Document:

exv10w10

Exhibit 10.10

PURCHASE MONEY NOTE

			
	US $6,650,000.00
	 	August 11, 2010

     FOR VALUE RECEIVED, the undersigned (“Borrower”) jointly and severally (if more than one)
promises to pay to the order of TOWNE REALTY, INC. d/b/a LINCOLN TOWER, INC., the principal sum of
Six Million Six Hundred Fifty Thousand and No/100 Dollars (US $6,650,000.00) or so much thereof as
shall be outstanding from time to time, with interest accruing at the Interest Rate on the unpaid
principal balance from the Disbursement Date until fully paid.

     1. Defined Terms. In addition to defined terms found elsewhere in this Purchase Money Note
(“Note”), as used in this Note, the following definitions shall apply:

	 	 	Amortization Period: N/A except as set forth in Paragraph 3(f).
	 
	 	 	Business Day: Any day other than a Saturday, Sunday or any other day on which
Lender is not open for business.
	 
	 	 	Debt Service Amounts: Amounts payable under this Note, the Security Instrument or
any other Loan Document.
	 
	 	 	Default Rate: A rate equal to the lesser of (i) 4 percentage points above the
Interest Rate or (ii) the maximum interest rate which may be collected from Borrower
under applicable law.
	 
	 	 	Disbursement Date: The date of disbursement of Loan proceeds hereunder.
	 
	 	 	First Payment Date: The first day of October, 2010.
	 
	 	 	Indebtedness: The principal of, interest on, or any other amounts owing at any time
under, this Note, the Security Instrument or any other Loan Document, including late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument.
	 
	 	 	Interest Rate: The annual rate of six percent (6.0%) or, if applicable, as provided
in Paragraph 3(f) hereof.
	 
	 	 	Lender: The holder of this Note.
	 
	 	 	Loan: The loan evidenced by this Note.
	 
	 	 	Loan Term: Sixty (60) months except as set forth in Paragraph 3(f).
	 
	 	 	Maturity Date: Except as set forth in Paragraph 3(f), the first day of September,
2015 or any earlier date on which the unpaid principal balance of this Note becomes
due and payable by acceleration or otherwise.

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	 	 	Property Jurisdiction: The jurisdiction in which the Land is located.
	 
	 	 	Security Instrument: A purchase money mortgage, deed to secure debt or deed of
trust dated as of the date of this Note.

Event of Default, Key Principal, and other capitalized terms used but not defined in this Note
shall have the meanings given to such terms in the Security Instrument.

     2. Address for Payment. All payments due under this Note shall be payable at c/o Towne
Realty, Inc., 710 N. Plankinton Avenue, #1200, Milwaukee, Wisconsin 53203, or such other place as
may be designated by written notice to Borrower from or on behalf of Lender.

     3. Payment of Principal and Interest. Principal and interest shall be paid as follows:

     (a) Short Month Interest. If disbursement of principal is made by Lender to Borrower on any
day other than the first day of the month, interest for the period beginning on the Disbursement
Date and ending on and including the last day of the month in which such disbursement is made shall
be payable simultaneously with the execution of this Note.

     (b) Interest Computation. Interest under this Note shall be computed on the basis of a
360-day year consisting of twelve 30-day months.

     (c)  Monthly Installments Consecutive monthly installments of interest only, each in
the amount of Thirty-three Thousand Two Hundred Fifty Dollars (US $33,250.00) (or such
lesser amount as may be applicable from and after any partial prepayment of any
principal of the Loan, as calculated by Lender based on the remaining principal balance
at the Interest Rate in accordance with Paragraph 3(b) hereof), shall be payable on the
First Payment Date and on the first day of every month thereafter, until the entire
unpaid principal balance evidenced by this Note is fully paid. The entire principal
balance and accrued but unpaid interest shall be due and payable on the Maturity Date.
The unpaid principal balance shall continue to bear interest after the Maturity Date at
the Default Rate set forth in this Note until and including the date on which it is
paid in full. Notwithstanding the foregoing, if either Extension Option (as defined
and described in Paragraph 3(f) below) is exercised by the Borrower, then (i) the
monthly payments required herein will be payable through September 1, 2015, (ii)
thereafter, consecutive monthly installments of principal and interest will be payable
as provided in Paragraph 3(f) below, (iii) any remaining principal and interest shall
be due and payable on the first day of the month that is one year after the Maturity
Date (the “First Extended Maturity Date”) or one year after the First Extended Maturity
Date (the “Second Extended Maturity Date”), as applicable, and (iv) any reference to
the term “Maturity Date” contained in this Note or in any other Loan Document will be
deemed to be a reference to the First Extended Maturity Date or the Second Extended
Maturity Date, as applicable.

     (d) Payments Before Due Date. Any regularly scheduled monthly installment of interest that is
received by Lender before the date it is due shall be deemed to have been received on the due date
solely for the purpose of calculating interest due.

     (e) Accrued Interest. Any accrued interest remaining past due for 30 days or more shall be
added to and become part of the unpaid principal balance and shall bear interest at the rate or
rates specified in this Note if and to the extent permitted by Illinois law. Any reference herein
to “accrued

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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.

     (f) Extension Option. The Borrower shall have two (2) successive options (each, an “Extension
Option”) to extend the Maturity Date of this Note, each for a one-year period beginning on the
Maturity Date and ending on the First Extended Maturity Date (the “First Extension Period”) and
beginning on the First Extended Maturity Date and ending on the Second Extended Maturity Date (the
“Second Extension Period”), as applicable, on the following terms and conditions:

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

     (2) Borrower provides to the Lender, at least 60 days, but not more than 90
days, prior to the Maturity Date or the First Extended Maturity Date, as applicable,
written notice (in the manner specified in the Security Instrument for giving
notices) that it intends to exercise an Extension Option.

     (3) On the initial Maturity Date, Borrower pays to an extension fee in the
amount of twenty-five (25) basis points on the then outstanding principal balance of
the loan for the First Extension Period and, if applicable, on the First Extended
Maturity Date, Borrower pays to an extension fee in the amount of twenty-five (25)
basis points on the then outstanding principal balance of the loan for the Second
Extension Period. For example, if the principal balance at the Maturity Date is Six
Million Six Hundred Fifty Thousand Dollars (US $6,650,000), then the extension fee
would be Sixteen Thousand Hundred Twenty-Five Dollars (US $16,625).

     (4) During the First Extension Period and, if applicable, the Second Extension
Period, interest shall accrue on the unpaid principal balance of this Note at the
Adjustable Rate. The Adjustable Rate shall change on each Rate Change Date (defined
below) until the loan is repaid in full. The Adjustable Rate shall be the rate per
annum that is equal to the sum of (i) the Current Index (defined below), and (ii)
the Margin (defined below), which sum is then rounded to three decimal places;
provided, however, that in no event shall the Adjustable Rate be less than the
Interest Rate. Accrued interest on this Note shall be paid in arrears.

     (5) Consecutive monthly installments of principal and interest, each in the
amount of the Required Monthly Payment (defined below), shall be due and payable on
the first day of the month following the initial Maturity Date or, if applicable,
the First Extended Maturity Date, and on the first day of each month thereafter,
until the entire unpaid principal balance evidenced by this Note is fully paid. Any
remaining principal and interest, if not sooner paid, shall be due and payable on
the First Extended Maturity Date or the Second Extended Maturity Date, as
applicable. The initial Required Monthly Payment shall be the amount required to
pay the unpaid principal balance of this Note in equal monthly installments,
including accrued interest at the Adjustable Rate over the Remaining Amortization
Period (defined below). Thereafter, to the extent that the Adjustable Rate has
changed or partial prepayments of principal are made by Borrower, the Required
Monthly Payment shall change on each Payment Change Date, and shall be in

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such amount as shall cause the unpaid principal balance of the Note to be amortized
over the Remaining Amortization Period (defined below). The Required Monthly
Payment shall be calculated utilizing a 30/360 interest calculation payment schedule
whether the amount allocated to interest on the loan is based on a 360-day year
consisting of twelve 30-day months or on a 360-day year consisting of the actual
number of days in each month. The amount of the Required Monthly Payment that is
allocated to interest shall be calculated utilizing the accrual method set forth in
Paragraph 3(b) above. The balance of the Required Monthly Payment will be allocated
to principal and such amount will vary depending on the amount of the Required
Monthly Payment that is allocated to interest.

     (6) Before each Payment Change Date, Lender shall re-calculate the Adjustable
Rate and shall notify Borrower (in the manner specified in the Security Instrument
for giving notices) of any change in the Adjustable Rate and the Required Monthly
Payment.

     (7) If Lender at any time determines, in its sole but reasonable discretion,
that it has miscalculated the amount of the Required Monthly Payment (whether
because of a miscalculation of the Adjustable Rate or otherwise), then Lender shall
give notice to Borrower of the corrected amount of the Required Monthly Payment (and
the corrected Adjustable Rate, if applicable) and (i) if the corrected amount of the
Required Monthly Payment represents an increase, then Borrower shall, within 30
calendar days thereafter, pay to Lender any sums that Borrower would have otherwise
been obligated under this Note to pay to Lender had the amount of the Required
Monthly Payment not been miscalculated, or (ii) if the corrected amount of the
Required Monthly Payment represents a decrease thereof and Borrower is not otherwise
in breach or default under any of the terms and provisions of the Note, the Security
Instrument or any other loan document evidencing or securing the Note, then Borrower
shall thereafter be paid the sums that Borrower would not have otherwise been
obligated to pay to Lender had the amount of the Required Monthly Payment not been
miscalculated.

     (8) For purposes of this Section, the following definitions shall apply:

     Current Index: The published Index that is effective on the 5th full
business day before the applicable Rate Change Date.

     Index: The “prime rate” (or “base rate”) reported in the Money Rates
column or section of The Wall Street Journal published on the 5th
full business day preceding the applicable Rate Change Date as having been
the rate in effect for corporate loans at large U.S. money center commercial
banks (whether or not such rate has actually been charged by any such bank)
or, if The Wall Street Journal ceases publication of such “prime rate” or
“base rate, “ the annual rate of interest announced by JP Morgan Chase Bank
(or another financial institution with a main or branch office in New York,
New York, selected, from time to time, by Lender) from time to time as its
“prime rate” or “base rate” in effect at its principal office in New York,
New York at 5:00 p.m., New York City time for such date.

     Margin: 2.00%

     Original Amortization Period: 300 months.

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     Payment Change Date: The first day of the month following each Rate
Change Date until this Note is repaid in full.

     Rate Change Date: The initial Maturity Date or the First Extended
Maturity Date, as applicable, and the first day of each month thereafter
until this Note is repaid in full.

     Remaining Amortization Period: As of the initial Maturity Date and the
applicable Payment Change Date thereafter, the Original Amortization Period
minus the number of scheduled monthly payments that have elapsed since the
initial Maturity Date.

     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 that payment 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, among other things, by the Security Instrument, and
reference is made to the Security Instrument for other rights of Lender concerning the collateral
for the Indebtedness.

     6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid
principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any,
and all other amounts payable under this Note and any other Loan Document shall at once become due
and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.

     7. Late Charge. If any monthly installment due hereunder is not received by Lender on or
before the 10th day of each month or if any other amount payable under this Note or
under the Security Instrument or any other Loan Document is not received by Lender within 10 days
after the date such amount is due, counting from and including the date such amount is due,
Borrower shall pay to Lender, immediately and without demand by Lender, a late charge equal to 5
percent of such monthly installment or other amount due. 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 Paragraph 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
Paragraph 8.

     8. Default Rate. So long as any monthly installment or any other payment due under this Note
remains past due for 30 days or more, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment or other payment
due, as applicable, at the Default Rate. If the unpaid principal balance and all accrued interest
are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest
shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that
its failure to make timely payments

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will cause Lender to incur additional expenses in servicing and processing the Loan, that, during
the time that any monthly installment or payment under this Note is delinquent for more than 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 that it is extremely difficult and impractical to
determine those additional costs and expenses. Borrower also acknowledges that, during the time
that any monthly installment or other payment due under this Note is delinquent for more than 30
days, 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. Notwithstanding the foregoing, if the Extension Option is exercised by the
Borrower, so long as any monthly installment or any other payment due under this Note remains past
due for 30 days or more, interest under this Note shall accrue on the unpaid principal balance from
the earlier of the due date of the first unpaid monthly installment or other payment due, as
applicable, at the Default Rate which is equal to the lesser of 4 percentage points above the
then-current Adjustable Rate or the maximum interest rate which may be collected from Borrower
under applicable law.

     9. Limits on Personal Liability.

     (a) Except as otherwise provided in this Paragraph 9, Borrower shall have no personal
liability under this Note, the Security Instrument 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
Mortgaged Property (as such term is defined in the Security Instrument) and any other collateral
held by Lender as security for the Indebtedness. This limitation on Borrower’s liability shall not
limit or impair Lender’s enforcement of its rights against any guarantor of the Indebtedness or any
guarantor of any obligations of Borrower.

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

     (1) failure of Borrower to pay to Lender upon demand after 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;

     (2) failure of Borrower to apply all insurance proceeds and condemnation proceeds as
required by the Security Instrument;

     (3) failure of Borrower to comply with Section 14(d) or (e) of the Security Instrument
relating to the delivery of books and records, statements, schedules and reports;

     (4) fraud or written material misrepresentation by Borrower, Key Principal or any
officer, director, partner, member or employee of Borrower in connection with the creation
of the Indebtedness or any request for any action or consent by Lender;

     (5) failure to apply Rents, first, to the payment of reasonable operating expenses and
then to Debt Service Amounts, except that Borrower will not be personally liable (i) to the
extent

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that Borrower lacks the legal right to direct the disbursement of such sums because of
a bankruptcy, receivership or similar judicial proceeding, or (ii) with respect to Rents
that are distributed in any calendar year if Borrower has paid all operating expenses and
Debt Service Amounts for that calendar year; or

     (6) failure by Borrower to comply with the provisions of Section 17(a)(1) of the
Security Instrument.

     (c) 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:

     (1) Borrower’s acquisition of any property or operation of any business not permitted
by Section 33 of the Security Instrument;

     (2) a Transfer that is an Event of Default under Section 21 of the Security Instrument;
or

     (3) the occurrence of a Bankruptcy Event (but only if the Bankruptcy Event occurs with
the consent, encouragement or active participation of Borrower, Key Principal or any
Borrower Affiliate).

     (d) To the extent that Borrower has personal liability under this Paragraph 9, Lender may
exercise its rights against Borrower personally without regard to whether Lender has exercised any
rights against the Mortgaged Property or any other security, or pursued any rights against any
guarantor, or pursued any other rights available to Lender under this Note, the Security
Instrument, any other Loan Document or applicable law. For purposes of this Paragraph 9, the term
“Mortgaged 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 (2)
Borrower was unable to apply as required or permitted by the Security Instrument because of a
bankruptcy, receivership, or similar judicial proceeding.

     10. Voluntary and Involuntary Prepayments.

     (a) No prepayment premium shall be payable in connection with any prepayment made under this
Note. Borrower may voluntarily prepay all or less than all of the unpaid principal balance of this
Note at any time provided that Borrower must give Lender at least 10 days (if given via U.S. Postal
Service) or 5 days (if given via facsimile, email or overnight courier), but not more than 60 days,
prior written notice of Borrower’s intention to make a prepayment (the “Prepayment Notice”). The
Prepayment Notice shall be given in writing (via facsimile, email, U.S. Postal Service or overnight
courier) and addressed to Lender. The Prepayment Notice shall include, at a minimum, the Business
Day upon which Borrower intends to make the prepayment (the “Intended Prepayment Date”). Any
prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued
interest, and (C) all other sums due Lender at the time of such prepayment.

     (b) In furtherance of the provisions of Paragraph 10(a), no prepayment premium shall be
payable with respect to any prepayment occurring as a result of the application of any insurance
proceeds or condemnation award under the Security Instrument.

     11. Costs and Expenses. Borrower shall pay on demand all expenses and costs, including fees
and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred
by

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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 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. 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 are waived by Borrower, Key
Principal, and all endorsers and guarantors of this Note and all other third party obligors.

     14. Loan Charges. Borrower agrees to pay an effective rate of interest equal to the sum of
the interest rate provided for in this Note and any additional rate of interest resulting from any
other charges of interest or in the nature of interest paid or to be paid in connection with the
loan evidenced by this Note and any other fees or amounts to be paid by Borrower pursuant to any of
the other Loan Documents. Neither this Note 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 permitted to be charged under applicable law. 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 any Loan Document, whether considered separately or together with other charges provided for
in 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 the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner that the rate of
interest so computed is uniform throughout the stated term of the Note.

     15. Commercial Purpose. Borrower represents that the Indebtedness is being incurred by
Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for
personal, family or household 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 law of the jurisdiction in which the
Land is located.

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

     19. Notices. All notices, demands and other communications required or permitted to be given
by Lender to Borrower pursuant to this Note shall be given in accordance with Section 31 of the
Security Instrument.

     20. Consent to Jurisdiction and Venue. Borrower and Key Principal each agrees that any
controversy arising under or in relation to this Note shall be litigated exclusively in the
Property Jurisdiction. The state and federal courts and authorities with jurisdiction in the
Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise
under or in relation to this Note. Borrower and Key Principal each 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.

     21. WAIVER OF TRIAL BY JURY. BORROWER, KEY PRINCIPAL 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, KEY PRINCIPAL 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.

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

	 	 	 	 	 
	 	BORROWER

SIR LINCOLN TOWER, LLC, an Illinois limited
 liability company

By:  Steadfast Income Advisor, LLC, a Delaware
         limited liability company,
its sole manager

 	 
	 	By:  	/s/  Dinesh Davar
 	 
	 	 	Name:  	Dinesh Davar 	 
	 	 	Title:  	Manager 	 

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ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO

PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY

     Key Principal, who has an economic interest in Borrower or who will otherwise obtain a
material financial benefit from the Loan, hereby absolutely, unconditionally and irrevocably agrees
to pay to Lender, or its assigns, on demand, all amounts for which Borrower is personally liable
under Paragraph 9 of the Purchase Money Note to which this Acknowledgment is attached (the “Note”).
The obligations of Key Principal shall survive any foreclosure proceeding, any foreclosure sale,
any delivery of any deed in lieu of foreclosure, and any release of record of the Security
Instrument. Lender may pursue its remedies against Key Principal without first exhausting its
remedies against the Borrower or the Mortgaged Property. All capitalized terms used but not defined
in this Acknowledgment shall have the meanings given to such terms in the Security Instrument. As
used in this Acknowledgment, the term “Key Principal” (each if more than one) shall mean only those
individuals or entities that execute this Acknowledgment.

     The obligations of Key Principal shall be performed without demand by Lender and shall be
unconditional irrespective of the genuineness, validity, or enforceability of the Note, or any
other Loan Document, and without regard to any other circumstance which might otherwise constitute
a legal or equitable discharge of a surety or a guarantor. Key Principal hereby waives the benefit
of all principles or provisions of law, which are or might be in conflict with the terms of this
Acknowledgment, and agrees that Key Principal’s obligations shall not be affected by any
circumstances which might otherwise constitute a legal or equitable discharge of a surety or a
guarantor. Key Principal hereby waives the benefits of any right of discharge and all other rights
under any and all statutes or other laws relating to guarantors or sureties, to the fullest extent
permitted by law, diligence in collecting the Indebtedness, presentment, demand for payment,
protest, all notices with respect to the Note including this Acknowledgment, which may be required
by statute, rule of law or otherwise to preserve Lender’s rights against Key Principal under this
Acknowledgment, including notice of acceptance, notice of any amendment of the Loan Documents,
notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice
of acceleration, notice of dishonor, notice of foreclosure, notice of protest, notice of the
incurring by Borrower of any obligation or indebtedness and all rights to require Lender to (a)
proceed against Borrower, or (b) proceed against or exhaust any collateral held by Lender to secure
the repayment of the Indebtedness.

     At any time without notice to Key Principal, and without affecting the liability of Key
Principal hereunder, (a) the time for payment of the principal of or interest on the Indebtedness
may be extended or the Indebtedness may be renewed in whole or in part; (b) the time for Borrower’s
performance of or compliance with any covenant or agreement contained in the Note, or any other
Loan Document, whether presently existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the maturity of the Indebtedness may be accelerated as
provided in the Note or any other Loan Document; (d) the Note or any other Loan Document may be
modified or amended by Lender and Borrower in any respect, including an increase in the principal
amount; and (e) any security for the Indebtedness may be modified, exchanged, surrendered or
otherwise dealt with or additional security may be pledged or mortgaged for the Indebtedness.

     Key Principal acknowledges that Key Principal has received a copy of the Note and all other
Loan Documents. Neither this Acknowledgment nor any of its provisions may be waived, modified,
amended, discharged, or terminated except by an agreement in writing signed by the party against
which the enforcement of the waiver, modification, amendment, discharge, or termination is sought,
and then only to the extent set forth in that agreement. Key Principal agrees to notify Lender (in
the manner for

Page 10

 

giving notices provided in Section 31 of the Security Instrument) of any change of Key Principal’s
address within 10 Business Days after such change of address occurs. Any notices to Key Principal
shall be given in the manner provided in Section 31 of the Security Instrument. Key Principal
agrees to be bound by Paragraphs 20 and 21 of the Note and Section 32 of the Security Instrument,
including joining in any acknowledgement and/or consent therein referred to.

     THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE NOTE. BY SIGNING
THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME AN ACCOMMODATION PARTY TO, OR AN
ENDORSER OF, THE NOTE.

     IN WITNESS WHEREOF, Key Principal has signed and delivered this Acknowledgment or has caused
this Acknowledgment to be signed and delivered by its duly authorized representative.

	 	 	 	 	 
	 	KEY PRINCIPAL

Steadfast Income REIT, Inc., a Maryland corporation

 	 
	 	By:  	/s/ Dinesh Davar
 	 
	 	 	Name:  	Dinesh Davar 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	Address:
 	 
	 	 	 	
18100 Von Karman Avenue

Suite 500

Irvine, CA 92612

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Page 11exv10w11

Exhibit 10.11

Prepared by, and after

recording return to:

Sandra J. DeLisle, Esq.           Reserved for Recorder’s Office

Young & Madigan, S.C.

710 N. Plankinton

Avenue, #1200

Milwaukee, Wisconsin

53203

PURCHASE MONEY MORTGAGE,

ASSIGNMENT OF RENTS, LEASES

AND SECURITY AGREEMENT

(ILLINOIS)

Permanent Real Estate Tax Index No.:

Part of 14-34-154-020

Common (Street) Address of Property:

520 South Second Street

Springfield, Illinois 62701

Page 1

 

PURCHASE MONEY MORTGAGE,

ASSIGNMENT OF RENTS, LEASES

AND SECURITY AGREEMENT

     THIS PURCHASE MONEY MORTGAGE, ASSIGNMENT OF RENTS, LEASES AND SECURITY AGREEMENT (the
“Instrument”) is dated as of the 11th day of August, 2010, between SIR LINCOLN TOWER,
LLC, a limited liability company organized existing under the laws of the State of Illinois, whose
address is c/o Steadfast Companies, 18100 Von Karman Avenue, Suite 500, Irvine, CA 92612,
as mortgagor (“Borrower”), and TOWNE REALTY, INC. d/b/a LINCOLN TOWER, INC., whose address is
c/o Towne Realty, Inc., 710 N. Plankinton Avenue, #1400, Milwaukee, Wisconsin 53203, as mortgagee
(“Lender”).

     Borrower is indebted to Lender in the principal amount of $6,650,000.00, as evidenced by
Borrower’s Purchase Money Note payable to Lender, dated as of the date of this Instrument, and
maturing on September 1, 2015. The maturity date of the Indebtedness may be extended and the
monthly payment amounts may change during the First Extension Period or Second Extension Period
(each as defined in the Note) if the Borrower elects to exercise either Extension Option (as
defined in the Note).

     TO SECURE TO LENDER the repayment of the Indebtedness, and all renewals, extensions and
modifications of the Indebtedness, and the performance of the covenants and agreements of Borrower
contained in the Loan Documents, Borrower mortgages, warrants, grants, conveys and assigns to
Lender the Mortgaged Property, including the Land located in Sangamon County, State of Illinois and
described in Exhibit A attached to this Instrument.

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

Covenants. Borrower and Lender covenant and agree as follows:

     1. DEFINITIONS.

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

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

     (b) [Intentionally omitted]

Page 2

 

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

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

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

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

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

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

Page 3

 

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

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

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

     (l) [Intentionally omitted]

     (m) “Key Principal” means Steadfast Income REIT, Inc., a Maryland corporation whose address is
18100 Von Karman Avenue, Suite 500, Irvine, California 92612, and any person or entity who becomes
a Key Principal after the date of this Instrument and is identified as such in an assumption
agreement, or another amendment or supplement to this Instrument or who otherwise signs the
Acknowledgement and Agreement of Key Principal to Personal Liability for Exceptions to Non-Recourse
Liability (or any other guaranty of the Indebtedness).

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

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

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

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

     (r) [Intentionally omitted]

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

	 	(1)	 	the Land;
	 
	 	(2)	 	the Improvements;
	 
	 	(3)	 	the Fixtures;

Page 4

 

	 	(4)	 	the Personalty;
	 
	 	(5)	 	all current and future rights, including air rights,
development rights, zoning rights and other similar rights or interests,
easements, tenements, rights-of-way, strips and gores of land, streets, alleys,
roads, sewer rights, waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all rights-of-way,
streets, alleys and roads which may have been or may in the future be vacated;
	 
	 	(6)	 	all proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, whether or not Borrower obtained the insurance pursuant to Lender’s
requirement;
	 
	 	(7)	 	all awards, payments and other compensation made or to be made
by any municipal, state or federal authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the Mortgaged
Property, including any awards or settlements resulting from condemnation
proceedings or the total or partial taking of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property under the
power of eminent domain or otherwise and including any conveyance in lieu
thereof;
	 
	 	(8)	 	all contracts, options and other agreements for the sale of the
Land, the Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future, including
cash or securities deposited to secure performance by parties of their
obligations;
	 
	 	(9)	 	all proceeds from the conversion, voluntary or involuntary, of
any of the above into cash or liquidated claims, and the right to collect such
proceeds;
	 
	 	(10)	 	all Rents and Leases;
	 
	 	(11)	 	all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of the Mortgaged
Property, and all undisbursed proceeds of the loan secured by this Instrument
and, if Borrower is a cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
	 
	 	(12)	 	all Imposition Deposits;
	 
	 	(13)	 	all refunds or rebates of Impositions by any municipal, state
or federal authority or insurance company (other than refunds applicable to
periods before the real property tax year in which this Instrument is dated);

Page 5

 

	 	(14)	 	all tenant security deposits which have not been forfeited by
any tenant under any Lease; and
	 
	 	(15)	 	all names under or by which any of the above Mortgaged Property
may be operated or known, and all trademarks, trade names, and goodwill
relating to any of the Mortgaged Property.

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

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

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

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

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

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

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

Page 6

 

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

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

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

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

     2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

     This Instrument is also a security agreement under the Uniform Commercial Code as in effect in
the State of Illinois as 810 ILCS 5 (as amended from time to time, the “Uniform Commercial Code”)
for any of the Mortgaged Property which, under applicable law, may be subject to a security
interest under Article 9 of the Uniform Commercial Code (810 ILCS 5/9-101 et. seq.), whether
acquired now or in the future, and all products and cash and non-cash proceeds thereof
(collectively, “UCC Collateral”), and Borrower hereby grants to Lender a security interest in the
UCC Collateral. Borrower hereby authorizes Lender to file financing statements, continuation
statements and financing statement amendments in such form as Lender may require to perfect or
continue the perfection of this security interest and Borrower agrees, if Lender so requests, to
execute and deliver to Lender such financing statements, continuation statements and amendments.
Borrower shall pay all filing costs and all costs and expenses of any record searches for financing
statements that Lender may require. Without the prior written consent of Lender, Borrower shall
not create or permit to exist any other lien or security interest in any of the UCC Collateral. If
an Event of Default has occurred and is continuing, Lender shall have the remedies of a secured
party under the Uniform Commercial Code, in addition to all remedies provided by this Instrument or
existing under applicable law. In exercising any remedies, Lender may exercise its remedies
against the

Page 7

 

UCC Collateral separately or together, and in any order, without in any way affecting
the availability of Lender’s other remedies. This Instrument constitutes a financing statement
with respect to any part of the Mortgaged Property which is or may become a Fixture in respect of
the following:

Name of Debtor: SIR LINCOLN TOWER, LLC, an Illinois limited liability company

Name of Secured Party: TOWNE REALTY, INC. d/b/a LINCOLN TOWER, INC., a Wisconsin corporation

Name of Record Owner: SIR LINCOLN TOWER, LLC, an Illinois limited liability company

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

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

     (b) After the occurrence of an Event of Default, Borrower authorizes Lender to collect, sue
for and compromise Rents and directs each tenant of the Mortgaged Property to pay all Rents to, or
as directed by, Lender, and Borrower shall, upon Borrower’s receipt of any Rents from any sources
(including, but not limited to subsidy payments under any Housing Assistance Payments Contract),
pay the total amount of such receipts to the Lender. However, until the occurrence of an Event of
Default, Lender hereby grants to Borrower a revocable license to collect and receive all Rents, to
hold all Rents in trust for the benefit of Lender and to apply all Rents to pay the installments of
interest and principal then due and payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition Deposits, and to pay the current costs
and expenses of managing, operating and maintaining the Mortgaged Property, including utilities,
Taxes and insurance premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no Event of Default has occurred and is
continuing, the Rents remaining after application pursuant to the preceding sentence may be
retained by Borrower free and clear of, and released from, Lender’s rights with respect to Rents
under this Instrument. From and after the occurrence of an Event of Default, and without the
necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower’s license to collect Rents shall automatically terminate and
Lender shall without notice be entitled to all Rents as they become due and payable, including
Rents

Page 8

 

then due and unpaid. Borrower shall pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender’s demand for Rents, Lender may give, and
Borrower hereby irrevocably authorizes Lender to give, notice to all tenants of the Mortgaged
Property instructing them to pay all Rents to Lender, no tenant shall be obligated to inquire
further as to the occurrence or continuance of an Event of Default, and no tenant shall be
obligated to pay to Borrower any amounts which are actually paid to Lender in response to such a
notice. Any such notice by Lender shall be delivered to each tenant personally, by mail or by
delivering such demand to each rental unit. Borrower shall not interfere with and shall cooperate
with Lender’s collection of such Rents.

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

     (d) If an Event of Default has occurred and is continuing, Lender may, regardless of the
adequacy of Lender’s security or the solvency of Borrower and even in the absence of waste, enter
upon and take and maintain full control of the Mortgaged Property in order to perform all acts that
Lender in its discretion determines to be necessary or desirable for the operation and maintenance
of the Mortgaged Property, including the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the Mortgaged Property and the execution or
termination of contracts providing for the management, operation or maintenance of the Mortgaged
Property, for the purposes of enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this Instrument, or for such other purposes as
Lender in its discretion may deem necessary or desirable. Alternatively, if an Event of Default
has occurred and is continuing, regardless of the adequacy of Lender’s security, without regard to
Borrower’s solvency and without the necessity of giving prior notice (oral or written) to Borrower,
Lender may apply to any court having jurisdiction for the appointment of a receiver for the
Mortgaged Property to take any or all of the actions set forth in the preceding sentence. If
Lender elects to seek the appointment of a receiver for the Mortgaged Property at any time after an
Event of Default has occurred and is continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver, including the appointment of a receiver ex
parte if permitted by applicable law. Lender or the receiver, as the case may be, shall be
entitled to receive a reasonable fee for managing the Mortgaged Property. Immediately upon
appointment of a receiver or immediately upon the Lender’s entering upon and taking possession and
control of the Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to
Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver, as the
case may be, all documents, records (including records on electronic or magnetic media), accounts,
surveys, plans, and specifications relating to the Mortgaged Property and all security deposits and
prepaid Rents. In the event Lender takes possession and control of the Mortgaged Property, Lender
may exclude Borrower and its representatives from the Mortgaged Property. Borrower acknowledges
and agrees that the exercise

Page 9

 

by Lender of any of the rights conferred under this Section 3 shall
not be construed to make Lender a mortgagee-in-possession of the Mortgaged Property so long as
Lender has not itself entered into actual possession of the Land and Improvements.

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

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

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

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

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

     (b) Until Lender gives notice to Borrower of Lender’s exercise of its rights under this
Section 4, Borrower shall have all rights, power and authority granted to Borrower under any Lease
(except as otherwise limited by this Section or any other provision of this Instrument), including
the right, power and authority to modify the terms of any Lease or extend or terminate any Lease.
Upon the occurrence of an Event of Default, the permission given to Borrower pursuant to the
preceding sentence to exercise all rights, power and authority under Leases shall automatically
terminate. Borrower shall comply with and observe Borrower’s obligations under all Leases,
including Borrower’s obligations pertaining to the maintenance and disposition of tenant security
deposits.

Page 10

 

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

     (d) Upon delivery of notice by Lender to Borrower of Lender’s exercise of Lender’s rights
under this Section 4 at any time after the occurrence of an Event of Default, and without the
necessity of Lender entering upon and taking and maintaining control of the Mortgaged Property
directly, by a receiver, or by any other manner or proceeding permitted by the laws of the Property
Jurisdiction, Lender immediately shall have all rights, powers and authority granted to Borrower
under any Lease, including the right, power and authority to modify the terms of any such Lease, or
extend or terminate any such Lease.

     (e) Borrower shall, promptly upon Lender’s request, deliver to Lender an executed copy of each
residential Lease then in effect. All Leases for residential dwelling units shall be on forms
approved by Lender, shall be for initial terms of at least six months and not more than two years,
and shall not include options to purchase. If customary in the applicable market, residential
Leases with terms of less than six months may be permitted with Lender’s prior written consent.

     (f) Except for the second floor of the Mortgaged Property which may be leased for office use,
Borrower shall not lease any portion of the Mortgaged Property for non-residential use except with
the prior written consent of Lender and Lender’s prior written approval of the Lease agreement.
Borrower shall not modify the terms of, or extend or terminate, any Lease for non-residential use
(other than with respect to office leases on the second floor of the Mortgaged Property) without
the prior written consent of Lender. Borrower shall, without request by Lender, deliver an
executed copy of each non-residential Lease to Lender promptly after such Lease is signed. Except
for office leases on the second floor of the Mortgaged Property, all non-residential Leases shall
specifically provide that (1) such Leases are subordinate to the lien of this Instrument (unless
waived in writing by Lender); (2) the tenant shall attorn to Lender and any purchaser at a
foreclosure sale, such attornment to be self-executing and effective upon acquisition of title to
the Mortgaged Property by any purchaser at a foreclosure sale or by Lender in any manner; (3) the
tenant agrees to execute such further evidences of attornment as Lender or any purchaser at a
foreclosure sale may from time to time request; (4) the Lease shall not be terminated by
foreclosure or any other transfer of the Mortgaged Property; (5) after a foreclosure sale of the
Mortgaged

Page 11

 

Property, Lender or any other purchaser at such foreclosure sale may, at Lender’s or such
purchaser’s option, accept or terminate such Lease; and (6) the tenant shall, upon receipt after
the occurrence of an Event of Default of a written request from Lender, pay all Rents payable under
the Lease to Lender.

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

     5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS.

     Borrower shall pay the Indebtedness when due in accordance with the terms of the Note and the
other Loan Documents and shall perform, observe and comply with all other provisions of the Note
and the other Loan Documents.

     6. EXCULPATION.

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

     7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

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

Page 12

 

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

     (c) If Lender receives a bill or invoice for an Imposition, Lender shall pay the Imposition
from the Imposition Deposits held by Lender. Lender shall have no obligation to pay any Imposition
to the extent it exceeds Imposition Deposits then held by Lender. Lender may pay an Imposition
according to any bill, statement or estimate from the appropriate public office or insurance
company without inquiring into the accuracy of the bill, statement or estimate or into the validity
of the Imposition.

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

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

Page 13

 

     8. Intentionally Omitted.

     9. APPLICATION OF PAYMENTS.

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

     10. COMPLIANCE WITH LAWS.

     Borrower shall comply with all laws, ordinances, regulations and requirements of any
Governmental Authority and all recorded lawful covenants and agreements relating to or affecting
the Mortgaged Property, including all laws, ordinances, regulations, requirements and covenants
pertaining to health and safety, construction of improvements on the Mortgaged Property, fair
housing, zoning and land use, and Leases. Borrower also shall comply with all applicable laws that
pertain to the maintenance and disposition of tenant security deposits. Borrower shall at all
times maintain records sufficient to demonstrate compliance with the provisions of this Section
10. Borrower shall take appropriate measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that could endanger tenants or visitors,
result in damage to the Mortgaged Property, result in forfeiture of the Mortgaged Property, or
otherwise materially impair the lien created by this Instrument or Lender’s interest in the
Mortgaged Property. Borrower represents and warrants to Lender that no portion of the Mortgaged
Property has been or will be purchased with the proceeds of any illegal activity. Notwithstanding
anything herein to the contrary, Lender hereby acknowledges the existence of that certain
violation, described as violation #4 in the Inspection Report issued on May 25, 2010 by the
Springfield Fire Department Fire Safety Division to Lincoln Tower Apartments (the “Violation”), and
agrees that the existence of such Violation and the condition of the Mortgaged Property giving rise
to such Violation shall not be a breach of the terms of this Section 10.

     11. USE OF PROPERTY.

     Unless required by applicable law, Borrower shall not (a) except for any change in use
approved by Lender, allow changes in the use for which all or any part of the Mortgaged Property is
being used at the time this Instrument was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a change in the zoning classification
of the Mortgaged Property, or (d) establish any condominium or cooperative regime with respect to
the residential apartments and offices within the Mortgaged Property other than the Condominium (as
defined in Section 48 below).

Page 14

 

     12. PROTECTION OF LENDER’S SECURITY.

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

     (b) Any amounts disbursed by Lender under this Section 12, or under any other provision of
this Instrument that treats such disbursement as being made under this Section 12, shall be added
to, and become part of, the principal component of the Indebtedness, shall be immediately due and
payable and shall bear interest from the date of disbursement until paid at the “Default Rate”, as
defined in the Note.

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

     13. INSPECTION.

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

     14. BOOKS AND RECORDS; FINANCIAL REPORTING.

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

     (b) Borrower shall furnish to Lender:

	 	(1)	 	(i) except as provided in clause (ii) below, within 45 days
after the end of each fiscal quarter of Borrower, a statement of income and
expenses for Borrower’s operation of the Mortgaged Property on a year-to-date
basis as of

Page 15

 

	 	 	 	the end of each fiscal quarter, (ii) within 120 days after the end
of each fiscal year of Borrower, (A) a statement of income and expenses for
Borrower’s operation of the Mortgaged Property for such fiscal year, (B) a
statement of changes in financial position of Borrower relating to the
Mortgaged Property
for such fiscal year, and (C) when requested by Lender, a balance sheet
showing all assets and liabilities of Borrower relating to the Mortgaged
Property as of the end of such fiscal year; and (iii) any of the foregoing
at any other time upon Lender’s request;
	 
	 	(2)	 	(i) except as provided in clause (ii) below, within 45 days
after the end of each fiscal quarter of Borrower, and (ii) within 120 days
after the end of each fiscal year of Borrower, and at any other time upon
Lender’s request, a rent schedule for the Mortgaged Property showing the name
of each tenant, and for each tenant, the space occupied, the lease expiration
date, the rent payable for the current month, the date through which rent has
been paid, and any related information requested by Lender;
	 
	 	(3)	 	within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender’s request, an accounting of all security
deposits held pursuant to all Leases, including the name of the institution (if
any) and the names and identification numbers of the accounts (if any) in which
such security deposits are held and the name of the person to contact at such
financial institution, along with any authority or release necessary for Lender
to access information regarding such accounts;
	 
	 	(4)	 	within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender’s request, a statement that identifies all
owners of any interest in Borrower and the interest held by each, if Borrower
is a corporation, all officers and directors of Borrower, and if Borrower is a
limited liability company, all managers who are not members;
	 
	 	(5)	 	upon Lender’s request, a monthly property management report for
the Mortgaged Property, showing the number of inquiries made and rental
applications received from tenants or prospective tenants and deposits received
from tenants and any other information requested by Lender;
	 
	 	(6)	 	upon Lender’s request, a balance sheet, a statement of income
and expenses for Borrower and a statement of changes in financial position of
Borrower for Borrower’s most recent fiscal year; and
	 
	 	(7)	 	if required by Lender, within 30 days of the end of each
calendar month, a monthly statement of income and expenses for such calendar
month on a year-to-date basis for Borrower’s operation of the Mortgaged
Property.

     (c) Each of the statements, schedules and reports required by Section 14(b) shall be certified
to be complete and accurate by an individual having authority to bind Borrower, and shall

Page 16

 

be in such form and contain such detail as Lender may reasonably require. Lender also may require that
any statements, schedules or reports be audited at Borrower’s expense by independent certified
public accountants acceptable to Lender.

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

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

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

     15. TAXES; OPERATING EXPENSES.

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

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

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

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

Page 17

 

reasonably requested by Lender, which may include the delivery to Lender of the reserves
established by Borrower to pay the contested Imposition.

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

     16. LIENS; ENCUMBRANCES.

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

     17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY.

     (a) Borrower (1) shall not commit waste or permit impairment or deterioration of the Mortgaged
Property, (2) shall not abandon the Mortgaged Property, (3) shall restore or repair promptly, in a
good and workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of its
original condition, or such other condition as Lender may approve in writing, whether or not
insurance proceeds or condemnation awards are available to cover any costs of such restoration or
repair, (4) shall keep the Mortgaged Property in good repair, including the replacement of
Personalty and Fixtures with items of equal or better function and quality, (5) shall provide for
professional management of the Mortgaged Property by a residential rental property manager
satisfactory to Lender under a contract approved by Lender in writing, and (6) shall give notice to
Lender of and, unless otherwise directed in writing by Lender, shall appear in and defend any
action or proceeding purporting to affect the Mortgaged Property, Lender’s security or Lender’s
rights under this Instrument; provided, however that Borrower shall not be in breach of this
Section 17(a) as a result of the existence of the Violation or the condition of the Mortgaged
Property giving rise to such Violation. Borrower shall not (and shall not permit any tenant or
other person to) remove, demolish or alter the Mortgaged Property or any part of the Mortgaged
Property except in connection with the replacement of tangible Personalty.

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

Page 18

 

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

     18. ENVIRONMENTAL HAZARDS.

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

	 	(1)	 	the presence, use, generation, release, treatment, processing,
storage (including storage in above ground and underground storage tanks),
handling, or disposal of any Hazardous Materials on or under the Mortgaged
Property or any other property of Borrower that is adjacent to the Mortgaged
Property;
	 
	 	(2)	 	the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
	 
	 	(3)	 	any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged Property, which
occurrence or condition is or may be in violation of Hazardous Materials Laws;
or
	 
	 	(4)	 	any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or any property of
Borrower that is adjacent to the Mortgaged Property.

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

     (b) Prohibited Activities and Conditions shall not include the safe and lawful use and storage
of quantities of (1) pre-packaged supplies, cleaning materials and petroleum products customarily
used in the operation and maintenance of comparable multifamily properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged containers for consumer use and used
by tenants and occupants of residential dwelling units in the Mortgaged Property; and (3) petroleum
products used in the operation and maintenance of motor vehicles from time to time located on the
Mortgaged Property’s parking areas, so long as all of the foregoing are used, stored, handled,
transported and disposed of in compliance with Hazardous Materials Laws.

Page 19

 

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

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

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

	 	(1)	 	Borrower has not at any time engaged in, caused or permitted
any Prohibited Activities or Conditions;
	 
	 	(2)	 	to the best of Borrower’s knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist or have existed;
	 
	 	(3)	 	except to the extent previously disclosed by Borrower to Lender
in writing, the Mortgaged Property does not now contain any underground storage
tanks, and, to the best of Borrower’s knowledge after reasonable and diligent
inquiry, the Mortgaged Property has not contained any underground storage tanks
in the past. If there is an underground storage tank located on the Property
which has been previously disclosed by Borrower to Lender in writing, that tank
complies with all requirements of Hazardous Materials Laws;
	 
	 	(4)	 	Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of Hazardous
Materials. Without limiting the generality of the foregoing, Borrower has
obtained all Environmental Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in effect and all such
Environmental Permits are in full force and effect;
	 
	 	(5)	 	no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving of notice would
constitute, noncompliance with the terms of any Environmental Permit;

Page 20

 

	 	(6)	 	there are no actions, suits, claims or proceedings pending or,
to the best of Borrower’s knowledge after reasonable and diligent inquiry,
threatened that involve the Mortgaged Property and allege, arise out of, or
relate to any Prohibited Activity or Condition; and
	 
	 	(7)	 	Borrower has not received any complaint, order, notice of
violation or other communication from any Governmental Authority with regard to
air emissions, water discharges, noise emissions or Hazardous Materials, or any
other environmental, health or safety matters affecting the Mortgaged Property
or any other property of Borrower that is adjacent to the Mortgaged Property.

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

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

	 	(1)	 	Borrower’s discovery of any Prohibited Activity or Condition;
	 
	 	(2)	 	Borrower’s receipt of or knowledge of any complaint, order,
notice of violation or other communication from any Governmental Authority or
other person with regard to present or future alleged Prohibited Activities or
Conditions or any other environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that is adjacent to the
Mortgaged Property; and
	 
	 	(3)	 	any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.

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

     (g) Borrower shall pay promptly the costs of any environmental inspections, tests or audits
(“Environmental Inspections”) required by Lender in connection with any foreclosure or deed in lieu
of foreclosure, or as a condition of Lender’s consent to any Transfer under Section 21, or required
by Lender following a reasonable determination by Lender that Prohibited Activities or Conditions
may exist. Any such costs incurred by Lender (including the fees and out-of-pocket costs of
attorneys and technical consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12. The results of all Environmental
Inspections made by Lender shall at all times remain the property of Lender and Lender shall have
no obligation to disclose or otherwise make available to Borrower or any other party such results
or any other information obtained by Lender in connection with its Environmental Inspections.
Lender hereby reserves the right, and Borrower hereby expressly authorizes Lender, to make
available to

Page 21

 

any party, including any prospective bidder at a foreclosure sale of the Mortgaged
Property, the results of any Environmental Inspections made by Lender with respect to the Mortgaged
Property. Borrower consents to Lender notifying any party (either as part of a notice of sale or
otherwise) of the results of any of Lender’s Environmental Inspections. Borrower acknowledges that
Lender cannot control or otherwise assure the truthfulness or accuracy of the results of any of its
Environmental Inspections and that the release of such results to prospective bidders at a
foreclosure sale of the Mortgaged Property may have a material and adverse effect upon the amount
which a party may bid at such sale. Borrower agrees that Lender shall have no liability whatsoever
as a result of delivering the results of any of its Environmental Inspections to any third party,
and Borrower hereby releases and forever discharges Lender from any and all claims, damages, or
causes of action, arising out of, connected with or incidental to the results of, the delivery of
any of Lender’s Environmental Inspections.

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

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

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

	 	(1)	 	any breach of any representation or warranty of Borrower in
this Section 18;
	 
	 	(2)	 	any failure by Borrower to perform any of its obligations under
this Section 18;
	 
	 	(3)	 	the existence or alleged existence of any Prohibited Activity
or Condition;

Page 22

 

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

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

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

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

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

	 	(1)	 	pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or administrative proceeding
incident to any matters against which Indemnitees are entitled to be
indemnified under this Section 18;
	 
	 	(2)	 	reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are entitled to be
indemnified under this Section 18; and
	 
	 	(3)	 	reimburse Indemnitees for any and all expenses, including fees
and out-of-pocket expenses of attorneys and expert witnesses, paid or incurred
in connection with the enforcement by Indemnitees of their rights under this
Section 18, or in monitoring and participating in any legal or administrative
proceeding.

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

Page 23

 

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

     19. PROPERTY AND LIABILITY INSURANCE.

     (a) Borrower shall keep the Improvements insured at all times against such hazards as Lender
may from time to time commercially reasonably require, which insurance shall include but not be
limited to:

	 	(1)	 	comprehensive all risk insurance on the Improvements and the
Personal Property, in each case (i) in an amount equal to 100% of the “Full
Replacement Cost,” which for purposes of this Instrument shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (ii) containing either
an agreed amount endorsement or a waiver of all co-insurance provisions; (iii)
providing for a deductible of not greater than
$25,000.00; and (iv) if any of the Improvements or the use of the Mortgaged
Property shall at any time constitute a legal non-conforming structure or
use, Borrower shall obtain an “Ordinance or Law Coverage” or “Enforcement”
endorsement, which shall include sufficient coverage for (A) costs to comply
with building and zoning codes and ordinances, (B) demolition costs, and (C)
increase costs of construction. In addition, in the event the Mortgaged
Property is located in a “seismic zone” 3 or 4 (as defined in the Uniform
Building Code published by the International Conference of Building
Officials), Borrower shall obtain earthquake insurance in amounts and in
form and substance satisfactory to Lender to the extent commercially
reasonable;
	 
	 	(2)	 	commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Mortgaged Property, such insurance (i) to be on the “occurrence” form
with a combined single limit (including “umbrella” coverage in place) of not
less than $10,000,000 and a general aggregate limit of not less than
$11,000,000; and (ii) to cover at least the following hazards: (A) premises
and operations; (B) products and completed operations on an “if any” basis; (C)
independent contractors; and (D) blanket contractual liability

Page 24

 

	 	 	 	for all written
and oral contracts, to the extent the same is available on a commercially
reasonable basis;
	 
	 	(3)	 	business income insurance (i) with loss payable to Lender; (ii)
on an agreed value actual loss sustained basis in an amount equal to 100% of
the projected gross income from the Mortgaged Property for a period of twelve
(12) months; and (iii) if Borrower is required to obtain an “Ordinance or Law
Coverage” or “Enforcement” endorsement, coverage for the increased period of
restoration. The amount of such business income insurance shall be determined
prior to the date hereof and at least once every third (3rd) year
thereafter based on Borrower’s reasonable estimate of the gross income from the
Property for the succeeding twelve (12) month period. All insurance proceeds
payable to Lender pursuant to this Subsection shall be held by Lender and shall
be applied to the obligations secured hereunder from time to time due and
payable hereunder and under the Note; provided, however, that nothing herein
contained shall be deemed to relieve Borrower of its obligations to pay the
obligations secured hereunder on the respective dates of payment provided for
in the Note except to the extent such amounts are actually paid out of the
proceeds of such business income insurance;
	 
	 	(4)	 	if Borrower has employees, commercially reasonable workers’
compensation (subject to the statutory limits of the state in which the
Mortgaged Property is located) and employer’s liability insurance; and
	 
	 	(5)	 	if the Mortgaged Property contains HVAC or other equipment not
covered by the comprehensive all risk insurance, comprehensive boiler and
machinery insurance, in amounts as shall be reasonably required by Lender.

     (b) All premiums on insurance policies required under Section 19(a) shall be paid in the
manner provided in Section 7, unless Lender has designated in writing another method of payment.
All such policies shall also be in a form approved by Lender. All policies of property damage
insurance shall include a non-contributing, non-reporting mortgage clause in favor of, and in a
form approved by, Lender. The liability policies under Section 19(a)(2) shall name Lender as an
additional insured. Lender shall have the right to hold the original policies or duplicate
original policies of all insurance required by Section 19(a). Borrower shall promptly deliver to
Lender a copy of all renewal and other notices received by Borrower with respect to the policies
and all receipts for paid premiums. At least 30 days prior to the expiration date of a policy,
Borrower shall deliver to Lender the original (or a duplicate original) of a renewal policy in form
satisfactory to Lender.

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

Page 25

 

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

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

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

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

     (h) If the Lender assigns its rights and interests under this Instrument as provided in
Sections 32 or 34 hereof, such assignee shall upon notice to the Borrower, be named as an
additional insured and loss payee under this Section 19 in the same manner as the Lender hereunder.

Page 26

 

     20. CONDEMNATION.

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

     (b) Lender may apply such awards or proceeds, after the deduction of Lender’s expenses
incurred in the collection of such amounts, at Lender’s option, to the restoration or repair of the
Mortgaged Property or to the payment of the Indebtedness, with the balance, if any, to Borrower.
Unless Lender otherwise agrees in writing, any application of any awards or proceeds to the
Indebtedness shall not extend or postpone the due date of any monthly installments referred to in
the Note, Section 7 of this Instrument, or change the amount of such installments. Borrower agrees
to execute such further evidence of assignment of any awards or proceeds as Lender may require.

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

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

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

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

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

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

Page 27

 

     (5) intentionally omitted;

     (6) intentionally omitted;

     (7) intentionally omitted;

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

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

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

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

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

     (1) a Transfer to which Lender has consented;

     (2) a Transfer that occurs by devise, descent, pursuant to the provisions of a trust,
or by operation of law upon the death of a natural person;

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

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

     (5) the grant of an easement, servitude, or restrictive covenant if, before the grant,
Lender determines that the easement, servitude, or restrictive covenant will not materially
affect the operation or value of the Mortgaged Property or Lender’s interest in the
Mortgaged Property, and Borrower pays to Lender, upon demand, all costs and expenses
incurred by Lender in connection with reviewing Borrower’s request;

Page 28

 

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

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

     (8) the conveyance of any interest in Borrower or the Mortgaged Property to Key
Principal or any entity in which Key Principal has (or the Initial Owners of Key Principal
have) the Controlling Interest.

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

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

     (2) the absence of any Event of Default;

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

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

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

Page 29

 

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

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

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

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

     (8) Borrower has agreed to Lender’s conditions to approve such Transfer, which may
include, but are not limited to (A) providing additional collateral, guaranties, a
replacement Key Principal or other credit support to mitigate any risks concerning the
proposed transferee or the performance or condition of the Mortgaged Property, and (B)
amending the Loan Documents to delete any specially negotiated terms or provisions
previously granted for the exclusive benefit of transferor.

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

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

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

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

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

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

     (iii) if such entity is a limited liability company or a limited
liability partnership, (A) a Transfer of any membership or other ownership
interest which would cause the Initial Owners to own less than 51% of all

Page 30

 

membership or other ownership interests in such entity, (B) a Transfer of
any membership, or other interest of a manager, in such entity that results
in a change of manager, or (C) a change of the non-member manager;

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

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

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

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

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

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

     (e) Lender shall be provided with written notice of all Transfers under this Section 21,
whether or not such Transfers are permitted under Section 21(b) or approved by Lender under Section
21(c), no later than 30 days prior to the date of the Transfer, and within 5 days of Borrower’s
receipt of written notice from the Lender, Borrower shall provide to Lender all documentation,
agreements and instruments relating to such proposed Transfer which are reasonably requested by
Lender so that Lender may confirm whether or not such Transfer is permitted under Section 21(b) or
meets the requirements for approval by Lender under Section 21(c).

Page 31

 

     22. EVENTS OF DEFAULT.

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

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

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

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

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

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

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

     (g) any failure by Borrower to perform any of its obligations under this Instrument (other
than those specified in Sections 22(a) through (f)), as and when required, which continues for a
period of 30 days after notice of such failure by Lender to Borrower; provided, however, if
Borrower’s failure to perform its obligations as described in this Section 22(g) is of the nature
that it cannot be cured within the thirty (30) day grace period but reasonably could be cured
within 90 days, then Borrower shall have an additional 60 days in which to cure such default,
provided that Borrower has diligently commenced to cure such default during the 30-day grace period
and diligently pursues the cure of such default, but no such notice or grace period shall apply in
the case of any such failure which could, in Lender’s judgment, absent immediate exercise by Lender
of a right or remedy under this Instrument, result in harm to Lender, impairment of the Note or
this Instrument or any other security given under any other Loan Document;

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

Page 32

 

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

Notwithstanding anything herein to the contrary, no Event of Default shall occur as a result of the
existence of the Violation, the underlying conditions resulting in said Violation, any liens
arising in connection with the Violation, or otherwise in connection with or in any manner arising
from the Violation.

     23. REMEDIES CUMULATIVE.

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

     24. FORBEARANCE.

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

     (b) Any forbearance by Lender in exercising any right or remedy under the Note, this
Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a
waiver of or preclude the exercise of any other right or remedy. The acceptance by Lender of
payment of all or any part of the Indebtedness after the due date of such payment, or in an amount
which is less than the required payment, shall not be a waiver of Lender’s right to require prompt
payment when due of all other payments on account of the Indebtedness or to exercise any remedies
for any failure to make prompt payment. Enforcement by Lender of any security for the Indebtedness
shall not constitute an election by Lender of remedies so as to preclude the exercise of any other
right available to Lender. Lender’s receipt of any awards or proceeds under Sections 19 and 20
shall not operate to cure or waive any Event of Default.

     25. LOAN CHARGES.

     If any applicable law limiting the amount of interest or other charges permitted to be
collected from Borrower is interpreted so that any charge provided for in any Loan Document,
whether considered separately or together with other charges levied in connection with any other
Loan Document, violates that law, and Borrower is entitled to the benefit of that law, that charge
is

Page 33

 

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

     26. WAIVER OF STATUTE OF LIMITATIONS.

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

     27. WAIVER OF MARSHALLING.

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

     28. FURTHER ASSURANCES.

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

     29. ESTOPPEL CERTIFICATE.

     Within 10 days after a request from Lender, Borrower shall deliver to Lender and/or any
pledgee of the Loan (described in Section 32 below) written statement in a form reasonably
acceptable to Lender, such pledgee (if applicable) and Borrower, signed and acknowledged by
Borrower, certifying to Lender and/or such pledgee, as of the date of such statement, (i) that the
Loan Documents are unmodified and in full force and effect (or, if there have been modifications,
that the Loan Documents are in full force and effect as modified and setting forth such
modifications); (ii) the unpaid principal balance of the Note; (iii) the date to which interest
under the

Page 34

 

Note has been paid; (iv) that Borrower is not in default in paying the Indebtedness or in
performing or observing any of the covenants or agreements contained in this Instrument or any of
the other Loan Documents (or, if the Borrower is in default, describing such default in reasonable
detail); (v) whether or not there are then existing any setoffs or defenses known to Borrower
against the enforcement of any right or remedy of Lender under the Loan Documents; and (vi) any
additional facts requested by Lender.

     30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

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

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

     31. NOTICE.

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

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

     (c) Notices to the Borrower shall be sent to the attention of Chief Legal Officer and notices
to the Lender shall be sent to the attention of John W. Kersey, Executive Vice President. Copies
of notices sent to the Borrower shall be sent in like manner simultaneously to Virginia A. Davis,
Esq., Katten Muchin Rosenman LLP, 2900 K Street, N.W., North Tower — Suite 200, Washington, DC
20007-5118. Copies of notices sent to the Lender shall be sent in like manner

Page 35

 

simultaneously to Towne Realty, Inc., Attention: James B. Young, Senior Vice President and General
Counsel at 710 North Plankinton Avenue, Suite 1200, Milwaukee, Wisconsin 53203.

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

     32. COLLATERAL ASSIGNMENT OF THE NOTE, THIS INSTRUMENT AND OTHER LOAN DOCUMENTS.

     The Note, this Instrument, and any other Loan Documents may be collaterally assigned by the
Lender to a third-party lender in conjunction with the Lender and/or its parent company, Zilber
Ltd., obtaining one or more third-party loans without the consent of, but with prior written notice
to, the Borrower. If, in the sole discretion of the Lender, the Lender requests the
acknowledgement of and/or consent to such collateral assignment by the Borrower (such
acknowledgement and/or consent by the Borrower is not required hereunder as a condition of Lender
making such collateral assignment) to accommodate Lender’s and/or Zilber Ltd.’s borrowing, the
Borrower shall, within ten (10) days of receipt of such request, execute an acknowledgement and/or
consent in form and substance reasonably acceptable to Borrower and Lender and return same to the
Lender and/or any collateral assignee; provided, however, that Lender shall pay all of Borrower’s
reasonable costs and expenses in connection therewith.

     33. SINGLE ASSET BORROWER.

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

     34. SUCCESSORS AND ASSIGNS BOUND.

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

     35. JOINT AND SEVERAL LIABILITY.

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

     36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.

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

Page 36

 

     (b) No creditor of any party to this Instrument and no other person shall be a third party
beneficiary of this Instrument or any other Loan Document.

     37. SEVERABILITY; AMENDMENTS.

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

     38. CONSTRUCTION.

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

     39. Intentionally Omitted.

     40. DISCLOSURE OF INFORMATION.

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

     41. Intentionally Omitted.

     42. SUBROGATION.

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

Page 37

 

     43. ACCELERATION; REMEDIES.

     At any time during the existence of an Event of Default, Lender, at Lender’s option, may
declare all of the Indebtedness to be immediately due and payable without further demand, and may
foreclose this Instrument by judicial proceeding and may invoke any other remedies permitted by
Illinois law or provided in this Instrument or in any other Loan Document. The Indebtedness shall
include, Lender shall be entitled to collect, and any decree which adjudicates the amount secured
by this Instrument shall include, all costs and expenses incurred in pursuing such remedies,
including attorneys’ fees, costs of documentary evidence, abstracts and title reports, any of which
my be estimated to reflect the costs and expenses to be incurred after the entry of such a decree.
It is the express intention of Borrower and Lender that the rights, remedies, powers and
authorities conferred upon Lender pursuant to this Instrument shall include all rights, remedies,
powers and authorities that a mortgagor may confer upon a mortgagee under the Illinois Mortgage
Foreclosure Law, 735 ILCS 5/15-1101 et. seq. (the “Act”) and/or as otherwise permitted by
applicable law, as if they were expressly provided herein. In the event that any provision in this
Instrument is deemed inconsistent with any provision in the Act, the provisions of the Act shall
take precedence over the provisions of this Instrument, but shall not invalidate or render
unenforceable any other provision of this Instrument that can be construed in a manner consistent
with the Act.

     44. RELEASE.

     Upon payment of the Indebtedness, Lender shall release this Instrument. Borrower shall pay
Lender’s reasonable costs incurred in releasing this Instrument.

     45. WAIVER OF HOMESTEAD AND REDEMPTION.

     Borrower releases and waives all rights under the homestead and exemption laws of the State of
Illinois. Borrower acknowledges that the Mortgaged Property does not include “agricultural real
estate” or “residential real estate” as those terms are defined in 735 ILCS 5/15-1201 and
5/15-1219. Pursuant to 735 ILCS 5/15-1601(b), Borrower waives any and all rights of redemption
from sale under any order of foreclosure of this Instrument, or other rights of redemption, which
may run to Borrower or any other Owner of Redemption, as that term is defined in 735 ILCS
5/15-1212. Borrower waives all rights of reinstatement under 735 ILCS 5/15-1602 to the fullest
extent permitted by Illinois law.

     46. MAXIMUM AMOUNT OF INDEBTEDNESS.

     Notwithstanding any provision to the contrary in this Instrument, the Note or any other Loan
Document which permits any additional sums to be advanced on or after the date of this Instrument,
whether as additional loans or for any payments authorized by this Instrument, the total amount of
the principal component of the Indebtedness shall not at any time exceed three hundred percent
(300%) of the original principal amount of the Note set forth on the first page of this Instrument.

Page 38

 

     47. WAIVER OF TRIAL BY JURY.

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

     48. CONDOMINIUM PROVISIONS.

     (a) Borrower represents and warrants that the Mortgaged Property is a part of a condominium
and constitutes all of “Unit 2” and related common elements in the Lincoln Tower Mixed Use
Condominium (the “Condominium”) as established under the Condominium Property Act of the State of
Illinois, as from time to time amended (the “Condominium Act”). The Declaration, as recorded in
the official records of Sangamon County, State of Illinois, on August 6, 2010 as Document No.
2010R26399, Bylaws (as modified) and Plats establishing and describing the Condominium are
collectively referred to below as the “Condominium Instruments”.

     (b) Borrower agrees that it shall own, operate and maintain the Mortgaged Property in
accordance with the terms of this Instrument and the Condominium Instruments.

     (c) The Mortgaged Property granted, conveyed and assigned to Lender hereunder shall include
all rights, easements, rights of way, reservations and powers of the Borrower under Condominium
Instruments in Borrower’s capacity as owner of Unit 2, as well as any rights that Borrower may
have, in any capacity, under the Condominium Instruments, and in furtherance thereof, Borrower
hereby instructs and grants and gives to Lender full power and authority to do and perform all and
every act and thing whatsoever authorized, permitted, requisite or necessary to be done by Borrower
under the provisions of the Condominium Instruments to all intents and purposes the same as
Borrower might do, it being understood and agreed that the aforesaid provisions impose no burden or
obligation on the Lender to do or perform any act whatsoever. Notwithstanding anything in this
paragraph to the contrary, the rights and powers of Borrower granted to Lender in this paragraph
may not be exercised by Lender other than during the continuance of an Event of Default

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

	 	 	þ Exhibit A    Description of the Land (required).

Page 39

 

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

	 	 	 	 	 
	 	BORROWER

SIR LINCOLN TOWER, LLC, an Illinois limited 

liability company

 	 
	 

	 	By:  	 Steadfast Income Advisor, LLC, a Delaware 

limited liability company, its sole manager

 	 
	 	 	 
	 	By:  	                                                /s/ Dinesh Davar
 	 
	 	 	Name:  	Dinesh Davar 	 
	 	 	Title:  	Manager 	 
	 

State of California

ss

County of Orange

On August 10, 2010, before me, Mary L. Kelly, Notary Public, personally appeared Dinesh Davar, who
proved to me on the basis of satisfactory evidence to the person whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his authorized capacity and
that by his signature on the instrument the person or the entity on behalf of which the person
acted, executed this instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.

	 	 	 	 	 
	 	WITNESS my hand and official seal.

 	 
	 	/s/ Mary L. Kelly
 	 
	NOTARY PUBLIC 	 	 
	 	 	 

Page 40

 

	 	 	 	 	 

EXHIBIT A

DESCRIPTION OF THE LAND

THOSE certain premises comprising a portion of the Lincoln Tower Mixed Use Condominium, a
condominium, said condominium having been established pursuant to the Illinois Condominium Act and
the Declaration of Condominium Ownership and Covenant, Easements and Restrictions of Lincoln Tower
Mixed Use Condominium, a condominium, recorded in the Official Records of Sangamon County, Illinois
on August 6, 2010 as Document No. 2010R26399 (the “Declaration”), the premises being more
particularly described as follows:

All of Unit 2 (the “Unit”) as described in the Declaration and as shown on the Plat of Condominium
for Lincoln Tower Mixed Use Condominium, a condominium (the “ Plat of Condominium”) that is
recorded in the Official Records of Sangamon County, Illinois on August 6, 2010 as Document No.
2010R26399;

TOGETHER WITH, the Unit’s interest in all Common Elements and Limited Common Elements of the
Condominium, as described in the Declaration and shown on the Plat of Condominium; and

TOGETHER WITH, a Non-Exclusive Easement for the benefit of Unit 2 recorded March 31, 2003 as
Document Number 2003R17397, for the purposes of permitting existing balconies which have been in
place since circa 1965 to remain and be maintained in their present location over and above the
Third Street right of way immediately East and adjacent to Lot 62 of the Assessor’s Subdivision of
the North Half of the Northeast Quarter of Section 33, and part of the West Half of the Northwest
Quarter of Section 34, Township 16 North, Range 5 West of the Third Principal Meridian.

Permanent Tax Number: Part of 14-34-154-020

together with the tenements and appurtenances thereunto belonging.

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