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Developer's proposed development, the Developer and the City will discuss their options and formulate a course of action. ARTICLE VB MORTGAGE FINANCING Section 7.1. Limitation Upon Encumbrance of Property. Prior to the completion of a Phase or Sub-Phase of the Minimum Improvements, as determined by the City, neither the Developer nor any successor in interest to the Parcel of the Development Property on which the Phase or Sub-Phase will be built, or any part thereot: shall engage in any financing or any other transaction creating any mortgage or other encumbrance or lien upon the Development Property, other than Permitted Encumbrances, whether by express agreement or operation of law, or suffer any encumbrance or lien to be made on or attach to the Development Property, other than Permitted Encumbrances, except: (a) for the purposes of obtaining funds only to the extent necessary for the acquisition of the Development Property and making the Minimum Improvements (including, but not limited to, labor and materials, equipment, professional fees, real estate taxes, construction interest, organi7.ation and other indirect costs of development, costs of constructing the Minimum Improvements, an allowance for contingencies, costs of issuance of any Note issued to fund construction or acquisition of the respective Phase or Sub-Phase, amounts required to fund any Note reserves relating to construction or acquisition of the Phase or Sub-Phase, and amounts required to fund any required escrow accounts); and (b) and 7.2. only upon the prior written approval of the City in accordance with Sections 7.1 Section 7.2. Apnroval of Morte:age. The City shall approve a Mortgage if: (a) the City first receives a copy of all mortgage documents; (b) the mortgage loan, together with other funds available to the Developer, will, in the reasonable judgment of the City, be sufficient to construct the subject Phase or Sub-Phase of the Minimum Improvements; and (c) the City is not entitled under Section 9.2 to exercise any of the remedies set forth therein as a result of an Event of Default Section 7.3. Modification for the Benefit of Mortgae:ees. (b) In order to facilitate the obtaining of financing for the construction of the Minimum Improvements, the City agrees that it will consider reasonable modifications of this Article vn or Article V, intercreditor agreement or waiver of its rights hereunder to accommodate the interests of the holder of a Mortgage, provided, however, that the City determines, in its reasonable judgment, that any such modification(s) will adequately protect the legitimate interests and security of the City under this Agreement. 22