United Realty Trust Incorporated 10-Q [urt-10q_063014.htm] 

Exhibit 10.17

 

LOAN AGREEMENT

 

Dated as of May 21, 2014

 

Between

 

United 945 82nd Parkway Fee, LLC,
as Borrower

 

and

 

Starwood Mortgage Capital LLC,
as Lender

 

 

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE 1 DEFINITIONS; PRINCIPLES OF CONSTRUCTION 1 Section 1.1
Specific Definitions 1 Section 1.2 Principles of Construction 20       ARTICLE 2
THE LOAN 20 Section 2.1 The Loan 20 Section 2.2 Interest Rate 20 Section 2.3
Loan Payments 21 Section 2.4 Prepayments 23 Section 2.5 Defeasance 24      
ARTICLE 3 REPRESENTATIONS AND WARRANTIES 27 Section 3.1 Borrower Representations
27 Section 3.2 Survival of Representations 41       ARTICLE 4 BORROWER COVENANTS
41 Section 4.1 Borrower Affirmative Covenants 41 Section 4.2 Borrower Negative
Covenants 50       ARTICLE 5 INSURANCE, CASUALTY AND CONDEMNATION 53 Section 5.1
Insurance 53 Section 5.2 Casualty 58 Section 5.3 Condemnation 59 Section 5.4
Restoration 60       ARTICLE 6 CASH MANAGEMENT AND RESERVE FUNDS 65 Section 6.1
Cash Management Arrangements 65 Section 6.2 Required Repairs Funds 65 Section
6.3 Tax Funds 65 Section 6.4 Insurance Funds 66 Section 6.5 Capital Expenditure
Funds 67 Section 6.6 Rollover Funds 68 Section 6.7 Major Tenant Funds 70 Section
6.8 Rent Concession Funds 71 Section 6.9 Excess Cash Flow Funds 71 Section 6.10
Security Interest in Reserve Funds 71 Section 6.11 Property Cash Flow Allocation
72       ARTICLE 7 PROPERTY MANAGEMENT 73 Section 7.1 The Management Agreement
73 Section 7.2 Prohibition Against Termination or Modification 74 Section 7.3
Replacement of Manager 74       ARTICLE 8 PERMITTED TRANSFERS 74 Section 8.1
Permitted Transfer of the Property 74

 

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    Page       Section 8.2 Permitted Transfers of Interest in Borrower 75
Section 8.3 Cost and Expenses 77       ARTICLE 9 SALE AND SECURITIZATION OF
MORTGAGE 77 Section 9.1 Sale of Mortgage and Securitization 77 Section 9.2
Securitization Indemnification 79 Section 9.3 Intentionally Omitted 81 Section
9.4 Severance Documentation 81       ARTICLE 10 DEFAULTS 82 Section 10.1 Events
of Default 82 Section 10.2 Remedies 85 Section 10.3 Lender’s Right to Perform 87
Section 10.4 Remedies Cumulative 87       ARTICLE 11 MISCELLANEOUS 87 Section
11.1 Survival; Successors and Assigns 87 Section 11.2 Lender’s Discretion 87
Section 11.3 Governing Law 88 Section 11.4 Modification, Waiver in Writing 88
Section 11.5 Delay Not a Waiver 88 Section 11.6 Notices 88 Section 11.7 Trial by
Jury 90 Section 11.8 Headings 90 Section 11.9 Severability 90 Section 11.10
Preferences 91 Section 11.11 Waiver of Notice 91 Section 11.12 Remedies of
Borrower 91 Section 11.13 Expenses; Indemnity 91 Section 11.14 Schedules
Incorporated 93 Section 11.15 Offsets, Counterclaims and Defenses 93 Section
11.16 No Joint Venture or Partnership; No Third Party Beneficiaries 93 Section
11.17 Publicity 93 Section 11.18 Waiver of Marshalling of Assets 94 Section
11.19 Waiver of Offsets/Defenses/Counterclaims 94 Section 11.20 Conflict;
Construction of Documents; Reliance 94 Section 11.21 Brokers and Financial
Advisors 95 Section 11.22 Exculpation 95 Section 11.23 Prior Agreements 98
Section 11.24 Servicer 98 Section 11.25 Joint and Several Liability 99 Section
11.26 Creation of Security Interest 99 Section 11.27 Assignments and
Participations 99 Section 11.28 Counterparts 99 Section 11.29 Set-Off 100

 

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LOAN AGREEMENT

                  

THIS LOAN AGREEMENT, dated as of May 21, 2014 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between
STARWOOD MORTGAGE CAPITAL LLC, a Delaware limited liability company, having an
address at 1601 Washington Avenue, Suite 800, Miami Beach, Florida 33139
(together with its successors and assigns, collectively, “Lender”), and United
945 82nd Parkway Fee, LLC, a Delaware limited liability company having an
address at c/o United Realty Advisors, LP, 60 Broad Street, 34th Floor, New
York, New York 10004 (together with its permitted successors and assigns,
collectively, “Borrower”).

 

All capitalized terms used herein shall have the respective meanings set forth
in Article 1 hereof.

 

W I T N E S S E T H :

                  

WHEREAS, Borrower desires to obtain the Loan from Lender; and

 

WHEREAS, Lender has advised Borrower that subject to the terms of this Agreement
and the documents to be executed in connection herewith, and based upon the
representations, warranties, covenants and undertakings of Borrower herein and
therein contained, Lender is willing to make the Loan to Borrower on the terms
and conditions set forth herein and therein.

 

NOW, THEREFORE, in consideration of the covenants set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree, represent and warrant
as follows:

 

ARTICLE 1

DEFINITIONS; PRINCIPLES OF CONSTRUCTION

 

Section 1.1          Specific Definitions.

 

For all purposes of this Agreement, except as otherwise expressly provided:

 

“Accounts” shall have the meaning set forth in Section 6.1.

 

“Act” shall have the meaning set forth in Section 3.1.24(r).

 

“Affiliate” shall mean, as to any Person, any other Person that (i) owns
directly or indirectly ten percent (10%) or more of all equity interests in such
Person, and/or (ii) is in control of, is controlled by or is under common
ownership or control with such Person, and/or (iii) is a director or officer of
such Person or of an Affiliate of such Person, and/or (iv) is the spouse, issue
or parent of such Person or of an Affiliate of such Person. As used in this
definition, the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management, policies or
activities of such Person, whether through ownership of voting securities, by
contract or otherwise.

 

 

 

 

“ALTA” shall mean American Land Title Association, or any successor thereto.

 

“Alteration Threshold” shall mean 4% of the outstanding principal amount of the
Loan.

 

“Annual Budget” shall mean the operating and capital budget for the Property
setting forth, on a month-by-month basis, in reasonable detail, each line item
of Borrower’s good faith estimate of anticipated Operating Income, Operating
Expenses and Capital Expenditures for the applicable Fiscal Year.

 

“Approved Annual Budget” shall have the meaning set forth in Section 4.1.7(g).

 

“Approved Capital Expenditures” shall mean Capital Expenditures incurred by
Borrower and either (i) included in the Approved Annual Budget or (ii) approved
by Lender, which approval shall not be unreasonably withheld, conditioned or
delayed.

 

“Approved Leasing Expenses” shall mean actual out-of-pocket expenses incurred by
Borrower in leasing space at the Property pursuant to existing Leases and Leases
entered into in accordance with the Loan Documents, including brokerage
commissions and tenant improvements, which expenses (i) are (A) specifically
approved by Lender in connection with approving the applicable Lease,
(B) incurred in the ordinary course of business and on market terms and
conditions in connection with Leases which do not require Lender’s approval
under the Loan Documents, and Lender shall have received and approved a budget
for such tenant improvement costs and a schedule of leasing commissions payments
payable in connection therewith (which schedule shall including the name of the
applicable brokerage company and state whether the applicable broker is an
Affiliate of Borrower or Guarantor), or (C) otherwise approved by Lender, which
approval shall not be unreasonably withheld, conditioned or delayed, and
(ii) are substantiated by executed Lease documents and brokerage agreements.

 

“Approved Operating Expenses” shall mean Operating Expenses incurred by Borrower
which (i) are included in the Approved Annual Budget for the current calendar
month, (ii) are for real estate taxes, insurance premiums, electric, gas, oil,
water, sewer or other utility service to the Property, (iii) are for property
management fees payable to Manager under the Management Agreement, such amounts
not to exceed 3% of the monthly Operating Income (and provided no Sweep Event
Period is in effect, an additional incentive fee not to exceed 2% of the monthly
Operating Income), or (iv) have been approved by Lender.

 

“Assignment of Leases” shall mean that certain first priority Assignment of
Leases and Rents, dated as of the date hereof, from Borrower, as assignor, to
Lender, as assignee, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.

 

“Assignment of Management Agreement” shall mean that certain Assignment of
Management Agreement and Subordination of Management Fees dated as of the date
hereof among Borrower, Manager and Lender, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to time.

 

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“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation.

 

“Bankruptcy Code” shall mean Title 11 of the United States Code entitled
“Bankruptcy”, as amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time promulgated thereunder,
and any comparable foreign laws relating to bankruptcy, insolvency or creditors’
rights.

 

“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and permitted assigns.

 

“Borrower Operating Account” shall mean an account specified to Lender by
Borrower in writing from time to time as Borrower’s operating account.

 

“Borrower’s Recourse Liabilities” shall have the meaning set forth in
Section 11.22.

 

“Broker” shall have the meaning set forth in Section 11.21.

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal
holiday on which national banks are not open for general business in (i) the
State of New York, (ii) the state where the corporate trust office of the
Trustee is located, or (iii) the state where the servicing offices of the
Servicer are located.

 

“Capital Expenditure Account” shall have the meaning set forth in Section 6.5.1.

 

“Capital Expenditure Funds” shall have the meaning set forth in Section 6.5.1.

 

“Capital Expenditures” for any period shall mean amounts expended for
replacements and alterations to the Property (excluding tenant improvements) and
required to be capitalized according to GAAP.

 

“Capital Expenditures Work” shall mean any labor performed or materials
installed in connection with any Capital Expenditure.

 

“Cardiology/Gastro Associates” shall mean Cardiology Gastroenterology Associates
of Myrtle Beach, P.A., or any successor Tenant or Tenants occupying the
Cardiology/Gastro Associates Space.

 

“Cardiology/Gastro Associates Space” shall mean that certain space at the
Property demised on the date hereof to Cardiology/Gastro Associates in the
approximate size of 16,488 square feet.

 

“Cash Management Account” shall have the meaning set forth in Section 6.1.
Lender may in its sole discretion change the Cash Management Account from time
to time.

 

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“Cash Management Agreement” shall mean that certain Cash Management Agreement of
even date herewith among Lender, Borrower, and Manager.

 

“Cash Management Bank” shall mean the bank or banks selected by Lender to
maintain the Cash Management Account. Lender may in its sole discretion change
the Cash Management Bank from time to time.

 

“Casualty” shall have the meaning set forth in Section 5.2.

 

“Casualty and Condemnation Account” shall have the meaning set forth in the Cash
Management Agreement.

 

“Casualty Consultant” shall have the meaning set forth in Section 5.4(b(iii).

 

“Casualty Retainage” shall have the meaning set forth in Section 5.4(b)(iv).

 

“Certification of Borrower” shall mean that certain Borrower’s Closing
Certificate dated as of the date hereof made by Borrower to Lender.

 

“Clearing Account” shall have the meaning set forth in Section 6.1.

 

“Clearing Account Agreement” shall mean that certain Deposit Account Control
Agreement dated the date hereof by and among Borrower, Lender and Clearing Bank.

 

“Clearing Bank” shall mean Wells Fargo Bank, National Association.

 

“Closing Date” shall mean the date of the funding of the Loan.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended, and as it may
be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

 

“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of the Property, or
any interest therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part thereof.

 

“Control” shall mean, with respect to any Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, through the ownership of voting securities, by contract
or otherwise, and the terms Controlled, Controlling and Common Control shall
have correlative meanings.

 

“Creditors’ Rights Laws” shall mean any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to its debts
or debtors.

 

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“Debt” shall mean the Outstanding Principal Balance together with all interest
accrued and unpaid thereon and all other sums (including the Prepayment Fee, if
applicable) due to Lender in respect of the Loan under the Note, this Agreement,
the Mortgage, the Environmental Indemnity or any other Loan Document.

 

“Debt Service” shall mean, with respect to any particular period of time, the
aggregate amount of scheduled principal and interest (if applicable) payments
due and payable under the Note.

 

“Debt Service Account” shall have the meaning set forth in the Cash Management
Agreement.

 

“Debt Service Coverage Ratio” shall mean, a ratio, as determined by Lender in
its sole discretion for the applicable period in which:

 

(a)          the numerator is the Net Operating Income for such period; and

 

(b)          the denominator is the Debt Service (disregarding any interest-only
period and based on a thirty (30) year amortization) due for such period.

 

“Default” shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would constitute an Event of Default.

 

“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (i) the Maximum Legal Rate or (ii) five percent (5%) above the
Interest Rate.

 

“Defeasance Collateral” shall have the meaning set forth in Section 2.5.1(c)(i).

 

“Defeasance Lockout Expiration Date” shall have the meaning set forth in
Section 2.5.1.

 

“Defeasance Rights and Obligations” shall have the meaning set forth in
Section 2.5.3.

 

“Defeasance Security Agreement” shall have the meaning set forth in
Section 2.5.1(c)(ii).

 

“Disclosure Document” shall have the meaning set forth in Section 9.2(a).

 

“Discount Rate” shall mean the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semiannually.

 

“Easements” shall have the meaning set forth in Section 3.1.12.

 

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“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (i) an account or accounts
(or subaccounts thereof) maintained with a federal or state-chartered depository
institution or trust company which complies with the definition of Eligible
Institution or (ii) a segregated trust account or accounts (or subaccounts
thereof) maintained with a federal or state chartered depository institution or
trust company acting in its fiduciary capacity which, in the case of a state
chartered depository institution or trust company is subject to regulations
substantially similar to 12 C.F.R. §9.10(b), having in any case a combined
capital and surplus of at least Fifty Million and No/100 Dollars
($50,000,000.00) and subject to supervision or examination by federal and state
authorities. An Eligible Account will not be evidenced by a certificate of
deposit, passbook or other instrument.

 

“Eligible Institution” shall mean a depository institution or trust company the
short term unsecured debt obligations or commercial paper of which are rated at
least A-1+ by S&P, P-1 by Moody’s, and F-1+ by Fitch in the case of accounts in
which funds are held for thirty (30) days or less or, in the case of Letters of
Credit or accounts in which funds are held for more than thirty (30) days, the
long term unsecured debt obligations of which are rated at least “A” by Fitch
and S&P and “Aa2” by Moody’s.

 

“Embargoed Person” shall have the meaning set forth in Section 4.2.15.

 

“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement dated as of the date hereof executed by Borrower and Guarantor in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

 

“Equipment” shall have the meaning set forth in the granting clause of the
Mortgage.

 

“ERISA” shall have the meaning set forth in Section 4.2.13.

 

“Event of Default” shall have the meaning set forth in Section 10.1.

 

“Excess Cash Flow Account” shall have the meaning set forth in Section 6.9.

 

“Excess Cash Flow Funds” shall have the meaning set forth in Section 6.9.

 

“Exchange Act” shall have the meaning set forth in Section 9.2(a).

 

“Exchange Act Filing” shall have the meaning set forth in Section 9.2(c).

 

“Extraordinary Expense” shall have the meaning set forth in Section 4.1.7(g).

 

“Fiscal Year” shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during each year of the Term.

 

“Fitch” shall mean Fitch, Inc.

 

“FRBNY” shall mean the Federal Reserve Bank of New York.

 

“Full Replacement Cost” shall have the meaning set forth in Section 5.1.1(a)(i).

 

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“GAAP” shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such entity as may be in general use by significant segments
of the U.S. accounting profession.

 

“Governmental Authority” shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
commonwealth, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

 

“Government Lists” shall have the meaning set forth in Section 4.1.14(b).

 

“Gross Revenue” shall mean all revenue derived from the ownership and operation
of the Property from whatever source, including Rents and any Insurance
Proceeds, but only if and to the extent Lender elects to treat any such
Insurance Proceeds as business or rental interruption Insurance Proceeds
pursuant to Section 5.4(e) hereof.

 

“Guarantor” shall mean Jacob Frydman, an individual.

 

“Guaranty” shall mean that certain Guaranty of Recourse Obligations of even date
herewith from Guarantor for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise amended from time to time.

 

“Improvements” shall have the meaning set forth in the granting clause of the
Mortgage.

 

“Indebtedness” shall mean, for any Person, without duplication: (i) all
indebtedness of such Person for borrowed money, for amounts drawn under a letter
of credit, or for the deferred purchase price of property for which such Person
or its assets is liable, (ii) all unfunded amounts under a loan agreement,
letter of credit, or other credit facility for which such Person would be liable
if such amounts were advanced thereunder, (iii) all amounts required to be paid
by such Person as a guaranteed payment to partners or a preferred or special
dividend, including any mandatory redemption of shares or interests, (iv) all
indebtedness guaranteed by such Person, directly or indirectly, (v) all
obligations under leases that constitute capital leases for which such Person is
liable, and (vi) all obligations of such Person under interest rate swaps, caps,
floors, collars and other interest hedge agreements, in each case for which such
Person is liable or its assets are liable, whether such Person (or its assets)
is liable contingently or otherwise, as obligor, guarantor or otherwise, or in
respect of which obligations such Person otherwise assures a creditor against
loss.

 

“Indemnified Liabilities” shall have the meaning set forth in Section 11.13(b).

 

“Independent” shall mean, when used with respect to any Person, a Person who:
(i) does not have any direct financial interest or any material indirect
financial interest in Borrower or in any Affiliate of Borrower, (ii) is not
connected with Borrower or any Affiliate of Borrower as an officer, employee,
promoter, underwriter, trustee, partner, member, manager, creditor, director,
supplier, customer or person performing similar functions and (iii) is not a
member of the immediate family of a Person defined in (i) or (ii) above.

 

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“Independent Accountant” shall mean a certified public accounting firm which is
Independent and which is selected by Borrower and reasonably acceptable to
Lender.

 

“Initial Interest Period” shall have the meaning set forth in Section 2.3.1.

 

“Insurance Account” shall have the meaning set forth in Section 6.4.1.

 

“Insurance Funds” shall have the meaning set forth in Section 6.4.1.

 

“Insurance Premiums” shall have the meaning set forth in Section 5.1.1(b).

 

“Insurance Proceeds” shall have the meaning set forth in Section 5.4(b).

 

“Interest Period” shall have the meaning set forth in Section 2.3.3.

 

“Interest Rate” shall mean a rate of four and seven hundred eighty-eight
thousandths percent (4.788%) per annum.

 

“Investor Member” shall have the meaning set forth in Section 8.2.

 

“Lease” shall mean any lease, sublease or sub-sublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy, all or any portion of any space in the
Property, and every modification, amendment or other agreement relating to such
lease, sublease, sub-sublease or other agreement entered into in connection with
such lease, sublease, sub-sublease or other agreement and every guarantee of the
performance and observance of the covenants, conditions and agreements to be
performed and observed by the other party thereto.

 

“Lease Termination Payments” shall have the meaning set forth in
Section 6.6.1(b).

 

“Legal Requirements” shall mean all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, building
codes, land laws, judgments, decrees and injunctions of Governmental Authorities
affecting the Loan, any Secondary Market Transaction with respect to the Loan,
the Borrower or the Property or any part thereof or the construction, use,
alteration or operation thereof, or any part thereof, whether now or hereafter
enacted and in force, including, without limitation, zoning and land use laws
and the Americans with Disabilities Act of 1990, and all permits, licenses and
authorizations and regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting the Property or any part
thereof, including any which may (i) require repairs, modifications or
alterations in or to the Property or any part thereof, or (ii) in any way limit
the use and enjoyment thereof.

 

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“Lender Affiliate” shall have the meaning set forth in Section 9.2(b).

 

“Lender Group” shall have the meaning set forth in Section 9.2(b).

 

“Letter of Credit” shall mean an irrevocable, unconditional, transferable
(without payment of any transfer fee), clean sight draft letter of credit
acceptable to Lender and the Rating Agencies (either an evergreen letter of
credit or one which does not expire until at least thirty (30) Business Days
after the Stated Maturity Date) in favor of Lender and entitling Lender to draw
thereon in New York, New York, issued by a domestic Eligible Institution or the
U.S. agency or branch of a foreign Eligible Institution. If at any time the bank
issuing any such Letter of Credit shall cease to be an Eligible Institution,
Lender shall have the right immediately to draw down the same in full and hold
the proceeds of such draw in accordance with the applicable provisions hereof.

 

“Liabilities” shall have the meaning set forth in Section 9.2(b).

 

“Lien” shall mean any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, easement, restrictive covenant, preference, assignment,
security interest, or any other encumbrance, charge or transfer of, or any
agreement to enter into or create any of the foregoing, on or affecting all or
any portion of the Property or any interest therein, or any direct or indirect
interest in Borrower or any SPC Party, including any conditional sale or other
title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any financing statement,
and mechanic’s, materialmen’s and other similar liens and encumbrances.

 

“Loan” shall mean the loan in the original principal amount of Ten Million Three
Hundred Thousand and No/100 Dollars ($10,300,000) made by Lender to Borrower
pursuant to this Agreement.

 

“Loan Documents” shall mean, collectively, this Agreement, the Note, the
Mortgage, the Assignment of Leases, the Cash Management Agreement, the Clearing
Account Agreement, the Environmental Indemnity, the Assignment of Management
Agreement, the Guaranty, the Certificate of Borrower and any other documents,
agreements and instruments now or hereafter evidencing, securing or delivered to
Lender in connection with the Loan.

 

“Loan to Value Ratio” shall mean the ratio, as of a particular date, in which
the numerator is equal to the Outstanding Principal Balance and the denominator
is equal to the appraised value of the Property as determined by Lender in its
sole discretion.

 

“Major Contract” shall mean (i) any management, brokerage or leasing agreement,
or (ii) any cleaning, maintenance, service or other contract or agreement of any
kind (other than Leases) of a material nature (materiality for these purposes to
include, without limitation, contracts which have monetary obligations of either
party of $50,000 or more, or extend beyond one year (unless cancelable on
thirty (30) days or less notice without requiring the payment of termination
fees or payments of any kind)), in either case relating to the ownership,
leasing, management, use, operation, maintenance, repair or restoration of the
Property, whether written or oral.

 

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“Major Lease” shall mean any Lease which, either individually, or when taken
together with any other Lease with the same Tenant or its Affiliates, (i) covers
more than 6,650 square feet at the Property or (ii) constitutes more than 15% of
the total annual Rents.

 

“Major Tenant Account” shall have the meaning set forth in Section 6.7.1.

 

“Major Tenant Funds” shall have the meaning set forth in Section 6.7.1.

 

“Major Tenant Trigger Period” shall mean, with respect to Cardiology/Gastro
Associates, the period commencing upon the date on which:

 

(a) such Tenant (A) “goes dark” or otherwise ceases operations in its space at
the Property, (B) defaults under the terms of its Lease, (C) terminates its
Lease, or (D) vacates or otherwise fails to occupy its premises, or such Tenant
provides written notice of its intention to commence any of the foregoing;

 

(b) such Tenant (A) commences any case, proceeding or other action (1) under any
Creditors’ Rights Laws seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, or (2) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial part
of its assets, or makes a general assignment for the benefit of its creditors;
(B) there shall be commenced against such Tenant any case, proceeding or other
action of a nature referred to in the immediately preceding clause (A); or

 

(c) such Tenant fails to extend the term of its Lease, on terms and conditions
acceptable to Lender in its sole discretion and in accordance with the terms of
this Agreement, for a period of no less than five (5) years, on or prior to the
date occurring twelve (12) months prior to such Lease’s expiration date, or
Borrower’s receipt of written notice from such Tenant of its intention to not
renew its Lease;

 

and terminating, provided that no other Major Tenant Trigger Period has occurred
and is continuing, upon:

 

(A) with regard to a Major Tenant Trigger Period described in clause (a) above,
upon the first to occur of (I) the date on which such Tenant is not in default
under its Lease, has been in occupancy of and in operation in its space at the
Property for thirty (30) days (other than in connection with a termination of
its Lease, which can only be cured pursuant to clause (II)) and has delivered to
Lender a tenant estoppel certificate in form and substance satisfactory to
Lender confirming the foregoing and stating that such Tenant does not intend to
vacate its space in the future, and (II) a Re-Tenanting Event;

 

(B) with regard to a Major Tenant Trigger Period described in clause (b) above,
upon the first to occur of (I) Lender’s receipt of evidence in form and
substance satisfactory to Lender that such Tenant is no longer a debtor in such
proceeding and the applicable Lease has been assumed in such proceeding and
remains in full force and effect and (II) a Re-Tenanting Event; and

 

- 10 -

 

 

(C) with regard to a Major Tenant Trigger Period described in clause (c) above,
upon the first to occur of (I) Lender’s receipt of evidence in form and
substance satisfactory to Lender that such Tenant has extended the term of its
Lease, on terms and conditions acceptable to Lender and in accordance with the
terms of this Agreement, for a period of no less than five (5) years together
with a tenant estoppel certificate from such Tenant in form and substance
acceptable to Lender, and (II) a Re-Tenanting Event.

 

“Management Agreement” shall mean the management agreement entered into by and
between Borrower and the Manager, pursuant to which the Manager is to provide
management and other services with respect to the Property.

 

“Manager” shall mean URA Property Management LLC, a Delaware limited liability
company, or any other manager approved by Lender and the Rating Agencies in
accordance with the terms and conditions of the Loan Documents.

 

“Manager Termination Ratio” shall have the meaning set forth in Section 7.3.

 

“Material Alteration” shall have the meaning set forth in Section 4.1.11.

 

“Maturity Date” shall mean the date on which the final payment of principal of
the Note becomes due and payable as herein and therein provided, whether at the
Stated Maturity Date, by declaration of acceleration, extension or otherwise.

 

“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such Governmental
Authority whose laws are held by any court of competent jurisdiction to govern
the interest rate provisions of the Loan.

 

“Monthly Debt Service Payment Amount” shall mean (i) for the Monthly Payment
Date occurring in July, 2014 and for each Monthly Payment Date occurring
thereafter up to and including the Monthly Payment Date occurring in June, 2016,
a payment equal to the amount of interest which has accrued during the preceding
Interest Accrual Period computed at the Interest Rate and (ii) for the Monthly
Payment Date occurring in July, 2016, and for each Monthly Payment occurring
thereafter, a constant monthly payment of $53,965.85.

 

“Monthly Operating Expense Budgeted Amount” shall mean the monthly amount for
Operating Expenses set forth in the Approved Annual Budget for the calendar
month in which such Monthly Payment Date occurs.

 

“Monthly Payment Date” shall mean the sixth (6th) day of every calendar month
occurring during the Term.

 

“Moody’s” shall mean Moody’s Investors Service, Inc.

 

“Mortgage” shall mean that certain first priority Mortgage, Assignment of Leases
and Rents and Security Agreement, dated the date hereof, executed and delivered
by Borrower as security for the Loan and encumbering the Property, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.

 

- 11 -

 

 

“Net Operating Income” shall mean the amount obtained by subtracting Operating
Expenses from Operating Income.

 

“Net Proceeds” shall mean: (i) the net amount of all Insurance Proceeds payable
as a result of a Casualty to the Property, after deduction of reasonable costs
and expenses (including reasonable attorneys’ fees and costs), if any, in
collecting such Insurance Proceeds, or (ii) the net amount of the Award, after
deduction of reasonable costs and expenses (including reasonable attorneys’ fees
and costs), if any, in collecting such Award.

 

“Net Proceeds Deficiency” shall have the meaning set forth in
Section 5.4(b)(vi).

 

“Note” shall have the meaning set forth in Section 2.1.3.

 

“Notice” shall have the meaning set forth in Section 11.6.

 

“Obligations” shall mean, collectively, Borrower’s obligations for the payment
of the Debt and the performance of the Other Obligations.

 

“OFAC” shall have the meaning set forth in Section 4.1.14(b).

 

“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized senior officer of the manager of Borrower.

 

“Open Prepayment Date” shall mean March 6, 2024.

 

“Operating Agreements” shall mean the REA, and any other covenants,
restrictions, easements, declarations or agreements of record relating to the
construction, operation or use of the Property.

 

“Operating Expenses” shall mean, for any period, without duplication, all
expenses actually paid or payable by Borrower during such period in connection
with the operation, management, maintenance, repair and use of the Property,
determined on an accrual basis, and, except to the extent otherwise provided in
this definition, in accordance with GAAP. Operating Expenses specifically shall
include (i) all expenses incurred in the immediately preceding twelve (12) month
period based on quarterly financial statements delivered to Lender in accordance
with Section 4.1.7 hereof, (ii) all payments required to be made pursuant to any
Operating Agreements, (iii) property management fees in an amount equal to the
greater of three percent (3%) of Operating Income and the management fees
actually paid under the Management Agreement, (iv) administrative, payroll,
security and general expenses for the Property, (v) the cost of utilities,
inventories and fixed asset supplies consumed in the operation of the Property,
(vi) a reasonable reserve for uncollectible accounts, (vii) costs and fees of
independent professionals (including, without limitation, legal, accounting,
consultants and other professional expenses), technical consultants, operational
experts (including quality assurance inspectors) or other third parties retained
to perform services required or permitted hereunder, (viii) cost of attendance
by employees at training and manpower development programs,

 

- 12 -

 

 

(ix) association dues, (x) computer processing charges, (xi) operational
equipment and other lease payments as reasonably approved by Lender, (xii) Taxes
and Other Charges (other than income taxes or Other Charges in the nature of
income taxes) and insurance premiums and (xiii) all underwritten reserves
required by Lender hereunder (without duplication). Notwithstanding the
foregoing, Operating Expenses shall not include (1) depreciation or
amortization, (2) income taxes or Other Charges in the nature of income taxes,
(3) any expenses (including legal, accounting and other professional fees,
expenses and disbursements) incurred in connection with the making of the Loan
or the sale, exchange, transfer, financing or refinancing of all or any portion
of the Property or in connection with the recovery of Insurance Proceeds or
Awards which are applied to prepay the Note, (4) Capital Expenditures, (5) Debt
Service, (6) intentionally omitted and (7) any item of expense which would
otherwise be considered within Operating Expenses pursuant to the provisions
above but is paid directly by any Tenant.

 

“Operating Income” shall mean, for any period, all income of Borrower during
such period from the use, ownership or operation of the Property, including:

 

(a)          all amounts payable to Borrower by any Person as Rent and other
amounts under Leases or other agreements relating to the Property;

 

(b)          business interruption insurance proceeds allocable to the
applicable reporting period; and

 

(c)          all other amounts which in accordance with GAAP, are included in
Borrower’s annual financial statements as operating income attributable to the
Property.

 

Notwithstanding the foregoing, Operating Income shall not include (a) any
Insurance Proceeds (other than business interruption insurance proceeds and only
to the extent allocable to the applicable reporting period), (b) any proceeds
resulting from the Transfer of all or any portion of the Property, (c) any Rent
attributable to a Lease prior to the date in which the Tenant thereunder has
taken occupancy or in which the actual payment of rent is required to commence
thereunder, (d) any item of income otherwise included in Operating Income but
paid directly by any Tenant to a Person other than Borrower as an offset or
deduction against Rent payable by such Tenant, provided such item of income is
for payment of an item of expense (such as payments for utilities paid directly
to a utility company) and such expense is otherwise excluded from the definition
of Operating Expenses pursuant to clause ”(6)” of the definition thereof,
(e) security deposits received from Tenants until forfeited or applied, and
(f) any Rents paid by or on behalf of any Tenant under a Lease which is the
subject of any proceeding or action relating to its bankruptcy, reorganization
or other arrangement pursuant to federal bankruptcy law or any similar federal
or state law or which has been adjudicated a bankrupt or insolvent unless such
Lease has been assumed by the trustee in such proceeding or action. Operating
Income shall be calculated on the accrual basis of accounting and, except to the
extent otherwise provided in this definition, in accordance with GAAP.

 

“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes and any other charges, including vault charges and license fees
for the use of vaults, chutes and similar areas adjoining the Property, now or
hereafter levied or assessed or imposed against the Property or any part
thereof.

 

- 13 -

 

 

“Other Obligations” shall mean (a) the performance of all obligations of
Borrower contained herein; (b) the performance of each obligation of Borrower
contained in any other Loan Document; and (c) the performance of each obligation
of Borrower contained in any renewal, extension, amendment, modification,
consolidation, change of, or substitution or replacement for, all or any part of
this Agreement, the Note or any other Loan Document.

 

“Outstanding Principal Balance” shall mean, as of any date, the outstanding
principal balance of the Loan.

 

“Patriot Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT
ACT) of 2001, as the same may be amended from time to time, and corresponding
provisions of future laws.

 

“Patriot Act Offense” shall have the meaning set forth in Section 4.1.14(b).

 

“Permitted Encumbrances” shall mean, collectively, (i) the Liens and security
interests created by the Loan Documents, (ii) all encumbrances and other matters
disclosed in the Title Insurance Policy and otherwise acceptable to Lender in
its sole discretion, (iii) Liens, if any, for Taxes or Other Charges imposed by
any Governmental Authority not yet due or delinquent, and (iv) such other title
and survey exceptions as Lender has approved or may approve in writing in
Lender’s sole discretion.

 

“Permitted Indebtedness” shall have the meaning set forth in Section 3.1.24(d).

 

“Permitted Investments” shall have the meaning set forth in the Cash Management
Agreement.

 

“Permitted Transfer” shall have the meaning set forth in Section 8.2(a).

 

“Permitted Transferee” shall mean a corporation, partnership or limited
liability company (i) acceptable to Lender in its sole discretion, (ii) that
qualifies as a single purpose, bankruptcy remote entity under criteria
established by the Rating Agencies, and (iii) such entity, together with the
direct and indirect owners of such entity and any related guarantor, are
reputable Persons of good character, creditworthy and with sufficient financial
worth considering the obligations assumed and undertaken, as evidenced by
financial statements and other information reasonably requested by Lender.

 

“Person” shall mean any individual, corporation, partnership, limited liability
company, joint venture, estate, trust, unincorporated association, any other
entity, any Governmental Authority and any fiduciary acting in such capacity on
behalf of any of the foregoing.

 

“Physical Condition Report” shall mean a report prepared by a company
satisfactory to Lender regarding the physical condition of the Property,
satisfactory in form and substance to Lender in its sole discretion, which
report shall, among other things, (i) confirm that the Property and its use
comply, in all material respects, with all applicable Legal Requirements
(including zoning, subdivision and building laws), and (ii) include a copy of a
final certificate of occupancy with respect to all Improvements.

 

- 14 -

 

 

“Policies” shall have the meaning set forth in Section 5.1.1(b).

 

“Prepayment Date” shall mean the date of a prepayment of the Loan pursuant to
the provisions of Section 2.4 hereof.

 

“Prepayment Fee” shall mean an amount equal to the greater of (i) the Yield
Maintenance Amount, or (ii) five percent (5%) of the unpaid principal balance of
the Note as of the Prepayment Date.

 

“Prepayment Notice” shall mean a prior irrevocable written notice to Lender
specifying the proposed Business Day on which a prepayment is to be made
pursuant to Section 2.4 hereof, which date must be a Monthly Payment Date and
shall be no earlier than thirty (30) days after the date of such Prepayment
Notice and no later than sixty (60) days after the date of such Prepayment
Notice.

 

“Property” shall mean the parcel of real property described on Exhibit A
attached hereto and made a part hereof, the Improvements now or hereafter
erected or installed thereon and all personal property owned by Borrower and
encumbered by the Mortgage, together with all rights pertaining to such property
and Improvements, all as more particularly described in the Granting Clauses of
the Mortgage.

 

“Rating Agencies” shall mean, prior to the final Securitization of the Loan,
each of S&P, Moody’s, Fitch, Realpoint LLC and DBRS, Inc. or any other
nationally-recognized statistical rating agency which has been designated by
Lender and, after the final Securitization of the Loan, shall mean any of the
foregoing that have rated any of the Securities.

 

“Rating Agency Confirmation” shall mean a written affirmation from each of the
Rating Agencies that the credit rating of the Securities by such Rating Agency
immediately prior to the occurrence of the event with respect to which such
Rating Agency Confirmation is sought will not be qualified, downgraded or
withdrawn as a result of the occurrence of such event, which affirmation may be
granted or withheld in such Rating Agency’s sole and absolute discretion. For
the purposes of this Agreement and the other Loan Documents, if any Rating
Agency shall waive, decline or refuse to review or otherwise engage any request
for a Rating Agency Confirmation hereunder or under the other Loan Documents
(hereinafter a “RA Consent”), such RA Consent shall be deemed to eliminate, for
such request only, the condition that a Rating Agency Confirmation by such
Rating Agency (only) be obtained for purposes of this Agreement or the other
Loan Documents, as applicable; provided, however, if Lender does not have a
separate and independent approval right with respect to such event set forth
herein or in the other Loan Documents, as applicable, then the term “Rating
Agency Confirmation” shall be deemed instead to require the approval of Lender
based on its good faith determination of whether the applicable Rating Agency
would issue a Rating Agency Confirmation for the applicable event. For purposes
of clarity, any such waiver, declination or refusal to review or otherwise
engage in any request for a Rating Agency Confirmation hereunder or under the
other Loan Documents shall not be deemed a waiver, declination or refusal to
review or otherwise engage in any subsequent request for a Rating Agency
Confirmation hereunder or under the other Loan Documents, and the condition for
Rating Agency Confirmation pursuant to this Agreement and the other Loan
Documents for any subsequent request shall apply regardless of any previous
waiver, declination or refusal to review or otherwise engage in such prior
request.

 

- 15 -

 

 

“REA” shall mean, collectively, as the same may be amended, restated,
supplemented or otherwise modified from time to time, any reciprocal easement
agreement or similar document affecting the Property now or hereafter of record.

 

“Registration Statement” shall have the meaning set forth in Section 9.2(b).

 

“Regulation AB” shall mean Regulation AB under the Securities Act and the
Exchange Act, as such Regulation may be amended from time to time.

 

“Related Loan” shall mean a loan to an Affiliate of Borrower or any Guarantor or
secured by a Related Property, that is included in a Securitization with the
Loan, and any other loan that is cross-collateralized with the Loan.

 

“Related Property” shall mean a parcel of real property, together with
improvements thereon and personal property related thereto, that is “related”
within the meaning of the definition of Significant Obligor, to the Property.

 

“Release Date” shall have the meaning set forth in Section 2.5.1(a).

 

“Remaining Receipts” shall have the meaning set forth in Section 6.11.1.

 

“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note.

 

“Rents” shall mean all rents, rent equivalents, moneys payable as damages
(including payments by reason of the rejection of a Lease in a bankruptcy
proceeding) or in lieu of rent or rent equivalents, royalties (including all oil
and gas or other mineral royalties and bonuses), income, fees, receivables,
receipts, revenues, deposits (including security, utility and other deposits),
accounts, cash, issues, profits, charges for services rendered, and other
payment and consideration of whatever form or nature received by or paid to or
for the account of or benefit of Borrower, Manager or any of their respective
agents or employees from any and all sources arising from or attributable to the
Property and the Improvements, including all receivables, customer obligations,
installment payment obligations and other obligations now existing or hereafter
arising or created out of the sale, lease, sublease, license, concession or
other grant of the right of the use and occupancy of the Property or rendering
of services by Borrower, Manager or any of their respective agents or employees,
and Insurance Proceeds, if any, from business interruption or other loss of
income insurance, but only to the extent Lender elects to treat such Insurance
Proceeds as business or rental interruption Insurance Proceeds pursuant to
Section 5.4(e) hereof.

 

“Reporting Failure” shall have the meaning set forth in Section 4.1.7(i).

 

“Required Financial Item” shall have the meaning set forth in Section 4.1.7(i).

 

- 16 -

 

 

“Reserve Funds” shall mean, collectively, all funds deposited by Borrower with
Lender or Cash Management Bank pursuant to Article 6 of this Agreement,
including, but not limited to, the Capital Expenditure Funds, the Insurance
Funds, the Tax Funds, the Major Tenant Funds, the Excess Cash Flow Funds and the
Rollover Funds.

 

“Reserve Items” shall have the meaning set forth in Section 6.10.4.

 

“Restoration” shall mean the repair and restoration of the Property after a
Casualty or Condemnation as nearly as possible to the condition the Property was
in immediately prior to such Casualty or Condemnation, with such alterations as
may be reasonably approved by Lender.

 

“Restoration DSCR” shall mean, as of any date of determination, the ratio of
(a) the Net Operating Income of the Property, based on rents in place
(annualized) and trailing 12-month expenses, to (b) an amount equal to
twelve (12) times the Monthly Debt Service Payment Amount.

 

“Restoration Threshold” shall mean 1% of the outstanding principal amount of the
Loan.

 

“Re-Tenanting Event” shall mean, with respect to the Cardiology/Gastro
Associates Space, Lender’s receipt of evidence in form and substance
satisfactory to Lender that one or more replacement tenants reasonably
satisfactory to Lender are in full occupancy of such premises, open for business
and paying full, unabated rent pursuant to a lease with a term of no less than
five (5) years and a net effective rental payment of no less than $23.00 per
foot, on a triple net basis (however, in the event that such lease provides for
a term of less than five (5) years or a net effective rental payment of less
than $23.00 per foot, on a triple net basis, such lease terms shall be
acceptable to Lender in its sole discretion), such evidence to include, without
limitation, (i) a fully-executed Lease entered into in accordance with the terms
of the Loan Agreement and satisfactory to Lender and (ii) a tenant estoppel
certificate from such replacement tenant that confirms the foregoing.

 

“RICO” shall have the meaning set forth in Section 11.22.

 

“Rollover Account” shall have the meaning set forth in Section 6.6.1(a).

 

“Rollover Funds” shall have the meaning set forth in Section 6.6.1(a).

 

“S&P” shall mean Standard & Poor’s Ratings Group, a division of the McGraw-Hill
Companies.

 

“Secondary Market Transaction” shall have the meaning set forth in
Section 9.1(a).

 

“Securities” shall have the meaning set forth in Section 9.1(a).

 

“Securities Act” shall have the meaning set forth in Section 9.2(a).

 

- 17 -

 

  

“Securitization” shall have the meaning set forth in Section 9.1(a).

 

“Servicer” shall have the meaning set forth in Section 11.24.

 

“Servicing Agreement” shall have the meaning set forth in Section 11.24.

 

“Severed Loan Documents” shall have the meaning set forth in Section 10.2(c).

 

“Significant Obligor” shall have the meaning set forth in Item 1101(k) of
Regulation AB under the Securities Act.

 

“SPC Party” shall have the meaning set forth in Section 3.1.24(o).

 

“Special Member” shall have the meaning set forth in Section 3.1.24(r).

 

“Sponsor Member” shall have the meaning set forth in Section 8.2.

 

“Springing Recourse Event” shall have the meaning set forth in Section 11.22.

 

“State” shall mean the State of South Carolina.

 

“Stated Maturity Date” shall mean June 6, 2024.

 

“Successor Borrower” shall have the meaning set forth in Section 2.5.3.

 

“Survey” shall mean a survey of the Property prepared by a surveyor licensed in
the State and satisfactory to Lender and the company or companies issuing the
Title Insurance Policy, and containing a certification of such surveyor
satisfactory to Lender.

 

“Sweep Event Period” shall mean (I) a Major Tenant Trigger Period or (II) a
period of time commencing with the occurrence of (i) an Event of Default; or
(ii) the Debt Service Coverage Ratio (based on the trailing twelve (12) calendar
months and as determined by Lender) is at any time less than 1.10 to 1.00; and
such Sweep Event Period shall expire, provided that no other Sweep Event Period
has occurred and is continuing, (1) with regard to any Sweep Event Period
commenced in connection with clause (i) above, upon the cure (if applicable) of
such Event of Default and acceptance by Lender of such cure in Lender’s sole and
absolute discretion, and (2) with regard to any Sweep Event Period commenced in
connection with clause (ii) above, upon the date on which the Debt Service
Coverage Ratio (based on the trailing twelve (12) calendar months and as
determined by Lender) is at least 1.15 to 1.00 for two (2) consecutive calendar
quarters.

 

“Tax Account” shall have the meaning set forth in Section 6.3.1.

 

“Tax Funds” shall have the meaning set forth in Section 6.3.1.

 

“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against the Property or part thereof, together with all interest and penalties
thereon.

 

- 18 -

 

 

“Tenant” shall mean any Person obligated by contract or otherwise to pay monies
(including a percentage of gross income, revenue or profits) under any Lease now
or hereafter affecting all or any part of the Property.

 

“Term” shall mean the entire term of this Agreement, which shall expire upon
repayment in full of the Debt and full performance of each and every obligation
to be performed by Borrower pursuant to the Loan Documents.

 

“Title Insurance Policy” shall mean an ALTA mortgagee title insurance policy in
the form acceptable to Lender issued with respect to the Property and insuring
the Lien of the Mortgage.

 

“Transfer” shall have the meaning set forth in Section 4.2.1.

 

“Treasury Rate” shall mean the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15 Selected
Interest Rates under the heading U.S. Government Securities/Treasury Constant
Maturities for the week ending prior to the Prepayment Date, of U.S. Treasury
constant maturities with maturity dates (one longer and one shorter) most nearly
approximating the Stated Maturity Date. (In the event Release H.15 is no longer
published, Lender shall select a comparable publication to determine the
Treasury Rate.)

 

“Trustee” shall mean any trustee holding the Loan in a Securitization.

 

“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State.

 

“Underwriter Group” shall have the meaning set forth in Section 9.2(b).

 

“Updated Information” shall have the meaning set forth in Section 9.1(b)(i).

 

“U.S. Obligations” shall mean securities evidencing an obligation to timely pay
principal and/or interest in a full and timely manner that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged, (ii) not subject to prepayment, call or early
redemption and (iii) “government securities” as defined in the Treasury
Regulations Section 1.860G-2(a)(8)(ii).

 

“U.S. Person” shall mean any Person that is (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other entity created or
organized under the laws of the United States or any state, commonwealth or
district thereof, or (iii) any estate or trust that is subject to United States
federal income taxation, regardless of the source of its income.

 

“Yield Maintenance Amount” shall mean the present value, as of the Prepayment
Date, of the remaining scheduled payments of principal and interest from the
Prepayment Date through the Stated Maturity Date (including any balloon payment)
determined by discounting such payments at the Discount Rate, less the amount of
principal being prepaid.

 

- 19 -

 

 

Section 1.2          Principles of Construction.

 

All references to sections and schedules are to sections and schedules in or to
this Agreement unless otherwise specified. Unless otherwise specified, the words
“hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement and the word “including” shall mean “including but
not limited to”. Unless otherwise specified, all meanings attributed to defined
terms herein shall be equally applicable to both the singular and plural forms
of the terms so defined.

 

ARTICLE 2

THE LOAN

 

Section 2.1          The Loan.

 

2.1.1          Agreement to Lend and Borrow. Subject to and upon the terms and
conditions set forth herein, Lender shall make the Loan to Borrower and Borrower
shall accept the Loan from Lender on the Closing Date.

 

2.1.2          Single Disbursement to Borrower. Borrower shall receive only one
borrowing hereunder in respect of the Loan and any amount borrowed and repaid
hereunder in respect of the Loan may not be reborrowed.

 

2.1.3          The Note. The Loan shall be evidenced by that certain Promissory
Note of even date herewith, in the stated principal amount of Ten Million Three
Hundred Thousand and No/100 Dollars ($10,300,000.00) executed by Borrower and
payable to the order of Lender in evidence of the Loan (as the same may
hereafter be amended, supplemented, restated, increased, extended or
consolidated from time to time, the “Note”) and shall be repaid in accordance
with the terms of this Agreement and the Note.

 

2.1.4          Use of Proceeds. Borrower shall use proceeds of the Loan to
(i) acquire the Property and/or pay and discharge any existing loans relating to
the Property, (ii) pay all past-due Taxes, Insurance Premiums and Other Charges,
if any, in respect of the Property, (iii) make initial deposits of the Reserve
Funds, (iv) pay costs and expenses incurred in connection with the closing of
the Loan, and (v) to the extent any proceeds remain after satisfying clauses (i)
through (iv) above, for such other general corporate purposes as Borrower shall
designate.

 

Section 2.2          Interest Rate.

 

2.2.1          Interest Rate. Interest on the Outstanding Principal Balance
shall accrue throughout the Term at the Interest Rate.

 

2.2.2          Intentionally Omitted.

 

- 20 -

 

 

2.2.3          Default Rate. In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the Outstanding Principal Balance
and, to the extent permitted by law, overdue interest in respect of the Loan,
shall accrue interest at the Default Rate, calculated from the date such payment
was due without regard to any grace or cure periods contained herein. Interest
at the Default Rate shall be paid immediately upon demand, which demand may be
made as frequently as Lender shall elect.

 

2.2.4          Interest Calculation. Interest on the Outstanding Principal
Balance shall be calculated by multiplying (A) the actual number of days elapsed
in the period for which the calculation is being made by (B) a daily rate based
on a three hundred sixty (360) day year (that is, the Interest Rate or the
Default Rate, as then applicable, expressed as an annual rate divided by 360) by
(C) the Outstanding Principal Balance. The accrual period for calculating
interest due on each Monthly Payment Date shall be the Interest Period
immediately prior to such Monthly Payment Date.

 

2.2.5          Usury Savings. This Agreement and the other Loan Documents are
subject to the express condition that at no time shall Borrower be required to
pay interest on the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being in excess of
the Maximum Legal Rate. If by the terms of this Agreement or the other Loan
Documents, Borrower is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of the Maximum Legal Rate,
the Interest Rate or the Default Rate, as the case may be, shall be deemed to be
immediately reduced to the Maximum Legal Rate and all previous payments in
excess of the Maximum Legal Rate shall be deemed to have been payments in
reduction of principal and not on account of the interest due hereunder. All
sums paid or agreed to be paid to Lender for the use, forbearance, or detention
of the sums due under the Loan, shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full stated
term of the Loan until payment in full so that the rate or amount of interest on
account of the Loan does not exceed the Maximum Legal Rate from time to time in
effect and applicable to the Loan for so long as the Loan is outstanding.

 

Section 2.3          Loan Payments.

 

2.3.1          Payments. Borrower shall pay to Lender (a) on the date hereof, an
amount equal to interest only on the Outstanding Principal Balance from the
Closing Date up to and including June 5, 2014 (the “Initial Interest Period”),
(b) on each Monthly Payment Date thereafter beginning on July 6, 2014 up to and
including the Maturity Date, a payment of principal and interest (if applicable)
in an amount equal to the Monthly Debt Service Payment Amount, which payments
shall be applied first to accrued and unpaid interest and the balance to the
Outstanding Principal Balance, and (c) all amounts required in respect of
Reserve Funds as set forth in Article 6 hereof.

 

2.3.2          Intentionally Omitted.

 

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2.3.3          Payments Generally. After the Initial Interest Period, each
interest accrual period thereafter (each, an “Interest Period”) shall commence
on the sixth (6th) day of each calendar month during the Term and shall end on
and include the fifth (5th) day of the following calendar month. For purposes of
making payments hereunder, but not for purposes of calculating interest accrual
periods, if the day on which such payment is due is not a Business Day, then
amounts due on such date shall be due on the immediately preceding Business Day.
Lender shall have the right from time to time, in its sole discretion, upon not
less than ten (10) days prior written notice to Borrower, to change the Monthly
Payment Date to a different calendar day and, if requested by Lender, Borrower
shall promptly execute an amendment to this Agreement to evidence such change;
provided, however, that if Lender shall have elected to change the Monthly
Payment Date as aforesaid, Lender shall have the option, but not the obligation,
to adjust the Interest Period accordingly. With respect to payments of principal
due on the Maturity Date, interest shall be payable at the Interest Rate or the
Default Rate, as the case may be, through and including the day immediately
preceding such Maturity Date. All amounts due pursuant to this Agreement and the
other Loan Documents shall be payable without setoff, counterclaim, defense or
any other deduction whatsoever.

 

2.3.4          Payment on Maturity Date. Borrower shall pay to Lender on the
Maturity Date the Outstanding Principal Balance, all accrued and unpaid interest
and all other amounts due hereunder and under the Note, the Mortgage and the
other Loan Documents.

 

2.3.5          Late Payment Charge. If any principal, interest or any other sum
due under the Loan Documents (other than the Outstanding Principal Balance due
and payable on the Maturity Date) is not paid by Borrower on the date on which
it is due (taking into account any applicable notice and/or grace period
provided pursuant to the terms of the Loan Documents), Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of such
unpaid sum or the maximum amount permitted by applicable law in order to defray
the expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment. Any such amount shall be secured by the Mortgage and the other Loan
Documents to the extent permitted by law.

 

2.3.6          Method and Place of Payment.

 

(a)         Except as otherwise specifically provided herein, all payments and
prepayments under this Agreement and the Note shall be made to Lender not later
than 12:00 noon, New York City time, on the date when due and shall be made in
lawful money of the United States of America in immediately available funds at
Lender’s office or at such other place as Lender shall from time to time
designate, and any funds received by Lender after such time shall, for all
purposes hereof, be deemed to have been paid on the next succeeding Business
Day.

 

(b)         Whenever any payment to be made hereunder or under any other Loan
Document shall be stated to be due on a day which is not a Business Day, the due
date thereof shall be the immediately preceding Business Day.

 

(c)         All payments required to be made by Borrower hereunder or under the
Note or the other Loan Documents shall be made irrespective of, and without
deduction for, any setoff, claim or counterclaim and shall be made irrespective
of any defense thereto.

 

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Section 2.4          Prepayments.

 

2.4.1          Prepayments. Except as otherwise provided herein, Borrower shall
not have the right to prepay the Loan in whole or in part prior to the Stated
Maturity Date.

 

2.4.2          Intentionally Omitted.

 

2.4.3          Open Prepayment. Notwithstanding anything to the contrary
contained herein, provided no Event of Default shall have occurred, and provided
that Borrower shall deliver to Lender a Prepayment Notice, Borrower may prepay
the entire principal balance of the Note and any other amounts outstanding under
the Note, this Agreement, or any of the other Loan Documents (including, without
limitation, all amounts pursuant to Section 2.4.6(a) and Section 2.4.6(c)
hereof), without payment of the Prepayment Fee or any other prepayment premium
or fee, on any Payment Date on or after the Open Prepayment Date.

 

2.4.4          Mandatory Prepayments. If Lender is not obligated to make Net
Proceeds available to Borrower for Restoration, on the next occurring Monthly
Payment Date following the date on which (a) Lender actually receives any Net
Proceeds, and (b) Lender has determined that such Net Proceeds shall be applied
against the Outstanding Principal Balance, (1) Borrower shall prepay, or
authorize Lender to apply Net Proceeds as a prepayment of, the Outstanding
Principal Balance in an amount equal to one hundred percent (100%) of such Net
Proceeds and (2) Borrower shall comply with the provisions set forth in
Section 2.4.6. Notwithstanding anything herein to the contrary, so long as no
Event of Default has occurred and is continuing, no Prepayment Fee shall be due
in connection with any prepayment made pursuant to this Section 2.4.4. Any
partial prepayment under this Section 2.4.4 shall be applied to the last
payments of principal due under the Loan.

 

2.4.5          Prepayments After Default. If after the occurrence and during the
continuance of an Event of Default, payment of all or any part of the Debt is
tendered by Borrower or otherwise recovered by Lender (including through
application of any Reserve Funds), such tender or recovery shall be deemed
(a) to have been made on the next occurring Monthly Payment Date together with
the Monthly Debt Service Payment Amount, and (b) to be a voluntary prepayment by
Borrower in violation of the prohibition against prepayment set forth in
Section 2.4.1 hereof, and Borrower shall pay, in addition to the Debt, an amount
equal to the Prepayment Fee.

 

2.4.6         Payments in Connection with a Prepayment.

 

(a)          On the date on which a prepayment, voluntary or mandatory, is made
under the Note or as required under this Agreement, which date must be a
Business Day, Borrower shall pay to Lender all unpaid interest on the portion of
the Outstanding Principal Balance prepaid plus, if the Prepayment Date is not a
Monthly Payment Date, all interest accruing for the full Interest Period in
which the Prepayment Date falls.

 

(b)          On the Prepayment Date, Borrower shall pay to Lender (i) the
Prepayment Fee and (ii) all other sums, excluding scheduled interest payments,
then due under the Note, this Agreement, the Mortgage, and the other Loan
Documents.

 

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(c)          Borrower shall pay all costs and expenses of Lender incurred in
connection with the prepayment (including without limitation, any costs and
expenses associated with a release of the Lien of the Mortgage as set forth in
Section 2.4.7 below and reasonable attorneys’ fees and expenses).

 

2.4.7          Release on Payment in Full. Lender shall, upon the written
request and at the expense of Borrower, upon payment in full of all principal
and interest due on the Loan and all other amounts due and payable under the
Loan Documents in accordance with the terms and provisions of the Note and this
Agreement, release the Lien of the Mortgage.

 

Section 2.5          Defeasance.

 

2.5.1          Conditions to Defeasance. Provided no Event of Default has
occurred and is continuing, at any time after the date which is the earlier to
occur of (A) two (2) years after the “startup day,” within the meaning of
Section 860G(a)(9) of the Code, of the final “real estate mortgage investment
conduit,” established within the meaning of Section 860D of the Code, that holds
any note that evidences all or any portion of the Loan or (B) three (3) years
after the date hereof (the “Defeasance Lockout Expiration Date”), Borrower may
cause the release of the Property (in whole but not in part) from the Lien of
the Mortgage and the other Loan Documents upon the satisfaction of the following
conditions:

 

(a)          not less than thirty (30) days' prior written notice shall be given
to Lender specifying a date (the “Release Date”) on which the Defeasance
Collateral is to be delivered, such Release Date to occur only on a Monthly
Payment Date;

 

(b)          all accrued and unpaid interest and all other sums due under the
Note and under the other Loan Documents up to the Release Date, including,
without limitation, all costs and expenses incurred by Lender or its agents in
connection with such release (including, without limitation, the fees and
expenses incurred by attorneys and accountants in connection with the review of
the proposed Defeasance Collateral and the preparation of the Defeasance
Security Agreement and related documentation), shall be paid in full on or prior
to the Release Date; and

 

(c)         Borrower shall deliver to Lender on or prior to the Release Date:

 

(i)         an amount equal to that which is sufficient to purchase U.S.
Obligations that provide for payments (1) on or prior to, but as close as
possible to and including, all successive scheduled Monthly Payment Dates after
the Release Date through the Open Prepayment Date, and (2) in amounts equal to
or greater than the Monthly Debt Service Payment Amount through and including
the Open Prepayment Date together with payment in full of the Outstanding
Principal Balance as of the Open Prepayment Date (the “Defeasance Collateral”),
each of which shall be duly endorsed by the holder thereof as directed by Lender
or accompanied by a written instrument of transfer in form and substance wholly
satisfactory to Lender (including, without limitation, such instruments as may
be required by the depository institution holding such securities to effectuate
book-entry transfers and pledges through the book-entry facilities of such
institution) in order to create a first priority security interest therein in
favor of the Lender in conformity with all applicable state and federal laws
governing granting of such security interests;

 

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(ii)        a pledge and security agreement, in form and substance satisfactory
to Lender in its sole discretion, creating a first priority security interest in
favor of Lender in the Defeasance Collateral (the “Defeasance Security
Agreement”), which shall provide, among other things, that any payments
generated by the Defeasance Collateral shall be paid directly to Lender and
applied by Lender in satisfaction of all amounts then due and payable hereunder
and any excess received by Lender from the Defeasance Collateral over the
amounts payable by Borrower hereunder or under the Note shall be refunded to
Borrower promptly after each Monthly Payment Date;

 

(iii)       a certificate of Borrower certifying that all of the requirements
set forth in this Section 2.5 have been satisfied;

 

(iv)      an opinion of counsel for Borrower in form and substance and delivered
by counsel satisfactory to Lender in its sole discretion stating, among other
things, that (1) Lender has a perfected first priority security interest in the
Defeasance Collateral and that the Defeasance Security Agreement is enforceable
against Borrower in accordance with its terms; and (2) that any REMIC Trust
formed pursuant to a Securitization will not fail to maintain its status as a
“real estate mortgage investment conduit” within the meaning of Section 860D of
the Code as a result of such defeasance;

 

(v)        evidence in writing from the applicable Rating Agencies to the effect
that the defeasance of the Loan and collateral substitution will not result in a
downgrading, withdrawal or qualification of the respective ratings in effect
immediately prior to such defeasance event for any securities issued in
connection with the Securitization which are then outstanding;

 

(vi)       a certificate from a firm of independent public accountants
acceptable to Lender certifying that the Defeasance Collateral is sufficient to
satisfy the provisions of Section 2.5.1(c)(i) above;

 

(vii)      such other certificates, documents or instruments as Lender may
reasonably require;

 

(viii)     in connection with the conditions set forth in Section 2.5.1(c)
above, Borrower hereby appoints Lender as its agent and attorney in fact for the
purpose of using the amounts delivered pursuant to Section 2.5.1(c)(i) above to
purchase the Defeasance Collateral; and

 

(ix)        payment of all escrow, closing, recording, legal, appraisal, Rating
Agency and other fees, costs and expenses paid or incurred by Lender or its
agents in connection with Borrower’s exercise of its rights under this Section
2.5, the release of the lien of Mortgage on the Property, the review of the
proposed Defeasance Collateral and the preparation of the Defeasance Security
Agreement and related documentation.

 

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2.5.2          Release of Property. Upon compliance with the requirements of
this Section 2.5, the Property shall be released from the Lien of the Mortgage
and the other Loan Documents, and the Defeasance Collateral shall constitute the
only collateral which shall secure the Note and all other Obligations. Lender
will, at Borrower’s expense, execute and deliver any agreements reasonably
requested by Borrower to release the Lien of the Mortgage from the Property.
Borrower, pursuant to the Defeasance Security Agreement, shall authorize and
direct that the payments received from Defeasance Collateral be made directly to
Lender and applied to satisfy the Obligations, including payment in full of the
Outstanding Principal Balance as of the Stated Maturity Date.

 

2.5.3          Successor Borrower. Upon the release of the Property in
accordance with Section 2.5.2, Borrower shall assign all its Obligations,
together with the pledged Defeasance Collateral, to a successor, single purpose,
bankruptcy remote entity designated by Lender in its sole discretion or, at the
option of Lender, designated by Borrower and approved by Lender (in each case,
the “Successor Borrower”). Lender shall have the right to establish or designate
the Successor Borrower and to purchase, or cause to be purchased, the Defeasance
Collateral (the “Defeasance Rights and Obligations”), which rights may be
exercised in Lender’s sole discretion and shall be retained by the Lender named
herein notwithstanding the transfer or securitization of the Loan. Such
successor entity shall execute an assumption agreement in form and substance
satisfactory to Lender in its sole discretion pursuant to which it shall assume
Borrower’s Obligations and the Defeasance Security Agreement. As conditions to
such assignment and assumption, Borrower shall (i) deliver to Lender an opinion
of counsel in form and substance and delivered by counsel satisfactory to Lender
in its sole discretion stating, among other things, that such assumption
agreement is enforceable against Borrower and such successor entity in
accordance with its terms and that the Note, the Defeasance Security Agreement
and the other Loan Documents, as so assumed, are enforceable against such
successor entity in accordance with their respective terms, and (ii) pay all
costs and expenses incurred by Lender or its agents in connection with such
assignment and assumption (including, without limitation, the review of the
proposed transferee and the preparation of the assumption agreement and related
documentation). Additionally, Borrower shall pay all costs and expenses incurred
by Successor Borrower, including attorneys’ fees and expenses, incurred in
connection therewith. Upon such assumption, Borrower shall be relieved of its
Obligations hereunder, under the other Loan Documents and under the Defeasance
Security Agreement other than those Obligations which are specifically intended
to survive the termination, satisfaction or assignment of this Agreement or the
exercise of Lender’s rights and remedies hereunder.

 

2.5.4          Appointment as Attorney in Fact. Upon the release of the Property
in accordance with Section 2.5.2, Borrower shall have no further right to prepay
the Note pursuant to the other provisions of this Section 2.5 or otherwise. In
connection with the conditions set forth in this Section 2.5, Borrower hereby
appoints Lender as its agent and attorney-in-fact for the purpose of purchasing
the Defeasance Collateral with funds provided by Borrower. Borrower shall pay
any and all expenses incurred in the purchase of the Defeasance Collateral and
any revenue, documentary stamp or intangible taxes or any other tax or charge
due in connection with the transfer of the Note or otherwise required to
accomplish the agreements of this Section 2.5.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

Section 3.1          Borrower Representations.

 

Borrower represents and warrants that as of the date hereof:

 

3.1.1          Organization. Borrower is duly organized, validly existing and in
good standing with full power and authority to own its assets and conduct its
business, and is duly qualified and in good standing in all jurisdictions in
which the ownership or lease of its property or the conduct of its business
requires such qualification, and Borrower has taken all necessary action to
authorize the execution, delivery and performance of this Agreement and the
other Loan Documents by it, and has the power and authority to execute, deliver
and perform under this Agreement, the other Loan Documents and all the
transactions contemplated hereby. Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own its properties and to transact the businesses in which it is now engaged,
and the sole business of Borrower is the ownership, management and operation of
the Property.

 

3.1.2          Proceedings. This Agreement and the other Loan Documents have
been duly authorized, executed and delivered by Borrower and, as applicable, by
Guarantor or other obligor thereunder, and constitute a legal, valid and binding
obligation of Borrower and, as applicable, by Guarantor or other obligor
thereunder, enforceable against such parties in accordance with their respective
terms, except as such enforcement may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization or other similar laws affecting the
enforcement of creditors’ rights generally, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

 

3.1.3          No Conflicts. The execution and delivery of this Agreement and
the other Loan Documents by Borrower and the performance of its Obligations
hereunder and thereunder will not conflict with any provision of any law or
regulation to which Borrower is subject, or conflict with, result in a breach
of, or constitute a default under, any of the terms, conditions or provisions of
any of Borrower’s organizational documents or any agreement or instrument to
which Borrower is a party or by which it is bound, or any order or decree
applicable to Borrower, or result in the creation or imposition of any Lien on
any of Borrower’s assets or property (other than pursuant to the Loan
Documents).

 

3.1.4          Litigation. There is no action, suit, proceeding or investigation
pending or, to the best of Borrower’s knowledge, threatened against Borrower,
any SPC Party, Guarantor, the Manager or the Property in any court or by or
before any other Governmental Authority which, in each case, if adversely
determined, might materially and adversely affect (a) title to the Property, (b)
the validity or enforceability of the Mortgage, (c) Borrower’s ability to
perform under the Loan Documents, (d) Guarantor’s ability to perform under the
Guaranty, (e) the use, operation or value of the Property, (f) the principal
benefit of the security intended to be provided by the Loan Documents, (g) the
current ability of the Property to generate net cash flow sufficient to service
the Loan, (h) the current principal use of the Property or (i) the condition
(financial or otherwise) or business of Borrower (including the ability of
Borrower to carry out the transactions contemplated by this Agreement), any SPC
Party, Guarantor, Manager or the condition or ownership of the Property.

 

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3.1.5          Agreements. Borrower is not a party to any agreement or
instrument or subject to any restriction which might materially and adversely
affect Borrower or the Property, or Borrower’s business, properties or assets,
operations or condition, financial or otherwise. Borrower is not in default with
respect to any order or decree of any court or any order, regulation or demand
of any Governmental Authority, which default might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of Borrower or its properties or might have consequences that would adversely
affect its performance hereunder. Borrower is not in default in any material
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Permitted Encumbrance or any other
agreement or instrument to which it is a party or by which it or the Property is
bound. Borrower has no material financial obligation (contingent or otherwise)
under any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which Borrower is a party or by which Borrower or the Property
is otherwise bound, other than (a) obligations incurred in the ordinary course
of the operation of the Property and (b) obligations under the Loan Documents.

 

3.1.6          Consents. No consent, approval, authorization or order of any
court or Governmental Authority is required for the execution, delivery and
performance by Borrower of, or compliance by Borrower with, this Agreement or
the other Loan Documents or the consummation of the transactions contemplated
hereby, other than those which have been obtained by Borrower.

 

3.1.7          Title. Borrower has good, marketable and insurable fee simple
title to the real property comprising part of the Property and good title to the
balance of the Property owned by it, free and clear of all Liens whatsoever
except the Permitted Encumbrances. To Borrower's actual knowledge, the Mortgage,
when properly recorded in the appropriate records, together with any Uniform
Commercial Code financing statements required to be filed in connection
therewith, will create (i) a legal, valid and enforceable first priority,
perfected Lien on Borrower’s interest in the Property, subject only to Permitted
Encumbrances, and (ii) valid, perfected security interests in and to, and
perfected collateral assignments of, all personal property and personalty
(including the Leases), all in accordance with the terms thereof, in each case
subject only to the Permitted Encumbrances. There are no mechanics’,
materialman’s or other similar Liens, encumbrances or claims which have been
filed (and no rights exist which under law could give rise to any such lien or
encumbrance) which are or may be Liens prior to, or equal or coordinate with,
the Lien of the Mortgage. None of the Permitted Encumbrances, individually or in
the aggregate, (a) materially interfere with the benefits of the security
intended to be provided by the Mortgage and this Agreement, (b) materially and
adversely affect the value of the Property, (c) impair the use or operation of
the Property (as currently used), or (d) impair Borrower’s ability to pay its
Obligations in a timely manner.

 

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3.1.8          No Plan Assets. As of the date hereof and throughout the Term
(i) Borrower does not sponsor, is not obligated to contribute to, and is not
itself and will not be an “employee benefit plan,” as defined in Section 3(3) of
ERISA, subject to Title I of ERISA or Section 4975 of the Code, (ii) none of the
assets of Borrower constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101, (iii) Borrower is
not and will not be a “governmental plan” within the meaning of Section 3(3) of
ERISA, and (iv) transactions by or with Borrower are not and will not be subject
to state statutes regulating investment of, and fiduciary obligations with
respect to, governmental plans within the meaning of Section 3(3) of ERISA which
is similar to the provisions of Section 406 of ERISA or Section 4975 of the Code
and which prohibit or otherwise restrict the transactions contemplated by this
Agreement including, but not limited to, the exercise by Lender of any of its
rights under the Loan Documents.

 

3.1.9          Compliance. Borrower and the Property (including, but not limited
to the Improvements) and the use thereof comply in all material respects with
all applicable Legal Requirements, including parking, building and zoning and
land use laws, ordinances, regulations, rules, covenants, restrictions and
codes. Borrower is not in default or violation of any order, writ, injunction,
decree or demand of any Governmental Authority, the violation of which might
materially adversely affect the condition (financial or otherwise) or business
of Borrower. Borrower has not committed any act which may give any Governmental
Authority the right to cause Borrower to forfeit the Property or any part
thereof or any monies paid in performance of Borrower’s Obligations under any of
the Loan Documents. The Property is used exclusively as a medical office
building and for other appurtenant and related uses. In the event that all or
any part of the Improvements are destroyed or damaged, said Improvements can be
legally reconstructed to their condition prior to such damage or destruction,
and thereafter exist for the same use without violating any zoning or other
ordinances applicable thereto and without the necessity of obtaining any
variances or special permits. No legal proceedings are pending or, to the
knowledge of Borrower, threatened with respect to the zoning of the Property.
Neither the zoning nor any other right to construct, use or operate the Property
is in any way dependent upon or related to any property other than the Property.
The use being made of the Property is in conformity with the certificate of
occupancy issued for the Property and all other restrictions, covenants and
conditions affecting the Property.

 

3.1.10          Financial Information. To the best of Borrower's knowledge, all
financial data, including the statements of cash flow and income and operating
expense, that have been delivered to Lender in connection with the Loan (i) are
true, complete and correct in all material respects, (ii) accurately represent
the financial condition of the Property as of the date of such reports, and
(iii) have been prepared in accordance with sound accounting methods throughout
the periods covered, except as disclosed therein. Borrower does not have any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Borrower and reasonably likely to have a materially adverse
effect on the Property or the operation thereof, except as referred to or
reflected in said financial statements. Since the date of the financial
statements, there has been no material adverse change in the financial
condition, operations or business of Borrower or the Property from that set
forth in said financial statements.

 

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3.1.11          Condemnation. No Condemnation or other proceeding has been
commenced or, to Borrower’s best knowledge, is contemplated with respect to all
or any portion of the Property or for the relocation of roadways providing
access to the Property.

 

3.1.12          Easements; Utilities and Public Access. To Borrower’s actual
knowledge, all easements, cross easements, licenses, air rights and
rights-of-way or other similar property interests (collectively, “Easements”),
if any, necessary for the full utilization of the Improvements for their
intended purposes have been obtained, are described in the Title Insurance
Policy and are in full force and effect without default thereunder. The Property
is located on or adjacent to a public road and has direct legal access to such
road, or has access via an irrevocable easement or irrevocable right of way
permitting ingress and egress to and from a public road. The Property is served
by water, sewer, sanitary sewer and storm drain facilities and all required
utilities, each of which is appropriate to service the Property for its intended
uses. To Borrower’s actual knowledge, all public utilities necessary or
convenient to the full use and enjoyment of the Property are located in the
public right-of-way abutting the Property, and all such utilities are connected
so as to serve the Property without passing over other property absent a valid
irrevocable easement. To Borrower’s actual knowledge, all roads necessary for
the use of the Property for its current purpose have been completed and
dedicated to public use and accepted by all Governmental Authorities.

 

3.1.13          Separate Lots. The Property is comprised of one (1) or more
parcels which constitute separate tax lots and do not constitute a portion of
any other tax lot not a part of the Property.

 

3.1.14          Assessments. There are no pending or proposed special or other
assessments for public improvements or otherwise affecting the Property, nor are
there any contemplated improvements to the Property that may result in such
special or other assessments.

 

3.1.15          Enforceability. The Loan Documents are not subject to any right
of rescission, offset, counterclaim or defense by Borrower, any SPC Party or
Guarantor including the defense of usury, nor would the operation of any of the
terms of the Loan Documents, or the exercise of any right thereunder, to
Borrower's actual knowledge, render the Loan Documents unenforceable, and none
of Borrower, any SPC Party or Guarantor have asserted any right of rescission,
set-off, counterclaim or defense with respect thereto.

 

3.1.16          Assignment of Leases. To Borrower's actual knowledge, the
Assignment of Leases creates a valid, first priority collateral assignment of,
or a valid, first priority security interest in, rents and certain rights under
the Leases, subject only to a license granted to Borrower to exercise certain
rights and to perform certain obligations of the lessor under the Leases,
including the right to operate the Property. No Person other than Lender has any
interest in or assignment of the Leases or any portion of the Rents due and
payable or to become due and payable thereunder.

 

3.1.17          Insurance. Borrower has obtained and has delivered to Lender
original or certified copies of all of the Policies, with all premiums prepaid
thereunder, reflecting the insurance coverages, amounts and other requirements
set forth in this Agreement. No claims have been made under any of the Policies,
and no Person, including Borrower, has done, by act or omission, anything which
would impair the coverage of any of the Policies.

 

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3.1.18          Licenses. All certifications, permits, licenses, franchises,
consents, approvals and any other applicable governmental authorizations,
including, without limitation, certificates of completion and occupancy permits
required of Borrower for the legal use, occupancy and operation of the Property
as a medical office building (collectively, the “Licenses”), have been obtained
and are in full force and effect. Borrower shall keep and maintain all Licenses
necessary for the operation of the Property as a medical office building. The
use being made of the Property is in conformity with the certificate of
occupancy issued for the Property.

 

3.1.19          Flood Zone. None of the Improvements on the Property is located
in an area identified by the Federal Emergency Management Agency as a special
flood hazard area, or, if so located, the flood insurance required pursuant to
Section 5.1.1(a) hereof is in full force and effect with respect to the
Property.

 

3.1.20          Physical Condition. Except as may be expressly set forth in the
Physical Condition Report, the Property, including all buildings, improvements,
parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems,
HVAC systems, fire protection systems, electrical systems, equipment, elevators,
exterior sidings and doors, landscaping, irrigation systems and all structural
components, are in good condition, order and repair in all material respects;
there exists no structural or other material defect or damage in the Property,
whether latent or otherwise, and Borrower has not received notice from any
insurance company or bonding company of any defects or inadequacies in the
Property, or any part thereof, which would adversely affect the insurability of
the same or cause the imposition of extraordinary premiums or charges thereon or
of any termination or threatened termination of any policy of insurance or bond.

 

3.1.21          Boundaries. All of the Improvements which were included in
determining the appraised value of the Property lie wholly within the boundaries
and building restriction lines of the Property, and no improvements on adjoining
properties encroach upon the Property, and no easements or other encumbrances
affecting the Property encroach upon any of the Improvements, so as to affect
the value or marketability or current use of the Property. No improvements on
adjoining parcels encroach onto the Property except for encroachments that do
not materially and adversely affect the value or current use of the Property. No
Improvements encroach upon any easements except for encroachments the removal of
which would not materially and adversely affect the value or current use of the
Property.

 

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3.1.22          Leases. The rent roll attached hereto as Schedule I is true,
complete and correct and the Property is not subject to any Leases other than
the Leases described in Schedule I. Borrower is the owner and lessor of
landlord’s interest in the Leases. No Person has any possessory interest in the
Property or right to occupy the same except under and pursuant to the provisions
of the Leases. The Leases identified on Schedule I are in full force and effect
and there are no defaults thereunder by either party, and there are no
conditions that, with the passage of time or the giving of notice, or both,
would constitute defaults thereunder. The copies of the Leases delivered to
Lender are true and complete, and there are no oral agreements with respect
thereto. No Rent (including security deposits) has been paid more than one (1)
month in advance of its due date. All work to be performed by Borrower under
each Lease has been performed as required and has been accepted by the
applicable Tenant. Any payments, free rent, partial rent, rebate of rent or
other payments, credits, allowances or abatements required to be given by
Borrower to any Tenant has already been received by such Tenant. The Tenants
under the Leases have accepted possession of and are in occupancy of all of
their respective demised premises and have commenced the payment of full,
unabated rent under the Leases. Borrower has delivered to Lender a true, correct
and complete list of all security deposits made by Tenants at the Property which
have not been applied (including accrued interest thereon), all of which are
held by Borrower in accordance with the terms of the applicable Lease and
applicable Legal Requirements. No Tenant under a Major Lease is a debtor in
state or federal bankruptcy, insolvency or similar proceeding. No Tenant under
any Lease (or any sublease) is an Affiliate of Borrower. The Tenants under the
Leases are open for business and paying full, unabated rent. There are no
brokerage fees or commissions due and payable in connection with the leasing of
space at the Property, except as has been previously disclosed to Lender in
writing, and no such fees or commissions will become due and payable in the
future in connection with the Leases, including by reason of any extension of
such Lease or expansion of the space leased thereunder, except as has previously
been disclosed to Lender in writing. There has been no prior sale, transfer or
assignment, hypothecation or pledge of any Lease or of the Rents received
therein which is still in effect. No Tenant listed on Schedule I has assigned
its Lease or sublet all or any portion of the premises demised thereby, no such
Tenant holds its leased premises under assignment or sublease, nor does anyone
except such Tenant and its employees occupy such leased premises. No Tenant
under any Lease has a right or option pursuant to such Lease or otherwise to
purchase all or any part of the leased premises or the building of which the
leased premises are a part. No Tenant under any Lease has any right or option
for additional space in the Improvements.

 

3.1.23          Filing and Recording Taxes. All transfer taxes, deed stamps,
intangible taxes or other amounts in the nature of transfer taxes required to be
paid under applicable Legal Requirements in connection with the transfer of the
Property to Borrower have been paid or are being paid simultaneously herewith.
All mortgage, mortgage recording, stamp, intangible or other similar tax
required to be paid under applicable Legal Requirements in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including the Mortgage, have been paid
or are being paid simultaneously herewith. All taxes and governmental
assessments due and owing in respect of the Property have been paid, or an
escrow of funds in an amount sufficient to cover such payments has been
established hereunder or are insured against by the Title Insurance Policy.

 

3.1.24          Single Purpose. Borrower hereby represents and warrants to, and
covenants with, Lender that since the date of its formation and at all times on
and after the date hereof and until such time as the Obligations shall be paid
and performed in full:

 

(a)         Borrower (i) has been, is, and will be organized solely for the
purpose of acquiring, developing, owning, holding, selling, leasing,
transferring, exchanging, managing and operating the Property, entering into
this Agreement with the Lender, refinancing the Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing, and (ii) has
not owned, does not own, and will not own any asset or property other than
(A) the Property, and (B) incidental personal property necessary for the
ownership or operation of the Property.

 

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(b)         Borrower has not engaged and will not engage in any business other
than the ownership, management and operation of the Property and Borrower will
conduct and operate its business as presently conducted and operated.

 

(c)         Borrower has not and will not enter into any contract or agreement
with any Affiliate of Borrower, any constituent party of Borrower or any
Affiliate of any constituent party, except upon terms and conditions that are
intrinsically fair, commercially reasonable, and no less favorable to it than
would be available on an arms-length basis with third parties other than any
such party.

 

(d)         Borrower has not incurred and will not incur any Indebtedness other
than (i) the Debt, and (ii) unsecured trade payables and operational debt not
evidenced by a note and in an aggregate amount not exceeding one percent (1%) of
the original principal amount of the Loan at any one time; provided that any
Indebtedness incurred pursuant to subclause (ii) shall be (A) outstanding not
more than sixty (60) days, and (B) incurred in the ordinary course of business
(the Indebtedness described in the foregoing clauses (i) and (ii) is referred to
herein, collectively, as “Permitted Indebtedness”). No Indebtedness other than
the Debt may be secured (senior, subordinate or pari passu) by the Property.

 

(e)         Borrower has not made and will not make any loans or advances to any
third party (including any Affiliate or constituent party), and has not and
shall not acquire obligations or securities of its Affiliates.

 

(f)         Borrower has been, is, and will remain solvent and Borrower has paid
and will pay its debts and liabilities (including, as applicable, shared
personnel and overhead expenses) from its assets as the same shall become due
(to the extent of available cash flow from the operations of the Property and
provided that nothing contained herein shall be deemed to require any member of
Borrower to make any additional capital contributions to Borrower).

 

(g)         Borrower has done or caused to be done, and will do, all things
necessary to observe organizational formalities and preserve its existence, and
Borrower has not, will not, nor will Borrower permit any SPC Party to,
(i) terminate or fail to comply with the provisions of its organizational
documents, or (ii) unless (A) Lender has consented and (B) following a
Securitization of the Loan, the applicable Rating Agencies have issued a Rating
Agency Confirmation in connection therewith, amend, modify or otherwise change
its partnership certificate, partnership agreement, articles of incorporation
and bylaws, operating agreement, trust or other organizational documents.

 

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(h)         Borrower has maintained and will maintain all of its books, records,
financial statements and bank accounts separate from those of its Affiliates and
any other Person. Borrower’s assets will not be listed as assets on the
financial statement of any other Person, provided, however, that Borrower’s
assets may be included in a consolidated financial statement of its Affiliates
provided that (i) appropriate notation shall be made on such consolidated
financial statements to indicate the separateness of Borrower and such
Affiliates and to indicate that Borrower’s assets and credit are not available
to satisfy the debts and other obligations of such Affiliates or any other
Person, and (ii) such assets shall be listed on Borrower’s own separate balance
sheet. Borrower will file its own tax returns (to the extent Borrower is
required to file any such tax returns) and will not file a consolidated federal
income tax return with any other Person. Borrower has maintained and shall
maintain its books, records, resolutions and agreements as official records.

 

(i)         Borrower has been, will be, and at all times has held and will hold
itself out to the public as, a legal entity separate and distinct from any other
entity (including any Affiliate of Borrower or any constituent party of
Borrower), shall correct any known misunderstanding regarding its status as a
separate entity, shall conduct business in its own name, shall not identify
itself or any of its Affiliates as a division or department or part of the other
and shall maintain and utilize separate stationery, invoices and checks bearing
its own name.

 

(j)         Borrower has maintained and intends to maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations (to the extent of
available cash flow from the operations of the Property and provided that
nothing contained herein shall be deemed to require any member of Borrower to
make any additional capital contributions to Borrower).

 

(k)         Neither Borrower nor any constituent party of Borrower has sought or
will seek or effect the liquidation, dissolution, winding up, consolidation,
asset sale or merger, in whole or in part, of Borrower.

 

(l)         Borrower has not and will not commingle the funds and other assets
of Borrower with those of any Affiliate or constituent party or any other
Person, and has held and will hold all of its assets in its own name.

 

(m)         Borrower has and will maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any Affiliate or constituent party or any other
Person.

 

(n)         Borrower has not and will not assume or guarantee or become
obligated for the debts of any other Person and does not and will not hold
itself out to be responsible for or have its credit available to satisfy the
debts or obligations of any other Person.

 

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(o)         Unless Borrower shall be a Delaware limited liability company
satisfying the requirements of clause (r) below, Borrower’s managing member
(“SPC Party”) shall be a Person whose sole asset is its interest in Borrower and
each such SPC Party (i) will cause Borrower to comply with each of the
representations, warranties and covenants contained in this Section 3.1.24;
(ii) will at all times comply with each of the representations, warranties and
covenants contained in this Section 3.1.24 (other than subsections (a), (b), (d)
and (aa)) as if such representation, warranty or covenant was made directly by
such SPC Party; (iii) will not engage in any business or activity other than
owning an interest in Borrower; (iv) will not acquire or own any assets other
than its partnership or membership interest in Borrower; and (v) will not incur
any debt, secured or unsecured, direct or contingent (including guaranteeing any
obligation) other than unsecured trade payables incurred in the ordinary course
of business related to the ownership of an interest in Borrower that (A) do not
exceed at any one time $10,000.00, and (B) are paid within thirty (30) days
after the date incurred. Upon the withdrawal or the disassociation of an SPC
Party from Borrower, Borrower shall immediately appoint a new SPC Party whose
articles of formation or incorporation are substantially similar to those of
such SPC Party.

 

(p)         Intentionally omitted.

 

(q)         The organizational documents of Borrower and each SPC Party shall
provide that Borrower and each SPC Party and Borrower and each SPC Party agrees
that it will not without the unanimous written consent of its board of
directors, members, managers or partners, as applicable, on behalf of itself or
the Borrower (i) file or consent to the filing of any petition, either voluntary
or involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, (ii) seek or consent to the appointment
of a receiver, liquidator or any similar official of Borrower or a substantial
part of its business, (iii) take any action that might cause such entity to
become insolvent, (iv) make an assignment for the benefit of creditors,
(v) admit in writing its inability to pay debts generally as they become due,
(vi) declare or effectuate a moratorium on the payment of any obligations, or
(vii) take any action in furtherance of the foregoing. In addition, the
organizational documents of Borrower and each SPC Party, as applicable, shall
provide that, when voting with respect to any matters set forth in the
immediately preceding sentence of this Section 3.1.24(q), the directors,
members, managers, or partners, as applicable, shall consider only the interests
of Borrower, including its creditors.

 

(r)         Notwithstanding anything herein to the contrary, Borrower or the SPC
Party may be a Delaware limited liability company provided that:

 

(i)         the organizational documents of Borrower or such SPC Party, as
applicable, shall provide that, as long as any portion of the Obligations
remains outstanding, upon the occurrence of any event that causes the last
remaining member of Borrower or such SPC Party (the “Last Member”) to cease to
be a member of Borrower or such SPC Party (other than (i) upon an assignment by
Last Member of all of its limited liability company interest in Borrower or SPC
Party, as applicable, and the admission of the transferee, if permitted pursuant
to the organizational documents of Borrower or SPC Party, as applicable, and the
Loan Documents, or (ii) the resignation of Last Member and the admission of an
additional member of Borrower or SPC Party, as applicable, if permitted pursuant
to the organizational documents of Borrower or SPC Party, as applicable, and the
Loan Documents), each of the persons acting as the designated special member of
Borrower or SPC Party, as applicable, shall, without any action of any Person
and simultaneously with Last Member ceasing to be a member of Borrower or SPC
Party, as applicable, automatically be admitted as members of Borrower or SPC
Party, as applicable (in each case, individually, a “Special Member” and
collectively, the “Special Members”) and shall preserve and continue the
existence of Borrower or SPC Party, as applicable, without dissolution. The
organizational documents of Borrower or SPC Party, as applicable, shall further
provide that for so long as any portion of the Obligations is outstanding, no
Special Member may resign or transfer its rights as Special Member unless a
successor Special Member has been admitted to Borrower or SPC Party, as
applicable, as a Special Member; and

 

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(ii)         the organizational documents of Borrower or SPC Party, as
applicable, shall provide that, as long as any portion of the Obligations
remains outstanding: (i) Borrower or SPC Party, as applicable, shall be
dissolved, and its affairs shall be wound up, only upon the first to occur of
the following: (A) the termination of the legal existence of the last remaining
member of Borrower or SPC Party, as applicable, or the occurrence of any other
event which terminates the continued membership of the last remaining member of
Borrower or SPC Party, as applicable unless the business of Borrower or SPC
Party, as applicable, is continued in a manner permitted by its operating
agreement or the Delaware Limited Liability Company Act (the “Act”), or (B) the
entry of a decree of judicial dissolution under Section 18-802 of the Act;
(ii) upon the occurrence of any event that causes the last remaining member of
Borrower or SPC Party, as applicable, to cease to be a member of Borrower or SPC
Party, as applicable, or that causes Last Member to cease to be a member of
Borrower or SPC Party, as applicable (other than (A) upon an assignment by Last
Member of all of its limited liability company interest in Borrower or SPC
Party, as applicable, and the admission of the transferee, if permitted pursuant
to the organizational documents of Borrower or SPC Party, as applicable, and the
Loan Documents, or (B) the resignation of Last Member and the admission of an
additional member of Borrower or SPC Party, as applicable, if permitted pursuant
to the organizational documents of Borrower or SPC Party, as applicable, and the
Loan Documents), to the fullest extent permitted by law, the personal
representative of such last remaining member shall be authorized to, and shall,
within ninety (90) days after the occurrence of the event that terminated the
continued membership of such member in Borrower or SPC Party, as applicable,
agree in writing (i) to continue the existence of Borrower or SPC Party, as
applicable, and (ii) to the admission of the personal representative or its
nominee or designee, as the case may be, as a substitute member of Borrower or
SPC Party, as applicable, effective as of the occurrence of the event that
terminated the continued membership of such member in Borrower or SPC Party, as
applicable; (iii) the bankruptcy of Last Member or a Special Member shall not
cause such Last Member or Special Member, respectively, to cease to be a member
of Borrower or SPC Party, as applicable, and upon the occurrence of such an
event, the business of Borrower or SPC Party, as applicable, shall continue
without dissolution; (iv) in the event of the dissolution of Borrower or SPC
Party, as applicable, Borrower or SPC Party, as applicable shall conduct only
such activities as are necessary to wind up its affairs (including the sale of
the assets of Borrower or SPC Party, as applicable, in an orderly manner), and
the assets of Borrower or SPC Party, as applicable, shall be applied in the
manner, and in the order of priority, set forth in Section 18-804 of the Act;
and (v) to the fullest extent permitted by law, each of Last Member and the
Special Members shall irrevocably waive any right or power that they might have
to cause Borrower or SPC Party, as applicable, or any of its assets to be
partitioned, to cause the appointment of a receiver for all or any portion of
the assets of Borrower or SPC Party, as applicable, to compel any sale of all or
any portion of the assets of Borrower or SPC Party, as applicable, pursuant to
any applicable law or to file a complaint or to institute any proceeding at law
or in equity to cause the dissolution, liquidation, winding up or termination of
Borrower or SPC Party, as applicable.

 

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(s)         Intentionally omitted.

 

(t)         Borrower has not permitted and will not permit any Affiliate or
constituent party independent access to its bank accounts.

 

(u)         Borrower has paid and shall pay its own liabilities and expenses,
including the salaries of its own employees (if any) from its own funds, and has
maintained and shall maintain a sufficient number of employees (if any) in light
of its contemplated business operations.

 

(v)         Borrower has compensated and shall compensate each of its
consultants and agents from its funds for services provided to it and pay from
its own assets all obligations of any kind incurred.

 

(w)         Borrower has not, and without the unanimous consent of all of its
directors or members, as applicable, will not (i) file a bankruptcy, insolvency
or reorganization petition or otherwise institute insolvency proceedings or
otherwise seek any relief under any laws relating to the relief from debts or
the protection of debtors generally, (ii) seek or consent to the appointment of
a receiver, liquidator, assignee, trustee, sequestrator, custodian or any
similar official for such entity or for all or any portion of Borrower’s
properties, (iii) make any assignment for the benefit of Borrower’s creditors,
or (iv) take any action that might cause Borrower to become insolvent.

 

(x)         Borrower has maintained and will maintain an arm’s-length
relationship with its Affiliates.

 

(y)         Borrower has allocated and will allocate fairly and reasonably any
overhead expenses that are shared with any Affiliate, including shared office
space.

 

(z)         Except in connection with the Loan, Borrower has not pledged and
will not pledge its assets for the benefit of any other Person.

 

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(aa)         Borrower has and will have no obligation to indemnify its officers,
directors, members or partners, as the case may be, or has such an obligation
that is fully subordinated to the Debt and will not constitute a claim against
it if cash flow in excess of the amount required to pay the Debt is insufficient
to pay such obligation.

 

(bb)         if such Borrower is (i) a limited liability company, has articles
of organization, a certificate of formation and/or an operating agreement, as
applicable, (ii) a limited partnership, has a limited partnership agreement, or
(iii) a corporation, has a certificate of incorporation or articles that, in
each case, provide that such entity will not: (A) dissolve, merge, liquidate,
consolidate; (B) sell, transfer, dispose, or encumber (except with respect to
the Loan Documents) all or substantially all of its assets or acquire all or
substantially all of the assets of any Person; or (C) engage in any other
business activity, or amend its organizational documents with respect to the
matters set forth in this Section 3.1.24 without the consent of the Lender.

 

(cc)         Borrower will consider the interests of Borrower’s creditors in
connection with all limited liability company actions.

 

(dd)         Borrower has not, does not, and will not have any of its
obligations guaranteed by any Affiliate.

 

3.1.25          Tax Filings. To the extent required, Borrower has filed (or has
obtained effective extensions for filing) all federal, state, commonwealth,
district and local tax returns required to be filed and has paid or made
adequate provision for the payment of all federal, state, commonwealth, district
and local taxes, charges and assessments payable by Borrower. Borrower’s tax
returns (if any) properly reflect the income and taxes of Borrower for the
periods covered thereby, subject only to reasonable adjustments required by the
Internal Revenue Service or other applicable tax authority upon audit.

 

3.1.26          Solvency. Borrower (i) has not entered into the Loan transaction
or any Loan Document with the actual intent to hinder, delay, or defraud any
creditor, and (ii) received reasonably equivalent value in exchange for its
Obligations under the Loan Documents. Giving effect to the Loan, the fair
saleable value of Borrower’s assets exceeds and will, immediately following the
making of the Loan, exceed Borrower’s total liabilities, including subordinated,
unliquidated, disputed and contingent liabilities. The fair saleable value of
Borrower’s assets is, and immediately following the making of the Loan, will be,
greater than Borrower’s probable liabilities, including the maximum amount of
its contingent liabilities on its debts as such debts become absolute and
matured. Borrower’s assets do not and, immediately following the making of the
Loan will not, constitute unreasonably small capital to carry out its business
as conducted or as proposed to be conducted. Borrower does not intend to, and
does not believe that it will, incur Indebtedness and liabilities (including
contingent liabilities and other commitments) beyond its ability to pay such
Indebtedness and liabilities as they mature (taking into account the timing and
amounts of cash to be received by Borrower and the amounts to be payable on or
in respect of the obligations of Borrower). No petition in bankruptcy has been
filed against Borrower or any constituent Person of Borrower, and neither
Borrower nor any constituent Person of Borrower has ever made an assignment for
the benefit of creditors or taken advantage of any insolvency act for the
benefit of debtors. Neither Borrower nor any of its constituent Persons are
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
Borrower’s assets or properties, and Borrower has no knowledge of any Person
contemplating the filing of any such petition against it or such constituent
Persons. Neither the Property, nor any portion thereof, is the subject of, and
neither Borrower nor Guarantor is a debtor in, state or federal bankruptcy,
insolvency or similar proceeding. None of Borrower, any Person owning a direct
ownership interest in Borrower of 20% or greater, or Guarantor has ever been in
a state or federal bankruptcy or insolvency proceeding or convicted of a felony.

 

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3.1.27          Federal Reserve Regulations. No part of the proceeds of the Loan
will be used for the purpose of purchasing or acquiring any “margin stock”
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System or for any other purpose which would be inconsistent with such
Regulation U or any other Regulations of such Board of Governors, or for any
purposes prohibited by Legal Requirements or by the terms and conditions of this
Agreement or the other Loan Documents.

 

3.1.28          Organizational Chart. The organizational chart attached as
Schedule III, relating to Borrower and certain Affiliates and other parties, is
true, complete and correct on and as of the date hereof and accurately
identifies all beneficial controlling owners of Borrower (i.e., managing
members, general partners or similar controlling person of Borrower). No Person
other than those Persons shown on Schedule III have any ownership interest in,
or right of control, directly or indirectly, in Borrower and no direct or
indirect interest in Borrower is subject to and pledge or other security
interest.

 

3.1.29          Organizational Status. Borrower’s exact legal name is: United
945 82nd Parkway Fee, LLC. Borrower is of the following organizational type
(e.g., corporation, limited liability company): limited liability company, and
the jurisdiction in which Borrower is organized is: Delaware. Borrower’s Tax
I.D. number is 46-5621922 and Borrower’s Delaware Organizational I.D. number is
5471633.

 

3.1.30          Bank Holding Company. Borrower is not a “bank holding company”
or a direct or indirect subsidiary of a “bank holding company” as defined in the
Bank Holding Company Act of 1956, as amended, and Regulation Y thereunder of the
Board of Governors of the Federal Reserve System.

 

3.1.31          No Casualty. The Improvements have suffered no material casualty
or damage which has not been fully repaired and the cost thereof fully paid.

 

3.1.32          Purchase Options. Other than that certain right of first refusal
granted to Myrtle Beach Farms Company, Inc., pursuant to that certain Deed
recorded in the register of deeds for Horry Count, South Carolina, deed Book
1853, Page 1260, neither the Property nor any part thereof are subject to any
purchase options, rights of first refusal, rights of first offer or other
similar rights in favor of third parties.

 

3.1.33          FIRPTA. Borrower is not a “foreign person” within the meaning of
Sections 1445 or 7701 of the Code.

 

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3.1.34          Investment Company Act. Borrower is not (i) an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended, or (ii) subject to any other
United States federal or state law or regulation which purports to restrict or
regulate its ability to borrow money.

 

3.1.35          Use of Property. The Property consists solely of a medical
office building and related operations and is used for no other purpose.

 

3.1.36          Fiscal Year. Each fiscal year of Borrower commences on
January 1.

 

3.1.37          No Other Financing. Borrower has not borrowed any funds which
have not heretofore been repaid in full, except for the Loan.

 

3.1.38          Contracts.

 

(a)         Borrower has not entered into, and is not bound by, any Major
Contract which continues in existence, except those previously disclosed in
writing to Lender.

 

(b)         Each of the Major Contracts is in full force and effect, there are
no monetary or other material defaults by Borrower thereunder and, to the best
knowledge of Borrower, there are no monetary or other material defaults
thereunder by any other party thereto. None of Borrower, Manager or any other
Person acting on Borrower’s behalf has given or received any notice of default
under any of the Major Contracts that remains uncured or in dispute.

 

(c)         Borrower has delivered true, correct and complete copies of the
Major Contracts (including all amendments and supplements thereto) to Lender.

 

(d)         Except for the Manager under the Management Agreement, no Major
Contract has as a party an Affiliate of Borrower. All fees and other
compensation for services previously performed under the Management Agreement
have been paid in full.

 

3.1.39          Full and Accurate Disclosure. No statement of fact made by
Borrower in this Agreement or in any of the other Loan Documents contains any
untrue statement of a material fact or omits to state any material fact
necessary to make statements contained herein or therein not misleading. There
is no material fact presently known to Borrower which has not been disclosed to
Lender which adversely affects, nor as far as Borrower can foresee, might
adversely affect, the Property or the business, operations or condition
(financial or otherwise) of Borrower.

 

3.1.40          Other Obligations and Liabilities. Borrower has no liabilities
or other obligations that arose or accrued prior to the date hereof that, either
individually or in the aggregate, could have a material adverse effect on
Borrower, the Property and/or Borrower’s ability to pay the Debt. Borrower has
no known contingent liabilities.

 

3.1.41          Intentionally Omitted.

 

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3.1.42          REA. There are currently no REA’s affecting the Property.

 

3.1.43          Intentionally Omitted.

 

3.1.44          Illegal Activity. No portion of the Property has been or will be
purchased with proceeds of any illegal activity.

 

3.1.45          Business Purposes. The Loan is solely for the business purpose
of Borrower, and is not for personal, family, household, or agricultural
purposes.

 

Section 3.2          Survival of Representations.

 

The representations and warranties set forth in Section 3.1 and elsewhere in
this Agreement and the other Loan Documents shall survive until the Obligations
have been paid and performed in full.

 

ARTICLE 4

BORROWER COVENANTS

 

Section 4.1          Borrower Affirmative Covenants.

 

Borrower hereby covenants and agrees with Lender that throughout the Term:

 

4.1.1          Payment and Performance of Obligations. Borrower shall pay and
otherwise perform the Obligations in accordance with the terms of this Agreement
and the other Loan Documents.

 

4.1.2          Existence; Compliance with Legal Requirements. Each of Borrower
and each SPC Party shall do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its existence, rights,
licenses, permits and franchises and comply with all Legal Requirements
applicable to it and the Property. There shall never be committed by Borrower
and Borrower shall not permit any other Person in occupancy of or involved with
the operation or use of the Property to commit any act or omission affording the
federal government or any state or local government the right of forfeiture
against the Property or any part thereof or any monies paid in performance of
Borrower’s obligations under any of the Loan Documents. Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture. Borrower shall at all times
maintain, preserve and protect all franchises and trade names and preserve all
the remainder of its property used or useful in the conduct of its business and
shall keep the Property in good working order and repair, and from time to time
make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto, all as more fully provided
in the Mortgage. Borrower shall keep the Property insured at all times by
financially sound and reputable insurers, to such extent and against such risks,
and maintain liability and such other insurance, as is more fully provided in
this Agreement.

 

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4.1.3          Taxes and Other Charges. Borrower shall pay all Taxes and Other
Charges now or hereafter levied, assessed or imposed as the same become due and
payable, and shall furnish to Lender receipts for the payment of the Taxes and
the Other Charges prior to the date the same shall become delinquent (provided,
however, that Borrower need not pay Taxes directly nor furnish such receipts for
payment of Taxes to the extent that funds to pay for such Taxes have been
deposited into the Tax Account pursuant to Section 6.3). Borrower will deliver
to Lender receipts for payment or other evidence satisfactory to Lender that the
Taxes and Other Charges have been so paid no later than ten (10) days prior to
the date on which the Taxes and/or Other Charges would be delinquent if not
paid. Borrower shall not permit or suffer, and shall promptly discharge, any
Lien or charge against the Property, and shall promptly pay for all utility
services provided to the Property. After prior notice to Lender, Borrower, at
its own expense, may contest by appropriate legal proceeding, conducted in good
faith and with due diligence, the amount or validity of any Taxes or Other
Charges, provided that (i) no Default or Event of Default has occurred and
remains uncured; (ii) such proceeding shall be permitted under and be conducted
in accordance with all applicable statutes, laws and ordinances; (iii) neither
the Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, terminated, canceled or lost; (iv) Borrower shall promptly upon
final determination thereof pay the amount of any such Taxes or Other Charges,
together with all costs, interest and penalties which may be payable in
connection therewith; (v) such proceeding shall suspend the collection of Taxes
or Other Charges from the Property; (vi) Borrower shall deposit with Lender
cash, or other security as may be approved by Lender, in an amount equal to one
hundred fifteen percent (115%) of the contested amount, to insure the payment of
any such Taxes or Other Charges, together with all interest and penalties
thereon, (vii) failure to pay such Taxes or Other Charges will not subject
Lender to any civil or criminal liability, (viii) such contest shall not affect
the ownership, use or occupancy of the Property, and (ix) Borrower shall, upon
request by Lender, give Lender prompt notice of the status of such proceedings
and/or confirmation of the continuing satisfaction of the conditions set forth
in clauses (i) – (viii) of this Section 4.1.3. Lender may pay over any such cash
or other security held by Lender to the claimant entitled thereto at any time
when, in the judgment of Lender, the entitlement of such claimant is established
or the Property (or any part thereof or interest therein) shall be in danger of
being sold, forfeited, terminated canceled or lost or there shall be any danger
of the Lien of the Mortgage being primed by any related Lien.

 

4.1.4          Litigation. Borrower shall give prompt notice to Lender of any
material litigation or governmental proceedings pending or threatened against
the Property, Borrower, any SPC Party or Guarantor which might materially
adversely affect the Property or Borrower’s, such SPC Party’s or Guarantor’s
condition (financial or otherwise) or business (including Borrower’s ability to
perform its Obligations hereunder or under the other Loan Documents).

 

4.1.5          Access to Property. Borrower shall permit agents,
representatives, consultants and employees of Lender to inspect the Property or
any part thereof at reasonable hours upon reasonable advance notice (which may
be given verbally). Lender or its agents, representatives, consultants and
employees as part of any inspection may take soil, air, water, building material
and other samples from the Property, subject to the rights of Tenants under
Leases.

 

4.1.6          Further Assurances; Supplemental Mortgage Affidavits. Borrower
shall, at Borrower’s sole cost and expense:

 

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(a)         furnish to Lender all instruments, documents, boundary surveys,
footing or foundation surveys, certificates, plans and specifications,
appraisals, title and other insurance reports and agreements, and each and every
other document, certificate, agreement and instrument required to be furnished
by Borrower pursuant to the terms of the Loan Documents or which are reasonably
requested by Lender in connection therewith;

 

(b)         execute and deliver to Lender such documents, instruments,
certificates, assignments and other writings, and do such other acts necessary
or desirable, to evidence, preserve and/or protect the collateral at any time
securing or intended to secure the Obligations, as Lender may reasonably
require; and

 

(c)         do and execute all and such further lawful and reasonable acts,
conveyances and assurances for the better and more effective carrying out of the
intents and purposes of this Agreement and the other Loan Documents, as Lender
shall reasonably require from time to time.

 

4.1.7          Financial Reporting.

 

(a)         Borrower shall keep and maintain or will cause to be kept and
maintained proper and accurate books and records, in accordance with GAAP or
such other accounting method reasonably acceptable to Lender, consistently
applied, reflecting the financial affairs of Borrower and all items of income
and expense in connection with the operation of the Property. Lender shall have
the right from time to time during normal business hours upon reasonable notice
(which may be given verbally) to Borrower to examine such books and records at
the office of Borrower or other Person maintaining such books and records and to
make such copies or extracts thereof as Lender shall desire. After an Event of
Default, Borrower shall pay any costs incurred by Lender to examine such books,
records and accounts, as Lender shall determine to be necessary or appropriate
in the protection of Lender’s interest.

 

(b)         Not later than forty-five (45) days following the end of each fiscal
quarter (and for the first twelve (12) months following the Closing Date, not
later than fifteen (15) days following the end of each calendar month), Borrower
shall deliver to Lender unaudited operating statements, internally prepared on a
cash basis including a balance sheet and profit and loss statement as of the end
of such quarter and for the corresponding quarter of the previous year, and a
statement of revenues and expenses for the year to date, a statement of Net
Operating Income for such quarter, and a comparison of the year to date results
with (i) the results for the same period of the previous year, (ii) the results
that had been projected by Borrower for such period and (iii) the Annual Budget
for such period and the Fiscal Year. Such statements for each quarter shall be
accompanied by an Officer’s Certificate certifying to the best of the signer’s
knowledge, (A) that such statements fairly represent the financial condition and
results of operations of Borrower, (B) that as of the date of such Officer’s
Certificate, no Default exists under this Agreement, the Note or any other Loan
Document or, if so, specifying the nature and status of each such Default and
the action then being taken by Borrower or proposed to be taken to remedy such
Default, (C) that as of the date of each Officer’s Certificate, no litigation
exists involving Borrower or the Property in which the amount involved is
$250,000 (in the aggregate) or more or in which all or substantially all of the
potential liability is not covered by insurance, or, if so, specifying such
litigation and the actions being taking in relation thereto and (D) the amount
by which actual Operating Expenses were greater than or less than the Operating
Expenses anticipated in the applicable Annual Budget. Such financial statements
shall contain such other information as shall be reasonably requested by Lender
for purposes of calculations to be made by Lender pursuant to the terms hereof.

 

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(c)         Not later than ninety (90) days after the end of each Fiscal Year of
Borrower’s operations, Borrower shall deliver to Lender unaudited financial
statements and operating statements, covering the Property, including a balance
sheet as of the end of such year, a statement of Net Operating Income for the
year and for the fourth quarter thereof and a statement of revenues and expenses
for such year, and stating in comparative form the figures for the previous
fiscal year and the Annual Budget for such fiscal year, as well as the
supplemental schedule of net income or loss presenting the net income or loss
for the Property and occupancy statistics for the Property, and copies of all
federal income tax returns to be filed. Such annual financial statements shall
also be accompanied by an Officer’s Certificate in the form required pursuant to
Section 4.1.7(b) above.

 

(d)         Not later than forty-five (45) days after the end of each fiscal
quarter of Borrower’s operations, Borrower shall deliver to Lender a true and
complete rent roll for the Property, dated as of the last month of such fiscal
quarter, showing the percentage of gross leasable area of the Property, if any,
leased as of the last day of the preceding calendar quarter, the current annual
rent for the Property, the expiration date of each lease, whether to Borrower’s
knowledge any portion of the Property has been sublet, and if it has, the name
of the subtenant, and such rent roll shall be accompanied by an Officer’s
Certificate certifying that such rent roll is true, correct and complete in all
material respects as of its date and stating whether Borrower, within the past
three (3) months, has issued a notice of default with respect to any Lease which
has not been cured and the nature of such default.

 

(e)         Borrower shall, within ninety (90) days after the end of each
calendar year during the term of the Note, deliver to Lender an annual summary
of any and all Capital Expenditures made at the Property during the prior
twelve (12) month period.

 

(f)         Borrower shall deliver to Lender, within ten (10) Business Days of
the receipt thereof by Borrower, a copy of all reports prepared by Manager
pursuant to the Management Agreement, including, without limitation, the Annual
Budget and any inspection reports.

 

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(g)         Borrower shall submit to Lender by November 1 of each year the
Annual Budget for the succeeding Fiscal Year. Lender shall have the right to
approve each Annual Budget (which approval shall not be unreasonably withheld so
long as no Event of Default has occurred) and Annual Budgets approved by Lender
shall hereinafter be referred to as an “Approved Annual Budget”. In the event
that Borrower incurs an extraordinary operating expense or extraordinary capital
expenditure not set forth in the Approved Annual Budget (each an “Extraordinary
Expense”), then Borrower shall promptly deliver to Lender a reasonably detailed
explanation of such proposed Extraordinary Expense for Lender’s approval. Until
such time that any Annual Budget has been approved by Lender, the prior Approved
Annual Budget shall apply for all purposes hereunder (with such adjustments as
reasonably determined by Lender to reflect actual increases in Taxes, Insurance
Premiums and utilities expenses). Neither Borrower nor Manager shall change or
modify the Annual Budget that has been approved by Lender without the prior
written consent of Lender.

 

(h)         Borrower shall, promptly after written request by Lender or, if a
Securitization shall have occurred, the Rating Agencies, furnish or cause to be
furnished to Lender, in such manner and in such detail as may be reasonably
requested by Lender, such additional information as may be reasonably requested
with respect to the Property.

 

(i)         If any financial statements and other items required to be delivered
to Lender pursuant to this Section 4.1.7 (each a “Required Financial Item” and
collectively, the “Required Financial Items”) is not timely delivered
(“Reporting Failure”), following ten (10) Business Days' written notice from
Lender, Borrower shall promptly pay to Lender, as a late charge, the sum of One
Thousand and No/100 Dollars ($1,000) per Required Financial Item. In addition,
Borrower shall promptly pay to Lender an additional late charge of Five Hundred
and No/100 Dollars ($500.00) per Required Financial Item for each full month
during which such Reporting Failure continues following written notice from
Lender. Borrower acknowledges that Lender will incur additional expenses as a
result of any such Reporting Failure, which expenses would be impracticable to
quantify, and that Borrower’s payments under this Section 4.1.7 are a reasonable
estimate of such expenses. Borrower acknowledges further that payment by
Borrower of this late charge does not in any manner affect or otherwise impair
or waive any rights and remedies Lender may have hereunder, under the Loan
Documents or under applicable law for any Event of Default.

 

4.1.8          Title to the Property. Borrower shall warrant and defend (a) its
title to the Property and every part thereof, subject only to Permitted
Encumbrances and (b) the validity and priority of the Liens of the Mortgage, the
Assignment of Leases and this Agreement on the Property, subject only to
Permitted Encumbrances, in each case against the claims of all Persons
whomsoever. Borrower shall reimburse Lender for any losses, costs, damages or
expenses (including reasonable attorneys’ fees and court costs) incurred by
Lender if an interest in the Property, other than as permitted hereunder, is
claimed by another Person.

 

4.1.9          Estoppel Statement.

 

(a)         After request by Lender, Borrower shall within five (5) Business
Days furnish Lender with a statement, duly acknowledged and certified, stating
(i) the Outstanding Principal Balance of the Note, (ii) the Interest Rate,
(iii) the date installments of interest and/or principal were last paid,
(iv) any offsets or defenses to the payment and performance of the Obligations,
if any, and (v) that this Agreement and the other Loan Documents have not been
modified or if modified, giving particulars of such modification.

 

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(b)         Intentionally Omitted.

 

(c)         Borrower shall deliver to Lender, upon request, an estoppel
certificate from each Tenant under any Lease (provided that Borrower shall only
be required to use commercially reasonable efforts to obtain an estoppel
certificate from any Tenant not required to provide an estoppel certificate
under its Lease) in form and substance reasonably satisfactory to Lender;
provided, that Borrower shall not be required to deliver such certificates more
frequently than three (3) times in any calendar year.

 

(d)         In the event that an REA affects the Property, Borrower shall use
commercially reasonable efforts to deliver to Lender, upon request, estoppel
certificates from each party under any REA, in form and substance reasonably
satisfactory to Lender; provided, that Borrower shall not be required to deliver
such certificates more than one (1) time during the Term and not more frequently
than once per calendar year (or twice during any calendar year in which a
Securitization occurs).

 

4.1.10          Leases.

 

(a)         All Leases and all renewals of Leases executed after the date hereof
shall (i) provide for economic terms, including rental rates, comparable to
existing local market rates for similar properties, (ii) be on commercially
reasonable terms, (iii) have a term of not less than three (3) years (unless
Lender approves in writing a shorter term), (iv) have a term of not more than
ten (10) years, including all extensions and renewals (unless Lender approves in
writing a longer term), (v) provide that such Lease is subordinate to the
Mortgage and the Assignment of Leases and that the Tenant thereunder will attorn
to Lender and any purchaser at a foreclosure sale, (vi) be to Tenants that are
creditworthy, (vii) be written substantially in accordance with the standard
form of Lease which shall have been approved by Lender (subject to any
commercially reasonable changes made in the course of negotiations with the
applicable Tenant), (viii) not be to an Affiliate of Borrower or any Guarantor,
and (ix) not contain any option to purchase, any right of first refusal to
purchase, any right to terminate (except in the event of the destruction or
condemnation of substantially all of the Property), any requirement for a
non-disturbance or recognition agreement, or any other terms which would
materially adversely affect Lender’s rights under the Loan Documents. All Major
Leases and all renewals, amendments and modifications thereof executed after the
date hereof shall be subject to Lender’s prior approval. Borrower shall not
permit or consent to any assignment or sublease of any Major Lease without
Lender’s prior written approval (other than assignments or subleases expressly
permitted under any Major Lease pursuant to a unilateral right of the Tenant
thereunder not requiring the consent of Borrower). Lender, at Borrower’s sole
cost and expense, shall execute and deliver its then standard form of
subordination, non-disturbance and attornment agreement to Tenants under any
future Major Lease approved by Lender upon request, with such commercially
reasonable changes as may be requested by such Tenants and which are acceptable
to Lender.

 

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(b)         Borrower (i) shall observe and perform the obligations imposed upon
the lessor under the Leases in a commercially reasonable manner; (ii) shall
enforce the terms, covenants and conditions contained in the Leases upon the
part of the Tenants thereunder to be observed or performed in a commercially
reasonable manner, provided, however, Borrower shall not terminate or accept a
surrender of a Lease without Lender’s prior approval; (iii) shall not collect
any of the Rents more than one (1) month in advance (other than security
deposits); (iv) shall not execute any assignment of lessor’s interest in the
Leases or the Rents (except as contemplated by the Loan Documents); and
(v) shall not alter, modify or change any Lease so as to change the amount of or
payment date for rent, change the expiration date, grant any option for
additional space or term, materially reduce the obligations of the Tenant or
increase the obligations of the lessor. Upon request, Borrower shall furnish
Lender with executed copies of all Leases. Borrower shall promptly send copies
to Lender of all written notices of material default which Borrower shall
receive under the Leases.

 

(c)         All security deposits of Tenants, whether held in cash or any other
form, shall be held in compliance with all Legal Requirements, shall not be
commingled with any other funds of Borrower and, if cash, shall be deposited by
Borrower at a separately designated account under Borrower’s control at the
Clearing Bank. After the commencement of the initial Sweep Event Period,
Borrower shall, upon Lender’s request, if permitted by applicable Legal
Requirements, cause all such security deposits (and any interest theretofore
earned thereon) to be transferred into the Cash Management Account (which shall
then be held by Cash Management Bank in a separate Account), which shall be held
by Cash Management Bank subject to the terms of the Leases. Any bond or other
instrument which Borrower is permitted to hold in lieu of cash security deposits
under any applicable Legal Requirements (i) shall be maintained in full force
and effect in the full amount of such deposits unless replaced by cash deposits
as herein above described, (ii) shall be issued by an institution reasonably
satisfactory to Lender, (iii) shall, if permitted pursuant to any Legal
Requirements, name Lender as payee or mortgagee thereunder (or at Lender’s
option, be fully assignable to Lender), and (iv) shall in all respects comply
with any applicable Legal Requirements and otherwise be satisfactory to Lender.
Borrower shall, upon request, provide Lender with evidence satisfactory to
Lender of Borrower’s compliance with the foregoing.

 

(d)         Borrower shall have the right, without the consent or approval of
Lender, to terminate or accept a surrender of any Lease that is not a Major
Lease so long as such termination or surrender is (i) by reason of a tenant
default and (ii) in a commercially reasonable manner to preserve and protect the
Property.

 

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4.1.11          Alterations. Lender’s prior approval shall be required in
connection with any alterations to any Improvements (i) that may have a material
adverse effect on Borrower’s financial condition, the value or use of the
Property or the ongoing revenues and expenses of the Property, (ii) the cost of
which (including any related alteration, improvement or replacement) is
reasonably anticipated to exceed the Alteration Threshold, or (iii) that
materially adversely affects any structural component of any Improvements, any
utility or HVAC system contained in the Improvements or the exterior of any
building constituting a part of any Improvements (any of the foregoing, a
“Material Alteration”). If the total unpaid amounts incurred and to be incurred
with respect to such alterations to the Improvements shall at any time exceed
the Alteration Threshold, Borrower shall promptly deliver to Lender as security
for the payment of such amounts and as additional security for Borrower’s
Obligations under the Loan Documents any of the following: (i) cash, (ii) a
Letter of Credit, (iii) U.S. Obligations, (iv) other securities acceptable to
Lender, provided that Lender shall have received a Rating Agency Confirmation as
to the form and issuer of same, or (v) a completion bond, provided that Lender
shall have received a Rating Agency Confirmation as to the form and issuer of
same. Such security shall be in an amount equal to the excess of the total
unpaid amounts incurred and to be incurred with respect to such alterations to
the Improvements (other than such amounts to be paid or reimbursed by Tenants
under the Leases) over the Alteration Threshold, and Lender may apply such
security from time to time at the option of Lender to pay for such alterations.
Upon substantial completion of any Material Alteration, Borrower shall provide
evidence satisfactory to Lender that (i) the Material Alteration was constructed
in accordance with applicable Legal Requirements, (ii) all contractors,
subcontractors, materialmen and professionals who provided work, materials or
services in connection with the Material Alteration have been paid in full and
have delivered unconditional releases of liens, and (iii) all material licenses
and permits necessary for the use, operation and occupancy of the Material
Alteration (other than those which depend on the performance of tenant
improvement work) have been issued.

 

4.1.12          Approval of Major Contracts. Borrower shall be required to
obtain Lender’s prior written approval of any and all Major Contracts affecting
the Property, which approval may be granted or withheld in Lender’s reasonable
discretion.

 

4.1.13          After Acquired Property. Borrower will grant to Lender a first
Lien security interest in and to all equipment and other personal property owned
by Borrower, whether or not used in the construction, maintenance and/or
operation of the Improvements, immediately upon acquisition of same or any part
of same.

 

4.1.14          Patriot Act Compliance.

 

(a)         Borrower will use its good faith and commercially reasonable efforts
to comply with the Patriot Act and all applicable requirements of Governmental
Authorities having jurisdiction over Borrower and/or the Property, including
those relating to money laundering and terrorism. Lender shall have the right to
audit Borrower’s compliance with the Patriot Act and all applicable requirements
of Governmental Authorities having jurisdiction over Borrower and/or the
Property, including those relating to money laundering and terrorism. In the
event that Borrower fails to comply with the Patriot Act or any such
requirements of Governmental Authorities, then Lender may, at its option, cause
Borrower to comply therewith and any and all costs and expenses incurred by
Lender in connection therewith shall be secured by the Mortgage and the other
Loan Documents and shall be immediately due and payable.

 

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(b)         Neither Borrower nor any owner of a direct or indirect interest in
Borrower (i) is listed on any Government Lists, (ii) is a person who has been
determined by competent authority to be subject to the prohibitions contained in
Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar
prohibitions contained in the rules and regulations of OFAC or in any enabling
legislation or other Presidential Executive Orders in respect thereof, (iii) has
been previously indicted for or convicted of any felony involving a crime or
crimes of moral turpitude or for any Patriot Act Offense, or (iv) is currently
under investigation by any Governmental Authority for alleged criminal activity.
For purposes hereof, the term “Patriot Act Offense” means any violation of the
criminal laws of the United States of America or of any of the several states,
or that would be a criminal violation if committed within the jurisdiction of
the United States of America or any of the several states, relating to terrorism
or the laundering of monetary instruments, including any offense under (A) the
criminal laws against terrorism, (B) the criminal laws against money laundering,
(C) the Bank Secrecy Act, as amended, (D) the Money Laundering Control Act of
1986, as amended, or (E) the Patriot Act. “Patriot Act Offense” also includes
the crimes of conspiracy to commit, or aiding and abetting another to commit, a
Patriot Act Offense. For purposes hereof, the term “Government Lists” means
(1) the Specially Designated Nationals and Blocked Persons Lists maintained by
the Office of Foreign Assets Control (“OFAC”), (2) any other list of terrorists,
terrorist organizations or narcotics traffickers maintained pursuant to any of
the Rules and Regulations of OFAC that Lender notified Borrower in writing is
now included in “Government Lists”, or (3) any similar lists maintained by the
United States Department of State, the United States Department of Commerce or
any other Governmental Authority or pursuant to any Executive Order of the
President of the United States of America that Lender notified Borrower in
writing is now included in “Government Lists”.

 

4.1.15          Intentionally Omitted.

 

4.1.16          Intentionally Omitted.

 

4.1.17          Notice of Default. Borrower shall promptly advise Lender of any
material adverse change in Borrower’s, SPC Party’s or Guarantor’s condition,
financial or otherwise, or of the occurrence of any Default or Event of Default
of which Borrower has knowledge.

 

4.1.18          Cooperate in Legal Proceedings. Borrower shall cooperate fully
with Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.

 

4.1.19          Award and Insurance Benefits. Borrower shall cooperate with
Lender in obtaining for Lender the benefits of any Awards or Insurance Proceeds
lawfully or equitably payable in connection with the Property (including the
payment by Borrower of the expense of an appraisal on behalf of Lender in case
of Casualty or Condemnation affecting the Property or any part thereof), and
Lender shall be reimbursed for any expenses incurred in connection therewith
(including attorneys’ fees and disbursements) out of such Insurance Proceeds and
Awards.

 

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4.1.20          Business and Operations. Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the Property.
Borrower will qualify to do business and will remain in good standing under the
laws of each jurisdiction as and to the extent the same are required for the
ownership, maintenance, management and operation of the Property.

 

4.1.21          Costs of Enforcement. In the event (a) that the Mortgage is
foreclosed in whole or in part or that the Mortgage is put into the hands of an
attorney for collection, suit, action or foreclosure, (b) of the foreclosure of
any mortgage prior to or subsequent to the Mortgage in which proceeding Lender
is made a party, (c) of the bankruptcy, insolvency, rehabilitation or other
similar proceeding in respect of Borrower or any of its constituent Persons or
an assignment by Borrower or any of its constituent Persons for the benefit of
its creditors or (d) an Event of Default occurs and Lender exercises any of its
remedies under the Loan Documents, Borrower, its successors or assigns, shall be
chargeable with and agrees to pay all costs of collection and defense
(including, without limitation, the taxes, appraisals and legal fees), incurred
by Lender or Borrower in connection therewith and in connection with any
appellate proceeding or post-judgment action involved therein, together with all
required service or use taxes.

 

4.1.22          Performance by Borrower. Borrower shall in a timely manner
observe, perform and fulfill each and every covenant, term and provision of each
Loan Document executed and delivered by, or applicable to, Borrower, and shall
not enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior consent of Lender.

 

Section 4.2          Borrower Negative Covenants.

 

Borrower covenants and agrees with Lender that throughout the Term:

 

4.2.1          Due on Sale and Encumbrance; Transfers of Interests. Without the
prior written consent of Lender, but, in each instance, subject to the
provisions of Article 8, neither Borrower nor SPC Party nor any other Person
having a direct or indirect ownership or beneficial interest in Borrower or SPC
Party shall sell, convey, mortgage, grant, bargain, encumber, pledge, assign or
transfer the Property or any part thereof, or any interest, direct or indirect,
in Borrower, any SPC Party, whether voluntarily or involuntarily (a “Transfer”).
A Transfer within the meaning of this Section 4.2.1 shall be deemed to include
(i) an installment sales agreement wherein Borrower agrees to sell the Property
or any part thereof for a price to be paid in installments; (ii) an agreement by
Borrower for the leasing of all or a substantial part of the Property for any
purpose other than the actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security interest in,
Borrower’s right, title and interest in and to any Leases or any Rents; (iii) if
Borrower, Guarantor or any general partner, managing member or controlling
shareholder of Borrower or Guarantor is a corporation, the voluntary or
involuntary sale, conveyance or transfer of such corporation’s stock (or the
stock of any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock; (iv) if
Borrower, SPC Party, any Guarantor or any general partner, managing member or
controlling shareholder of Borrower, SPC Party, or any Guarantor is a limited or
general partnership, joint venture or limited liability company, the change,
removal, resignation or addition of a general partner, managing partner, limited
partner, joint venturer or member or the transfer of the partnership interest of
any general partner, managing partner or limited partner or the transfer of the
interest of any joint venturer or member; and (v) any pledge, hypothecation,
assignment, transfer or other encumbrance of any direct or indirect ownership
interest in Borrower or any SPC Party.

 

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4.2.2          Liens. Borrower shall not create, incur, assume or permit to
exist any Lien on any direct or indirect interest in Borrower or any SPC Party
or any portion of the Property, except for the Permitted Encumbrances.

 

4.2.3          Dissolution. Borrower shall not (i) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(ii) engage in any business activity not related to the ownership and operation
of the Property, (iii) transfer, lease or sell, in one transaction or any
combination of transactions, all or substantially all of the property or assets
of Borrower except to the extent expressly permitted by the Loan Documents, or
(iv) cause, permit or suffer any SPC Party to (A) dissolve, wind up or liquidate
or take any action, or omit to take any action, as a result of which such SPC
Party would be dissolved, wound up or liquidated in whole or in part, or
(B) amend, modify, waive or terminate the certificate of incorporation, bylaws,
certificate of formation or operating agreement of such SPC Party, in each case
without obtaining the prior consent of Lender.

 

4.2.4          Change in Business. Borrower shall not enter into any line of
business other than the ownership and operation of the Property. Borrower shall
not change the current use of the Property in any material respect.

 

4.2.5          Debt Cancellation. Borrower shall not cancel or otherwise forgive
or release any claim or debt (other than the termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower’s business.

 

4.2.6          Affiliate Transactions. Borrower shall not enter into, or be a
party to, any transaction with an Affiliate of Borrower or any of the partners,
members or shareholders, as applicable, of Borrower except in the ordinary
course of business and on terms which are fully disclosed to Lender in advance
and are no less favorable to Borrower or such Affiliate than would be obtained
in a comparable arm’s-length transaction with an unrelated third party.

 

4.2.7          Zoning. Borrower shall not initiate or consent to any zoning
reclassification of any portion of the Property or seek any variance under any
existing zoning ordinance or use or permit the use of any portion of the
Property in any manner that could result in such use becoming a non-conforming
use under any zoning ordinance or any other applicable land use law, rule or
regulation, without the prior consent of Lender.

 

4.2.8          Assets. Borrower shall not purchase or own any property other
than the Property and any property necessary or incidental for the operation of
the Property.

 

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4.2.9          No Joint Assessment. Borrower shall not suffer, permit or
initiate the joint assessment of the Property (i) with any other real property
constituting a tax lot separate from the Property, and (ii) with any portion of
the 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 the Property.

 

4.2.10          Principal Place of Business. Borrower shall not change its
principal place of business from the address set forth on the first page of this
Agreement without first giving Lender thirty (30) days prior written notice.

 

4.2.11          Change of Name, Identity or Structure. Borrower shall not change
Borrower’s name, identity (including its trade name or names) or, if not an
individual, Borrower’s corporate, partnership or other structure without
notifying Lender of such change in writing at least thirty (30) days prior to
the effective date of such change and without first obtaining the prior written
consent of Lender. Borrower shall execute and deliver to Lender, prior to or
contemporaneously with the effective date of any such change, any financing
statement or financing statement change required by Lender to establish or
maintain the validity, perfection and priority of the security interest granted
herein. At the request of Lender, Borrower shall execute a certificate in form
satisfactory to Lender listing the trade names under which Borrower intends to
operate the Property, and representing and warranting that Borrower does
business under no other trade name with respect to the Property.

 

4.2.12          Special Purpose. Without in any way limiting the provisions of
this Article 4, Borrower shall not take or permit any action that would result
in Borrower or any SPC Party not being in compliance with the representations,
warranties and covenants set forth in Section 3.1.24.

 

4.2.13          ERISA.

 

(a)         Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under the Employee Retirement Income Security Act of
1974, as amended (“ERISA”).

 

(b)         Borrower shall deliver to Lender such certifications or other
evidence from time to time throughout the Term, as requested by Lender in its
sole discretion, that (A) Borrower is not and does not maintain an “employee
benefit plan” as defined in Section 3(32) of ERISA, which is subject to Title I
of ERISA, or a “governmental plan” within the meaning of Section 3(32) of ERISA;
(B) Borrower is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (C) one or more of
the following circumstances is true:

 

(i)         Equity interests in Borrower are publicly offered securities, within
the meaning of 29 C.F.R §2510.3-101(b)(2);

 

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(ii)        Less than twenty-five percent (25%) of each outstanding class of
equity interests in Borrower are held by “benefit plan investors” within the
meaning of 29 C.F.R §2510.3-101(f)(2);

 

(iii)       Borrower qualifies as an “operating company” or a “real estate
operating company” within the meaning of 29 C.F.R §2510.3-101(c) or (e); or

 

(iv)       The assets of Borrower are not otherwise “plan assets” of one or more
“employee benefit plans” (as defined in Section 3(3) of ERISA) subject to
Title I of ERISA, within the meaning of 29 C.F.R. §2510.3-101.

 

4.2.14          Intentionally Omitted.

 

4.2.15          Embargoed Person. At all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower or Guarantor shall
constitute property of, or shall be beneficially owned, directly or indirectly,
by any Person subject to trade restrictions under United States law, including,
but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and
any Executive Orders or regulations promulgated thereunder, with the result that
the investment in Borrower or Guarantor, as applicable (whether directly or
indirectly), would be prohibited by law (each, an “Embargoed Person”), or the
Loan made by Lender would be in violation of law, (b) no Embargoed Person shall
have any interest of any nature whatsoever in Borrower or Guarantor, as
applicable, with the result that the investment in Borrower or Guarantor, as
applicable (whether directly or indirectly), would be prohibited by law or the
Loan would be in violation of law, and (c) none of the funds of Borrower or
Guarantor, as applicable, shall be derived from any unlawful activity with the
result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), would be prohibited by law or the Loan would be in
violation of law.

 

4.2.16          Operating Agreements. Borrower shall at all times comply in all
material respects with all Operating Agreements. Borrower agrees that without
the prior written consent of Lender, Borrower will not amend, modify or
terminate any of the Operating Agreements.

 

ARTICLE 5

INSURANCE, CASUALTY AND CONDEMNATION

 

Section 5.1          Insurance.

 

5.1.1          Insurance Policies.

 

(a)         Borrower, at its sole cost and expense, shall obtain and maintain
during the entire Term, or cause to be maintained, insurance policies for
Borrower and the Property providing at least the following coverages:

 

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(i)         Property insurance against loss or damage by fire, lightning, riot
and civil commotion, vandalism, malicious mischief, burglary and theft,
terrorism and such other perils as are normally included in a “special form”
policy (formerly known as an “all-risk” policy), (A) in an amount equal to one
hundred percent (100%) of the “Full Replacement Cost” of the Property, which for
purposes of this Agreement shall mean actual replacement value (exclusive of
costs of excavations, foundations, underground utilities and footings) with a
waiver of depreciation and a deductible in an amount acceptable to Lender; (B)
containing an agreed amount endorsement with respect to the Improvements and
personal property at the Property waiving all co-insurance provisions; and
(C) containing an “Ordinance or Law Coverage” or “Enforcement” endorsement if
any of the Improvements or the use of the Property shall at any time constitute
legal non-conforming structures or uses, and compensating for loss of value or
property resulting from operation of law and the cost of demolition and the
increased cost of construction in amounts as required by Lender. In addition,
Borrower shall obtain: (y) if any portion of the Improvements is currently or at
any time in the future located in a federally designated “special flood hazard
area”, flood insurance in an amount equal to the maximum amount of such
insurance available under the National Flood Insurance Program, or such greater
amount as Lender shall require; and (z) earthquake insurance in an amount equal
to one and one-half times (1.5x) the probable maximum loss of the Property as
determined by Lender in its sole discretion and in form and substance
satisfactory to Lender in the event the Property is located in an area with a
high degree of seismic activity, provided that the insurance pursuant to
clauses (y) and (z) hereof shall be on terms consistent with the comprehensive
all risk insurance policy required under this subsection (i);

 

(ii)        commercial general liability insurance, including a broad form
comprehensive general liability endorsement and coverages against claims for
personal injury, bodily injury, death or property damage occurring upon, in or
about the Property, such insurance (A) to be on the so-called “occurrence” form
and containing minimum limits per occurrence of One Million and No/100 Dollars
($1,000,000.00), with a combined limit per policy year, excluding umbrella
coverage, of not less than Two Million and No/100 Dollars ($2,000,000.00);
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender by reason of changed economic conditions making such
protection inadequate; and (C) to cover at least the following hazards:
(1) premises and operations; (2) products and completed operations on an “if
any” basis; (3) independent contractors; (4) blanket contractual liability for
all legal contracts; and (5) contractual liability covering the indemnities
contained in Article 9 of the Mortgage to the extent the same is available;

 

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(iii)       rent loss and/or business interruption insurance (A) with loss
payable to Lender; (B) covering all risks required to be covered by the
insurance provided for in subsection (i) above and Section 5.1.1(h) below;
(C) covering a period of restoration of twelve (12) months and containing an
extended period of indemnity endorsement which provides that after the physical
loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of one hundred eighty (180)
days from the date that the Property is repaired or replaced and operations are
resumed, whichever first occurs, and notwithstanding that the policy may expire
prior to the end of such period; (D) in an amount equal to one hundred
percent (100%) of the projected Gross Revenue from the Property for a period of
twelve (12) months from the date that the Property is repaired or replaced and
operations are resumed; and (E) covering the actual loss sustained during the
restoration. The amount of such business income insurance shall be determined
prior to the date hereof and at least once each year thereafter based on
Borrower’s reasonable estimate of the Gross Revenue from the Property for the
succeeding twelve (12) month period. All proceeds payable to Lender pursuant to
this subsection shall be held by Lender and shall be applied to the Obligations
secured by the Loan Documents from time to time due and payable hereunder and
under the Note; provided, however, that nothing herein contained shall be deemed
to relieve Borrower of its Obligations to pay the Debt on the respective dates
of payment provided for in the Note and the other Loan Documents except to the
extent such amounts are actually paid out of the proceeds of such business
income insurance;

 

(iv)       at all times during which structural construction, repairs or
alterations are being made with respect to the Improvements, and only if the
Property coverage form does not otherwise apply, (A) owner’s contingent or
protective liability insurance covering claims not covered by or under the terms
or provisions of the above-mentioned commercial general liability insurance
policy; and (B) the insurance provided for in subsection (i) above written in a
so-called builder’s risk completed value form (1) on a non-reporting basis,
(2) against all risks insured against pursuant to subsection (i) above,
(3) including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions;

 

(v)        workers’ compensation, subject to the statutory limits of the state
in which the Property is located, and employer’s liability insurance with limits
which are required from time to time by Lender in respect of any work or
operations on or about the Property, or in connection with the Property or its
operation (if applicable);

 

(vi)       comprehensive boiler and machinery insurance, if applicable, in
amounts as shall be reasonably required by Lender on terms consistent with the
commercial property insurance policy required under subsection (i) above;

 

(vii)      umbrella liability insurance in addition to primary coverage in an
amount not less than Ten Million and No/100 Dollars ($10,000,000.00) per
occurrence on terms consistent with the commercial general liability insurance
policy required under subsection (ii) above and (viii) below;

 

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(viii)     motor vehicle liability coverage for all owned and non-owned
vehicles, including rented and leased vehicles containing minimum limits per
occurrence, including umbrella coverage, with limits which are required from
time to time by Lender;

 

(ix)        windstorm insurance in an amount equal one hundred percent (100%) of
the Full Replacement Cost of the Property, with a deductible acceptable to
Lender;

 

(x)         insurance against employee dishonesty in an amount not less than
one (1) month of Gross Revenue from the Property and with a deductible not
greater than Ten Thousand and No/100 Dollars ($10,000.00); and

 

(xi)        upon sixty (60) days’ notice, such other reasonable insurance and in
such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for properties similar to the Property located in or around the region
in which the Property is located.

 

(b)         All insurance provided for in Section 5.1.1(a) shall be obtained
under valid and enforceable policies (collectively, the “Policies” or in the
singular, the “Policy”) and shall be subject to the approval of Lender as to
form and substance, including insurance companies, amounts, deductibles, loss
payees and insureds. Not less than ten (10) days prior to the expiration dates
of the Policies theretofore furnished to Lender, certificates of insurance
evidencing the Policies (and, upon the written request of Lender, copies of such
Policies) accompanied by evidence satisfactory to Lender of payment of the
premiums then due thereunder (the “Insurance Premiums”), shall be delivered by
Borrower to Lender.

 

(c)         Any blanket insurance Policy shall specifically allocate to the
Property the amount of coverage from time to time required hereunder and shall
otherwise provide the same protection as would a separate Policy insuring only
the Property in compliance with the provisions of Section 5.1.1(a).

 

(d)         All Policies of insurance provided for or contemplated by
Section 5.1.1(a), except for the Policy referenced in Section 5.1.1(a)(v), shall
name Borrower as the insured and Lender and its successors and/or assigns as the
additional insured, as its interests may appear, and in the case of property
damage, boiler and machinery, windstorm, flood and earthquake insurance, shall
contain a so-called New York standard non-contributing mortgagee clause in favor
of Lender providing that the loss thereunder shall be payable to Lender.
Additionally, if Borrower obtains property insurance coverage in addition to or
in excess of that required by Section 5.1.1(a)(i), then such insurance policies
shall also contain a so-called New York standard non-contributing mortgagee
clause in favor of Lender providing that the loss thereunder shall be payable to
Lender.

 

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(e)         All Policies of insurance provided for in Section 5.1.1(a), except
for the Policies referenced in Section 5.1.1(a)(v) and (a)(viii), shall contain
clauses or endorsements to the effect that:

 

(i)         no act or negligence of Borrower, or anyone acting for Borrower, or
of any Tenant or other occupant, or failure to comply with the provisions of any
Policy, which might otherwise result in a forfeiture of the insurance or any
part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;

 

(ii)        the Policy shall not be canceled or terminated without at least
thirty (30) days’ written notice to Lender and any other party named therein as
an additional insured and shall not be materially changed (other than to
increase the coverage provided thereby) without such a thirty (30) day notice;

 

(iii)       Lender shall not be liable for any Insurance Premiums thereon or
subject to any assessments thereunder; and

 

(iv)       the issuers thereof shall give notice to Lender if the Policies have
not been renewed fifteen (15) days prior to its expiration; and

 

(f)         If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Property, including the obtaining of such
insurance coverage as Lender in its sole discretion deems appropriate and all
premiums incurred by Lender in connection with such action or in obtaining such
insurance and keeping it in effect (including, without limitation, reasonable
attorney’s fees) shall be paid by Borrower to Lender upon demand and until paid
shall be secured by the Mortgage and shall bear interest at the Default Rate.

 

(g)         In the event of foreclosure of the Mortgage or other transfer of
title to the Property in extinguishment in whole or in part of the Obligations,
all right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Property and all proceeds payable
thereunder shall thereupon vest in the purchaser at such foreclosure or Lender
or other transferee in the event of such other transfer of title.

 

(h)         The property insurance and rental loss and/or business interruption
insurance required under Sections 5.1.1(a)(i), (ii) and (iii) above shall cover
perils of terrorism and acts of terrorism and Borrower shall maintain property
insurance and rental loss and/or business interruption insurance for loss
resulting from perils and acts of terrorism on terms (including amounts)
consistent with those required under Sections 5.1.1(a)(i), (ii), and (iii) above
at all times during the term of the Loan.

 

(i)         The property and loss of rents/business interruption insurance
policies required in this Section 5.1 shall not exclude “Acts of Terrorism” as
defined in the Terrorism Risk Insurance Act of 2002, as amended by the Terrorism
Risk Insurance Program Reauthorization Act of 2007.

 

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5.1.2          Insurance Company. All Policies required pursuant to
Section 5.1.1 (i) shall be issued by companies authorized to do business in the
state where the Property is located, with a financial strength and claims paying
ability rating of at least “A-:VIII” from A.M. Best Company or “A” from Moody’s
Investors Service, Inc. or “A-” from Standard & Poor’s Ratings Service; (ii)
shall, with respect to all property insurance policies, name Lender and its
successors and/or assigns as their interest may appear as Lender and Mortgagee;
(iii) shall, with respect to all property insurance policies and rental loss
and/or business interruption insurance policies, contain a Standard Mortgagee
Clause and a Lender’s Loss Payable Endorsement, or their equivalents, naming
Lender and its successors and/or assigns as the person to whom all payments made
by such insurance company shall be paid; (iv) shall, with respect to all
liability policies, name Lender and its successors and/or assigns as an
additional insured; (v) shall contain a waiver of subrogation against Lender;
(vi) shall contain such provisions as Lender deems reasonably necessary or
desirable to protect its interest including endorsements providing (A) that
neither Borrower, Lender nor any other party shall be a co-insurer under said
Policies, (B) that Lender shall receive at least thirty (30) days prior written
notice of any modification, reduction or cancellation, and (C) for a deductible
per loss of an amount not more than that which is customarily maintained by
prudent owners of properties with a standard of operation and maintenance
comparable to and in the general vicinity of the Property, but in no event in
excess of an amount reasonably acceptable to Lender; and (vii) shall be
satisfactory in form and substance to Lender and shall be approved by Lender as
to amounts, form, risk coverage, deductibles, loss payees and insureds. No
property or rental loss/business interruption insurance policy required
hereunder shall include any so called “terrorist exclusion” or similar exclusion
or exception to insurance coverage relating to the acts of terrorist groups or
individuals. Certified copies of the Policies shall be delivered to Lender, 1601
Washington Avenue, Suite 800, Miami Beach, Florida 33139, on the date hereof
with respect to the current Policies and within thirty (30) days after the
effective date thereof with respect to all renewal Policies. Borrower shall pay
the Insurance Premiums annually in advance as the same become due and payable
and shall furnish to Lender evidence of the renewal of each of the Policies with
receipts for the payment of the Insurance Premiums or other evidence of such
payment reasonably satisfactory to Lender (provided, however, that Borrower
shall not be required to pay such Insurance Premiums nor furnish such evidence
of payment to Lender in the event that the amounts required to pay such
Insurance Premiums have been deposited into the Insurance Account pursuant to
Section 6.4 hereof). In addition to the insurance coverages described in
Section 5.1.1 above, Borrower shall obtain such other insurance as may from time
to time be reasonably required by Lender in order to protect its interests.
Within thirty (30) days after request by Lender, Borrower shall obtain such
increases in the amounts of coverage required hereunder as may be reasonably
requested by Lender, taking into consideration changes in the value of money
over time, changes in liability laws, changes in prudent customs and practices,
and the like.

 

Section 5.2          Casualty.

 

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If the Property shall be damaged or destroyed, in whole or in part, by fire or
other casualty (a “Casualty”), Borrower shall give prompt notice of such damage
to Lender and shall promptly commence and diligently prosecute the completion of
the Restoration of the Property as nearly as possible to the condition the
Property was in immediately prior to such Casualty, with such alterations as may
be reasonably approved by Lender and otherwise in accordance with Section 5.4.
Borrower shall pay all costs of such Restoration whether or not such costs are
covered by insurance. Lender may, but shall not be obligated to make proof of
loss if not made promptly by Borrower. In addition, Lender may participate in
any settlement discussions with any insurance companies (and shall approve any
final settlement) with respect to any Casualty in which the Net Proceeds or the
costs of completing the Restoration are equal to or greater than the Restoration
Threshold and Borrower shall deliver to Lender all instruments required by
Lender to permit such participation. Any Insurance Proceeds in connection with
any Casualty (whether or not Lender elects to settle and adjust the claim or
Borrower settles such claim) shall be due and payable solely to Lender and held
by Lender in accordance with the terms of this Agreement. In the event Borrower
or any party other than Lender is a payee on any check representing Insurance
Proceeds with respect to any Casualty, Borrower shall immediately endorse, and
cause all such third parties to endorse, such check payable to the order of
Lender. Borrower hereby irrevocably appoints Lender as its attorney-in-fact,
coupled with an interest, to endorse any such check payable to the order of
Lender. The expenses incurred by Lender in the adjustment and collection of
Insurance Proceeds shall become part of the Obligations, shall be secured by the
Loan Documents and shall be reimbursed by Borrower to Lender upon demand.
Borrower hereby releases Lender from any and all liability with respect to the
settlement and adjustment by Lender of any claims in respect of any Casualty.

 

Section 5.3          Condemnation.

 

Borrower shall promptly give Lender notice of the actual or threatened
commencement of any proceeding for the Condemnation of all or any portion of the
Property and shall deliver to Lender copies of any and all papers served in
connection with such proceedings. Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation. Borrower shall, at its
expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings. Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt. Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the Note.
If the Property or any portion thereof is taken by a condemning authority,
Borrower shall promptly commence and diligently prosecute the Restoration of the
Property and otherwise comply with the provisions of Section 5.4, whether or not
an Award is available. If the Property is sold, through foreclosure or
otherwise, prior to the receipt by Lender of the Award, Lender shall have the
right, whether or not a deficiency judgment on the Note shall have been sought,
recovered or denied, to receive the Award, or a portion thereof sufficient to
pay the Debt.

 

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Section 5.4          Restoration.

 

The following provisions shall apply in connection with the Restoration:

 

(a)         If the Net Proceeds shall be less than the Restoration Threshold and
the costs of completing the Restoration shall be less than the Restoration
Threshold, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Section 5.4(b)(i) are
met and Borrower delivers to Lender a written undertaking to expeditiously
commence and to satisfactorily complete with due diligence the Restoration in
accordance with the terms of this Agreement.

 

(b)         If the Net Proceeds are equal to or greater than the Restoration
Threshold or the costs of completing the Restoration is equal to or greater than
the Restoration Threshold, the Net Proceeds will be held by Lender and Lender
shall make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 5.4. The term “Net Proceeds” for purposes of this
Section 5.4 shall mean: (i) the net amount of all insurance proceeds received by
Lender pursuant to Section 5.1.1(a)(i), (iv), and (vi) and Section 5.1.1(h) as a
result of such damage or destruction, after deduction of its reasonable costs
and expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting same (“Insurance Proceeds”), or (ii) the net amount of the Award,
after deduction of its reasonable costs and expenses (including, but not limited
to, reasonable counsel fees), if any, in collecting same (“Condemnation
Proceeds”), whichever the case may be.

 

(i)         The Net Proceeds shall be made available to Borrower for Restoration
upon the approval of Lender in its sole discretion that the following conditions
are met:

 

(A)         no Event of Default shall have occurred and be continuing;

 

(B)         (1) in the event the Net Proceeds are Insurance Proceeds, less than
twenty-five percent (25%) of the total floor area of the Improvements on the
Property has been damaged, destroyed or rendered unusable as a result of such
Casualty or (2) in the event the Net Proceeds are Condemnation Proceeds, less
than ten percent (10%) of the land constituting the Property is taken, and such
land is located along the perimeter or periphery of the Property, and no portion
of the Improvements is located on such land;

 

(C)         Leases demising in the aggregate a percentage amount equal to or
greater than seventy-five percent (75%) of the total rentable space in the
Property which has been demised under executed and delivered Leases in effect as
of the date of the occurrence of such Casualty or Condemnation, whichever the
case may be, shall remain in full force and effect during and after the
completion of the Restoration without abatement of rent beyond the time required
for Restoration, notwithstanding the occurrence of any such Casualty or
Condemnation, whichever the case may be, and will make all necessary repairs and
restorations thereto at their sole cost and expense;

 

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(D)         Borrower shall commence the Restoration as soon as reasonably
practicable (but in no event later than sixty (60) days after such Casualty or
Condemnation, whichever the case may be, occurs) and shall diligently pursue the
same to satisfactory completion;

 

(E)         Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
incurred with respect to the Property as a result of the occurrence of any such
Casualty or Condemnation, whichever the case may be, will be covered out of
(1) the Net Proceeds, (2) the insurance coverage referred to in
Section 5.1.1(a)(iii), if applicable, or (3) by other funds of Borrower;

 

(F)         Lender shall be satisfied that the Restoration will be completed on
or before the earliest to occur of (1) the date six (6) months prior to the
Stated Maturity Date, (2) the earliest date required for such completion under
the terms of any Lease, (3) such time as may be required under applicable Legal
Requirements or (4) the expiration of the insurance coverage referred to in
Section 5.1.1(a)(iii);

 

(G)         the Property and the use thereof after the Restoration will be in
compliance with and permitted under all applicable Legal Requirements;

 

(H)         the Restoration shall be done and completed by Borrower in an
expeditious and diligent fashion and in compliance with all applicable Legal
Requirements;

 

(I)         such Casualty or Condemnation, as applicable, does not result in the
loss of access to the Property or the related Improvements;

 

(J)         the Restoration DSCR, after giving effect to the Restoration, shall
be equal to or greater than 1.25 to 1.0;

 

(K)         the Loan to Value Ratio after giving effect to the Restoration,
shall be equal to or less than seventy-five percent (75%);

 

(L)         Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be acceptable
to Lender; and

 

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(M)         the Net Proceeds together with any cash or cash equivalent deposited
by Borrower with Lender are sufficient in Lender’s discretion to cover the cost
of the Restoration.

 

(ii)        The Net Proceeds shall be held by Lender in the Casualty and
Condemnation Account and, until disbursed in accordance with the provisions of
this Section 5.4(b), shall constitute additional security for the Debt and other
obligations under the Loan Documents. The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower from time to time during the course of
the Restoration, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of intention
to file same, or any other liens or encumbrances of any nature whatsoever on the
Property which have not either been fully bonded to the satisfaction of Lender
and discharged of record or in the alternative fully insured to the satisfaction
of Lender by the title company issuing the Title Insurance Policy.

 

(iii)       All plans and specifications required in connection with the
Restoration shall be subject to the prior approval of Lender and an independent
consulting engineer selected by Lender (the “Casualty Consultant”). Lender shall
have the use of the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The identity
of the contractors, subcontractors and materialmen engaged in the Restoration,
as well as the contracts under which they have been engaged, shall be subject to
the approval of Lender and the Casualty Consultant. All costs and expenses
incurred by Lender in connection with recovering, holding and advancing the Net
Proceeds for the Restoration including, without limitation, reasonable
attorneys’ fees and disbursements and the Casualty Consultant’s fees and
disbursements, shall be paid by Borrower.

 

(iv)       In no event shall Lender be obligated to make disbursements of the
Net Proceeds in excess of an amount equal to the costs actually incurred from
time to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, less the Casualty Retainage. The term “Casualty Retainage”
shall mean, as to each contractor, subcontractor or materialman engaged in the
Restoration, an amount equal to ten percent (10%) of the costs actually incurred
for work in place as part of the Restoration, as certified by the Casualty
Consultant, until the Restoration has been completed. The Casualty Retainage
shall in no event, and notwithstanding anything to the contrary set forth above
in this Section 5.4(b), be less than the amount actually held back by Borrower
from contractors, subcontractors and materialmen engaged in the Restoration. The
Casualty Retainage shall not be released until the Casualty Consultant certifies
to Lender that the Restoration has been completed in accordance with the
provisions of this Section 5.4(b) and that all approvals necessary for the
re-occupancy and use of the Property have been obtained from all appropriate
Governmental Authorities,

 

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and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the Casualty
Retainage; provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which (i) the
Casualty Consultant certifies to Lender that such contractor, subcontractor or
materialman has satisfactorily completed all work and has supplied all materials
in accordance with the provisions of such contractor’s, subcontractor’s or
materialman’s contract, (ii) the contractor, subcontractor or materialman
delivers the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and
(iii) Lender receives an endorsement to the Title Insurance Policy insuring the
continued priority of the Lien of the Mortgage and evidence of payment of any
premium payable for such endorsement. If required by Lender, the release of any
such portion of the Casualty Retainage shall be approved by the surety company,
if any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.

 

(v)         Lender shall not be obligated to make disbursements of the Net
Proceeds more frequently than once every calendar month.

 

(vi)        If at any time the Net Proceeds or the undisbursed balance thereof
shall not, in the opinion of Lender in consultation with the Casualty
Consultant, be sufficient to pay in full the balance of the costs which are
estimated by the Casualty Consultant to be incurred in connection with the
completion of the Restoration, Borrower shall deposit the deficiency (the “Net
Proceeds Deficiency”) with Lender (for deposit into the Casualty and
Condemnation Account) before any further disbursement of the Net Proceeds shall
be made. The Net Proceeds Deficiency deposited with Lender shall be deposited by
Lender into the Casualty and Condemnation Account and shall be disbursed for
costs actually incurred in connection with the Restoration on the same
conditions applicable to the disbursement of the Net Proceeds, and until so
disbursed pursuant to this Section 5.4(b) shall constitute additional security
for the Obligations.

 

(vii)       The excess, if any, of the Net Proceeds and the remaining balance,
if any, of the Net Proceeds Deficiency deposited with Lender after the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 5.4(b), and the receipt by Lender
of evidence satisfactory to Lender that all costs incurred in connection with
the Restoration have been paid in full, shall be remitted by Lender to Borrower,
provided no Event of Default shall have occurred and shall be continuing.

 

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(c)         All Net Proceeds not required (i) to be made available for the
Restoration or (ii) to be returned to Borrower as excess Net Proceeds pursuant
to Section 5.4(b)(vii), may be retained and applied by Lender in accordance with
Section 2.4.4 hereof toward the payment of the Debt whether or not then due and
payable in such order, priority and proportions as Lender in its sole discretion
shall deem proper, or, at the discretion of Lender, the same may be paid, either
in whole or in part, to Borrower for such purposes as Lender shall approve, in
its discretion. Additionally, throughout the term of the Loan, if a Default or
an Event of Default has occurred, then the Borrower shall pay to Lender, with
respect to any payment of the Debt pursuant to this Section 5.4(c), an
additional amount equal to the Prepayment Fee; provided, however, that if a
Default or an Event of Default has not occurred, then the Prepayment Fee shall
not be payable.

 

(d)         In the event of foreclosure of the Mortgage, or other transfer of
title to the Property in extinguishment in whole or in part of the Debt, all
right, title and interest of Borrower in and to the Policies that are not
blanket Policies then in force concerning the Property, and all proceeds payable
thereunder, shall thereupon vest in the purchaser at such foreclosure, or Lender
or other transferee in the event of such other transfer of title.

 

(e)         Notwithstanding anything to the contrary contained herein, if in
connection with a Casualty any insurance company makes a payment under a
property insurance Policy that Borrower proposes be treated as business or
rental interruption insurance, then, notwithstanding any designation (or lack of
designation) by the insurance company as to the purpose of such payment, as
between Lender and Borrower, such payment shall not be treated as business or
rental interruption Insurance Proceeds unless Borrower has demonstrated to
Lender’s satisfaction that the remaining Net Proceeds that have been received
from the property insurance companies are sufficient to pay 100% of the cost of
the Restoration or, if such Net Proceeds are to be applied to repay the
Obligations in accordance with the terms hereof, that such remaining Net
Proceeds will be sufficient to satisfy the Obligations in full.

 

(f)         Notwithstanding the foregoing provisions of this Section 5.4, if the
Loan is included in a REMIC Trust and, immediately following a release of any
portion of the real property relating to the Property following a Casualty or
Condemnation, the ratio of the unpaid principal balance of the Loan to the value
of the remaining real property relating to the Property is greater than 125%
(such value to be determined, in Lender’s sole discretion, by any commercially
reasonable method permitted to a REMIC Trust, based solely on real property and
excluding personal property and going concern value, if any), Lender shall not
be required to release any Net Proceeds for Restoration of the Property, and the
principal balance of the Loan must be paid down by Borrower by the greater of
(A) such amount as may be required such that the Securitization will not fail to
maintain its status as a REMIC Trust as a result of the related release of lien
or (B) least of the following amounts: (i) the Net Proceeds, (ii) the fair
market value of the released Property at the time of the release, or (iii) an
amount such that the loan-to-value ratio of the Loan (as so determined by
Lender) does not increase after the release.

 

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ARTICLE 6

CASH MANAGEMENT AND RESERVE FUNDS

 

Section 6.1          Cash Management Arrangements.

 

Borrower shall cause all Rents to be transmitted directly by all tenants of the
Property into a trust account (the “Clearing Account”) established and
maintained by Borrower at the Clearing Bank as more fully described in the
Clearing Account Agreement. Without in any way limiting the foregoing, if
Borrower or Manager receive any Gross Revenue from the Property, then (i) such
amounts shall be deemed to be collateral for the Obligations and shall be held
in trust for the benefit, and as the property, of Lender, (ii) such amounts
shall not be commingled with any other funds or property of Borrower or Manager,
and (iii) Borrower or Manager shall deposit such amounts in the Clearing Account
within one (1) Business Day of receipt. Funds deposited into the Clearing
Account shall be swept by the Clearing Bank on a daily basis into an Eligible
Account at the Cash Management Bank controlled by Lender (the “Cash Management
Account”) and applied and disbursed in accordance with this Agreement and the
Cash Management Agreement. Funds in the Cash Management Account shall be
invested in Permitted Investments, as more particularly set forth in the Cash
Management Agreement. Lender may also establish subaccounts of the Cash
Management Account which shall at all times be Eligible Accounts (and may be
ledger or book entry accounts and not actual accounts) (such subaccounts are
referred to herein as “Accounts”). The Cash Management Account and all other
Accounts will be under the sole control and dominion of Lender, and Borrower
shall have no right of withdrawal therefrom. Borrower shall pay for all expenses
of opening and maintaining all of the above accounts.

 

Section 6.2          Intentionally Omitted.

 

Section 6.3          Tax Funds.

 

6.3.1          Deposits of Tax Funds. Borrower shall deposit with Lender (i) an
amount reasonably determined by Lender on the Closing Date, and (ii) on each
Monthly Payment Date, an amount equal to one-twelfth of the Taxes that Lender
estimates will be payable during the next ensuing twelve (12) months, in order
to accumulate sufficient funds to pay all such Taxes at least thirty (30) days
prior to their respective due dates, which amounts shall be transferred into an
Account established by or on behalf of Lender to hold such funds (the “Tax
Account”). Amounts deposited from time to time into the Tax Account pursuant to
this Section 6.3.1 are referred to herein as the “Tax Funds”. If at any time
Lender reasonably determines that the Tax Funds will not be sufficient to pay
the Taxes, Lender shall notify Borrower of such determination and the monthly
deposits for Taxes shall be increased by the amount that Lender estimates is
sufficient to make up the deficiency by the date that is at least thirty (30)
days prior to the respective due dates for the Taxes; provided, that if Borrower
receives notice of any deficiency after the date that is thirty (30) days prior
to the date that Taxes are due, Borrower will deposit with or on behalf of
Lender such amount within one (1) Business Day after its receipt of such notice.

 

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6.3.2          Release of Tax Funds. Provided no Event of Default shall exist
and remain uncured, Lender shall direct Servicer to apply the Tax Funds in the
Tax Account to payments of Taxes, provided Borrower shall furnish Lender with
all bills, invoices and statements for the Taxes for which such funds are
required at least thirty (30) days prior to the date on which such charges first
become payable. In making any payment relating to Taxes, Lender may do so
according to any bill, statement or estimate procured from the appropriate
public office (with respect to Taxes) without inquiry into the accuracy of such
bill, statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien or title or claim thereof. If the amount of the Tax Funds
shall exceed the amounts due for Taxes, Lender shall, in its sole discretion,
return any excess to Borrower or credit such excess against future payments to
be made to the Tax Funds. Any Tax Funds remaining in the Tax Account after the
Obligations have been paid in full shall be returned to Borrower.

 

Section 6.4          Insurance Funds.

 

6.4.1          Deposits of Insurance Funds. Borrower shall deposit with Lender
(i) an amount reasonably determined by Lender on the Closing Date, and (ii) on
each Monthly Payment Date, an amount equal to one-twelfth of the Insurance
Premiums that Lender estimates will be payable for the renewal of the coverage
afforded by the Policies upon the expiration thereof, in order to accumulate
sufficient funds to pay all such Insurance Premiums at least thirty (30) days
prior to the expiration of the Policies, which amounts shall be transferred into
an Account established by or on behalf of Lender to hold such funds (the
“Insurance Account”). Amounts deposited from time to time into the Insurance
Account pursuant to this Section 6.4.1 are referred to herein as the “Insurance
Funds”. If at any time Lender reasonably determines that the Insurance Funds
will not be sufficient to pay the Insurance Premiums, Lender shall notify
Borrower of such determination and the monthly deposits for Insurance Premiums
shall be increased by the amount that Lender estimates is sufficient to make up
the deficiency by the date that is at least thirty (30) days prior to the
expiration of the Policies; provided, that if Borrower receives notice of any
deficiency after the date that is thirty (30) days prior to the expiration of
the Policies, Borrower will deposit with or on behalf of Lender such amount
within one (1) Business Day after its receipt of such notice.

 

6.4.2          Release of Insurance Funds. Provided no Event of Default shall
exist and remain uncured, Lender shall direct Servicer to apply the Insurance
Funds in the Insurance Account to payment of Insurance Premiums, provided
Borrower shall furnish Lender with all bills, invoices and statements for the
Insurance Premiums for which such funds are required at least thirty (30) days
prior to the date on which such charges first become payable. In making any
payment relating to Insurance Premiums, Lender may do so according to any bill,
statement or estimate procured from the insurer or its agent, without inquiry
into the accuracy of such bill, statement or estimate. If the amount of the
Insurance Funds shall exceed the amounts due for Insurance Premiums, Lender
shall, in its sole discretion, return any excess to Borrower or credit such
excess against future payments to be made to the Insurance Funds. Any Insurance
Funds remaining in the Insurance Account after the Obligations have been paid in
full shall be returned to Borrower.

 

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Section 6.5          Capital Expenditure Funds.

 

6.5.1          Deposits of Capital Expenditure Funds. Borrower shall deposit
with Lender on each Monthly Payment Date, the amount of $1,330, for annual
Capital Expenditures, which amounts shall be transferred into an Account
established by or on behalf of Lender to hold such funds (the “Capital
Expenditure Account”). Amounts deposited from time to time into the Capital
Expenditure Account pursuant to this Section 6.5.1 are referred to herein as the
“Capital Expenditure Funds”. Lender may reassess its estimate of the amount
necessary for Capital Expenditures from time to time and may require Borrower to
increase the monthly deposits required pursuant to this Section 6.5.1 upon
thirty (30) days’ notice to Borrower if Lender determines in its reasonable
discretion that an increase is necessary to maintain proper operation of the
Property.

 

6.5.2          Release of Capital Expenditure Funds.

 

(a)         Lender shall direct Servicer to disburse the Capital Expenditure
Funds to Borrower out of the Capital Expenditure Account upon satisfaction by
Borrower of each of the following conditions with respect to each such
disbursement: (i) such disbursement is for an Approved Capital Expenditure;
(ii) Borrower shall submit a request for payment to Lender at least ten (10)
days prior to the date on which Borrower requests such payment be made, which
request shall specify the Approved Capital Expenditures to be paid; (iii) on the
date such request is received by Lender and on the date such payment is to be
made, no Event of Default shall exist and remain uncured, and (iv) Lender shall
have received (1) an Officer’s Certificate from Borrower (A) stating that the
items to be funded by the requested disbursement are Approved Capital
Expenditures, and a description thereof, (B) stating that all Approved Capital
Expenditures to be funded by the requested disbursement have been completed in a
good and workmanlike manner and in accordance with all applicable Legal
Requirements, (C) identifying each Person that supplied materials or labor in
connection with the Approved Capital Expenditures to be funded by the requested
disbursement, (D) stating that each such Person has been paid in full or will be
paid in full upon such disbursement, (E) stating that the Approved Capital
Expenditures to be funded have not been the subject of a previous disbursement,
(F) stating that all previous disbursements of Capital Expenditure Funds have
been used to pay the previously identified Approved Capital Expenditures, and
(G) stating that all outstanding trade payables (other than those to be paid
from the requested disbursement or those constituting Permitted Indebtedness)
have been paid in full, (2) a copy of any license, permit or other approval
required by any Governmental Authority in connection with the Approved Capital
Expenditures and not previously delivered to Lender, (3) lien waivers or other
evidence of payment satisfactory to Lender, (4) at Lender’s option, a title
search for the Property indicating that the Property is free from all Liens,
claims and other encumbrances not previously approved by Lender, and (5) such
other evidence as Lender shall reasonably request to demonstrate that the
Approved Capital Expenditures to be funded by the requested disbursement have
been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Capital Expenditure Funds
more frequently than once each calendar month, and Lender shall not be required
to make disbursements from the Capital Expenditure Account unless such requested
disbursement is in an amount greater than $10,000 (or a lesser amount if the
total amount in the Capital Expenditure Account is less than $10,000, in which
case only one disbursement of the amount remaining in the account shall be
made).

 

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(b)         Nothing in this Section 6.5.2 shall (i) make Lender responsible for
performing or completing any Capital Expenditures Work; (ii) require Lender to
expend funds in addition to the Capital Expenditure Funds to complete any
Capital Expenditures Work; (iii) obligate Lender to proceed with any Capital
Expenditures Work; or (iv) obligate Lender to demand from Borrower additional
sums to complete any Capital Expenditures Work.

 

(c)         Borrower shall permit Lender and Lender’s agents and representatives
(including Lender’s engineer, architect or inspector) or third parties to enter
onto the Property during normal business hours (subject to the rights of Tenants
under their Leases) to inspect the progress of any Capital Expenditures Work and
all materials being used in connection therewith and to examine all plans and
shop drawings relating to such Capital Expenditures Work. Borrower shall cause
all contractors and subcontractors to cooperate with Lender or Lender’s
representatives or such other Persons described above in connection with
inspections described in this Section 6.5.2(c).

 

(d)         If a disbursement of Capital Expenditure Funds will exceed Fifty
Thousand and No/100 Dollars ($50,000.00), Lender may require an inspection of
the Property at Borrower’s expense prior to making a disbursement of Capital
Expenditure Funds in order to verify completion of the Capital Expenditures Work
for which reimbursement is sought. Lender may require that such inspection be
conducted by an appropriate independent qualified professional selected by
Lender and may require a certificate of completion by an independent qualified
professional architect acceptable to Lender prior to the disbursement of Capital
Expenditure Funds. Borrower shall pay the expense of the inspection as required
hereunder, whether such inspection is conducted by Lender or by an independent
qualified professional architect.

 

(e)         In addition to any insurance required under the Loan Documents,
Borrower shall provide or cause to be provided workmen’s compensation insurance,
builder’s risk insurance, public liability insurance and other insurance to the
extent required under applicable law in connection with the Capital Expenditures
Work. All such policies shall be in form and amount satisfactory to Lender.

 

Section 6.6          Rollover Funds.

 

6.6.1          Deposits of Rollover Funds.

 

(a)         Borrower shall deposit with Lender on each Monthly Payment Date the
sum of $3,694, for tenant improvements and leasing commissions that may be
incurred following the date hereof, which amounts shall be transferred into an
Account established by or on behalf of Lender to hold such funds (the “Rollover
Account”). Lender may from time to time reassess its estimate of the required
monthly amount necessary for tenant improvements and leasing commissions and,
upon notice to Borrower, Borrower shall be required to deposit with or on behalf
of Lender each month such reassessed amount, which shall be transferred into the
Rollover Account. Amounts deposited from time to time into the Rollover Account
pursuant to this Section 6.6.1 are referred to herein as the “Rollover Funds”.

 

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(b)         In addition to the required monthly deposits set forth in
subsection (a) above, the following items (collectively, “Lease Termination
Payments”) shall be deposited into the Rollover Account and held as Rollover
Funds and shall be disbursed and released as set forth in Section 6.6.2 below,
and Borrower shall advise Lender at the time of receipt thereof of the nature of
such receipt so that Lender shall have sufficient time to instruct the Cash
Management Bank to deposit and hold such amounts in the Rollover Account
pursuant to the Cash Management Agreement:

 

(i)         All sums paid with respect to (A) a modification of any Lease or
otherwise paid in connection with Borrower taking any action under any Lease
(e.g., granting a consent) or waiving any provision thereof, (B) any settlement
of claims of Borrower against third parties in connection with any Lease,
(C) any rejection, termination, surrender or cancellation of any Lease
(including in any bankruptcy case) or any lease buy-out or surrender payment
from any Tenant (including any payment relating to unamortized tenant
improvements and/or leasing commissions), (D) any Rents paid more than one (1)
month in advance of the due date thereof and (E) any sum received from any
Tenant to obtain a consent to an assignment or sublet or otherwise, or any
holdover rents or use and occupancy fees from any Tenant or former Tenant (to
the extent not being paid for use and occupancy or holdover rent); and

 

(ii)        Any other extraordinary event pursuant to which Borrower receives
payments or income (in whatever form) derived from or generated by the use,
ownership or operation of the Property not otherwise covered by this Agreement
or the Cash Management Agreement.

 

6.6.2          Release of Rollover Funds. Lender shall direct Servicer to
disburse the Rollover Funds to Borrower out of the Rollover Account upon
satisfaction by Borrower of each of the following conditions with respect to
each such disbursement: (i) such disbursement is for an Approved Leasing
Expense; (ii) Borrower shall submit a request for payment to Lender at least
ten (10) days prior to the date on which Borrower requests such payment be made,
which request shall specify the Approved Leasing Expense to be paid; (iii) on
the date such request is received by Lender and on the date such payment is to
be made, no Event of Default shall exist and remain uncured; (iv) Lender shall
have reviewed and approved the Lease giving rise to the Approved Leasing Expense
to be paid; and (v) Lender shall have received (1) an Officer’s Certificate from
Borrower (A) stating that the items to be funded by the requested disbursement
are Approved Leasing Expenses, and a description thereof, (B) stating that all
tenant improvements at the Property to be funded by the requested disbursement
have been completed in a good and workmanlike manner and in accordance with all
applicable Legal Requirements and any agreement with the applicable Tenant,
(C) identifying each Person that supplied materials or labor in connection with
the tenant improvements to be funded by the requested disbursement or the broker
entitled to the leasing commissions, (D) stating that each such Person has been
paid in full or will be paid in full upon such disbursement, (E) stating that
the Approved Leasing Expenses to be funded have not been the subject of a
previous disbursement,

 

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(F) stating that all previous disbursements of Rollover Funds have been used to
pay the previously identified Approved Leasing Expenses, and (G) stating that
all outstanding trade payables (other than those to be paid from the requested
disbursement or those constituting Permitted Indebtedness) have been paid in
full, (2) a copy of any license, permit or other approval by any Governmental
Authority required in connection with the tenant improvements and not previously
delivered to Lender, (3) lien waivers or other evidence of payment satisfactory
to Lender, (4) at Lender’s option, a title search for the Property indicating
that the Property is free from all Liens, claims and other encumbrances not
previously approved by Lender, (5) if requested by Lender, with respect to
disbursements from the Rollover Account for tenant improvement costs, a current
tenant estoppel certificate in form and substance acceptable to Lender, and
(6) such other evidence as Lender shall reasonably request to demonstrate that
the Approved Leasing Expenses to be funded by the requested disbursement have
been completed and are paid for or will be paid upon such disbursement to
Borrower. Lender shall not be required to disburse Rollover Funds more
frequently than once each calendar month, and Lender shall not be required to
make disbursements from the Rollover Account unless such requested disbursement
is in an amount greater than $10,000 (or a lesser amount if the total amount in
the Rollover Account is less than $10,000, in which case only one disbursement
of the amount remaining in the account shall be made).

 

Section 6.7          Major Tenant Funds.

 

6.7.1          Deposits of Major Tenant Funds. During the continuance of a Major
Tenant Trigger Period, Borrower shall deposit with Lender on each Monthly
Payment Date all Remaining Receipts, which amounts shall be transferred into an
Account established by or on behalf of Lender to hold such funds (the “Major
Tenant Account”). Amounts deposited from time to time into the Major Tenant
Account pursuant to this Section 6.7.1 are referred to herein as the “Major
Tenant Funds”.

 

6.7.2          Release of Major Tenant Funds. Provided no Event of Default has
occurred and is continuing and Borrower shall have satisfied the terms and
conditions of Section 6.6.2, as if such Major Tenant Funds were Rollover Funds,
Lender shall apply the Major Tenant Funds to payments of Approved Leasing
Expenses incurred in connection with (y) the extension of the Lease with
Cardiology/Gastro Associates, or (z) a Re-Tenanting Event with respect to the
Cardiology/Gastro Associates Space. Upon (i) Lender’s receipt of satisfactory
evidence that all obligations of Borrower as landlord with respect to tenant
improvement and leasing commission costs have been satisfied in full in
connection with the extension of the Lease to Cardiology/Gastro Associates, or
that a Re-Tenanting Event has occurred with respect to the Cardiology/Gastro
Associates Space, in form and substance satisfactory to Lender or (ii) the
termination of the applicable Major Tenant Trigger Period (as described in
clause (a) or clause (b) of the definition of “Major Tenant Trigger Period”) and
such termination is not effected pursuant to a Re-Tenanting Event, Lender shall,
(1) if no Sweep Event Period is continuing, disburse the remaining Major Tenant
Funds to the Borrower Operating Account, (2) if any other Major Tenant Trigger
Period is in effect, such remaining Major Tenant Funds shall remain on deposit
in the Major Tenant Account, or (3) if a Sweep Event Period that is not a Major
Tenant Trigger Period is continuing, deposit the remaining Major Tenant Funds
into the Excess Cash Flow Account.

 

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Section 6.8          Intentionally Omitted.

 

Section 6.9          Excess Cash Flow Funds. During the continuance of a Sweep
Event Period that is not a Major Tenant Trigger Period, Borrower shall deposit
or cause to be deposited with or on behalf of Lender the funds specified in
Section 6.11.1(a) hereof, which shall be transferred by Cash Management Bank
into an Account established to hold such funds (the “Excess Cash Flow Account”)
and held as additional collateral and security for the Loan. Amounts deposited
from time to time into the Excess Cash Flow Account pursuant to this Section 6.9
and Section 6.11 are referred to herein as the “Excess Cash Flow Funds.” Upon a
termination of a Sweep Event Period, provided no other Sweep Event Period is
then continuing, Lender shall distribute the Excess Cash Flow Funds on deposit
in the Excess Cash Flow Account to Borrower.

 

Section 6.10          Security Interest in Reserve Funds.

 

6.10.1          Grant of Security Interest. Borrower shall be the owner of the
Reserve Funds. Borrower hereby pledges, assigns and grants to Lender a
first-priority perfected security interest to Lender, as security for the
payment and performance of the Obligations, in all of Borrower’s right, title
and interest in and to the Reserve Funds. The Reserve Funds shall be under the
sole dominion and control of Lender. The Reserve Funds shall not constitute a
trust fund and may be commingled with other monies held by Lender.

 

6.10.2          Income Taxes; Interest. Borrower shall report on its federal,
state, commonwealth, district and local income tax returns all interest or
income accrued on the Reserve Funds. The Reserve Funds shall earn interest at a
rate commensurate with the rate of interest paid from time to time on money
market accounts at a commercial bank selected by Lender in its sole discretion
from time to time, with interest credited monthly to such Reserve Funds (with
the exception of the Tax Funds and the Insurance Funds). All earnings or
interest on each of the Reserve Funds (with the exception of the Tax Funds and
the Insurance Funds) shall be and become part of the respective Reserve Fund and
shall be disbursed as provided in the paragraph(s) of this Agreement applicable
to each such Reserve Fund. No earnings or interest on the Tax Funds or the
Insurance Funds shall be payable to Borrower.

 

6.10.3          Prohibition Against Further Encumbrance. Borrower shall not,
without the prior consent of Lender, further pledge, assign or grant any
security interest in the Reserve Funds or permit any Lien or encumbrance to
attach thereto or any levy to be made thereon or any UCC-1 financing statements
to be filed with respect thereto, except those naming Lender as the secured
party.

 

6.10.4          Lender Remedy for Failure to Perform. In addition to Lender’s
remedies following an Event of Default, Borrower acknowledges that Lender shall
have the right (but not the obligation) to complete or perform the Capital
Expenditures, tenant improvements, and leasing commissions (individually and
collectively, as the context requires, the “Reserve Items”) for which amounts
have been reserved under this Loan Agreement (or pay the leasing commissions as
applicable) and for such purpose, Borrower hereby appoints Lender its
attorney-in-fact with full power of substitution (and which shall be deemed to
be coupled with an interest and irrevocable until the Loan is paid in full and
the Mortgage is discharged of record, with Borrower hereby ratifying all that
its said attorney shall do by virtue thereof):

 

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(i) to complete or undertake such work in the name of Borrower; (ii) to proceed
under existing contracts or to terminate existing contracts (even where a
termination penalty may be incurred) and employ such contractors,
subcontractors, watchman, agents, architects and inspectors as Lender determines
necessary or desirable for completion of such work; (iii) to make any additions,
changes and corrections to the scope of the work as Lender deems necessary or
desirable for timely completion; (iv) to pay, settle or compromise all existing
bills and claims which are or may become Liens against the Property or as may be
necessary or desirable for completion of such work; (v) to execute all
applications and certificates in the name of Borrower which may be required to
obtain permits and approvals for such work or completion of such work; (vi) to
prosecute and defend all actions or proceedings in connection with the repair or
improvements to the Property; and (vii) to do any and every act which Borrower
might do in its own behalf to fulfill the terms of Borrower’s obligations under
this Agreement. Amounts expended by Lender which exceed amounts held in the
Accounts shall be added to the Outstanding Principal Balance, shall be
immediately due and payable, and shall bear interest at the Default Rate from
the date of disbursement by Lender until paid in full. In addition, in order to
perform inspections or, following an Event of Default, to complete Reserve Items
which Borrower has failed to perform, Borrower hereby grants Lender and its
agents the right, from time to time, to enter onto the Property.

 

Section 6.11          Property Cash Flow Allocation.

 

6.11.1          Order of Priority of Funds in Cash Management Account.

 

(a)         On each Monthly Payment Date during the Term, except during the
continuation of an Event of Default, all funds deposited into the Cash
Management Account during the immediately preceding Interest Period shall be
applied on such Monthly Payment Date in the following order of priority:

 

(i)         First, to the Tax Account, to make the required payments of Tax
Funds as required under Section 6.3;

 

(ii)        Second, to the Insurance Account, to make the required payments of
Insurance Funds as required under Section 6.4;

 

(iii)       Third, to Lender, funds sufficient to pay the Monthly Debt Service
Payment Amount, applied first to the payment of interest computed at the
Interest Rate with the remainder applied to the reduction of the Outstanding
Principal Balance;

 

(iv)       Fourth, to the Capital Expenditure Account, to make the required
payments of Capital Expenditure Funds as required under Section 6.5;

 

(v)        Fifth, to the Rollover Account, to make the required payments of
Rollover Funds as required under Section 6.6; and

 

(vi)       Sixth, to Lender, of any other amounts then due and payable under the
Loan Documents;

 

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(vii)      Seventh, subject to the terms of the Cash Management Agreement, to
the Borrower Operating Account, funds in an amount equal to the Monthly
Operating Expense Budgeted Amount;

 

(viii)     Eighth, to the Borrower Operating Account, payments for Extraordinary
Expenses approved by Lender, if any; and

 

(ix)        Lastly, all amounts remaining after payment of the amounts set forth
in clauses (i) through (viii) above (the “Remaining Receipts”) (A) during the
continuation of a Major Tenant Trigger Period, to the Major Tenant Account, (B)
during the continuation of any Sweep Event Period that is not a Major Tenant
Trigger Period, to the Excess Cash Flow Account, or (C) otherwise, to the
Borrower Operating Account.

 

6.11.2          Failure to Make Payments. The failure of Borrower to make all of
the payments required under clauses (i) through (vi) of Section 6.11.1(a) in
full on each Monthly Payment Date shall constitute an Event of Default under
this Agreement; provided, however, if adequate funds are available in the Cash
Management Account for such payments, and Borrower is not otherwise in Default
hereunder, the failure by the Cash Management Bank to allocate such funds into
the appropriate Accounts shall not constitute an Event of Default.

 

6.11.3          Application After Event of Default. Notwithstanding anything to
the contrary contained in this Article 6, upon the occurrence of an Event of
Default, Lender, at its option, may withdraw the Reserve Funds and any other
funds of Borrower then in the possession of Lender, Servicer or Cash Management
Bank (including any Gross Revenue) and apply such funds to the items for which
the Reserve Funds were established or to the payment of the Debt in such order,
proportion and priority as Lender may determine in its sole discretion. Lender’s
right to withdraw and apply any of the foregoing funds shall be in addition to
all other rights and remedies provided to Lender under the Loan Documents.

 

ARTICLE 7

PROPERTY MANAGEMENT

 

Section 7.1          The Management Agreement.

 

Borrower shall (i) cause Manager to manage the Property in accordance with the
Management Agreement, (ii) diligently perform and observe all of the terms,
covenants and conditions of the Management Agreement on the part of Borrower to
be performed and observed, (iii) promptly notify Lender of any default under the
Management Agreement of which it is aware, (iv) promptly deliver to Lender a
copy of each financial statement, business plan, capital expenditures plan,
report and estimate received by it under the Management Agreement, and
(v) promptly enforce the performance and observance of all of the covenants
required to be performed and observed by Manager under the Management Agreement.
If Borrower shall default in the performance or observance of any material term,
covenant or condition of the Management Agreement on the part of Borrower to be
performed or observed, then, without limiting Lender’s other rights or remedies
under this Agreement or the other Loan Documents, and without waiving or
releasing Borrower from any of its Obligations hereunder or under the Management
Agreement, Lender shall have the right, but shall be under no obligation, to pay
any sums and to perform any act as may be appropriate to cause all the material
terms, covenants and conditions of the Management Agreement on the part of
Borrower to be performed or observed.

 

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Section 7.2          Prohibition Against Termination or Modification.

 

Borrower shall not (i) surrender, terminate, cancel, modify, renew or extend the
Management Agreement, (ii) enter into any other agreement relating to the
management or operation of the Property with Manager or any other Person,
(iii) consent to the assignment by the Manager of its interest under the
Management Agreement, or (iv) waive or release any of its rights and remedies
under the Management Agreement, in each case without the express consent of
Lender, which consent shall not be unreasonably withheld; provided, however,
with respect to a new manager such consent may be conditioned upon Borrower
delivering a Rating Agency Confirmation as to such new manager and management
agreement. If at any time Lender consents to the appointment of a new manager,
such new manager and Borrower shall, as a condition of Lender’s consent, execute
(i) a management agreement in form and substance reasonably acceptable to
Lender, and (ii) a subordination of management agreement in a form reasonably
acceptable to Lender.

 

Section 7.3          Replacement of Manager.

 

Lender shall have the right to require Borrower to replace the Manager with a
Person chosen by Borrower and approved by Lender (provided, that such approval
may be conditioned upon Borrower delivering a Rating Agency Confirmation as to
such new manager and management agreement) upon the occurrence of any one or
more of the following events: (i) at any time following the occurrence of an
Event of Default, (ii) if at any time the Debt Service Coverage Ratio falls
below 1.05 to 1.0 (the “Manager Termination Ratio”), as determined by Lender in
its sole discretion, (iii) if Manager shall be in default under the Management
Agreement beyond any applicable notice and cure period, (iv) if Manager shall
become insolvent or a debtor in any bankruptcy or insolvency proceeding, or
(v) if at any time the Manager has engaged in gross negligence, fraud, willful
misconduct or misappropriation of funds. Notwithstanding the foregoing, after
the occurrence and during the continuance of an Event of Default, Lender may,
but shall not be obligated to, select the replacement Property Manager.

 

ARTICLE 8

PERMITTED TRANSFERS

 

Section 8.1          Permitted Transfer of the Property.

 

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From and after the date that is one year after the Closing Date, Lender shall
not withhold its consent to the conveyance of the Property to a Permitted
Transferee provided that (a) Borrower shall give Lender written notice of such
Transfer request not less than sixty (60) days prior to the proposed date of
such Transfer and pay to Lender a non-refundable processing fee in the amount of
$25,000, (b) if a Securitization has occurred, Lender has received a Rating
Agency Confirmation as to the conveyance of the Property to the Permitted
Transferee, (c) Lender has received an agreement, acceptable to it in its sole
discretion, pursuant to which Permitted Transferee assumes all of Borrower’s
obligations under the Loan Documents, (d) Lender receives a transfer fee equal
to (I) one-half of one percent (0.5%) of the then outstanding principal amount
of the Loan with respect to the first such assumption and (II) one percent (1%)
of the then outstanding principal amount of the Loan for any subsequent
assumption (but, with respect to each of clause (I) and (II), in no event less
than $15,000), (e) Lender shall have received such documents, certificates and
legal opinions as it may reasonably request, (f) no Event of Default or event
which with the giving of notice or the passage of time or both would constitute
an Event of Default shall have occurred and remain uncured; (g) the Permitted
Transferee and its property manager shall have sufficient experience in the
ownership and management of properties similar to the Property, and Lender shall
be provided with reasonable evidence thereof (and Lender reserves the right to
approve the Permitted Transferee without approving the substitution of the
property manager); (h) the Permitted Transferee shall have executed and
delivered to Lender an assumption agreement in form and substance acceptable to
Lender, evidencing such Permitted Transferee’s agreement to abide and be bound
by the terms of the Note, this Agreement and the other Loan Documents and an
Affiliate of such Permitted Transferee acceptable to Lender shall execute a
recourse guaranty and an environmental indemnity in form and substance identical
to the Guaranty and Environmental Indemnity, respectively, with such changes to
each of the foregoing as may be reasonably required by Lender, together with
such legal opinions and title insurance endorsements as may be reasonably
requested by Lender; and (i) prior to any release of the Guarantor, a substitute
guarantor acceptable to Lender shall have assumed the Guaranty executed by
Guarantor or executed a replacement guaranty reasonably satisfactory to Lender.
Notwithstanding the foregoing or anything herein to the contrary, Borrower may
not exercise its rights pursuant to this Section 8.1 during the period that
commences on the date that is sixty (60) days prior to the date of any intended
Securitization of the Loan and ending on the date that is sixty (60) days after
the date of such Securitization of the Loan.

 

Section 8.2          Permitted Transfers of Interest in Borrower.

 

(a)         Notwithstanding anything to the contrary contained in Section 4.2.1,
the following Transfers (“Permitted Transfers”) shall be deemed to be permitted
hereunder without the consent of Lender:

 

(i)         provided that no Default or Event of Default shall have occurred and
remain uncured, a Transfer (but not a pledge) of a direct or indirect interest
in Borrower, provided that (A) such Transfer shall not cause the transferee
(together with its Affiliates) to acquire Control of, or result in any change in
Control of, Borrower or any SPC Party (if such transferee did not previously
Control Borrower), (B) after giving effect to such Transfer, the aggregate of
all Transfers of direct or indirect interests in Borrower shall not exceed
forty-nine percent (49%) of the direct and indirect interests in Borrower
existing as of the date hereof (excluding however the sale, transfer or issuance
of shares of common stock in any entity that is a publicly traded entity,
provided that either (I) such shares of common stock are listed on the New York
Stock Exchange or another nationally recognized stock exchange or (II) such
shares are sold, transferred or issued to third party investors through licensed
U.S. broker-dealers in accordance with Legal Requirements), (C) to the extent
any transferee owns twenty percent (20%) or more of the direct or indirect
interests in Borrower immediately following such Transfer, Borrower shall give
Lender notice of such Transfer together with copies of all instruments effecting
such Transfer not less than ten (10) days prior to the date of such Transfer,
(D) to the extent any transferee owns twenty percent (20%) or more of the direct
or indirect interests in Borrower immediately following such Transfer (provided
such transferee did not own 20% or more of the direct or indirect ownership
interests in Borrower as of the Closing Date), Borrower shall, prior to such
Transfer, deliver, at Borrower’s sole cost and expense, customary searches
(credit, judgment, lien, etc.) acceptable to Lender with respect to such
transferee, and (E) the legal and financial structure of Borrower and the single
purpose nature and bankruptcy remoteness of Borrower after such Transfer, shall
satisfy Lender’s then current applicable underwriting criteria and requirements;

 

(ii)        provided that no Default or Event of Default shall have occurred and
remain uncured, a Transfer (but not a pledge) of an indirect interest in
Borrower or any SPC Party that occurs by maintenance, devise or bequest or by
operation of law upon the death of a natural person that was the holder of such
interest to a member of the immediate family of such interest holder or a trust
established for the benefit of such immediate family member, provided that (A)
no such Transfer shall result in a change of the day-to-day management of the
Property, (B) Borrower shall give Lender notice of such Transfer together with
copies of all instruments effecting such Transfer not less than ten (10) days
after the date of such Transfer,

 

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(C) the legal and financial structure of Borrower and its members or partners,
as applicable, and the single purpose nature and bankruptcy remoteness of
Borrower and its members or partners, as applicable after such Transfer, shall
satisfy Lender’s then current applicable underwriting criteria and requirements,
(D) to the extent any transferee owns twenty percent (20%) or more of the direct
or indirect interests in Borrower immediately following such Transfer (provided
such transferee did not own 20% or more of the direct or indirect ownership
interests in Borrower as of the Closing Date), Borrower shall deliver, at
Borrower’s sole cost and expense, customary searches (credit, judgment, lien,
etc.) acceptable to Lender with respect to such transferee within thirty (30)
days after any such Transfer, (E) if any such Transfer would result in a change
of Control of Borrower or any SPC Party and occurs prior to Securitization, such
Transfer is approved by Lender in writing in its sole and absolute discretion
within thirty (30) days after any such Transfer, and (F) if any such Transfer
would result in a change of Control of Borrower or any SPC Party and occurs
after Securitization, Borrower, at Borrower’s sole cost and expense, shall,
within thirty (30) days after any such Transfer, (y) deliver (or cause to be
delivered) a Rating Agency Confirmation to Lender, and (z) obtain the written
consent of Lender, which shall not be unreasonably withheld.

 

(iii)      Lender acknowledges that United Realty Capital Operating Partnership,
L.P. (“Sponsor Member”), has pledged its ownership interests in Borrower to
Arbor-Myrtle Beach PE LLC (“Investor Member”) and Lender’s consent shall not be
required in connection with any Transfer of the direct or indirect interests in
Borrower from Sponsor Member to Investor Member provided that the terms and
conditions for such Transfers as are set out in that certain Subordination
Agreement, dated as of the date hereof, by and between Lender and Investor
Member are satisfied. Additionally, Lender’s consent shall not be required in
connection with a Transfer of the preferred equity ownership interests of
Investor Member to Sponsor Member in connection with a redemption of the
preferred equity ownership interests as provided in operating agreement of
Borrower. Borrower shall provide to Lender notice of such Transfer in connection
with a redemption of the preferred equity ownership interests within thirty (30)
days of the occurrence of such Transfer.

 

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(b)         For purposes of this Section 8.2, (i) a change of “Control” of
Borrower (or any SPC Party) shall be deemed to have occurred if (A) there is any
change in the identity of any individual or entity or any group of individuals
or entities who have the right, by virtue of any partnership agreement, articles
of incorporation, by-laws, articles of organization, operating agreement or any
other agreement, with or without taking any formative action, to cause Borrower
(or any SPC Party) to take some action or to prevent, restrict or impede
Borrower (or any SPC Party) from taking some action which, in either case,
Borrower (or any SPC Party) could take or could refrain from taking were it not
for the rights of such individuals, or (B) the individual or entity or group of
individuals or entities that “Control” Borrower (and any SPC Party) as described
in clause (A) ever cease to own at least one percent (1%) of all equity
interests (direct or indirect (individually or as trustee of one or more
trusts)) in Borrower (and each SPC Party); and (ii) an “immediate family member”
shall mean a sibling, spouse or a child of any interest holder. For the
avoidance of doubt, changes in the composition of directors or officers of any
entity which is that is a publicly traded entity, which shares of common stock
are (I) listed on the New York Stock Exchange or another nationally recognized
stock exchange or (II) such shares are sold, transferred or issued to third
party investors through licensed U.S. broker-dealers in accordance with Legal
Requirements, shall not be deemed to be a change in “Control” hereunder.

 

(c)         Upon written request of Lender, Borrower shall provide to Lender an
updated organizational structure chart of Borrower.

 

Section 8.3          Cost and Expenses.

 

Borrower shall pay all costs and expenses of Lender in connection with any
Transfer, whether or not such Transfer is deemed to be a Permitted Transfer,
including, without limitation, all fees and expenses of Lender’s counsel,
whether internal or outside, and the cost of any required counsel opinions
related to REMIC or other securitization or tax issues and any Rating Agency
fees.

 

ARTICLE 9

SALE AND SECURITIZATION OF MORTGAGE

 

Section 9.1          Sale of Mortgage and Securitization.

 

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(a)         Lender shall have the right (i) to sell or otherwise transfer the
Loan or any portion thereof as a whole loan, (ii) to sell participation
interests in the Loan, or (iii) to securitize the Loan or any portion thereof in
a single asset securitization or a pooled loan securitization. (The transactions
referred to in clauses (i), (ii) and (iii) shall hereinafter be referred to
collectively as “Secondary Market Transactions” and the transactions referred to
in clause (iii) shall hereinafter be referred to as a “Securitization”. Any
certificates, notes or other securities issued in connection with a
Securitization are hereinafter referred to as “Securities”).

 

(b)         If requested by Lender, Borrower shall assist Lender, at Borrower’s
reasonable expense not to exceed $5,000, in satisfying the market standards to
which Lender customarily adheres or which may be required in the marketplace or
by the Rating Agencies or any Governmental Authority in connection with any
Secondary Market Transactions, including to:

 

(i)         (A) provide updated financial and other information with respect to
the Property, the business operated at the Property, Borrower and the Manager,
(B) provide updated budgets relating to the Property, and (C) provide updated
appraisals, market studies, environmental reviews and reports (Phase I’s and, if
appropriate, Phase II’s), property condition reports and other due diligence
investigations of the Property (the “Updated Information”), together, if
customary, with appropriate verification of the Updated Information through
letters of auditors or opinions of counsel acceptable to Lender and the Rating
Agencies;

 

(ii)        provide opinions of counsel, which may be relied upon by Lender, the
Rating Agencies, and their respective counsel, agents and representatives, as to
non-consolidation, fraudulent conveyance and true sale or any other opinion
customary in Secondary Market Transactions or required by the Rating Agencies
with respect to the Property and Borrower and its Affiliates, which counsel and
opinions shall be satisfactory to Lender and the Rating Agencies;

 

(iii)       provide updated, as of the closing date of the Secondary Market
Transaction, representations and warranties made in the Loan Documents and such
additional representations and warranties as the Rating Agencies may require;
and

 

(iv)       execute amendments to the Loan Documents and Borrower’s
organizational documents requested by Lender; provided, however, that Borrower
shall not be required to modify or amend any Loan Document if such modification
or amendment would (A) change the interest rate, the stated maturity or the
amortization of principal as set forth herein or in the Note, or (B) modify or
amend any other material economic term of the Loan.

 

(c)         Upon request, Borrower shall furnish to Lender from time to time
such financial data and financial statements as Lender determines to be
necessary, advisable or appropriate for complying with any Applicable Law
(including those applicable to Lender or any Servicer (including, without
limitation and to the extent applicable, Regulation AB)) within the timeframes
necessary, advisable or appropriate in order to comply with such Applicable Law.

 

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Section 9.2          Securitization Indemnification.

 

(a)         Borrower understands that information provided to Lender by Borrower
and its agents, counsel and representatives, including information contained in
the Certification of Borrower may be included in disclosure documents in
connection with the Securitization, including an offering circular, a
prospectus, prospectus supplement, private placement memorandum or other
offering document (each, a “Disclosure Document”) and may also be included in
filings with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the “Securities Act”), or the Securities and Exchange
Act of 1934, as amended (the “Exchange Act”), and may be made available to
investors or prospective investors in the Securities, the Rating Agencies and
service providers relating to the Securitization.

 

(b)         Borrower shall provide in connection with each of (i) a preliminary
and a final private placement memorandum or (ii) a preliminary and final
prospectus or prospectus supplement, as applicable, an agreement (A) certifying
that Borrower has examined such Disclosure Documents specified by Lender and
that each such Disclosure Document, as it relates to Borrower, Guarantor,
Borrower’s Affiliates, the Property, Manager and all other aspects of the Loan,
does not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, (B) indemnifying
Lender (and for purposes of this Section 9.2, Lender hereunder shall include its
officers and directors), the Affiliate of Lender (“Lender Affiliate”) that has
filed the registration statement relating to the Securitization (the
“Registration Statement”), each of its directors, each of its officers who have
signed the Registration Statement and each Person that controls the Affiliate
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, the “Lender Group”), Lender Affiliate, and any other
placement agent or underwriter with respect to the Securitization, each of their
respective directors and each Person who controls Lender Affiliate or any other
placement agent or underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the “Underwriter
Group”) for any losses, claims, damages or liabilities (collectively, the
“Liabilities”) to which Lender, the Lender Group or the Underwriter Group may
become subject insofar as the Liabilities arise out of, or are based upon, any
untrue statement or alleged untrue statement of any material fact contained in
such sections or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated in such sections
or necessary in order to make the statements in such sections, in light of the
circumstances under which they were made, not misleading, and (C) agreeing to
reimburse Lender, the Lender Group and/or the Underwriter Group for any legal or
other expenses reasonably incurred by Lender, the Lender Group and/or the
Underwriter Group in connection with investigating or defending the Liabilities;
provided, however, that Borrower will be liable in any such case under
clauses (B) or (C) above only to the extent that any such Liability arises out
of, or is based upon, any such untrue statement or omission made therein in
reliance upon, and in conformity with, information furnished to Lender by or on
behalf of Borrower in connection with the preparation of the Disclosure Document
or in connection with the underwriting or closing of the Loan, including
financial statements of Borrower, operating statements and rent rolls with
respect to the Property. This indemnity agreement will be in addition to any
liability which Borrower may otherwise have.

 

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(c)         In connection with any filing pursuant to the Exchange Act in
connection with or relating to the Securitization ("Exchange Act Filing"),
Borrower shall (i) indemnify Lender, the Lender Group and the Underwriter Group
for Liabilities to which Lender, the Lender Group and/or the Underwriter Group
may become subject insofar as the Liabilities arise out of, or are based upon,
the omission to state in the Disclosure Document a material fact required to be
stated in the Disclosure Document in order to make the statements in the
Disclosure Document, in light of the circumstances under which they were made,
not misleading, and (ii) reimburse Lender, the Lender Group and/or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Lender Group and/or the Underwriter Group in connection with defending or
investigating the Liabilities.

 

(d)         In connection with any Securitization, Borrower shall (i) indemnify
Lender, the Lender Group and the Underwriter Group for Liabilities to which
Lender, the Lender Group and/or the Underwriter Group may become subject insofar
as the Liabilities arise out of or are based upon, any error or omission in any
Disclosure Document and (ii) reimburse Lender, the Lender Group and/or the
Underwriter Group for any legal or other expenses reasonably incurred by Lender,
the Lender Group and/or the Underwriting Group in connection with defending or
investigating the Liabilities.

 

(e)         Promptly after receipt by an indemnified party under this
Section 9.2 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 9.2, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent that
failure to notify causes prejudice to the indemnifying party. In the event that
any action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled, jointly with any other indemnifying party, to participate therein and,
to the extent that it (or they) may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. After notice from the indemnifying party to such
indemnified party under this Section 9.2, such indemnified party shall pay for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there are any legal defenses available to
it and/or other indemnified parties that are different from or additional to
those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to assert such legal defenses
and to otherwise participate in the defense of such action on behalf of such
indemnified party at the cost of the indemnifying party. The indemnifying party
shall not be liable for the expenses of more than one separate counsel unless an
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party.

 

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(f)         In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9.2(b)
or (c) is for any reason held to be unenforceable as to an indemnified party in
respect of any Liabilities (or action in respect thereof) referred to therein
which would otherwise be indemnifiable under Section 9.2(b) or (c), the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party as a result of such Liabilities (or action in respect
thereof); provided, however, that no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. In determining the amount of contribution to which
the respective parties are entitled, the following factors shall be considered:
(i) Lender Affiliate’s and Borrower’s relative knowledge and access to
information concerning the matter with respect to which the claim was asserted;
(ii) the opportunity to correct and prevent any statement or omission; and
(iii) any other equitable considerations appropriate in the circumstances.
Lender and Borrower hereby agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation.

 

(g)         The liabilities and obligations of both Borrower and Lender under
this Section 9.2 shall survive the termination of this Agreement and the
satisfaction and discharge of the Debt.

 

Section 9.3          Intentionally Omitted.

 

Section 9.4          Severance Documentation.

 

Lender, without in any way limiting Lender’s other rights hereunder, in its sole
and absolute discretion, shall have the right, at any time (whether prior to or
after any sale, participation or Securitization of all or any portion of the
Loan), to require the Borrower to execute and deliver “component” notes and/or
modify the Loan in order to create one or more senior and subordinate notes
(i.e., an A/B or A/B/C structure) and/or one or more additional components of
the Note or Notes (including the implementation of a mezzanine loan structure),
reduce the number of components of the Note or Notes, revise the interest rate
for each component, reallocate the principal balances of the Notes and/or the
components, increase or decrease the monthly debt service payments for each
component or eliminate the component structure and/or the multiple note
structure of the Loan (including the elimination of the related allocations of
principal and interest payments), provided that the Outstanding Principal
Balance of all components immediately after the effective date of such
modification equals the Outstanding Principal Balance immediately prior to such
modification and the weighted average of the interest rates for all components
immediately after the effective date of such modification equals the interest
rate of the original Note immediately prior to such modification.

 

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At Lender’s election, each note comprising the Loan may be subject to one or
more Securitizations. Lender shall have the right to modify the Note and/or
Notes and any components in accordance with this Section 9.4 and, provided that
such modification shall comply with the terms of this Section 9.4, it shall
become immediately effective. If requested by Lender, Borrower shall promptly
execute an amendment to the Loan Documents to evidence any such modification.
Borrower shall (1) cooperate with all reasonable requests of Lender in order to
establish the “component” notes, and (2) execute and deliver such documents as
shall be required by Lender and any Rating Agency in connection therewith, all
in form and substance satisfactory to Lender and satisfactory to any Rating
Agency, including, without limitation, the severance of security documents if
requested. In the event Borrower fails to execute and deliver such documents to
Lender within five (5) Business Days following such request by Lender, Borrower
hereby absolutely and irrevocably appoints Lender as its true and lawful
attorney, coupled with an interest, in its name and stead to make and execute
all documents necessary or desirable to effect such transactions, Borrower
hereby ratifying all that such attorney shall do by virtue thereof. It shall be
an Event of Default under this Agreement, the Note, the Mortgage and the other
Loan Documents if Borrower fails to comply with any of the terms, covenants or
conditions of this Section 9.4 after expiration of ten (10) Business Days after
notice thereof.

 

ARTICLE 10

DEFAULTS

 

Section 10.1          Events of Default.

 

(a)         Each of the following events shall constitute an event of default
hereunder (an “Event of Default”):

 

(i)         if (A) the Obligations are not paid in full on the Maturity Date,
(B) any regularly scheduled monthly payment of interest, and, if applicable,
principal due under the Note is not paid in full on or by the applicable Monthly
Payment Date, (C) any prepayment of principal due under this Agreement or the
Note is not paid when due, (D) the Prepayment Fee is not paid when due, or (E)
any deposit to the Reserve Funds is not made on the required deposit date
therefor;

 

(ii)        if any other amount payable pursuant to this Agreement, the Note or
any other Loan Document (other than as set forth in the foregoing clause (i)) is
not paid in full when due and payable in accordance with the provisions of the
applicable Loan Document, with such failure continuing for ten (10) Business
Days after Lender delivers written notice thereof to Borrower;

 

(iii)       if any of the Taxes or Other Charges are not paid when due (provided
that it shall not be an Event of Default if there are sufficient funds in the
Tax Account to pay such amounts when due, no other Event of Default is then
continuing and Servicer fails to make such payment in violation of this
Agreement);

 

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(iv)       if the Policies are not (A) delivered to Lender and (B) kept in full
force and effect, each in accordance with the terms and conditions hereof
(provided that it shall not be an Event of Default under clause (B) as a result
of failure to pay Insurance Premiums if Borrower shall have delivered to
Servicer invoices for such Insurance Premiums in accordance with this Agreement,
there are sufficient funds in the Insurance Account to pay such amounts when
due, no other Event of Default is then continuing and Servicer fails to make
such payment in violation of this Agreement);

 

(v)        if Borrower breaches or permits or suffers a breach of the provisions
of Section 4.2.1;

 

(vi)       if any certification, representation or warranty made by Borrower or
Guarantor herein or in any other Loan Document, or in any report, certificate,
financial statement or other instrument, agreement or document furnished to
Lender, including but not limited to the Certification of Borrower, shall have
been materially false or materially misleading in any respect as of the date
hereof;

 

(vii)      if Borrower, any SPC Party or Guarantor shall make an assignment for
the benefit of creditors;

 

(viii)     if a receiver, liquidator or trustee shall be appointed for Borrower,
any SPC Party or Guarantor or if Borrower, any SPC Party or Guarantor shall be
adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Borrower, any SPC Party or Guarantor, or if any voluntary proceeding for
the dissolution or liquidation of Borrower, any SPC Party or Guarantor shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower, such SPC Party or
Guarantor, upon the same not being discharged, stayed or dismissed within
ninety (90) days following its filing;

 

(ix)        if Borrower attempts to assign its rights under this Agreement or
any of the other Loan Documents or any interest herein or therein in
contravention of the Loan Documents;

 

(x)         intentionally omitted;

 

(xi)        if Borrower or any SPC Party breaches any representation, warranty
or covenant contained in Section 3.1.24 hereof provided, however, if (1) Lender
determines that such breach of covenant or representation (i) was not made in
bad faith, (ii) is capable of being cured, (iii) is not material and (iv) Lender
would not be prejudiced by permitting Borrower to cure the same, and (2) at the
request of any Rating Agency, Borrower provides a non-consolidation opinion
addressing such breach, Lender will permit Borrower thirty (30) days after
written notice thereof to cure such misrepresentation or breach of warranty
before it becomes an Event of Default hereunder;

 

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(xii)       if Borrower shall be in default under any mortgage or security
agreement covering any part of the Property whether it be superior, pari passu
or junior in Lien to the Mortgage;

 

(xiii)      subject to Borrower’s right to contest as provided in Section 3.6 of
the Mortgage, if the Property becomes subject to any mechanic’s, materialman’s
or other Lien except a Lien for Taxes not then due and payable;

 

(xiv)      except as expressly permitted herein, the alteration, improvement,
demolition or removal of any of the Improvements without the prior consent of
Lender;

 

(xv)       if, without Lender’s prior written consent, (i) the Management
Agreement is terminated, (ii) the ownership, management or control of Manager is
transferred, (iii) there is a material change in the Management Agreement, or
(iv) if there shall be a material default by Borrower under the Management
Agreement;

 

(xvi)      if Borrower ceases to continuously operate the Property or any
material portion thereof as a medical office building for any reason whatsoever
(other than temporary cessation in connection with any repair or renovation
thereof undertaken with the consent of Lender);

 

(xvii)     if Borrower shall continue to be in Default under any of the other
terms, covenants or conditions of this Agreement not specified in
subsections (i) to (xvi) above or in subsections (xviii) to (xxii) below, and
such Default shall continue for ten (10) days after notice to Borrower from
Lender, in the case of any such Default which can be cured by the payment of a
sum of money, or for thirty (30) days after notice to Borrower from Lender in
the case of any other such Default; provided, however, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such 30-day
period, and provided further that Borrower shall have commenced to cure such
Default within such 30-day period shall and thereafter diligently and
expeditiously proceed to cure the same, such 30-day period shall be extended for
such time as is reasonably necessary for Borrower in the exercise of due
diligence to cure such Default, such additional period not to exceed sixty (60)
days;

 

(xviii)    if Borrower or any Person owning a direct or indirect ownership
interest in Borrower shall be convicted of a Patriot Act Offense by a court of
competent jurisdiction;

 

(xix)       if Borrower breaches any covenant contained Section 4.1.7 hereof and
such failure shall continue for five (5) Business Days following notice to
Borrower from Lender;

 

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(xx)        except as expressly permitted pursuant to the Loan Documents, if
Borrower or any other Person grants any easement, covenant or restriction (other
than the Permitted Encumbrances) over the Property;

 

(xxi)       if Borrower breaches the negative covenant contained in
Section 4.2.16 hereof or acts or neglects to act in such a manner as to be
considered a default under any of the Operating Agreements; or

 

(xxii)      if there shall occur any other event which is defined as an Event of
Default in this Agreement or in any other Loan Document or if there shall be a
default under any of the other Loan Documents beyond any applicable cure periods
contained in such Loan Documents, whether as to Borrower, Guarantor or the
Property, or if any other such event shall occur or condition shall exist, if
the effect of such event or condition is to accelerate the maturity of any
portion of the Obligations or to permit Lender to accelerate the maturity of all
or any portion of the Obligations.

 

(b)         Upon the occurrence of an Event of Default (other than an Event of
Default described in clauses (vii), (viii) or (ix) above) and at any time
thereafter, Lender may, in addition to any other rights or remedies available to
it pursuant to this Agreement and the other Loan Documents or at law or in
equity, take such action, without notice or demand, that Lender deems advisable
to protect and enforce its rights against Borrower and in and to the Property,
including declaring the Obligations to be immediately due and payable, and
Lender may enforce or avail itself of any or all rights or remedies provided in
the Loan Documents against Borrower and the Property, including all rights or
remedies available at law or in equity; and upon any Event of Default described
in clauses (vii), (viii) or (ix) above, the Obligations of Borrower hereunder
and under the other Loan Documents shall immediately and automatically become
due and payable, without notice or demand, and Borrower hereby expressly waives
any such notice or demand, anything contained herein or in any other Loan
Document to the contrary notwithstanding.

 

Section 10.2          Remedies.

 

(a)         Upon the occurrence of an Event of Default, all or any one or more
of the rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to, Borrower or at law or in equity may be exercised
by Lender at any time and from time to time, whether or not all or any of the
Obligations shall be declared due and payable, and whether or not Lender shall
have commenced any foreclosure proceeding or other action for the enforcement of
its rights and remedies under any of the Loan Documents with respect to the
Property. Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singly, successively, together or otherwise,
at such time and in such order as Lender may determine in its sole discretion,
to the fullest extent permitted by law, without impairing or otherwise affecting
the other rights and remedies of Lender permitted by law, equity or contract or
as set forth herein or in the other Loan Documents. Without limiting the
generality of the foregoing, if an Event of Default is continuing (i) Lender
shall not be subject to any “one action” or “election of remedies” law or rule,
and (ii) all Liens and other rights, remedies or privileges provided to Lender
shall remain in full force and effect until Lender has exhausted all of its
remedies against the Property and the Mortgage has been foreclosed, sold and/or
otherwise realized upon in satisfaction of the Obligations or the Obligations
have been paid in full.

 

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(b)         Lender shall have the right from time to time to partially foreclose
the Mortgage in any manner and for any amounts secured by the Mortgage then due
and payable as determined by Lender in its sole discretion, including the
following circumstances: (i) in the event Borrower defaults beyond any
applicable grace period in the payment of one or more scheduled payments of
principal and interest, Lender may foreclose the Mortgage to recover such
delinquent payments, or (ii) in the event Lender elects to accelerate less than
the entire Outstanding Principal Balance, Lender may foreclose the Mortgage to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by the Mortgage as Lender may elect. Notwithstanding
one or more partial foreclosures, the Property shall remain subject to the
Mortgage to secure payment of the sums secured by the Mortgage and not
previously recovered.

 

(c)         Lender shall have the right from time to time to sever the Note and
the other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder. Borrower shall execute and
deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender. Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power. Except as may be required in connection with a
Securitization pursuant to Section 9.1 hereof, (i) Borrower shall not be
obligated to pay any costs or expenses incurred in connection with the
preparation, execution, recording or filing of the Severed Loan Documents, and
(ii) the Severed Loan Documents shall not contain any representations,
warranties or covenants not contained in the Loan Documents.

 

(d)         Any amounts recovered from the Property or any other collateral for
the Loan after an Event of Default may be applied by Lender toward the payment
of any interest and/or principal of the Loan and/or any other amounts due under
the Loan Documents, in such order, priority and proportions as Lender in its
sole discretion shall determine.

 

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Section 10.3          Lender’s Right to Perform.

 

If Borrower fails to perform any covenant or obligation contained herein and
such failure shall continue for a period of five (5) Business Days after
Borrower’s receipt of written notice thereof from Lender, without in any way
limiting Lender’s right to exercise any of its rights, powers or remedies as
provided hereunder, or under any of the other Loan Documents, Lender may, but
shall have no obligation to, perform, or cause the performance of, such covenant
or obligation, and all costs, expenses, liabilities, penalties and fines of
Lender incurred or paid in connection therewith shall be payable by Borrower to
Lender upon demand and if not paid shall be added to the Obligations (and to the
extent permitted under applicable laws, secured by the Mortgage and the other
Loan Documents) and shall bear interest thereafter at the Default Rate.
Notwithstanding the foregoing, Lender shall have no obligation to send notice to
Borrower of any such failure.

 

Section 10.4          Remedies Cumulative.

 

The rights, powers and remedies of Lender under this Agreement shall be
cumulative and not exclusive of any other right, power or remedy which Lender
may have against Borrower pursuant to this Agreement or the other Loan
Documents, or existing at law or in equity or otherwise. Lender’s rights, powers
and remedies may be pursued singly, concurrently or otherwise, at such time and
in such order as Lender may determine in Lender’s sole discretion. No delay or
omission to exercise any remedy, right or power accruing upon an Event of
Default shall impair any such remedy, right or power or shall be construed as a
waiver thereof, but any such remedy, right or power may be exercised from time
to time and as often as may be deemed expedient. A waiver of one Default or
Event of Default with respect to Borrower shall not be construed to be a waiver
of any subsequent Default or Event of Default by Borrower or to impair any
remedy, right or power consequent thereon.

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.1          Survival; Successors and Assigns.

 

This Agreement and all covenants, agreements, representations and warranties
made herein and in the certificates delivered pursuant hereto shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as all or any of the
Obligations are outstanding and unpaid unless a longer period is expressly set
forth herein or in the other Loan Documents. Whenever in this Agreement any of
the parties hereto is referred to, such reference shall be deemed to include the
legal representatives, successors and assigns of such party. All covenants,
promises and agreements in this Agreement, by or on behalf of Borrower, shall
inure to the benefit of the legal representatives, successors and assigns of
Lender.

 

Section 11.2          Lender’s Discretion.

 

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Whenever pursuant to this Agreement Lender exercises any right given to it to
approve or disapprove any matter, or any arrangement or term is to be
satisfactory to Lender, the decision of Lender to approve or disapprove such
matter or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive. Prior to a
Securitization, whenever pursuant to this Agreement the Rating Agencies are
given any right to approve or disapprove any matter, or any arrangement or term
is to be satisfactory to the Rating Agencies, the decision of Lender to approve
or disapprove such matter or to decide whether arrangements or terms are
satisfactory or not satisfactory, based upon Lender’s determination of Rating
Agency criteria, shall be substituted therefor.

 

Section 11.3          Governing Law.

 

THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF SOUTH CAROLINA. ANY
LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY AT LENDER’S OPTION BE
INSTITUTED IN THE CITY AND COUNTY IN WHICH THE PROPERTY IS LOCATED, AND BORROWER
WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE AND/OR
FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING.

 

Section 11.4          Modification, Waiver in Writing.

 

No modification, amendment, extension, discharge, termination or waiver of any
provision of this Agreement or of any other Loan Document, nor consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in a writing signed by the party or parties against whom enforcement is
sought, and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. Except as otherwise expressly
provided herein, no notice to, or demand on Borrower, shall entitle Borrower to
any other or future notice or demand in the same, similar or other
circumstances.

 

Section 11.5          Delay Not a Waiver.

 

Neither any failure nor any delay on the part of Lender in insisting upon strict
performance of any term, condition, covenant or agreement, or exercising any
right, power, remedy or privilege hereunder or under any other Loan Document,
shall operate as or constitute a waiver thereof, nor shall a single or partial
exercise thereof preclude any other future exercise, or the exercise of any
other right, power, remedy or privilege. In particular, and not by way of
limitation, by accepting payment after the due date of any amount payable under
this Agreement or any other Loan Document, Lender shall not be deemed to have
waived any right either to require prompt payment when due of all other amounts
due under this Agreement or the other Loan Documents, or to declare a default
for failure to effect prompt payment of any such other amount. Lender shall have
the right to waive or reduce any time periods that Lender is entitled to under
the Loan Documents in its sole and absolute discretion.

 

Section 11.6          Notices.

 

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All notices, demands, requests, consents, approvals or other communications (any
of the foregoing, a “Notice”) required, permitted or desired to be given
hereunder shall be in writing and shall be sent by telefax (with answer back
acknowledged) or by registered or certified mail, postage prepaid, return
receipt requested, or delivered by hand or by reputable overnight courier,
addressed to the party to be so notified at its address hereinafter set forth,
or to such other address as such party may hereafter specify in accordance with
the provisions of this Section 11.6. Any Notice shall be deemed to have been
received: (a) three (3) days after the date such Notice is mailed, (b) on the
date of sending by telefax if sent during business hours on a Business Day
(otherwise on the next Business Day), (c) on the date of delivery by hand if
delivered during business hours on a Business Day (otherwise on the next
Business Day), and (d) on the next Business Day if sent by an overnight
commercial courier, in each case addressed to the parties as follows:

 

If to Lender:                          Starwood Mortgage Capital LLC
1601 Washington Avenue, Suite 800
Miami Beach, Florida 33139
Attention: Ms. Leslie K. Fairbanks
Facsimile No. (305) 695-5539

 

with a copy to:                     Winstead PC
201 North Tryon Street
Suite 2000
Charlotte, North Carolina 28202
Attention: Jeffrey J. Lee, Esq.
Facsimile No.: (704) 339-1701

 

and with a copy to:             Wells Fargo Commercial Mortgage Services
Duke Energy Center
550 South Tryon St., 12th Floor
MAC D1086-120
Charlotte, North Carolina 28202
Attention: Asset Manager – Starwood Mortgage Capital
Facsimile No.: (704) 715-0036

 

If to Borrower:                     c/o United Realty Advisors, LP
60 Broad Street, 34th Floor
New York, New York 10004
Attention: Barry Funt
Facsimile No.: (212) 388-6811

 

with a copy to:                     Nelson Mullins Riley & Scarborough LLP
Bank of America Corporate Center
42nd Floor
100 North Tryon Street
Charlotte, NC 28202-4007
Attention: Jonathan J. Nugent
Facsimile No. (704) 417-3237

 

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with a copy to:                     Arbor Myrtle Beach PE LLC
333 Earle Ovington Boulevard
Uniondale, New York 11553
Attention: William Connolly, Esq.

 

with a copy to:                     Blank Rome LLP
405 Lexington Avenue
New York, New York 10174
Attention: Carol Joseph, Esq.

 

Any party may change the address to which any such Notice is to be delivered by
furnishing ten (10) days written notice of such change to the other parties in
accordance with the provisions of this Section 11.6. Notices shall be deemed to
have been given on the date as set forth above, even if there is an inability to
actually deliver any such Notice because of a changed address of which no Notice
was given, or there is a rejection or refusal to accept any Notice offered for
delivery. Notice for any party may be given by its respective counsel.
Additionally, Notice from Lender may also be given by Servicer and Lender hereby
acknowledges and agrees that Borrower shall be entitled to rely on any Notice
given by Servicer as if it had been sent by Lender.

 

Section 11.7          Trial by Jury.

 

BORROWER AND LENDER EACH HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE
TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN
DOCUMENTS OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION
THEREWITH. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND
VOLUNTARILY BY BORROWER AND LENDER AND IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD
OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED TO FILE A COPY OF THIS
PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER.

 

Section 11.8          Headings.

 

The Article and/or Section headings and the Table of Contents in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

 

Section 11.9          Severability.

 

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

 

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Section 11.10          Preferences.

 

Lender shall have the continuing and exclusive right to apply or reverse and
reapply any and all payments by Borrower to any portion of the Obligations of
Borrower hereunder. To the extent Borrower makes a payment or payments to
Lender, which payment or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or proceeds received, the Obligations hereunder or part thereof intended
to be satisfied shall be revived and continue in full force and effect, as if
such payment or proceeds had not been received by Lender.

 

Section 11.11          Waiver of Notice.

 

Borrower shall not be entitled to any notices of any nature whatsoever from
Lender except with respect to matters for which this Agreement or the other Loan
Documents specifically and expressly provide for the giving of notice by Lender
to Borrower and except with respect to matters for which Borrower is not,
pursuant to applicable Legal Requirements, permitted to waive the giving of
notice. Borrower hereby expressly waives the right to receive any notice from
Lender with respect to any matter for which this Agreement or the other Loan
Documents do not specifically and expressly provide for the giving of notice by
Lender to Borrower.

 

Section 11.12          Remedies of Borrower.

 

In the event that a claim or adjudication is made that Lender or its agents have
acted unreasonably or unreasonably delayed acting in any case where, by law or
under this Agreement or the other Loan Documents, Lender or such agent, as the
case may be, has an obligation to act reasonably or promptly, neither Lender nor
its agents shall be liable for any monetary damages and Borrower’s sole remedy
shall be limited to commencing an action seeking injunctive relief or
declaratory judgment. Any action or proceeding to determine whether Lender has
acted reasonably shall be determined by an action seeking declaratory judgment.

 

Section 11.13          Expenses; Indemnity.

 

(a)         Borrower shall pay or, if Borrower fails to pay, reimburse Lender
upon receipt of notice from Lender, for all costs and expenses (including
reasonable attorneys’ fees and disbursements) incurred by Lender in connection
with (i) Borrower’s ongoing performance of and compliance with Borrower’s
agreements and covenants contained in this Agreement and the other Loan
Documents on its part to be performed or complied with after the Closing Date,
including confirming compliance with environmental and insurance requirements;
(ii) Lender’s ongoing performance of and compliance with all agreements and
covenants contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iii) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Borrower;

 

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(iv) the filing and recording fees and expenses, title insurance and reasonable
fees and expenses of counsel for providing to Lender all required legal
opinions, and other similar expenses incurred in creating and perfecting the
Liens in favor of Lender pursuant to this Agreement and the other Loan
Documents; (v) enforcing or preserving any rights, in response to third party
claims or the prosecuting or defending of any action or proceeding or other
litigation, in each case against, under or affecting Borrower, this Agreement,
the other Loan Documents, the Property or any other security given for the Loan;
(vi) enforcing any Obligations of or collecting any payments due from Borrower
under this Agreement, the other Loan Documents or with respect to the Property
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings, including, but not limited to any
customary servicer or special servicer fees, and (vii) Borrower’s failure to
comply with the requirements of Section 4.1.15 or Section 9.1 hereof; provided,
however, that Borrower shall not be liable for the payment of any such costs and
expenses to the extent the same arise by reason of the active gross negligence,
illegal acts, fraud or willful misconduct of Lender. Any costs due and payable
to Lender may be paid, at Lender’s election in its sole discretion, from any
amounts in the Cash Management Account.

 

(b)         Borrower shall indemnify, defend and hold harmless Lender from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including the reasonable fees and disbursements of counsel
for Lender in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not Lender shall be designated a
party thereto), that may be imposed on, actually incurred by, or asserted
against Lender in any manner relating to or arising out of (i) any breach by
Borrower of its Obligations under, or any material misrepresentation by Borrower
contained in, this Agreement or the other Loan Documents, (ii) the use or
intended use of the proceeds of the Loan, (iii) any information provided by or
on behalf of Borrower, or contained in any documentation approved by Borrower;
(iv) ownership of the Mortgage, the Property or any interest therein, or receipt
of any Rents; (v) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or on the adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(vi) any use, nonuse or condition in, on or about the Property or on adjoining
sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways;
(vii) performance of any labor or services or the furnishing of any materials or
other property in respect of the Property; (viii) any failure of the Property to
comply with any Legal Requirement; (ix) any claim by brokers, finders or similar
persons claiming to be entitled to a commission in connection with any Lease or
other transaction involving the Property or any part thereof, or any liability
asserted against Lender with respect thereto; and (x) the claims of any lessee
of any portion of the Property or any Person acting through or under any lessee
or otherwise arising under or as a consequence of any Lease (collectively, the
“Indemnified Liabilities”); provided, however, that Borrower shall not have any
obligation to Lender hereunder to the extent that such Indemnified Liabilities
arise from the active gross negligence, illegal acts, fraud or willful
misconduct of Lender. To the extent that the undertaking to indemnify, defend
and hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by Lender.

 

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Section 11.14          Schedules Incorporated.

 

The Schedules annexed hereto are hereby incorporated herein as a part of this
Agreement with the same effect as if set forth in the body hereof.

 

Section 11.15          Offsets, Counterclaims and Defenses.

 

Any assignee of Lender’s interest in and to this Agreement and the other Loan
Documents shall take the same free and clear of all offsets, counterclaims or
defenses which are unrelated to such documents which Borrower may otherwise have
against any assignor of such documents, and no such unrelated counterclaim or
defense shall be interposed or asserted by Borrower in any action or proceeding
brought by any such assignee upon such documents and any such right to interpose
or assert any such unrelated offset, counterclaim or defense in any such action
or proceeding is hereby expressly waived by Borrower.

 

Section 11.16          No Joint Venture or Partnership; No Third Party
Beneficiaries.

 

(a)         Borrower and Lender intend that the relationships created hereunder
and under the other Loan Documents be solely that of borrower and lender.
Nothing herein or therein is intended to create a joint venture, partnership,
tenancy-in-common or joint tenancy relationship between Borrower and Lender nor
to grant Lender any interest in the Property other than that of mortgagee,
beneficiary or lender.

 

(b)         This Agreement and the other Loan Documents are solely for the
benefit of Lender and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender any right to
insist upon or to enforce the performance or observance of any of the
Obligations contained herein or therein. All conditions to the obligations of
Lender to make the Loan (and disburse Reserve Funds) hereunder are imposed
solely and exclusively for the benefit of Lender and no other Person shall have
standing to require satisfaction of such conditions in accordance with their
terms or be entitled to assume that Lender will refuse to make the Loan (or make
any disbursement of Reserve Funds) in the absence of strict compliance with any
or all thereof and no other Person shall under any circumstances be deemed to be
a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by Lender if, in Lender’s sole discretion, Lender deems it
advisable or desirable to do so.

 

Section 11.17          Publicity.

 

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All news releases, publicity or advertising by Borrower or its Affiliates
through any media intended to reach the general public which refers to the Loan
Documents or the financing evidenced by the Loan Documents, to Lender, Lender
Affiliate or any of their affiliates shall be subject to the prior written
approval of Lender. Borrower hereby agrees that Lender and its affiliated
entities and its subsidiaries, may publicly identify details of the Loan in
their respective advertising and public communications of all kinds, including,
but not limited to, press releases, direct mail, newspapers, magazines,
journals, e-mail or internet advertising or communications.  Such details may
include the name of the Property, the address of the Property, the amount of the
Loan, the names of the Borrower and/or Guarantor, the Closing Date, and a
description of the size and location of the Property.

 

Section 11.18          Waiver of Marshalling of Assets.

 

To the fullest extent permitted by law, Borrower, for itself and its successors
and assigns, waives all rights to a marshalling of the assets of Borrower,
Borrower’s members or partners, as applicable, and others with interests in
Borrower, and of the Property, and shall not assert any right under any laws
pertaining to the marshalling of assets, the sale in inverse order of
alienation, homestead exemption, the administration of estates of decedents, or
any other matters whatsoever to defeat, reduce or affect the right of Lender
under the Loan Documents to a sale of the Property for the collection of the
Obligations without any prior or different resort for collection, or of the
right of Lender to the payment of the Obligations out of the net proceeds of the
Property in preference to every other claimant whatsoever.

 

Section 11.19          Waiver of Offsets/Defenses/Counterclaims.

 

To the extent permitted by applicable laws, Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents or otherwise to offset any
obligations to make the payments required by the Loan Documents. No failure by
Lender to perform any of its obligations hereunder shall be a valid defense to,
or result in any offset against, any payments which Borrower is obligated to
make under any of the Loan Documents.

 

Section 11.20          Conflict; Construction of Documents; Reliance.

 

In the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control. The
parties hereto acknowledge that they were represented by competent counsel in
connection with the negotiation, drafting and execution of the Loan Documents
and that such Loan Documents shall not be subject to the principle of construing
their meaning against the party which drafted same. Borrower acknowledges that,
with respect to the Loan, Borrower shall rely solely on its own judgment and
advisors in entering into the Loan, without relying in any manner on any
statements, representations or recommendations of Lender or any parent,
subsidiary or affiliate of Lender. Lender shall not be subject to any limitation
whatsoever in the exercise of any rights or remedies available to it under any
of the Loan Documents or any other agreements or instruments which govern the
Loan by virtue of the ownership by it or any parent, subsidiary or affiliate of
Lender of any equity interest any of them may acquire in Borrower, and Borrower
hereby irrevocably waives the right to raise any defense or take any action on
the basis of the foregoing with respect to Lender’s exercise of any such rights
or remedies. Borrower acknowledges that Lender engages in the business of real
estate financings and other real estate transactions and investments which may
be viewed as adverse to or competitive with the business of Borrower or its
Affiliates.

 

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Section 11.21          Brokers and Financial Advisors.

 

Borrower hereby represents that it has dealt with no financial advisors,
brokers, underwriters, placement agents, agents or finders in connection with
the transactions contemplated by this Agreement. Borrower shall indemnify,
defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein. The provisions of this Section 11.21 shall
survive the expiration and termination of this Agreement and the payment of the
Obligations.

 

Section 11.22          Exculpation.

 

Subject to the qualifications below, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the Obligations contained in the
Note, this Agreement, the Mortgage or the other Loan Documents by any action or
proceeding wherein a money judgment shall be sought against Borrower, except
that Lender may bring a foreclosure action, an action for specific performance
or any other appropriate action or proceeding to enable Lender to enforce and
realize upon its interest under the Note, this Agreement, the Mortgage and the
other Loan Documents, or in the Property, the Gross Revenues or any other
collateral given to Lender pursuant to the Loan Documents; provided, however,
that, except as specifically provided herein, any judgment in any such action or
proceeding shall be enforceable against Borrower only to the extent of
Borrower’s interest in the Property, in the Gross Revenues and in any other
collateral given to Lender, and Lender, by accepting the Note, this Agreement,
the Mortgage and the other Loan Documents, shall not sue for, seek or demand any
deficiency judgment against Borrower in any such action or proceeding under or
by reason of or under or in connection with the Note, this Agreement, the
Mortgage or the other Loan Documents. The provisions of this Section 11.22 shall
not, however, (a) constitute a waiver, release or impairment of any obligation
evidenced or secured by any of the Loan Documents; (b) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
foreclosure and sale under the Mortgage; (c) affect the validity or
enforceability of any of the Loan Documents or any guaranty made in connection
with the Loan or any of the rights and remedies of Lender thereunder; (d) impair
the right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of the Assignment of Leases; (f) constitute a prohibition against
Lender to seek a deficiency judgment against Borrower in order to fully realize
the security granted by the Mortgage or to commence any other appropriate action
or proceeding in order for Lender to exercise its remedies against the Property;
or (g) constitute a waiver of the right of Lender to enforce the liability and
obligation of Borrower, by money judgment or otherwise, to the extent of any
loss, damage, cost, expense, liability, claim or other obligation incurred by
Lender (including attorneys’ fees and costs reasonably incurred) arising out of
or in connection with the following (all such liability and obligation of
Borrower for any or all of the following being referred to herein as “Borrower’s
Recourse Liabilities”):

 

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(i)         fraud, gross negligence, willful misconduct, intentional material
misrepresentation or failure to disclose a material fact by or on behalf of
Borrower, Guarantor, any Affiliate of Borrower or Guarantor, or any of their
respective agents or representatives in connection with the Loan;

 

(ii)        the breach of any representation, warranty, covenant or
indemnification provision in the Environmental Indemnity or in any other Loan
Document concerning environmental laws, hazardous substances and/or asbestos and
any indemnification of Lender with respect thereto in either document;

 

(iii)       wrongful removal or destruction of any portion of the Property or
damage to the Property caused by willful misconduct or gross negligence;

 

(iv)       any intentional material physical waste at the Property;

 

(v)        the forfeiture by Borrower of the Property, or any portion thereof,
because of the conduct or purported conduct of criminal activity by Borrower or
Guarantor or any of their respective agents or representatives in connection
therewith, including by reason of any claim under the Racketeer Influenced and
Corrupt Organizations Act (“RICO”);

 

(vi)       the misapplication, misappropriation or conversion by or on behalf of
Borrower of (A) any Insurance Proceeds paid by reason of any loss, damage or
destruction to the Property, (B) any Awards or other amounts received in
connection with the Condemnation of all or a portion of the Property, or (C) any
Gross Revenues (including Rents, security deposits, advance deposits or any
other deposits and Lease Termination Payments);

 

(vii)      failure to pay charges for labor or materials or other charges that
can create Liens on any portion of the Property to the extent that the revenue
from the Property is sufficient to pay such amounts (other than charges for
labor or materials or other charges owed that are contested strictly in
accordance with the terms of the Loan Documents);

 

(viii)     any security deposits, advance deposits or any other deposits
collected with respect to the Property which are not delivered to Lender in
accordance with the provisions of the Loan Documents;

 

(ix)        the failure to pay Taxes to the extent that the revenue from the
Property is sufficient to pay such amounts (other than (x) amounts deposited
with Lender as Tax Funds for Taxes where Lender elects not to apply such funds
toward payment of such Taxes owed, provided Borrower has delivered to Lender all
invoices for the payment of such Taxes as required by this Agreement or
(y) Taxes owed that are contested strictly in accordance with the terms of the
Loan Documents);

 

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(x)         failure to obtain and maintain the fully paid for Policies in
accordance with Section 5.1.1 hereof to the extent that the revenue from the
Property is sufficient to pay the Insurance Premiums (other than amounts
deposited with Lender as Insurance Funds for Insurance Premiums where Lender
elects not to apply such funds toward payment of such Insurance Premiums owed,
provided Borrower has delivered to Lender all invoices for the payment of such
Insurance Premiums as required by this Agreement);

 

(xi)        at any time prior to a Securitization, the failure to permit on-site
inspections of the Property to the extent required by, and in accordance with,
the terms and provisions of this Agreement and the Mortgage;

 

(xii)       the failure to provide financial information to the extent required
by, and in accordance with, the terms and provisions of this Agreement and the
Mortgage;

 

(xiii)      the failure to timely appoint a new property manager upon the
request of Lender after the occurrence of any of the events set forth in Section
7.3 hereof;

 

(xiv)      the failure by Borrower or Guarantor to cooperate with Lender’s
execution of a Secondary Market Transaction pursuant to the terms and provisions
of Section 9.1;

 

(xv)       Borrower’s indemnification of Lender set forth in Section 9.2 hereof;

 

(xvi)      the amendment or modification of any Major Lease made without
Lender’s prior written consent;

 

(xvii)     Borrower’s failure to comply with the provisions of Section 3.1.24
hereof if such failure does not result in a substantive consolidation of
Borrower with any other Person;

 

(xviii)    Borrower's indemnification obligations set forth in Sections 8.2 and
8.3 of the Mortgage; and/or

 

(xix)       if Guarantor, Borrower or any Affiliate of any of the foregoing, in
connection with any enforcement action or exercise or assertion of any right or
remedy by or on behalf of Lender under or in connection with the Guaranty, the
Note, the Mortgage or any other Loan Document, seeks in bad faith a defense,
judicial intervention or injunctive or other equitable relief of any kind, or
asserts in bad faith in a pleading filed in connection with a judicial
proceeding any defense against Lender or any right in connection with any
security for the Loan.

 

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Notwithstanding anything to the contrary in this Agreement or any of the other
Loan Documents, (A) Lender shall not be deemed to have waived any right which
Lender may have under Section 506(a), 506(b), 1111(b) or any other provisions of
the Bankruptcy Code to file a claim for the full amount of the Obligations or to
require that all collateral shall continue to secure all of the Obligations
owing to Lender in accordance with the Loan Documents, and (B) the Obligations
shall be fully recourse to Borrower in the event that any of the following occur
(each, a “Springing Recourse Event”): (i) Borrower fails to comply with the
provisions of Section 3.1.24 hereof if such failure results in a substantive
consolidation of Borrower with any other Person; (ii) Borrower fails to obtain
Lender’s prior consent to any subordinate financing secured by the Property or
other voluntary Lien encumbering the Property except as permitted herein;
(iii) Borrower fails to obtain Lender’s prior consent to any Transfer of the
Property or any interest therein or any Transfer of any direct or indirect
interest in Borrower, in either case as required by the Mortgage or this
Agreement other than a Permitted Transfer; (iv) Borrower or any SPC Party files
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (v) the filing of an involuntary petition against
Borrower and/or any SPC Party under the Bankruptcy Code or any other Federal or
state bankruptcy or insolvency law by any other Person in which Borrower, any
SPC Party and/or Guarantor colludes with or otherwise assists such Person,
and/or Borrower, any SPC Party and/or Guarantor solicits or causes to be
solicited petitioning creditors for any involuntary petition against Borrower
and/or any SPC Party by any Person; (vi) Borrower, any SPC Party and/or
Guarantor files an answer consenting to, or otherwise acquiescing in, or joining
in, any involuntary petition filed against it by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(vii) Borrower or any Affiliate, officer, director or representative which
controls Borrower consents to, or acquiesces in, or joins in, an application for
the appointment of a custodian, receiver, trustee or examiner for Borrower or
any portion of the Property; or (viii) Borrower, any SPC Party and/or Guarantor
makes an assignment for the benefit of creditors or admits, in writing or in any
legal proceeding, its insolvency or inability to pay its debts as they become
due.

 

Section 11.23          Prior Agreements.

 

This Agreement and the other Loan Documents contain the entire agreement of the
parties hereto and thereto in respect of the transactions contemplated hereby
and thereby, and all prior agreements among or between such parties, whether
oral or written, including the Summary of Terms and Conditions dated March 3,
2014 (as amended) delivered by United Realty Capital to Lender, are superseded
by the terms of this Agreement and the other Loan Documents. In addition,
Borrower hereby agrees that it is not relying on and has not relied on any
representations, warranties or statements, whether written or oral, of the
Lender, any Affiliate of the Lender or any other party in connection with its
decision to enter into the transaction described in this Agreement and the
related Loan Documents and that this Agreement and the related Loan Documents
set forth the entire set of representations, warranties and understandings of
the Borrower with respect to the transaction described herein and in the Loan
Documents.

 

Section 11.24          Servicer.

 

At the option of Lender, the Loan may be serviced by a servicer (the “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to the
Servicer pursuant to a servicing agreement (the “Servicing Agreement”) between
Lender and Servicer.

 

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Section 11.25          Joint and Several Liability.

 

If more than one Person has executed this Agreement as “Borrower,” the
representations, covenants, warranties and obligations of all such Persons
hereunder shall be joint and several.

 

Section 11.26          Creation of Security Interest.

 

Notwithstanding any other provision set forth in this Agreement, the Note, the
Mortgage or any of the other Loan Documents, Lender may at any time create a
security interest in all or any portion of its rights under this Agreement, the
Note, the Mortgage and any other Loan Document (including the advances owing to
it) in favor of any Federal Reserve Bank in accordance with Regulation A of the
Board of Governors of the Federal Reserve System.

 

Section 11.27          Assignments and Participations.

 

(a)         Lender may assign, without the consent of Borrower, to one or more
Persons all or a portion of its rights and obligations under this Agreement and
the other Loan Documents.

 

(b)         Upon such execution and delivery, from and after the effective date
specified in the related assignment and acceptance agreement, the assignee
thereunder shall be a party hereto and shall have the rights and obligations of
Lender hereunder to the extent of its interest in the Loan.

 

(c)         Lender may sell participations to one or more Persons in or to all
or a portion of its rights and obligations under this Agreement; provided,
however, that (i) Lender’s obligations under this Agreement shall remain
unchanged, (ii) Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) Lender shall remain the
holder of any Note for all purposes of this Agreement, and (iv) Borrower shall
continue to deal solely and directly with Lender in connection with Lender’s
rights and obligations under and in respect of this Agreement and the other Loan
Documents.

 

Lender may, in connection with any assignment or participation or proposed
assignment or participation pursuant to this Section 11.27, disclose to the
assignee or participant or proposed assignees or participants, as the case may
be, any information relating to Borrower or any of its Affiliates or to any
aspect of the Loan that has been furnished to Lender by or on behalf of the
Borrower or any of its Affiliates.

 

Section 11.28          Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.

 

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Section 11.29          Set-Off.

 

In addition to any rights and remedies of Lender provided by this Agreement and
by law, Lender shall have the right in its sole discretion, without prior notice
to Borrower, any such notice being expressly waived by Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise), to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by Lender or any Affiliate thereof to or
for the credit or the account of Borrower. Lender agrees promptly to notify
Borrower after any such set-off and application made by Lender; provided that
the failure to give such notice shall not affect the validity of such set-off
and application.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.

 

LENDER:

 

/s/ United 945 82nd Parkway Fee, LLC

 

BORROWER:

 

/s/ Starwood Mortgage Capital LLC

 

 

 

 

SCHEDULE I

                  

RENT ROLL

              

Sch. I-1

 

 

SCHEDULE II

              

INTENTIONALLY OMITTED

              

Sch. II-1

 

 

SCHEDULE III

              

ORGANIZATIONAL CHART

              

Sch. III-1

 

 

EXHIBIT A

              

LEGAL DESCRIPTION

              

 

A-1

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