              (ii)

            	
              then
      dividing the figure obtained in (i) above by three hundred and sixty (360)
      days; and

            

    

    

     

    
      	
               
      

            	
              (iii)

            	
              then
      multiplying the figure obtained in (ii) above by the Interest Period
      Balance.

            

    

     

    Notwithstanding
the foregoing, if the Reinvestment Rate is greater than or equal to the
Reference BillsSM Rate
the fee calculated under this subparagraph (b) shall equal zero.

     

    If at any
time a prepayment occurs of a Borrowing Tranche bearing interest at the LIBO
Rate, for purposes of computing the fee payable under this subparagraph (b), all
references in this Schedule 4.4 to Reference BillsSM Rate
shall be deemed to refer to LIBO Rate, as the context requires.

     

    Borrower
recognizes that prepayment of any amount due under the Revolving Credit Note,
whether voluntary or involuntary resulting from a default by Borrower, will
result in Lender's incurring loss, including reinvestment loss, additional
expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the- extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth above represents a reasonable estimate of the
damages Lender will incur because of a prepayment. Borrower further acknowledges
that the above prepayment premium provisions are a material part of the
consideration for the Loan, and acknowledges that the terms of the Revolving
Credit Note are in other respects more favorable to Borrower as a result of the
Borrower's voluntary agreement to the prepayment premium
provisions.

     

    Set forth
below, for informational purposes only, is an example of the computation of the
Prepayment Fee, based on a hypothetical (i) principal amount being prepaid of
Five Million and NO/100 Dollars ($5,000,000.00), (ii) Interest Period Balance of
fifteen (15) days, (iii) Reference Bills
Rate of 2.75% and (iv) Reinvestment Rate of 2.25%. Based on such hypothetical
amounts:

    

    
      
        
           

        

        
          Sch. 4.4 -
2

          
            

          

        

        
           

        

      

    

     

    
      
        	
              	
                (a) 

              	
                 the
      computation set forth in Section 2(a) above is as
  follows:

              

      

    

     

    
      	
               
      

            	
              (i)

            	
              the
      Interest Period Balance (15 days) divided by three hundred sixty (360)
      days yields an amount equal to approximately
  .041666;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              one
      percent (1%) of the figure obtained in (i) above (approximately .041666)
      is an amount equal to approximately
..0004166;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      product of the figure obtained in (ii) above (approximately .0004166)
      times the amount of principal being prepaid ($5,000,000.00) is an amount
      equal to approximately $2,083.33.

            

    

     

    
      
        	
              	
                (b) 

              	
                the
      computation set forth in Section 2(b) above is as
  follows:

              

      

    

     

    
      	
               
      

            	
              (i)

            	
              the
      product of the principal being prepaid ($5,000,000.00) times the excess of
      the Reference Bills Rate (2.75%) over the Reinvestment Rate (2.25%) (such
      excess .5%) is an amount equal to
$25,000.00;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              the
      figure obtained in (i) above ($25,000.00) divided by 360 days is an amount
      equal to approximately 69.4444;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              the
      product of the figure obtained in (ii) above (approximately 69.4444) times
      the Interest Period Balance (15 days) is an amount equal to approximately
      $1,041.67.

            

    

     

    As the
figure obtained under the calculation set forth in (a) ($2,083.33) exceeds the
figure obtained under the calculation set forth in (b) ($1,041.67), the
Prepayment Fee under this example would be equal to the figure obtained in (a)
or $2,083.33.

     

     

     Sch. 4.4 - 3

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