Document:

Exhibit 10.42

 

ASSIGNMENT OF PURCHASE AND SALE AGREEMENT

 

This
ASSIGNMENT OF PURCHASE AND SALE AGREEMENT
(this “Assignment”) is made and entered into as of March 8, 2010,
by and between BEHRINGER HARVARD MULTIFAMILY OP I LP,
a Delaware limited partnership (“Assignor”), and BEHRINGER
HARVARD PARK CREST, LLC, a Delaware limited liability company (“Assignee”).

 

RECITALS:

 

A.                                   Park Crest
Building 5 Associates, LLC, a Virginia limited liability company, as seller,
and Assignor, as purchaser, entered into that certain Purchase and Sale
Agreement (as amended, the “Agreement”) dated as of January 28,
2010, regarding real property commonly known as The Lofts at Park*Crest
Condominium, located in McLean, Virginia, as more particularly described in the
Agreement.

 

B.                                     Assignor
desires to assign to Assignee all of Assignor’s right, title and interest as
purchaser in and to the Agreement, and Assignee desires to accept such
assignment, subject to the provisions hereof.

 

AGREEMENTS:

 

NOW,
THEREFORE, in consideration of the sum of $10.00, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Assignor, the parties hereto agree as follows:

 

1.                                       Assignor has
ASSIGNED, TRANSFERRED, CONVEYED and DELIVERED, and by these presents does
ASSIGN, TRANSFER, CONVEY and DELIVER, unto Assignee, its successors and
assigns, all of Assignor’s right, title and interest in and to the Agreement.

 

2.                                       Assignee hereby
assumes all of the liabilities, obligations, duties and responsibilities of
Assignor in respect of the terms and conditions of the Agreement.

 

3.                                       This Assignment
may be executed in identical counterparts, all of which, when taken together,
will constitute one and the same instrument. A facsimile transmission shall be
binding on the party or parties whose signatures appear thereon.

 

* * * * *

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

 

EXECUTED
by the undersigned to be effective for all purposes as of the date first above
written.

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY
  OP I LP,

  
	
   

  	
  a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BHMF, Inc.,

  
	
   

  	
   

  	
  a Delaware corporation,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
   

  	
  Name:

  	
  Mark
  T. Alfieri

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
   

  	
   

  
	
   

  	
  BEHRINGER
  HARVARD PARK CREST, LLC,

  a
  Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
  Name:

  	
  Mark
  T. Alfieri

  
	
   

  	
  Title:

  	
  Chief
  Operating Officer

  

 

2Exhibit 10.43

 

EXECUTION VERSION

 

Loan Number:
504180657

Deal Number:  100101

 

CREDIT AGREEMENT

 

BY AND AMONG

 

BEHRINGER HARVARD MULTIFAMILY OP I LP, and BEHRINGER
HARVARD

ORANGE, LLC (doing business as Grand Reserve Orange)

 

collectively, as Borrower

 

AND

 

NORTHMARQ CAPITAL, LLC,

as Lender

 

March 26,
2010

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
  1.1.

  	
  Definitions

  	
   

  	
  1

  
	
   

  	
  1.2.

  	
  Construction

  	
   

  	
  14

  
	
   

  	
  1.3.

  	
  Accounting Principles

  	
   

  	
  15

  
	
  2.

  	
  REVOLVING CREDIT
  FACILITY

  	
   

  	
  16

  
	
   

  	
  2.1.

  	
  Revolving Credit
  Commitment

  	
   

  	
  16

  
	
   

  	
  2.2.

  	
  Term

  	
   

  	
  16

  
	
   

  	
  2.3.

  	
  Nature of Lender’s
  Obligations with Respect to the Loan

  	
   

  	
  16

  
	
   

  	
  2.4.

  	
  Fees

  	
   

  	
  16

  
	
   

  	
  2.5.

  	
  Loan Requests

  	
   

  	
  18

  
	
   

  	
  2.6.

  	
  The Loan

  	
   

  	
  19

  
	
   

  	
  2.7.

  	
  The Revolving Credit
  Note

  	
   

  	
  20

  
	
   

  	
  2.8.

  	
  Use of Proceeds

  	
   

  	
  20

  
	
   

  	
  2.9.

  	
  Additions to the
  Collateral Pool

  	
   

  	
  20

  
	
   

  	
  2.10.

  	
  Release of Collateral

  	
   

  	
  22

  
	
   

  	
  2.11.

  	
  Payment of the Loan
  Balance Without Termination

  	
   

  	
  23

  
	
   

  	
  2.12.

  	
  Valuations

  	
   

  	
  23

  
	
   

  	
  2.13.

  	
  Termination

  	
   

  	
  25

  
	
   

  	
  2.14.

  	
  Material Adverse Change
  to Borrower or a Collateral Pool Property

  	
   

  	
  26

  
	
   

  	
  2.15.

  	
  Release of Collateral
  Followed by a Permanent Loan

  	
   

  	
  27

  
	
   

  	
  2.16.

  	
  Loan Documents

  	
   

  	
  28

  
	
  3.

  	
  INTEREST RATES

  	
   

  	
  29

  
	
   

  	
  3.1.

  	
  Interest Rate

  	
   

  	
  29

  
	
   

  	
  3.2.

  	
  Interest Rate
  Determinations

  	
   

  	
  29

  
	
   

  	
  3.3.

  	
  Interest Periods

  	
   

  	
  29

  
	
   

  	
  3.4.

  	
  Illegality; Increased
  Costs

  	
   

  	
  32

  
	
  4.

  	
  PAYMENTS

  	
   

  	
  32

  
	
   

  	
  4.1.

  	
  Payments

  	
   

  	
  32

  
	
   

  	
  4.2.

  	
  Payment Dates

  	
   

  	
  33

  
	
   

  	
  4.3.

  	
  Prepayments

  	
   

  	
  33

  

 

i

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.4.

  	
  Prepayment Fee

  	
   

  	
  35

  
	
   

  	
  4.5.

  	
  Additional Payment
  Obligations

  	
   

  	
  35

  
	
   

  	
  4.6.

  	
  Additional Compensation
  in Certain Circumstances

  	
   

  	
  36

  
	
  5.

  	
  CONDITIONS OF LENDING

  	
   

  	
  37

  
	
   

  	
  5.1.

  	
  Initial Borrowing
  Tranche

  	
   

  	
  37

  
	
   

  	
  5.2.

  	
  Each Subsequent
  Borrowing Tranche

  	
   

  	
  39

  
	
  6.

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  40

  
	
   

  	
  6.1.

  	
  Representations and
  Warranties

  	
   

  	
  40

  
	
   

  	
  6.2.

  	
  Updates

  	
   

  	
  51

  
	
   

  	
  6.3.

  	
  Survival of
  Representations and Warranties

  	
   

  	
  51

  
	
  7.

  	
  COVENANTS

  	
   

  	
  51

  
	
   

  	
  7.1.

  	
  Covenants

  	
   

  	
  51

  
	
   

  	
  7.2.

  	
  Reporting Requirements

  	
   

  	
  58

  
	
   

  	
  7.3.

  	
  Escrows

  	
   

  	
  59

  
	
   

  	
  7.4.

  	
  Additional Financial
  Covenants

  	
   

  	
  59

  
	
  8.

  	
  DEFAULT

  	
   

  	
  59

  
	
   

  	
  8.1.

  	
  Events of Default

  	
   

  	
  59

  
	
   

  	
  8.2.

  	
  Consequences of Event
  of Default

  	
   

  	
  62

  
	
   

  	
  8.3.

  	
  Notice of Sale

  	
   

  	
  62

  
	
  9.

  	
  MISCELLANEOUS

  	
   

  	
  62

  
	
   

  	
  9.1.

  	
  Cooperation by
  Borrower; Borrower’s Obligations

  	
   

  	
  62

  
	
   

  	
  9.2.

  	
  Successors and Assigns

  	
   

  	
  62

  
	
   

  	
  9.3.

  	
  Modifications,
  Amendments or Waivers

  	
   

  	
  63

  
	
   

  	
  9.4.

  	
  Forbearance

  	
   

  	
  63

  
	
   

  	
  9.5.

  	
  Remedies Cumulative

  	
   

  	
  63

  
	
   

  	
  9.6.

  	
  Reimbursement and Indemnification
  of Lender and Servicer by Borrower; Taxes

  	
   

  	
  63

  
	
   

  	
  9.7.

  	
  Holidays

  	
   

  	
  64

  
	
   

  	
  9.8.

  	
  Notices

  	
   

  	
  64

  
	
   

  	
  9.9.

  	
  Severability

  	
   

  	
  65

  

 

ii

 

TABLE OF CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.10.

  	
  Governing Law; Consent
  to Jurisdiction and Venue

  	
   

  	
  66

  
	
   

  	
  9.11.

  	
  Prior Understanding

  	
   

  	
  66

  
	
   

  	
  9.12.

  	
  Duration; Survival

  	
   

  	
  66

  
	
   

  	
  9.13.

  	
  Disclosure of
  Information

  	
   

  	
  67

  
	
   

  	
  9.14.

  	
  Exceptions

  	
   

  	
  67

  
	
   

  	
  9.15.

  	
  Relationship of
  Parties; No Third Parties Benefited

  	
   

  	
  67

  
	
   

  	
  9.16.

  	
  Authority to File
  Notices

  	
   

  	
  67

  
	
   

  	
  9.17.

  	
  WAIVER OF TRIAL BY JURY

  	
   

  	
  67

  
	
   

  	
  9.18.

  	
  Interpretation

  	
   

  	
  68

  
	
   

  	
  9.19.

  	
  Brokerage Fee

  	
   

  	
  68

  
	
   

  	
  9.20.

  	
  Advertising

  	
   

  	
  68

  
	
   

  	
  9.21.

  	
  Time of Essence

  	
   

  	
  68

  
	
   

  	
  9.22.

  	
  Counterparts

  	
   

  	
  68

  
	
   

  	
  9.23.

  	
  NOTICE OF FINAL
  AGREEMENT

  	
   

  	
  68

  

 

iii

 

CREDIT
AGREEMENT

 

THIS CREDIT AGREEMENT (“Agreement”)
is dated as of March 26, 2010 and is
made by and among BEHRINGER HARVARD MULTIFAMILY OP I LP, a Delaware limited
partnership, and BEHRINGER HARVARD ORANGE, LLC (doing business as Grand Reserve
Orange), a Delaware limited liability company, each having an address at 15601
Dallas Parkway, Suite 600, Addison, Texas 75001 (collectively, “Borrower”) and NORTHMARQ CAPITAL, LLC, a
Minnesota limited liability company having an address at 3500 American
Boulevard West, Suite 500, Bloomington, Minnesota 55431, Attn: Paul
Cairns.

 

RECITALS

 

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

 

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

 

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

 

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

 

1.                                       DEFINITIONS

 

1.1.                              Definitions.

 

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

 

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

 

“Affiliate” or “Affiliates” as to any Person shall mean any
other Person (i) which directly or indirectly controls, is controlled by,
or is under common control with such Person, (ii) which beneficially owns
or holds fifty percent (50%) or more of any class of the voting or other equity
interests of such Person, or (iii) fifty percent (50%) or more of any
class of voting interests or other equity interests of which is beneficially
owned or held, directly or indirectly, by such Person.  Control, as used in this definition, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the power
to elect a majority of the directors or trustees of a corporation or trust, as
the case may be.

 

 

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

 

“Authorized Officer”
shall mean those individuals, designated by written Notice to Lender from
Borrower, who are authorized to execute Notices, reports and other documents on
behalf of Borrower where an Authorized Officer’s authority is required
hereunder; provided, further,
that the individuals so designated as the Authorized Officers of Borrower shall
be the sole representatives of Borrower for the purpose of giving or receiving
any Notices permitted or required of an Authorized Officer by this
Agreement.  Borrower may amend such list
of individuals from time to time by giving written Notice of such amendment to
Lender.  All Loan Documents shall be
executed by an Authorized Officer.

 

“Authorized Representative”
shall mean those individuals, designated by written Notice to Lender from
Borrower, who are authorized to execute Notices, reports and other documents on
behalf of Borrower where an Authorized Representative’s
authority is required hereunder; provided, further, that the individuals so designated as
the Authorized Representative of Borrower shall be the sole
representatives of Borrower for the purpose of giving or receiving any Notices
permitted or required of an Authorized Representative
by this Agreement.  Borrower may amend
such list of individuals from time to time by giving written Notice of such
amendment to Lender.

 

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

 

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

 

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

 

“BHMR” shall
mean Behringer Harvard Multifamily REIT I, Inc., a Maryland corporation.

 

“BHOP” shall
mean Behringer Harvard Multifamily OP I LP, a Delaware limited partnership.

 

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

 

2

 

“Borrower’s Knowledge”
shall mean the knowledge of any officer or employee of Borrower and/or any
Affiliate which manages or operates any of the Collateral Pool Properties on
behalf of a Borrower who is directly involved in the management or operation of
the applicable Collateral Pool Property and not below the level of an asset
manager or property manager.

 

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

 

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

 

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

 

“Certificate of Compliance” shall have the
meaning set forth in Section 7.4.3.

 

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

 

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

 

“Collateral Agreements”
shall mean (i) any agreements between Borrower and Lender for the purpose
of establishing replacement reserves for the Collateral Pool Properties or a
particular Collateral Pool Property, including (a) agreements establishing
a fund to assure the completion of repairs or improvements specified in any
such agreement, or (b) agreements assuring a reduction of the outstanding
principal balance of the Loan if the occupancy income from a Collateral Pool
Property does not increase to a level specified in such agreement, and (ii) 

 

3

 

any other agreement or
agreements between Borrower and Lender which provide for the establishment of
any other fund, reserve or account, all of the foregoing to be imposed only
pursuant to an express written agreement between Borrower and Lender entered
into (a) at the Closing Date, or (b) with respect to real estate
properties added to the Collateral Pool pursuant to Section 2.9,
at or prior to such addition.

 

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

 

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

 

“Commitment”
shall mean ONE HUNDRED FIFTY MILLION and NO/100 Dollars ($150,000,000.00).

 

“Commitment Fee” shall have the meaning set
forth in Section 2.4.5 hereof.

 

“Consolidated Net Worth” means, for any period
of determination with respect to BHMR and its subsidiaries on a consolidated
basis, the excess of the Person’s assets over the Person’s liabilities,
determined in accordance with GAAP on a consolidated basis, provided
that all real property shall be valued on an undepreciated basis.

 

“Deemed Minimum Loan Amount”
shall mean an amount equal to seventy-five percent (75%) of the Commitment.

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

“Facility Debt Service”
shall mean, for the purposes of this Agreement, the sum of (i) the
interest due on the Revolving Credit Note, including any default interest
(subject to a floor of two percent (2.0%) for the LIBO Rate or any other index
then being used by Lender to determine the interest rate of the Revolving
Credit Note pursuant to this Agreement) and (ii) an amount equal to one
hundred basis points (0.01) of the then outstanding amount of such Revolving
Credit Note, but exclusive of any voluntary or mandatory principal prepayments
allowed or required hereunder.  Facility
Debt Service shall be annualized at the time of Lender’s determination based on
the interest rates then accruing under all outstanding Borrowing Tranches,
notwithstanding the duration of any Interest Period.  Facility Debt Service shall be recalculated (a) as
of each Loan Request, (b) as of each Renewal Request, or deemed renewal
under Section 3.3.3,
(c) on or about September 1st of each calendar year during the term
of this Agreement, commencing on or about September 1, 2011, (d) as
of each addition, substitution or deletion of a property to or from the
Collateral Pool, (e) as of each repayment of any principal portion of the
Loan, and (f) upon the occurrence of any Material Adverse Change.

 

“Facility Debt Service
Coverage Ratio” shall mean, at the time of Lender’s determination,
the then prevailing computation of Net Operating Income of the Collateral Pool
Properties, using Lender’s then current policies and guidelines, divided by the
then prevailing computation of Facility Debt Service.

 

“Freddie Mac”
shall mean the Federal Home Loan Mortgage Corporation.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

“LIBO Rate”
shall mean, with respect to any Base Rate Borrowing Tranche, the rate of
interest, rounded to the nearest basis point (i.e. one-hundredth of one percent
(0.0001)), displayed as of 11:00 a.m. London time on the second Business
Day preceding the first day of the applicable Interest Period on the Bloomberg,
L.P., page “BBAM”, as the British Bankers Association (“BBA”) LIBO Rate (such page, or such other page as
may replace page BBAM on that service, or at the option of Lender (i) the
applicable page on another credible and generally recognized service which
electronically transmits or displays BBA LIBO Rates for the applicable Interest
Period or (ii) any publication of LIBO Rates available from BBA for the
applicable Interest Period, is referred to as the “Designated
Bloomberg Page”) for purposes of calculating effective rates of
interest for loans or obligations for an amount comparable to such Borrowing
Tranche and having a term equal to the Interest Period.  If the Designated Bloomberg Page is not
available, but such information is generally still published, the LIBO Rate for
such Interest Period will be the BBA LIBO Rate most recently published for such
Interest Period.

 

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

 

“Liquidity” shall mean the sum of (a) all
available cash on hand, (b) the fair market value of all readily
marketable securities and (c) any unused or undrawn borrowing capacity
under any line of credit (other than any line of credit extended pursuant to
this Agreement or otherwise extended by Freddie Mac).

 

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

 

“Loan Document”
or “Loan Documents” shall mean any or all
of this Agreement, the Revolving Credit Note, the Collateral Pool Property
Documents and any other instruments, 

 

6

 

certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith.

 

“Loan to Value Ratio”
shall mean the product, expressed as a percentage, determined by dividing the
Loan by the aggregate of the then current Market Values of the Collateral Pool
Properties.  The Loan to Value Ratio
shall be recalculated based on Lender’s then current underwriting policies
consistently applied (a) as of each Loan Request, (b) as of each
Renewal Request, or deemed renewal under Section 3.3.3, (c) on
or about September 1st of each calendar year during the term of this
Agreement, commencing on or about September 1, 2011, (d) as of each
addition, substitution or deletion of a property to or from the Collateral
Pool, (e) as of each repayment of any principal portion of the Loan, and (f) upon
the occurrence of any Material Adverse Change.

 

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

 

“Margin” shall mean with respect to a Base Rate
Borrowing Tranche, the sum of the Net Spread and the Servicing Spread.

 

“Market Value”
shall mean as to each individual Collateral Pool Property, the lesser of (a) if
applicable, the Maximum Market Value for such Collateral Pool Property or (b) the
Initial Market Value of such property, in each case as such Market Value may be
subsequently increased or decreased in accordance with the terms and conditions
of this Agreement; provided, that, the Market Value of an individual
Collateral Pool Property shall never exceed the Maximum Market Value for such
Collateral Pool Property; provided, further, that, with respect
to such Collateral Pool Properties acquired or developed within twelve (12)
months prior to the date such Collateral Pool Property is added to the
Collateral Pool, the Initial Market Value shall not exceed the sum of (i) the
purchase price paid by Borrower (or an Affiliate) for such Collateral Pool
Property, (ii) the capital expenditures paid by Borrower (or an Affiliate)
for such Collateral Pool Property during such twelve (12) month period, (iii) the
acquisition costs (not to exceed three percent (3%) of the purchase price paid
by Borrower (or an Affiliate)) paid by Borrower (or an Affiliate) in connection
with the purchase of such Collateral Pool Property and (iv) any escrows
held by or on behalf of Lender on account of capital expenditures (i.e.
replacement reserves or repair escrows) for such Collateral Pool Property.

 

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

 

7

 

expected to have a
material adverse effect on the financial performance of Market Value of any
Collateral Pool Property.

 

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

 

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

 

“Maximum Loan to Value
Ratio” shall mean seventy percent (70%).

 

“Maximum Market Value” shall mean, as
applicable, with respect to any individual Collateral Pool Property, the
product of the Maximum Recovery Amount for such Collateral Pool Property
divided by the Maximum Loan to Value Ratio. 
The Maximum Market Value of the Collateral Pool Properties is shown on Schedule 1.1(A).  Schedule 1.1(A) shall
be deemed amended each time a Collateral Pool Property is added to the
Collateral Pool.  For the avoidance of
doubt, the Maximum Market Value shall only be applicable to those Collateral
Pool Properties where the maximum amount which Lender may recover in connection
with its exercise of remedies hereunder or under any other Transaction Document
is limited pursuant to applicable Law or pursuant to restrictions contained in
the applicable Collateral Pool Property Documents as specified by Lender on Schedule 1.1(A) as amended from time to time.

 

“Maximum Recovery Amount”
shall mean, at the time the Collateral Pool Property is added to the Collateral
Pool, the maximum amount which Lender may recover pursuant to applicable Law or
pursuant to restrictions contained in the applicable Collateral Pool Property
Documents from a Collateral Pool Property (through foreclosure or otherwise) in
connection with its exercise of remedies hereunder or under any other
Transaction Document.  For illustrative
purposes only, the Collateral Pool Property Documents for Collateral Pool
Properties located in the State of New York may contain language that limits
the maximum recovery allowed under those Collateral Pool Property
Documents.  The Maximum Recovery Amount
of the Collateral Pool Properties is shown on Schedule 1.1(A).  Schedule 1.1(A) shall
be deemed amended each time a Collateral Pool Property is added to the
Collateral Pool.  For the avoidance of
doubt, the Maximum Recovery Amount shall only be applicable to those Collateral
Pool Properties where the maximum amount which Lender may recover in connection
with its exercise of remedies hereunder or under any other Transaction Document
is limited pursuant to applicable Law or pursuant to restrictions contained in
the applicable Collateral Pool Property Documents as specified by Lender on Schedule 1.1(A) as amended from time to time.

 

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

 

“Month” shall
mean the appropriate calendar month.

 

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

 

8

 

“Mortgage Review Fee”
shall mean a non-refundable fee in an amount equal to (i) with respect to
Freddie Mac, for each Collateral Pool Property included in the Collateral as of
the Closing Date, FIVE THOUSAND and NO/100 Dollars ($5,000.00) per real
property payable to Freddie Mac and (ii) with respect to Servicer, (a) for
the initial Collateral Pool Property included in the Collateral, TEN THOUSAND
and NO/100 Dollars ($10,000.00) for such real property payable to Servicer and (b) for
each subsequent Collateral Pool Property included in the Collateral (including
Collateral Pool Properties included in the Collateral as of the Closing Date
other than the initial Collateral Pool Property), FIVE THOUSAND and NO/100
Dollars ($5,000.00) per real property payable to Servicer.  For any Collateral Pool Properties included
in the Collateral after the Closing Date, Freddie Mac’s underwriting fees will
be included in the Addition Fee.

 

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

 

“Net Operating Income”
shall mean an annualized dollar amount, as determined by Lender in its sole
discretion in accordance with Lender’s then applicable underwriting standards,
which is equal to all income from the operations of the Collateral Pool
Properties that is available for repayment of debt after deducting for economic
vacancy and all expenses (exclusive of debt service on account of the Loan) and
otherwise calculated as provided below. 
Net Operating Income shall be calculated by Lender for each individual Collateral
Pool Property as of the Closing Date and thereafter on or about September 1st,
commencing on or about September 1st, 2011, of each calendar year during
the term of this Agreement, in accordance with Lender’s then current
methodology, excluding from such calculation expenses from depreciation,
amortization, interest expenses, non-recurring items and capital expenses, but
including in such calculation an assumed capital expense reserve in an amount
consistent with Lender’s then current requirements for such capital reserves,
and provided further that in the event Lender’s methodology or underwriting
standards for calculating Net Operating Income changes to include any of the
foregoing excluded items, then such methodology shall apply to Collateral Pool
Properties added after the date of the change in methodology or underwriting
standards.  In addition, upon the
addition, substitution or release of any real property in the Collateral Pool
pursuant to the provisions hereof, Lender shall redetermine Net Operating
Income for the Collateral Pool in the following manner: (i) in the event
of an addition of a real property to the Collateral Pool, Lender shall add the
Net Operating Income of the real property added to the Collateral Pool to the
most recent determination of Net Operating Income for the existing Collateral
Pool; (ii) in the event of a release of a real property from the
Collateral Pool, Lender shall subtract the Net Operating Income of the real
property released from the Collateral Pool from the most recent determination
of Net Operating Income for the Collateral Pool; or (iii) in the event of
a substitution of a real property in the Collateral Pool, Lender shall (x) add
the Net Operating Income of the real property added to in the Collateral Pool
to the most recent determination of Net Operating Income for the existing
Collateral Pool and (y) subtract the Net Operating Income of the real
property released from the Collateral Pool from the most recent determination
of Net Operating Income for the Collateral Pool.

 

9

 

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

 

“NorthMarq” shall mean NorthMarq Capital, LLC,
a Minnesota limited liability company.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Permitted Exceptions”
shall mean:

 

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

 

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

 

10

 

payable or have been
bonded over to the satisfaction of Lender or which is released of record or
otherwise remedied to Lender’s satisfaction within 30 days of the date of
creation;

 

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

 

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

 

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

 

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

 

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

 

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

 

“Permitted Transfer”
shall mean a Transfer (as defined in the applicable Security Instrument as
modified) that does not result in an Event of Default under such Security
Instrument.

 

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

 

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

 

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

 

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

 

11

 

“Prime Rate Borrowing Tranche” shall mean all
Prime Rate fundings in the aggregate which accrue interest at the Prime
Rate.  Notwithstanding anything to the
contrary contained herein, no Prime Rate Borrowing Tranches will be permitted
hereunder except as may be required pursuant to Sections
3.3.2 or 3.4.

 

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

 

“Proposed Borrower”
shall mean a Single Asset Entity that is a subsidiary of, and controlled by,
BHOP (or in the case of a Permitted Transfer involving BHOP, Behringer Harvard
Multifamily Advisors I LP, a Texas limited partnership), and is the owner of
one or more properties which have been proposed to be included in the
Collateral Pool, pursuant to the terms hereof. 
A Proposed Borrower may own multiple properties provided that
each property is included in the Collateral Pool.

 

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

 

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

 

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

 

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

 

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

 

“Scheduled Maturity Date”
shall mean April 1, 2017.

 

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

 

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

 

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

 

12

 

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

 

“Servicing Spread”
shall mean five basis points (0.0005).

 

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

 

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

 

“Streamlined Refinancing
Program” shall mean Lender’s then current program for refinancing a
performing loan in its loan portfolio.

 

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

 

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

 

13

 

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

 

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

 

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

 

“Valuation”
shall have the meaning set forth in Section 2.12.

 

1.2.                              Construction.

 

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

 

1.2.1.                     Number;
Inclusion.

 

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

 

1.2.2.                     Determination.

 

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

 

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

 

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

 

1.2.4.                     Documents Taken
as a Whole.

 

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

 

14

 

1.2.5.                     Headings.

 

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

 

1.2.6.                     Implied
References to this Agreement.

 

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

 

1.2.7.                     Persons.

 

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

 

1.2.8.                     Modifications to
Documents.

 

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

 

1.2.9.                     From, To and
Through.

 

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

 

1.2.10.               Conflicts with
Other Loan Documents.

 

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

 

1.3.                              Accounting
Principles.

 

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

 

15

 

2.                                       REVOLVING CREDIT FACILITY

 

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

 

2.2.                              Term. 
The term of the Loan shall commence on the Closing Date and shall
terminate on the Scheduled Maturity Date unless otherwise terminated earlier by
Borrower, pursuant to and subject to the provisions of Section 2.13
hereof, or by Lender following an Event to Default, pursuant to the provisions
hereof.  The entire Indebtedness shall be
due and payable on the Expiration Date and, solely to the extent the Expiration
Date occurs on the Scheduled Maturity Date, without prepayment penalty or fee
(other than accrued and unpaid Minimum Usage Fees or Unused Facility Fees due
hereunder).

 

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

 

Subject to the provisions of this Agreement, the
aggregate amount of the Loan outstanding hereunder at any time shall never
exceed the amount which would be permitted to be outstanding under the
Sublimits.  Lender shall have no
obligation to make any additional advance hereunder on or after the Business
Day immediately preceding the Maturity Date. 
While a Potential Default or Material Adverse Change exists, Lender may
refuse to make any additional advances to Borrower, provided that upon the cure
of a Potential Default in accordance with the terms of this Agreement or the
cure of a Material Adverse Change in accordance with Section 2.14, Lender
will resume funding additional advances and renewing Borrowing Tranches as
provided for in, and in accordance with, this Agreement.  Following the occurrence of an Event of
Default, Lender shall have the rights specified in Section 8.2.

 

2.4.                              Fees.

 

2.4.1.                     Fees Paid Prior
to the Closing Date.

 

Lender acknowledges that, in addition to Borrower’s
obligations under Section 5.1.6,
Borrower has paid to Lender, as consideration for Lender’s costs in
underwriting the transaction contemplated hereby, a Mortgage Review Fee and a
Seismic Report Fee, if and as applicable, for each property described at Schedule 1.1(A) and proposed
by Borrower to be included in the Collateral Pool on the Closing Date.

 

2.4.2.                     Fees and Costs
Due on the Closing Date.  Borrower
shall pay on the Closing Date (simultaneously with the closing of the Loan), as
further consideration for Lender’s cost in underwriting the commitment, (a) a
non-refundable transaction fee, payable to Freddie Mac, equal to the amount of
fifteen basis points (0.0015) times the Commitment, (b) the Commitment Fee
described in Section 2.4.5 and (c) all
reasonable out-of-pocket costs, expenses 

 

16

 

and disbursements
(including fees and expenses of counsel for Lender and Servicer), incurred by
Lender and Servicer in connection with the negotiation and execution of this
Agreement and other instruments and documents to be delivered hereunder.

 

2.4.3.                     Unused Facility
Fee.

 

Accruing from the Closing Date until the Maturity
Date, Borrower shall pay to Lender, as consideration for Lender’s commitment
hereunder, a nonrefundable unused facility fee (the “Unused Facility Fee”)
equal to one hundred  basis points (0.01) per
annum (computed on the basis of a year of 360 days and actual days elapsed) on
the average daily difference between the amount of (i) the Commitment and (ii) the
greater of (a) the Deemed Minimum Loan Amount or (b) the outstanding
principal amount of the Loan.  Except as
otherwise provided in connection with Borrower’s election to terminate this
Agreement prior to the Maturity Date pursuant to Section 2.13.2,
in which instance a liquidated Unused Facility Fee shall be payable in
accordance with the provisions of Section 2.13.2,
all Unused Facility Fees shall be payable monthly in arrears on each Payment
Date and shall be set forth on the applicable Monthly Payment Statement.  Unused Facility Fee payments which cover less
than one (1) month shall be prorated based on the actual number of days
elapsed.  Any accrued but unpaid Unused
Facility Fees shall also be due and payable on the Expiration Date.

 

2.4.4.                     Minimum Usage
Fee.

 

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

 

17

 

2.4.5.                     Commitment Fees. 
The commitment fee (the “Commitment Fee”) payable to NorthMarq on
the Closing Date shall be equal to the amount of twenty-five basis points
(0.0025) times the Commitment.

 

2.4.6.                     Margin and Net
Spread.

 

2.4.6.1.            Intentionally
Omitted.

 

2.4.6.2.            Base Rate
Borrowing Tranches.  The net spread (the “Net Spread”) applicable for any Base Rate Borrowing Tranche
shall be as set forth in Schedule 3.2.

 

2.5.                              Loan Requests.

 

2.5.1.                     Except as otherwise provided herein,
Borrower may from time to time prior to the Maturity Date request Lender to
make an advance, consistent with the Sublimits, by delivering Notice to
Servicer (a “Loan Request”) in the form attached hereto as Schedule 2.5.  Borrower may at any one time submit one (1) or
more Loan Requests; each Loan Request shall specify the items set forth on Schedule 2.5. including, but not
limited to, (i) the proposed Borrowing Date (which Borrowing Date shall be
in accordance with the requirements of Section 2.6)
and (ii) the amount of the proposed Borrowing Tranche, which shall not be
less than TEN MILLION and NO/100 Dollars ($10,000,000.00).  Notwithstanding anything to the contrary
contained herein, no Prime Rate Borrowing Tranches will be permitted hereunder
except as may be required pursuant to Sections 3.3.2
or 3.4.

 

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

 

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

 

2.5.2.                     Intentionally
Omitted.

 

2.5.3.                     Sublimits.

 

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

 

18

 

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

 

2.5.3.2.                               the Facility Debt Service Coverage Ratio
shall not be less than 1.55 : 1.00;

 

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

 

2.5.3.4.                               the Loan shall not exceed the Commitment.

 

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

 

2.6.                              The Loan.

 

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

 

19

 

foregoing, any Loan
Request made contemporaneously with a request for the addition of a real
property under Section 2.9
shall be subject to the time requirements set forth in Section 2.9.

 

2.7.                              The Revolving Credit Note.

 

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

 

2.8.                              Use of Proceeds.

 

The proceeds of the Loan may be used by Borrower
solely for the purpose of carrying on a business or commercial enterprise and
not for personal, family, household or agricultural purposes.

 

2.9.                              Additions to the
Collateral Pool.

 

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

 

Borrower or Proposed Borrower, as the case may be, may
propose to add one or more multi-family real properties to the Collateral Pool
by delivering to Lender (i) a written proposal for addition of the
proposed real property(ies), (ii) a Mortgage Review Fee for each proposed
real property, (iii) a Seismic Report Fee, if and as applicable, for each
proposed real property, and (iv) the Underwriting Materials with respect
to the proposed real property(ies) and with respect to Proposed Borrower, if
applicable, provided that, (a) such property(ies) shall have been
sourced by or through NorthMarq so long as NorthMarq is acting as Servicer and (b) no
more than one (1) such proposal shall be submitted to Lender in any one (1) Month.  Borrower shall endeavor to provide all
required Underwriting Materials within fifteen (15) days of the date of
submission of Borrower’s proposal(s) to add a property or properties.  Upon Lender’s receipt of all fees required
hereunder and all Underwriting Materials, Lender shall notify Borrower or
Proposed Borrower of the same.  The
determination of whether Borrower or Proposed Borrower has provided Lender with
all Underwriting Materials shall be in Lender’s discretion.  For purposes of this Section 2.9,
Borrower or Proposed Borrower may submit a multi-family real property for
addition to the Collateral Pool, if Borrower or Proposed Borrower has a
contract to purchase such real property, provided that Borrower or
Proposed Borrower consummates the purchase of such real property on or before
the date such real property is proposed to be added to the Collateral
Pool.  Both the Mortgage Review Fee and
the Seismic Report Fee, if any, shall be deemed earned upon delivery thereof,
whether or not Lender approves or disapproves such real property for addition
hereunder.  Borrower shall pay all
reasonable costs and expenses that Lender and Servicer incur in connection with
any such proposal to add a real property to the Collateral Pool, including, but
not limited to, reasonable attorneys’ fees and any reasonable costs and
expenses incurred with respect to third party reports, whether or not Lender
approves or disapproves such real property for addition hereunder.  Borrower or its Affiliates shall be permitted
to engage and pay directly the third-party consultants to be retained for the
required property condition reports and environmental reports provided
that (A) Lender and Servicer approve in advance and in writing each such
consultant and the scope of each such report, and

 

20

 

(B) each such report
states that it is made for the benefit, use and reliance of Lender and
Servicer, as well as Borrower and/or its Affiliate.

 

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

 

2.9.2.1.                               With respect to any multi-family real
property that Borrower or Proposed Borrower, as the case may be, proposes for
addition to the Collateral Pool, Lender shall, within fifty (50) days of the
date on which Lender notifies Borrower or Proposed Borrower that it has
received all Underwriting Materials, use its best efforts to accept or reject
in writing the proposed real property on the basis of whether such proposed
real property meets Lender’s then current requirements for addition to the
Collateral Pool, and in the event that Lender accepts the proposed real
property for addition to the Collateral Pool, Lender shall provide Borrower
with a written approval letter and use its best efforts to add such real
property to the Collateral Pool within twenty (20) days of the date of such
acceptance, subject to Borrower’s or Proposed Borrower’s timely performance of
all obligations listed under Section 2.9.2.2. 
Each property must pass Lender’s own assessment of earthquake risk to be
included in the Collateral Pool. 
Notwithstanding anything contained herein to the contrary, no real
property shall be submitted for addition unless (x) such property has a
fair market value of greater than NINE MILLION NINE HUNDRED NINETY NINE
THOUSAND NINE HUNDRED NINETY-NINE and NO/100 Dollars ($9,999,999.00) and (y) Borrower
is in compliance with all Sublimits.  The
failure of Lender to respond to Borrower’s or Proposed Borrower’s request
within such fifty (50) day period shall be deemed a rejection by Lender of the
proposal to add the real property to the Collateral Pool.  If Lender provide(s) the reason(s) for
such rejection, Borrower or Proposed Borrower shall have fifty (50) days to
cure or otherwise resolve to the satisfaction of Lender, the objections of
Lender to such proposed real property (Lender, in its sole discretion, may
require that Borrower provide within such fifty (50) day cure period necessary
updates of any or all of the Underwriting Materials).  If Borrower or Proposed Borrower does not
satisfy Lender’s objections, then such proposal shall be deemed terminated
(unless Lender, in its sole discretion shall opt to extend such fifty (50) day
cure period) provided that, any such termination shall not prevent
Borrower or Proposed Borrower from subsequently resubmitting a real property
(together with all fees required hereunder and the Underwriting Materials) for
addition to the Collateral Pool, further provided that Borrower may not
resubmit the same real property for addition to the Collateral Pool more often
than one (1) time in any six (6) month period.  Notwithstanding anything contained in the
foregoing to the contrary, under no circumstances shall the addition of any
real property increase the amount of the Commitment.

 

2.9.2.2.                               If and upon the date of acceptance by
Lender of a multi-family real property submitted for addition to the Collateral
Pool (such acceptance to be in writing, together with Lender’s determination of
the Initial Market Value of such real property and the Net Operating Income of
such property), whether following the initial proposal of such real property or
after satisfying any objections of Lender, such real property shall be added to
the Collateral Pool, provided that, prior to such addition (or in the
instance of the documents required under item (iii)(b) below, as soon as
practicable after such addition), Borrower or Proposed Borrower shall (i) pay
the Addition Fee pursuant to Section 2.9.3, (ii) pay all costs and
expenses that Lender or Servicer incur in connection with the inclusion of such
real property, including, but not limited to, attorneys’ fees, and (iii) submit
the following to Lender: (a) all Collateral Pool Property Documents
requested by Lender, where appropriate, fully executed and 

 

21

 

where appropriate duly
acknowledged and filed of record in the appropriate official public records, (b) copies
of all filing receipts and acknowledgements issued by any governmental
authority evidencing any recordation or filing necessary to perfect Lender’s
Lien on the subject real property or other evidence satisfactory to Lender of
such recordation and filing of the applicable Security Instrument, (c) evidence
satisfactory to Lender that, subject to the Permitted Exceptions, (1) in
the case of personal property, the Lien constitutes a first priority security
interest in favor of Lender and, (2) in the case of real property, the
Security Instrument constitutes a valid and recorded first priority Lien in
favor of Lender (such evidence to be in the form of a title insurance policy
acceptable to Lender in both form and substance) and (d) opinions of
counsel (as required pursuant to Lender’s then current requirements for real
property additions in connection with similar revolving credit facilities)
acceptable to Lender and (iv) in the case of a Proposed Borrower, such
Proposed Borrower shall execute (a) separate allonges to the Revolving
Credit Note and (b) a joinder agreement, both of which shall be in form
and substance satisfactory to Lender in its sole discretion.  If Borrower or Proposed Borrower fails to
perform any of the acts, where applicable, or to submit any of the documents
and evidence listed under (i), (ii), (iii) and (iv) above together
with any and all updates to the Underwriting Materials reasonably requested by
Lender within fifty (50) days of the date of Lender’s acceptance, Lender may at
its option reject the proposed real property and terminate such proposal.  In the event that Borrower or Proposed
Borrower performs all of the acts and submits all of the documents and evidence
listed in (i), (ii), (iii) and (iv) above within fifty (50) days of
the date of Lender’s acceptance, the proposed real property shall be added to
the Collateral Pool.

 

2.9.3.                     Addition Fee.

 

For each property added to the Collateral Pool,
Borrower shall pay all of Lender’s and Servicer’s costs and expenses in
connection with such addition (including, but not limited to, attorneys’ fees)
and, in addition to any other fees payable to Lender upon such Addition, a fee
to Lender in the amount of FIFTEEN THOUSAND and NO/100 Dollars ($15,000.00)
(the “Addition Fee”).  The Addition Fee shall be due and payable
upon consummation of the addition of the proposed real property to the
Collateral Pool.  In addition to the
foregoing, if at any time after the outstanding principal balance of the Loan
has equaled $150 Million, a real property is added to the Collateral Pool,
Borrower shall pay an additional origination fee of FIFTY THOUSAND AND NO 100
Dollars ($50,000.00) to NorthMarq for each such property, such fee to be due
and payable upon consummation of the addition of the proposed real property to
the Collateral Pool.

 

2.10.                        Release of
Collateral.

 

Lender shall, upon thirty (30) days advance written
Notice, release the Liens granted hereunder with respect to a Collateral Pool
Property or Properties which constitute(s) less than all Collateral Pool
Properties, provided that (i) prior to such release Borrower shall
pay Lender a non-refundable fee of TEN THOUSAND and NO/100 Dollars ($10,000.00)
(the “Release Fee”) and all costs and expenses that Lender or Servicer
incur in connection with such release, including, but not limited to, attorneys’
fees and all other amounts due to Lender hereunder in connection with such
release, including, without limitation, Prepayment Fees and accrued and unpaid
interest, if applicable, (ii) at the time of the request for such release,
no Event of Default or Potential Default shall exist, (iii) after giving
effect to such release, no Event of Default or 

 

22

 

Potential Default shall
exist, and (iv) Borrower shall be in compliance with all provisions hereof
including, without limitation, the Sublimits, provided, however,
that if such release would otherwise cause Borrower to be in non-compliance
with the Sublimits set forth in Section 2.5.3,
Borrower shall have the opportunity to cure the same prior to or simultaneously
with such release by either (a) pledging multi-family real property
collateral in form, substance, value and in a manner all acceptable to Lender,
in its sole discretion, in accordance with Section 2.9
or (b) prepaying so much of the Loan as is necessary to cause compliance
with the Sublimits, each in accordance with the provisions of Section 4.3.  Notwithstanding the foregoing, if Borrower is
unable to cause compliance with the Sublimits within fifteen (15) days
following Notice thereof from Servicer (or Lender) of Borrower’s non-compliance
with the Sublimits, then, for so long as Borrower fails to comply with the
Sublimits, the Net Spread applicable to all Base Rate Borrowing Tranches then
outstanding (and thereafter renewed) shall automatically increase to one
hundred basis points (0.01) over the highest Net Spread shown on Schedule 3.2, further adjusted, if
at all, in accordance with Schedule 3.2,
as a result of the duration of such Base Rate Borrowing Tranche(s).  Upon the release of a Lien on a Collateral
Pool Property, if the owner of such Collateral Pool Property owns no other
Collateral Pool Properties, such owner shall be released from its obligations
under the Loan Documents, except as otherwise expressly provided in the Loan
Documents.  Notwithstanding the
foregoing, under no circumstances may (i) BHOP be released from its
obligations under the Loan Documents and (ii) Borrower receive a release
of the Security Instrument with respect to the last property in the Collateral
Pool prior to the Maturity Date, in each case unless Borrower has elected to
terminate this Agreement under Section 2.13 hereunder.  Borrower may revoke a pending request to
release a Collateral Pool Property at any time; provided that Borrower
pays all of Lender’s reasonable costs and expenses with respect to such release
request, including, without limitation, reasonable attorneys fees; provided,
further, that Borrower shall not be entitled to reimbursement of the
Release Fee paid to Lender in connection with such request to release a
Collateral Pool Property.

 

2.11.                        Payment of the
Loan Balance Without Termination.

 

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

 

2.12.                        Valuations.

 

2.12.1.               Timing and
Procedure of Valuation.

 

In addition to any other provisions requiring
valuations hereunder, Lender shall perform, in accordance with its then current
underwriting policies, practices and procedures consistently applied, an annual
valuation (the “Valuation”) to determine
the then (i) Market Value and (ii) Net Operating Income of each of
the Collateral Pool Properties, which Valuation shall be performed on or about September 1st of each
calendar year during the term of this Agreement, 

 

23

 

commencing on or about September 1,
2011.  In connection with such Valuation,
Borrower shall deliver to Servicer by no later than May 1  of each calendar year, a current
rent roll (which shall be no more than thirty (30) days old) and a twelve (12)
month operating statement (or an operating statement covering the time period
in which the applicable Single Asset Entity Borrower has owned the Collateral
Pool Property, if shorter than twelve (12) months) with respect to each
Collateral Pool Property, each certified by an Authorized Officer or, in the
case of the rent roll, an Authorized Representative.  Any operating statement required hereunder
shall relate to the operations of the applicable Collateral Pool Property
during the preceding calendar year. 
Without limiting the foregoing, each such rent roll and operating
statement shall be in such form and contain such detail as Lender may
reasonably require and Lender may require that any such rent rolls and
operating statements shall be verified by an independent party acceptable to
Lender.

 

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

 

If any Valuation discloses that the Market Value
and/or Net Operating Income of the Collateral Pool Properties has decreased
below the then current values or calculations thereof, the Maximum Facility
Available may be adjusted in accordance with the provisions of Section 2.5.3 and in the event
such decrease in Market Value or Net Operating Income shall cause Borrower to
be in non-compliance with the Sublimits set forth in Section 2.5.3,
Borrower shall within the time periods set forth in (i) and (ii), cure the
same by bringing the Loan into compliance with the Sublimits by either (i) within
ninety (90) days of Notice from Servicer (or Lender) of Borrower’s
non-compliance with the Sublimits, pledging multi-family real property
collateral in form, substance, value and in a manner all acceptable to Lender,
in its sole discretion, in accordance with Section 2.9
or (ii) within thirty (30) days of Notice from Servicer (or Lender) of
Borrower’s non-compliance with the Sublimits, prepaying so much of the Loan as
is necessary to cause compliance with the Sublimits, each in accordance with
the provisions of Section 4.3.  Borrower shall cause Servicer to provide
Notice to Lender, within fifteen (15) days of Servicer’s (or Lender’s) Notice
to Borrower of Borrower’s non-compliance with the Sublimits, of Borrower’s
election to proceed under clause (i) or clause (ii) of the preceding
sentence. Notwithstanding the foregoing, if Borrower is unable to cause compliance
with the Sublimits within fifteen (15) days following Notice thereof from
Servicer (or Lender) of Borrower’s non-compliance with the Sublimits, then, for
so long as Borrower fails to comply with the Sublimits, the Net Spread
applicable to all Base Rate Borrowing Tranches then outstanding (and thereafter
renewed) shall automatically increase to one hundred basis points (0.01) over
the highest Net Spread shown on Schedule 3.2,
further adjusted, if at all, in accordance with Schedule
3.2, as a result of the duration of such Base Rate Borrowing
Tranche(s).

 

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

 

If any Valuation discloses that the Market Value
and/or Net Operating Income of the Collateral Pool Properties has increased
above the then current values thereof, the Maximum Facility Available may be
adjusted, if necessary, in accordance with the provisions of Section 

 

24

 

2.5.3, and Borrower shall be entitled to borrow
and reborrow hereunder, subject to the Sublimits, up to the amount of the
Commitment in accordance with the terms of this Agreement.

 

2.13.                        Termination.

 

2.13.1.               Rights to
Terminate.

 

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

 

2.13.2.               Borrower’s Right to Terminate the
Agreement.  At any time during the term of the Loan,
Borrower shall have the right to terminate this Agreement in full and the
parties’ obligations under the Loan Documents, provided that Borrower (i) delivers
to Lender thirty (30) days advance written Notice of its revocable election to
terminate this Agreement specifying the Expiration Date, (ii) repays all
accrued interest on, and principal with respect to, the Loan in full and (iii) performs
all Obligations under this Agreement, the Revolving Credit Note and the other
Loan Documents, including, but not limited to, Borrower’s obligations to pay
all fees as specified in Section 2.13.4.  In the event Borrower has complied with the
requirements set forth in this Section 2.13.2,
Lender shall release the Liens granted hereunder on the Expiration Date in
accordance with Section 2.10.  Without limiting any other provision
contained herein, in the event Borrower shall revoke any such request to
terminate its obligations under this Agreement in full and the parties’
obligations under the Loan Documents, Borrower shall pay all costs and expenses
incurred by Lender and Servicer in connection with such revocation, including,
without limitation, reasonable attorneys’ fees.

 

2.13.3.               Lender’s Right
to Accelerate.

 

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

 

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

 

In the event (i) Borrower shall terminate
Borrower’s obligations under the Loan Documents pursuant to the provisions of Section 2.13.2
or (ii) Lender shall accelerate the Loan pursuant to the provisions of Section 2.13.3
prior to the Scheduled Maturity Date, Borrower shall pay (i) a Prepayment
Fee with respect to each outstanding Base Rate Borrowing Tranche calculated in
accordance with Section 4.4
and (ii) an early termination fee (an “Early Termination Fee”)
equal to the greater of (a) one percent (1.0%) of the Commitment or (b) the
sum of (x) the liquidated Unused Facility Fee equal to one hundred basis
points (0.01) per annum (computed on the basis of a year of 360 days and actual
days elapsed) times the difference between the Commitment (as the same shall
exist as of such date) and the Deemed Minimum Loan Amount, for each Month which
will elapse from the Month in which such termination and/or acceleration occurs
through and including the Scheduled Maturity Date, such liquidated Unused Facility
Fee to be discounted to net present value at a discount rate equal to the
Treasury Rate, together with all accrued Unused Facility Fees payable as of the
date of such termination, and (y) a liquidated Minimum Usage Fee, to be
calculated as the product of an assumed Base 

 

25

 

Rate Borrowing Tranche in
an amount equal to the Deemed Minimum Loan Amount times the sum of (a) the
lowest Net Spread shown on Schedule 3.2 
plus (b) the Servicing Spread, for each Month which will elapse
from the Month in which such termination and/or acceleration occurs through and
including the Scheduled Maturity Date, such liquidated Minimum Usage Fee to be
discounted to net present value at a discount rate equal to the Treasury Rate,
together with all accrued Minimum Usage Fees, if any, payable as of the date of
such termination and/or acceleration.  If
the Revolving Credit Note is not then held in a securitized pool and, in
connection with such early termination of this Agreement pursuant to this Section 2.13,
Borrower elects to refinance all of the Collateral Pool Properties with Freddie
Mac, Freddie Mac may (in its discretion) waive a portion of the Early
Termination Fee in an amount equal to up to one percent (1.0%) of the then outstanding
principal amount of the Loan.

 

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

 

If (i) Borrower or a
Collateral Pool Property experiences a Material Adverse Change or (ii) a
Material Adverse Change occurs with respect to this Agreement or any of the
other Loan Documents taken as a whole, Borrower shall promptly notify Lender of
the same in writing as soon as Borrower has notice thereof.  If Lender shall receive Notice of a Material Adverse
Change in accordance with the preceding sentence, or otherwise becomes aware of
a Material Adverse Change, which Material Adverse Change affects a Collateral
Pool Property, Lender may promptly conduct a Valuation of the affected
Collateral Pool Property pursuant to Section 2.12.  Until such time as such Valuation, if
requested, shall be completed, the Collateral Pool Property which experienced
the Material Adverse Change, or which is owned by a Borrower that experienced a
Material Adverse Change, shall be deemed, for the purposes of determining
whether any new borrowing request satisfies all of the Sublimits set forth in Section 2.5.3,
to have a Market Value and Net Operating Income reasonably determined and
quantified by Lender upon the information then available to Lender.  Lender shall promptly provide Borrower with
written Notice of the results of such Valuation.  If the results of such Valuation disclose
that the Market Value of the affected Collateral Pool Property has decreased,
then the Market Value shall thereafter be deemed to be the amount shown in such
Valuation.  In the event that such
Valuation hereunder shall cause Borrower to be in non-compliance with the
Sublimits set forth in Section 2.5.3,
Borrower shall, within the time periods set forth in (x) and (y) below,
cure the same by bringing the Loan into compliance with the Sublimits by either
(x) within ninety (90) days of the Notice of Borrower’s non-compliance
with the Sublimits, pledging multi-family real property collateral in form,
substance, value and in a manner all acceptable to Lender, in its sole
discretion, in accordance with Section 2.9
or (y) within thirty (30) days of the Notice of Borrower’s non-compliance
with the Sublimits, prepaying so much of the Loan as is necessary to cause
compliance with the Sublimits, each in accordance with the provisions of Section 4.3.  Borrower shall cause Servicer to provide
Notice to Lender, within fifteen (15) days of Servicer’s (or Lender’s) Notice
to Borrower of Borrower’s non-compliance with the Sublimits, of Borrower’s
election to proceed under clause (x) or clause (y) of the preceding
sentence.  Notwithstanding the foregoing,
if Borrower is unable to cause compliance with the Sublimits within fifteen
(15) days following Notice thereof from Servicer (or Lender) of Borrower’s non-compliance
with the Sublimits, then, for so long as Borrower fails to comply with the
Sublimits, the Net Spread applicable to all Base Rate Borrowing Tranches then
outstanding (and thereafter renewed) shall automatically increase to one
hundred basis points (0.01) over the highest Net Spread shown on Schedule 3.2, further adjusted, if
at all, in accordance with Schedule 3.2,
as a 

 

26

 

result of the
duration of such Base Rate Borrowing Tranche(s).  If Lender shall receive Notice of a Material
Adverse Change from Borrower hereunder, or otherwise becomes aware of a
Material Adverse Change which affects Borrower or the enforceability of this
Agreement or the other Loan Documents taken as a whole, Borrower shall immediately
provide any information or documents reasonably requested by Lender, including,
but not limited to, (a) with respect to a Material Adverse Change which
affects Borrower, financial statements and Borrower’s business plan to cure
such Material Adverse Change or (b) with respect to a Material Adverse
Change which affects the enforceability of this Agreement or the other Loan
Documents taken as a whole, replacement documents in form and substance
acceptable to Lender in its discretion, together with a legal opinion regarding
the enforceability of such replacement documents, acceptable to Lender in its
discretion.

 

2.15.                        Release of Collateral Followed by a
Permanent Loan.

 

2.15.1.               Permanent Loan.

 

Borrower may request that Lender cause Servicer to
make a permanent loan (the “Permanent Loan”)
to be secured by one or more Collateral Pool Properties designated by Borrower
(the “Permanent Loan Collateral”) to be
simultaneously released from the Collateral Pool and encumbered in favor of
Servicer as security for Borrower’s obligations under the Permanent Loan, which
request shall be made in accordance with the provisions of Section 2.15.2.  The Permanent Loan shall be made in
accordance with the terms and conditions of the Streamlined Refinancing
Program.  Notwithstanding the foregoing,
under no circumstances may Borrower receive a release of the Security
Instrument with respect to the last property in the Collateral Pool prior to
the Maturity Date, unless Borrower has elected to terminate this Agreement under
Section 2.13
hereunder.  Servicer shall be permitted
to collect from Borrower (and Borrower shall pay to Servicer) a commitment fee
for such Permanent Loan, as reasonably determined by Servicer based on
then-current market commitment fees.

 

2.15.2.               Procedure for
Making a Permanent Loan.

 

Borrower may request that Lender cause Servicer to
make a Permanent Loan to Borrower, which request (i) shall be in writing,
which writing shall specify (a) the Collateral Pool Property(ies) that
will constitute the Permanent Loan Collateral, (b) the original principal
amount of the requested Permanent Loan, which amount shall be greater than or
equal to TEN MILLION and NO/100 Dollars ($10,000,000.00), (c) the related
reduction in the Maximum Facility Available, (d) whether Borrower has
selected Lender’s then current early rate lock delivery option, and (e) any
payment or prepayment of a Borrowing Tranche, and (ii) shall be
accompanied by (a) any fees then due and owing under Lender’s Streamlined
Refinancing Program for each Collateral Pool Property proposed by Borrower to
be subject to the Permanent Loan, and (b) the Underwriting Materials.  Following receipt of all of the items
specified in (i) and (ii) of the previous sentence, Lender shall use
its best efforts to consent to Borrower’s request within sixty (60) days of
such Notice, provided that (1) at the time of such request no Event
of Default or Potential Default exists, (2) the Permanent Loan shall be
made in accordance with the terms and conditions of the Streamlined Refinancing
Program, (3) after giving effect to such release no Event of Default or
Potential Default shall exist and Borrower will be in compliance with all
provisions hereof, including the Sublimits set forth in Section 2.5.3,
further 

 

27

 

provided that if any release occasioned by a
Permanent Loan would otherwise cause Borrower to be in non-compliance with the
Sublimits, Borrower shall have the opportunity to cure the same, prior to or
simultaneously with the release and the consummation of the Permanent Loan
(which shall occur pursuant to the Streamlined Refinancing Program), by either (A) pledging
collateral in form, substance, value and in a manner all acceptable to Lender,
in its sole discretion, or (B) prepaying so much of the Loan as is
necessary to cause compliance with the Sublimits, each in accordance with the
provisions of Section 4.3,
(4) Borrower shall provide evidence to Lender of title insurance in form
and substance acceptable to Lender and in the face amount of the Permanent
Loan, (5) the proposed Borrower under the Permanent Loan shall execute and
deliver such documents as Lender, in its discretion, may request in order to
evidence the making of the Permanent Loan and in order to grant Lender a first
priority Lien on the real and personal property constituting the Permanent Loan
Collateral subject, in each case, to any Permitted Exceptions, and (6) Borrower
shall pay Lender any fees then due and owing under Lender’s Streamlined
Refinancing Program.  Thereafter, Lender
shall use commercially reasonable efforts to consummate the Permanent Loan
within ninety (90) days after its consent to Borrower’s request thereof.  Notwithstanding the foregoing, if Borrower is
unable to cause compliance with the Sublimits within fifteen (15) days
following Notice thereof from Servicer (or Lender) of Borrower’s non-compliance
with the Sublimits, then, for so long as Borrower fails to comply with the
Sublimits, the Net Spread applicable to all Base Rate Borrowing Tranches then
outstanding (and thereafter renewed) shall automatically increase to one
hundred basis points (0.01) over the highest Net Spread shown on Schedule 3.2, further adjusted, if
at all, in accordance with Schedule 3.2,
as a result of the duration of such Base Rate Borrowing Tranche(s).  Notwithstanding the foregoing, in the event
that Borrower selects Lender’s then current early rate lock delivery option,
Lender shall use its best efforts, subject to Borrower’s timely compliance with
Lender’s requests, to lock the interest rate for the requested Permanent Loan
within fifteen (15) Business Days of Borrower’s Notice hereunder.  Any Permanent Loan granted pursuant to the
foregoing provisions shall not reduce the Commitment hereunder.  Simultaneous with the closing of the
Permanent Loan, Lender shall release the Lien granted hereunder on the
Permanent Loan Collateral. 
Notwithstanding the foregoing, at any time prior to the release and
consummation of the Permanent Loan, Borrower may by written Notice revoke its
request for a release and a Permanent Loan pursuant to this Section 2.15; provided,
however, that Borrower shall reimburse Lender and Servicer respectively,
for Lender’s and Servicer’s  costs and
expenses, including breakage costs and reasonable attorneys’ fees and any other
fees due under this Agreement, that Lender or Servicer incur in connection with
such proposed release and Permanent Loan financing prior to Borrower’s
revocation.

 

2.16.                        Loan Documents.

 

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

 

28

 

3.                                       INTEREST RATES

 

3.1.                              Interest Rate.

 

The interest rate on each Borrowing Tranche evidenced
by the Revolving Credit Note shall be the Base Rate or, if required pursuant to
Sections 3.3.2 or 3.4 hereof, the Prime Rate.  Interest rates under this Agreement and the
Revolving Credit Note shall be computed on the basis of a year of three hundred
sixty (360) days and actual days elapsed.

 

3.2.                              Interest Rate
Determinations.

 

3.2.1.                     Prime Rate and
Base Rate Determination.

 

(a)                                  The initial Prime Rate applicable to any
Prime Rate Borrowing Tranche required under Sections
3.3.2 or 3.4 shall
equal the Prime Rate as of the Borrowing Date or Renewal Date, as
applicable.  The Prime Rate shall
thereafter fluctuate in accordance with any changes to the Prime Rate as published
from time to time during the term of the Prime Rate Borrowing Tranche.

 

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

 

3.2.2.                     Prime Rate, Base
Rate and Margin Quotations.

 

Borrower may call Servicer on or before the date on
which a Loan Request is to be delivered or prior to the end of an Interest
Period, to receive both a calculation of the resulting Facility Debt Service
Coverage Ratio for a proposed Prime Rate (if required pursuant to Sections 3.3.2 or 3.4) or Base Rate Borrowing Tranche
and an indication of the rates then in effect, including the Margin, but both
parties acknowledge that such projection shall not be binding on Lender or
Borrower, nor shall such projection affect the rate of interest which
thereafter is actually in effect when the election is made.

 

3.3.                              Interest Periods.

 

Upon each Loan Request for a new Base Rate Borrowing
Tranche, and upon each Renewal Request applicable to a Base Rate Borrowing
Tranche, Borrower shall notify Lender of 

 

29

 

the period (the “Interest
Period”) which may only be a one-month (having original durations to maturity
of approximately thirty (30) days) or three-month (having original durations to
maturity of approximately ninety (90) days)  for which
the LIBO Rate shall be determined.

 

3.3.1.                     Interest Period to End on a Business Day.

 

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

 

3.3.2.                     No Interest
Periods Beyond the Expiration Date.

 

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

 

3.3.3.                     Renewals.

 

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

 

30

 

duration of such Base
Rate Borrowing Tranche(s).  In the event
that the Facility Debt Service Coverage Ratio shall continue to be less than
required pursuant to Section 2.5.3.2
or the Loan to Value Ratio shall exceed the ratio permitted in accordance with Section 2.5.3.1 for a period
of ninety (90) consecutive days from the date of Borrower’s receipt of Notice
of such non-compliance, the same shall constitute an Event of Default.

 

3.3.4.                     Interest After
Default.

 

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

 

3.3.5.                     Late Charge.

 

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

 

31

 

3.4.                              Illegality;
Increased Costs.

 

3.4.1.                     Reserved.

 

3.4.2.                     Illegality; Increased
Costs.

 

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

 

3.4.3.                     Lender’s Rights.

 

In the case of the events specified in Section 3.4.2
above, Lender shall promptly notify Borrower thereof.  Upon the date as shall be specified in such
Notice, the obligation of Lender to make advances under any Borrowing Tranche(s) at
the Base Rate shall be suspended until Lender shall have later notified
Borrower of Lender’s reasonable determination that the circumstances set forth
in Section 3.4.2
no longer exist.  If at any time Lender
notifies Borrower that it has made a determination under Section 3.4.2,
then with respect to any Loan Request previously submitted but not yet funded,
and with respect to any Borrowing Tranche on which an Interest Period shall
thereafter expire, each such new or renewal Borrowing Tranche(s) shall
thereafter bear interest at the Prime Rate, in each case subject to Section 3.3.2 hereof.

 

4.                                       PAYMENTS

 

4.1.                              Payments.

 

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

 

32

 

4.2.                              Payment Dates.

 

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

 

4.3.                              Prepayments.

 

4.3.1.                     Voluntary
Prepayments.

 

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

 

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

 

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

 

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

 

33

 

12:00 Noon Eastern Time,
Lender shall not be obligated to prepare and deliver such statement of interest
until the Business Day following Lender’s receipt of such Notice.

 

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

 

4.3.2.1.                               If at the time of the release of a
portion of the Collateral pursuant to Section 2.10,
Borrower shall be in violation of any of the Sublimits set forth in Section 2.5.3,
Borrower may cure such violation prior to or simultaneously with such release
by either (i) pledging multi-family real property collateral in form,
substance, value and in a manner all acceptable to Lender, in its sole
discretion, in accordance with Section 2.9
or (ii) prepaying that portion of the Loan outstanding as is necessary to
cause compliance with such Sublimit without any Prepayment Fee or similar fee
or penalty.  Notwithstanding the
foregoing, if Borrower is unable to cause compliance with the Sublimits within
fifteen (15) days following Notice thereof from Servicer (or Lender) of
Borrower’s non-compliance with the Sublimits, then, for so long as Borrower
fails to comply with the Sublimits, the Net Spread applicable to all Base Rate
Borrowing Tranches then outstanding (and thereafter renewed) shall
automatically increase to one hundred basis points (0.01) over the highest Net
Spread shown on Schedule 3.2,
further adjusted, if at all, in accordance with Schedule
3.2, as a result of the duration of such Base Rate Borrowing
Tranche(s).  Lender shall deliver to
Borrower as soon as practicable, but in any event within two (2) Business Days
prior to such release, a statement of the principal and interest due with
respect to any required prepayment.

 

4.3.2.2.                               If at the time of a Valuation pursuant to
Section 2.12 or at any other
time, Borrower shall be in violation of any of the Sublimits set forth in Section 2.5.3, Borrower shall
cure such violation, within the time periods set forth in (a) and (b), by
either (a) within ninety (90) days of Notice, pledging multi-family
collateral in form, substance, value and in a manner all acceptable to Lender
in its sole discretion, in accordance with Section 2.9
or (b) within thirty (30)  days of
Notice, prepaying that portion of the Loan outstanding as is necessary to cause
compliance with such Sublimit, together with any Prepayment Fee or similar fee
or penalty.  Borrower shall cause
Servicer to provide Notice to Lender, within fifteen (15) days of Servicer’s
(or Lender’s) Notice to Borrower of Borrower’s non-compliance with the
Sublimits, of Borrower’s election to proceed under clause (a) or clause (b) of
the preceding sentence.  If at the time
of a Material Adverse Change pursuant to Section 2.14,
Borrower shall cure such violation within the time periods set forth in (i), (ii) and
(iii), by either (i) within ninety (90) days of Notice, pledging
multi-family collateral in form, substance, value and in a manner all
acceptable to Lender in its sole discretion, in accordance with Section 2.9, (ii) within
thirty (30) days of Notice, prepaying that portion of the Loan outstanding as
is necessary to cause compliance with such Sublimit or (iii) provided
that Borrower is not in violation of a Sublimit, within ninety (90) days of
Notice, releasing one or more Collateral Pool Properties, together with any
Prepayment Fee or similar fee or penalty. 
Borrower shall cause Servicer to provide Notice to Lender, within
fifteen (15) days of Servicer’s (or Lender’s) Notice to Borrower of a Material
Adverse Change, of Borrower’s election to proceed under clause (i), clause (ii) or
clause (iii) of the preceding sentence. 
Lender shall deliver to Borrower within two (2) Business Days
following the notice of Valuation, Material Adverse Change or other event, as
the case may be, a statement of the principal and interest due with respect to
any required prepayment.  Notwithstanding
the foregoing, if Borrower is unable to cause compliance with the Sublimits 

 

34

 

within fifteen (15) days
following Notice thereof from Servicer (or Lender) of Borrower’s non-compliance
with the Sublimits, then, for so long as Borrower fails to comply with the
Sublimits, the Net Spread applicable to all Base Rate Borrowing Tranches then
outstanding (and thereafter renewed) shall automatically increase to one
hundred basis points (0.01) over the highest Net Spread shown on Schedule 3.2, further adjusted, if
at all, in accordance with Schedule 3.2,
as a result of the duration of such Base Rate Borrowing Tranche(s).

 

4.3.2.3.                               In the event of a casualty or
condemnation affecting any of the Collateral Pool Properties, any award and/or
proceeds payable with respect to such casualty or condemnation and applied to
Borrower’s Obligations in accordance with the provisions of the applicable
Security Instrument shall be applied without any Prepayment Fee or other
penalty, and this Agreement, and the parties’ obligations under the Loan
Documents, shall be terminated, at Borrower’s election in accordance with Section 2.13.

 

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

 

4.4.                              Prepayment Fee.

 

Unless Borrower for any reason (i) repays a
Borrowing Tranche permitted hereunder accruing interest at the Prime Rate or (ii) repays
all or a part of a Base Rate Borrowing Tranche upon the expiration of such Base
Rate Borrowing Tranche’s Interest Period, any prepayment under Section 4.3
shall be accompanied by a prepayment fee (the “Prepayment
Fee”).  The Prepayment Fee for
any Base Rate Borrowing Tranche shall be an amount equal to the interest,
applicable to the particular Borrowing Tranche being prepaid, which would have
otherwise accrued over the remainder of the applicable Interest Period.  The Prepayment Fee shall not constitute the
payment of interest and therefore shall not be included in the calculation of
Facility Debt Service Coverage Ratio or the determination of Borrower’s
compliance with the Sublimits set forth in Section 2.5.3.  In addition, upon Lender’s exercise of any
right of acceleration under this Agreement, the Revolving Credit Note, or any
other Loan Document following an Event of Default, Borrower shall pay to Lender
the Prepayment Fee on all Base Rate Borrowing Tranches at the time of
acceleration in addition to all interest accrued thereon, and all other sums
and fees payable to Lender hereunder.

 

4.5.                              Additional
Payment Obligations.

 

Notwithstanding anything to the contrary set forth
herein, if Lender shall determine that the Facility Debt Service Coverage Ratio
is less than required pursuant to Section 2.5.3.2
or that the Loan to Value Ratio exceeds the ratio permitted in accordance with Section 2.5.3.1, and such
noncompliance shall remain uncured for fifteen (15) days following Notice
thereof from Servicer (or Lender), then, for so long as Borrower fails to
comply with the Sublimits, the Net Spread applicable to all Base Rate Borrowing
Tranches then outstanding (and thereafter renewed) shall automatically increase
to one hundred basis points (0.01) over the highest Net Spread shown on Schedule 3.2, further adjusted, if
at all, in accordance with Schedule 3.2,
as a result of the 

 

35

 

duration of such Base
Rate Borrowing Tranche(s).  In the event
that the Facility Debt Service Coverage Ratio shall continue to be less than
required pursuant to Section 2.5.3.2
or the Loan to Value Ratio shall exceed the ratio permitted in accordance with Section 2.5.3.1 for a period
of ninety (90) consecutive days, the same shall constitute an Event of Default.

 

4.6.                              Additional
Compensation in Certain Circumstances.

 

4.6.1.                     Increased Costs
Resulting from Taxes, Etc.

 

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

 

4.6.1.1.                               subjects Lender to any tax or changes the
basis of taxation with respect to this Agreement, the Revolving Credit Note,
the Loan or payments by Borrower of any principal, interest, fees, or other
amounts due from Borrower hereunder or under the Revolving Credit Note (except
for taxes on the overall net income of Lender and any franchise, income,
corporate, personal property, capital levy, capital stock, gross receipts,
excess profits, transfer, revenue, or succession tax imposed on Lender);

 

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

 

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

 

4.6.2.                     Termination.

 

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

 

4.6.3.                     Indemnity.

 

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

 

36

 

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

 

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

 

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

 

5.                                       CONDITIONS OF LENDING

 

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

 

5.1.                              Initial Borrowing Tranche.

 

On the Closing Date:

 

5.1.1.                     Delivery of Loan
Documents.

 

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

 

5.1.2.                     Validity of
Representations.

 

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

 

37

 

5.1.3.                     Officer’s
Certificate.

 

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

 

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

 

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

 

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

 

5.1.3.4.                               the matters described in Section 5.1.8.

 

5.1.4.                     Opinion of
Counsel.

 

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

 

5.1.5.                     Legal Details.

 

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

 

5.1.6.                     Payment of Fees.

 

Borrower shall have paid or caused to be paid to
Lender and Freddie Mac to the extent not previously paid all fees accrued through
the Closing Date and all of Lender’s and Freddie Mac’s costs and expenses,
including, but not limited to, attorneys’ fees, title insurance premiums,
surveys, appraisals, all costs incurred in obtaining environmental, engineering
and credit reports, 

 

38

 

all third party due
diligence costs and other costs and expenses incurred by either Lender or
Freddie Mac in connection with the closing of this Loan.

 

5.1.7.                     Consents.

 

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

 

5.1.8.                     No Material
Adverse Change.

 

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

 

5.1.9.                     No Violation of
Laws.

 

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

 

5.1.10.               No Actions or
Proceedings.

 

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

 

5.1.11.               Collateral
Initially Included in Collateral Pool.

 

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

 

5.1.12.               Other Conditions.

 

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

 

5.2.                              Each Subsequent
Borrowing Tranche.

 

At the time of funding of any Base Rate Borrowing
Tranche (excluding renewals, conversions and continuances of any outstanding
Base Rate Borrowing Tranche(s) which do not increase the outstanding
principal amount of the Loan made hereunder) other than the funds advanced on
the Closing Date, and after giving effect to the proposed extensions of credit:
(i) the representations and warranties of Borrower contained in Section 6
and in the other Loan Documents shall be true and correct in all material
respects on and as of the date of the funding 

 

39

 

of any such Base Rate
Borrowing Tranche with the same effect as though such representations and
warranties had been made on and as of the date of the funding of any such Base
Rate Borrowing Tranche (except representations and warranties that expressly
relate solely to an earlier date or time, which representations and warranties
shall be true and correct in all material respects on and as of the specific
dates or times referred to therein and except such changes as would not
constitute a Material Adverse Change) and Borrower shall have performed and
complied with all covenants and conditions hereof; (ii) no Event of
Default or, to Borrower’s knowledge, Potential Default shall have occurred and
be continuing or shall exist; (iii) the funding of any Borrowing Tranche
shall not contravene any Law applicable to Borrower, its Affiliates or Lender; (iv) Borrower
shall have delivered to Lender a duly executed and completed Loan Request or
Renewal Request, as the case may be; and (v) Borrower shall have paid all
fees and expenses incurred by Lender or Servicer in connection therewith.

 

6.                                       REPRESENTATIONS AND WARRANTIES

 

6.1.                              Representations
and Warranties.

 

Borrower represents and warrants to Lender, as of the
date hereof and at all times throughout the term of this Agreement, as follows:

 

6.1.1.                     Organization and
Qualification.

 

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

 

6.1.2.                     Single Asset
Entity.

 

Each Borrower (other than BHOP) and Proposed Borrower
is a Single Asset Entity, and each Borrower (other than BHOP) and Proposed Borrower
agrees to limit its operations to owning, maintaining and operating only the
Collateral Pool Properties.

 

6.1.3.                     Power and
Authority.

 

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

 

6.1.4.                     Validity and
Binding Effect.

 

This Agreement has been duly and validly executed and
delivered by Borrower and each other Loan Document which Borrower is required
to execute and deliver on or after the date 

 

40

 

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

 

6.1.5.                     No Conflict.

 

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

 

6.1.6.                     Litigation.

 

There are no actions, suits, proceedings or
investigations pending, or to Borrower’s knowledge threatened, against Borrower
or its Affiliates at law or equity before any Official Body which individually
or in the aggregate may result in any Material Adverse Change, subject to
Lender’s and Borrower’s rights under Section 2.14.  Neither Borrower nor its Affiliates are in
violation of any order, writ, injunction or decree of any Official Body which
may result in any Material Adverse Change, subject to Lender’s and Borrower’s
rights under Section 2.14.

 

6.1.7.                     Title to
Collateral Pool Properties.

 

Borrower (other than BHOP solely to the extent of the
Collateral Pool Properties) has good and marketable (or, solely in the case of
Collateral Pool Properties located in Texas, indefeasible) title to all
Collateral Pool Properties and to all other assets which it purports to own or
which are reflected as owned on its books and records (except for those assets
(not including Collateral Pool Properties) that a Borrower has disposed of
since the date of such books and records, either in the ordinary course of
business or because they were no longer used or useful in the conduct of such
Borrower’s business, provided that any such disposed assets have been
replaced by items of comparable value to the extent necessary for such Borrower
to operate its property in a manner comparable to that which prevailed prior to
such disposition), free and clear of all Liens and encumbrances except the
Permitted Exceptions.  The Permitted Exceptions
do 

 

41

 

not and will not
materially and adversely affect (i) the ability of Borrower to pay in full
all sums due under the Revolving Credit Note or any of its other Obligations in
a timely manner, (ii) the use of any Collateral Pool Property for the use
currently being made thereof, (iii) the operation of any Collateral Pool
Property as currently being operated, or (iv) the value of any Collateral
Pool Property.

 

6.1.8.                     Use of Proceeds.

 

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

 

6.1.9.                     Full Disclosure.

 

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

 

6.1.10.               Taxes.

 

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

 

6.1.11.               Consents and
Approvals.

 

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

 

42

 

6.1.12.               No Event of
Default.

 

No event has occurred and is continuing and no
condition exists or will exist after giving effect to the borrowings or other
extensions of credit to be made on the Closing Date or thereafter under or
pursuant to the Loan Documents, which constitutes an Event of Default.  No event has occurred and is continuing and
no condition exists or will exist after giving effect to the borrowings or
other extensions of credit to be made on the Closing Date or thereafter under
or pursuant to the Loan Documents, which constitutes a Potential Default unless
Borrower is curing the same pursuant to any applicable cure periods expressly
provided for herein.

 

6.1.13.               Security
Interests.

 

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

 

6.1.14.               Mortgage Liens.

 

Upon filing in the appropriate real property records
in the county in which the Collateral Pool Properties are located, the Liens in
real property and fixtures granted to and for the benefit of Lender pursuant to
the Collateral Pool Property Documents constitute a valid first priority Lien
under applicable Law, subject to any Permitted Exceptions.  All such action as will be necessary in
Lender’s sole opinion to establish such Lien of Lender and its priority as
described in the preceding sentence will be taken at or prior to the time
required for such purpose as directed by Lender, and there will be as of the
date of execution, delivery and filing of the Collateral Pool Property
Documents no necessity for any further action in order to protect, preserve and
continue such Lien and such priority (except for the timely filing in the
required 

 

43

 

offices of Uniform
Commercial Code financing statement continuations).  All filing fees and other expenses in
connection with each such action have been or will be paid by Borrower.

 

6.1.15.               Insurance.

 

All insurance policies and other bonds to which
Borrower and any Affiliates providing insurance coverage for a Borrower or a
Collateral Pool Property, whether through a blanket policy or otherwise, are a
party are valid and in full force and effect. 
No notice has been given, no claim has been made, and no grounds exist,
to cancel or avoid any of such policies or bonds or to reduce the coverage
provided thereby.  Such policies and
bonds provide adequate coverage from reputable and financially sound insurers
in amounts sufficient to insure the assets and risks of Borrower and the
Collateral Pool Properties in accordance with prudent business practice in the
industry of Borrower.

 

6.1.16.               Material
Contracts; Burdensome Restrictions.

 

All material contracts, indentures, agreements and
instruments relating to the Collateral Pool Properties, to which the Borrower
and/or its Affiliates are a party (whether by execution thereby, by assignment
or otherwise), taken as a whole, are valid, binding and enforceable upon
Borrower and such Affiliates, as applicable, and, to Borrower’s knowledge, each
of the other parties thereto in accordance with their respective terms (except
to the extent that enforceability of any such contracts may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar Laws
affecting the enforceability of creditors’ rights generally or limiting the
right of specific performance and except as disclosed in writing by Borrower to
Lender prior to the date hereof or prior to the date any applicable real
property is added to the Collateral Pool). 
There is no default under any such contracts, indentures, agreements and
instruments by Borrower (or its Affiliates), or to Borrower’s knowledge by any
of the other parties thereto, except for defaults which would not result in a
Material Adverse Change.  Neither
Borrower nor any of its Affiliates is bound by any contractual obligation, or
subject to any restriction in any organizational document, or any requirement
of Law, which is reasonably expected to result in a Material Adverse Change.

 

6.1.17.               Investment
Companies; Regulated Entities.

 

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

 

6.1.18.               Pension Plans
and Benefit Arrangements.

 

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

 

6.1.18.1.                         Borrower and each other member of the
ERISA Group are in compliance in all material respects with any applicable
provisions of ERISA with respect to all Benefit Arrangements, Pension Plans and
Multiemployer Plans.  There has been no
Prohibited 

 

44

 

Transaction with respect
to any Benefit Arrangement or any Pension Plan or, with respect to any
Multiemployer Plan, which could result in any material liability of Borrower or
any other member of the ERISA Group. 
Borrower and all members of the ERISA Group have made when due any and
all payments required to be made under any agreement relating to a
Multiemployer Plan or any Law pertaining thereto.  With respect to each Pension Plan and
Multiemployer Plan, Borrower and each member of the ERISA Group (i) have
fulfilled in all material respects their obligations under the minimum funding
standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have
not had asserted against them any penalty for failure to fulfill the minimum
funding requirements of ERISA.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.1.19.               Other
Indebtedness.

 

Other than the Loan, each Single Asset Entity Borrower
(other than BHOP) has not incurred any debt other than (i) unsecured trade
debt incurred in the ordinary course of business, (ii) subordinate
intercompany debt and (iii) debt otherwise permitted under Section 7.1.11.

 

45

 

6.1.20.               Solvency.

 

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

 

6.1.21.               Representations
and Warranties in the Loan Documents.

 

All representations and warranties made by Borrower
(or BHMR) in any Loan Document, or certificates delivered in connection
therewith, are true, accurate and correct.

 

6.1.22.               No Bankruptcy
Filing.

 

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

 

6.1.23.               Formation.

 

BHOP was formed in the State of Delaware.

 

6.1.24.               Compliance.

 

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

 

6.1.25.               Not a Foreign
Person.

 

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

 

6.1.26.               Labor Matters.

 

Borrower is not a party to any collective bargaining
agreements.

 

46

 

6.1.27.               Condemnation.

 

Other than those takings, condemnations or eminent
domain proceedings that Borrower has given written Notice of to Lender, no
taking, condemnation or eminent domain proceeding has been commenced or, to
Borrower’s knowledge, is contemplated with respect to all or any portion of any
Collateral Pool Property or for the relocation of roadways providing access to
any Collateral Pool Property.

 

6.1.28.               Utilities and
Public Access.

 

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

 

6.1.29.               No Joint
Assessment; Separate Lots.

 

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

 

6.1.30.               Assessments.

 

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

 

6.1.31.               No Liabilities.

 

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

 

47

 

6.1.32.               No Prior
Assignment.

 

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

 

6.1.33.               Certificate of
Occupancy.

 

Borrower has obtained (in its own name or is the
express successor or assignee of) all permits necessary to use and operate the
Collateral Pool Properties for the uses described in Section 2.8,
and all such permits are in full force and effect.  The use being made of each Collateral Pool
Property is in conformity in all material respects with the certificate of
occupancy (or similar certificate applicable to the local jurisdiction of the
Collateral Pool Property, if any) in order to allow Borrower to operate the
Collateral Pool Property in a manner comparable to the manner under which it
was originally underwritten and/or permits for such Collateral Pool Property
and any other restrictions, covenants or conditions affecting such Collateral
Pool Property, including without limitation, the applicable zoning and land use
ordinances, except as otherwise disclosed in writing to Lender prior to the
Closing Date or the date the applicable real property was added to the
Collateral Pool.  Each Collateral Pool
Property contains all equipment necessary to use and operate such Collateral
Pool Property in manner comparable to the manner in which the Collateral Pool
Property was being operated at the time of Lender’s pre-closing
inspection.  Borrower will continue to
operate each Collateral Pool Property in the manner in which it is presently
being operated in all material respects.

 

6.1.34.               Intellectual
Property.

 

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

 

6.1.35.               Conduct of Business.

 

Except as disclosed in writing to Lender, Borrower
does not conduct its business “also known as”, “doing business as” or under any
other name.

 

6.1.36.               Title Insurance.

 

Each Collateral Pool Property is, or will be at the
time such Collateral Pool Property is included in the Collateral, covered by a
title insurance policy (or an irrevocable commitment by a title insurance
company to insure the same) acceptable to Lender, provided that Lender
acknowledges that the title insurance policies to be delivered to the Lender
pursuant to the title commitments delivered and approved by Lender prior to the
Closing Date or the addition of any real property to the Collateral Pool are
acceptable to Lender.

 

48

 

6.1.37.               No Default.

 

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

 

6.1.38.               Condition of the
Collateral Pool Properties.

 

To the extent that any Collateral Pool Property has been
damaged by fire, water, wind, earthquake or other cause of loss prior to the
Closing Date, or prior to the inclusion of the real property to the Collateral
Pool, as the case may be, such Collateral Pool Property has been fully restored
as of the such Closing Date, or date of such inclusion.

 

6.1.39.               Non-Residential
Leases.

 

Each Collateral Pool Property is a multi-family
housing project.  Gross income derived
from commercial space, if any, located in any Collateral Pool Property shall
not exceed twenty-five percent (25%) of the total gross income of such
Collateral Pool Property except as otherwise approved in writing by Lender (in
its sole discretion).  Except as approved
by Lender in writing prior to the Closing Date or, in connection with adding
Collateral Pool Properties to the Collateral in accordance with Section 2.9 hereof, the date
such Collateral Pool Property is added to the Collateral, neither Borrower, nor
any general partner, managing member or principal thereof, is an Affiliate or
otherwise related to the lessee under any leases for laundry equipment,
telecommunications, television or similar systems on or about any of the
Collateral Pool Properties.  For the
purposes of this Section, leases of parking to tenants shall not be deemed to
be derived from commercial space.

 

6.1.40.               No Low Income
Housing Tax Credit.

 

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

 

6.1.41.               No Restrictions.

 

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

 

49

 

6.1.42.               No Adverse
Affect on the Loan.

 

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

 

6.1.43.               Term of Leases.

 

Except as otherwise permitted under the applicable
Security Instrument, all Leases for residential dwelling units with respect to
the Collateral Pool Properties shall be on forms approved by Lender, shall be
for initial terms of at least one (1) month and not more than two (2) years,
and shall not include options to purchase.

 

6.1.44.               Authorized
Officer/Authorized Representative.

 

The officers and employees of Borrower who are now (or
in the future become) Authorized Officers of Borrower (i) are duly
appointed officers of the Borrower, and (ii) are familiar with the
organization and operations of Borrower and with the operations of the
Collateral Pool Properties which are the subject of any certification or Notice
delivered by such Authorized Officer.

 

The officers and employees of Borrower who are now (or
in the future become) Authorized Representatives of Borrower are familiar with
the organization and operations of Borrower and with the operations of the
Collateral Pool Properties which are the subject of any certification or Notice
delivered by such Authorized Representative.

 

6.1.45.               Fraudulent
Conveyances.

 

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

 

6.1.46.               Affiliate
Transactions.

 

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

 

6.1.47.               No Existing Material Adverse
Circumstances.

 

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

 

50

 

6.1.48.               Collateral Pool Properties.

 

Each Collateral Pool Property is fully constructed and
has received all final certificates of occupancy.

 

6.2.                              Updates.

 

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

 

6.3.                              Survival of
Representations and Warranties.

 

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

 

7.                                       COVENANTS

 

7.1.                              Covenants.

 

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

 

7.1.1.                     Preservation of
Existence.

 

Borrower shall, and shall cause each of its Affiliates
to, maintain its legal existence as a corporation, general or limited
partnership or limited liability company and its license or qualification and
good standing in each jurisdiction in which its ownership or lease of property
or the nature of its business makes such license or qualification necessary
unless the failure to 

 

51

 

maintain the same shall
not result in a Material Adverse Change to Borrower or any Collateral Pool
Property.

 

7.1.2.                     Maintenance of
Collateral Pool Properties and Leases.

 

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

 

7.1.3.                     Collateral
Agreements.

 

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

 

7.1.4.                     Inspection
Rights.

 

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

 

7.1.5.                     Single Asset
Borrower.

 

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

 

52

 

sentence, BHOP shall not
directly own or acquire any fee and/or leasehold interests in real property,
but such limitation shall not restrict BHOP’s ability to indirectly own or
acquire any such interests or any other assets through one or more
subsidiaries.

 

7.1.6.                     Use of Proceeds.

 

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

 

7.1.7.                     Further
Assurances.

 

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

 

7.1.8.                     Collateral Pool
Properties.

 

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

 

7.1.8.2.                               Borrower shall own at all times the
entire fee simple interest or insurable ground lease interest in each
Collateral Pool Property.

 

7.1.9.                     Subsequent
Periodic Valuations.

 

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

 

7.1.10.               Special ERISA
Related Covenants.

 

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

 

53

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

54

 

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

 

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

 

7.1.11.               Indebtedness.

 

Borrower (other than BHOP) shall not, at any time
create, incur, assume or suffer to exist any indebtedness, except:

 

7.1.11.1.                         Indebtedness under the Loan Documents;

 

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

 

7.1.11.3.                         Indebtedness included as Permitted
Exceptions.

 

7.1.12.               Liens.

 

Borrower (other than BHOP solely to the extent of
properties or assets that are not part of the Collateral hereunder or under any
of the other Loan Documents) shall not, at any time create, incur, assume or
suffer to exist any Lien on any of its property or assets, tangible or
intangible, now owned or hereafter acquired, or agree or become liable to do
so, except the Permitted Exceptions. 
Upon Lender’s reasonable request, which request shall not be made more
frequently than annually unless Lender has a reasonable suspicion of a title
defect, Borrower shall promptly perform or cause to be performed, at Borrower’s
sole cost and expense, a title search satisfactory to Lender, demonstrating
compliance with the provisions of this Section 7.1.12.

 

7.1.13.               Liquidations,
Mergers, Consolidations, Acquisitions.

 

Borrower shall not dissolve, liquidate or wind-up its
affairs.  Borrower may not become a party
to any merger or consolidation unless Borrower is either directly or indirectly
the surviving entity or except as otherwise permitted in the Security
Instrument.

 

7.1.14.               Dispositions of
Assets or Affiliates.

 

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

 

7.1.15.               Affiliate
Transactions.

 

Except as approved in writing by Lender, Borrower
shall not enter into or become a party to any contract, lease or other
agreement with any Person directly or indirectly controlling, controlled by, or
under common control with Borrower for the provision of any service, 

 

55

 

materials or supplies to
any Collateral Pool Property (including any contract, lease or agreement for
the provision of property management services, cable television services or
equipment, gas, electric or other utilities, security services or equipment,
laundry services or equipment, or telephone services or equipment).

 

7.1.16.               Continuation of
or Change in Business.

 

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

 

7.1.17.               Changes in Organizational
Documents; Name.

 

Except as otherwise permitted by the Security
Instrument, Borrower and its general partners, managing members, or principals
shall not amend in any respect their respective certificate of incorporation
(including any provisions or resolutions relating to capital stock), by-laws,
certificate of formation, limited liability company agreement, certificate of
limited partnership, or limited partnership agreement (as applicable) or other
formation agreement or other organizational documents without first sending
Notice to Lender (provided, that to the extent such
amendment would not likely result in a Material Adverse Change, the failure to
provide such Notice shall not result in an Event of Default hereunder unless
Borrower receives Notice of such failure and fails to cure the same within five
(5) Business Days of such Notice) and, if such amendment will likely
result in a Material Adverse Change, without obtaining the prior written
consent of Lender, which shall be granted or denied within thirty (30)  Business Days of Lender’s receipt
of the proposed amendment, a brief explanation of its purpose and effect, and
such other documents as Lender may reasonably request.  Borrower shall not amend, revise or otherwise
change its name in any respect without the prior written consent of Lender
unless such name change is as a result of a transfer permitted under the
Security Instrument or otherwise permitted by the terms of the Security
Instrument, in which case Borrower shall provide Lender with notice of such
name change as soon as practicable (but in no event later than five (5) Business
Days) following such name change.

 

7.1.18.               Properties Under
Development.

 

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

 

7.1.19.               Further
Documentation.

 

In the event any further documentation or information
is required by Lender to enable Lender to sell the Loan, Borrower shall
provide, or cause to be provided to Lender, at Borrower’s sole cost and
expense, such documentation or information. 
Borrower shall execute and deliver to Lender such documentation,
including, but not limited to, any amendments, corrections, deletions or
additions to this Agreement, the Revolving Credit Note, and the other Loan
Documents as is required by Lender; provided that Borrower shall not be
required to do anything that has the effect of (i) changing the material
economic or other business terms of this Agreement, the Revolving Credit Note,
or any other Loan Documents or (ii) imposing on 

 

56

 

Borrower greater liability
or obligation than that set forth in this Agreement, the Revolving Credit Note
or any other Loan Documents.

 

7.1.20.               Compliance with
Lender Requirements.

 

Borrower shall comply with the requirements of Lender
in order to enable Lender to sell or securitize the Loan, provided that
neither Borrower nor any guarantor shall be required to do anything that has
the effect of (i) changing the material economic or other business terms
of this Agreement, the Revolving Credit Note, or any other Loan Documents or (ii) imposing
on Borrower or any guarantor greater liability or obligation than that set
forth in this Agreement, the Revolving Credit Note or any other Loan Documents.

 

7.1.21.               Subordination of
Leases.

 

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

 

7.1.22.               Enforceability
of Loan Documents.

 

In the event that any of the Loan Documents shall
cease to be legal, valid and binding agreements enforceable against the party
executing the same or such party’s successors and assigns (as permitted under
the Loan Documents) in accordance with the respective terms thereof, resulting
in the failure to provide the practical benefit of the respective Liens,
security interests, rights, titles, interests, remedies, powers or privileges
intended to be created thereby (except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
Laws affecting the enforceability of creditors’ rights generally or limiting
the right to specific performance) or shall in any way be terminated (except in
accordance with its terms) or become or be declared ineffective or inoperative
or shall in any way be challenged or contested, resulting in the failure to
provide the practical benefit of the respective Liens, security interests,
rights, titles, interests, remedies, powers or privileges intended to be
created thereby, Borrower shall use best efforts to cure any such defect(s) in
such Loan Document(s), provided that if Borrower is unable to cure any
such defect(s) within a reasonable time period, not to exceed thirty (30)
days, or if the cure involves the substitution or addition of a new Collateral
Pool Property, not to exceed ninety (90) days, Lender may in its discretion,
upon ten (10) days Notice to Borrower, accelerate Borrower’s obligations
under the Revolving Credit Note.

 

7.1.23.               ERISA Matters.

 

The provisions set forth in this Section 7.1.23,
shall only apply to the extent Borrower is at any time and from time to time
subject to the provisions of ERISA.  In
the event that any of the following occurs: 
(i) any Reportable Event, which Lender determines in good faith
constitutes grounds for the termination of any Pension Plan by the PBGC or the
appointment of a trustee to administer or liquidate any Pension Plan, shall
have occurred and be continuing; (ii) proceedings shall have been
instituted or other action taken to terminate any Pension Plan, or a 

 

57

 

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

 

7.1.24.               Covenants in the Loan Documents.

 

Borrower shall comply with all of the terms,
conditions and covenants set forth in the Loan Documents.

 

7.2.                              Reporting
Requirements.

 

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

 

7.2.1.                     Notice of
Default.

 

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

 

7.2.2.                     Notice of
Litigation.

 

Promptly after the commencement thereof, Notice of all
actions, suits, proceedings or investigations before or by any Official Body or
any other Person which (a) relate to the Collateral, or (b) involve a
claim or series of claims in excess of TWO HUNDRED FIFTY THOUSAND and NO/100
Dollars ($250,000.00) which is not covered by Borrower’s insurance policies and
which if adversely determined would constitute a Material Adverse Change; and

 

58

 

7.2.3.                     Notice of
Material Adverse Change.

 

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

 

7.3.                              Escrows.

 

Borrower shall be responsible for the payment of real
estate taxes on the Collateral Pool Properties and fire, hazard and other
insurance premiums (collectively, the “Impositions”).  Collection of monthly escrow deposits for the
payment of Impositions relating to real estate taxes will be required.  Collection of monthly escrow deposits for the
payment of Impositions relating to fire, hazard and other insurance premiums
will be deferred; provided, that collections of
insurance premiums may subsequently be initiated as set forth in the Loan
Documents. Collection of monthly escrow deposits for required replacements will
be required under the Replacement Reserve Agreement (provided,
that Lender may, in its sole discretion, elect to defer such collections for a
particular Collateral Pool Property as set forth in the Loan Documents).  To the extent that Borrower has escrowed
deposits for Impositions sufficient to pay such Impositions when due without
penalty, Borrower shall have satisfied its obligation to pay such Impositions
hereunder.

 

7.4.                              Additional Financial Covenants. 
Subject to Section 7.4.3
below, Borrower hereby agrees and covenants with Lender that, at all times
during the term of this Agreement:

 

7.4.1.                     Consolidated Net Worth. 
Borrower shall not permit the Consolidated Net Worth of BHMR to be less
than ONE HUNDRED FIFTY MILLION and NO/100 Dollars ($150,000,000.00).

 

7.4.2.                     Liquidity.  Borrower
shall not permit the Liquidity of BHMR to be less than FIFTEEN MILLION and
NO/100 Dollars ($15,000,000.00).

 

7.4.3.                     Quarterly Certifications. 
Borrower shall deliver to Servicer for further delivery to Lender,
within sixty (60) days after the end of each fiscal quarter of BHMR (other than
the fiscal fourth quarter) and within one hundred twenty (120) days after the
end of each fiscal year of BHMR, an officer’s certificate from an Authorized
Officer (“Certificate of Compliance”) certifying that BHMR is in compliance
with the financial covenants set forth in Sections 7.4.1
and 7.4.2 above.  Borrower hereby covenants and agrees to
provide (or to cause Servicer to provide) Lender with such information as
Lender may reasonably request in order for Lender to confirm BHMR’s compliance
with the financial covenants set forth in Sections 7.4.1
and 7.4.2 above.

 

8.                                       DEFAULT

 

8.1.                              Events of
Default.

 

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

 

59

 

8.1.1.                     Payments Under
Loan Documents.

 

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

 

8.1.2.                     Breach of
Representation or Warranty.

 

Any representation or warranty made at any time by
Borrower herein or in any other Loan Document, or in any certificate, other
instrument or statement furnished pursuant to the provisions hereof or thereof,
shall prove to have been false or misleading in any material respect as of the
time it was made or furnished and the result of such false or misleading
representation, warranty, certificate, other instrument or statement is a
Material Adverse Change which is not cured within thirty (30) days after
written Notice thereof from Lender to Borrower, or within such additional reasonable
time as may be necessary, in Lender’s judgment to cure such breach, in the
event Borrower commences such cure within such thirty (30) day period and
thereafter diligently pursues such cure, not to exceed ninety (90)  additional days;

 

8.1.3.                     Breach of
Covenant.

 

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

 

8.1.4.                     Event of Default
under the Loan Documents.

 

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

 

8.1.5.                     Final Judgments
or Orders.

 

Any final judgments or orders for the payment of money
in excess of FIVE HUNDRED THOUSAND and NO/100 DOLLARS ($500,000.00) in the
aggregate shall be entered against Borrower by a court having jurisdiction in
the premises, which judgment is not discharged, vacated, bonded or stayed
pending appeal within a period of thirty (30) days from the date of entry;

 

60

 

8.1.6.                     Notice of Lien
or Assessment.

 

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

 

8.1.7.                     Insolvency.

 

Borrower (on a consolidated basis) ceases to be
Solvent or admits in writing its inability to pay its debts as they mature;

 

8.1.8.                     Cessation of
Business.

 

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

 

8.1.9.                     Lien Priority.

 

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

 

8.1.10.               Bankruptcy and
Other Proceedings.

 

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

 

8.1.11.               Material Adverse
Change.

 

Subject to the terms, time periods and cure rights of
Borrower under Section 2.14. there shall
occur a Material Adverse Change which is not corrected to the reasonable
satisfaction of Lender within thirty (30) days after the occurrence of the Material
Adverse Change, or such 

 

61

 

additional reasonable
time period necessary to cure such Material Adverse Change, in the event
Borrower commences such cure within such thirty (30) day period and thereafter
diligently pursues such cure, not to exceed thirty (30) additional days (such
cure period to be applicable only in the event such default can be remedied by
corrective action of Borrower to the satisfaction of Lender as determined by
Lender in its reasonable discretion).

 

8.2.                              Consequences of
Event of Default.

 

8.2.1.                     Remedies
Cumulative.

 

Upon an Event of Default under Section 8.1,
Lender shall be entitled to all of the rights and remedies granted to Lender
under the Loan Documents and applicable Law, all of which rights and remedies
shall be cumulative and non-exclusive, to the extent permitted by Law.  Following an Event of Default, the Loan may
be reinstated only upon the express written approval of Lender, to be granted,
withheld or conditioned in its sole discretion.

 

8.2.2.                     Acceleration of
Loan.

 

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

 

8.3.                              Notice of Sale.

 

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

 

9.                                       MISCELLANEOUS

 

9.1.                              Cooperation by
Borrower; Borrower’s Obligations.

 

Borrower grants to Lender the right to distribute on a
confidential basis financial and other information concerning Borrower, each
indemnitor, other Person, (but only to the extent Borrower has authority to
distribute such information for such other Person) the Collateral Pool
Properties, and other pertinent information with respect to the Loan to any
party purchasing securities issued by Lender; provided that the
recipient is informed that such information is confidential and that Lender use
commercially reasonable efforts to get the recipient to agree to be bound by
this Section 9.1.

 

9.2.                              Successors and
Assigns.

 

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

 

62

 

9.3.                              Modifications,
Amendments or Waivers.

 

Lender and Borrower may from time to time enter into
written agreements amending or changing any provision of this Agreement or any
other Loan Document or the rights of Lender or Borrower hereunder or
thereunder, or may grant written waivers or consents to a departure from the
due performance of the Obligations of Borrower hereunder or thereunder.  Any such written agreement, waiver or consent
(i) shall be effective to bind Lender and Borrower and (ii) shall be
accompanied in each instance by a written affirmation executed by any
guarantors consenting to such actions.

 

9.4.                              Forbearance.

 

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

 

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

 

9.5.                              Remedies
Cumulative.

 

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

 

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

 

Borrower agrees unconditionally upon demand to pay or
reimburse to Lender and Servicer and to hold Lender and Servicer harmless
against (i) liability for the payment of all reasonable out-of-pocket
costs, expenses and disbursements (including fees and expenses of counsel for
Lender and Servicer, incurred by Lender and Servicer (a) in connection
with the 

 

63

 

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

 

9.7.                              Holidays.

 

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

 

9.8.                              Notices.

 

All notices, requests, demands, directions and other
communications (“Notice”) given to or made upon any party hereto under
the provisions of this Agreement shall be in writing unless otherwise expressly
provided hereunder and shall be delivered or sent by facsimile, certified mail,
expedited or overnight courier or air service such as Federal Express or UPS,
or hand delivery if to Lender, to Lender at the address and numbers set forth
below, and if to Borrower or

 

64

 

Proposed Borrower, to
each of them at the addresses and numbers set forth for BHOP below, provided
that such Notice also includes the name of each applicable Borrower or Proposed
Borrower, or in accordance with any subsequent unrevoked written direction from
any party to the others.  All such
Notices shall, except as otherwise expressly herein provided, be effective (a) in
the case of facsimile, when received if received prior to 5:00 p.m. at the
recipient’s time on a Business Day, otherwise at 9:00 a.m. on the next
Business Day, provided that such facsimile be confirmed by delivery of
notice by one of the other methods specified herein, (b) in the case of
hand-delivered Notice, when hand-delivered, (c)  if given by certified
mail, three (3) days after such communication is deposited in the mail
with first-class postage prepaid, return receipt requested, and (d) if
given by any other means (including by air courier), when delivered; provided, that all such Notices to Lender shall
not be effective until received. 
Notwithstanding anything to the contrary contained in this Agreement,
all Notices to Lender required hereunder or under any Loan Document shall be
delivered to Servicer, as agent on behalf of Lender, unless notified otherwise
in writing by Lender.

 

Lender’s Notice
Address and Numbers:

 

NorthMarq
Capital, LLC

3500 American Boulevard West

Suite 500

Bloomington, MN 55431-4435

Attention:  Paul Cairns

Facsimile: 952.356.0099

 

Borrower’s
Notice Addresses and Numbers:

 

Behringer
Harvard Multifamily OP I LP

15601 Dallas Parkway, Suite 600

Addison, TX 75001

Attention:  Chief Financial Officer

Facsimile: 214.655.1610

 

With a
copy of Notices of Default to:

 

Behringer
Harvard Multifamily OP I LP

15601 Dallas Parkway, Suite 600

Addison, TX 75001

Attention:  Chief Legal Officer

Facsimile: 214.655.1610

 

9.9.                              Severability.

 

The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision, and all other provisions shall remain in full force and effect.  This Agreement contains the entire agreement
between the parties as to the 

 

65

 

rights granted and the
obligations assumed in this Agreement. 
This Agreement may not be amended or modified except by a writing signed
by the party against whom enforcement is sought.

 

9.10.                        Governing Law;
Consent to Jurisdiction and Venue.

 

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

 

9.11.                        Prior
Understanding.

 

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

 

9.12.                        Duration;
Survival.

 

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

 

66

 

9.13.                        Disclosure of Information.

 

Lender may furnish information regarding Borrower or
the Collateral Pool Properties to third parties with an existing or prospective
interest in the servicing, enforcement, evaluation, performance, purchase or
securitization of the Loan, including, but not limited to, trustees, master
servicers, special servicers, rating agencies, and organizations maintaining
databases on the underwriting and performance of multifamily mortgage
loans.  Borrower irrevocably waives any
and all rights it may have under applicable Law to prohibit such disclosure,
including, but not limited to, any right of privacy.

 

9.14.                        Exceptions.

 

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

 

9.15.                        Relationship of
Parties; No Third Parties Benefited.

 

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

 

9.16.                        Authority to
File Notices.

 

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

 

9.17.                        WAIVER OF TRIAL BY JURY.

 

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

 

67

 

	
   

  	
  /s/ MTA

  	
   

  
	
   

  	
  Initials of the Authorized Officer of Borrower

  	
   

  

 

9.18.                        Interpretation.

 

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

 

9.19.                        Brokerage Fee.

 

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

 

9.20.                        Advertising.

 

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

 

9.21.                        Time of Essence.

 

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

 

9.22.                        Counterparts.

 

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

 

9.23.                        NOTICE OF FINAL AGREEMENT.

 

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

 

68

 

[Signatures
Commence on the Following Page]

 

69

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
  WITNESS:

  	
  BEHRINGER HARVARD MULTIFAMILY
  OP I LP, a Delaware limited partnership

  
	
   

  	
   

  
	
   

  	
  By: BHMF, Inc., a Delaware
  corporation

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  
	
  /s/ Gwenyth S. Wood

  	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
  Name:  Mark T. Alfieri

  
	
   

  	
  Title:  Chief Operating Officer

  
				

 

 

[Signatures
Continue on the Following Page]

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
  WITNESS:

  	
  BEHRINGER HARVARD ORANGE, LLC
  (doing business as Grand Reserve Orange), a Delaware limited liability company

  
	
   

  	
   

  
	
  /s/ Gwenyth S. Wood

  	
   

  	
  By:

  	
  /s/ Mark T. Alfieri

  
	
   

  	
  Name:  Mark T. Alfieri

  
	
   

  	
  Title:  Chief Operating Officer

  
				

 

 

[Signatures
Continue on the Following Page]

 

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
  WITNESS:

  	
  NORTHMARQ CAPITAL, LLC, a Minnesota limited liability company

  
	
   

  	
   

  
	
  /s/ Authorized
  Signatory

  	
   

  	
  By:

  	
  /s/ Paul W. Cairns

  
	
  Seal

  	
  Name:  Paul W. Cairns

  
	
   

  	
  Title:  Senior Vice President

  
				

 

 

SCHEDULE 1.1(A)

 

LIST OF COLLATERAL POOL
PROPERTIES

AND ASSOCIATED INITIAL NET OPERATING INCOMES AND MARKET VALUES

 

	
  Collateral
  Pool

  Property

  	
   

  	
  Initial Net

  Operating Income

  	
   

  	
  Initial Market

  Value

  	
   

  	
  Maximum

  Recovery

  Amount

  	
   

  	
  Maximum

  Market

  Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1. Grand Reserve Orange

  	
   

  	
  $

  	
  1,563,154

  	
   

  	
  $

  	
  23,443,000

  	
   

  	
  N/A

  	
   

  	
  N/A

  	
   

  
												

 

 

SCHEDULE 1.1(B)

 

LIST OF

COLLATERAL POOL PROPERTY DOCUMENTS

 

(a)                                  Mortgage/Deed
of Trust/Deed to Secure Debt

 

(b)                                 UCC-1 Financing
Statements

 

(c)                                  FIRPTA
Certificate

 

(d)                                 Collateral
Agreements (if any)

 

(e)                                  Documents
evidencing O & M Programs (if any)

 

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

 

(g)                                 Guaranty Agreements

 

(h)                                 Certificate of Representations and
Warranties

 

 

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

 

SCHEDULE 2.5

 

FORM OF

LOAN REQUEST

 

                            ,
20  

 

[Lender’s
Name and Address]

Attention:

 

Ladies
and Gentlemen:

 

Reference is made to the Credit Agreement dated as of March 19,
2010, as amended (the “Credit Agreement”) by and among Behringer Harvard Multifamily OP I LP, a
Delaware limited partnership, and Behringer Harvard Orange, LLC (doing business
as Grand Reserve Orange), a Delaware limited liability company, each having an
address at 15601 Dallas Parkway, Suite 600, Addison, Texas 75001
(collectively, “Borrower”) and NorthMarq
Capital, LLC, a Minnesota limited liability company.  Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein with the same meanings.

 

I,
                              ,
the                               
of each Borrower, a
                              ,
does hereby certify on behalf of each Borrower as of the date hereof, as
follows:

 

Borrower is entitled to and hereby requests Lender to make an advance
under the Credit Agreement in the amount of $                    
(which must be greater than or equal to Ten Million and NO/100 Dollars
($10,000,000).  Funds should be delivered
to Borrower by wire to the following account:

 

Bank Name and Location:

ABA Number:

Account Name:

Account Number:

Further Credit Instructions:

Attention:

 

1.                                       The requested date of the advance (the “Borrowing
Date”) is
                            .

 

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

 

o                                    Prime Rate*

o                                    Base Rate

 

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

 

 

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

 

o                                    one-month

o                                    three-month*

 

*subject
to a five  (5) basis point (0.0005) increase in the Margin
otherwise applicable to such Borrowing Tranche

 

4.                                       Borrower will (check one):

 

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

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

 

5.                                       If applicable, the Base Rate for the Base
Rate Borrowing Tranche requested hereunder shall be
                      
(          %) consisting of a
LIBO Rate of
                    
percent (       %) and a Margin of                 
(    %).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

17.                                 The undersigned is an Authorized Officer
of Borrower.

 

18.                                 Notice of this Loan Request shall be
deemed received by Lender when (i) sent by facsimile to (703) 714-3002 or
email to mfla@freddiemac.com and (ii) verbally confirmed by telephone call
to either (when called in the following order of priority):  (1) Loan Accounting Specialist,
currently Denise Sanchez (703-714-3239), (2) Loan Accounting Senior,
currently Steve Dillon (703-714-2691), (3) Loan Accounting Manager,
currently Wendy McCain (703-714-2926) or such other names and numbers as Lender
may specify upon prior written Notice to Borrower, or (iii) confirmed by a
return e-mail from one of the foregoing individuals.

 

[The Loan Request continues on the following page]

 

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
             day of
                      ,
        .

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY
  OP I LP, a Delaware limited partnership  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHMF, Inc., a Delaware
  corporation 

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[The Loan Request continues on the following page]

 

 

19.                                 The current Loan to Value Ratio is
                      (    %),
which is less than or equal to the Maximum Loan to Value Ratio specified in Section 2.5.3.1 of seventy
percent (70%), determined as follows:

 

	
   

  	
  A.

  	
   

  	
  The
  current Loan balance

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  The
  current aggregate Market Value of the Collateral Pool

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

20.                                 Following the disbursement of the funds
comprising the Borrowing Tranche requested herein, the Loan to Value Ratio will
equal 
                                  (    %),
which is less than or equal to the Maximum Loan to Value Ratio set forth in Schedule 2.5.3.1 of the Credit
Agreement of seventy percent (70%), determined as follows:

 

	
   

  	
  A.

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  The
  current aggregate Market Value of the Collateral Pool

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

21.                                 The current Facility Debt Service
Coverage Ratio is
             :
1.00, which is not less than 1.55 : 1.00, determined as follows:

 

	
   

  	
  A.

  	
   

  	
  Net
  Operating Income of the Collateral Pool Properties determined by Lender

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  Facility
  Debt Service (as defined in the Credit Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

 

22.                                 Following the disbursement of the funds
comprising the Borrowing Tranche requested herein, the Facility Debt Service
Coverage Ratio will be
             :
1.00, which is not less than 1.55 : 1.00, determined as follows:

 

	
   

  	
  A.

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  Facility
  Debt Service (as defined in the Credit Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

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

 

 

	
   

  	
  SERVICER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  Dated: 

  	
   

  
				

 

 

SCHEDULE 3.2

 

NET SPREAD TABLE

 

	
  Facility
  Debt Service Coverage Ratio

  	
   

  	
  Net Spread*

  	
   

  	
  Margin*

  	
   

  
	
  Greater than or equal to 1.55 : 1.00 but less than
  or equal to 1.749: 1.00

  	
   

  	
  0.0222

  	
   

  	
  0.0227

  	
   

  
	
  Greater than or equal to 1.75 : 1.00 but less than or
  equal to 1.949: 1.00

  	
   

  	
  0.0211

  	
   

  	
  0.0216

  	
   

  
	
  Greater than or equal to 1.95 : 1.00

  	
   

  	
  0.0203

  	
   

  	
  0.0208

  	
   

  

 

* The Net Spread and Margin set forth above assumes that the Base Rate
Borrowing Tranches will have a one-month Interest Period.  The Net Spread and Margin shall be increased
by five (5) basis points (0.0005) for any Base Rate Borrowing Tranche
having a three-month Interest Period.

 

 

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

 

SCHEDULE 3.3.3

 

RENEWAL REQUEST

 

                            ,
20

 

[Lender’s
Name and Address]

Attention:

 

Ladies
and Gentlemen:

 

Reference is made to the
Credit Agreement dated as of March 19, 2010, as amended (the “Credit
Agreement”) by
and among Behringer Harvard Multifamily OP I LP, a Delaware limited
partnership, and Behringer Harvard Orange, LLC (doing business as Grand Reserve
Orange), a Delaware limited liability company, each having an address at 15601
Dallas Parkway, Suite 600, Addison, Texas 75001, (collectively, “Borrower”) and NorthMarq Capital, LLC, a
Minnesota limited liability company.  Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein with the same meanings.

 

I,
                                    ,
the                               
of each Borrower, a
                                                    ,
does hereby certify on behalf of each Borrower as of the date hereof, as
follows:

 

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

 

or

 

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

 

[or

 

Borrower
hereby requests Lender to combine two (2) or more Borrowing Tranches
pursuant to the provisions of the Credit Agreement into a single Borrowing
Tranche, specifically Borrower hereby requests that Lender combine the
Borrowing Tranche in the amount of $                            ,
whose Interest Period will mature on
                      ,
         with the Borrowing

 

 

Tranche in the amount of
$                            ,
whose Interest Period will mature on                       ,
         [add descriptions of
additional Borrowing Tranches as necessary.]

 

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

 

o                                                Prime Rate*

o                                                Base Rate

 

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

 

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

 

o                                    one-month

o                                    three-month*

 

*
subject to a five (5) basis points (0.0005) increase in the Margin
otherwise applicable to such Borrowing Tranche

 

3.                                       Borrower will
(check one):

 

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

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

 

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

 

5.                                       If applicable,
the Base Rate for the Borrowing Tranche renewed hereunder shall be
                      
(          %) consisting of a
LIBO Rate of
                      
percent (         %) and a Margin of
                
(        %).

 

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

 

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

 

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

 

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

 

8.                                       [Check one of
the following:]

 

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

 

 

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

 

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

 

10.                                 The undersigned
is an Authorized Officer of Borrower.

 

11.                                 Notice of this
Loan Request shall be deemed received by Lender when (i) sent by facsimile
to (703) 714-3002 or email to mfla@freddiemac.com and (ii) verbally
confirmed by telephone call to either (when called in the following order of
priority):  (1) Loan Accounting
Specialist, currently Denise Sanchez (703-714-3239), (2) Loan Accounting
Senior, currently Steve Dillon (703-714-2691), Loan Accounting Manager,
currently Wendy McCain (703-714-2926) or such other names and numbers as Lender
may specify upon prior written notice to Borrower, or (iii) confirmed by a
return e-mail from one of the foregoing individuals.

 

[The Renewal Request continues on the following page]

 

 

IN
WITNESS WHEREOF, the undersigned has executed this Certificate this
             day of
                      ,
        .

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BEHRINGER HARVARD MULTIFAMILY
  OP I LP, a Delaware limited partnership  

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BHMF, Inc., a
  Delaware corporation 

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

[The Renewal Request continues on the following page]

 

 

12.                                 The current
Loan to Value Ratio  is
                      (    %),
which is less than or
equal to the Maximum Loan to Value Ratio set forth in Section 2.5.3.1
of the Credit Agreement of seventy percent (70%), determined as follows:

 

	
   

  	
  A.

  	
   

  	
  The
  current Loan balance

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  The
  current aggregate Market Value of the Collateral Pool

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

13.                                 The current
Facility Debt Service Coverage Ratio is [      ]
: 1.00, which [check one:]

 

o                                    is less than
1.55 : 1.00, or

 

o                                    is greater than
or equal to 1.55 : 1.00,

 

determined as follows:

 

	
   

  	
  A.

  	
   

  	
  Net
  Operating Income of the Collateral Pool Properties determined by Lender

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  Facility
  Debt Service (as defined in the Credit Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

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

 

o                                    is less than
1.55 : 1.00, or

 

o                                    is greater than
or equal to 1.55 : 1.00,

 

determined
as follows:

 

 

	
   

  	
  A.

  	
   

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

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
   

  	
  Facility
  Debt Service (as defined in the Credit Agreement)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
   

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

  	
   

  	
   

  	
  %

  

 

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

 

 

	
   

  	
  SERVICER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Dated:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00171-of-00352.parquet"}]]